**Exhibit 10.3**

 

**AGREEMENT**

 

This AGREEMENT(“Agreement”) is dated as of February 28,****2002 by and between RedKey,Inc., an Ohio corporation doing business as Cardinal Health Sales and MarketingServices (“Vendor”), with its principal place of business at 7000 CardinalPlace, Dublin, Ohio, and Alliance Pharmaceutical Corp. (“Company”), a New Yorkcorporation having a principal place of business at 3040 Science Park Road, SanDiego, California 92121.

 

**Background Information**

 

Company develops, distributes and sells pharmaceuticalproducts, and Vendor provides medical representatives who Detail (ashereinafter defined) pharmaceutical products for third parties. The Companydesires Vendor to provide representatives to Detail certain products asdetermined and directed by Company in the geographical territory hereinafterspecified, pursuant to the terms and conditions of this Agreement, and Vendordesires to provide the Representatives and perform such services pursuant tothe terms and conditions set forth in this Agreement.

 

The parties hereby agree as follows:

 

**ARTICLE IDEFINITIONS AND REFERENCES TO VENDOR**

 

1.1.                              Definitions.The following terms when used in this Agreement shall, except where the contextotherwise requires, have the following meanings:

 

(a)                                  “Act”means the Federal Food, Drug and Cosmetic Act, as amended, and the regulationspromulgated thereunder from time to time.

 

(b)                                 “Affiliate”means any corporate or non-corporate business entity that controls, iscontrolled by, or is under common control with a party to this Agreement. Acorporation or non-corporate business entity shall be regarded as in control ofanother corporation if it owns or directly or indirectly controls at leastforty percent (40%) of the voting stock of the other corporation, or (i) in theabsence of the ownership of at least forty percent (40%) of the voting stock ofa corporation or (ii) in the case of a non-corporate business entity, if itpossesses directly or indirectly, the power to direct or cause the direction ofthe management and policies of such corporation or non-corporate businessentity, as applicable.

 

(c)                                  “Agency”means any governmental regulatory authority in the Territory responsible forgranting approvals for the sale or maintaining regulatory oversight of theProducts, including, without limitation, the FDA.

 

(d)                                 “ClinicalScience Liaison” means an individual hired by and retained as an employee ofVendor to educate physicians, sonographers and nurses on new technology andultrasound techniques.

 

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(e)                                  “Detail”means an interactive, face-to-face visit by a Representative with a TargetCustomer or his or her legally empowered designee in the Territory, duringwhich the FDA-approved indicated uses, safety, effectiveness, contraindications,side effects, warnings and other relevant characteristics of one of theProducts are described by the Representative in a fair and balanced mannerconsistent with the requirements of the Act, and using, as necessary ordesirable, the Product Labeling and the Product Promotional Materials. “ProductDetail” means Detail of a Product between Target Customer and Representative.When used as a verb, “Detail” or “Detailing” shall mean to engage in a Detailas defined in this Section 1.1(e).

 

(f)                                    “FDA”means the United States Food and Drug Administration and any successor agencyhaving substantially the same functions.

 

(g)                                 “GrossSales” means all sales of the Product for uses in the cardiology area by Vendor and/or by Company, its agents,Affiliates, distributors, assignees, licensees or any other third party,without reduction for credits, returns and related items.

 

(h)                                 “Manager”means individuals hired by and retained as an employee of Vendor to superviseactivities of Clinical Science Liaisons and Representatives under thisAgreement.

 

(i)                                     “PDMA”means the Prescription Drug Marketing Act of 1987, as amended, and theregulations promulgated thereunder from time to time.

 

(j)                                     “ProductLabeling” means all labels and other written, printed, or graphic matterprovided by the Company including (i) any container or wrapper utilized with aProduct, or (ii) any written material accompanying a Product, including,without limitation, Product package inserts.

 

(k)                                  “ProductLaunch Date” means ninety (90) days after FDA approval of the Product.

 

(1)                                  “ProductPromotional Materials” means all written, printed or graphic material providedby the Company, including Product Labeling, intended for use by Representativesduring a Detail, including visual aids, file cards, premium items, clinicalstudies, reprints, drug information updates and any other promotional supportitems that Company deems necessary or appropriate to conduct the Program.Product Promotional Materials shall include FDA approved indicated uses, safety,effectiveness, contraindications, side effects, warnings and other relevantcharacteristics of each of the Products.

 

(m)                               “Product”means the pharmaceutical product set forth on attached Schedule 1.1(m) andsuch other products as may be mutually agreed between the parties and added toSchedule 1.1(m) attached hereto.

 

(n)                                 “Program”means the program of Detailing to be conducted by the Representatives pursuantto this Agreement and during the term of this Agreement, as defined inSection 14.1.

 

(o)                                 “Representative”and “Representatives” mean an individual hired by and 

 

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[****]    Representsmaterial which has been redacted pursuant to a request for confidentialtreatment pursuant to Rule 24B-2 under the Securities Exchange act of1934, as amended.

 

retainedas an employee of Vendor to conduct Detailing of Products in connection withthe Program. As sometimes used in this Agreement where the connotation isappropriate, “Representatives” shall include “Clinical Science Liaisons” and“Managers.”

 

(p)                                 “Target”or “Target Customer” means a physician or other specialist identified byCompany.

 

(q)                                 “Territory”means the United States of America.

 

(r)                                    “Vendor”means RedKey, Inc., an Ohio corporation, doing business as Cardinal HealthSales and Marketing Services. References herein to Vendor shall be deemed toinclude the Mangers, Representatives and Clinical Science Liaisons.

 

**ARTICLE IIAPPOINTMENT OF VENDOR; GENERAL SCOPE OF ACTIVITIES**

 

2.1.                              FurnishingRepresentatives. Beginning upon full execution of this Agreement and over aperiod of time to be mutually agreed upon by the parties, Vendor shall recruitand hire at least [****] of which will be Clinical Science Liaisons, to engagein Product Detail activities in the Territory. In addition, Vendor shallrecruit and hire [****]. The hiring of the Representatives and Managers may bephased over a period of time as directed by the JCC (as hereinafter defined).

 

Vendor shallassign Representatives for such Target Customers, in such numbers, and in suchTerritories as shall be designated by Joint Commercialization Committee (ashereinafter defined) during the term of this Agreement. Each Representativeshall make Product Details on his or her assigned Target Customers based on thegeneral direction given by the Joint Commercialization Committee. The duties ofsuch Representatives shall be exclusively to Detail the Products and performother related activities deemed necessary for the establishment and maintenanceof new and existing customers of the Products in the Territory.

 

From time to time,Vendor may utilize the Representatives to Detail products for other clients ofVendor, in addition to such Representatives’ obligations to Detail Company’sProduct, upon the mutual written agreement of Company and Vendor regarding thegeneral terms and conditions of such arrangement, including but not limited tocompensation (i.e., credit or reduction in fees) to Company.

 

2.2                                 JointCommercialization Committee. During the term of this Agreement Company andVendor will participate on a Joint Commercialization Committee (“JCC”).

 

(a)                                  Theresponsibilities of the JCC shall include, but not be limited to the following:the overall strategic direction for the Product, including phase IV clinicalfield studies; the overall marketing and sales strategy for the Product;approval of plans and budgets related to the marketing and sale of the Product;specification of minimum levels of sales of the Product; and review of anyother activity related to the use of the Product. Notwithstanding anything tothe contrary contained herein or elsewhere in this Agreement, Company shall atall times remain solely responsible for the sale and use of the Product.Further, Company shall have 

 

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ultimateresponsibility for the marketing and sales of the Product, direction of theRepresentatives regarding the Product, manufacturing of the Product, providingmedical affairs services (including physicians and staff) to support themarketing and sale of the Product, management of the clinical development ofthe Product (including phase IV studies) and regulatory affairs.

 

(b)                                 TheJCC will develop a five (5)-year Comprehensive Commercialization Plan (“CCP”)for the marketing, promotion, sale, manufacturing and distribution of theProduct. The CCP will define the market opportunity for the Product andformulate a strategy to exploit the existing market opportunity. The partieswill use their best efforts to prepare the CCP within sixty (60) days of fullexecution of this Agreement. In order to implement the CCP, each year the JCCwill prepare and approve a marketing plan (“Marketing Plan”) for the upcomingyear that is based, in part, on the actual performance of the Product duringthe previous year. The JCC shall utilize the Marketing Plan in carrying out itsduties regarding the marketing, promotion, distribution and sale of theProduct. From time to time during the year, the JCC shall review the MarketingPlan and make any necessary adjustments to reflect actual market conditions.

 

(c)                                  TheJCC will include two (2) executives from Company and two (2) executives fromVendor. The chairperson of the JCC shall be one of the Company executives.Company maintains the final and definitive authority over the decisions made bythe JCC.

 

(d)                                 TheJCC will meet at least once per month, or more frequently as mutually agreedupon by the parties, either in person or via telephone. The location of inperson meetings shall alternate between Company’s offices in San Diego,California, and Vendor’s offices in Dublin, Ohio.

 

2.3.                              Scopeof Activities. The parties shall perform the following activities asapplicable to each in connection with the Program:

 

(a)                                  Vendorwill recruit, interview and hire as its employees, the Representatives. Vendorwill use its best efforts to ensure that Representatives have experience in themedical/pharmaceutical industry, preferably with a sonography background andexperience in performing cardiac sonography in a hospital setting; priorexperience and training in ultrasound equipment sales preferred; or such othersales experience deemed mutually acceptable by Company and Vendor. TheRepresentatives shall have a minimum of a four (4) year degree from a college oruniversity, professional in manner and appearance, and shall be hired inaccordance with all applicable state and federal laws. Each Representativeshall have a valid driver’s license for purposes of performing his/herobligations under this Agreement. Vendor shall use its best efforts to ensurethat the Representatives have satisfactory references from prior employers.Vendor shall have the sole authority to reject any applicant for employment asa Representative. Company may, at its sole cost and expense, participate withVendor in the interviewing of Representatives; provided, however, in the eventthat Vendor rejects an applicant for Representative and thereafter hires suchapplicant at the request of Company, Company shall indemnify and hold Vendor harmlessfrom any Damages (as defined in Section 16.1) arising as a result of suchRepresentative’s breach of this Agreement, or any wrongful or negligent acts oromissions.

 

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(b)                                 Vendorshall have sole and exclusive authority to discipline or terminate theemployment of Representatives. Company may reasonably request that aRepresentative be terminated or reassigned if such Representative’s activitiesor conduct are not adequately achieving the performance goals of the Product,or if the Representative fails to comply with all applicable laws, regulations,and Company requirements for Detailing the Product. Vendor shall use its bestefforts to comply with such request; provided that such action complies with applicablelaws and is in accordance with Vendor’s policies and procedures, as determinedby Vendor’s human resources manager. In the event Vendor determines that itspolicies and procedures or applicable laws prohibit the termination orreassignment of any Representative so requested by Company, it shall notifyCompany of such determination and submit a corrective action plan for Companyapproval.

 

(c)                                  Vendorshall cause each Representative to attend and successfully complete theTraining Program (as defined in Section 6.1) conducted by Company for eachof the Products prior to participating in the Program. Any such Representativewho does not successfully complete all such requirements shall be removed andreplaced by another Representative who shall comply with such requirements.

 

(d)                                 Companyshall provide Vendor without cost with sufficient quantities of the ProductPromotional Materials and Product Labeling for the performance and supervisionof Detailing. Company shall be solely responsible for the preparation, content,and method of distribution of the Product Promotional Materials and the ProductLabeling. In connection with the Detailing of the Products, the Representativesshall use only the Product Labeling and the Product Promotional Materials providedby Company; and under no circumstances shall Vendor or the Representativesdevelop, create, or use any other promotional material or literature for theDetailing of the Products. Company shall advise Vendor immediately of anyinaccuracy or incompleteness of the Product Promotional Materials or theProduct Labeling, and upon such notice, Vendor and the Representatives shallimmediately cease the use of any portion or all of the Product PromotionalMaterials or Product Labeling so identified by Company.

 

(e)                                  Vendorshall instruct the Representatives to limit their verbal statements and claimsregarding the Products, including efficacy and safety, to those that areconsistent with the Product Labeling and the Product Promotional Materials. TheRepresentatives shall not add, delete, or modify claims of efficacy or safetyin the Detailing of the Products, nor make any changes (including underliningor otherwise highlighting any language or adding any notes thereto) in theProduct Promotional Materials. Representatives shall utilize only printedmaterials provided by Company. Representatives shall not make any disparaging,untrue, or misleading statements about any of Company or its Affiliates,**employees, competitors, orcompeting products. Representatives shall Detail the Products in strictadherence to all applicable laws, regulations, and professional requirements,including, but not limited to, the Act, the Medicare and Medicaid Anti-KickbackStatute, and the American Medical Association Gifts to Physicians from IndustryGuidelines.

 

(f)                                    TheRepresentatives shall remain under the direct authority and control of Vendor,but shall cooperate with the members of Company and shall receive advice 

 

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anddirection related to Detail activities on the Products from Company and Vendormutually through the JCC. Company shall make all decisions with respect to theoverall strategy in connection with the Detailing of the Products. Any Companypersonnel interacting with Vendor Representatives shall not discipline theRepresentatives or implement terms or conditions of employment or personnelpolicies and/or practices with respect to the Representatives or otherwisecontrol the daily activities of Representatives. Company shall provide Vendorwith copies of all reports, memoranda, audits and other data it developspertaining to the Representatives, Detailing, and the Program within fifteen(15) days of the preparation of such documents. Provided, however, that anysuch documents claiming negligent or wrongful acts or omissions ofRepresentatives shall, as provided in Section 2.5, be sent to Vendor aspromptly as practicable.

 

(g)                                 Vendorshall supply Representatives with a vehicle allowance (to be mutually agreed toby Company) for their use in performing and supervising the Detailing, andCompany shall reimburse Vendor for such vehicle allowance. Company shallreimburse Vendor for all Territory Operating Expenses (as defined inSchedule 3.1). All Territory Operating Expenses shall be subject to a fivepercent (5%) administrative fee as further set forth on Schedule 3.1.

 

(h)                                 Companyshall provide Vendor with a list of Target Customers in the Territory and withdata on sales in the Territory for Vendor’s use in performing this Agreement.Company shall also provide Vendor with such other sales and marketinginformation concerning the Products that is obtained or prepared during theterm of this Agreement. Upon the request of Company, Vendor will purchasecustomer lists and other data; provided, however, Company shall reimburseVendor for the costs associated with such purchase(s).

 

(i)                                     Representativesshall comply with Company’s drug policy, a copy of which is attached hereto andincorporated by reference herein as Schedule 2.3(i).

 

2.4.                              Ordersfor Products. Company shall be solely responsible for establishing theterms and conditions of the sale of the Products, including without limitation,the price at which the Products will be sold, whether sales of the Productswill be subject to any discounts, the method of distribution of the Products,and whether any credit will be granted or refused in connection with the saleor return of any Product. Company shall be exclusively responsible foraccepting and filling all purchase orders for the Products, billing and returnsfor the Products, and all other activities in connection with the sale anddelivery of the Products, other than Detailing. If Vendor or theRepresentatives receive an order for the Products, they shall immediatelytransmit such order to Company for further handling and communications with thesubmitter of the order, including acceptance or rejection, which shall be inCompany’s sole discretion.

 

2.5.                              Representatives’Activity. Subject to Company’s obligations and representations andwarranties contained in this Agreement, including, but not limited to, thosecontained in Sections 2.3(a) and 4.2, any negligent or wrongful act or omissionon the part of the Representatives (both individually and as a group) thatoccur during the term of this Agreement and that arise during the course andwithin the scope of their employment with Vendor 

 

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[****]    Representsmaterial which has been redacted pursuant to a request for confidential treatmentpursuant to Rule 24B-2 under the Securities Exchange act of 1934, asamended.

 

pursuantto this Agreement shall be deemed to be negligent or wrongful acts or omissionsof Vendor. Provided, however, that any acts or omissions of the Representativespursuant to the direction, control or supervision of Company or its employeesor agents shall not be deemed to be negligent or wrongful acts or omissions ofVendor. Each party shall notify the other in writing as promptly as practicableof any such material alleged negligent or wrongful acts or omissions on thepart of the Representatives of which it becomes aware along with a plan toremedy such acts or omissions, and Company shall provide Vendor with areasonable opportunity to remedy such acts or omissions, and if indicated, toreplace the involved Representatives.

 

2.6                                 Vacancies/Turnover.In the event of a Representative vacancy due to resignation, reassignment ortermination of a Representative, Vendor shall use its best efforts to fill anysuch vacancy within [****] (as defined in Section 3.1 below) during suchvacancy, unless such vacancy exceeds the [****] period, in which event, theassociated Representative Fee for such vacancy shall be suspended after the[****] period and shall resume once the vacancy is filled by Vendor. Allrecruiting and other related expenses for filling a vacancy shall be borne byVendor; provided, however, that Company shall be responsible for all recruitingand other related expenses for filling any vacancy occurring pursuant toCompany’s request for reassignment or termination other than a request pursuantto the last sentence of Section 2.5 or resulting from the Representative’sfailure to comply with any one or more of the provisions of Section 2.3.In addition, if Company desires to interview any candidates, Company shall bearits own cost of attending any final interview conducted by Vendor or the costsof any separate interview arranged for by Company.

 

2.7                                 ManagementReports. Vendor shall provide Company with monthly reports in the form setforth in Schedule 2.7 within fifteen (15) days after the end of eachmonth. At the request of Company, Vendor shall furnish Company at reasonabletimes such documentation as Company reasonably requests for purposes ofverifying the accuracy of any monthly report.

 

2.8                                 ProjectManager. Vendor shall appoint a Project Manager to serve as a liaisonbetween Vendor, Representatives and Company regarding the performance by Vendorand Company of their respective obligations under this Agreement.

 

2.9                                 Exclusivityand Right of First Negotiation. At all times during the term of thisAgreement, Vendor shall be Company’s exclusive provider of sales and marketingservices related to the Product in the Territory. During the term of thisAgreement, Company will not (i) grant any third party any right to market orsell the Product in the Territory, or (ii) directly or indirectly develop,sell, market or promote any Competitive Product (as hereinafter defined) in theTerritory. The term “Competitive Product” shall mean any product used forcontrast enhancement during ultrasound cardiology imaging procedures, or whichmay reasonably be considered to compete with, or could reasonably be consideredto provide a substitute for, the Product; provided, however, CompetitiveProduct shall not include (i) alternate indications for the Product (other thanthose listed on Schedule 1.1(m)) developed after the date of thisAgreement; or (ii) new technologies that do not directly compete with, orreasonably provide a substitute for, the Product.

 

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[****]    Representsmaterial which has been redacted pursuant to a request for confidentialtreatment pursuant to Rule 24B-2 under the Securities Exchange act of1934, as amended.

 

During the term ofthe Agreement, Vendor will not provide the services described in this Agreementfor any Competitive Product in the Territory.

 

Company shallprovide Vendor with a right of first negotiation with respect to the marketingand sales services, including but not limited to expansion of the number ofRepresentatives, related to promotion of the Products for uses in thecardiology area. Company shall grant Vendor an exclusive right of negotiationwith respect to such additional services for a period of sixty (60) days afterCompany’s notice to Vendor that it desires to obtain additional marketing andsales services and/or expand the number of Representatives. If the parties havenot reached an agreement with respect to the marketing and sales services orexpansion of the number of Representatives within sixty (60) days from the dateof Company’s notice, and entered into a definitive amendment to this Agreementwithin sixty (60) days thereafter, or if Vendor notifies Company in writing atany point during such negotiation period that it is not interested or unable toprovide such services, then Company shall have no further obligation withrespect to such additional marketing and sales services and/or additionalRepresentatives under this Section 2.9.

 

2.10                           Marketingand Medical Education Services. Company will hire inChord to provide thefollowing marketing services for the Program:

 

•                  Sales Training

•                  Presentationsand Symposia

•                  ScientificAdvisory Board

•                  CommercialAdvisory Panels

•                  PublicationProgram

•                  JournalAdvertising

•                  Direct Mail

•                  ProductMonograph

•                  PromotionalLiterature

•                  Market Researchand Pharmacoeconomics

•                  TelemarketingSymposia

•                  Tradeshows

 

Company will havefinal review and approval authority for all materials prepared by the marketingfirm and shall be solely responsible for such materials. Company shall beresponsible for and shall pay all costs and expenses associated with theservices provided by inChord (“Marketing Expenses”). At the request of Companyand upon presentation to Vendor of appropriate documentation of any MarketingExpenses solely related to the Product and the Program, Vendor shall fund up to[****] of such Marketing Expenses incurred during the initial [****] of thisAgreement (“Funded Marketing Expenses”); provided, however, the FundedMarketing Expenses shall not exceed a total of [****]. The Funded MarketingExpenses shall be made a part of the Deferred Fees (as hereinafter defined),and subject to repayment as further set forth below.

 

During the term ofthis Agreement and for a period of one (1) year after its expiration ortermination, Company shall permit Vendor’s designated employees or agents tohave 

 

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[****]    Representsmaterial which has been redacted pursuant to a request for confidentialtreatment pursuant to Rule 24B-2 under the Securities Exchange act of1934, as amended.

 

access during ordinarybusiness hours to records of such costs and expenses in order to verify theamounts paid by Company or reimbursed by Vendor hereunder.

 

2.11                           Rightof First Negotiation to Manufacture Product. If, at any time during theterm of this Agreement, Company desires to outsource the manufacture of theProduct to a third party, Company shall grant Vendor an exclusive right ofnegotiation to manufacture the Product for a period of sixty (60) days afterCompany’s notice to Vendor that it desires to outsource the manufacture of theProduct. If the parties have not reached an agreement with respect tomanufacturing of the Product within sixty (60) days from the date of Company’snotice, and entered into a definitive amendment to this Agreement within sixty(60) days thereafter, or if Vendor notifies Company in writing at any pointduring such negotiation period that it is not interested or unable to providesuch services, then Company shall have no further obligation with respect tosuch manufacturing under this Section 2.11.

 

**ARTICLE IIICOMPENSATION**

 

3.1.                                   Amountand Time of Payment. For services hereunder, Company shall pay to Vendorthe fees set forth in Schedule 3.1 attached hereto and incorporated byreference (the “Service Fee”), which shall be payable as follows:

 

(a)                                  Duringthe initial twelve (12) months of this Agreement Company will pay to Vendor, tobe applied to the Service Fees and Territory Operating Expenses due, [****] ofeach gross sales dollar earned from the Gross Sales of the Product. During thesecond year of this Agreement, such amount shall be [****]. Collectively, theforegoing amounts shall be referred to as the “Amounts Paid”. To the extentsuch Amounts Paid are not sufficient to pay the Service Fees and TerritoryOperating Expenses due to Vendor, payment of such deficiency shall be deferred(up to a maximum of [****]) as set forth below. To the extent such Amounts Paidare in excess of the Service Fees and Territory Operating Expenses due toVendor, such excess shall be applied to the Deferred Fees (as hereinafterdefined), as applicable. Beginning on the first day of the third year of theAgreement, or when the principal of the Deferred Fees plus any accrued butunpaid Interest (as hereinafter defined) equal [****], whichever is sooner,Company shall pay to Vendor all Service Fees and Territory Operating Expenseswithin thirty (30) days of the date of invoice.

 

For purposes ofthis Agreement, the Service Fees and Territory Operating Expenses deferredpursuant to the terms and conditions of this 3.1(a) shall be defined as the“Deferred Fees.” The Deferred Fees shall, in addition to the amount of theService Fees and Territory Operating Expenses financed by Vendor as set forthabove, include all other amounts due from Company and financed by Vendor underthis Agreement; provided, however, that in no event shall the principal of theDeferred Fees plus any accrued but unpaid Interest (as hereinafter defined)exceed [****].

 

(i)                                     Companyshall pay the Deferred Fees in monthly installments of principal plus accruedInterest equal to an amount set forth on Vendor’s invoice, 

 

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[****]    Representsmaterial which has been redacted pursuant to a request for confidentialtreatment pursuant to Rule 24B-2 under the Securities Exchange act of1934, as amended.

 

whichshall commence on the first day of (a) the twenty-fifth (25th) monthof this Agreement or (b) the month after the principal of the Deferred Feesplus any accrued but unpaid Interest equal [****], and continue in equalinstallments each calendar month for a period of twelve (12) months, unlessthis Agreement has been terminated pursuant to Article XIV. Company shallpay such invoices in accordance with Section 3.1(b) below.

 

(ii)                                  TheDeferred Fees shall accrue interest at the rate of [****] (“Interest”).

 

(iii)                               Companyshall have the right to prepay the Deferred Fees, in whole or in part, at anytime without penalty. No prepayment of the principal balance of the DeferredFees shall extend or modify the timing of the next installment of Interest orprincipal and Interest due under this Agreement, and any partial prepaymentshall be applied to the last payments to become due under this Agreement (inreverse order of maturity). Each payment made by Company to Vendor shall beapplied, to the extent of such payment, in the following manner: (a) first, tothe amount of accrued but unpaid Interest as of the date of such payment; and(b) second, against the unpaid principal balance of the Deferred Fees.

 

(iv)                              Ifany payment of Deferred Fees and/or Interest is not paid when due, then a latecharge in an amount equal [****] of such payment shall become immediately dueto Vendor as liquidated damages for failure to make prompt payment. Such chargeshall be payable in any event not later than the due date of the nextsubsequent installment of Interest or principal and Interest.

 

(b)                                 Vendorshall submit monthly invoices to Company for all Service Fees, TerritoryOperating Expenses and Deferred Fees set forth above and any other amounts dueunder this Agreement and Company shall pay such amounts within thirty (30) daysof the invoice date.

 

(c)                                  Notwithstandingany other right or remedy, in the event of Company’s default or a breach ofthis Agreement and failure of Company to cure same within thirty (30) days ofnotice to such effect by Vendor, all unpaid Deferred Fees consisting of allunpaid principal and accrued but unpaid Interest and any other amounts due fromCompany and financed by Vendor under this Agreement shall be accelerated andimmediately due and payable by Company.

 

(d)                                 Withoutlimiting Vendor’s rights under law or equity, Vendor and its Affiliates, parentor related entities, may exercise a right of set off against Company for anyand all amounts due under this Agreement including, but not limited to, theDeferred Fees, against any amounts owed to Company by Vendor, or itsAffiliates, parent, or related entity, if Vendor deems Company, during the termof this Agreement, in default of any of its loan covenants with its third partylenders, or their assignees, which default remains uncorrected for a period often (10) days.

 

(e)                                  Inthe event the Initial Term of this Agreement is extended, as set forth 

 

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[****]    Representsmaterial which has been redacted pursuant to a request for confidentialtreatment pursuant to Rule 24B-2 under the Securities Exchange act of1934, as amended.

 

inSection 14.1, Company shall pay Vendor a Service Fee for the extension asfurther negotiated by the parties.

 

3.2.                              EarlyTermination Fee. In the event (i) Vendor terminates this Agreement pursuantto Sections 14.3, 14.6, or 14.7, such termination shall be effective only uponCompany’s payment to Vendor of a fee in an amount equal to [****], or (ii)Vendor terminates this Agreement pursuant to Sections 14.4, 14.5 or 14.8 orCompany terminates this Agreement pursuant to Sections 14.5 or 14.8, suchtermination shall be effective only upon Company’s payment to Vendor of a feein an amount equal to [****] (each, an “Early Termination Fee”). Company andVendor acknowledge that Vendor would suffer damages upon early termination andsuch damages would be difficult to ascertain and are not susceptible of readyproof. The Early Termination Fee has been agreed to as a reasonable estimationof reimbursement of Vendor’s expenses in preparing to perform under thisAgreement, its expectancy interest and damages upon Company’s early terminationof the Agreement, and shall not be construed or deemed to be a penalty. In theevent of early termination of this Agreement for any reason, Vendor shallreceive, in addition to the Early Termination Fee set forth above (ifapplicable), the residual payments pursuant to Section 14.13.

 

3.3                                 Company’sTermination, Removal, or Hiring of Representatives or Managers.

 

(a)                                  Atany time after Company has paid in full all Deferred Fees, but prior to six (6)months prior to expiration of the Initial Term (or any extension thereof) asfurther set forth below, Company has the option to hire all, but not a portionthereof, Representatives as its own employees upon payment of a fee to Vendorequal to [****] remaining in the term of this Agreement (“Buyout Fee”). Uponpayment of the Buyout Fee this Agreement shall immediately terminate. Upon suchtermination, Vendor shall receive, in addition to the Buyout Fee set forthabove, the residual payments pursuant to Section 14.13.

 

(b)                                 NotwithstandingSection 3.3(a) above, during the six (6) month period immediately prior tothe end of the later of the Initial Term (if no extension thereof is mutuallyagreed upon) or the end of the Initial Term is extended pursuant toSection 14.1, as applicable, Company shall have the right to identifythose Representatives and Managers Company desires to hire (collectively, the“Targeted Employees”) and to negotiate with any Targeted Employee concerningthe terms on which Company might hire that Targeted Employee. At the end of thelater of the Initial Term or the extended Initial Term, as applicable, Companyshall have a period of thirty (30) days (the “Employee Selection Period”) tohire some or all of the Targeted Employees. Vendor agrees not to interfere withthe Company’s solicitation and hiring of the Targeted Employees prior to orduring the Employee Selection Period, and Vendor will assist Company in thetransition of Targeted Employees from Vendor to Company. For a period of twelve(12) months after the expiration of the Employee Selection Period: (a) theCompany shall not hire or retain as an employee or as agent or independent 

 

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[****]    Representsmaterial which has been redacted pursuant to a request for confidentialtreatment pursuant to Rule 24B-2 under the Securities Exchange act of1934, as amended.

 

contractor anyRepresentatives and Managers that are not Targeted Employees or are notactually hired by Company during the Employee Selection Period, and (b) Vendoragrees not to solicit for hire as an employee, agent or independent contractorany Targeted Employee hired by Company during the Employee Selection Period.

 

(c)                                  Otherthan as specifically set forth above, Vendor shall at no time during the termof this Agreement, and for a period of three (3) years after the expiration ortermination of this Agreement, directly or indirectly, solicit or hire foremployment any employee of Vendor.

 

3.4.                              Reimbursementof Expenses. Unless otherwise set forth in this Agreement, all expenses ofVendor for which Company is obligated to reimburse Vendor under this Agreementshall be paid by Company within thirty (30) days after Vendor has submitted astatement itemizing such expenses. Vendor shall use its best efforts to submitsuch expense statements to Company monthly.

 

3.5                                 PastDue Amounts. Failure of the Company to timely make any payment to Vendorunder this Agreement will constitute a material breach of this Agreement byCompany. All amounts owing by Company to Vendor pursuant to this Agreement thatare not timely paid by Company will bear interest at the rate of [****] fromthe due date.

 

3.6                                 Royalties.During the term of this Agreement, Company shall pay to Vendor a royalty(“Royalty”) based upon the percentage of Gross Sales of the Product in excessof the agreed upon threshold of Gross Sales of the Product set forth below(“Gross Sales Threshold”) during each twelve (12)-month period of thisAgreement beginning on the Product Launch Date as follows (“Royalty”):

 

| **Actual Gross Sales of  Product/Gross Sales   Threshold** |   | **Royalty** |   |
|------------------------------------------------------------|--------|-------------|--------|
| 101%-115%                                                  |   | [****]      |   |
| 116%-125%                                                  |   | [****]      |   |
| 125% - greater                                             |   | [****]      |   |

 

The Gross SalesThreshold for each twelve (12)-month period of this Agreement beginning on theProduct Launch Date is as follows:

 

| **Twelve (12)-Month   Period** |   | **Gross  Sales   Threshold** |   |
|--------------------------------|--------|------------------------------|--------|
| 1                              |   | $                            | [****] |   |
| 2                              |   | $                            | [****] |   |
| 3                              |   | $                            | [****] |   |
| 4                              |   | $                            | [****] |   |
| 5                              |   | $                            | [****] |   |

 

The Gross SalesThreshold may be adjusted from time to time by mutual agreement of the parties.The Royalty shall be calculated on an annual basis, and Company shall pay theRoyalty to Vendor within thirty (30) days of the end of the applicable twelve(12)-month 

 

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period.All Royalty payments shall be made as set forth in the preceding sentence. Atno time shall the Royalty owed to Vendor by Company be financed by Company(i.e., added to the Deferred Fees).

 

**ARTICLE IVREPRESENTATIONS, WARRANTIES AND COVENANTS**

 

4.1.                              ByVendor. Vendor represents, warrants, and covenants to Company, as ofexecution of this Agreement and during the term of this Agreement, as follows:

 

(a)                                  thatVendor and the Representatives shall perform the Detailing in a professionaland timely manner;

 

(b)                                 thatVendor shall comply, in all material respects, with all laws, rules andregulations that apply to the performance of services under this Agreement,including but not limited to the PDMA, the Medicare and Medicaid Anti-KickbackAct (42 U.S.C. § 1320a-7b(a)), the Civil False Claims Act (31 U.S.C.§ 3729(a)), Sections 1128A, 1128B, and 1877 of the Social Security Act (42U.S.C. §§ 1320a-7a, -7b, and 1395nn), the Health Care Fraud Act (18 U.S.C.§ 1347), and the Criminal False Claims Act (18 U.S.C. § 287), asamended from time to time, as well as similar applicable state laws;

 

(c)                                  whenon Company’s premises or on the premises of Company’s customers, Vendor and theRepresentatives shall comply with all of Company’s or Company’s customer’spolicies regarding the conduct of visitors of which Vendor and theRepresentatives are aware;

 

(d)                                 thatVendor is under no obligation to any third party that would prevent theexecution of this Agreement or interfere with its performance under thisAgreement.

 

4.2.                              ByCompany.  Company represents,warrants, and covenants to Vendor, as of execution of this Agreement and duringthe term of this Agreement, as follows:

 

(a)                                  thatCompany is under no obligation to any third party that would prevent theexecution of this Agreement or interfere with its performance under thisAgreement;

 

(b)                                 thatCompany shall comply, in all material respects, with all laws, rules andregulations that apply to the Products and their sale, the Program, and thisAgreement, including but not limited to the Act, the PDMA, the Medicare andMedicaid Anti-Kickback Act (42 U.S.C. § 1320a-7b(a)), the Civil FalseClaims Act (31 U.S.C. § 3729(a)), Sections 1128A, 1128B, and 1877 of theSocial Security Act (42 U.S.C. §§ 1320a-7a, -7b, and 1395nn), the HealthCare Fraud Act (18 U.S.C. § 1347), and the Criminal False Claims Act (18 U.S.C. § 287), as amendedfrom time to time, as well as similar applicable state laws;

 

(c)                                  thatthe Product Labeling and Product Promotional Materials are accurate, complete,and in compliance with the Act and all rules and regulations of the FDA;

 

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(d)                                 thatthe manufacture, sale, and distribution of the Products do not and will notduring the term of this Agreement, in any material respect, infringe any patentor other proprietary rights of third parties, and the Products have allnecessary governmental approvals and may be lawfully Detailed and sold byCompany and the Representatives;

 

(e)                                  thatCompany has the right and authority to market and sell the Product in theTerritory and to grant Vendor the exclusive right and authority to market andsell the Product in the Territory.

 

**ARTICLE VSTATUS OF VENDOR AND THE REPRESENTATIVES**

 

5.1.                              VendorIndependent Contractor. Vendor is being retained and shall performhereunder strictly as an independent contractor. Representatives performingservices hereunder shall not be, and shall not be considered to be, employeesof Company for any purpose, and shall at all times remain employees of Vendor, subjectto Section 3.3. Neither party shall have any responsibility for thehiring, termination, compensation, benefits or other conditions of employmentof the other party’s employees, except as otherwise provided in this Agreement.

 

5.2.                              NoCompany Benefits. While employees of Vendor, the Representatives are noteligible to participate in any benefits programs or sales bonuses offered byCompany to its employees, or in any pension plans, profit sharing plans, stockpurchase plans, insurance plans or any other employee benefit plans offeredfrom time to time by Company to its employees, provided that theRepresentatives shall be eligible to participate in Company sales contests ifso requested by Company and approved by Vendor. Vendor acknowledges and agreesthat Company does not, and will not, maintain or procure any worker’scompensation or unemployment compensation insurance for or on behalf of theRepresentatives while they are employees of Vendor. Vendor acknowledges andagrees that it shall be solely responsible for paying all salaries, wages,benefits and other compensation which its employees (including Representatives)may be entitled to receive in connection with the performance of the serviceshereunder.

 

5.3                                 Sales,Use and Excise Taxes. If any state or local government or other taxingauthority determines that sales, use or excise Taxes (“Taxes”) are applicableto Vendor’s services performed hereunder, Vendor shall promptly accrue andCompany shall pay such Taxes on behalf of Vendor to the appropriate taxingauthorities (excluding Taxes on Vendor’s or any Representative’s income). Inaddition, Company shall be responsible for the payment of any applicable Taxesrelated to Company’s supply to Vendor of Product Promotional Materials andProduct Samples.

 

5.4.                              NoJoint Venture. Nothing contained in this Agreement shall be construed ascreating a joint venture or, except as otherwise provided herein, as grantingto either party the authority to bind or contract any obligations in the nameof or on the account of the other party or to make any guarantees or warrantieson behalf of the other party.

 

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**ARTICLE VI TRAINING**

 

6.1.                              TrainingPrograms.

 

(a)                                  Companyshall conduct a training program (of approximately five (5) days duration) forthe Representatives prior to the commencement of the Program, which shallinclude such medical and technical information about the Products and suchsales training as Company, along with Vendor, deems necessary and appropriate(the “Training Program”). The Training Program shall also include instructionon compliance with applicable laws. Vendor shall assist Company with theTraining Program only to the extent requested by Company.

 

(b)                                 Inorder to qualify for assignment in a Territory, a Representative mustdemonstrate thorough knowledge of the Products by passing Company approvedProduct tests at a level of proficiency agreed upon by Company and Vendor.

 

(c)                                  Vendorshall conduct a selling skills training program for the Representatives priorto commencement of the Program.

 

6.2.                              TrainingMaterials. With the advice and assistance of Vendor, Company shall preparewritten training materials for the Training Program and an up-to-dateprogrammed learning unit for the Products, to be sent to each Representativefor “at home” study a minimum of five (5) days prior to the commencement of theTraining Program.

 

**ARTICLE VIISAMPLES**

 

7.1.                              Provisionof Samples. Company shall provide samples of the Products to theRepresentatives at Company’s option and at its expense. Company shall determinethe quantity and types of samples to be provided to the Representatives and themethod of distribution of the samples. In the event Company elects to haveVendor manage the storage and distribution of samples, Vendor shall pass on toCompany the actual invoice costs for storage, distribution and other relatedcosts and use prudent business sense in costs incurred. All samples shall bestored and handled by Company and Vendor in compliance with the PDMA and otherapplicable law.

 

7.2                                 SampleAccountability.  Vendor shallprepare and provide to Company for approval a sample accountability programapplicable to the samples provided by Company.

 

7.3.                              Returnof Samples. Within thirty (30) days following the termination or expirationof this Agreement or within thirty (30) days from the termination or removalfrom the Program of a Representative (unless such Representative has been hiredor retained by Company), Vendor shall cause the Representatives to return toCompany all unused Product samples provided to Vendor or the Representatives byCompany. Company shall pay or reimburse Vendor for all costs and expenses inconnection with the storage and shipment of returned samples.

 

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**ARTICLE VIIITRADEMARKS AND INTELLECTUAL PROPERTY RIGHTS**

 

The Products shallbe Detailed by Vendor’s Representatives under trademarks owned by Company or anAffiliate of Company. This Agreement does not constitute a grant to Vendor ofany property right or interest in the Products or any trademarks which Companyor an Affiliate of Company uses with respect to the Products or to the name orbusiness style of Company. Vendor and the Representatives shall use the ProductPromotional Materials only for the purposes of this Agreement, and allcopyright and other intellectual property rights in the Product PromotionalMaterials shall remain with Company.

 

**ARTICLE IXCOMMUNICATIONS;**MONITORINGTHE PROGRAM**

 

9.1.                              Communicationsfrom Third Parties. Vendor and its Representatives shall use their bestefforts to advise Company of all comments, statements, requests and inquiriesof the medical profession or any other third parties relating to the Productsthat are not addressed by either Product Labeling or the Product PromotionalMaterials, of which Vendor becomes aware. All responses to such communicationsto the medical profession or such other third parties shall be handled solelyby Company. Vendor shall provide reasonable assistance to Company to the extentrequested by Company, and at Company’s cost and expense, to fully respond tosuch communications.

 

9.2.                              GovernmentAgencies. All communications with government agencies, including the FDA,concerning the Products shall be the sole responsibility of Company. Companyshall supply Vendor with a copy of all such communications. Vendor shall assistCompany with respect to such communications with government agencies to theextent requested by Company, and at Company’s cost and expense. Vendor shall useits best efforts to provide Company with any documents or informationreasonably requested by Company for purposes of responding to anycommunications with government agencies within seventy-two (72) hours ofCompany’s request.

 

9.3.                              CustomerCommunications. In addition to Detailing, Vendor shall assist Company withrespect to customer communications (as reasonably requested by Company and atCompany’s cost and expense) within the Territory and shall regularly adviseCompany of market, economic, regulatory and other developments of which Vendormay become aware which may affect the sale of the Products in the Territory.

 

9.4.                              Appointmentof Coordinators. The parties shall each appoint an authorized coordinatorof the Program (“Coordinators”) between whom all communications required ordesired to be given will be sent and between whom Detailing activities will becoordinated. Within thirty (30) days of signing this Agreement, each party willnotify the other as to the name of its Coordinator. Each party may replace itsCoordinator at any time, upon notice to the other party.

 

9.5.                              Reviewof Results. The parties shall review and discuss the actual resultscompared to the marketing plans for Detailing of the Products at the JCCmeetings, or as otherwise mutually agreed upon by the parties. Company shallregularly and promptly 

 

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[****]    Representsmaterial which has been redacted pursuant to a request for confidentialtreatment pursuant to Rule 24B-2 under the Securities Exchange act of1934, as amended.

 

share with Vendor allreports, audits and other data it develops relative to the Program.

 

**ARTICLE X INSURANCE**

 

10.1.                        Vendor Insurance Coverage.Vendor shall maintain insurance coverage as follows:

 

(a)                                  Workers’Compensation insurance with statutory limits of liability and Employer’sLiability insurance with a limit of [****];

 

(b)                                 CommercialGeneral Liability insurance, including completed operations and productsliability, with a combined single limit of [****];

 

(c)                                  Automobileliability insurance with a combined single limit of [****].

 

10.2.                        CompanyInsurance Coverage. Company shall maintain Commercial General Liabilityinsurance (primary and secondary coverage combined), including completedoperations and products liability, with a combined single limit of at least[****].

 

10.3                           Certificatesof Insurance. All **of**the foregoing insurance shall bemaintained with responsible carriers and such terms of coverage shall beevidenced by certificates of insurance furnished by one party to the other.Such certificates of insurance shall provide for at least thirty (30) days’written notice to the other party prior to cancellation or modification of anyof the material terms of such coverage, and include a loss payable clausenaming the other party as a beneficiary of such insurance or as an additionalinsured.

 

**ARTICLE XIADVERSE REACTION REPORTING AND REGULATORY MATTERS**

 

11.1.                        ImmediateNotification. Vendor and Company agree to notify the other party as soon asreasonably practicable of any information that each may obtain or learnconcerning any Product or package complaint or any serious unexpected sideeffect, injury, toxicity, or sensitivity reaction or any unexpected incidenceof severity thereof associated with the clinical uses, studies, investigations,tests and marketing of the Products, whether or not determined to beattributable to the Products. “Serious” as used in this Section 11.1refers to an experience which results in death, permanent or substantial disability,in-patient hospitalization, prolongation of existing in-patienthospitalization, a congenital anomaly or cancer, or a result of an overdose orlife threatening condition. “Unexpected” as used in this Section 11.1refers to (i) conditions or developments not previously submitted togovernmental Agencies or encountered during clinical studies of the Productsand not reflected in the Product Promotional Materials or the Product Labeling,or (ii) conditions or developments occurring with greater frequency, severity,or specificity than shown by information previously submitted to governmentalAgencies or encountered during clinical studies of the Products and notreflected in the Product Promotional Materials or the Product Labeling. Eachparty shall also notify the other in a timely manner of any other adverseexperience, i.e., any unfavorable and unintended change in the structure(signs), function 

 

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(symptoms)or chemistry (laboratory data) of the body temporally associated with the useof the Products, whether or not considered related thereto.

 

11.2.                        ThreatenedAgency Action. Vendor and Company shall each immediately notify the otherparty of any information that each may obtain or learn regarding any threatenedor pending action by an Agency which may affect the Products. Vendor shall, atthe request of Company and at the cost and expense of Company, cooperate withCompany in formulating a procedure for taking appropriate action in response tosuch information. Unless compelled by law, Vendor shall not respond to anAgency without the prior written consent of Company.

 

11.3.                        Training.Vendor and Company shall develop appropriate instructions in the TrainingProgram for Representatives as to handling of information received or obtainedsubject to Sections 11.1 and 11.2.

 

**ARTICLE XIIRETURN/RECALL**

 

12.1.                        ReturnedProducts.

 

(a)                                  Companyshall be responsible for handling all returned Products, including shipment andcompensation or credit for the returned Products. Any Products inadvertentlyreturned to Vendor shall be shipped to Company or at its direction, incompliance with Company’s returned goods policy, and Vendor shall advise thecustomer who made the return that the Products have been returned to Company.Company shall reimburse Vendor’s shipping and other costs in connection withthe handling of such returned Products within thirty (30) days of delivery toCompany of Vendor’s statement for such costs. Upon request Vendor shall provideCompany with documentation relating to such costs.

 

(b)                                 AtCompany’s request, Vendor shall assist Company in obtaining and receiving anyProducts that have been recalled, and any costs incurred by Vendor with respectto participating in any such recall shall be reimbursed by Company withinthirty (30) days of delivery to Company of Vendor’s statement for such costs.

 

**ARTICLE XIIICONFIDENTIAL INFORMATION**

 

13.1.                        ConfidentialInformation. Each party acknowledges and agrees that it will have accessto, or become acquainted with, Confidential Information of Company in thecourse of the performance of services under this Agreement. For the purposes ofthis Agreement, “Confidential Information” shall mean any information ofVendor, Company or any of their respective Affiliates, which gives Vendor orCompany an advantage over its competitors who do not possess such informationand constitutes valuable trade secrets and/or proprietary data which wasrevealed to Company or Vendor as a result of entering into or performing itsobligations under this Agreement, including but not limited to, informationwhich relates to Products, the Program, Target Customers, designs, methods,discoveries, improvements, documents, trade secrets, proprietary rights,business affairs, customer information or employee information. Provided,however, that Confidential Information shall not include any 

 

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informationthat:

 

(a)                                  Wasknown to the receiving party formation prior to execution of this Agreement.without an obligation to keep it confidential;

 

(b)                                 Waslawfully obtained by the receiving party from a third party without anyobligation of confidentiality;

 

(c)                                  Is**,**at the time of disclosure, in the publicdomain;

 

(d)                                 Becomespart of the public domain after disclosure by publication or otherwise, exceptby breach of this Agreement;

 

(e)                                  Isdeveloped by or for the receiving party independently and apart from thisAgreement; or

 

(f)                                    Isotherwise knowledge possessed by the receiving party or its employees as theresult of their industry experience or education.

 

13.2                           Handlingof Confidential Information. Except as otherwise required by law, eachparty shall keep all Confidential Information in confidence and shall not, atany time during or for a period of three (3) years from the termination of thisAgreement, without the disclosing party’s prior written consent, disclose orotherwise make available, directly or indirectly, any Confidential Informationto anyone other than the receiving party’s employees who need to know the samein the performance of the services hereunder. Each party shall use theConfidential Information only in connection with the performance of theservices hereunder and for no other purpose. Each party shall inform itsemployees of the trade secret, proprietary and confidential nature of theConfidential Information.

 

**ARTICLE XIVTERM AND TERMINATION**

 

14.1.                        Term.This Agreement shall take effect on the date on which both parties execute thisAgreement and shall continue in effect until the date five (5) years after theProduct Launch Date (the “Initial Term”), unless terminated earlier as setforth herein. The Initial Term of this Agreement may be extended upon mutual,written agreement of the parties. If the Initial Term is extended, the partiesshall negotiate in good faith provisions of Section 3.1 regarding ServiceFees. References in this Agreement to the term of this Agreement include boththe Initial Term and any extension thereof, if applicable.

 

14.2.                        Bankruptcy:Insolvency. Either party may terminate this Agreement upon notice to theother upon the occurrence of: (a) the entry of a decree or order for relief bya court of proper jurisdiction in an involuntary case of the other party underthe Federal Bankruptcy Code, as now constituted or hereafter amended, or anyother applicable federal or state insolvency or other similar laws, and thecontinuance of any such decree or order in effect for a period of sixty (60)consecutive days; or (b) the filing by the other party of a petition for reliefunder the Federal Bankruptcy Code, as now constituted or hereafter amended, orany other applicable federal or state insolvency or similar laws.

 

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14.3                           TerminationFor Breach. Subject to Section 3.2 and other continuing obligations,either party may terminate this Agreement in the event of a material breach ofthe other party’s obligations under this Agreement, provided that such breachhas not been cured within thirty (30) days after notice thereof from thenon-breaching party.

 

14.4                           TerminationDue to Failure to Receive FDA Approval. If Company does not receive anapproval letter from the FDA for the Product on or before May 1, 2002,Vendor may terminate this Agreement immediately upon providing written noticeto Company.

 

14.5                           TerminationDue To Delay in Product Launch. If the Product Launch Date does not occurwithin ninety (90) days after FDA approval, either party may terminate thisAgreement upon sixty (60) days written notice to the other.

 

14.6                           TerminationDue To Regulatory And Other Problems. If the Product is not being marketeddue to regulatory problems, court or administrative proceedings, productliability claims, recalls, raw materials shortages, or similar factors beyondthe control of Company, then, subject to Section 3.2, Vendor may terminatethis Agreement upon thirty (30) days written notice to Company.

 

14.7                           TerminationDue To Assignment or Change in Control. In the event of a Change of Control(defined herein), the party that has had a Change In Control (the “AffectedParty”) shall give Notice to the other party (the “Non-Affected Party”) withinthirty (30) days of the occurrence of such Change In Control. If the Change InControl involves a material and direct competitor of the Non-Affected Party,the Non-Affected Party may terminate this Agreement by written notice to theAffected Party within sixty (60) days after receipt of the Notice of a ChangeIn Control . If the Change In Control does not involve a material and direct competitorof the Non-Affected Party, this Agreement may not be terminated by theNon-Affected Party. For purposes of this Section, “Change In Control” includesa purchase, assignment or transfer of a controlling interest in the AffectedParty or substantially all of its business and assets and any merger orconsolidation involving the Affected Party or any Affiliate of the AffectedParty that requires a vote of the stockholders of the Ultimate Parent of theAffected Party. “Ultimate Parent” for Vendor is Cardinal Health, Inc. and theUltimate Parent for Company is its stockholders.

 

14.8                           TerminationDue to Failure to Reach Sales Minimums. Upon expiration of the twelve(12)-month period beginning on the Product Launch Date, either party mayterminate this Agreement upon providing at least one hundred eighty (180) daysprior written notice to the other party if sales of the Product are less thanthe minimum levels specified by the JCC; provided, however, Company may notterminate this Agreement pursuant to this Section 14.8 until all amountsowed to Vendor by Company are paid in full.

 

14.9                           Termination:Phase Out. In the event that this Agreement is terminated pursuant toSections 14.2 through 14.8, and at Company’s request, the parties shall discussin good faith an appropriate phase-out of Vendor’s Detailing activities.

 

14.10                     Termination:Continuing Rights. The termination or expiration of this 

 

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Agreementshall not affect Company’s obligation to reimburse or pay Vendor any amountthen due and owing under this Agreement. Further, the termination or expirationof this Agreement shall not affect any rights or obligations of any party underthis Agreement which are intended by the parties to survive such termination.The Service Fee paid by Company for the month in which this Agreement isterminated shall be prorated based on the number of days in that month, andVendor shall refund any overpayment to Company.

 

14.11                     Termination:Return of Materials. Within sixty (60) days following the termination orexpiration of this Agreement, Vendor shall return to Company all ConfidentialInformation, Product Promotional Materials, marketing plans, forms, territorylists, reports and any and all other tangible items provided to Vendor byCompany.

 

14.12                     Termination:Acceleration of Deferred Fees., Upon termination of this Agreement, allunpaid Deferred Fees consisting of all unpaid principal and accrued but unpaidInterest and any other amounts due from Company and financed by Vendor underthis Agreement shall be accelerated and immediately due and payable by Company.

 

14.13                     ResidualPayments. Upon expiration or termination of this Agreement, with theexception of termination by Company pursuant to Section 14.3 of thisAgreement, Company shall continue to pay Vendor on a monthly basis, in arrears,for a period of twenty-four (24) months after such expiration or termination,residual payments as follows: the residual payments shall equal three percent(3%) of the Gross Sales of the Product, whether the Product is marketed, sold,distributed or owned by Company or any other third party; provided, however,such residual payment percentage may be reduced as follows: In the eventCompany increases the number of Representatives hired by Vendor under thisAgreement (as set forth in Section 2.1 of this Agreement), the residualpayment shall be reduced by three hundredths of one percent (0.03%) for eachRepresentative hired above the number of Representatives set forth in Section 2.1of this Agreement. Further, if this Agreement is extended beyond the initialfive (5) year term in accordance with Section 14.1 of this Agreement, theresidual payment shall be reduced by three hundredths of one percent (0.03%)for each Representative for which Vendor receives a Service Fee during suchextension. For purposes hereof, the number of Representatives and the relatedresidual fee shall be determined as of the first day of each calendar month.This Section shall not limit any damages to which either Vendor may beentitled as a result of Company’s breach.

 

During the term ofthis Agreement and thereafter as long as residual payments are due to Vendorpursuant to this Section 14.13, Company shall provide to Vendor monthlysales reports in a mutually agreed upon format. Such sales reports shall beprovided to Vendor electronically within ten (10) days of the end of eachmonth.

 

During the term ofthis Agreement and for a period of one (1) year after the final residualpayment owed to Company is made by Vendor, Company shall permit Vendor’sdesignated employees or agents to have access during ordinary business hours torecords of all Product sales information in order to verify the accuracy ofamounts paid to Vendor by Company.

 

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**ARTICLE XVRECORDKEEPING; AUDIT RIGHTS**

 

Vendor shall keepaccurate records in sufficient detail as to costs and expenses for whichCompany must reimburse Vendor under this Agreement. Upon Company’s reasonablerequest made during or within one (1) year after the term of this Agreement,and at Company’s expense, Vendor shall permit Company’s designated employees oragents to have access during ordinary business hours to records of such costsand expenses in order to verify the accuracy of amounts reimbursed by Companyto Vendor. Company and its designated employees or agents shall maintain inconfidence all such cost and expense records of Vendor.

 

**ARTICLE XVIINDEMNIFICATION**

 

16.1                           Definitions.As used in this Article 16 and this Agreement, “Damages” shall mean allliabilities, damages, assessments, levies, losses, fines, penalties, costs, andexpenses, including, without limitation, reasonable attorneys’, accountants’,investigators’, and experts’ fees and expenses, sustained or incurred as aresult of any claims, suits, liabilities, or actions of any nature.

 

16.2.                        Indemnificationby Vendor. Subject to the extent of any indemnification from Companypursuant to Section 16.3 hereof, Vendor shall indemnify and hold Company,its Affiliates, directors, officers, employees and agents harmless from andagainst any and all Damages, except to the extent such damages arise from thenegligence or intentional wrongful actions of Company, arising directly orindirectly from:

 

(a)                                  Vendor’sbreach of or failure to comply with any of its obligations under thisAgreement;

 

(b)                                 anyinaccuracy in or breach or failure of any representation, warranty, or covenantmade by Vendor in this Agreement;

 

(c)                                  anynegligent or wrongful act or omission on the part of Vendor or its employees oragents;

 

(d)                                 Vendor’sviolation of or failure to comply with all applicable laws relating to thepromotion, distribution and sale of the Products, including but not limited tothe Act, the PDMA, the Medicare and Medicaid Anti-Kickback Act (42 U.S.C.§ 1320a-7b(a)), the Civil False Claims Act (31 U.S.C. § 3729(a)),Sections 1128A, 1128B, and 1877 of the Social Security Act (42 U.S.C.§§ 1320a-7a, -7b, and 1395nn), the Health Care Fraud Act (18 U.S.C.§ 1347), and the Criminal False Claims Act (18 U.S.C. § 287), asamended from time to time, as well as similar applicable state laws;

 

(e)                                  Detailingof the Products, except to the extent such Damages arise from a negligent orwrongful act or omission of Company; or

 

(f)                                    anyfederal or state claim or assessment for nonpayment or late payment by Vendorof any tax or contribution based on the status of any Representatives as 

 

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employees of Vendor.

 

16.3.                        Indemnificationby Company. Subject to the extent of any indemnification from Vendorpursuant to Section 16.2 hereof, Company shall indemnify and hold Vendorand its Affiliates, directors, officers, employees and agents harmless from andagainst any and all Damages, except to the extent such damages arise from thenegligence or intentional wrongful actions of Vendor, arising directly orindirectly from:

 

(a)                                  Company’sbreach of or failure to comply with any of its obligations under thisAgreement;

 

(b)                                 anyinaccuracy in or breach or failure of any representation, warranty, or covenantmade by Company in this Agreement;

 

(c)                                  anynegligent or wrongful act or omission on the part of Company or its employeesor agents;

 

(d)                                 Company’sviolation of or failure to comply with all applicable laws relating to themanufacture, sale, distribution, possession and use of the Product, the Programand this Agreement, including but not limited to the Act, the PDMA, theMedicare and Medicaid Anti-Kickback Act (42 U.S.C. § 1320a-7b(a)), theCivil False Claims Act (31 U.S.C. § 3729(a)), Sections 1128A, 1128B, and1877 of the Social Security Act (42 U.S.C. §§ 1320a-7a, -7b, and 1395nn),the Health Care Fraud Act (18 U.S.C. § 1347), and the Criminal FalseClaims Act (18 U.S.C. § 287), as amended from time to time, as well assimilar applicable state laws;

 

(e)                                  Detailingof the Products, except to the extent such Damages arise from a negligent orwrongful act or omission of Vendor;

 

(f)                                    theaccuracy or completeness of the Product Labels, Product Promotional Materials,or the Training Program;

 

(g)                                 anyclaims or liabilities for injury to or death of persons, regardless of whensuch, claim or liability is asserted or incurred, resulting from orarising out of the manufacture, use, sale, distribution, possession of the Products,or a manufacturing design or defect of the Products, or any failure to warn orinadequacy of warning regarding the Products;

 

(h)                                 Company’sfailure to pay when due or to reimburse Vendor for any Taxes (as defined inSection 5.3);

 

(i)                                     anynegligent or wrongful acts or omissions on the part of Company with respect toVendor’s employees or Representatives or those individuals who have madeapplication to be Representatives of Vendor;

 

(j)                                     anyfederal or state claim or assessment for nonpayment or late payment by Companyof any tax or contribution based on the status of any former Representatives asemployees or agents of Company;

 

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(k)                                  theuse by Vendor, in the performance of its duties hereunder and as specified ordirected by Company, of any trademark, trade name, copyright, patent or otherrights which use actually or allegedly infringes on the rights of any thirdparty;

 

(1)                                  anydecision or action of the JCC.

 

16.4.                        IndemnificationProcedures. A party (the “Indemnitee”) which intends to claimindemnification under this Article 16 shall promptly notify the otherparty (the “lndemnitor”) in writing of any action, claim or liability inrespect of which the lndemnitee or any of its employees or agents are entitledto indemnification. The Indemnitee shall permit, and shall cause its employeesand agents to permit, the Indemnitor at its discretion, to settle any suchaction, claim or liability and agrees to the complete control of such defenseor settlement by the Indemnitor; provided, however, that such settlement ordefense does not adversely affect the Indemnitee’s rights hereunder or imposeany obligations on the Indemnitee in addition to those set forth in thisAgreement. The Indemnitee, its employees, and agents, shall cooperate fullywith the Indemnitor and its legal representatives in the investigation anddefense of any action, claim or liability subject to indemnification. TheIndemnitee shall have the right, but not the obligation, to be represented bycounsel of its own selection and at its own expense in connection with anyindemnified claim.

 

16.5.                        Limitationon Vendor Liability. It is understood that Vendor is not an insurer andthat the sums payable hereunder to Vendor by Company are based upon the valueof services offered and the scope of liability undertaken, and such sums arenot related to any potential liability of Company. Vendor makes no warranty,expressed or implied, that the services it furnishes will avert or preventoccurrences or the consequences therefrom which may result in loss or damage toCompany. In the event of any Damages of which Vendor is liable, Company agreesthat Vendor’s total liability to indemnify Company shall not exceed FiveMillion Dollars ($5,000,000).

 

16.6                           NoConsequential Damages. Notwithstanding any provision of this Agreement tothe contrary, and except with regard to claims by third parties, neither partyshall be liable to the other for any special, indirect, incidental orconsequential damages (other than liability for personal injury as provided inthis Article 16), including lost profits.

 

**ARTICLE XVIIMISCELLANEOUS**

 

17.1.                        NoWaiver: Cumulative Remedies. No failure or delay on the part of eitherparty in exercising any right, power or remedy hereunder shall operate as awaiver thereof; nor shall any single or partial exercise of any such right,power or remedy preclude any other or further exercise thereof or the exerciseof any other right, power or remedy hereunder. No waiver of any provisionhereof shall be effective unless in writing and signed by the party giving suchwaiver. The remedies herein provided are cumulative and not exclusive of anyremedies provided by law.

 

17.2.                        Captions.  Article andSection headings used in this Agreement are for convenience only and shallnot affect the construction of this Agreement.

 

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17.3.                        GoverningLaw. This Agreement shall be construed and the respective rights of theparties hereto determined according to the substantive laws of the State ofOhio, exclusive of conflict of laws principles.

 

17.4.                        Severability.If any provision of this Agreement or any other document delivered under thisAgreement is prohibited or unenforceable in any jurisdiction, it shall be ineffectivein such jurisdiction only to the extent of such prohibition orunenforceability, and such prohibition or unenforceability shall not invalidatethe balance of such provision to the extent it is not prohibited or enforceablenor the remaining provisions hereof, nor render unenforceable such provision inany other jurisdiction. In the event any provisions of this Agreement shall beheld to be invalid, illegal or unenforceable, the parties hereto shall usetheir best efforts to substitute a valid, legal and enforceable provisionwhich, insofar as practical, implements the purposes hereof.

 

17.5.                        EntireAgreement: Modification. This Agreement contains the entire and exclusiveagreement between the parties in respect of the subject matter hereof and supersedesand cancels all previous agreements, negotiations, commitments and writingsbetween the parties hereto in respect of the subject matter hereof. Except asprovided herein, this Agreement may not be changed or modified in any manner orreleased, discharged, abandoned or otherwise terminated unless in writing andsigned by the duly authorized officers or representatives of the parties.

 

17.6.                        Notices.Any notice or request required or desired to be given in connection with thisAgreement shall be deemed to have been sufficiently given if sent by pre-paidregistered or certified mail or facsimile transmission to the intendedrecipient at the address set forth below or such other address as may have beenfurnished in writing by the intended recipient to the sender. The date ofmailing or facsimile transmission shall be deemed to be the effective date onwhich notice was given, provided that all facsimile transmissions shall containa provision requiring the intended recipient to confirm receipt and no facsimiletransmission shall be effective unless confirmation of its receipt is receivedwithin twenty-four hours of its transmission.

 

All notices shallbe addressed to:

 

*If to Company, to:*

Alliance PharmaceuticalCorp. 

3040 Science Park Road San 

Diego, California 92121Fax:

(858) 410-5306

*Attention:*

President

 

*If to Vendor, to:*

Cardinal Health Sales andMarketing Services 

7000 Cardinal Place

Dublin, Ohio 43017 

Fax: (614) 757-6000

 

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*Attention:*

President

 

17.7.                        Executionin Counterparts. This Agreement may be executed in counterparts, each ofwhich, when executed and delivered, shall be deemed to be an original and allof which together shall constitute one and the same document.

 

17.8.                        Assignment.This Agreement may not be assigned or transferred by a party without the priorwritten consent of the other party hereto, and any such assignment by Companyshall be specifically subject to the continued obligation to pay the residualpayments pursuant to Section 14.13 of this Agreement. Any such assignmentshall not materially or adversely affect the rights or obligations of eitherparty to this Agreement.

 

17.9.                        PublicAnnouncements. Neither party shall issue any press release or other publicannouncement, verbally or in writing, referring to the other party or anyentity which controls, is controlled by or under common control of such party,without the prior written consent of such party. Nothing contained herein shalllimit the right of either party to issue a press release or public announcementif, in the opinion of such party’s counsel, such press release or publicannouncement is required pursuant to state or federal securities laws, rules orregulations, or other applicable laws, in which case the party required to makethe press release or public announcement shall use its commercially reasonableefforts to obtain the approval of the other party as to the form, nature andextent of the press release or public announcement prior to issuing the pressrelease or making the public announcement.

 

17.10.                  Maintenanceof Records. Vendor and Company each agree that throughout the term of thisAgreement and for a period of six years after the termination of thisAgreement. each will maintain records and otherwise establish procedures toassure compliance with all regulatory, professional, and other applicable legalrequirements which relate to the Detailing and marketing of the Products and ifapplicable, with the other services and activities to be performed hereunder.

 

17.11.                  ForceMajeure. Failure of either party hereto to fulfill or perform itsobligations under this Agreement shall not subject such party to any liabilityif such failure is caused or occasioned by, without limitation, acts of God,acts of the public enemy, fire, explosion, flood, drought, war, riot, sabotage,embargo, strikes or other labor disputes (which strikes or disputes need not besettled), compliance with any order, regulation, or request of government, orby any other event or circumstance of like or different character to theforegoing beyond the reasonable control and without the fault or negligence ofsuch party (a “Force Majeure Event”) provided such party uses reasonableefforts to remove such Force Majeure Event and gives the other party promptnotice of the existence of such Force Majeure Event. Provided, further, that noForce Majeure Event shall serve to delay or excuse any payment by one party tothe other then due and owing.

 

17.12                     Setoff.The parties agree that with respect to this Agreement, no party shall delay orrefuse to make any payment then due and owing or to take any action whichitself is not in dispute on the grounds that such party is entitled to delay orrefusal as a result of some other matter between the parties which is indispute or is otherwise unresolved.

 

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IN WITNESSWHEREOF, the parties have caused this Agreement to be executed by their dulyauthorized officers.

 
| REDKEY, INC. dba  CARDINAL HEALTH SALES AND   MARKETING SERVICES | ALLIANCE PHARMACEUTICAL   CORP |
|------------------------------------------------------------------|--------------------------------|
|                                                             |                           |
|                                                             |                           |
| By:                                                              | /s/ Don Wetherhold             |   | By: | /s/ Duane J. Roth |   |
|                                                             |                           |
| Name:                                                            | Don Wetherhold                 | Name: | Duane J. Roth |
|                                                             |                           |   |   |
| Title:                                                           | President                      | Title: | Chairman and Chief Executive Officer |
|                                                             |                           |   |   |
| Date:                                                            | February 28, 2002         | Date: | February 28, 2002 |
|                                                                  |                                |  |  |  |  |  |  |

 

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**Schedule 1.1(m)**

 

**List of Products**

 

Imagent®(perflexane lipid microbubble) sterile, single-use, non-pyrogenic white powderthat upon reconstitution with sterile water into a suspension of microbubbles,is used for contrast enhancement during ultrasound cardiology imagingprocedures. The initial indication will be for Left Ventricle Opacification(LV) / Endocardial Border Delineation (EBD).

 

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Schedule 2.3(i)

 

**DRUG POLICY**

 

I.                                       PURPOSE

 

To prohibit the use, sale, dispensing, possession ormanufacture of illegal drugs or narcotics on Company premises or the use orpossession of substances which may impair the employee’s ability to performhis/her job safely or properly.

 

II.                                   POLICY

 

A.                                   TheCompany expressly prohibits the use, sale, dispensing, possession ormanufacture of illegal drugs and narcotics on its premises.

 

B.                                     Theemployee will be subject to disciplinary action up to and including immediateInvoluntary Termination for bringing non-prescribed drugs or narcotics to theworkplace; being under the influence of drugs or alcohol while working; usingillegal drugs or alcohol while working; or dispensing, distributing orillegally manufacturing or selling such substances on Company premises or worksites in the Company workplace.

 

C.                                     Asa condition of employment, the employee is required to sign a consent formallowing the Company the right to test the employee for suspected substanceabuse. All testing procedures shall confirm to local, state and federalregulations.

 

D.                                    TheCompany reserves the right to inform appropriate law enforcement agencies ofany activity prohibited by this policy, including the name of the person knownor suspected to be involved.

 

E.                                      Nothingin this statement of policy is to be interpreted as constituting a waiver ofManagement’s responsibility to maintain discipline or the right to takedisciplinary measures in the case of poor performance or misconduct.

 

F.                                      Uponapproval of the President, the Company may allow the use of alcohol atCompany-sponsored events.

 

III.                                 PROCEDURE

 

A.                                   Anyemployee who notices any other employee demonstrating unusual behavior patternswhich appear to be drug, narcotic or alcohol related should report the observedbehavior to a supervisor or Human Resources. In such instances, it is advisableto have such behavior witnessed by another supervisor (if possible).

 

B.                                     Theemployee determined by the supervisor to be under the influence of drugs,narcotics or alcohol shall be required to leave the premises and will not bepaid for the time not at work. If appropriate, the employee should beencouraged to obtain safe transportation.

 

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C.                                     Theemployee experiencing problems relating from drug, narcotic or alcohol abuse ordependency shall be encouraged to seek outside counseling. Such substanceabuse-related counseling in and of itself shall have no influence on workperformance evaluations.

 

D.                                    Theemployee who is diagnosed as a drug abuser or alcoholic may be granted an LOAto undertake rehabilitation. The employee will not be permitted to return towork until certification is presented to the Company that the employee iscapable of performing his/her job. Failure to cooperate with an agreed-uponplan may result in discipline up to and including Involuntary Termination.Rehabilitative LOAs will be limited to one per employee during the entire termof employment.

 

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**Schedule 2.7**

 

**Form ofManagement Report**

** **
| **Report  Name**            |   | **Description**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | **Frequency**       |
|-----------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------|
|                        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                |
| Territory Assignment Report |   | Lists the individuals covering each region and  territory.  If a territory is vacant,  the report will indicate the date when the territory became vacant and what  alternate coverage is being applied (i.e. District Manager,  Adjacent Rep, etc.)  In addition, the report will indicate the current turnover rate.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | Monthly             |
| Territory Coverage Report   |   | For each territory, the  report provides the call statistics:

•                       Percentage  of call to target audience 

•                       Percentage  of samples delivered to target audience 

•                       Average  number of calls/day (calculated on a six month moving average).

The report is  summarized at the Regional and National levels.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | Monthly   Quarterly |
| Sales Statistics Report     |   | For each territory, based on actual sales, the  report will show:

•                       New Rx

•                       Total Rx

•                       Percent  Change for New Rx

•                       Percent  Change for Total Rx

•                       New  Market Share Percent Change

•                       Total  Market Change Percent Change

The report is  summarized at the Regional and National levels.                                                                                            |   | Monthly   Quarterly |
| Inventory Report            |   | For each Territory, the report will document all the  sample distribution activities. The report will reflect the following:  

For each SKU:

•                       Period  beginning balance

•                       Total  shipments received

•                       Total  samples dropped

•                       Total  adjustments

•                       Period  ending balance

•                       Total  variance (units / percent)

The report is  summarized at the Regional and National levels. |   | Monthly             |
| Inventory Exception Report  |   | The report will provide details on variances and adjustments  related to the distribution of samples if any has occurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | Monthly             |

 

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[****]    Representsmaterial which has been redacted pursuant to a request for confidential treatmentpursuant to Rule 24B-2 under the Securities Exchange act of 1934, asamended.

 

**Schedule 3.1**

 

**Service Fees**

 

The monthlyService Fee per Representative is as follows:

 
| **Period**                                                                                                            |   | **Monthly  Service Fee per   Representative** |   |
|-----------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------|--------|
|                                                                                                                  |   |                                          |   |
| Execution of  this Agreement - twelfth (12th) month following Product Launch  Date                                    |   | $                                             | [****] |   |
|                                                                                                                  |   |                                          |   |
| Thirteenth (13th)  month following Product Launch Date - twenty-fourth (24th) month  following Product Launch Date    |   | $                                             | [****] |   |
|                                                                                                                  |   |                                          |   |
| Twenty-fifth (25th)  month following Product Launch Date - thirty-sixth (36th) month  following Product Launch Date   |   | $                                             | [****] |   |
|                                                                                                                  |   |                                          |   |
| Thirty-seventh  (37th) month following Product Launch Date - forty-eighth (48th)  month following Product Launch Date |   | $                                             | [****] |   |
|                                                                                                                  |   |                                          |   |
| Forty-ninth (49th)  month following Product Launch Date - sixtieth (60th)month  following Product Launch Date         |   | $                                             | [****] |   |

 

The Service Feeshall be effective as of the first (1st) day of the month afterCompany receives written authorization to staff the position.

 

The Service Feesshall include the following:

 

•Representative Salary

•Representative Payroll Taxes and Benefits

•Administrative Costs (supplies, printing, postage)

•Call Reporting

•Program Management

•Recruiting

•Representative Background Check and Drug Testing

•Expense Reporting and Travel Administrative

 

The monthlyService Fee does NOT include the following expenses (“Territory OperatingExpenses”), which will be invoiced to Company monthly (in arrears) and shall besubject to a five percent (5%) administrative fee:

 

•In-Territory Travel Expenses (i.e., airfare, lodging, travel meals, travelincidentals, rental cars, etc.)

•Promotional Expenses

 

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•Automobile-Related Expenses and/or Allowances

•Cellular Telephone Expenses

•Bonuses, including related payroll taxes and benefits costs

•Out-of-Territory Travel Expenses (i.e., airfare, lodging, travel meals, travelincidentals, rental cars, etc.), such as those incurred for Product launchactivities, training, POA meetings, and/or convention coverage 

•Other Representative Prizes or Awards

 

TerritoryAlignment and other related services may be provided upon request by Company,at a specifically quoted fee.

 

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