Exhibit 10.1

 

Confidential Materials omitted and filed separately with the

Securities and Exchange Commission. Asterisks denote omissions.

 

COMMERCIAL OUTSOURCING SERVICES AGREEMENT

 

This Commercial Outsourcing Services Agreement (“Agreement”) is entered into as
of August 25, 2011 (the “Effective Date”) by INTEGRATED COMMERCIALIZATION
SOLUTIONS, INC., a California corporation (“ICS”) and PACIRA
PHARMACEUTICALS, INC., a California corporation (the “Company”).

 

RECITALS

 

A.            Company is, among other things, in the business of manufacturing,
selling and distributing pharmaceutical products, including those listed on
Schedule A (“Products”);

 

B.            ICS is, among other things, in the business of providing
commercialization services for pharmaceutical products;

 

C.            The Company desires to engage ICS as its agent to provide certain
commercialization services related to Products pursuant to this Agreement; and

 

D.            ICS desires to provide such commercialization services to the
Company as its agent pursuant to this Agreement.

 

AGREEMENT

 

NOW, THEREFORE, the parties hereby agree as follows:

 

1.             Appointment As Exclusive Agent

 

The Company hereby appoints ICS as the exclusive provider of Services (as
defined in Section 2) for Products sold to the Company’s customers (“Customers”)
in the United States, Guam, Puerto Rico and the U.S. Territories during the Term
(as defined in Section 4.1), as provided in this Agreement.

 

2.             Services To Be Performed

 

2.1           Services.  The Company hereby engages ICS to provide the following
services with respect to Products (“Services”):

 

2.1.1        Customer Services as described in Exhibit B.

 

2.1.2        Warehousing and Inventory Program Services as described in
Exhibit C.

 

2.1.3        Distribution Services as described in Exhibit D.

 

2.1.4                        Warehousing and Distribution of Sample Products as
described in Exhibit E.

 

2.1.5                        Marketing Materials Fulfillment Services as
described in Exhibit F.

 

2.1.6                        Contract Administration and Chargeback Processing
as described in Exhibit G.

 

2.1.7                        Accounts Receivable Management and Cash
Applications as described in Exhibit H.

 

2.1.8        Financial Management Services as described in Exhibit I.

 

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2.1.9        Information Technology Services as described in Exhibit J.

 

2.2           ADR Status.  Solely for the limited purpose of compliance with the
pedigree requirements of the Prescription Drug Marketing Act and any similar
state laws, ICS shall be considered an “Authorized Distributor of Record” for
the Products and a third party logistics provider who does not take title to
Product or have general responsibility to direct the Product’s sale or
disposition.  The foregoing shall not be construed in a manner that results in
ICS being considered a distributor or wholesaler for any other purpose or under
any other law or regulation.

 

2.3           Taxes.  ICS will not be responsible for collection or payment of
any Taxes on behalf of the Company.

 

2.4           Definitions.  Capitalized words used without definition in this
Agreement will each have the meaning in Schedule C.  Capitalized words used
without definition in this Agreement will each have the meaning in Schedule C.

 

3.             Compensation — Fees For Services

 

3.1           Compensation.  The Company will compensate ICS for Services in
accordance with Schedule B.  ICS will provide monthly invoices for fees for
Services to the Company, and will bill the Company for any pass through charges
monthly or as ICS is billed.  The Company will notify ICS of any disputed
charges in writing within 30 days of the date of the invoice covering such
charges.  In the absence of any such notice of dispute, all invoices will be
deemed to be correct and due in full within 30 days of the invoice date.  If the
Company disputes a portion of an invoice, the Company shall pay the undisputed
portion of the invoice within 30 days of the invoice date.  A late fee of [**]%
per month (or any portion thereof) will be charged as of the due date on all
amounts not paid within [**] days of the invoice date, except any amount
disputed by the Company in good faith.  If any dispute is resolved in favor of
ICS, the Company will pay the applicable late fee on such amount from the
original due date.

 

3.2           Price Changes.  For all fees, excluding pass-through costs which
are billed on a “cost plus” basis, ICS and the Company will negotiate annual
adjustments to take effect on each anniversary of the date of this Agreement
during the Term.  ICS and the Company will negotiate such adjustments in good
faith, taking into account all relevant factors including changes in the
consumer price index, documented material changes to ICS costs of providing
Services that have occurred (or are reasonably likely to occur), quantities of
services used and any resultant economies of scale to ICS, and any other
relevant factors (but without double-counting any cost increases addressed by
Section 3.3).  ICS and the Company will use commercially reasonable best efforts
to agree upon any proposed adjustment at least one hundred twenty (120) days
prior to its effective date

 

3.3           Cost Adjustment.  If ICS can reasonably demonstrate to the Company
that the costs to ICS for providing Services have materially increased (or are
reasonably likely to increase materially during the following twelve (12) month
period of the Term) as a result of any changes in the Requirements of Law,
including the adoption of any new Requirements of Law impacting Services, then
ICS may increase the applicable component of the fees for such Services provided
in Schedule B (“Cost Adjustment”).  ICS will notify the Company of any proposed
Cost Adjustment at least one hundred twenty (120) days prior to its effective
date.  All Cost Adjustments will be determined under generally accepted
accounting principles (“GAAP”) and cost allocation methods applied on a
consistent basis.  If the Company objects to any Cost Adjustment and the parties
are unable in good faith to resolve such objection to the reasonable
satisfaction of both parties, then either party may terminate this Agreement
upon ninety (90)

 

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days’ prior written notice to the other party.

 

3.4           Program Ready Date.  If the Company requests that ICS delay the
launch of Services more than thirty-five (35) days beyond the agreed-upon date
on the signatory page (the “Program Launch Date”) for any reason other than ICS’
failure to be in compliance with its obligations under this Agreement, the
Company will pay ICS the Stand-Ready Fee and any associated expenses as
specified in Schedule B, including reasonable out-of-pocket costs and other
expenses.  The Company will give ICS at least one week’s written notice of
changes to the Program Launch Date.  Program ready fees will continue until the
Program Launch Date.  After the Program Launch Date, the Company will pay
applicable monthly program fees.  For the first month during which Services are
provided, ICS will prorate any difference between program ready fees and
applicable monthly program fees.

 

4.             Term And Termination

 

4.1           Initial Term.  This Agreement will be effective as of the
Effective Date and will continue for three (3) years (the “Term”) unless sooner
terminated in accordance with Section 4.  The Term may be extended upon written
mutual agreement of the parties, such extension to be negotiated in good faith
six (6) months prior to the expiration of the Term.

 

4.2           Termination For Breach.

 

4.2.1        If a party fails to pay any amount due to the other party under
this Agreement, such unpaid amount shall bear interest at the rate of [**]
percent ([**]%) per month from the date due until paid.  If such amount becomes
more than [**] days past due, the other party may provide notice to the
non-paying party specifying the amount due and notifying the non-paying party
that the other party may terminate this Agreement if the non-paying party fails
to pay the amount due within ten days of the date of the notice.  If the
non-paying party fails to pay the amount due within 10 days of the date of the
notice, the other party may terminate this Agreement immediately and, in such
event, shall provide written notice thereof to the non-paying party; provided
that if such breach occurs more than three times during any 12-month period, the
non-breaching party may terminate this Agreement upon five days’ written notice
without any opportunity for cure.

 

4.2.2        Time and timely performance, consistent with the mutually agreed
SOPs, are of the essence of this Agreement.  If a party fails to perform any
obligation under this Agreement (other than payment of money), the other party
may provide notice to the breaching party describing the breach in detail and
notifying the breaching party that the other party may terminate this Agreement
if the breaching party’s failure to perform is not cured within ten
(10) business days of the date of the notice.  If the breaching party’s failure
to perform is not cured and, if necessary, a corrective action plan implemented,
within ten business days of the date of the notice, then the other party may
terminate this Agreement immediately and, in such event, shall provide written
notice thereof to the breaching party; provided that such cure right may not be
exercised more than once during any 12-month period for any given breach.

 

4.3           Termination For Specific Events.  Either party may immediately
terminate this Agreement upon written notice to the other party upon the other
party’s:  (a) filing an application for or consenting to appointment of a
trustee, receiver or custodian of its assets; (b) having an order for relief
entered in Bankruptcy Code proceedings; (c) making a general assignment for the
benefit of creditors; (d) having a trustee, receiver, or custodian of its assets
appointed unless proceedings and the person appointed are dismissed within 30
days; (e) dissolving its existence under applicable state law; (f) insolvency
within the meaning of Uniform Commercial Code Section 1-201 or failing generally
to pay its debts as they become due within the meaning

 

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of Bankruptcy Code Section 303(h)(1), as amended; or (g) certification in
writing of its inability to pay its debts as they become due (and either party
may periodically require the other to certify its ability to pay its debts as
they become due) (each, a “Bankruptcy Event”).  Each party agrees to provide
immediate notice to the other party upon a Bankruptcy Event.  The Company may
terminate this Agreement as to any Product without cause, effective upon written
notice, if the Company ceases marketing or divests the Product, or if any
regulatory action suspends or materially restricts the marketing of the Product,
provided that the Company will be obligated to pay the Monthly Management Fee
for the month in which notice of termination is provided and the following
month.

 

4.4           Expenses.  Within 30 days of expiration or earlier termination of
this Agreement for any reason, the Company will (a) pay ICS any amount owed;
(b) return to ICS all hardware, software and other equipment, or pay to ICS the
replacement cost of items not returned, other than consumables or
Product-specific items; and (c) pay non-recoverable expenses for
telecommunication, facsimile, postage, shipping and other services incurred by
ICS up to the effective date of termination.  Upon expiration or termination of
this Agreement, ICS agrees to reasonably cooperate to transition the Services to
Company’s successor vendor with fees to be mutually agreed upon.

 

4.5           Survival.  Accrued payment obligations, and any provision if its
context shows that the parties intended it to survive, will survive expiration
or termination of this Agreement for a period of two (2) years, confidentiality
obligations will survive for a period of three years, and indemnity obligations
will survive until the expiration of any applicable statute of limitations; in
each case, except as expressly provided, expiration or termination will not
affect any obligations arising prior to the expiration or termination date. 
Recordkeeping and documentation requirements will survive this Agreement for the
period required by law or regulation.

 

5.             Recalls; Other FDA Issues

 

5.1           Recalls.  If the Company conducts a recall, market withdrawal or
field correction of any Products (“Recall”), the Company will conduct the Recall
or designate a third party to do so and be responsible for all Recall expenses. 
ICS will comply with the Company’s reasonable requests in the Recall.  If the
Recall was not due primarily to ICS’s negligence, the Company will pay or
reimburse ICS’s Recall expenses (including reasonable attorneys’ fees) for those
services requested by Company in writing.  If the Recall was due primarily to
ICS’s negligence, ICS will pay or reimburse the Company’s reasonable documented
out-of-pocket Recall expenses (including reasonable attorneys’ fees).  Each
party will use its best efforts to minimize Recall expenses.  The Company will
notify ICS of any proposed Recall as soon as possible and, in any event, will do
so within forty-eight (48) hours of initiating a Recall.  If both Parties’ acts
or omissions contributed to Recall, Recall expenses will be borne by each Party
in proportion to its fault.

 

5.2           Government Notices; Adverse Events Notification.  Each party will
provide the other with a copy of any correspondence or notices it receives from
the FDA, DEA or any counterpart state agency specifically relating to Services
or relating to a material violation of any kind that is related to the Company
or the Product, whether such violation resulted from an act or omission by the
Company or by ICS, no later than three (3) business days following such
receipt.  In addition, ICS will provide the Company with any notice relating to
Products promptly upon its receipt.  Each party will also provide the other with
concurrent copies of any responses to any such correspondence or notices (e.g.,
such as an FDA 483 notice, warning letters, untitled regulatory letters and
establishment inspection reports).  Where reasonably possible, ICS will give
prior notice to the Company of any scheduled FDA or DEA inspections of ICS’s

 

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facilities specifically relating to any Products, and, if reasonably possible,
will afford the Company the opportunity to be present at such inspection and to
review and contribute to any written response, to the extent permitted by law. 
ICS shall warm transfer any calls from a customer to Company at 1-855-EXPAREL if
the customer reports information that relates, refers or pertains to:  (i) an
adverse or unexpected event in humans relating to the Products; (ii) a technical
or other complaint relating to the Products; or (iii) any report of any other
problem involving the Products (e.g., contamination, discoloration, improper
labeling, adulteration, et cetera).

 

6.             Legal Compliance

 

6.1           General.  During the Term, each party will comply with all
Requirements of Law.  ICS will comply with Requirements of Law related to
storage, handling and distribution of Products.  The Company will comply with
Requirements of Law related to importation, manufacture, distribution, labeling,
storage, sale and handling of Products.

 

6.2           Other.  The Company hereby represents and warrants to ICS that,
during the Term (a) no Products delivered by or on behalf of the Company to or
on the order of ICS will be, at the time of shipment or delivery, adulterated,
misbranded or otherwise prohibited within the meaning of the Act or within the
meaning of any applicable state or local law, (b) all Products will be, at the
time of shipment and delivery to ICS, merchandise that may be introduced and
delivered into interstate commerce under the provisions of Sections 404 or 405
of the Act, (c) all Products will be the subject of a duly approved NDA or ANDA
and may be legally transported or sold under Requirements of Law, (d) all
Products will have been approved by each applicable Governmental Authority for
commercial sale and shipment within the United States and (e) the Company either
(i) owns or holds the duly approved Biologics License Application, as such term
is used in the Public Health Service Act, Title 21, United States Code, as
amended, or the duly approved NDA or ANDA , for each of the Products, or (ii) is
otherwise considered the “manufacturer” of all Products within the meaning of
any applicable federal, state or local law relating to pedigrees.

 

7.             Representations And Warranties

 

7.1           By the Company.  The Company represents and warrants to ICS that: 
(a) it has authority to enter into and perform this Agreement without
restriction and this Agreement is a valid and binding obligation of the Company,
(b) execution, delivery and performance of this Agreement by the Company has
been duly authorized by all necessary corporate actions, (c) the Company has and
will maintain, in full force and effect, all licenses and permits required under
applicable law for the Company to sell and distribute Products under this
Agreement, (d) as of the Program Launch Date, there is no proceeding or
investigation pending or threatened that questions validity of this Agreement,
marketing authorizations related to Products or actions pursuant to this
Agreement, (e) Products, or any part thereof, have not been materially adversely
affected in any way as a result of any legislative or regulatory change,
revocation of the right to manufacture, distribute, handle, store, sell or
market them or the Company’s breach of this Agreement, and (f) no approvals,
consents, orders or authorizations of or designation, registration, declaration
or filing with any Governmental authority (within the United States) are
required for Company’s performance of its obligations under this Agreement,
other than any approvals already obtained.

 

7.2           By ICS.  ICS represents and warrants to the Company that: (a) it
has authority to enter into and perform this Agreement without restriction and
this Agreement is a valid and binding obligation of ICS, (b) execution, delivery
and performance of this Agreement by ICS has

 

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been duly authorized by all necessary corporate actions, (c) ICS has and will
maintain in full force and effect, all licenses and permits required under
applicable law for ICS to perform the Services under this Agreement, (d) there
is no proceeding or investigation pending or threatened that questions validity
of this Agreement, ICS’s licenses to warehouse and distribute pharmaceuticals,
or any actions pursuant to this Agreement, (e) Products have not been materially
adversely affected while in ICS’s possession as a result of any revocation of
its licenses or ICS’s breach of this Agreement, (f) ICS shall handle and store
Product in a clean and orderly location, in conformity with Product
specifications, and in a manner that maintains the proper rotation and quality
of Product, (g) ICS shall comply with Company criteria in shipping and storing
Product that requires special handling, and (h) no approval of or filing with
any Governmental Authority (within the United States) is required to perform
Services, other than any approvals already obtained.  ICS will permit Company to
conduct audits and inspections under normal working hours as not to disrupt ICS
workflow and business operations, and shall permit Company to conduct a physical
inspection of ICS storage facilities within ten (10) business days of a written
request by Company for such inspection and shall reasonably cooperate to assist
Company with such inspection, if requested.  Inspections and audits will require
reasonable advanced written notice and will be reasonable in time and scope
(limited to validating compliance with terms and conditions of this Agreement,
including all Exhibits and Schedules hereto).

 

7.3           Notice of Changes.  The Company and ICS will give prompt written
notice to the other if it becomes aware during the Term of any action or
development that would cause any warranty in this Section 7 to become untrue.

 

8.             Trademarks/Data

 

Neither party may use the other party’s name, trademarks, service marks, logos,
other similar marks, other intellectual property, or other data or information
in any manner without its prior written approval, except to satisfy its
obligations under this Agreement.  ICS shall not alter, modify, replace or
reproduce any Product labeling, packaging or advertising.  Data and information
that belong to the Company will be any data and information related to Products
(including sales information), except “ICS Data.”  ICS Data is data and
information that is not specific to Products or the Company and was developed by
ICS relating to its processes, reports and services provided to the Company
under this Agreement.  ICS Data, including information and data relating to any
of ICS’s customers and their profiles, belongs to ICS.

 

9.             Confidentiality

 

9.1           Existing Agreement.  The parties have previously executed a
written Confidentiality Agreement (“Confidentiality Agreement”), attached as
Schedule D.  The parties will abide by its provisions during the Term and for at
least five (5) years thereafter, regardless of any shorter term in the
Confidentiality Agreement.  Information disclosed under this Agreement and the
terms and conditions of this Agreement (including all attachments) shall be
deemed “Confidential Information” under the Confidentiality Agreement.

 

9.2           Termination.  Upon expiration or termination of this Agreement for
any reason each party will promptly: (a) return to the other party all documents
and other material containing Confidential Information (as defined in the
Confidentiality Agreement), including copies, other than those which a party is
reasonably required to maintain for legal, tax or valid business purposes; or
(b) certify to the other party that it has destroyed all such documentation and
other materials.

 

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10.          Remedies

 

10.1         Generally.  Rights and remedies under this Agreement are cumulative
and in addition to any other available rights or remedies under any agreement,
at law or in equity.  In the event of termination pursuant to Section 4.2.2, the
terminating party shall not have any further liability to the other party except
for obligations accrued as of the date of termination and continuing compliance
with any provisions of this Agreement which by their terms survive termination.

 

10.2         Equitable Relief.  If either party violates or threatens to violate
Recall, Legal Compliance, Trademark/Data infringement, Confidentiality or other
provisions of this Agreement, the other party may suffer irreparable harm and
its remedies at law may be inadequate.  Accordingly, the other party may seek
equitable relief.

 

10.3         Breach by the Company.  The Company acknowledges the difficulty (if
not the impossibility) of ascertaining the amount of damages that would be
suffered by ICS if (i) the Company terminates this Agreement without cause or
(ii) ICS terminates this Agreement following a breach by the Company.  In such
event, as compensation, as its sole remedy, and not as a penalty, the early
termination fee (the “ETF”) payable to ICS shall be equal to twenty percent
(20%) of the aggregate amount of all fees and other sums that, in absence of
such breach, would have been paid by the Company to ICS under this Agreement,
[**], with such fees and other sums to be based on the average monthly amount
paid or owed by the Company to ICS during the six months preceding such breach
(or such shorter time as the Agreement has been in effect).  The ETF is in
addition to any other claims or amounts owed by Company to ICS under this
Agreement, including Fees for Services performed and costs incurred prior to the
effective date of termination and indemnification obligations under this
Agreement and the Continuing Guaranty and Indemnification Agreement referenced
in Section 13 below (the “Continuing Guaranty”).

 

10.4        LIMITATIONS.  EXCEPT FOR EACH PARTY’S OBLIGATIONS OF CONFIDENTIALITY
UNDER SECTION 9, ETF UNDER SECTION 10.3, INDEMNIFICATION UNDER SECTIONS 11.1 AND
11.2, AND INTELLECTUAL PROPERTY UNDER SECTION 12:

 

(A)          NO PARTY WILL BE LIABLE TO ANY OTHER PARTY FOR ANY CONSEQUENTIAL,
INCIDENTAL, INDIRECT, SPECIAL OR OTHER SIMILAR DAMAGES ARISING OUT OF OR IN
CONNECTION WITH A BREACH OF THIS AGREEMENT;

 

(B)          ANY LOSS DUE TO DAMAGE OR LOSS OF PRODUCTS WILL BE BASED UPON THE
COMPANY’S COST OF MANUFACTURING OR ACQUIRING PRODUCTS, NOT ITS SELLING COST; AND

 

(C)          COMPANY UNDERSTANDS AND AGREES THAT IT HOLDS TITLE AND RISK OF LOSS
FOR THE PRODUCTS AT THE ICS FACILITY UNDER THIS AGREEMENT.  AS A SERVICE
PROVIDER, ICS DOES NOT ACCEPT LIABILITY FOR DAMAGE OR LOSS TO THE PRODUCT WHILE
IN THE ICS FACILITY, EXCEPT FOR LIABILITY FOR THIRD PARTY CLAIMS SUBJECT TO
INDEMNIFICATION UNDER SECTION 11.2 BELOW.  NOTWITHSTANDING THE FOREGOING, ICS
AGREES THAT IF DAMAGE OR LOSS TO PRODUCTS IS CAUSED BY:  (1) A BREACH OF THIS
AGREEMENT BY ICS, ICS SHALL BE LIABLE FOR SUCH LOSS UP TO A MAXIMUM AMOUNT EQUAL
TO THE ETF (AS DEFINED UNDER SECTION 10.3(C) ABOVE); OR (2) ICS’S GROSSLY
NEGLIGENT OR WILLFUL ACT OR OMISSION, THEN NO LIMITATION OF LIABILITY SHALL
APPLY, EXCEPT FOR THE LIMITATIONS OF SECTIONS 10.4(A) AND (B) ABOVE.  COMPANY IS
RESPONSIBLE FOR ENSURING THAT IT HAS APPROPRIATE INSURANCE IN PLACE TO PROTECT
ITSELF FROM POTENTIAL DAMAGE OR LOSS TO ITS PRODUCTS.  THE

 

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INSURANCE REQUIRED UNDER SECTION 13 BELOW IS A MINIMUM ONLY, AND ICS DOES NOT
REPRESENT OR WARRANT THAT THESE COVERAGES ARE SUFFICIENT FOR COMPANY’S NEEDS.

 

11.          Indemnification

 

11.1         By the Company.  The Company will defend, indemnify and hold
harmless ICS and its Related Parties from and against all claims, liabilities,
losses, damages, costs and expenses, including reasonable attorneys’ fees
(collectively, “Claims”) brought by third parties or the Company’s employees
caused by or arising from any (a) act or omission of the Company or its Related
Parties in breach of this Agreement or violation of applicable law or
regulation, (b) failure of the Company to perform its obligations or to comply
with Requirements of Law, (c) breach of any warranty made by the Company in this
Agreement (d) claims of patent, trademark, copyright or other infringement
related to Products, (e) the Company’s storage, handling, use, non-use,
demonstration, consumption, ingestion, digestion, manufacture, production and
assembly of Products and their transportation to ICS, or (f) Taxes imposed
against ICS or its Related Parties; provided, however, the Company will have no
obligations under this Section 11.1 for any Claims to the extent caused by any
negligent act or omission of ICS or its Related Parties.

 

11.2         By ICS.  ICS will defend, indemnify and hold harmless the Company
and its Related Parties from and against all Claims brought by third parties or
ICS’s employees against the Company or its Related Parties caused by or arising
from any (a) act or omission of ICS or its Related Parties in breach of this
Agreement or in violation of applicable law or regulation, (b) failure of ICS to
perform its obligations or to comply with Requirements of Law, (c) breach of any
warranty made by ICS in this Agreement, (d) the storage, handling, and assembly
of Products and their transportation by ICS in violation of the terms of this
Agreement or mutually agreed upon SOP’s, or (e) making by ICS of representations
or warranties with respect to Products to the extent not expressly authorized by
the Company in writing; provided, however, that ICS will have no obligations
under this Section 11.2 for any Claims to the extent caused by any negligent act
or omission of the Company or its Related Parties.

 

11.3         Procedures.  The obligations and liabilities of the parties with
respect to Claims subject to indemnification under this Section 11 (“Indemnified
Claims”) will be subject to the following terms and conditions:

 

11.3.1      The party claiming a right to indemnification hereunder
(“Indemnified Person”) will give prompt written notice to the indemnifying party
(“Indemnifying Person”) of any Indemnified Claim, stating its nature, basis and
amount, to the extent known.  Each such notice will be accompanied by copies of
all relevant documentation, including any summons, complaint or other pleading
that may have been served or any written demand or other document.

 

11.3.2      With respect to any Indemnified Claim: (a) the Indemnifying Person
will defend or settle the Indemnified Claim, subject to provisions of this
subsection, (b) the Indemnified Person will, at the Indemnifying Person’s sole
cost and expense, cooperate in the defense by providing access to witnesses and
evidence available to it, (c) the Indemnified Person will have the right to
participate in any defense at its own cost and expense to the extent that, in
its judgment, the Indemnified Person may otherwise be prejudiced thereby,
(d) the Indemnified Person will not settle, offer to settle or admit liability
in any Indemnified Claim without the written consent of an officer of the
Indemnifying Person, and (e) the Indemnifying Person will not settle, offer to
settle or admit liability as to any Indemnified Claim in which it controls the
defense if such settlement, offer or admission contains any admission of fault
or

 

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guilt on the part of the Indemnified Person, or would impose any liability or
other restriction or encumbrance on the Indemnified Person, without the written
consent of an officer of the Indemnified Person.

 

11.3.3      Each party will cooperate with, and comply with all reasonable
requests of, each other party and act in a reasonable and good faith manner to
minimize the scope of any Indemnified Claim.

 

12.          Intellectual Property

 

All concepts, inventions, ideas, patent rights, data, trademarks, and copyrights
that are related to Products will remain exclusive property of the Company,
except those not specific to Products and that relate to the general processes,
reports and services developed by ICS and provided to the Company.  Any
concepts, inventions, ideas, patent rights, data, trademarks, and copyrights
that are developed by ICS that are not specific to Products or that relate to
the processes, reports and services developed by ICS will remain the exclusive
property of ICS.

 

13.          Insurance

 

13.1         By the Company.  During the Term, the Company will maintain:
(a) casualty and theft or loss insurance in amounts sufficient to protect all
Products and other materials consigned to ICS, and (b) products liability and
commercial general liability insurance having a limit of not less than [**]
dollars ($[**]) per occurrence, Combined Single Limit (Bodily Injury and
Property Damage), pursuant to one or more insurance policies with reputable
insurance carriers having a Best’s Rating of A VII or otherwise as reasonably
approved by ICS.  If the required insurance is underwritten on a “claims made”
basis, the insurance must include a provision for an extended reporting period
(“ERP”) of not less than twenty-four months; the Company further agrees to
purchase the ERP if continuous claims made insurance, with a retroactive date
not later than the date of this Agreement, is not continually maintained or is
otherwise unavailable.  The Company will designate ICS and its Related Parties
as “additional insureds” under each such insurance policy.  The Company will
obtain a broad form vendor’s endorsement for products liability for ICS and its
Related Parties.  Once the Products have been FDA approved, the Company will
provide to ICS, upon request, a certificate of insurance indicating that such
obligations have been satisfied.  As a condition precedent to the effectiveness
of this Agreement, the Company will execute the form of Continuing Guaranty and
Indemnification Agreement attached as Exhibit A.

 

13.2         By ICS.  During the Term, ICS will maintain the following
insurance:

 

13.2.1      Workers’ Compensation.  Workers’ compensation statutory coverage as
required by law in states where Services are performed;

 

13.2.2      Employer’s Liability.  Employer’s liability insurance with a limit
of $[**] for bodily injury by accident per person, $[**] for bodily injury by
accident, all persons and $[**] bodily injury by disease policy limit;

 

13.2.3      General Liability.  Commercial general liability insurance,
including personal injury blanket contractual liability and broad form property
damage, with a $[**] combined single limit;

 

13.2.4      Umbrella Liability.  Umbrella liability insurance in the amount of
$[**] per occurrence and aggregate;

 

13.2.5      Property Insurance.  Property insurance covering the business
property of

 

9

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ICS and others while at any unnamed location in the amount of $[**]; and

 

13.2.6      Other.  ICS will not be obligated to insure Products against any
loss or damage to Products arising from the shipment or storage of Products at
the ICS Facility, other than for its obligations under Section 10.4 above.

 

13.3         Self-Insurance.  The insurance required by Section 13 may be made
up through a combination of self-insured retention and traditional insurance.

 

13.4         Source of Recovery.  Except to the extent that ICS is liable for
Product damage or loss under Section 10.4(c) above, the Company agrees to look
for recovery in respect of any such loss or damage solely to the casualty and
theft or loss insurance provided by the Company in accordance with Section 13.1
of this Agreement.

 

13.5         Notice and Proof of Insurance.  Throughout the Term, ICS will
(a) provide prompt written notice to the Company in the event ICS becomes aware
or is notified that the insurance described in Section 13.2 will be materially
adversely modified or cancelled and (b) provide the Company with proof of such
insurance.

 

14.          Notices

 

Notices will be in writing and will be delivered personally (which will include
delivery by courier or reputable overnight delivery service) or sent by
certified mail, postage and fee prepaid, return receipt requested, to the
address on the signature page.  Items delivered personally will be deemed
delivered on the date of actual delivery.  Items sent by certified mail will be
deemed delivered on the date the return receipt is signed.  A party may change
its contact information by a written notice delivered in accordance with this
Section 14.

 

15.          Governing Law

 

This Agreement and the rights and obligations of the parties under this
Agreement will be construed and interpreted under the internal laws of the State
of Delaware, excluding its conflict and choice of law principles.  The
successful party in any legal action arising out of this Agreement, including
enforcing its rights in a bankruptcy proceeding, may recover all costs,
including reasonable attorneys’ fees.

 

16.          Severability

 

If any court determines a provision of this Agreement is invalid, such holding
will not affect the validity of other provisions and they will remain in effect.

 

17.          Complete Agreement; Amendments; Counterparts; Waivers; Signatures.

 

This Agreement and its schedules and exhibits, including the Confidentiality
Agreement and Continuing Guaranty, contain the entire agreement between the
parties and supersede any prior oral and written representations by the parties
that relate to the subject matter of this Agreement.  This Agreement may not be
amended, supplemented or waived in any respect without written agreement of both
parties, signed by their respective authorized representatives.  This Agreement
may be executed in one or more counterparts, which will together constitute but
one agreement and each of which will be an original.  A party’s failure to
insist, in one or more instances, upon performance of any provision of this
Agreement will not be construed as a waiver of its right and the other party’s
obligations will continue in full force.  Either party’s consent to any act by
the other party on any occasion will not be deemed consent on any other
occasion.  Facsimile transmissions bearing a party’s signature will for all
purposes be deemed

 

10

--------------------------------------------------------------------------------

 

an original.

 

18.          Force Majeure

 

If the performance of any part of this Agreement by any party will be affected
for any length of time by fire or other casualty, government restrictions, war,
terrorism, riots, strikes or labor disputes, lock out, transportation delays,
electronic disruptions, internet, telecommunication or electrical system
failures or interruptions, and acts of God, or any other cause which is beyond
control of a party (financial inability excepted), such party will not be
responsible for delay or failure of performance of this Agreement for such
length of time, provided, however, (a) the affected party will cooperate with
and comply with all reasonable requests of the non-affected party to facilitate
Services to the extent possible, and (b) the obligation of one party to pay
amounts due to any other party will not be subject to the provisions of this
Section.  If ICS is affected by any event of force majeure, it shall promptly
notify the Company of the occurrence and, if known, the duration thereof.  If
the event is expected to or does prevent ICS’ performance hereunder for ten days
or more, Company shall have the right to terminate this Agreement without
further liability, except payment for Services performed through the date of
termination and costs for any transition services.

 

19.          Interpretation

 

Each party to this Agreement (i) has participated in the preparation of this
Agreement, (ii) has read and understands this Agreement, and (iii) has been
represented by counsel of its own choice in the negotiation and preparation of
this Agreement.  Each party represents that this Agreement is executed
voluntarily and should not be construed against a party solely because it
drafted all or a portion of this Agreement.  Headings of the various Sections
are not part of the context of this Agreement, and are only labels to assist in
locating those Sections, and will be ignored in construing this Agreement.  When
this Agreement requires approval of one or more parties, such approval may not
be unreasonably withheld or delayed.  Words, regardless of the number and gender
specifically used, will be construed to include any other number, singular or
plural, and any gender, masculine, feminine, or neuter, as the context
requires.  “And” includes “or.”  “Or” is disjunctive but not necessarily
exclusive.  “Including” means “including but not limited to.”

 

20.          Successors

 

Neither party may assign this Agreement (including pursuant to a merger or
change in voting control) or any of its rights or obligations without prior
written consent of the other party, which consent will not be unreasonably
withheld or delayed. Upon such consent, this Agreement will be binding upon the
successor party.

 

21.          Relationship Of The Parties

 

Neither party has any ownership interest in the other and their relationship, as
established by this Agreement, is that of agent and master within the confines
of the terms of this Agreement.  Other than such limited agency, this Agreement
does not create any partnership, joint venture or similar business relationship
between the parties.  Notwithstanding the limited agency created hereunder, each
party will remain fully responsible for its actions and the actions of its
Related Parties not specifically related to this Agreement.

 

22.          Letter of Intent

 

Pursuant to Section 17 of this Agreement, the parties’ Letter of Intent dated
February 7, 2011, is superseded by this Agreement, provided that,Company shall
pay $[**] on

 

11

--------------------------------------------------------------------------------

 

December 1, 2011, in full satisfaction of all amounts due under the Letter of
Intent, which represents [**]% of the implementation fee set forth in Schedule
B.

 

 

SIGNATURE PAGE FOLLOWS

 

12

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties have had a duly authorized officer, partner or
principal execute this Commercial Outsourcing Services Agreement as of the
Effective Date.

 

 

PACIRA PHARMACEUTICALS, INC., COMPANY:

INTEGRATED COMMERCIALIZATION SOLUTIONS, INC.

 

 

 

By:

/s/ James S. Scibetta

 

By:

/s/ Doug Cook

 

 

 

 

 

Name:

James S. Scibetta

 

Name:

Doug Cook

 

 

 

 

 

Title:

CFO

 

Title:

VP, General Manager

 

 

 

 

 

Address:

5 Sylvan Way

 

Address:

Attn: Executive Vice President and

 

Parsippany, NJ 07054

 

 

General Manager

 

 

 

 

3101 Gaylord Parkway

 

8/30/11

 

 

Frisco, TX 75034

 

 

 

 

 

 

 

 

 

with a copy to:

 

AmerisourceBergen Specialty Group, Inc.

Attn: Group Counsel, 1N-E186
3101 Gaylord Parkway
Frisco, TX 75034

 

 

 

 

Program Launch Date:  December 1, 2011

 

 

 

 

13

--------------------------------------------------------------------------------

 

LIST OF SCHEDULES AND EXHIBITS

 

 

Schedules:

 

 

 

 

 

Schedule A

Description of Products

 

Schedule B

Summary of Fees

 

Schedule C

Additional Definitions

 

Schedule D

Copy of Executed Confidentiality Agreement

 

 

 

 

Exhibits:

 

 

 

 

 

Exhibit A

Continuing Guaranty and Indemnification Agreement

 

Exhibit B

Customer Services

 

Exhibit C

Warehousing and Inventory Program Services

 

Exhibit D

Distribution Services

 

Exhibit E

Warehousing and Distribution of Sample Products

 

Exhibit F

Marketing Materials Fulfillment Services

 

Exhibit G

Contract Administration and Chargeback Processing

 

Exhibit H

Accounts Receivable Management and Cash Applications

 

Exhibit I

Financial Management Services

 

Exhibit J

IT Services

 

14

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SCHEDULE A

 

DESCRIPTION OF PRODUCTS

 

Description

 

NDC Number

 

EXPAREL™ is an extended-release liposome injection of bupivacaine, an amide-type
local anesthetic/analgesic, indicated for single-dose local administration into
the surgical wound to produce postsurgical analgesia.

 

[**]

 

 

Samples

 

Non- sampled product

 

 

Free Goods

 

Yes — selective basis

 

15

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SCHEDULE B

SUMMARY OF FEES

 

Fee

 

Amount

 

Description

3PL Services

 

 

 

 

Development and Implementation

 

$[**]

 

· [**]

Stand-Ready Fee

 

$[**]

 

[**]

Monthly Management Fee

 

 

 

 

Customer Service

 

$[**]/month

 

· [**]

Warehouse & Distribution

 

 

 

 

Returns Management

 

 

 

 

Finance

 

 

 

 

Information Technology & Reporting

 

 

 

 

Chargeback Management

 

 

 

 

Sample Management

 

 

 

 

Marketing Material Management

 

 

 

 

Customer Service Fees

 

 

 

 

Order Processing Fee

 

$[**]

 

[**]

Customer Setup Fee

 

$[**]

 

[**]

Account Maintenance/License Updates

 

$[**]

 

[**]

Allocation Fee

 

$[**]

 

[**]

Rush Order

 

$[**]

 

[**]

Emergency Order

 

$[**]

 

[**]

International Order

 

$[**]

 

[**]

Warehouse & Distribution Fees

 

 

 

 

Product Storage

 

$[**]

 

[**]

 

16

--------------------------------------------------------------------------------

 

Fee

 

Amount

 

Description

Order Processing Fees ( refrigerated)

 

$[**]

 

[**]

Receiving Fee

 

$[**]

 

[**]

Shipping Fee

 

$[**]

 

[**]

Bulk Shipments

 

$[**]

 

[**]

Packing Supplies

 

[**]

 

[**]

Freight

 

[**]

 

[**]

Finance

 

 

 

 

Invoice Processing

 

$[**]

 

[**]

Credit Verification Reports — Dun & Bradstreet

 

$[**]

 

[**]

Credit Verification Reports — Experian

 

$[**]

 

[**]

Returns Management

 

 

 

 

RGA Initiation

 

$[**]

 

[**]

Return Processing

 

$[**]

 

[**]

Partial Return Processing

 

$[**]

 

[**]

Returns Storage

 

$[**]

 

[**]

Contract and Chargeback Management

 

 

 

 

Chargeback Processing — Manual

 

$[**]

 

[**]

Chargeback Processing — Electronic

 

$[**]

 

[**]

Membership Additions

 

$[**]

 

[**]

Contract Setup

 

$[**]

 

[**]

Contract Updates

 

$[**]

 

[**]

Information Technology and Reporting

 

 

 

 

852/867: ABC, CAH, MCK

 

$[**]

 

[**]

Custom Reports

 

$[**]

 

[**]

Custom Development

 

$[**]

 

[**]

 

17

--------------------------------------------------------------------------------

 

Fee

 

Amount

 

Description

Services

 

 

 

 

Additional Fees

 

 

 

 

Product Destruction

 

[**]

 

[**]

Telecom

 

[**]

 

[**]

FedEx/UPS/Postage Expenses

 

[**]

 

[**]

Pre-Approved Assessorial Labor Charge - Warehouse

 

$[**]

 

[**]

Pre-Approved Assessorial Labor Charge — Office Staff

 

$[**]

 

[**]

Pre-Approved Assessorial Labor Charge — QC,

 

$[**]

 

[**]

Management ICS Travel

 

[**]

 

[**]

 

18

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SCHEDULE C

 

ADDITIONAL DEFINITIONS

 

“Act” means the Federal Food, Drug and Cosmetic Act, Title 21, United States
Code, as amended, and the regulations promulgated thereunder.

 

“ANDA” means an Abbreviated New Drug Application as defined in and contemplated
by the Act.

 

“Customer” is defined in Agreement Section 1.

 

“DEA” means the United States Drug Enforcement Administration.

 

“FDA” means the United States Food and Drug Administration.

 

“Governmental Authority” means any nation, government, state or other political
subdivision, or any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government.

 

“ICS Facility” means the facility located at 420 International Blvd. Suite#500,
Brooks, KY 40109 or 5360 Capital Court #102, Reno, NV 89502.

 

“NDA” means a New Drug Application as defined in and contemplated by the Act.

 

“Person” means any corporation, natural person, the Company, entity, firm, joint
venture, partnership, trust, unincorporated organization, or Government
Authority.

 

“Products” is defined in Agreement Recital A.

 

“Related Parties” means the subsidiaries, parents, affiliated companies,
officers, directors, employees, independent contractors, representatives,
shareholders, trustees and agents of any Person.

 

“Requirements of Law” means any law (including consumer law), treaty, rule or
regulation or a final and binding determination of a court or other Governmental
Authority, in each case applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject.

 

“Services” is defined in Agreement Section 2.1.

 

“Taxes” means any and all liabilities, losses, expenses, and costs of any kind
whatsoever that are, or are in the nature of taxes, fees, assessments, or other
governmental charges, including interest, penalties, fines and additions to tax
imposed by any federal, state or local government or taxing authority in the
United States on or with respect to: (a) the Agreement or any related agreements
or any future amendment, supplement, waiver, or consent requested by the Company
or any required by the Agreement with respect to the execution, delivery or
performance of any thereof, or the issuance, acquisition or subsequent transfer
thereof, (b) the return, acquisition, transfer of title, storage, removal,
replacement, substitution, purchase, acceptance, possession, rejection,
ownership, delivery, non-delivery, use, operation, sale, abandonment, redelivery
or other disposition of any interest in Products or any part thereof,

 

19

--------------------------------------------------------------------------------

 

(c) the receipts or earnings arising from any interest in Products or any part
thereof, (d) any payment made pursuant to this Agreement or to any Products, or
(e) otherwise as a result of or by reason of the transactions contemplated by
this Agreement, excluding, however, taxes imposed upon ICS that are based upon
or measured by gross or net income and any franchise Taxes of ICS or any
personal property taxes for Products or equipment owned by ICS.

 

“Term” is defined in Agreement Section 4.1.

 

20

--------------------------------------------------------------------------------

 

SCHEDULE D

COPY OF EXECUTED CONFIDENTIALITY AGREEMENT

 

Pacira Pharmaceuticals, Inc.
10450 Science Center Drive
San Diego, CA 92121
Phone:  858-625-2424

 

MUTUAL CONFIDENTIALITY DISCLOSING AGREEMENT

 

Agreement dated November 4, 2010 (the “Effective Date”), between Pacira
Pharmaceuticals, Inc., a California corporation (the “Company”) with offices at
10450 Science Center Drive, San Diego, California 92121, and Integrated
Commercialization Solutions, Inc., a California corporation with offices at 3101
Gaylord Parkway, Frisco, Texas 75034 ( “ICS”).

 

1.             Background.  The Company and ICS (the “parties”) intend to engage
in discussions and negotiations concerning the possible establishment of a
business relationship between them or in furtherance of an existing business
relationship between them.  In the course of such discussions and negotiations
and in the course of any such business relationship, it is anticipated that each
party will disclose or deliver to the other party and to the other party’s
directors, officers, employees, authorized agents, attorneys, accountants,
consultants and financial advisors) (collectively, “Representatives”) certain of
its trade secrets or confidential or proprietary information for the purposes of
enabling the other party to evaluate the feasibility of such business
relationship and to perform its obligations and exercise its rights under any
such business relationship that is agreed to between the parties (the
“Purposes”).  The parties have entered into this Agreement in order to assure
the confidentiality of such trade secrets and confidential or proprietary
information in accordance with the terms of this Agreement.  As used in this
Agreement, the party disclosing Proprietary Information (as defined below) is
referred to as the “Disclosing Party”; the party receiving such Proprietary
Information is referred to as the “Recipient.”

 

2.             Proprietary Information.  As used in this Agreement, the term
“Proprietary Information” shall mean all trade secrets or confidential or
proprietary information either (i) designated as such in writing (e-mail is
sufficient) by the Disclosing Party, including, without limitation, by letter or
by the use of an appropriate proprietary stamp or legend or otherwise identified
as confidential, or (ii) or is of such a nature that a reasonable person would
understand that such information is confidential, prior to or at the time any
such trade secret or confidential or proprietary information is disclosed by the
Disclosing Party to the Recipient.  Proprietary Information may be disclosed in
any manner including in writing, orally, electronically, or visually.  The
Company’s Proprietary Information shall include all information relating to the
Company’s compounds, development work and materials, whether or not marked or
otherwise identified as trade secrets or confidential or proprietary
information.  ICS’s Proprietary Information shall include all information about
processes, systems, strategic plans, business plans, operating data, customer
information, pricing information, financial information and other information,
whether or not marked or otherwise identified as trade secrets or confidential
or proprietary information.  In addition, the term “Proprietary Information”
shall be deemed to include:  (a) that portion of any notes, analyses,
compilations, studies,

 

21

--------------------------------------------------------------------------------

 

interpretations, memoranda or other documents prepared by the Recipient or its
Representatives which contain, reflect or are based upon, in whole or in part,
any Proprietary Information furnished to the Recipient or its Representatives
pursuant hereto; and (b) the existence or status of, and any information
concerning, the discussions between the parties concerning the possible
establishment of a business relationship, including the fact that the parties
hereto have entered into this Agreement and the terms and conditions thereof.

 

3.             Use and Disclosure of Proprietary Information.  The Recipient and
its Representatives shall use the Proprietary Information only for the Purposes,
and such Proprietary Information shall not be used for any other purpose without
the prior written consent of the Disclosing Party.  The Recipient and its
Representatives shall hold in confidence, and shall not disclose to any person,
except as permitted hereunder, any Proprietary Information or exploit such
Proprietary Information for its own benefit or the benefit of another without
the prior written consent of the Disclosing Party.  Without limitation of the
foregoing, the Recipient shall not cause or permit reverse engineering of any
Proprietary Information or decompilation or disassembly of any drug products
which are part of the Proprietary Information.  The Recipient shall disclose
Proprietary Information received by it under this Agreement only to its
Representatives (i) who have a need to know such Proprietary Information in the
course of the performance of their duties in connection with the Purposes,
(ii) who are informed of the confidential nature of the Proprietary Information
and (iii) who are obligated to the Recipient to maintain Proprietary Information
under terms and conditions at least as stringent as those under this Agreement. 
The Recipient shall be responsible to the Disclosing Party for any disclosure or
misuse of Proprietary Information that results from a failure to comply with
terms of this Agreement by the Recipient and/or Recipient’s Representatives. 
The Recipient shall promptly report to the Disclosing Party any actual or
suspected violation of the terms of this Agreement and shall take all reasonable
further steps requested by the Disclosing Party to prevent, control or remedy
any such violation.

 

4.             Compelled Disclosure.  Notwithstanding anything contained in this
Agreement to the contrary, if the Recipient or any of its Representatives is
requested or required (by oral questions, interrogatories, requests for
information or documents, subpoena, civil investigative demand or similar
process) to disclose any Proprietary Information, the Recipient, to the extent
legally permitted, shall promptly notify the Disclosing Party in writing of such
request or requirement so that the Disclosing Party may seek an appropriate
protective order or other appropriate remedy or waive compliance with the
provisions of this Agreement.  The Recipient shall reasonably cooperate with the
Disclosing Party (at the Disclosing Party’s sole cost and expense) to obtain
such a protective order or other remedy.  If such order or other remedy is not
obtained, or the Disclosing Party waives compliance with the provisions of this
Agreement, the Recipient shall only disclose that portion of the Proprietary
Information which it is advised by counsel that it is legally required to so
disclose and shall obtain reliable assurance (at the Disclosing Party’s sole
cost and expense) that confidential treatment will be accorded the Proprietary
Information so disclosed.

 

5.             Limitation on Obligations.  The obligations of the Recipient
specified in this Agreement shall not apply, and the Recipient shall have no
further obligations, with respect to any Proprietary Information to the extent
that such Proprietary Information:

 

(a)           is generally known to the public at the time of disclosure or
becomes generally known without the Recipient or its Representatives violating
this Agreement;

 

22

--------------------------------------------------------------------------------

 

(b)           is in the Recipient’s possession at the time of disclosure
otherwise than as a result of Recipient’s breach of any legal obligation;

 

(c)           becomes known to the Recipient through disclosure by sources other
than the Disclosing Party without such sources violating any confidentiality
obligations to the Disclosing Party; or

 

(d)           is independently developed by the Recipient without reference to
or reliance upon the Disclosing Party’s Proprietary Information.

 

6.             Ownership of Proprietary Information.  The Recipient agrees that
it shall not receive any right, title or interest in, or any license or right to
use, the Disclosing Party’s Proprietary Information or any patent, copyright,
trade secret, trademark or other intellectual property rights therein, by
implication or otherwise.

 

7.             Return of Proprietary Information.  The Recipient shall, upon the
written request of the Disclosing Party, promptly return to the Disclosing Party
all Proprietary Information received by the Recipient or its Representatives
from the Disclosing Party (and all copies and reproductions thereof).  In
addition, the Recipient shall destroy:  (i) that portion of any notes, reports
or other documents prepared by the Recipient which contain Proprietary
Information of the Disclosing Party; and (ii) any Proprietary Information of the
Disclosing Party (and all copies and reproductions thereof) which is in
electronic form or cannot otherwise be returned to the Disclosing Party. 
Alternatively, upon written request of the Disclosing Party, the Recipient shall
promptly destroy (with written certification of destruction) all Proprietary
Information received by the Recipient or its Representatives from the Disclosing
Party (and all copies and reproduction thereof) and that portion of any notes,
reports or other documents prepared by the Recipient which contain Proprietary
Information of the Disclosing Party.  Notwithstanding the foregoing, the
Recipient and its Representatives (i) may retain solely for compliance purposes
one (1) copy of the Proprietary Information in order to comply with law or
regulation and (ii) need not destroy electronic archives and backups made in the
ordinary course of business where it would be commercially impracticable to do
so.  Moreover, notwithstanding the return or destruction of the Proprietary
Information, the Recipient and its Representatives will continue to be bound by
their obligations of confidentiality and other obligations hereunder.

 

8.             No Representations and Warranties.  The parties acknowledge and
agree that the Proprietary Information is being provided to each party “as is”
and without any representation or warranty of any kind, either express or
implied.  Each party understands and agrees that neither the Disclosing Party
nor any of its Representatives makes any representation or warranty, express or
implied, as to the accuracy or completeness of the Proprietary Information nor
will any of them have any liability to the Recipient or its Representatives or
any other person relating to or resulting from the use of the Proprietary
Information or any errors therein or omissions therefrom.  Each party
understands and agrees that the Disclosing Party is under no duty or obligation
to provide the Recipient with access to any information, and nothing herein is
intended to impose any such obligation on the Disclosing Party or any of its
Representatives.

 

9.             Communications.  All questions and communications between the
parties hereto with respect to the Purposes and/or the Proprietary Information
will be submitted or directed only to the persons designated by the respective
parties hereto.  The parties hereto agree that no other employees of the other
party shall be contacted in connection with the Purposes or the Proprietary
Information.

 

23

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10.           Securities Laws.  The Recipient hereby acknowledges that it is
aware, and that Recipient shall use its best efforts to advise its
Representatives who are informed of the matters which are the subject of this
Agreement, that the United States securities laws place certain restrictions on
any person who has material, non-public information concerning the issuer with
respect to purchasing or selling securities of such issuer or from communicating
such information to any other person under circumstances in which it is
reasonably foreseeable that such person is likely to purchase or sell such
securities.

 

11.           Miscellaneous.

 

(a)           This Agreement supersedes all prior agreements, written or oral,
between the parties relating to the subject matter of this Agreement.  This
Agreement may not be modified, changed or discharged, in whole or in part,
except by an agreement in writing signed by both parties.

 

(b)           This Agreement will be binding upon and inure to the benefit of
the parties and their respective heirs, successors and assigns.  This Agreement
may be assigned by either party to any affiliate.

 

(c)           This Agreement shall be construed and interpreted in accordance
with the internal laws of the State of California, without giving effect to the
principles of conflicts of law thereof.

 

(d)           The provisions of this Agreement are necessary for the protection
of the business and goodwill of the parties and are considered by the parties to
be reasonable for such purpose.  The parties hereto agree that money damages
would not be a sufficient remedy for any breach or threatened breach of this
Agreement by the Recipient or its Representatives, and the Disclosing Party
shall be entitled to specific performance and injunctive relief and any other
appropriate equitable remedies for any such breach.  The Recipient shall not and
shall cause its Representatives not to oppose the granting of such equitable
relief, and to waive any requirement for the securing or posting of any bond in
connection with such remedy.  Such remedies shall not be deemed to be the
exclusive remedies for a breach of this Agreement by the Disclosing Party or its
Representatives but shall be in addition to all other remedies available at law
or in equity.

 

(e)           This Agreement covers Proprietary Information that is disclosed by
the Disclosing Party to the Recipient until the first anniversary of the
Effective Date.  The Recipient’s confidentiality obligations imposed by this
Agreement shall continue with respect to Proprietary Information until the third
(3rd) anniversary of the Effective Date; provided, however, that the
confidentiality obligations imposed by this Agreement with respect to the trade
secrets and the DepoFoam manufacture included in the Company’s Proprietary
Information shall continue in perpetuity.

 

(f)            For the convenience of the parties, this Agreement may be
executed by facsimile and in counterparts, each of which shall be deemed to be
an original, and both of which taken together, shall constitute one agreement
binding on both parties.

 

[THIS SPACE INTENTIONALLY LEFT BLANK]

 

24

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first set forth above.

 

 

 

PACIRA PHARMACEUTICALS, INC.

 

 

 

 

 

By:

/s/ James S. Scibetta

 

 

 

 

Name:

James S. Scibetta

 

 

 

 

Title:

CFO

 

 

 

 

 

INTEGRATED COMMERCIALIZATION SOLUTIONS, INC.

 

 

 

 

 

By:

/s/ Doug Cook

 

 

 

 

Name:

Doug Cook

 

 

 

 

Title:

General Manager

 

 

[SIGNATURE PAGE TO CONFIDENTIALITY AGREEMENT]

 

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EXHIBIT A

 

CONTINUING GUARANTY AND INDEMNIFICATION AGREEMENT

 

The undersigned does hereby guarantee to AmerisourceBergen Corporation and each
of its subsidiary companies and their successors that any food, drugs, devices,
cosmetics, or other merchandise (“Products”) now or hereafter shipped or
delivered by or on behalf of the undersigned, its subsidiaries, divisions,
affiliated companies and representatives (“Guarantors”) to or on the order of
AmerisourceBergen Corporation or any of its subsidiaries will not be, at the
time such shipment or delivery, adulterated, misbranded, or otherwise prohibited
under applicable federal, state and local laws, including applicable provisions
of the Federal Food, Drug and Cosmetic Act, 21 U.S.C.A. §301 et seq., (“FDCA”),
and Sections 351 and 361 of the Federal Public Health Service Act, 42 U.S.C.A.
§§ 262 and 264, and their implementing regulations (“Applicable Laws”), each as
amended and in effect at the time of shipment or delivery of such Products; and
such Products are not, at the time of such shipment or delivery, merchandise
which may not otherwise be introduced or delivered for introduction into
interstate commerce under Applicable Laws, including FDCA section 301 (21
U.S.C.A. §331); and such Products are merchandise which may be legally
transported or sold under the provisions of any other applicable federal, state
or local law; and Guarantors guarantee further that, in the case of food
shipments, only those chemicals or sprays approved by federal, state or local
authorities have been used, and any residue in excess of the amount allowed by
any such authorities has been removed from such Products.

 

Guarantors hereby agree to defend, indemnify and hold AmerisourceBergen
Corporation and each of its subsidiaries harmless against any and all claims,
losses, damages, and liabilities whatsoever (and expenses connected therewith,
including counsel fees), arising as a result of (a) any actual or asserted
violation of Applicable Laws or by virtue of which Products made, sold,
supplied, or delivered by or on behalf of Guarantors may be alleged or
determined to be adulterated, misbranded or otherwise not in full compliance
with or in contravention of Applicable Laws, (b) possession, distribution, sale
and/or use of, or by reason of the seizure of, any Products of Guarantors,
including any prosecution or action whatsoever by any governmental body or
agency or by any private party, including claims of bodily injury, death or
property damage, (c) any actual or asserted claim that Guarantors’ Products
infringe any proprietary or intellectual property rights of any person,
including infringement of any trademarks or service names, trade names, trade
secrets, inventions, patents or violation of any copyright laws or any other
applicable federal, state or local laws, and (d) any actual or asserted claim of
negligence, willful misconduct or breach of contract by Guarantors.  Guarantors
further agree to maintain primary and noncontributing Products Liability
Insurance of not less than U.S. $[**] per occurrence, Combined Single Limit
(Bodily Injury and Property Damage) including AmerisourceBergen Corporation and
its subsidiary companies and their successors as Additional Insureds, including
a Broad Form Vendors Endorsement.  If the required insurance is underwritten on
a “claims made” basis, the insurance must include a provision for an extended
reporting period (“ERP”) of not less than twenty-four months; Guarantors further
agree to purchase the ERP if continuous claims made insurance, with a
retroactive date not later than the date of this Agreement, is not continually
maintained or is otherwise unavailable.  Guarantors will endeavor to provide at
least 30 days’ prior written notice to the Additional Insureds in the event of
cancellation or material reduction of coverage, and upon request promptly submit
satisfactory evidence of such insurance.  All insurance coverage must be with a
carrier and in a form acceptable to AmerisourceBergen Corporation, at its sole
discretion, including any deductible or self-insurance risk retained by
Guarantors.  In combination with significant excess liability insurance, any
retained risk must be commercially reasonable, actuarially sound and acceptable
to AmerisourceBergen Corporation, at its sole discretion.  Each Guarantor
warrants that its assets are sufficient to cover any self-insurance liability it
assumes under this Agreement.  Provisions in this Continuing Guaranty and
Indemnification Agreement are in addition to, and not in lieu of, any terms set
forth in any purchase orders accepted by Guarantors or any separate agreement
entered into between AmerisourceBergen Corporation or any of its subsidiaries or
their successors and Guarantors.  In the event of any conflict between the
language of such other documents and the language set forth herein, the language
herein shall be controlling.

 

 

 

 

 

 

 

By:

 

 

 

 

 

Name:

 

 

 

 

 

Title:

 

 

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Date:

 

Revised

6/2/05

 

27

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EXHIBIT B

CUSTOMER SERVICES

 

ICS shall perform the following Services on and after the Program Launch Date
during the Term of the Agreement:

 

1.             ICS, as agent of the Company, will develop, operate and maintain
an Integrated Access Center (“Access Center”) to manage the comprehensive
distribution Services related to Products described herein (“Customer Services”)
for the Company.  ICS agrees to develop the Access Center and provide the
Customer Services for the fees listed in Schedule B.

 

2.             The Access Center includes the following:

 

2.1                               A fully-integrated telecommunications and
information system that will capture and manage key data from each Customer
requesting information or specific services relating to Products;

 

2.2                               A toll-free Company-dedicated telephone and
fax number solely for the Access Center, with all costs being the Company’s
responsibility;

 

2.3                               The capability to handle queries about
Products related to order processing and account management; and

 

2.4                               The capability to triage queries and forward
to Company phones.

 

3.               ICS, as agent of the Company, will retain, train and manage
appropriate staff personnel to operate the Access Center.  Responsibilities of
Access Center personnel will be to:

 

3.1                               Receive orders via Electronic Data Interchange
(“EDI”), facsimile, email, mail or telephone, and (b) be available from
8:00 a.m. to 5:00 p.m. (Central) to receive orders or triage calls to the
Company as necessary;

 

3.2                               Receive EDI orders from the Company or its
Customers.  Upon receipt, ICS will:

 

3.2.1                     Verify that product order file processed from customer
and into ICS’ ERP system;

 

3.2.2                     Review EDI order processing error logs and communicate
any non-processed orders and reasons to the Company or its Customers; and

 

3.2.3                     Take appropriate action based on direction from the
Company to resolve any issues and re-enter orders or order files into the ERP
for processing;

 

3.3                                 Generate and issue packing slips for the
sale of Products sold under this Agreement;

 

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3.4                               Manage the process of issuing Product return
authorizations and Product destruction authorizations in accordance with the
Company’s policies that have been provided to ICS, and coordinate shipment of
Product for destruction;

 

3.5                               Set up customer accounts for Customers
eligible to purchase from the Company according to parameters provided by the
Company, and the Company will periodically supply ICS with its written criteria,
as amended from time to time, for all Customer eligibility; and

 

3.6                               At the Company’s prior written request, verify
that such Customers meet the Company’s eligibility criteria by:

 

3.6.1                     Credit verification using approved agencies and
establishment of credit limits based on the Company’s guidance;

 

3.6.2                     Verification of licenses (including verification of
DEA and state controlled substances, regulatory licenses and registrations when
filling orders of controlled substances); and

 

3.6.3                     License verification using the NTIS database augmented
by a copy of the Customer license if necessary; and

 

3.7                               Obtain Proofs of Deliveries (PODs) for the
Company.

 

4.             Order allocations encompass any inbound orders to ICS that need
to have original conditions reviewed and/or manipulated as opposed to allowing
the order to flow freely through the order process system.  All allocated orders
shall be filled in accordance with the Company’s written instructions.

 

5.             An order is defined as a shipment to a unique address that leaves
the distribution center, regardless of the number of cartons or packages that
constitute that shipment and/or the number of inbound requests for such order.

 

6.             The following services are not a part of Customer Services
normally provided in the Access Center:

 

6.1          Product substitution relating to backorder management:

 

6.2          Stock allocation of Product to the Company’s Customer base:

 

6.3          Arranging for the re-distribution of Product within the Company’s
Customer base; or

 

6.4           Any services not identified in paragraphs 1 through 3 of this
Exhibit B.

 

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EXHIBIT C

 

WAREHOUSING AND INVENTORY MANAGEMENT SERVICES

 

ICS shall perform the following Services on and after the Program Launch Date
during the Term of the Agreement:

 

1.             ICS will warehouse and inventory Products at the ICS Facility.

 

2.             ICS will visually inspect each shipment of Product for external
container or package damage or loss in transit (based upon records provided to
ICS by the Company Product, or in accordance with the Statement of Work for the
applicable product, if otherwise specified.

 

3.             ICS will promptly notify the Company upon ICS’s discovery of any
damage or loss to Product.

 

4.             ICS will quarantine Product upon receipt and will release Product
to salable inventory status within twenty-four (24) hours of written
authorization from the Company.

 

5.             ICS will store all Product in compliance with current good
manufacturing practice regulations and guidelines and other requirements of the
FDA, the U.S. Drug Enforcement Administration (including maintaining required
registrations, licenses and other authorizations, observing all DEA security
standards and timely filing any necessary ARCOS reports and other DEA forms,
including DEA form 222), all other applicable Requirements of Law and in
accordance with the Company’s written instructions, if any.

 

6.             The Company will pay all costs, charges, expenses and import and
export duties for delivery and transportation of Product to and from an ICS
Facility; provided that ICS shall be responsible for the costs of any transfers
of Product from one ICS Facility to another ICS Facility that are initiated by
ICS and not requested by the Company.

 

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EXHIBIT D

DISTRIBUTION SERVICES

 

ICS shall perform the following Services on and after the Program Launch Date
during the Term of the Agreement:

 

1.             Distribution.  ICS shall provide the following distribution
tasks:

 

1.1                                 ICS shall use its best efforts to ensure
that Products will be packaged and distributed by trained personnel in client
approved shipment containers.

 

1.2                                 ICS shall use its best efforts to ship
Products within one (1) business day of receipt of orders by ICS unless
otherwise specified under the terms of this Agreement.  Pacira will use drop
ship through wholesaler Customers.  Should a customer need an emergency shipment
for Saturday delivery ICS will follow shipping SOP and customer emergency
shipment billing.

 

1.3                                 ICS shall ship Veterans Administration and
other government orders direct or to the designated PPV (Preferred
Pharmaceutical Vendor).

 

1.4                                 ICS shall distribute bulk shipments by a
designated carrier using carrier bulk shipment terms.

 

1.5                                 ICS shall use its best efforts to ensure
that Products are distributed on a FEFO (first expired/first out) basis unless
otherwise directed by the Company in writing.

 

1.6                                 ICS shall deliver Products as a drop ship to
end-user customers and billed to the designated wholesaler

 

1.7                                 ICS shall use its best efforts to ensure
that non-EDI orders received by ICS during standard warehouse hours of shipping
(currently M-F 8:00 a.m. to 3:00 p.m. Eastern, except holidays) and EDI orders
received prior to the 3:00 p.m. Eastern cutoff time will be filled the same
day.  ICS shall also use its best efforts to ensure that orders received after
this agreed upon cut-off time will be processed no later than the next business
day.  ICS shall use its best efforts to ensure that EDI orders arriving after
the cutoff time will be processed within 24 hours of transmission to ICS.

 

1.8                                 At the Company’s request, ICS shall provide
a “Rush Order” service for specific order or orders to be processed and shipped
the same day; provided however, that such services are dependent on ICS’s
ability to perform based upon order receipt time, ICS personnel, and
transportation carrier availability.  Such orders shall be subject to the
Company’s payment of the additional fees pursuant to Schedule B.

 

1.9                                 At the Company’s request, ICS shall provide
“Emergency Order” services, defined as any order received outside of scheduled
working hours (currently M-F 8:00 a.m. to 5:00 p.m. Eastern Time) requiring ICS
staff to return to the ICS Facility to process the order within the same day. 
Such Emergency Order services will be subject to additional fees pursuant to
Schedule B.  ICS shall clearly identify any such orders to the Company at the
time of the Company’s request.

 

2.             Inventory.  ICS will be responsible for the following inventory
tasks:

 

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2.1                                 ICS shall receive Products from the Company
or a Company designee.

 

2.2                                 ICS shall ensure that any end of lot
discrepancies evidenced by a difference in physical to book inventory as noted
during Product distribution will trigger inventory counts and reconciliation by
ICS to verify and determine, where possible, the cause for the discrepancy.

 

2.3                                 ICS shall provide the Company, at ICS’s
expense, one (1) physical product inventory per calendar year and routine cycle
counts.  ICS shall perform additional physical product inventories upon the
Company’s request and for an additional labor charge.  Any such additional
physical inventory requested by the Company will be scheduled based upon a
written request from the Company and a mutually agreed upon inventory date.

 

2.4                                 ICS shall obtain any required packaging
materials for distribution the cost of which shall be passed through to the
Company pursuant to Schedule B.

 

2.5                                 ICS shall pay all labor costs for warehouse
personnel providing the Services.

 

2.6                                 ICS shall provide tracking for all shipments
as required by the Company;

 

2.7                                 ICS shall pay for all security costs for the
ICS Facility and any other warehouse locations where Products may be stored in
accordance with the terms of this Agreement.

 

2.8                                 ICS shall denote receipt of returns that
include the proper RGA documentation within three (3) business days and process
returns within seven business days of receipt at the ICS Facility.

 

2.9                                 ICS shall ship outdated/damaged Products to
a site reasonably designated by the Company for disposal.  All transportation
and destruction costs will be borne by the Company pursuant to Schedule B.

 

2.10                           ICS shall not responsible for maintaining
inventory levels for Product fulfillment.

 

3.             Product Title.  The Company will at all times retain title to all
of Products under this Agreement.

 

4.             Exclusions.  The following services will not be provided by ICS
or included as Distribution Services under the terms of this Agreement:

 

4.1                                 Processing of Department of Transportation
hazardous materials.

 

4.2                                 Re-stacking of inbound Products required at
the ICS Facility.

 

4.3                                 Any other special labeling or packaging
required for Products on or for shipments leaving the ICS Facility.

 

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EXHIBIT E N/A

 

WAREHOUSING AND DISTRIBUTION OF SAMPLE PRODUCTS

 

ICS shall perform the following Services on and after the Effective Date during
the Term of the Agreement.  The parties’ respective obligations are set forth
below.

 

1.             Sample Products.  “Sample Products” shall mean [INSERT PRODUCT
NAME], which is not intended to be sold and shall be re-labeled as such and is
given to customers free of charge to promote sales.

 

2.             Storage and Shipment of Samples.  ICS will warehouse, inventory
and distribute Samples and Free Goods consistent with standards for warehousing,
inventory and distributing Services under Exhibit B.  ICS will distribute
Samples by mail or common carrier.  ICS’s obligation to perform Services is
conditioned on the Company’s performance of tasks as specified under Exhibit B.

 

3.             Re-Labeling of Sample Products.  ICS shall perform re-labeling
services reasonably requested by Company and consistent with all Requirements of
Law.  ICS shall ensure that each Sample Product distributed by ICS bears a label
that includes one of the following statements:  “Sample,” “Not for sale,” or
“Professional courtesy package.”  ICS shall include on the label of each Sample
Product and on the outside container or packaging (if any) an identifying lot or
control number that will permit the tracking of the distribution of each unit of
Sample Product.  ICS shall not make any other changes to labeling without prior
written direction of Company.

 

4.             Recipients.  For purposes of sending samples the Company will,
from time to time, provide ICS with a current and accurate list of recipients
authorized to receive Sample Products (“Recipients”), including additions,
corrections, and deletions.  At a minimum, the list will include the name and
ship-to address of each Recipient.  ICS will adhere to its standard operating
procedures for distribution of Sample Products to Recipients, as well as all
Requirements of Law, including without limitation the PDMA, pertaining to
distribution of samples to Recipients.

 

4.1          Physician Recipients.  Prior to each delivery of Sample Product by
ICS to a Physician Recipient, the Company will provide ICS with a completed
sample request form in a form mutually agreed upon by the Parties, which shall
be signed by the physician making the request (the “Sample Request Form”).  The
Sample Request Form will contain the following information:

 

4.1.1  the applicable state license or authorization number (or DEA number where
a controlled substance is requested) for the physician authorized to receive
Samples Products;

 

4.1.2  the name, address, professional title and signature of the physician
making the request;

 

4.1.3       the proprietary or established name and strength of the Sample
Product requested;

 

4.1.4       the amount of Sample Product requested;

 

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4.1.5       the date of the request;

 

4.1.6       the full names of the Company and ICS; and

 

4.1.7  any other information required by § 203.30 or other applicable law for
the distribution of Sample Products to a physician.

 

4.2          Pharmacy or Hospital Recipients.  Prior to each delivery of Sample
Product by ICS to pharmacy or hospital Recipient, the Company will provide ICS
with a completed Sample Request Form, which is signed by the physician making
the request.  The Sample Request Form shall contain all of the information
listed in Section 4.1 above and shall also include the name and address of the
pharmacy or hospital to which the Sample Product shall be delivered.

 

5.             Receipts for Sample Products.  Upon delivery of the Sample
Product, ICS shall obtain a receipt that contains the following information:

 

5.1          Physician Recipient.  If the Recipient is a physician, the receipt
will include at a minimum:  (i) the signature of the physician or the
physician’s authorized designee acknowledging delivery of the Sample Product;
(ii) the physician’s name, address, professional title; (iii) the proprietary or
established name and strength of the Sample Product; (iv) the quantity of the
Sample Product delivered; and (v) the date of delivery.

 

5.2          Pharmacy or Hospital Recipients.  If the Recipient is a Pharmacy or
Hospital, the receipt will include at a minimum:  (i) the name and address of
the licensed physician requesting the Sample Product; (ii) the name and address
of the pharmacy or hospital designated to receive the Sample Product; (iii) the
name, address, professional title and signature of the person acknowledging
delivery of the Sample Product; (iv) the proprietary or established name and
strength of the Sample Product; (v) the quantity of the Sample Product
requested; and (vi) the date of delivery.

 

6.             Reconciliation of Sample Product Requests and Receipts; Losses. 
ICS shall be responsible for reconciling sample requests, receipts and inventory
of Sample Products as mutually agreed by the parties and consistent with all
Requirements of Law.  ICS shall report all discrepancies, thefts and losses
involving Sample Products to Company.  Company shall develop an appropriate
definition for “Significant Loss,” and shall be responsible for determining
whether any discrepancy, theft or loss constitutes a Significant Loss.  In the
event that Company determines that a Significant Loss exists, Company shall
notify the FDA of the loss consistent with PDMA requirements.

 

7.             Record Keeping Requirements.  The Company and ICS will create and
maintain all applicable forms and records required by all Requirements of Law
applicable to warehousing and distribution of Samples and Free Goods including
PDMA, Rules and Controlled Substance Laws.  Prior to the distribution of any
Samples or Free Goods, the Company and ICS will identify in a separate written
procedure the specific forms and records each will maintain so that distribution
of Samples and Free Goods will comply with all Requirements of Law.  The Company
and ICS will permit the other, upon reasonable advance notice, to audit and
inspect all such forms and records it creates or maintains in distributing
Samples Products.  The Company and ICS will cooperate and assist with, and will
provide the other with access to and copies of, such forms and records as may be
useful in responding to, regulatory agency inspections or requests for such
forms or records.

 

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EXHIBIT F

 

MARKETING MATERIALS FULFILLMENT SERVICES

 

ICS will warehouse and manage distribution of Product and clinical and marketing
materials that are sent to the Company’s authorized personnel (the “Company
Representatives”) on and after the Program Launch Date during the Term as
follows:

 

1.                                       The Company will develop and provide to
ICS all materials for use in the Access Center.

 

2.                                       The Company will provide ICS with such
bulk clinical and marketing materials in mutually agreeable packaging
configuration shrink-wrapped packages designated as one “SKU” (Stock Keeping
Unit).  Whenever possible, the Company will direct its other vendors to adopt
specifications and coding systems that are currently being utilized in ICS’s
Facility, with the SKU clearly marked with Product code to be used by ICS.

 

3.                                       ICS will charge the Company the fees in
Schedule B for the storage of marketing materials.

 

4.                                       ICS will ship orders for marketing
materials by ground unless otherwise specified in writing by the Company.

 

5.                                       Upon prior written approval from the
Company, ICS will begin responding to requests for marketing materials, which
requests will be directed to ICS by the Company Representatives by facsimile or
electronic mail.  In addition, ICS will, upon written request of the Company,
ship marketing materials to medical conventions, back to the Company or the
Company’s Representatives, care givers and other healthcare providers, for fees
in Schedule B.

 

6.                                       The Company will provide new product
specifications as outlined in the “Product Set Up Sheets” to ICS at least five
business days prior to product receipt at the warehouse.

 

7.                                       The Company will ensure that Product is
configured in the minimum order quantity for shipment purposes.

 

8                                          Services not covered under the terms
of this Agreement include:

 

8.1           Any marking required at ICS’s Facility for Product identification
purposes; and

 

8.2           Processing or re-stocking marketing materials returned from trade
shows.

 

8.3           Repackaging of marketing materials to meet ICS configuration
requirements.

 

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EXHIBIT G

 

CONTRACT ADMINISTRATION AND CHARGEBACKS PROCESSING

 

ICS is licensed to utilize BPI Contracts software developed by BPI Technologies
Corporation to provide contract administration and chargeback processing
services.  ICS shall perform the following Services on and after the Program
Launch Date during the Term of the Agreement:

 

1.             Contract Administration.  ICS shall enter into the BPI Contracts
application key demographic information, membership, and pricing arrangements,
as provided by the Company, as negotiated between the Company and its key
government and non-government contract accounts, including DOD and VA.  ICS
shall assist the Company in managing information for such accounts, but shall
have no liability for the timeliness, accuracy or reliability of the information
provided by the Company under this Section.

 

2.             Chargeback Processing.  ICS will process debit memo submissions
from wholesalers for wholesaler contract sales pricing reconciliation.

 

2.1              Reconciliation is based upon verification of the submitted
wholesaler data against contract administration data.  Results of this
verification are:

 

2.1.1            Reconciliation reporting; and

 

2.1.2            Credit Memo generation.

 

2.2     Submissions by wholesalers will be either paper or electronic (EDI).

 

2.2.1                                    Paper — Processing time for paper
submissions will be five (5) business days.

 

2.2.2                                    EDI — Processing time for EDI
submissions will be three (3) business days.

 

2.2.3                                    These times do not apply to new or
newly acquired Products for a period of ninety (90) days.

 

3.             Rebates.  ICS will provide documentation for rebates to be paid
by the Company on a quarterly basis.  ICS will also provide the Company with
reports, in a format agreed upon by the parties, including pricing information
for AMP and FAMP reports, and which otherwise allow the Company to monitor
purchasing activity by its key accounts.

 

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EXHIBIT H

 

ACCOUNTS RECEIVABLE MANAGEMENT AND CASH APPLICATIONS

 

ICS shall perform the following Services on and after the Program Launch Date
during the Term of the Agreement:

 

1.             ICS will manage all accounts receivable transactions related to
the Company managed distribution programs for Product.  The Company will
establish a lock box at a financial institution of its choosing (the “Financial
Institution”“).  Payments from Customers will be directed to the address of the
lock box.  The Financial Institution will sweep the lock box daily and deposit
payments into the Company’s operating account.  The Financial Institution will
forward copies of all payment transactions to ICS for cash application
purposes.  ICS and the Company will jointly determine the following:

 

1.1           Credit policy

 

1.2           Class of trade designations

 

1.3           Terms and conditions

 

1.4           License requirements

 

1.5           Dunning process for past due accounts

 

1.6           Reporting requirements

 

2.             ICS will provide comprehensive accounts receivable management
services in conformance with ICS’s standard operating procedures, applicable
Statements of Work, and the Company’s collection policies as they apply to:

 

2.1           Invoicing (prepare and mail Customer invoices)

 

2.2           Cash application

 

2.3           Reconciliation of daily lock box deposits

 

2.4           Credit hold/release processing

 

2.5           Change to Customer credit limits per the Company’s approval

 

Credit reports:

 

2.5.1.                          Experian

 

2.5.2                             D & B

 

2.6           Return authorization credits

 

2.7           Credit and re-bills

 

2.8           Reconciliation of accounts receivable to chargebacks

 

3.             ICS will adhere to state and federally mandated good credit and
collection practices established jointly by ICS and the Company such as:

 

3.1           On-line details of calls

 

3.2           Call list of past due invoices

 

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3.3           Past due reminder letters

 

3.4           Research and collection of unauthorized deductions

 

3.5           The Company approved write-offs

 

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EXHIBIT I

 

FINANCIAL MANAGEMENT SERVICES

 

ICS shall perform the following Services on and after the Program Launch Date
during the Term of the Agreement:

 

1.             ICS will provide monthly reconciliation of all financial
transactions related to the Company managed distribution program for Product and
provided with 3 business days of calendar month end as follows:

 

1.1           Month end close

 

1.2           Reconciliation of cash, cash discounts and accounts receivable

 

1.3           Inventory roll over

 

1.4           Reconciliation of inventory adjustments

 

1.5           Reconciliation of goods received

 

1.6           Reconciliation of sales and cost of goods sold

 

1.7           Reconciliation of returns and cost of goods returns

 

2.             ICS will provide on a monthly basis (or other agreed upon
period), the following financial reports:

 

2.1                   Trial Balance

 

2.2                   Cash Application Summary

 

2.3                   Accounts Receivable Reports

 

2.4                   Inventory Reports

 

2.5                   Sales Reports

 

2.6                   Cash Discounts Report

 

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EXHIBIT J

IT SERVICES

 

ICS shall perform the following Services on and after the Program Launch Date
during the Term of the Agreement:

 

1.             Application Software.  ICS shall maintain a license to utilize
ERP software developed by International Business Systems to provide Distribution
and Financial Services to the Company.

 

2.             Access.  ICS shall ensure that access to the DataMart will be
available to the Company Monday through Friday from 7:00 a.m. — 7:00 p.m.
(Central) except for those holidays recognized by ICS (“Holidays”), a listing of
which will be mutually agreed to by the Company and ICS.  ICS will contact the
Company with reasonable notice of any non-availability of the DataMart due to
routine or non-routine system maintenance undertaken by ICS, .  “DataMart” shall
be defined as the repository of information available to ICS regarding Products
and related standard reports, including but not limited to daily inventory
reports and inventory adjustments.

 

3.             On-Call Support.  ICS shall maintain an on-call support line for
answering Company questions, receiving requests for correction of errors and
providing consulting services relative to the functionality and usage of the
DataMart.  The support line will be available from 8:30 a.m. — 5:00 p.m.
(Central) except for Holidays.

 

4.             Training.   ICS shall provide user documentation and training for
DataMart through data dictionaries of DataMart; provided, however, that ICS
shall have no obligation to provide Crystal Training and licenses to utilize
crystal reports to the Company.

 

5.             Back-Ups.  ICS shall perform back-up of all the Company
transactions at the end of each working day.  Such back-up will be performed at
a scheduled time each day and will use an IBM utility product to copy all ICS’s
the Company data on a media selected by ICS.

 

6.             Data Management and Reporting.  ICS shall provide the Company
with standard reports as may be reasonably requested by the Company from time to
time.  ICS has also developed a set of standard data file extracts that cover
distribution and financial activity.  Frequency for report or data file creation
is in part based on functional requirement but may be daily, weekly, monthly or
on demand.  If customization is needed, the Company and ICS will jointly and
reasonably determine the data elements and formats to be included in custom
reports, as well as their frequency and data files.  Mutually agreed-upon
standard reports and files are included in the pricing provided under this
Agreement.  Additional charges will apply to special reports and data files
created based upon hourly programming charges as listed in Schedule B for
creation of specialized reports.  The Company will be responsible for hardware
or software costs directly and for fees listed in Schedule B.

 

7.             Transfer Protocol.  ICS will make available to the Company data
in the form of electronic files on a detail or summary basis that reflects the
operational activity in the Company’s DataMart or CARS/IS environment.  The
frequency of the data file availability may be event based, daily, weekly or
monthly.  Certain timing restrictions apply based on type of data.  Conversely
ICS will receive files from the Company for the purpose of file building, file
maintenance or order processing.  The data may be delivered in one of four
methods:  1) Cyclone Encrypted or PGP encrypted, 2) Secure Website, 3) E-mail
(emergency only) or

 

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4) Electronic Data Interchange:

 

8.             System Disaster Recovery.  ICS shall maintain in place
disaster-relief plans consisting of disaster recovery procedures,
telecommunications switch over during disaster or emergency period, and AS/400
System switch over during disaster or emergency period (collectively, “Disaster
Plans”).  ICS will maintain the Disaster Plans during the Term.

 

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