**Exhibit 10.25**CONFIDENTIALMATERIALS OMITTED AND FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.**SUPPLY AGREEMENT****BETWEEN****WATSON PHARMA, INC.****AND****SAVIENT PHARMACEUTICALS, INC.**
 

 
**Table of Contents**     SECTION 1 DEFINITIONS  i SECTION 2 SUPPLY AND PURCHASE OF PRODUCTS iiiSECTION 3 PRICING viSECTION 4 FORECASTS, ORDERS viiiSECTION 5 SPECIFICATIONS ixSECTION 6 TERM xiiSECTION 7 TERMINATION xiiSECTION 8 DELIVERY; INVENTORY xvSECTION 9 DEFECTIVE PRODUCTS xvSECTION 10 REGULATORY MATTERS xviSECTION 11 FORCE MAJEURE xixSECTION 12 INSURANCE xixSECTION 13 CONFIDENTIALITY xxSECTION 14 PUBLIC ANNOUNCEMENTS xxSECTION 15 REPRESENTATIONS AND WARRANTIES xxiSECTION 16 INDEMNIFICATION xxiiSECTION 17 DISPUTE RESOLUTION xxiiiSECTION 18 MISCELLANEOUS xxiiiLISTOF EXHIBITSA. Product,Specifications and PackagingB. InitialFinished Product PricesC. AdverseEvent Reporting ProceduresD. InitialPurchase Order ForecastE. QualityRequirementsF. Formof Press Release
 

 
**SUPPLY AGREEMENT**     **SUPPLY AGREEMENT**, dated as of June 12, 2006, by and between Savient Pharmaceuticals, Inc., aDelaware corporation (“Seller”), and Watson Pharma, Inc., a Delaware corporation(“Purchaser”).     **WHEREAS**, Seller would like to make and sell the Products (as defined below) to Purchaser, andPurchaser would like to purchase the Products from Seller pursuant to the terms of this Agreement;     **NOW, THEREFORE**, in consideration of the mutual promises, covenants and agreements hereinafterset forth, the parties hereto agree as follows:**SECTION 1****DEFINITIONS**     As used throughout this Agreement and any exhibits, schedules or attachments hereto, each ofthe following terms shall have the respective meaning set forth below:     1.1 “**Additional Amount**” shall have the meaning given in Section 2.2.3.     1.2 “**Affiliate**” of a Party shall mean any entity that, directly or indirectly, controls, iscontrolled by, or is under common control with such entity. For the purposes of this definition,the term “controls” (including, with correlative meanings, the terms “controlled by” and “undercommon control with”) as used with respect to any Party, shall mean the possession (directly orindirectly) of more than 50% of the outstanding voting securities or other equity or votinginterest of an entity.     1.3 “**ANDA**” shall mean an Abbreviated New Drug Application filed with the FDA.     1.4 “**Bankruptcy Code**” shall have the meaning given in Section 7.3.     1.5 “**Bankruptcy Law**” shall have the meaning given in Section 7.3.     1.6 “**Commercially Reasonable Efforts**” shall mean, with respect to a Party, those commerciallyreasonable efforts that such Party is making in similar circumstances relative to other products inits portfolio with respect to production and/or marketing, distribution and sales of its ownproducts that are in production or that are being marketed, distributed and sold at that time, asapplicable. Commercially Reasonable Efforts shall be in accordance with the efforts and resourcesthat the Party would use for a product owned by it or to which it has rights, which is of similarmarket potential at a similar stage in its product life, taking into account the competitiveness ofthe marketplace, the proprietary position of the applicable active ingredient, the regulatorystructure involved, and the profitability of the product.     1.7 “**Damages**” shall have the meaning given in Section 16.1.     1.8 **“Delivery Price”**shall have the meaning given in Section 3.1.     1.9 “**Effective Date**” shall mean the date of this Agreement.
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     1.10 “**Equivalent Product**” shall mean any product, other than a Product that Seller isobligated to supply to Purchaser hereunder, which (i) is manufactured by a Party pursuant to anANDA which was approved by the FDA, which ANDA was filed on the basis of the original NDA for thebrand equivalent of such Product or (ii) is otherwise a generic version of the brand equivalent ofsuch Product.     1.11 “**Existing Inventory**” shall mean all Product manufactured by Seller into final tabletedform prior to [**] with the following lot numbers: A18061; C400715; C400721; C500173;C500174; C500175, and; 4A3069.     1.12 “**FDA**” shall mean the U.S. Food and Drug Administration, and any successor or replacementagency.     1.13  “**Finished Product Price**” shall mean the aggregate cost to manufacture and/or LabelProduct, on a batch by batch basis,
      (i) if Product is manufactured and/or Labeled by Seller or an Affiliate ofSeller the sum of Seller’s (a) [**], (b) [**] and (c) [**]; or       (ii) if such Product is manufactured and/or Labeled by a Third Partymanufacturer, the sum of (a) [**] and (b) [**].All costs included in Manufacturing Costs shall be calculated in accordance with U.S. generallyaccepted accounting principles, consistently applied to the manufacture of all products produced inthe facility or facilities in which such Product is manufactured and/or Labeled. [**]     1.14 “**Force Majeure Event**” shall have the meaning given in Section 11.     1.15 “**Gross Margin”**shall have the meaning given in Section 3.1.     1.16 “**Indemnity Claim**” shall have the meaning given in Section 16.3.     1.17 “**Initial Purchase Order**” shall have the meaning given in Section 2.2.1.     1.18 “**Label**”, “**Labeled**” or “**Labeling**” shall mean all labels and other written, printed orgraphic matter upon (i) any packaging, container or wrapper utilized with the Products, or (ii) anywritten material accompanying the Products, including package inserts; or as the context requires,the act of applying and/or using the same.     1.19 “**Latent Defect**” shall mean any instance where a lot of a Product fails to conform to theapplicable Specifications or is otherwise defective or fails to conform to the warranties given bySeller herein, and such failure would not be discoverable upon reasonable physical inspection orstandard testing of such Product upon receipt by Purchaser in accordance with Purchaser’s standardoperating procedures.     1.20 “**Launch Quantity**” shall have the meaning given in Section 2.2.1.     1.21 “**Material Change**” shall have the meaning given in Section 5.2.1     1.22 “**NDA**” shall mean a New Drug Application filed with the FDA.     1.23 “**Net Sales**” shall mean, with respect to any Product, the revenues derived from the saleby Purchaser, its Affiliates, licensees and assignees from the sale of a Product to independentthird parties, less: (i) all normal and customary discounts (such as cash discounts, volumediscounts, chargebacks, allowances (including shelf stock adjustments and promotional allowancesthat are not selling or marketing-related operational expenses), government mandated rebates andother rebates, credits, and Product returns), (ii) freight, shipping, insurance costs relating tothe shipment of the Product, duties and taxes; and (iii) bad debt related to the Product (as suchbad debts are actually
 

 
incurred). Net Sales shall be determined on an accrual basis (except for clause (iii) above)in accordance with generally accepted accounting principles in the Territory, applied on a basisconsistent with Purchaser’s annual audited financial statements. Subject to the foregoing,Purchaser will not deduct any marketing, selling, advertising or distribution expenses of any kindto determine Net Sales.     1.24 “**Packaging**” shall mean all primary containers, Labels, cartons, shipping cases or anyother like matter used in packaging or accompanying the Products; or as the context requires, theact of applying and/or using the same.     1.25 “**Party**” shall mean Seller or Purchaser and, when used in the plural, shall mean Sellerand Purchaser.     1.26 “**Patent Defect**” shall mean any instance where a lot of a Product fails to conform to theapplicable Specifications or is otherwise defective or fails to conform to the warranties given bySeller herein, and such failure is discoverable upon reasonable physical inspection or standardtesting of such Product upon receipt by Purchaser in accordance with Purchaser’s standard operatingprocedures.     1.27 “**Product**” or “**Products**”, as applicable, shall mean each of oxandrolone 2.5mg tablets (the“2.5mg Product”) and oxandrolone 10mg tablets (the “10mg Product”), collectively the Products and,any other products the parties agree to include herein; Product shall not include any brandedversion of oxandrolone either currently offered for sale or offered for sale in the future bySeller, whether or not of the same dosage strength or form.     1.28 “**Purchase Price**” shall have the meaning give in Section 3.1.     1.29 “**Purchaser Trademarks**” shall have the meaning given in Section 5.4.     1.30 “**Quality Requirements**” shall have the meaning give in Section 5.3.     1.31 “**Remainder Payment**” shall have the meaning given in Section 3.1.     1.32 “**Specifications**” shall mean the specifications for the design, composition, manufacture,packaging, and/or quality control of each of the Products, as set forth on Exhibit Aattached hereto and made a part hereof, as the same may hereafter be modified by mutual agreementof the parties in writing.     1.33 “**Start Date**” shall have the meaning given in Section 2.2.3.     1.34 “**Territory**” shall mean the United States of America, including its territories andpossessions and military bases and possessions (including, but not limited to, the Commonwealth ofPuerto Rico).**SECTION 2****SUPPLY AND PURCHASE OF PRODUCTS**     2.1 **Supply and Purchase Obligations**.          2.1.1 During the Distribution Term, Seller shall manufacture, or have manufactured by a thirdparty, and exclusively supply Purchaser with Products for sale and distribution in the
 

 
Territory. Seller shall supply Purchaser with those quantities of Products as are ordered byPurchaser pursuant to this Agreement. In the event Seller has any Product manufactured by anunaffiliated third party, Seller shall (i) notify the Purchaser as to the identity of the thirdparty manufacturer prior to the commencement of supply, and (ii) use its best efforts to obtainfrom such third party manufacturer rights for the benefit of Purchaser as set forth in Section 5.3,5.5, 10.3, 10.4, 10.9 and 10.10 hereto. During the Distribution Term (subject to the provisions ofSection 4.5) Purchaser shall purchase from Seller 100% of Purchaser’s requirements for the Productsin the Territory.          2.1.2 During the Distribution Term (and subject to the provisions of Section 4.5), Purchasershall purchase from Seller the Products solely for distribution and sale in the Territory. Duringthe Term, Seller and its Affiliates shall not, and shall not directly or indirectly grant to anyother person or entity the right to, sell or distribute the Products and/or Equivalent Product inthe Territory, and Seller shall not directly or indirectly cooperate with any other person orentity with respect to, or supply products or services for, the sale or distribution of theProducts and/or Equivalent Product in the Territory. Nothing in this Agreement shall prevent theSeller from marketing or selling, or granting third parties the right to market or sell (i) anyformulation, dosage or strength of oxandrolone, utilizing any method of delivery, under the brandname Oxandrin® or (ii) any other branded formulations, dosages or strengths of oxandrolone, in eachcase, other than those Products identified in Exhibit A.          2.1.3 During the Term, Purchaser shall not, directly or knowingly and indirectly, (i) solicitcustomers for the Product, or make sales of the Product, or establish or maintain any branch ordistribution depot for the Product, outside of the Territory, or assist any party in doing so or(ii) solicit customers for an Equivalent Product, or make sales of an Equivalent Product, orestablish or maintain any branch or distribution depot for an Equivalent Product, within theTerritory, or assist any party in doing so. If at any time Purchaser, directly or knowingly andindirectly, markets, sells, or distributes the Product outside the Territory, Seller may suspendall sales of the Product to Purchaser until Purchaser takes appropriate actions to cease suchsales. At such time as Purchaser learns that a customer is directly or indirectly using, marketing,selling or distributing Products outside of the Territory, or that such customer is assisting anyother party to do so, then Purchaser shall cease making sales of Products to such customer untilsuch a time as customer ceases making sales outside of the Territory and Purchaser shallimmediately notify Seller in writing of such occurrence and take reasonable actions within itslegal rights and powers to cause such third parties to cease making such sales of the Productoutside the Territory.          2.1.4[ ** ], nothing in thisAgreement shall prohibit Purchaser from undertaking its own development of any Equivalent Product,seeking regulatory approval of any such Equivalent Product, or undertaking manufacturingdevelopment and qualification, and limited manufacture (including third party manufacturing) ofstability batches and validation batches of Equivalent Product, in each case solely for purposes ofseeking regulatory approval for such Equivalent Product; provided, however, thatPurchaser shall not be permitted to sell any Equivalent Product which it so manufactures during theTerm of this Agreement. [ ** ]     2.2 **Commencement of Supply**.          2.2.1 Seller shall be obligated to commence supply of the Products to Purchaser within ninety(90) days of receipt of a binding purchase order of Products from Purchaser in accordance with theterms and conditions of this Agreement (“Initial Purchase Order”). The quantities in such InitialPurchase Order shall be discussed in good faith and mutually agreed
 

 
betweenthe parties (“Launch Quantity”). Subject to the immediately preceding sentence, the nonbinding forecast for theInitial Purchase Order is attached as Exhibit D to this Agreement. It isfurther agreed that Seller shall use best commercial efforts to supply a totalamount of [**] bottles of the 2.5mg Product, [**], as soon as commerciallypracticable but in no event later than ninety (90) days from the date ofreceipt by Purchaser of the Launch Quantities. All orders of Product byPurchaser shall be made in units which comprise whole batch amounts; thedelivery of such Product shall be in amounts that reflect the actual batchyield where such yield does not deviate from the defined range ([**] bottlesper batch for 2.5mg Product and [**] bottles per batch for 10mg Product).          2.2.2 Upon receipt of the Initial Purchase Order, Seller shall, as promptly as commerciallyfeasible and using diligent efforts (but in any event no later than ninety (90) days after receiptof such Initial Purchase Order or later date as requested in writing by Purchaser) supply toPurchaser the quantities of the applicable Product which are indicated on the Initial PurchaseOrder for such Product. In addition to any other right or remedy available to Purchaser, upon anyfailure by Seller to provide all of the Products in the Initial Purchase Order within the specifiedand mutually agreed upon time schedule, then Purchaser shall have the right, but not theobligation, to terminate this Agreement, without penalty to either Party, with respect to any orall of such Products (at Purchaser’s discretion) on thirty (30) days prior written notice toSeller.          2.2.3 The parties agree that they shall cooperate to determine when an Equivalent Product maybecome available to the marketplace. However, Seller shall, at its sole discretion, designate onwhich date the Products will be distributed in the Territory by Purchaser (“Start Date”)and provide Purchaser with reasonable written notice thereof. It is specifically contemplated andagreed that the 2.5mg Product and the 10mg Product may each have a separate and distinct Start Datebased upon the availability of an Equivalent Product in the respective dosage forms, and thatPurchaser shall only sell that Product for which Seller has provided explicit approval and forwhich a designated Start Date has been specified in writing by Seller.          2.2.4 Prior to the Start Date, Purchaser shall have in place with all significant wholesalers,chain and other drug supply and pharmacy outlets, a communication advising such entities of theProduct’s pending availability. Consequently, if any Product supplied to Purchaser under thisAgreement is delivered by Purchaser to any third party earlier than two (2) business days prior tothe applicable Start Date, then Purchaser shall pay to Seller, as liquidated damages (the“Additional Amount”) an amount equal to (X) the number of units of such Product shipped ordistributed by Purchaser to any third party prior to the applicable Start Date times (Y) Seller’saverage net selling price for Seller’s branded version of such Product, less (Z) the amounts paidor payable by Purchaser to Seller for such Product under Section 3 below.          Notwithstanding the foregoing, with Seller’s prior written approval, Purchaser may shipProduct to third party purchasers earlier than two (2) business days prior to the Start Datewithout penalty if such Product is held by third party purchasers thereof in isolation and notavailable for sale, resale or dispensing until the applicable Start Date; provided, however, thatPurchaser shall obtain from any third party purchasers of Product contemplated hereunder bindingassurances of non-release prior to the Start Date. To the extent any third party purchaserreleases Product for sale, resale or dispensing prior to the Start Date, then Purchaser shall beliable to Seller for the Additional Amount with respect to such Product as calculated above. TheAdditional Amount shall be Seller’s sole and exclusive remedy (whether arising in contract, tort orotherwise) for the sale prior to the applicable Start Date of any Product by Purchaser and in noevent shall such sale be considered or deemed as a breach hereunder. Purchaser shall deliver toSeller written notice of its initial shipment of Product to the retail trade within twenty-four(24) hours of such shipment.          2.2.5 Seller shall supply to Purchaser, and Purchaser shall accept from Seller subject to allapplicable terms and conditions herein, Launch Quantities of Product from Seller’s ExistingInventory provided that such Existing Inventory complies with the terms and conditions of thisAgreement. Anything to the contrary notwithstanding, to the extent that any Existing Inventory issold to Purchaser by Seller and subsequent thereto Purchaser is unable to sell such Existing
 

 
Inventory because its remaining expiry dating is equal to or less than twelve (12) months,Purchaser may return such quantities of Existing Inventory to Seller and Seller shall thereafter,in accordance with the applicable terms and conditions herein, refund to Purchaser one hundredpercent (100%) of the Delivery Price actually paid for such quantities as are actually returned toSeller.**SECTION 3****PRICING**     3.1 **Purchase Prices**. The purchase price (“Purchase Price”) paid by Purchaserfor each Product delivered by Seller shall be paid in two installments. The first installment (the“Delivery Price”) shall be a payment equal to the number of units of such Product deliveredby Seller to Purchaser pursuant to [**] of such Product. The second installment (the “Remainder Payment”) shall be aquarterly payment equivalent to [**] percent ([**]%) of Purchaser's Gross Margin (as defined below) on the sale of such Product for each calendar quarter during the Term hereof. For purposesof this Agreement “Gross Margin” for a particularcalendar quarter shall be equivalent to [**] of Product sold during the quarter in question. Purchaser shall provide to Seller withinthirty (30) days of the end of each quarter a reasonably detailed report which sets forth the GrossMargin for the quarter just completed.     3.2 **Delivery Price Adjustment**. The Delivery Price for Product in effect during anycalendar year may be adjusted by Seller upon notice to Purchaser during such calendar year toreflect any actual increase in Seller’s Manufacturing Cost for Product.     3.3 **Shipping Terms**. The prices charged by Seller to Purchaser shall be FCA (Incoterms2000), Seller’s facility in the Territory at which finished goods are packaged for shipment toPurchaser. All deliveries must be accompanied by a packing slip that describes the Products andidentifies the purchase order number and the shipment’s destination.     3.4 **Payment Terms**. The Delivery Price for each Product shall be paid by Purchaserwithin sixty (60) days from the date of delivery of such Product. The Remainder Payment shall bepaid to Seller within sixty (60) days after the end of each calendar quarter. All payments shallbe made in United States dollars.     3.5 **Negative Gross Margin**.          3.5.1 To the extent the Gross Margin is negative in any particular quarter or quartershereunder Seller shall reimburse Purchaser for [**] percent ([**]%) of the amount of any such negative Gross Marginwithin sixty (60) days after the end of (i) such calendar quarter or (ii) the expiration ortermination of this Agreement, as the case may be.          3.5.2 For any quarter in which Purchaser claims a negative Gross Margin, Seller shall have theright to have Seller’s independent public accountants (reasonably acceptable to Purchaser) conductan audit of Purchaser’s financial records, as such information relates to Net Sales and thecalculation of Gross Margin with respect to each Product during the quarter in question, for aperiod of twelve (12) months following receipt of Purchaser’s notice to Seller of such negativeGross Margin; *provided, however*, that this right may not be exercised more than once in anycalendar year. Any audit conducted pursuant to this Section 3.5.2 shall not count against themaximum number of audits to which Seller is entitled pursuant to Section 3.6 herein, and may beconducted by the
 

 
independent public accountants upon the provision of not less than thirty (30) days priorwritten notice to Purchaser.     3.6 **Annual Audit Rights**.          3.6.1 Purchaser shall keep accurate books and records for purposes of documenting the amountof the Net Sales and the calculation of Gross Margin with respect to each Product. Said books ofaccount shall be kept at Purchaser’s principal place of business. Upon at least thirty (30) daysprior written notice given on or before June 30th of each calendar year, Seller, at its expense,shall have the right to have Seller’s independent public accountants (reasonably acceptable toPurchaser) obtain access to Purchaser’s financial records for the previous calendar year, duringreasonable business hours solely for the purpose of verifying the amount of Net Sales and thecalculation of Gross Margin with respect to each Product for such previous calendar year;provided, however, that this right may not be exercised more than once in anycalendar year. Purchaser agrees to reasonably cooperate with Seller’s independent publicaccountants in the conduct of any such audit. Prior to disclosing the results of any such audit,the auditor shall present Purchaser with a preliminary report of its findings and provide Purchaserwith an opportunity to respond to any questions raised or issues identified; provided, however,that Seller shall receive the audit report as originally submitted by independent publicaccountants along with Purchasers responses thereto to the extent such responses are given pursuantto questions raised in an audit and to the extent that the responses are material to resolving theaudit. Seller shall solicit or receive only information relating to the accuracy of suchcalculations and shall deliver to Purchaser a detailed written accountants’ report (setting forth,among other things, the miscalculations, if any, identified by the audit) within thirty (30) daysof completion of the audit. If Seller does not submit a dispute in regards to the amount of NetSales or Gross Margin so audited within forty-five (45) days of Seller’s receipt of the auditreport, then the amount of Net Sales and Gross Margin as originally reported by Purchaser shall bedeemed to have been accepted and agreed to by Seller and shall be binding. Seller shall ensurethat Seller’s independent public accountants maintain the confidentiality of Purchaser’sConfidential Information on terms no less restrictive than those set forth in Section 13. Suchaccountants shall report to Seller only the results of the verification. Except in the event of abona fide dispute, any underpayment or overpayment of the Purchase Price due to amiscalculation of such amount shall be paid within sixty (60) days after the delivery of thedetailed written accountants’ report to Purchaser. To the extent that the results of any auditconducted by Seller discloses an underpayment of the Purchase Price by Purchaser to Seller by anamount equal to or exceeding ten percent (10%) for the period in question, then the costs of theaudit shall be borne by Purchaser and Purchaser shall remit such costs within thirty (30) days ofthe presentment of an invoice.          3.6.2 Seller shall keep accurate books and records for purposes of documenting the DeliveryPrice. Said books of account shall be kept at Seller’s principal place of business. Upon at leastthirty (30) days prior written notice given on or before June 30th of each calendar year,Purchaser, at its expense, shall have the right to have Purchaser’s independent public accountants(reasonably acceptable to Seller) obtain access to Seller’s financial records for the previouscalendar year, during reasonable business hours solely for the purpose of verifying the DeliveryPrice for such previous calendar year; provided, however, that this right may notbe exercised more than once in any calendar year. Seller agrees to reasonably cooperate withPurchaser’s independent public accountants in the conduct of any such audit. Prior to disclosingthe results of any such audit, the auditor shall present Seller with a preliminary report of itsfindings and provide Seller with an opportunity to respond to any questions raised or issuesidentified; provided, however, that Purchaser shall receive the audit report as originallysubmitted by independent public accountants along with Seller responses thereto to the extent suchresponses are given pursuant to questions raised in an audit and to the extent that the responsesare material to resolving the audit. Purchase shall solicit or
 

 
receive only information relating to the accuracy of such calculations and shall deliver toSeller a detailed written accountants’ report (setting forth, among other things, themiscalculations, if any, identified by the audit) within thirty (30) days of completion of theaudit. If Purchaser does not submit a dispute in regards to Delivery Price so audited withinforty-five (45) days of Purchaser’s receipt of the audit report, then the Delivery Price asoriginally reported by Seller shall be deemed to have been accepted and agreed to by Purchaser andshall be binding. Purchaser shall ensure that Purchaser’s independent public accountants maintainthe confidentiality of Seller’s Confidential Information on terms no less restrictive than thoseset forth in Section 13. Such accountants shall report to Purchaser only the results of theverification. Except in the event of a bona fide dispute, any underpayment or overpaymentof the Purchase Price due to a miscalculation of such amount shall be paid within sixty (60) daysafter the delivery of the detailed written accountants’ report to Seller. To the extent that theresults of any audit conducted by Purchaser discloses an overpayment of the Delivery Price byPurchaser to Seller by an amount equal to or exceeding ten percent (10%) for the period inquestion, then the costs of the audit shall be borne by Seller and Seller shall remit such costswithin thirty (30) days of the presentment of an invoice.**SECTION 4****FORECASTS, ORDERS**     4.1 **Forecasts and Orders**. The initial forecast for the Products will be a 24-monthnon-binding forecast of demand for each Product after the Effective Date for capacity planningpurposes, and is attached as Exhibit D. Purchaser shall submit to Seller a purchase orderfor the initial six (6) months of the initial forecast within five (5) days of the Start Date ofthis Agreement. Within five (5) days after the beginning of each calendar quarter during the Termof this Agreement, Purchaser shall provide Seller with a written rolling forecast of Purchaser’sexpected requirements for the Products during the following twelve (12) months. The first six (6)months of each such forecast shall be binding; and the amounts set forth for each of the followingtwo (2) calendar quarters shall constitute a non-binding, good faith estimate of the Productrequirements of Purchaser for such period for planning purposes only. Seller shall be required tomanufacture and deliver to Purchaser such quantities of Products as Purchaser orders in anycalendar quarter up to 125% of the quantity forecast for such calendar quarter in the immediatelypreceding binding forecast. Seller shall use reasonable commercial efforts to manufacture, or havemanufactured, and deliver to Purchaser any quantities of Product Purchaser orders in excess of 125%of the quantity forecasted for such calendar quarter, but shall be under no obligation to provideto Purchaser any quantities of Product which exceed 125% of the quantity forecasted for suchcalendar quarter. If Seller becomes aware of any circumstances that may cause Seller to default onits obligation to deliver such quantities of Product as Purchaser orders or to fail to supplyquantities of Product in accordance with Purchaser’s forecasts for any calendar quarter, Sellershall give Purchaser prompt written notice describing such circumstances, together with a proposedcourse of action to remedy such failure. In the event of a significant change in marketconditions, significant new competitive factors and/or new key customer demands, the parties agreeto negotiate in good faith on appropriate changes to such forecasts.     4.2 **Orders**. Purchaser shall submit binding written or electronic purchase orders forProduct (or by any other means agreed to in writing by the parties) to Seller, which shall beplaced at least one hundred eighty (180) days prior to the desired date of delivery, and whichbinding orders shall comply with the binding forecasts set out in Section 4.1. Purchaser shallhave no minimum purchase requirements of Products during the Term of this Agreement. Purchaseorders shall be submitted by Purchaser to Seller in accordance with previously agreed upon deliverymechanisms.
 

 
     4.3 **Conflicts**. To the extent of any conflict or inconsistency between this Agreementand any purchase order, purchase order release, confirmation, acceptance or any similar document,the terms of this Agreement shall govern.     4.4 **Capacity Allocation**. In the event that Seller’s inability (including withoutlimitation any inability as a result of a Force Majeure Event) to meet firm orders, in whole or inpart, is due to a shortage of production capacity or common raw materials, Seller shall promptlynotify Purchaser in writing of such shortage of production capacity or common raw materials, and,if possible, the date such shortage of production capacity or common raw materials is expected toend. In such event, Seller shall allocate its available production capacity or raw materials tothe production of the Products in such proportion (expressed as a function of equipment utilized)as the production equipment capacity or common raw materials actually utilized to meet orders forthe Products over the previous six (6) month period bears to total production equipment capacitywhich is set up to manufacture the Products in such facility(ies) over that same period.     4.5 **Short Orders; Alternative Sources of Equivalent Products**. In the event thatSeller fails (for any or no reason including without limitation any Force Majeure Event) to deliverall or any portion of an order of Product to Purchaser in accordance with the terms of thisAgreement, Seller shall promptly notify in writing Purchaser of such fact. In addition to anyother rights and remedies available to Purchaser, Purchaser shall have the right, but not theobligation, to modify any outstanding purchase order.**SECTION 5****SPECIFICATIONS**     5.1 **Specifications**.          5.1.1 Attached as Exhibit A to this Agreement are the Specifications for each of theProducts. The Specifications for each Product shall not be changed except as permitted under thisAgreement.          5.1.2 The attached Exhibit A also reflects the current Packaging for each Product.The parties agree to cooperate in good faith with respect to any changes to the Packaging of theProduct with the Party requesting any changes to the Packaging bearing the development costs (e.g.artwork or package design) of such changes.     5.2 **Changes**.          5.2.1 From time to time during the Term of this Agreement, either Party may submit to theother written proposals for the adoption, implementation or development of any change, improvementor modification to the Product. If such change is proposed by Seller, such change may beimplemented by Seller after consultation with Purchaser (but without requiring Purchaser’s consent)so long as such change does not negatively impact the safety or efficacy of the Products, ormaterially increase Purchaser’s liability with respect to the Products (any such change hereinafterreferred to as a “Material Change”). If such change is a Material Change, Seller shall not bepermitted to make such change without the prior written consent of Purchaser, such consent not tobe unreasonably withheld or delayed, and subject to the provisions of Sections 5.2.2 and 5.2.3below. The Specifications shall be modified to reflect any such changes. In the event of anychange, Seller shall establish an appropriate qualification protocol, and Purchaser and Sellershall determine an appropriate inventory level for the pre-change Product in order to coveron-going requirements
 

 
during the qualification process. The foregoing shall not preclude Seller from implementingprocess changes or other manufacturing related changes so long as such changes do not materiallyalter the Specifications.          5.2.2 In the event that Seller is required to change the Product Specifications pursuant toapplicable law, rule, or regulation or in response to the order of a governmental authority orregulatory body, Seller shall promptly advise Purchaser in writing of any such change, as well asany scheduling adjustments which may result from such change.          5.2.3 In addition to the changes under Section 5.2.2, Purchaser shall also have the right torequest that a change be made to the Specifications at its expense and upon prior written notice toSeller. Seller shall not be required to make any such change but shall consider Purchaser’srequest in good faith.          5.2.4 In order for Purchaser to include in any Product Label or Labeling Purchaser Trademarksor similar changes indicating Purchaser as the distributor of such Product, upon Purchaser’srequest, Seller shall provide Purchaser the Label artwork and text in electronic format. Purchasershall update such artwork and text to include Purchaser Trademarks and such other similar changesas desired by Purchaser to indicate Purchaser as the distributor of such Product; provided thatSeller shall not be required to accept such changes if such changes do not comply with the NDAunder which the Product is to be sold and distributed and all applicable laws, rules andregulations. Purchaser shall make all necessary arrangements, at its expense, to have such changedLabels or Labeling printed and shall provide to Seller printer’s proofs for Seller’s review andapproval. Except with respect to the use of Purchaser’s Trademarks and supplied artwork, Sellershall be responsible for ensuring the accuracy of all information contained on all Labels andLabeling for the Products and for the compliance of all such Labels and Labeling with the NDA underwhich such Products are to be sold and distributed and applicable law. In accordance with theforegoing, Seller shall, within ten (10) business days of receipt of said printer’s proofs, providewritten notice to Purchaser of Seller’s approval of such proofs in the form submitted by Purchaseror with such corrections thereto as included in Seller’s notice.     5.3 **Quality Requirements**. The Seller shall, and shall cause any third partymanufacturer to, materially comply with the quality requirements set forth on Exhibit Eattached hereto (the “Quality Requirements”), with respect to the manufacture of the Product. Tothe extent that any inconsistencies or conflicts exist between Exhibit E and thisAgreement, the stipulations and provisions in this Agreement shall prevail.     5.4 **Trademarks**.          5.4.1 All trademarks, trade names (if needed) and packaging graphics (collectively, the“Purchaser Trademarks”) used by Purchaser in connection with the Products shall be chosen byPurchaser in its discretion. Purchaser shall be responsible for any and all liabilities which mayarise from Purchaser’s use of the Purchaser Trademarks. Unless required by applicable law orregulation or unless otherwise agreed to by the parties, Purchaser shall not use a trademark, tradename, or copyright of Seller in connection with the distribution, marketing, promotion or sale ofthe Products; to the extent that Purchaser believes that it shall or must use a trademark, tradename or copyright of Seller, Seller shall be provided with advance notice of Purchaser’s intentionto do so and Seller must consent prior to any such use by Purchaser, such consent not to beunreasonably withheld; provided, however, that Purchaser may use Seller’s trademarks, trade namesand copyright as contemplated under Section 14.1 and in Purchaser’s advertising and promotionalmaterials in order to, among other things, identify the Products as comparable to Seller’s brandversion product and to identify Seller as
 

 
the owner of Seller’s trademark used with its brand version product (e.g., “OxandroloneTablets– Compare to Oxandrin®. Oxandrin® is a registered trademark of Savient Pharmaceuticals,Inc.”). For the purpose of clarity, any use of Seller’s trademarks, trade names and/or copyrightpursuant hereto shall be made only with the prior written approval of Seller as to the specific usethereby contemplated.          5.4.2 Use of Purchaser Trademarks by Seller shall be solely for the purpose of preparing andPackaging the Products for sale to Purchaser. Purchaser hereby grants a limited license on anon-exclusive basis to Seller hereunder to use the Purchaser Trademarks in accordance with theterms of this Agreement. Any and all Products supplied hereunder are for sale only to Purchaserfor distribution by Purchaser. Seller will not, at any time in any manner, represent that it hasownership in any Purchaser Trademarks and acknowledges that it has no ownership interest in anyPurchaser Trademarks nor will Seller grant a sublicense to any third party to use such PurchaserTrademarks. Upon expiration or earlier termination of this Agreement, Seller will cease and desistuse of any Purchaser Trademark in any way.     5.5 **Certificate of Analysis; Certificate of Compliance**. Each shipment of the Productsto Purchaser shall be accompanied by a certificate of analysis prepared by an authorizedrepresentative of Seller, including where applicable a third party manufacturer, confirming thatthe Products in the shipment have been tested and shown to be in accordance with the Specificationsfor such Products. Such certificates of analysis and certificates of compliance shall besubstantially in the form set forth in the Quality Requirements.     5.6 **Expiry Dating**. Except for Products which comprise the Existing Inventory whichare addressed in Section 2.2.4, all Products shipped to Purchaser, at the time of shipment bySeller, shall have no less than [ ** ] months expiry dating remaining for the 2.5mgProduct and no less than [ ** ] months expiry dating remaining for the 10mg Product.Purchaser shall notify Seller in the event a Product has [ ** ] months or less datingremaining, and within thirty (30) days of receipt of such notice Purchaser shall deduct from thenext quarterly payment owing to Seller [**] percent ([**]%) of the amount actually paid to Sellerfor such Product. For all deliveries consisting of Existing Inventory, at the time of shipment bySeller, such Products shall have no less than [ ** ] months expiry dating remaining. AtSeller’s option and sole expense, Purchaser shall (a) destroy such Product, or (b) return suchProduct to Seller.     5.7 **Stability Testing**. Seller shall maintain a stability testing program for theProducts and provide Purchaser with an annual product report thereon. In the event that anyresults from such program could indicate that Product would not meet its expiry date, Seller shallpromptly notify Purchaser. At least one (1) batch per year of each Product (or its brandedequivalent), or as otherwise required by the NDA, shall be included in the stability program.     5.8 **Annual Report**. Purchaser will supply distribution information and other requiredinformation to Seller for the purposes of inclusion into the Annual Report to FDA and shall providesuch information in a timely manner so as to enable Seller to file the Annual Report in accordancewith applicable regulations. To the extent that Seller requests additional information fromPurchaser, Purchaser agrees to reasonably cooperate with Seller.
 

 
**SECTION 6****TERM**     6.1 **Term**. The term of this Agreement shall commence on the Effective Date and remainin effect for each Product hereunder for a period of ten (10) years from the Start Date for suchProduct (the “Initial Term”), unless sooner terminated as expressly provided under the terms ofthis Agreement. This Agreement will automatically renew for successive two-year periods followingthe Initial Term (each, a “Renewal Term”), unless terminated prior to the expiry of the InitialTerm or any Renewal Term by either Party confirmed in writing and delivered at least twelve (12)months prior to the expiration of the Initial Term or the Renewal Term to which it relates (theInitial Term, together with any Renewal Terms, the “Term”). The distribution term for Productshall become effective as of the date upon which Seller supplies and Purchaser actually receivesthe Launch Quantities of Product (the “Distribution Term”) and shall remain in effect until the endof the Term unless sooner terminated as expressly provided under the terms of this Agreement.**SECTION 7****TERMINATION**     7.1 **Termination for Convenience**. Each of Seller or Purchaser may terminate thisAgreement in its sole discretion (and without any liability to the other for such termination),with respect to any Product, at any time on or after the fourth (4th) anniversary of the Start Dateof such Product upon no less than one (1) year prior written notice to the other, which priorwritten notice, if any, shall be delivered on or after such fourth (4th) anniversary of such StartDate.     7.2 **Breach**. This Agreement may be terminated, on a Product by Product basis, prior tothe expiration of the Term, by either Party by giving written notice of its intent to terminate andstating the grounds therefor if the other Party shall materially breach or materially fail in theobservance or performance of any representation, warranty, guarantee, covenant or obligation underthis Agreement. The Party receiving the default notice shall have sixty (60) days from the date ofreceipt thereof to cure the breach or failure. If a breach is not curable within such sixty (60)day period (other than a failure to supply Product in accordance with the terms of this Agreement),then the non-performing Party shall have an additional sixty (60) days within which to cure suchbreach so long as the non-performing Party is diligently working towards a remedy for such breach.In the event such breach or failure is cured in accordance with the provisions of this Section 7.2,the default notice shall be of no effect. In the event such breach or failure is not cured inaccordance with the provisions of this Section 7.2, then this Agreement shall terminate without therequirement of the non-defaulting Party providing any additional notice to the defaulting Party.     7.3 **Insolvency, Etc**. This Agreement may be terminated, prior to the expiration of theTerm, upon written notice by either Party: (i) in the event that the other Party hereto shall (1)apply for or consent to the appointment of, or the taking of possession by, a receiver, custodian,trustee or liquidator of itself or of all or a substantial part of its property, (2) make a generalassignment for the benefit of its creditors, (3) commence a voluntary case under the United StatesBankruptcy Code, as now or hereafter in effect (the “Bankruptcy Code”), (4) file a petition seekingto take advantage of any law (the “Bankruptcy Laws”) relating to bankruptcy, insolvency,reorganization, winding-up, or composition or readjustment of debts, (5) fail to controvert in atimely and appropriate manner, or acquiesce in writing to, any petition filed against it in anyinvoluntary case under the Bankruptcy Code, or (6) take any corporate action for the purpose ofeffecting any of the foregoing; or (ii) if a proceeding or case shall be commenced against theother Party hereto in any court of competent
 

 
jurisdiction, seeking (1) its liquidation, reorganization, dissolution or winding-up, or thecomposition or readjustment of its debts, (2) the appointment of a trustee, receiver, custodian,liquidator or the like of the Party or of all or any substantial part of its assets, or (3) similarrelief under any Bankruptcy Laws, or an order, judgment or decree approving any of the foregoingshall be entered and continue unstayed for a period of 60 days; or an order for relief against theother Party hereto shall be entered in an involuntary case under the Bankruptcy Code.     7.4 **Failure to Supply**. In the event that Seller supplies less than (i) [**] percent ([**]%) of theaggregate quantity of Purchaser’s for Product for any two (2) out of three (3) consecutive calendarmonths or (ii) [**] percent ([**]%) of the aggregate quantity of Purchaser’s for Product for any four (4) out ofsix (6) consecutive calendar months, then Purchaser shall have the right to terminate thisAgreement immediately by providing written notice to Seller of such termination.     7.5 **Gross Margin Deficiency**. If the aggregate Gross Margin in any period of three (3)consecutive months is less than [**] percent ([**]%) of the aggregate Finished Product Price during suchthree-month period (the amount by which the Gross Margin is less than [**] percent ([**]%) of the aggregatePurchase Price is referred to herein as the “Gross Margin Deficiency”), then either Partymay thereafter terminate this Agreement with sixty (60) days prior written notice to the otherParty; *provided, however*, that in the event such termination notice is delivered by Seller suchnotice shall be deemed rescinded and shall be of no force or effect if, within ten (10) businessdays after receipt thereof, Purchaser pays to Seller an amount in cash equal to the Gross MarginDeficiency. For avoidance of doubt, in the event that Purchaser provides notice of its intention toterminate this Agreement pursuant to this Section 7.5, Purchaser shall nonetheless remain obligatedto purchase any outstanding binding order quantities.     7.6 **Other Termination**. Purchaser shall have the right but not the obligation, toterminate this Agreement with respect to any Product if the Start Date for such Product does notoccur on or before January 1, 2009. In the event Purchaser terminates the Agreement pursuant tothis Section, Seller shall promptly refund to Purchaser the amount paid to Seller for any quantityof such Product on-hand at the time of such termination and Purchaser shall return all quantitiesof Product on-hand to Seller.     7.7 **Transaction Event**. Notwithstanding any other term of this Agreement, if, duringthe Term, Purchaser enters into an agreement (an “Acquisition Agreement”) pursuant to whichit becomes an affiliate of an entity that develops, manufactures, markets or sells an EquivalentProduct, and provided that the primary purpose of the Acquisition Agreement was for something otherthan acquiring rights to an Equivalent Product, Purchaser shall have the right to terminate thisAgreement with ninety (90) days’ prior written notice of such termination to the Seller. IfPurchaser exercises its rights under this Section 7.7, then beginning on the effective date of suchtermination (the “Termination Date”), through the shorter of (a) the date that would havebeen the natural expiration date of the Initial Term or the then current Renewal Term but for suchtermination or (b) the date upon which the Agreement could have been terminated in accordance withSection 7.1 hereof (i.e. one (1) year subsequent to the provision of notice following the fourth(4th) anniversary of the Effective Date), (in either case, such period, the“Remainder Period”), Purchaser shall:          7.7.1 where there exists two complete calendar quarters of sales of Product in accordance withthis Agreement, make quarterly payments to Seller equal to [**]% of the average quarterly GrossMargin of the two calendar quarters immediately preceding the quarter in which Purchaser providedsuch notice of termination.          7.7.2 in the event the Termination Date occurs prior to the completion of two (2) quarters ofsales of Product in accordance with this Agreement, amounts which are the product of the
 

 
following formula: (a) the average quarterly netsales of Seller’s branded version of theProduct for the two (2) most recent quarters prior to the effective date of such termination, times(b) the assumption on unit substitution rate of [**]percent ([**]%), times (c) the assumption of captured marketshare at [**] percent ([**]%), times (d) the pricing assumption of [**] percent ([**]%) of net selling price, less (e) cost ofgoods sold for the average quarterly net sales of Seller’s branded version of the Product for thetwo (2) most recent quarters prior to the effective date of such termination, the product thereoftimes (f) [**] percent ([**]%);          7.7.3 In both cases of 7.7.1 and 7.7.2 above, such amount shall be reduced by any amountsearned by or paid to Seller by a third party in connection with the sale of the Product during theRemainder Period.The remedies set forth in this Section 7.7 set forth Seller’s sole and exclusive remedy in theevent Purchaser enters into an Acquisition Agreement.     7.8 **Intervening Equivalent Product Launch**. In the event that an Equivalent Productbecomes commercially available, where such Equivalent Product is manufactured and sold byunaffiliated third party or parties, prior to the receipt by Purchaser of the Launch Quantity ofProduct, then Seller shall have the right to terminate this Agreement immediately upon theprovision of written notice to Purchaser; provided, however, that Seller shall promptly reimbursePurchaser for any (i) payments made to Seller by Purchaser prior to such termination and (ii)reasonable out-of-pocket costs incurred by Purchaser as a result of such termination.     7.9 **Effect of Termination**.          7.9.1 Subject to Section 7.9.3, upon expiration or termination of this Agreement, Seller shallmanufacture and ship, and Purchaser shall purchase from Seller in accordance with the terms andconditions of this Agreement, any and all amounts of Products ordered by Purchaser hereunder priorto the effective date of such expiration or termination.          7.9.2 Termination of this Agreement for any reason shall be without prejudice to any rightsthat have accrued to the benefit of either Party prior to such termination and shall not releaseeither Party hereto from any liability which at such time has already accrued or which thereafteraccrues from a breach or default prior to such expiration or termination, nor affect in any way thesurvival of any other right, duty or obligation of either Party hereto which is expressly statedelsewhere in this Agreement to survive such termination. In the case of a termination underSection 7.2 above, the non-defaulting Party may pursue any remedy available in law or in equitywith respect to such breach, subject to the terms of Sections 15, 16 and 17.          7.9.3 In the event that Purchaser terminates this Agreement pursuant to Section 7.2 forSeller’s failure to cure a material breach of this Agreement, Purchaser shall not be obligated toaccept shipments of Product regardless of whether such Products were manufactured pursuant to FirmOrders submitted by Purchaser. In the event that Seller terminates this Agreement pursuant toSection 7.2 for Purchaser’s failure to cure a material breach of this Agreement, Seller shall havethe right to cease the manufacture Product and cancel all shipments of Product to Purchaserregardless of whether such Products were manufactured pursuant to Firm Orders submitted byPurchaser.          7.9.4 For a period of five (5) years from the date of any termination orexpiration of the Agreement Purchaser shall, initially no later than sixty (60) days after thesix-month anniversary of the end of the calendar quarter within which the Agreement terminated orexpired, and quarterly thereafter, prepare and deliver to Seller a reasonably detailed report(each, a “Gross Margin Report”), of the cumulative Gross Margin from the Effective Date through theend of the period covered by the Gross Margin Report which reconciles (i) previously estimatedamounts of Gross Margin with (ii) actual
 

 
experience for the period covered by the Gross Margin Report (the difference, if any, the“Reconciled Amount”). If the Gross Margin Report shows a positive adjustment to Gross MarginPurchaser shall pay to Seller [**] percent ([**]%) of the Reconciled Amount within fifteen (15) days of Seller’sreceipt of the Gross Margin Report. If the Gross Margin Report shows a negative adjustment toGross Margin Seller shall pay to Purchaser [**] percent ([**]%) of the Reconciled Amount within fifteen (15) daysof Seller’s receipt of the Gross Margin Report.     7.10 **Survival**. Sections 1, 3.4, 3.5, 5.7, 7.9, 7.10, 13, 15, 16, 17 and 18 aswell as any other provision which by its clear language is intended to survive, shall survive theexpiration or earlier termination of this Agreement in accordance with the respective termsthereof.**SECTION 8****DELIVERY; INVENTORY**     8.1 **Delivery**. All charges for in-process storage, Packaging and bar coding areincluded in the Purchase Price unless otherwise agreed to by the parties. Seller shall not beresponsible for warehousing finished goods for Purchaser and Seller shall ship all finished goodsto Purchaser FCA (Incoterms 2000) Seller’s premises. All shipments must be accompanied by apacking slip that describes the articles, states the purchase order number and shows the shipment’sdestination. Deliveries of Products shall be made in accordance with the delivery schedule setforth in the purchase orders provided in compliance with Section 4.2. For the avoidance of doubt,Seller shall not make deliveries of Products in advance of the delivery schedule set forth in suchpurchase orders without the prior written approval of Purchaser.     8.2 **Shipment**. The risk of loss with respect to Products shall be with Purchaser inaccordance with the relevant provisions associated with the FCA (Incoterms 2000) delivery terms.Seller will pack all Products ordered hereunder in a manner suitable for shipment and sufficient toenable the Products to withstand the effects of shipping, including handling during loading andunloading. Purchaser shall use its Commercially Reasonable Efforts to notify Seller within one (1)business day of Purchaser’s discovery of any lost or stolen goods to facilitate Seller’snotification of the FDA.**SECTION 9****DEFECTIVE PRODUCTS**     9.1 **Rejection and Cure**. If a shipment of Product or any portion thereof has a PatentDefect or Latent Defect, then Purchaser shall have the right to reject such nonconforming shipmentof Product or the nonconforming portion thereof, as the case may be, in accordance with thefollowing:          9.1.1 Purchaser shall give written notice to Seller of its rejection hereunder, within thirty(30) days after Purchaser’s receipt of shipment of any Product containing a Patent Defect,specifying the grounds for such rejection. After receipt of such notice from Purchaser, Sellershall be permitted to analyze any Product rejected by Purchaser for nonconformity, and to presentits findings with respect to such Product to Purchaser. If the parties cannot agree on whether theProduct in question is nonconforming, an independent laboratory, reasonably acceptable to bothparties and at a cost equally shared by both parties, shall analyze both Purchaser’s and Seller’ssamples of Product in question, and the definitive results of such laboratory shall be binding. Ifthe shipment of Product in
 

 
question is determined to be nonconforming, such nonconforming Product shall be held forSeller’s disposition, or shall be returned to Seller, in each case at Seller’s expense, as directedby Seller. Seller shall use its Commercially Reasonable Efforts to replace each nonconformingshipment of Product, or the nonconforming portion thereof, with conforming Product as soon asreasonably practicable after receipt of notice of rejection thereof, and in any event shall do sowithin thirty (30) days after receipt of notice of rejection thereof. If and to the extent that thenominated independent laboratory determines that the rejected Product is conforming, and to theextent that Seller has replaced such rejected Product with additional Product, then Purchaser shallbe responsible for the Delivery Price for both the allegedly nonconforming Product and for thereplacement Product.          9.1.2 As soon as either Party becomes aware of a Latent Defect in any Product lot, it shallimmediately notify the other Party and the batch involved, at Purchaser’s election, shall be deemedrejected as of the date of such notice. Seller shall refund all moneys paid for the shipment ofProduct involved and shall reimburse Purchaser for its costs of accepting returns from itscustomers and shall be responsible for all costs reasonably incurred by Purchaser in recallingProduct that have Latent Defects.**SECTION 10****REGULATORY MATTERS**     10.1 **Reporting; Etc**. Purchaser shall have the responsibility in the Territory forcomplying with all regulatory filings, reporting requirements and other matters which relate solelyto Purchaser’s acting as a distributor of the Product in the Territory. All other regulatoryreporting matters (including adverse event and Product complaint reporting) shall be Seller’sresponsibility. Each of Seller and Purchaser shall notify the other of receipt of any report(s) ofadverse events or product complaints pursuant to Exhibit C. Exhibit C sets forthadditional details with respect to the handling of adverse event reporting.     10.2 **FDA Communications**. Purchaser and Seller agree to promptly notify the otherParty in the event they receive any communication or notice from the FDA with respect to theProducts, and each Party shall promptly provide a copy of such communications to the other. Theparties shall cooperate in good faith in responding to any such FDA inquiry or in making any reportto the FDA with respect to the Products, but in all cases Seller shall have final authority forregulatory decisions concerning the Products and responsibility for all communications with theFDA. Notwithstanding the foregoing, to the extent any such communication or decision relatessolely to the Products (and not Seller’s branded version of the Products), then Seller shall notmake such communication or decision without the prior written consent of Purchaser, such consentnot to be unreasonably withheld or delayed.     10.3 **Audits**. Purchaser shall have the right, at Purchaser’s sole expense, to auditSeller, during normal business hours, upon written notice to Seller in accordance with the terms ofthe Quality Requirements set forth in Exhibit E hereto, and Seller’s facilities anddocuments, which relate to the manufacture, processing, Packaging, testing or storage of a Product.Purchaser shall have the right to conduct such audit no more than one (1) time per calendar year;provided, however, that in the event Purchaser has identified any substantive,material quality issue, then Purchaser shall be entitled to such reasonable number of additionalfollow-up audits as may be needed to confirm the steps taken to rectify such issue. In no eventshall an audit of a particular facility exceed two (2) days in duration or involve more than three(3) representatives of Purchaser unless mutually agreed in writing by the parties. Suchinspections and audits hereunder shall be carried out in a manner that does not unreasonablyinterfere with the normal conduct of business. Any such representatives shall
 

 
be reasonably qualified in terms of auditing skill to conduct audits and shall comply withSeller’s normal company policies and with security and safety regulations. Any third partyrepresentatives conducting such audits shall execute a written agreement to maintain in confidenceall information obtained during the course of any such audit except for disclosure to Purchaser.In addition, Seller shall audit any unaffiliated third party manufacturer for compliance on aperiodic schedule and to the extent permitted pursuant to the terms of any agreement between Sellerand such unaffiliated third party manufacturer, shall promptly provide Purchaser a copy of suchaudit report. Seller shall use best efforts to obtain the consent of any third party manufacturerfor Purchaser to participate in, or to conduct on its own, audits as contemplated in this section.Notwithstanding the foregoing, any failure by Seller to obtain such third party consent shall notbe considered a breach of this Agreement.     10.4 **Audit Feedback**. Within thirty (30) days of completing any audit hereunder,Purchaser shall submit to Seller (and the third party manufacturer, if applicable) a writtenreport outlining its findings and/or observations from any such audit. If deficiencies arediscovered during an audit that could, in Purchaser’s opinion, prevent Seller or the third partymanufacturer from satisfying the requirements of cGMP, and Seller or the third party manufacturerin good faith disputes the observations or conclusions of Purchaser, then the Parties shallpromptly enter into good faith discussions to resolve their differences. If the Parties fail toresolve their differences within thirty (30) days after receipt of the audit report, then theparties shall resolve their differences in accordance with Section 17.1 hereto; provided,however, that Purchaser shall not be prohibited from taking any action applicable toPurchaser that it is required to take under applicable law. If Seller (or the third partymanufacturer, as the case may be) does not dispute the observations made during any audit it shalluse its Commercially Reasonable Efforts to correct those deficiencies at its own cost, and shallnotify Purchaser in writing when those deficiencies are corrected.     10.5 **Recalls**. Seller and Purchaser each shall notify the other promptly if any batchof Product purchased by Purchaser pursuant to this Agreement is the subject of a recall or marketwithdrawal, and the Parties shall cooperate in the handling and disposition of such recall ormarket withdrawal; *provided, however*, in the event of a disagreement as to any matters related tosuch recall or market withdrawal, other than the determination of who shall bear the costs as setforth below, Seller shall have the final authority with respect to any Product recall.Notwithstanding the foregoing, Purchaser shall not be restricted from taking any action whichPurchaser believes in good faith after consultation with its legal counsel is required by law orregulation; *provided, however*, that nothing in this section shall relieve Purchaser from anyliability associated with a Purchaser initiated voluntary recall of Product that is subsequentlydetermined, in accordance with the provisions of Section 17.2, to have been in error. Purchasershall bear the cost of all recall or market withdrawals of Product purchased by Purchaser pursuantto this Agreement unless such recall or market withdrawal shall have been the result of (i)Seller’s failure to manufacture, Package or Label the Product in accordance with the requirementsof this Agreement, or the failure of the Product to meet the Specifications, or (ii) Seller’sbreach of any of its obligations or warranties set forth in this Agreement, in which case Sellershall bear the cost of such recall or market withdrawal. Purchaser shall maintain records of allsales of Product and customers sufficient to adequately administer a recall or market withdrawalfor the longer of three (3) years after the date of the last sale of the Product by Purchaser orthe period required by applicable law. Purchaser shall, in all events and regardless of who bearsthe cost, be responsible for administrating the physical aspects of any recalls or marketwithdrawals with respect to the Products. For the avoidance of doubt, Product returns relating toa recall or market withdrawal will be deducted from Net Sales.
 

 
     10.6 **Batch Records**. Batch records, including information relating to themanufacturing, Packaging, and quality control testing and analysis for each lot of finished Productproduced hereunder, will be prepared in accordance with Seller’s standard operating procedures.Batch records and all other records relating to production hereunder shall be retained by Sellerfor such period of time as is required under applicable rules and regulations of the FDA. In theevent (i) Seller receives a regulatory letter or comments from any federal agency in connectionwith its manufacture of the Product or the facility where the Product is manufactured requiring aresponse or action by Seller, or the third party manufacturer, including, but not limited to,receipt of a Form 483 (Inspectional Observations) or a “Warning Letter,” or (ii) any batch ofProduct purchased by Purchaser pursuant to this Agreement is the subject of a recall or marketwithdrawal (each of (i) and (ii) a “For Cause Incident”), promptly following Purchaser’s priorwritten request therefore, Seller make available to Purchaser, at Seller’s premises during businesshours, a complete copy of an executed batch record for each SKU of Product associated with such ForCause Incident. Additionally, Seller shall, upon Purchaser’s written request in connection withany Audit, and to the extent applicable, make available for review by Purchaser during the courseof such Audit, updates to the process validation report and equipment cleaning validation for eachProduct. All records made available to Purchaser hereunder shall be considered highly confidentialmaterials of Seller and may not be used by Purchaser for any purpose other than the furtherance ofthe purposes of this Agreement.     10.7 **Adverse Events**. The parties respective obligations with respect to Productadverse event reporting are set forth in Exhibit C attached hereto.     10.8 **Medical Information Inquiries**. All requests for medical information for Productwill be directed back to the Seller for follow up. After the Effective Date, the Medical Affairsgroups of Purchaser and Seller shall discuss and agree upon procedures for the handling andtransfer of the inquiries.     10.9 **Labeling and Packaging**. The parties’ respective responsibilities with respect toLabeling and Packaging are set forth on Exhibit F attached hereto.     10.10 **Inspections**.          10.10.1 In the event Seller’s, or a third party manufacturer’s, manufacturing, packaging,testing or storage facility producing the Products hereunder is inspected by representatives of anyfederal agency in connection with Seller’s, or a third party manufacturer’s, manufacture,packaging, testing or storage of a Product, Seller shall notify Purchaser promptly upon learning ofsuch inspection, and shall promptly supply Purchaser with copies of any correspondence or portionsof correspondence which relate to such Product or the facility where such Product is manufactured;provided, however, that Seller shall not be obligated to provide any documents which would violateany agreement existing between Seller and any third party manufacturer. In the event Seller, or athird party manufacturer, receives any regulatory letter or comments from any federal agency inconnection with its manufacture of the Product or the facility where the Product is manufacturedrequiring a response or action by Seller, or the third party manufacturer, including, but notlimited to, receipt of a Form 483 (Inspectional Observations) or a “Warning Letter,” (a) Sellershall promptly provide Purchaser with a copy of such regulatory letter or comments, and (b)Purchaser will provide Seller with any data or information reasonably required by Seller inpreparing any response relating to Seller’s manufacture of the Product, and Purchaser willcooperate with Seller in preparing such response, and Seller will promptly provide Purchaser with acopy of any such response; provided, however, that Seller shall not be obligated to provide anydocuments which would violate any agreement existing between Seller and any third partymanufacturer.
 

 
          10.10.2 In the event Purchaser is inspected or receives a regulatory letter or comments fromany federal agency in connection to the distribution of the Products, Purchaser shall promptlynotify Seller upon learning of such inspection or receiving such documentation. Seller mayparticipate in that portion of such inspection relating to such Product (and shall be required toparticipate if reasonably requested by Purchaser). If either Seller or Purchaser requests Sellerto participate as described above, Seller and Purchaser shall mutually agree on the response withrespect to such Product and Purchaser shall be responsible for submitting any such responses to theregulatory authorities. Seller will promptly provide Purchaser with all data or informationreasonably required by Purchaser in preparing for any such inspection or any response relating tothe Products, and Purchaser will promptly provide Seller with a copy of any such response.     10.11 **Cooperation**. Seller shall provide reasonable assistance to Purchaser in itspreparation and filing with appropriate regulatory agencies (both federal and state agenciesrelated to reimbursement and health care insurance) of filings required for the marketing, Labeling(if applicable), Packaging (if applicable) and distribution of the Products in the Territory byPurchaser. Seller and Purchaser shall work together in good faith to develop such necessaryregulatory strategies which may be required for purposes of this Agreement, and to allow theProducts to be listed on applicable formularies and other drug listings as reasonably requested byPurchaser, and making any applicable filings or registrations to allow the Products to be includedon such formularies or listings, including, without limitation, Medicare and Medicaid. Inaddition, Seller shall promptly provide to Purchaser copies (in electronic format if available) ofthose materials which Seller currently uses to respond to inquiries regarding the Products fromconsumers and health care professionals.**SECTION 11****FORCE MAJEURE**     11.1 **Force Majeure Events**. If either Party is prevented from performing any of itsobligations hereunder (except for any financial payments due hereunder) due to any cause which isbeyond the non-performing Party’s reasonable control, including fire, explosion, flood, or otheracts of God; acts, regulations, or laws of any government; court injunction or other court order;war or civil commotion; strike, lock-out or labor disturbances; or failure of public utilities orcommon carriers (a “Force Majeure Event”), such non-performing Party shall not be liable for breachof this Agreement with respect to such non-performance to the extent any such non-performance isdue to a Force Majeure Event. Except as set forth below, such non-performance will be excused foras long as such Force Majeure event shall be continuing, provided that the non-performing Partygives immediate written notice to the other Party of the Force Majeure Event. Such non-performingParty shall exercise all reasonable efforts to eliminate the Force Majeure Event and to resumeperformance of its affected obligations as soon as practicable. In the event such Force MajeureEvent continues unabated for a period of ninety (90) days or longer, then the Party which is notsubject to such Force Majeure Event may terminate this Agreement in its entirety or with respect tothe Products affected by the Force Majeure Event upon thirty (30) days prior written notice to theother Party.**SECTION 12****INSURANCE**     12.1 **Insurance****.**Each Party agrees to procure and maintain in full force and effectduring the Term and for a period of three (3) years thereafter, at its sole cost and expenseProducts Liability, General Liability and Property Damage insurance with a combined single limit ofnot less than $10,000,000 per occurrence and $20,000,000 in the aggregate annually, which insurance shall namethe other Party as an
 

 
additional insured. Each Party shall, on request, provide to the other Party copies of acertificate of coverage or other written evidence reasonably satisfactory to such Party of suchinsurance coverage. Either Party may substitute a program of self-insurance for all or part of thethird party insurance required hereunder.**SECTION 13****CONFIDENTIALITY**     13.1 **Confidentiality****.**As used herein, “Confidential Information” shall include allconfidential or proprietary information given to one Party by the other Party, or otherwiseacquired by such Party in its performance of this Agreement, relating to such other Party or any ofits Affiliates, including information regarding any of the products of such other Party or any ofits Affiliates, information regarding its advertising, distribution, marketing or strategic plansor information regarding its costs, productivity or technological advances. Neither Party shalluse or disclose to third parties any Confidential Information of the other (except to comply withits obligations under this Agreement) and each Party shall insure that its and its Affiliates’employees, officers, representatives and agents shall not use or disclose to third parties anyConfidential Information and upon the termination of this Agreement shall return to the other ordestroy all Confidential Information in written form, provided, however, that such Party may retainone (1) copy of such Confidential Information to ensure compliance with the terms of thisAgreement. Confidential Information shall not include information that (i) was already known toreceiving Party at the time of its receipt thereof or is independently developed by receivingParty, as evidenced by its written records, (ii) is disclosed to receiving Party after its receiptthereof by a third party who has a right to make such disclosure without violating any obligationof confidentiality, (iii) is or becomes part of the public domain through no fault of receivingParty or (iv) is independently developed by a Party as evidenced by contemporaneous writtendocumentation. The obligations of confidentiality set out above shall survive termination orexpiration of this Agreement for a period of three (3) years.**SECTION 14****PUBLIC ANNOUNCEMENTS**     14.1 **Public Announcements****.**Neither Party shall make any publicity releases concerningthe terms of this Agreement without the prior written approval of the other Party, which approvalshall not unreasonably be withheld or delayed. Notwithstanding the foregoing, (a) the partiesagree that the form of the Press Release, attached hereto as Exhibit G, shall be publishedon the Start Date, (b) either Party may publish and republish, in whole or in part, any publicityrelease and/or make any statement to communication media, financial analysts or others that is thesame or substantially similar to a publicity release or statement that has been previously approvedby the other Party in accordance with the terms hereof, without obtaining the prior approval ofsuch other Party, and (c) either Party may upon notice to the other make any disclosure in filingswith regulatory agencies or exchanges or as required by law or applicable court order; providedthat the other Party shall have the opportunity to consult on such disclosures and filings.
 

 
**SECTION 15****REPRESENTATIONS AND WARRANTIES**          15.1 **Seller Warranties**. Seller represents and warrants to Purchaser as follows:          15.1.1 all Product supplied in connection with this Agreement shall be manufactured andprovided in accordance and conformity with the Specifications and at time of delivery will be freefrom material defects in materials and workmanship;          15.1.2 all Labeling shall be performed so that the Product shall not be misbranded under anyapplicable laws, rules and regulations.          15.1.3 it shall comply with all present and future statutes, laws, ordinances and regulationsrelating to the manufacture and supply of the Products being provided hereunder, including, withoutlimitation, those enforced by the United States Food and Drug Administration (including compliancewith good manufacturing practices);          15.1.4 to the best of Seller’s knowledge, the manufacture of the Products by Seller does notinfringe any patent of any third party or constitute a misappropriation of the trade secrets orother intellectual property rights of any third party; and          15.1.5 to the best of Seller’s knowledge, neither Seller nor its Affiliates or their employeeshave ever been (i) convicted of a crime for which a person can be debarred under Section 306(a) or306(b) of the Generic Drug Enforcement Act of 1992 or under 42 U.S.C. Section 1320-7 or (ii)sanctioned by, suspended, excluded or otherwise ineligible to participate in any federal healthcare program, including Medicare and Medicaid or in federal procurement or non-procurementprograms.     15.2 **Purchaser Warranties**. Purchaser represents and warrants to Seller as follows:          15.2.1 Purchaser shall discharge its obligations pursuant to this Agreement in accordance withall applicable laws, rules and regulations;          15.2.2 Purchaser is the owner of all Purchaser Trademarks and has the right to license toSeller the Purchaser Trademarks for use in accordance with the terms of this Agreement;          15.2.3 Purchaser shall avoid misleading or deceptive marketing practices in its distribution,marketing, promotion or sale of the Products hereunder;          15.2.4 Purchaser shall use Commercially Reasonable Efforts to actively promote thedistribution and sale of the Product within the Territory so as to maximize Net Sales therein; and          15.2.5 Purchase shall maintain the Product, pending sale to its customers, in a facility thatis properly equipped (including temperature and humidity control) to store such Product.     15.3 **Execution and Performance of Agreement**. Seller and Purchaser each represents tothe other that it has full right, power and authority to enter into and perform its obligationsunder this Agreement. Seller and Purchaser each further represents and warrants to the other thatthe performance of its obligations under this Agreement will not result in a violation or breachof, and will not conflict with or constitute a default under any agreement, contract, commitment orobligation to which such Party or any of its Affiliates is a Party or by which it is bound.
 

 
     15.4 EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, THERE ARE NO OTHER REPRESENTATIONS ORWARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, MADE OR GIVEN BY EITHER PARTY HEREUNDER, INCLUDING,WITHOUT LIMITATION, ANY WARRANTY AS TO MERCHANTABILITY, NONINFRINGEMENT OR FITNESS FOR ANYPARTICULAR PURPOSE.**SECTION 16****INDEMNIFICATION**     16.1 **Indemnification by Seller**. Seller shall indemnify and hold harmless Purchaser(and its Affiliates) from and against any and all damages, liabilities, claims, costs, charges,judgments and expenses (including reasonable attorneys’ fees) (collectively “Damages”) that may besustained, suffered or incurred by Purchaser (or its Affiliates), that result or arise inconnection with (i) any actual or alleged death or bodily injury to any individual arising out ofthe use of the Product sold by Purchaser, including any claim based on failure to warn, designdefect, product defect, strict liability in tort, or otherwise, (ii) the breach by Seller of anywarranty, representation, covenant or agreement made by Seller in this Agreement, (iii) the design,manufacture, Labeling, Packaging or supply of the Products by Seller or its Affiliates hereunder,or (iv) the (negligent or intentional misconduct of Seller or, to the extent related to any actionof an Affiliate in connection with this Agreement, its Affiliates; but excluding in each case abovethose matters for which Purchaser is obligated to indemnify Seller pursuant to Section 16.2 andexcept to the extent that any such Damages are a result of the negligent or intentional actions oromissions on the part of Purchaser.     16.2 **Indemnification by Purchaser**. Purchaser shall indemnify and hold harmless Seller(and its Affiliates) from and against any and all Damages, that may be sustained, suffered orincurred by Seller (or its Affiliates) that result or arise in connection with (i) the breach byPurchaser of any warranty, representation, covenant or agreement made by Purchaser in thisAgreement or (ii) the distribution, marketing, or sale of the Products by Purchaser following theSeller’s delivery of the Products to Purchaser, or (iii) the negligent or intentional misconduct ofPurchaser, or to the extent related to any action of an Affiliate in connection with thisAgreement, its Affiliates, but excluding in each case above those matters for which Seller isobligated to indemnify Purchaser pursuant to Section 16.1 and except to the extent that any suchDamages are a result of the negligent or intentional actions or omissions on the part of Seller.     16.3 **Claims**. Each indemnified Party agrees to give the indemnifying Party promptwritten notice of any matter upon which such indemnified Party intends to base a claim forindemnification (an “Indemnity Claim”) under this Section 16. The indemnifying Party shall havethe right to participate jointly with the indemnified Party in the indemnified Party’s defense,settlement or other disposition of any Indemnity Claim. With respect to any Indemnity Claimrelating solely to the payment of money damages and which could not result in the indemnifiedParty’s becoming subject to injunctive or other equitable relief or otherwise adversely affect thebusiness of the indemnified Party in any manner, and as to which the indemnifying Party shall haveacknowledged in writing the obligation to indemnify the indemnified Party hereunder, theindemnifying Party shall have the sole right to defend, settle or otherwise dispose of suchIndemnity Claim, on such terms as the indemnifying Party, in its sole discretion, shall deemappropriate; provided that the indemnifying Party shall provide reasonable evidence of its abilityto pay any damages claimed and with respect to any such settlement shall obtain the written releaseof the indemnified Party from the Indemnity Claim. The indemnifying Party shall obtain the writtenconsent of the indemnified Party, such consent not to be unreasonably withheld, prior to ceasing todefend, settling or otherwise disposing of any Indemnity Claim if as a result thereof theindemnified
 

 
Party would become subject to injunctive or other equitable relief or the business of theindemnified Party would be adversely affected in any manner.**SECTION 17****DISPUTE RESOLUTION**     17.1 **Executive Resolution**. If any dispute arises between the parties relating to theinterpretation, breach or performance of this Agreement or the grounds for the termination thereof,the parties agree that before submitting such dispute to arbitration as set forth in Section 17.2below, the Presidents (or a designee of senior management level) of each Party shall, for a periodof thirty (30) days after such dispute is formally submitted to either of such Presidents inwriting, attempt in good faith to negotiate a resolution of the dispute. The foregoing shall notbe interpreted to preclude either Party from seeking and obtaining from the appropriate courtprovisional remedies such as attachment, preliminary injunction, replevin, etc. to avoidirreparable harm, maintain the statusquo, or preserve the subject matter of thedispute.     17.2 **Arbitration**. All disputes relating in any way to this Agreement shall beresolved exclusively through arbitration conducted in accordance with the Commercial ArbitrationRule of the American Arbitration Association as then in effect. The arbitration hearing shall beheld in the English language in New York, NY (U.S.) in accordance with the substantive law of theState of New York (without reference to New York’s choice of law rules) and shall be before asingle arbitrator selected by the parties in accordance with the Commercial Arbitration Rule of theAmerican Arbitration Association pursuant to its rules on selection of arbitrators. Any arbitratorselected shall have reasonable experience as an arbitrator of disputes between entities in thepharmaceutical industry. The arbitrator shall render a formal, binding non-appealable resolutionand award on each issue as expeditiously as possible but not more than ten (10) business days afterthe hearing. The prevailing Party in the arbitration shall be entitled to reimbursement of itsreasonable attorneys’ fees, and the parties shall use all reasonable efforts to keep arbitrationcosts to a minimum. The relevant cure periods for breach under this Agreement shall toll whileeither Party pursues in good faith a resolution to a dispute under this Section 17.2.**SECTION 18****MISCELLANEOUS**     18.1 **Relationship of the Parties**. The relationship of Purchaser and Sellerestablished by this Agreement is that of independent contractors, and nothing contained hereinshall be construed to (i) give either Party any right or authority to create or assume anyobligation of any kind on behalf of the other or (ii) constitute the parties as partners, jointventurers, co-owners or otherwise as participants in a joint or common undertaking.     18.2 **Third Party Rights**. Nothing in this Agreement shall be deemed to create anythird party beneficiary rights in or on behalf of any other person.     18.3 **Entire Agreement**. It is the mutual desire and intent of the parties to providecertainty as to their respective future rights and remedies against each other by defining theextent of their mutual undertakings as provided herein. The parties have, in this Agreement(including the Exhibits hereto), incorporated all representations, warranties, covenants,commitments and understandings on which they have relied in entering into this Agreement, and,except as provided for herein, neither Party makes any covenant or other commitment to the otherconcerning its future
 

 
action. Accordingly, this Agreement and the Exhibits hereto (i) constitute the entireagreement and understanding between the parties with respect to the subject matter hereof and thereare no promises, representations, conditions, provisions or terms related thereto other than thoseset forth in this Agreement and (ii) supersede all previous understandings, agreements andrepresentations between the parties, written or oral. No modification, change or amendment to thisAgreement shall be effective unless in writing signed by each of the parties hereto.     18.4 **Headings**. The Article and Section headings contained in this Agreement are forreference purposes only and shall not affect in any way the meaning and interpretation of thisAgreement.     18.5 **Notices**. All notices and other communications hereunder shall be in writing.All notices hereunder of an Indemnity Claim, a Force Majeure Event, default or breach hereunder,or, if applicable, termination or renewal of the term hereof, or any other notice of any event ordevelopment material to this Agreement taken as a whole, shall be delivered personally, or sent bynational overnight delivery service or postage pre-paid registered or certified U.S. mail, andshall be deemed given: when delivered, if by personal delivery or overnight delivery service; orif so sent by U.S. mail, five business days after deposit in the mail, and shall be addressed:       If to Seller: Watson Pharma, Inc.    360 Mount Kemble Avenue    Morristown, NJ, 07962    Attention: President and Chief Operating Officer    Telephone: (973) 355-8550    Fax: (973) 355-8580       With a copy to: Watson Pharmaceuticals, Inc.    311 Bonnie Circle    Corona, CA 92880-2882    Attention: General Counsel    Telephone: (951) 493-5925    Fax: (951) 493-5821       If to Seller: Savient Pharmaceuticals, Inc.    One Tower Center    Fourteenth Floor    East Brunswick, New Jersey 08816    Attention: President    Telephone: (732) 418-4705    Fax: (732) 418-3687       With a copy to: Savient Pharmaceuticals, Inc.    Attn: General Counsel    One Tower Center, 14th Floor    East Brunswick, NJ 08816or to such other place as either Party may designate by written notice to the other in accordancewith the terms hereof.     18.6 **Failure to Exercise**. The failure of either Party to enforce at any time for anyperiod any provision hereof shall not be construed to be a waiver of such provision or of the rightof such
 

 
Party thereafter to enforce each such provision, nor shall any single or partial exercise ofany right or remedy hereunder preclude any other or further exercise thereof or the exercise of anyother right or remedy. Remedies provided herein are cumulative and not exclusive of any remediesprovided at law.     18.7 **Assignment**. This Agreement may not be assigned by either Party without the priorwritten consent of the other, such consent not to be unreasonably withheld, except that eitherParty may assign its rights and/or obligations hereunder to (i) any of its Affiliates, or (ii) anyparty or entity which acquires substantially all of the business or assets of such Party to whichthis Agreement relates if such Party guarantees the performance of the acquiring party and theacquiring party expressly assumes the assigning Party’s obligations hereunder.     18.8 **Severability**. In the event that any one or more of the provisions (or any partthereof) contained in this Agreement or in any other instrument referred to herein, shall, for anyreason, be held to be invalid, illegal or unenforceable in any respect pursuant to a final,non-appealable decision in accordance with the dispute resolution provisions set forth in Section17, then to the maximum extent permitted by law, such invalidity, illegality or unenforceabilityshall not affect any other provision of this Agreement or any other such instrument. Any term orprovision of this Agreement which is so held to be invalid, illegal or unenforceable in anyjurisdiction shall, to the extent the economic benefits conferred by this Agreement to both partiesremain substantially unimpaired, not affect the validity, legality or enforceability of any of theterms or provisions of this Agreement in any other jurisdiction.     18.9 **Counterparts**. This Agreement may be executed in one or more counterparts, eachof which shall be deemed an original, but all of which together shall constitute one and the sameinstrument.     18.10 **Expenses**. Each Party shall pay all of its own fees and expenses (including alllegal, accounting and other advisory fees) incurred in connection with the negotiation andexecution of this Agreement and the arrangements contemplated hereby.     18.11 **Governing Law**. This Agreement shall be governed by the laws of the State ofDelaware without giving effect to any conflict of law provisions or principles.     18.12 **Limitation of Liability****. EXCEPT FOR THE PARTIES’ INDEMNIFICATION OBLIGATIONSUNDER****SECTION 16.1****AND****16.2****, UNDER NO CIRCUMSTANCES WILL EITHER PARTY BE LIABLE FORANY SPECIAL, INCIDENTAL, INDIRECT, PUNITIVE OR CONSEQUENTIAL DAMAGES, COSTS OR EXPENSES (INCLUDING,BUT NOT LIMITED TO, LOST PROFITS, LOST REVENUES AND/OR LOST SAVINGS), ARISING UNDER THIS AGREEMENTOR CONCERNING ANY PRODUCTS, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES,COSTS OR EXPENSES.****[Signature page follows]**
 

 
     **IN WITNESS WHEREOF**, the parties hereto have caused this Agreement to be executed by their dulyauthorized respective representatives as of the day and year first above written.      **WATSON PHARMA, INC.**