Document:

Exhibit
10.34

 

SUPPLY AGREEMENT

 

SUPPLY AGREEMENT (“Agreement”) dated as of
September 23, 2003, (“Effective Date”) between RELIANT PHARMACEUTICALS, LLC, a
Delaware limited liability company (“Reliant”), and AUSTIN SHASUN, LLC, an
Illinois limited liability company (“ASL”).

 

WHEREAS, ASL and Reliant desire to enter into
this Agreement which will set forth the terms and conditions under which ASL
shall supply to Reliant bulk quantities of the Active Ingredient (as
hereinafter defined) for use in the manufacture of the Products (as hereinafter
defined);

 

NOW THEREFORE, in consideration of the mutual
covenants and consideration set forth herein, the parties hereto agree as
follows:

 

SECTION 1

 

DEFINITIONS

 

SECTION 1.1.        As used herein, the
following defined terms shall have the definitions set forth below:

 

(a)           “Act” shall mean the Federal Food Drug and
Cosmetic Act (21 U.S.C. §301 et seq) as amended from time to time and the
regulations promulgated thereunder and corresponding legislation in any other
country where the Active Ingredient is manufactured.

 

(b)           “Active Ingredient” or “API” shall mean
isradipine.

 

(c)           “Adverse Events” shall mean any serious or
unexpected side effect, injury, toxicity, or sensitivity reaction, or any
adverse drug reaction reports and the severity thereof associated with the
Product where the term “serious” as used in this Section refers to an
experience which results in death, permanent or substantial disability, a
vegetative state, inpatient hospitalization or prolongation of hospitalization,
a congenital anomaly, cancer, an overdose, or is life threatening. The term “unexpected”
as used in this definition means an adverse drug experience that is not listed
in the then current labeling for the Product and includes an event that may be
symptomatically or pathophysiologically related to an event listed in the
labeling, but differs from the event because of greater severity or
specificity.

 

(d)           “Affiliate” shall mean all corporations or
business entities which, directly or indirectly, are controlled by, control or
are under common control by any of ASL or Reliant, as the case may be. For this
purpose, “control” shall mean the possession, direct or indirect, of the power
to direct or cause the direction of the management and policies of a person or
entity, whether through the ownership of at least fifty percent (50%) of the
voting shares or interest of such person or entity, by contract or otherwise.

 

(e)           “Agreement Year” shall mean each twelve (12)
month period of the term of this Agreement beginning on the first day of the
calendar year except for the “First Agreement Year”

 

 

which shall
mean the period commencing on the Effective Date and ending on December 31,
2003.

 

(f).           “Annual Payment Amount” shall have the
meaning set forth in Section 2.7(c).

 

(g)           “Annualized Purchase Amount” shall have the
meaning set forth in Section 2.7(d).

 

(h)           A “Bankruptcy Event” shall have occurred
when the person or entity in question becomes insolvent, or voluntary or
involuntary proceedings by or against such person or entity are instituted in
bankruptcy or under any insolvency law, or a receiver or custodian is appointed
for such person or entity, or proceedings are instituted by or against such
person or entity for corporate reorganization or the dissolution of such person
or entity, which proceedings, if involuntary, shall not have been dismissed
within one hundred and twenty (120) days after the date of filing, or such
person or entity makes an assignment for the benefit of its creditors, or
substantially all of the assets of such person or entity are seized or attached
and not released within one hundred and twenty (120) days thereafter.

 

(i)            “Claims” shall have the meaning ascribed in
Section 2.9.

 

(j)            “Designated Facility” shall mean a location
in the Territory set forth by Reliant in the applicable purchase order.

 

(k)           “Drug Master File” or “DMF’ means a
submission to the FDA by ASL that may be used to provide confidential detailed
information about facilities, processes or articles used in the manufacturing,
processing, packaging and storing of the Active Ingredient.

 

(l)            “DynaCirc” shall mean isradipine capsules
(2.5 mg and 5 mg) marketed by Reliant pursuant to the NDA under the brand name
DynaCirc®.

 

(m)          “DynaCirc CR” shall mean controlled release
isradipine capsules (5 mg and 10 mg) marketed by Reliant pursuant to the NDA
under the brand name DynaCirc CR®.

 

(n)           “Effective Date” shall mean the date first
shown above.

 

(o)           “FDA” shall mean the United States Food and
Drug Administration or any successor entity performing similar functions.

 

(p)           “First Commercial Sale” shall mean the date
on which Reliant (or any Affiliate of Reliant) sells the first Product to an
unaffiliated third party utilizing API supplied by ASL pursuant to this
Agreement.

 

(q)           “GMP” shall mean current Good Manufacturing
Practice as defined in 21 CFR §210.211 as may be amended from time to time.

 

(r)            “Improvements” shall mean any improved
Products, line extensions, modified Products or similar items which contain the
Active Ingredient and which Reliant obtains rights to, develops or sells during
the course of this Agreement.

 

2

 

(s)           “Initial Forecast” shall have the meaning
ascribed in Section 2.8(a).

 

(t)            “Initial Products” shall mean DynaCirc and
DynaCirc CR manufactured using bulk amounts of the Active Ingredient supplied
by ASL.

 

(u)           “Losses” shall have the meaning ascribed in
Section 3.2.

 

(v)           “NDA” shall mean the New Drug Applications,
19-596 (DynaCirc) and 20-336 (DynaCirc CR) as amended and supplemented, to
market the Products and any materials, documents or information referred to or
relied upon therein.

 

(w)          “Process Description” shall mean, with
respect to the Active Ingredient, good manufacturing procedures (including, but
not limited to, FDA quality system requirements and procedures), as well as
such other know-how, technical specifications, instructions, processes and
other intellectual property and information Reliant shall possess and as shall
be necessary in order to allow ASL to manufacture and/or have manufactured the
Active Ingredient.

 

(x)            “Products” shall mean the Initial Products,
and any Improvements thereto including all formulations containing Active
Ingredient in all strengths, dosage forms and presentations.

 

(y)           “Product Quality Complaint” shall mean any
complaint that questions the purity, identity, potency or quality of the Active
Ingredient.

 

(z)            “Purchase Price” shall have the meaning
ascribed in Section 2.7.

 

(z2)          “Quality Agreement” refers to the form of Quality
Agreement attached as Exhibit C.

 

(z3)          “Quarterly Forecast” shall have meaning
ascribed in Section 2.8(a).

 

(aa)         “Receipt Date” shall mean the earliest date on
which a party or its Affiliate first becomes aware of the Adverse Event.

 

(bb)         “Regulatory Approval” shall mean, with respect
to the Products, the FDA’s regulatory approval of the amendment to the NDA
authorizing the use of Active Ingredient manufactured by ASL in the Initial
Products.

 

(cc)         “Regulatory Filings” shall mean all
applications, filings, materials, studies, data and documents of any nature
whatsoever (including any supporting information related thereto) filed with,
or prepared in connection with, the Regulatory Approval.

 

(dd)         “Specifications” shall have the meaning
ascribed in 2.2.

 

(ee)         “Term” shall have the meaning ascribed in 3.5.

 

(ff)           “Territory” shall mean the United States,
its territories and possessions including Puerto Rico.

 

3

 

SECTION 2

 

SUPPLY AGREEMENT

 

SECTION 2.1.        Supply of the Active
Ingredient.

 

(a)           During the term of this Agreement, and
subject to the other terms and conditions hereof, ASL shall supply and sell to
Reliant and Reliant shall purchase from ASL all of Reliant’s requirements for
the Active Ingredient pursuant to the terms of this Agreement. Notwithstanding
the preceding sentence, Reliant’s obligation to purchase all of its
requirements of API from ASL is contingent upon ASL’s ability to manufacture
all Reliant’s requirements, receipt by Reliant of Regulatory Approval and is
further subject to Reliant’s obligations to purchase minimum quantities of
Active Ingredient from Novartis pursuant to that certain Supply Agreement by
and between Reliant and Novartis dated January 10, 2003.

 

(b)           During the term of this Agreement and
provided that Reliant complies with its purchase obligations set forth herein,
ASL shall not supply or sell the Active Ingredient to any other purchaser in
the Territory or outside the Territory for sale of any product containing the
Active Ingredient inside the Territory without the prior written consent of
Reliant (provided, however, that nothing herein shall affect ASL’s ability to
manufacture products which are not the Active Ingredient).

 

(c)           ASL shall supply Reliant with Active
Ingredient meeting the Specifications. All Active Ingredient supplied by ASL to
Reliant hereunder shall be consistent with the DMF and NDA and produced in a
facility and in a manner compliant with GMP and all other applicable laws, and
shall not be adulterated or misbranded within the meaning of the Act and will
have expiration dating of at least twenty four (24) months from the date of
manufacture. Each shipment of Active Ingredient from ASL to Reliant shall be
sampled and analyzed by ASL to determine if the shipment of Active Ingredient
meets the Specifications. ASL shall deliver with each shipment of the Active
Ingredient a certificate of analysis stating that the Active Ingredient meets
the Specifications. ASL shall not relocate or otherwise transfer the site of manufacture
of API without the express prior written approval of Reliant in the absence of
a force majeure event or unremedied audit deficiencies under Section 2.3 below.
Upon delivery to the Designated Facility, title to the Active Ingredient so
delivered will be free and clear of any security interest or other encumbrance
created by ASL.

 

SECTION 2.2.        Specifications.

 

(a)           The specifications (“Specifications”) for
the Active Ingredient are set forth on Exhibit A.

 

(b)           All Active Ingredient supplied to Reliant
hereunder shall be supplied in bulk form in drums and on pallets or as
otherwise agreed by the parties. The packaging requirements shall be specified
in the Specifications.

 

(c)           No changes to the Specifications or to the
Active Ingredient shall be made by ASL without the prior written approval of
Reliant unless expressly required either under GMP or the Act. In addition, any
changes to the Active Ingredient, the Specifications or the

 

4

 

manufacturing
process which may require the submission of any amendment, filing or other
documentation with the FDA and could potentially impact the NDA or other
Regulatory Filings shall be identified, reviewed and require the written
approval of Reliant. To the extent reasonably practicable, Reliant shall
provide a response to any such proposed changes within twenty (20) business
days after receipt

 

SECTION 2.3.        Audit of Manufacturing
Facility.

 

(a)           Reliant or its representatives shall have
the right, upon not less than five (5) business days advance notice and during
regular business hours, to inspect and audit any facilities being used by ASL
and any of its Affiliates, subsidiaries, joint ventures or other entities for
the manufacture, production or supply or storage of the Active Ingredient (“Supply
Facilities”) including all documentation related thereto to assure compliance
by ASL or its suppliers with the terms of this Agreement, applicable US laws,
rules and regulations including GMP and the prevailing FDA quality system
requirements. Such inspection and audit shall be limited to those portions of
such Supply Facilities as are involved in the production of the Active
Ingredient, and shall be, conducted in a manner so as to minimize disruption of
ASL’s and the inspected facilities’ business operations. ASL shall ensure
Reliant has access to all such Supply Facilities (including, but not limited
to, any third party facilities) in accordance with the foregoing in order for
Reliant to conduct such audits; provided, however, that Reliant shall be
subject to such reasonable confidentiality obligations as may be required by
such third party in order to protect any proprietary information.

 

(b)           If any of such audits reveal that the Supply
Facilities do not satisfy the requirements of this Agreement or the Act, then
Reliant shall provide written notice of such fact, which notice shall contain
in reasonable detail (including reference to the applicable standard or
criteria which has not been met) the deficiencies found in the Supply
Facilities and, if practicable, those steps which should be undertaken in order
to remedy such deficiencies. ASL shall within thirty (30) days remedy any
deficiencies from any such audit which have been provided to ASL in writing. In
the event that ASL does not remedy, or is incapable of remedying, any of such
deficiencies within such thirty (30) day period, ASL shall have the option to
locate and qualify alternate GMP qualified Supply Facilities from which to
perform its supply obligations under this Agreement. Should ALSA not locate and
qualify such alternate GMP qualified Supply Facilities within 90 days of
receiving Reliant’s notice, then Reliant shall be entitled to terminate this
Agreement upon written notice to ASL, in which event ASL shall provide Reliant
at ASL’s cost such assistance and any other information (including the Process
Descriptions) as shall be necessary in order for Reliant to manufacture or have
manufactured the Active Ingredient at another facility.

 

(c)           ASL acknowledges that the provisions of this
Section 2.3 granting Reliant certain audit rights shall in no way relieve ASL
of any of its obligations under this Agreement, nor shall such provisions
require Reliant to conduct any such audits.

 

SECTION 2.4.        Notice of Audit.

 

(a)           Notice. ASL shall give Reliant
immediate notice of any impending FDA or other governmental audit of ASL as it
relates to the manufacture, production or testing storage of

 

5

 

Active
Ingredient supplied to Reliant pursuant to this Agreement and shall provide
Reliant with any documentation provided to it relating to such audit. ASL shall
provide Reliant the opportunity for a 15-day, or a mutually-agreed timeline for
review, prior to submission, any documentation prepared in response to such
governmental audit and shall promptly provide Reliant with the results of such
audit following its conclusion.

 

(b)           Inspection Reports. ASL shall
promptly provide to Reliant copies of any FDA or other US governmental
inspection reports it receives from the FDA or other US governmental agency
with jurisdiction over the manufacturing facility with respect to the
manufacturing facilities which supply the Active Ingredient.

 

(c)           Regulatory Inspections. ASL shall
promptly notify Reliant of any FDA or other US regulatory inspections of the
facilities which supply the Active Ingredient.

 

SECTION 2.5.        Notice of Regulatory
Action.

 

ASL shall provide Reliant with immediate
notification of its receipt of any of the following related to the manufacture,
production or testing storage of the Active Ingredient; a copy of any list of
observations (Form FD483), Warning Letters, Information Letters, Regulatory
Letters or the like issued by the FDA as well as provide Reliant an opportunity
to review any written response prior to submission to the FDA. ASL shall
maintain sole responsibility for any matter pertaining to such inspections.

 

SECTION 2.6.        Recordkeeping.

 

ASL shall keep and maintain all production,
batch, control laboratory and other records in accordance with all applicable
FDA laws, roles and regulations including but not limited to GMP. Such records
shall be made available to Reliant or its representatives upon request.

 

SECTION 2.7.        Orders, Prices and
Terms.

 

(a)           Purchase Price. The purchase price (“Purchase
Price”) for the Active Ingredient purchased from ASL for a period of three (3)
years from the date of Regulatory Approval for either of the Initial Products
(the “Initial Pricing Period”) shall be as set forth on Exhibit B hereto. In
the event that Reliant fails to order at least [***] kgs of Active Ingredient
(the “Minimum”) in any year of the Initial Pricing Period (excluding the “First
Agreement Year”), and fails to cure such failure in the Quarterly Forecast for
the succeeding Agreement Year, ASL shall have the right to renegotiate the
Purchase Price. Price increases will be limited to ASL’s direct incremental
price increase for raw materials directly attributable to the lower than
expected volume purchases of raw materials by ASL as demonstrated from ASL’s
records. The Purchase Price for each purchase order shall be determined by the
relevant Tier on Exhibit B according to the aggregate number of kilograms of
API purchased to date within the relevant Agreement Year. The Purchase Price
set forth on Exhibit B may be renegotiated at any time and from time to time
after expiration of the Initial Period. Any change in the Purchase Price of

 

[***]:  Certain information on this page has been
omitted and filed separately with the Commission.  Confidential treatment has been requested
with respect to the omitted portions.

 

6

 

Active
Ingredient following expiration of the Initial Pricing Period provided,
however, that the Purchase Price for Active Ingredient shall not be increased
greater than the annual increase in any Agreement Year during the Term by
greater than the annual increase in the Producer Price Industry Data figure for
pharmaceutical preparations [***] as published by the US Department of Labor.

 

(b)           Effect of Specification Changes on
Purchase Price. Notwithstanding the foregoing, in the event that Reliant
requests a change to the Specifications, ASL shall notify Reliant within 30
days of ASL’s receipt of such request whether the requested change will result
in a material increase or decrease in the direct cost of manufacture of the
Active Ingredient and ASL’s estimate of the cost of implementing the change. If
Reliant then confirms to ASL that it wants to have the change implemented, then
Reliant shall reimburse ASL for the estimated costs of implementing the change
and pay such increased or decreased price, as the case may be, for API in an
amount that enables ASL to pass through its consequent direct cost increases or
decreases

 

(c)           Quarterly Reconciliation. Within
thirty-(30) days of the last day of each calendar quarter, a quarterly
reconciliation shall be calculated by multiplying the total number of kgs
purchased by Reliant in such quarter by the cost/kg in the relevant Tier in
Exhibit B, and subtracting such amounts invoiced Reliant during such quarter
(the difference is the “the Quarterly Payment”). If the Quarterly Payment
Amount is less than zero ($0.00), ASL shall credit Reliant that entire amount
by way of a volume rebate in Kgs in the next invoice to Reliant for purchases.

 

(d)           Annual Reconciliation: During each
Agreement Year, ASL shall invoice Reliant for purchases as set forth in Exhibit
B. Within 30-days of the last day of each Agreement Year, an annual
reconciliation will be calculated by multiplying the total number of kilograms
of API purchased for the relevant agreement year by the relevant price in
appropriate Tier in Exhibit B, and subtracting the total invoiced amount in
dollars for such Agreement Year (the difference is the “Annual Payment Amount”).
If the Annual Payment Amount is less than zero ($0.00), ASL shall credit
Reliant that entire amount by way of a volume rebate in Kgs (the “Volume Rebate”)
in the next invoice to Reliant for purchases.

 

(e)           Invoices and Payments. ASL will
invoice Reliant within thirty-(30) days after delivery and acceptance of each
shipment of Active Ingredient to Reliant or Designated Facility. Reliant shall
pay ASL for API accepted within thirty-(30) days of receipt of the relevant
invoice. All payments shall be made in U.S. dollars without deduction of any
kind such as for withholding taxes or claims of set-off other than in the case
of a bona fide dispute with respect to this Agreement. If Reliant has not paid
the invoice within such thirty (30) day period (other than amounts related to
amounts subject to bona fide dispute), Reliant shall pay interest on any unpaid
and undisputed amounts at the rate of 1 1⁄2% per month or the maximum rate
allowed by law whatever is lower until paid in full, and, if the dispute is
resolved in ASL’s favor, Reliant shall pay interest at such rate on the
disputed amount until paid in full.

 

[***]:  Certain information on this page has been
omitted and filed separately with the Commission.  Confidential treatment has been requested
with respect to the omitted portions.

 

7

 

SECTION 2.8.        Forecasts and Purchase
Orders.

 

(a)           Following Regulatory Approval of one of the
Initial Products during the term of this Agreement, Reliant shall provide to
ASL no later than the first day of the first month of each calendar quarter a
non-binding good faith estimate (“Quarterly Forecast”) by quarter of Reliant’s
requirements for the Active Ingredient for the calendar quarter and the succeeding
three (3) calendar quarters. Reliant will be obligated to purchase 75% of the
quantities of API forecasted for the first two (2) succeeding calendar quarters
of each Quarterly Forecast. Within (30) days of Regulatory Approval, Reliant
shall provide an initial forecast (“Initial Forecast”) for the four calendar
quarters following Regulatory Approval.

 

(b)           Reliant shall place binding purchase orders
for Active Ingredient by written or electronic purchase order (or by any other
means agreed to by the parties) to ASL, which shall be placed at least ninety
(90) days prior to desired date of delivery.

 

(c)           ASL shall be obligated to supply Active
Ingredient as ordered by Reliant. To the extent purchase orders in any calendar
month exceed One Hundred Fifty percent (150%) of the Quarterly Forecast for the
relevant quarter, ASL shall use its best efforts to supply 125% of the quantity
ordered.

 

 (d)          ASL shall maintain
minimum inventory levels equal to the binding portion of the then current
Quarterly Forecast. The Active Ingredient shall be shipped C.I.F. Duty Unpaid
to a Designated Facility or other location agreed by the parties. Active
Ingredient shall be shipped upon completion of production in
temperature-controlled vehicles in accordance with the specifications including
light protecting containers and the Quality Agreement in order to maintain the
quality of the Active Ingredient. Carriers selected by ASL must be commercially
reputable, able to track shipments and fully insured with adequate coverage to
replace the value of the goods shipped. Title and risk of loss pass on delivery
to the Designated Facility.

 

(e)           All shipments of Active Ingredient shall be
accompanied by a packing slip and a certificate of analysis which describes the
Active Ingredient, states the purchase order number, confirms that the Active
Ingredient conforms in all ways with the Specifications, the Process
Description and was manufactured in accordance with GMP and all other
requirements of the Act. To the extent of any conflict or inconsistency between
this Agreement and any purchase order, purchase order release, confirmation,
acceptance or any similar document, the terms of this Agreement shall govern.

 

(f)            Reliant shall notify ASL of any
short-shipment claims within thirty (30) days of receipt of a shipment of
Active Ingredient.

 

(g)           ASL shall not be obligated to accept any
returns of Active Ingredient other than as a result of such Active Ingredient
failing to meet the Specifications in accordance with Section 2.9(a), was not
manufactured in accordance with GMP, or does not otherwise comply with the
manufacturing, storage and/or transportation requirements of the Act.

 

8

 

SECTION 2.9.        Product Claims.

 

(a)           After delivery of a shipment of any Active
Ingredient to Reliant, Reliant shall have sixty (60) days to examine the Active
Ingredient to determine if it conforms to the Specifications and, on the basis
of such examination, to accept or reject such shipment. Any claims for failure
to so conform (“Claims”) shall be made by Reliant in writing within such sixty
(60) day period to ASL, indicating the nonconforming characteristics of the
Active Ingredient.

 

(b)           If ASL agrees with such Claim, then as
promptly as possible after the submission of a Claim by Reliant, ASL shall, at
Reliant’s option, provide Reliant (i) with a credit against future billings
equal to the full amount paid by Reliant for such Active Ingredient or (ii)
replacement Active Ingredient free of charge. ASL shall pay for all shipping
costs of returning or destroying Active Ingredient that are the subject of such
accepted Claims. ASL shall bear the risk of loss for such Active Ingredient,
beginning at such time as they are taken at Reliant’s premises for return
delivery.

 

(c)           If ASL does not agree with such Claim, then
the parties shall submit the Active Ingredient in question to an independent
party with validated analytical methods (such as Metrics, Inc.) of testing the
Active Ingredient to determine whether or not it complies with the
Specifications. In the event the parties cannot agree upon such independent
party, or in the event it is not possible to acquire the services of such an
independent party, then such dispute shall be resolved pursuant to Section
4.15.

 

SECTION 2.10.      Additional Obligations of
ASL.

 

ASL shall:

 

(a)           Manufacture the Active Ingredient in
accordance with the Specifications and the Quality Agreement for sale to
Reliant taking care to adhere to GMP, and all applicable FDA and other
applicable US laws, rules and regulations including but not limited to the Act
and FDA Guides to Inspections of Bulk Pharmaceutical Chemicals.

 

(b)           Ship all Active Ingredient to Reliant with a
remaining shelf life of at least equal to the approved stability dating as set
forth in the NDA as may be amended from time to time from date of shipment and
perform annual stability testing on the API to support the expiration dating
used on the API and affix lot numbers on the containers of Active Ingredient on
each shipping carton in accordance with applicable US laws. Once expiration
dating of at least thirty six (36) months is assigned to the Active Ingredient,
all Active Ingredient supplied by ASL hereunder will have a remaining shelf
life of at least twenty four (24) months from the date of shipment.

 

(c)           On not less than five (5) business days
notice, afford representatives of Reliant, the FDA and any other United States
authority access to its facilities and that of its subcontractors for the
purpose of inspecting and approving the facilities used to manufacture the
Active Ingredient.

 

(d)           No later than forty five (45) days of
completion of test results on thirty (30) day accelerated stability on the
first validation batch of API, ASL will take all actions necessary to establish
a DMF with FDA as may be required by the rules and regulations of the FDA and
to make all filings necessary to maintain the DMF including, but not limited
to, any necessary updates following the completion of the stability report on
the ninety (90) day accelerated

 

9

 

stability test
on the first validation batch of API. In addition, ASL shall take all action
necessary to provide Reliant with access to the DMF such that the NDA may
reference the DMF for the purposes of this Agreement.

 

(e)           In the event any shipment of the Active
Ingredient fails to conform to the Specifications, GMP, or any applicable FDA
or other US governmental regulation, ASL shall, without charge, promptly
replace any such Active Ingredient with a non-defective, conforming Active
Ingredient. ASL shall promptly investigate the cause of such nonconformance or
defect and shall report back to Reliant with respect to such investigation no
later than seven (7) calendar days after notification or discovery of such
nonconformance or defect.

 

(h)           Neither ASL nor its subcontractors shall
initiate any contact with the FDA or any other US regulatory agency in
connection with the subject matter of this Agreement without the prior written
approval of Reliant. ASL and/or such subcontractor shall inform Reliant, via
same-day telephone and by receipt of written notice within one day thereafter,
of any contacts of ASL or such subcontractor by the FDA or any other US
regulatory agencies in connection with the subject matter of this Agreement,
and ASL or such subcontractor shall prepare and submit to Reliant for its
approval a written record of all such contacts. Reliant shall have the right to
have a representative present at any time the FDA or other US governmental
authority shall elect to conduct an inspection of any site at which a
manufacturing or other investigation of API is being conducted. ASL or such
subcontractor shall forward to Reliant any notice relating to such inspection,
immediately upon receipt thereof.

 

SECTION 2.11.      Adverse Events; FDA
Audits; Etc.

 

(a)           Each party agrees to cooperate with the
other party in the exchange of information concerning Adverse Events associated
with the use in humans of the Products which Reliant or any its Affiliates
manufactures or has manufactured, markets, and distributes from the Active
Ingredient supplied by ASL under this Agreement. Each party shall notify the
designated party of the other set forth in Section 2.13 within one (1) working
day of the Receipt Date. Unless otherwise required by law, Reliant will retain
exclusive authority and responsibility for the reporting of any Adverse Events
to the FDA.

 

(b)           Each party shall notify the designated
Quality Assurance Manager of the other by e-mail, fax or by telephone within one
(1) working day of receipt of any product complaint report received relating in
any manner to the Products which may meet FDA Field-alert Report criteria
codified at 21 CFR 314.81(b)(1)) with an original copy of the report sent by
overnight courier the same day. ASL shall investigate all such complaints
associated with the Active Ingredient and provide a written response to such
complaints with a copy to Reliant. Reliant shall investigate all such
complaints associated with Product (other than complaints associated with the
Active Ingredient)) and provide a written response to the FDA (if required by
applicable laws) to such complaints with a copy to ASL. Each party shall
provide the other with a preview copy of its written responses and consult with
the other regarding such responses prior to filing the responses with the FDA.

 

(c)           Reliant shall have the right to have a
representative present at any time the FDA or other US governmental authority
shall elect to conduct an inspection of any site at which a

 

10

 

manufacturing
or other investigation of the Active Ingredient is being conducted. ASL or such
subcontractor shall forward to Reliant any notice relating to such inspection,
immediately upon receipt thereof.

 

SECTION 2.12.      Product Quality
Complaints.

 

(a)           Complaints that concern any incident that
causes the Product or its labeling to be mistaken for, or applied to, another
article or any bacteriological contamination, or any significant chemical,
physical, or other change or deterioration in the Product, or any failure of
one or more distributed batches of the Product to meet the Specifications shall
be telephoned to both parties promptly upon receipt.

 

(b)           The relevant contact person with respect to
Adverse Events shall be:

 

	
   

  	
  If to ASL:

  
	
   

  	
   

  
	
   

  	
  Facsimile No.:  (847) 520 9160

  
	
   

  	
  Telephone No.:  (847) 520 9600

  
	
   

  	
  E-mail:                @austinchemical.com

  
	
   

  	
   

  
	
   

  	
  If to Reliant:  Reliant Medical Affairs

  
	
   

  	
   

  
	
   

  	
  Fax:

  	
  1-877-311-8160

  
	
   

  	
  Tel:

  	
  1-908-580-1200

  
	
   

  	
   

  	
  1-877-311-7515

  

 

SECTION 2.13.      Government Agency Recalls.

 

(a)           Each of the parties agree to maintain or
cause to be maintained such traceability records as are necessary to permit a
recall, withdrawal, field alert or field correction of Active Ingredient or
Product.

 

(b)           In the event any governmental agency having
applicable jurisdiction shall order any corrective action with respect to
Product containing Active Ingredient supplied hereunder such as customer
notice, restriction, change, corrective action or market action or any Product
change, and the cause of basis of such corrective action is due to the actions
or inactions of ASL under this Agreement including without limitation the
failure of the API to meet the Specifications or a breach by ASL of Section
3.1(a) below, then ASL shall be liable to Reliant to credit or replace such API
as required by Section 2.9(b), including paying all costs of returning or
destroying such API.

 

(c)           Reliant shall have the right to determine
that a recall of any portion of Product is necessary or appropriate at any
time, and to design, administer and control the recall process (provided,
however, that at the request of ASL, ASL shall have the right to consult with
Reliant prior to determining that a recall is necessary). If a recall is determined
to be necessary or appropriate due to ASL’s breach of any of its obligations
under this Agreement, ASL shall be

 

11

 

liable for
replacing the Active Ingredient used to manufacture the recalled Product. For
purposes of this Section, “recall” means a firm’s removal or correction (e.g.,
repair, modification, adjustment, re-labeling, destruction or inspection
(including patient/consumer marketing) of a product without its physical
removal to some other location) of a marketed Product that there are reasonable
grounds to believe could be considered by the FDA to be in violation of the Act
or against which the FDA could initiate legal action.

 

SECTION 2.14.      Annual Review. The
parties agree to establish an annual business review process pursuant to which
the parties will review (either in person, by telephone, videoconference or
other mutually agreeable means) Active Ingredient quality, cycle time,
manufacturing capacity, projected market needs, and delivery.

 

SECTION 3

 

GENERALLY APPLICABLE TERMS

 

SECTION 3.1.        Representations and
Warranties.

 

(a)           ASL to the best of its knowledge represents
and warrants to Reliant that:

 

(i)         the Active IngredientS
supplied by ASL will be manufactured in accordance with the Specifications GMP,
the DMF and all applicable FDA and other US governmental regulations;

 

(ii)        the Active Ingredient
supplied by ASL are being sold to Reliant free and clear of all liens, claims
and encumbrances of any nature;

 

(iii)       attached as Exhibit C is a
true and correct copy of the Quality Agreement as executed by the parties;

 

(iv)       to the best of its
knowledge after diligent inquiry, the Active Ingredient, and its manufacture or
use by ASL, does not violate any patents, patent rights, patent applications,
inventions, copyrights, confidential information, trade secrets, proprietary
rights or processes of any other person in the country where such Active
Ingredient is manufactured or in the Territory;

 

(v)        there are no pending or
threatened suits, claims, or actions of any type whatsoever against ASL with
respect to the Active Ingredient or the manufacture thereof;

 

(vi)       all necessary corporate and
other authorizations including all necessary approvals, licenses and
authorizations from FDA or other US governmental entities, consents and
approvals which are necessary or required for ASL to enter into this Agreement
have been duly obtained and are in and will remain in full force and effect;

 

(vii)      the entering into of this
Agreement (including the Quality Agreement) by ASL will not (i) violate any
provision of law, statute, rule or regulation or any ruling, writ, injunction,
order, judgment or decree of any court, administrative agency or other
governmental body or (ii) conflict with or result in any breach of any of the
terms,

 

12

 

conditions or
provisions of, or constitute a default (or give rise to any right of
termination, cancellation or acceleration) under, or result in the creation of
any lien, security interest, charge or encumbrance upon any of the properties
or assets of ASL, under its organizational documents, as amended to date, or
any material note, indenture, mortgage, lease, agreement (including the Quality
Agreement), contract, purchase order or other instrument, document or agreement
to which ASL is a party or by which it or any of its properties or assets is
bound or affected;

 

(viii)     ASL shall, and shall cause
its Affiliates, subcontractors, joint venture partners, and any other person or
entity performing services under this Agreement to, comply with all applicable
United States laws, rules and regulations applicable to their manufacture or
sale of the Active Ingredient (this warranty does not and is not intended to
address third party proprietary rights); and

 

(ix)       ASL has not been debarred
and ASL has not and will not use in any capacity in connection with the
performance of its obligations under this Supply Agreement the services of any
individual or person known by ASL to be debarred in each case by the FDA under
the provisions of the Generic Drug Enforcement Act of 1992, as amended, or
other applicable

 

The foregoing warranties extend only to
Reliant and its Affiliates, contract manufacturers, corporate partners and/or
other persons who collaborate with Reliant in the production of Product from
the Active Ingredient. THE FOREGOING WARRANTIES SHALL NOT COVER AND ASL MAKES
NO WARRANTIES WITH RESPECT TO: (A) ANY ACTIVE INGREDIENT THAT HAS BEEN SUBJECT
TO; (I) ABUSE, MISUSE, MISAPPLICATION, NEGLECT, ALTERATION OR ACCIDENT AFTER
DELIVERY AND ACCEPTANCE OF THE API BY RELIANT: (II) IMPROPER OR INCORRECT
STORAGE AFTER DELIVERY AND ACCEPTANCE BY RELIANT; OR (; OR (III) ANY MATERIALS,
PARTS, GOODS OR OTHER COMPONENTS NOT SUPPLIED BY ASL WHICH ARE USED BY RELIANT
IN CONNECTION WITH THE PRODUCT.

 

(b)           Reliant represents and warrants to ASL that:

 

(i)         all necessary corporate
and other authorizations, consents and approvals which are necessary or
required for Reliant to enter into this Agreement have been duly obtained;

 

(ii)        the entering into of this
Agreement (including the Quality Agreement) by Reliant will not (i) violate any
provision of law, statute, rule or regulation or any ruling, writ, injunction,
order, judgment or decree of any court, administrative agency or other
governmental body or (ii) conflict with or result in any breach of any of the
terms, conditions or provisions of, or constitute a default (or give rise to
any right of termination, cancellation or acceleration) under, or result in the
creation of any lien, security interest, charge or encumbrance upon any of the
properties or assets of Reliant under its organizational documents, as amended
to date, or any material note, indenture, mortgage, lease, agreement, contract,
purchase order or other instrument, document or

 

13

 

agreement in
which Reliant is a party or by which it or any of its properties or assets is
bound or affected;

 

(iii)       Reliant shall not, during
the course of any manufacturing, marketing or selling by it of the Products,
engage in any act which results in the Products being adulterated or misbranded
within the meaning of the Act, or any regulation promulgated thereunder;

 

(iv)       Reliant shall comply with
all applicable laws, rules and regulations applicable to their importation,
manufacture, use or sale of the Product in the Territory;

 

(v)        To the best of its
knowledge, the Product, and its manufacture, use or sale by Reliant and/or its
Affiliates, will not violate any patents, patent rights, patent applications,
inventions, copyrights, confidential information, trade secrets, proprietary
rights or processes of any other person;

 

(c)           THE WARRANTIES CONTAINED IN THIS SECTION 3.1
ARE THE EXCLUSIVE WARRANTIES MADE BY THE PARTIES IN RESPECT OF THE ACTIVE
INGREDIENT AND PRODUCT, AND ALL OTHER WARRANTIES RELATING THERETO, EXPRESS,
STATUTORY OR IMPLIED, INCLUDING BUT NOT LIMITED TO WARRANTIES OF FITNESS FOR A
PARTICULAR PURPOSE, AND MERCHANTABILITY ARE HEREBY WAIVED AND EXCLUDED;
PROVIDED HOWEVER THAT NOTHING IN THIS SECTION 3.1 SHALL BE DEEMED OR CONSTRUED
TO LIMIT ASL’s OBLIGATIONS UNDER SECTION 2.10.

 

SECTION 3.2.        Indemnification. In
order to distribute among themselves the responsibility for claims arising out
of this Agreement, and except as otherwise specifically provided for herein,
the parties agree as follows:

 

(a)           ASL shall defend and indemnify and hold
Reliant (and its Affiliates, and their respective officers, directors and
employees) harmless against any and all claims, suits, proceedings, expenses,
recoveries and damages, including court costs and reasonable attorneys fees and
expenses (collectively, “Losses”), arising out of, based on, or caused by (A)
the breach by ASL of any representation or warranty contained in this Agreement,
(B) any failure of ASL to comply with any applicable US law in connection with
performing its obligations under this Agreement or (C) any negligence or
intentional misconduct by ASL in connection with performing its obligations
under this Agreement in each case except to the extent that such Losses arise
from or are aggravated by the grossly negligent acts of or failure to act by
Reliant or its Affiliates. Reliant will promptly notify ASL of any such Losses
which come to its attention.

 

(b)           Reliant shall defend and indemnify and hold
ASL (and its Affiliates, and their respective officers, directors and
employees) harmless against any and all Losses, arising out of, based on, or
caused by (A) statements, whether written or oral, made or alleged to be made by
Reliant or its Affiliates on the packaging or labeling of any of the Products,
or in the advertising, manufacturing (other than the manufacturing of the
Active Ingredient), promotion, use or sale of any of the Products, (B) the
storage, sale, shipment, promotion or distribution of the Products by Reliant
or its Affiliates, or (C) the breach by Reliant of any representation or
warranty contained

 

14

 

in this
Agreement, in each case except to the extent that such Losses arise from or are
aggravated by the grossly negligent acts of or failure to act by ASL or its
Affiliates. ASL will promptly notify Reliant of any such Losses which comes to
its attention.

 

(c)           In the event either party becomes aware of
any product liability claims from third parties with respect to the Products
(whether related to the safety or efficacy of the Product, or arising out of
alleged defects in materials, design or workmanship of the Product or
otherwise, (hereinafter, a “Product Liability Claim”), it shall promptly notify
the other of such matter, and provide copies of any notices, claims, letters or
other information which such party has received or possesses in connection with
such Product Liability Claim. Each party shall reasonably cooperate with the
other with respect to the defense and resolution of any such Product Liability
Claim. Reliant shall have responsibility for controlling any litigation,
defense or settlement of any such Product Liability Claims.

 

SECTION 3.3.        Infringement
Indemnification.

 

(a)           ASL shall defend and indemnify and hold
Reliant (and its Affiliates and the respective officers, directors and
employees) harmless against any and all claims, suits, proceedings, expenses,
recoveries and damages, including court costs and reasonable attorneys fees and
expenses arising from or relating to claims that the formulation or manufacture
of Active Ingredient or other activities of ASL under this Agreement infringe
on the patent or other intellectual property rights of a third party within the
Territory.

 

(b)           Reliant shall defend and indemnify and hold
ASL (and its Affiliates and the respective officers, directors and employees)
harmless against any and all claims, suits, proceedings, expenses, recoveries
and damages, including court costs and reasonable attorneys fees and expenses
arising from or relating to claims that the Products manufactured using the API
supplied or its use or sale infringes on the patent or other intellectual
property rights of a third party.

 

SECTION 3.4.        Insurance.

 

(a)           Reliant and ASL shall each at its own
expense obtain and maintain insurance of the type and amount described in
Section 3.4(b). Neither party shall do or omit to do any act, matter or thing
which could prejudice or render voidable any such insurance.

 

(b)           The parties agree that each will maintain
during the performance of this Agreement the following insurance in amounts no
less than that specified for each type:

 

(i)         General liability
insurance with combined limits of not less than $1,000,000 per occurrence and
$1,000,000 per accident for bodily injury, including death and property damage.

 

(ii)        product liability
insurance with combined limits of not less than $3,000,000 per occurrence and
$3,000,000 per accident for bodily injury, including death and property damage.

 

15

 

(c)           Each party will provide to the other party
evidence of its insurance naming the other as an additional insured and
containing a waiver of subrogation against the other and thirty (30) days prior
written notice of any cancellation of its coverage or reduction in coverage
from the requirements stated herein.

 

SECTION 3.5.        Term.

 

(a)           This Agreement shall remain in effect from
the Effective Date for a period of seven (7) years from the receipt of the
first Regulatory Approval for either of the Initial Products (the “Initial Term”).
Unless sooner terminated, this Agreement shall be renewed automatically for
successive terms of two (2) years unless either party provides notice to the
contrary within one hundred twenty (120) days prior to the end of the Initial
Term or any such additional term.

 

(b)           Notwithstanding any other provision of this
Agreement, either Reliant or ASL may terminate this Agreement by notice in
writing to the other upon the occurrence of any of the following events:

 

(i)         if the other commits a
breach of this Agreement (other than a breach by Reliant of Section 2.8 hereof)
that the notified party fails to remedy within thirty (30) days of the receipt
by the other of a notice identifying the breach and requiring its remedy; or

 

(ii)        if the other is subject to
a Bankruptcy Event.

 

(c)           Reliant may terminate this Agreement
immediately upon written notice to ASL if:

 

(i)         the FDA prohibits the
Product(s) from being manufactured, shipped, sold or marketed, in which event
all outstanding or unfinished purchase orders (including any firm order
obligations pursuant to any forecasts) shall be cancelled;

 

(ii)        in the absence of a force
majeure event under Section 4.10 below, ASL is unable to supply API in
sufficient quantities to meet purchase orders submitted in accordance with
Section 2.8 hereunder for a period of six (6) months in any twelve (12) month
period or, taking into account any such force majeure event, ASL is unable to
meet such purchase orders for a continuous period of six (6) months; or

 

(iii)       any representation or
warranty made herein by ASL proves to be incorrect in any material respect when
made.

 

(d)           ASL may terminate this Agreement upon
written notice to Reliant if any representation or warranty made herein by
Reliant proves to be incorrect in any material respect when made.

 

SECTION 3.6.        Effect of Termination.

 

(a)           If this Supply Agreement is terminated for
any reason other than Reliant’s failure to make payment under this Agreement,
ASL shall complete the manufacture of any binding

 

16

 

purchase order
for Active Ingredient and ship such Active Ingredient pursuant to the terms of
this Agreement.

 

(b)           The termination or expiration of this
Agreement will not release either party from the obligation to pay any sum that
may be owing to the other party (whether then or thereafter due) to operate any
liability or obligation that had been incurred by either Party prior to any
such termination.

 

SECTION 4

 

MISCELLANEOUS

 

SECTION 4.1.        Confidentiality; Press
Releases.

 

(a)           Reliant and ASL will be exchanging
confidential and proprietary information relating to the Active Ingredient and
Products and their respective businesses at the inception of and from time to
time during the term of this Agreement. The party receiving such information
will maintain the information in confidence using the same standard of care it
uses to maintain its own information in confidence. Such obligation of
confidentiality shall not apply to information which (i) is known to the
receiving party prior to the disclosure, (ii) is publicly known as of the date
of the disclosure, (iii) becomes publicly known after the date of disclosure
through no fault of the receiving party, (iv) is received from a third party
who has no obligation of confidentiality to the disclosing party or (v) is
developed independently by or for the receiving party. Such obligation of
confidentiality shall continue for a period of five (5) years from the date of
termination of this Agreement.

 

(b)           Notwithstanding the foregoing Section
4.1(a), (i) Reliant shall be permitted to disclose to its manufacturers,
subcontractors, wholesalers, other direct customers, investment bankers and/or
financing sources such confidential information relating to the Products and
this Agreement as Reliant shall reasonably determine to be necessary in order
to effectively market and distribute the Products or otherwise engage in a bona
fide financing transaction and (ii) ASL shall be permitted to disclose to its
Affiliates, manufacturers, subcontractors, wholesalers, other direct customers,
investment bankers and/or financing sources such confidential information
relating to the Active Ingredient and Products as ASL may reasonably determine
to be necessary to perform its obligations under this Agreement, provided that
such entities undertake the same confidentiality obligation as the disclosing
party has with respect to the other’s confidential information and provided
that ASL and its Affiliates may disclose the fact of the Agreement for purposes
of marketing its services.

 

(c)           Except as may be required by applicable
laws, rules or regulations (including in connection with a public offering of
securities), neither party will originate any publicity, news release, or other
public announcement, written or oral, whether to the public press or otherwise,
relating to this Agreement, any amendment hereto or to performance hereunder,
or the existence of an arrangement between the parties, without the prior
written approval of the other party, which consent shall not be unreasonably
withheld or delayed (it being understood that such obligation is not intended
to restrict either party’s ability to promote, market and sell the Products or
its services in a commercially reasonable manner). In the event disclosure is

 

17

 

required by
applicable law, rules or regulations, then the party required to so disclose
such information shall, to the extent possible, provide to the other party for
its approval (such approval not to be unreasonably withheld) a written copy of
such public announcement at least ten (10) business days prior to disclosure. In
the absence of a communication approving or disapproving of the public
announcement from the party with the right of approval by the end of such ten
(10) day period, such party shall be deemed to have approved the public
announcement.

 

SECTION 4.2.        Survival. Those
provisions of this Agreement dealing with rights and obligations upon and/or
after termination of this Agreement including but not limited to Sections 1.1
(to the extent necessary to give effect to the Articles and Sections enumerated
in this Section 4.2), 2.6, 2.7(d), 2.8(d), 2.8(e), 2.8(f), 2.10, 2.11.2.12,
2.13, 3.2, 3.3, 3.4, 3.6, 4.3, 4.9, 4.15, 4.16 and 4.17 shall survive
termination of this Agreement to the extent necessary to give effect to such
provisions.

 

SECTION 4.3.        Penalties. If
either party terminates this Agreement in accordance with the terms herein the
terminating party shall owe no penalty to the terminated party on account of
such termination.

 

SECTION 4.4.        Independent Contractor
Status. Neither party shall have any authority to obligate the other in any
respect nor hold itself out as having any such authority. All personnel of ASL
shall be solely employees of ASL and shall not represent themselves as
employees of Reliant, and all personnel of Reliant shall be solely employees of
Reliant and shall not represent themselves as employees of ASL.

 

SECTION 4.5.        Binding Effect;
Benefits. This Agreement shall endure to the benefit of and be binding upon
the parties and their respective permitted successors and assigns. Nothing
contained herein shall give to any other person any benefit or any legal or
equitable right, remedy or claim.

 

SECTION 4.6.        Assignment.

 

Neither party may assign this Agreement or
any of its rights hereunder or delegate its performance of its obligations
hereunder without the express prior written consent of the other party, except
that either party may assign or delegate any of its rights or obligations under
this Agreement to an Affiliate or subsidiary; provided that the assigning party
shall be made liable for all obligations and liabilities of the assignee
following such assignment. Notwithstanding the foregoing (a) each party may
assign this Agreement to any purchaser of all or substantially all of its
assets or to any successor entity resulting from any merger or consolidation of
such party with or into such entity AND (b) Reliant may assign its rights and
obligations hereunder to an acquirer of all or substantially all of Reliant’s
assets relating to one or more of the Products. The (i) conversion of either
party from a limited liability company to a corporation and/or (ii) issuance by
either party of securities in connection with any financing transaction or
public offering shall not be deemed an assignment and shall be permitted
without notice to or consent from the other party or its Affiliates. My
attempted assignment in violation of this provision shall be deemed a material
breach of this Agreement.

 

18

 

SECTION 4.7.        Entire Agreement;
Amendments. The parties acknowledge that this Agreement sets forth the
entire agreement and understanding of the parties as to the subject matter of
this Agreement, and supersedes any prior verbal, written or other
understandings of the parties with respect to the subject matter of this
Agreement. This Agreement shall not be subject to any change or modification
except by the execution of a written instrument subscribed to by the parties. To
the extent of any conflict or inconsistency between this Agreement and any
purchase order, purchase order release, confirmation, acceptance or any similar
document, the terms of this Agreement shall govern.

 

SECTION 4.8.        Severability. In
the event that any provision of this Agreement would be held in any
jurisdiction to be invalid, prohibited or unenforceable for any reason, such
provision, as to such jurisdiction, shall be ineffective, without invalidating
the remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction. Notwithstanding the
foregoing, if such provision could be more narrowly drawn so as not to be
invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such
jurisdiction, be so narrowly drawn, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of
such provision in any other jurisdiction.

 

SECTION 4.9.        Remedies; Etc. Unless
otherwise expressly provided, all remedies hereunder are cumulative, are in
addition to any other remedies provided for by law and may, to the extent permitted
by law, be exercised concurrently or separately, and the exercise of any one
remedy shall not be deemed to be an election of such remedy or to preclude the
exercise of any other remedy.

 

SECTION 4.10.      Force Majeure.

 

The obligations of ASL and Reliant hereunder
shall be subject to any delays or non-performance caused by acts of God,
earthquakes, fires, floods, explosion, sabotage, riot, accidents; orders of, or
failure to issue all necessary permits or licenses by, regulatory,
governmental, or military authorities; strikes, lockouts or labor trouble;
perils of the sea; or any other similar cause beyond the reasonable control of
either party, and each party shall be under no liability to the other for
anything which would constitute a breach of this Agreement arising by reason of
such matters. The party which is not performing its obligations under this
Agreement as a result of an event of force majeure shall use diligent efforts
to resume compliance with this Agreement as soon as possible. Should the event
of force majeure continue unabated for a period of sixty (60) days or more, the
parties shall enter into good faith discussions with a view to alleviating its
affects or to agreeing upon such alternative arrangements as may be fair and
reasonable having regard to the circumstances prevailing at that time. In the
event that such alternative arrangements cannot be agreed upon within thirty
(30) days after the expiration of such initial sixty (60) day period, then the
non-performing party shall continue to diligently attempt to alleviate such
event of force majeure until it is removed or eliminated.

 

SECTION 4.11.      Notices. Any notice,
request, consent or communication (collectively, a “Notice”) under this
Agreement shall be effective if it is in writing and (i) personally delivered,
(ii) sent by certified or registered mail, postage prepaid, return receipt
requested, (iii) sent by an internationally recognized overnight delivery
service, with delivery confirmed, or (iv) e-mail,

 

19

 

telexed or
facsimile, with receipt confirmed, addressed as set forth in this Section or to
such address as shall be furnished by either party hereto to the other party
hereto. A Notice shall be deemed to have been given as of (i) the date when
personally delivered, (ii) five (5) business days after being deposited with
the United States Postal Service, certified or registered mail, properly
addressed, return receipt requested, postage prepaid, (iii) one business day
after being delivered to said overnight delivery service properly addressed, or
(iv) confirmation of receipt of the e-mail, telex or facsimile, as the case may
be. All Notices shall specifically state: (i) the provision (or provisions) of
this Agreement with respect to which such Notice is given, and (ii) the
relevant time period, if any, in which the party receiving the Notice must
respond.

 

	
   

  	
  If to ASL:

  	
  Austin Shasun LLC

  
	
   

  	
   

  	
  1565 Barclay Boulevard

  
	
   

  	
   

  	
  Buffalo Grove, IL 60089-4537

  
	
   

  	
   

  	
  Attn:                    

  
	
   

  	
   

  	
   

  
	
   

  	
  Facsimile: (847) 520 9160

  
	
   

  	
  E-mail:                  @austinchemical.com

  
	
   

  	
   

  	
   

  
	
   

  	
  Telecopier:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  if to Reliant to:

  	
  Reliant Pharmaceuticals, LLC

  
	
   

  	
   

  	
  110 Allen Road

  
	
   

  	
   

  	
  Liberty Corner, New Jersey 07938

  
	
   

  	
   

  	
  Attn: Joseph Krivulka, President

  
	
   

  	
   

  	
   

  
	
   

  	
  Telephone:

  	
  (908) 542-4400

  
	
   

  	
  Fax:

  	
  (908) 542-9406

  
	
   

  	
   

  	
   

  
	
   

  	
  with a copy to:

  	
  Reliant Pharmaceuticals, LLC

  
	
   

  	
   

  	
  110 Allen Road

  
	
   

  	
   

  	
  Liberty Corner, New Jersey 07938

  
	
   

  	
   

  	
  Attn: Michael J. Lerner, General Counsel

  
	
   

  	
   

  	
   

  
	
   

  	
  Telephone:

  	
  (908) 542-4408

  
	
   

  	
  Fax:

  	
  (908) 542-9406

  
					

 

SECTION 4.12.      Waivers. The failure
of either party to assert a right hereunder or to insist upon compliance with
any term or condition of this Agreement shall not constitute a waiver of that
right or excuse a similar subsequent failure to perform any such term or
condition by the other party.

 

SECTION 4.13.      Counterparts. This
Agreement may be executed in any number of counterparts, and execution by each
of the parties of any one of such counterparts will constitute due execution of
this Agreement. Each such counterpart shall be deemed to be an original
instrument, and all such counterparts together shall constitute but one
agreement.

 

20

 

SECTION 4.14.      Headings. The article
and section headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.

 

SECTION 4.15.      Governing Law; Dispute
Resolution.

 

(a)           This Agreement shall be construed, governed,
interpreted and applied in accordance with the laws of the State of New York,
U.S.A. without regard to the conflict of law principles thereof, and the United
Nations Convention on Contracts for the International Sale of Goods is
expressly disclaimed.

 

(b)           Excepting only actions and claims relating
to actions commenced by a third party against ASL or Reliant (including,
without limitation, actions for injuries caused by a Product, or in respect to
a patent infringement claim), any controversy or claim arising out of or
relating to this Agreement, or the parties’ decision to enter into this
Agreement, or the breach thereof, shall be settled by arbitration in accordance
with the arbitration American Arbitration Association, and judgment upon the
award rendered by the arbitrator may be entered in any court having jurisdiction
thereof.

 

(c)           The arbitration shall be held before a
single arbitrator, to be selected by ASL and Reliant or, if ASL and Reliant
cannot agree on such arbitrator, in accordance with the applicable arbitration
rules provided that the arbitrator shall have significant pharmaceutical
manufacturing and supply experience. Arbitration shall be in the State of New
York and the arbitrator shall apply the substantive law of the State of New
York. It shall be the duty of the arbitrator to set dates for preparation and
hearing of any dispute and to expedite the resolution of such dispute. The
arbitrator shall permit and facilitate discovery, taking into account the needs
of the parties and the desirability of making discovery expeditious and
cost-effective. The arbitrator will set a discovery schedule with which the
parties will comply and attend depositions if requested by either party. The
arbitrator will entertain such presentation of sworn testimony or evidence,
written briefs and/or oral argument as the parties may wish to present;
however, no testimony or exhibits will be admissible unless the adverse party
was afforded an opportunity to examine such witness and to inspect and copy
such exhibits during the pre-hearing discovery phase. The arbitrator shall among
his other powers and authorities, have the power and authority to award interim
or preliminary relief.

 

(d)           The arbitrator shall not award either
parties punitive damages and the parties shall be deemed to have waived any
right to such damages. A qualified court reporter will record and transcribe
the proceedings. The decision of the arbitrator will be in writing and judgment
upon the award by the arbitrator may be entered into any court having
jurisdiction thereof. Prompt handling and disposal of the issue is important. Accordingly,
the arbitrator is instructed to assume adequate managerial initiative and
control over discovery and other aspects of the proceeding to schedule
discovery and other activities for substantially continuous work, thereby
expediting the arbitration as much as is deemed reasonable to him, but in all
events to effect a final award within three hundred sixty five (365) days of
the arbitrator’s selection or appointment and within twenty (20) days of the
close of evidence.

 

21

 

(e)           The proceedings shall be confidential and
the arbitrator shall issue appropriate protective orders to safeguard both
parties’ confidential information. The fees of the arbitrator shall be paid by
the losing party, which shall be designated by the arbitrator. If the
arbitrator is unable to designate a losing party, he shall so state and the
fees shall be split equally between the parties.

 

(f)            Each party is required to continue to
perform its obligations under this Agreement pending final resolution of any
such dispute.

 

(g)           The procedures specified in this Section
4.15 shall be the sole and exclusive procedures for the resolution of disputes
between the parties arising out of or relating to this Agreement; provided
however, that a party, without prejudice to the above procedures, may seek
injunctive relief or other provisional judicial relief, if in its sole
judgment, such action is necessary to avoid irreparable damage.

 

SECTION 4.16.      Consequential Damages.
Neither Reliant nor ASL (which for the purposes of this Section 4.16 shall
include their respective Affiliates, directors, managers, officers, employees,
consultants, equity holders, representatives and agents) shall have any
liability to the other for any punitive damages, specialty, incidental,
consequential or indirect damage relating to or arising from the loss of
commercial or business opportunity, revenue or profit, in connection with or
arising out of this Agreement even if such damages may have been forecasted;
providing that such limitations shall not apply in the case of (a) fraud, (b)
intentional misconduct or (c) any damages claimed by or paid to a third party
in a third party action.

 

SECTION 4.17.      Limitation of Liability.
Except in the cases of fraud, gross negligence or intentional misconduct ASL’s
aggregate liability to Reliant under this Agreement for any calendar year
during the term of this Agreement shall not exceed the net amounts paid by
Reliant (amounts paid less the Annual Payment Amount rebated) under Section 2.7
above with respect to that calendar year.

 

SECTION 4.18       Conversion to
Non-Exclusive. Following the Initial Period, in the event that Reliant
fails to purchase the Minimum in any two (2) consecutive calendar quarters
pursuant to Section 2.8 hereof, ASL as its sole remedy hereunder shall on
thirty (30) days written notice shall be relieved of the restriction on sales
to third parties of Active Ingredient set forth in Section 2.1(b) hereof. Reliant,
however, shall have the option during the thirty days following notice from ASL
to purchase such amounts of API as necessary to satisfy the Minimum for the
calendar quarters in question in which case the restriction on sales of Active
Ingredient to third parties set forth in Section 2.1(b) shall remain in full
force and effect.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

22

 

IN WITNESS WHEREOF, duly authorized
representatives of the parties hereto have duly executed this Agreement as of
the date first above written.

 

	
   

  	
  RELIANT PHARMACEUTICALS, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  AUSTIN SHASUN, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Title:

  

 

23

 

Exhibit A

 

SPECIFICATIONS

 

[TO BE SUPPLIED]

 

24

 

Exhibit A

 

Isradipine API Specifications

 

	
   

  	
   

  	
  Tests

  	
   

  	
  Limits

  
	
  1

  	
   

  	
  [***]

  	
   

  	
  [***]

  
	
  2

  	
   

  	
  [***]

  	
   

  	
  [***]

  
	
  3

  	
   

  	
  [***]

  	
   

  	
  [***]

  
	
  4

  	
   

  	
  [***]

  	
   

  	
  [***]

  
	
  5

  	
   

  	
  [***]

  	
   

  	
  [***]

  
	
  6

  	
   

  	
  [***]

  	
   

  	
  [***]

  
	
  7

  	
   

  	
  [***]

  	
   

  	
  [***]

  
	
  8

  	
   

  	
  [***]

  	
   

  	
  [***]

  
	
  9

  	
   

  	
  [***]

  	
   

  	
  [***]

  
	
  10

  	
   

  	
  [***]

  	
   

  	
  [***]

  
	
  11

  	
   

  	
  [***]

  	
   

  	
  [***]

  

 

[***]:  Certain information on this page has been
omitted and filed separately with the Commission.  Confidential treatment has been requested
with respect to the omitted portions.

25

 

Exhibit B

 

Pricing

 

The purchase
price (“Purchase Price”) for Active Ingredient purchased from ASL shall be as
follows:

 

Non-Commercial
Use – [***]

 

Commercial
Use:

 

	
  Kilos Purchased (Annualized)

  	
   

  	
  Cost/Kg

  
	
  Tier 1

  	
  [***]

  	
   

  	
  [***]

  
	
  Tier 2

  	
  [***]

  	
   

  	
  [***]

  
	
  Tier 3

  	
  [***]

  	
   

  	
  [***]

  

 

[***]:  Certain information on this page has been
omitted and filed separately with the Commission.  Confidential treatment has been requested
with respect to the omitted portions.

 

26

 

Exhibit C

 

QUALITY AGREEMENT

 

[TO BE SUPPLIED]

 

27Exhibit 10.35

 

EXCLUSIVE
SUBLICENSE AGREEMENT

 

BETWEEN

 

RELIANT
PHARMACEUTICALS, LLC

 

AND

 

NOVARTIS
AG

 

 

SUBLICENSE
AGREEMENT

 

THIS
SUBLICENSE AGREEMENT (this “Agreement”) dated as of the 11th
day of March, 2003, by and between Novartis AG, a company incorporated under
the laws of Switzerland, with a principal place of business located at Postfach
4002, Basel, Switzerland (hereinafter “Novartis”) and Reliant Pharmaceuticals,
LLC, a Delaware limited liability company, with its principal place of business
at 110 Allen Road, Liberty Corner, New Jersey 07938 (“Reliant”).

 

WHEREAS,
Sandoz Pharma Ltd. (“Sandoz”) entered into a Development and License Agreement
with Alza Corporation (“Alza”) dated January 1, 1991 (the “Alza License”),
which Alza License is annexed hereto as Exhibit A;

 

WHEREAS,
Novartis is a successor to Sandoz and has succeeded to the rights and
obligations of Sandoz under the Alza License;

 

WHEREAS,
pursuant to the Option and Asset Transfer Agreement (as hereinafter defined)
dated as of July 10, 2000, as amended, Reliant has exercised its option to
purchase all of Novartis’ right, title and interest in the Assets (as defined
in the Option and Asset Transfer Agreement); and

 

WHEREAS,
pursuant to the Option and Asset Transfer Agreement, Novartis desires to grant
a sublicense of the Alza License to Reliant on the terms and conditions set
forth herein; and

 

WHEREAS,
pursuant to the Option and Asset Transfer Agreement, Reliant desires to
sublicense the Alza License from Novartis on the terms and conditions set forth
herein.

 

NOW,
THEREFORE, in consideration of the foregoing recitals and the
mutual promises, representations, warranties, covenants and agreements
hereinafter set forth, and intending to be legally bound, the parties do hereby
agree as follows:

 

2

 

ARTICLE 1

DEFINITIONS

 

In this Agreement the
following terms shall have the following meanings:

 

1.1           “Affiliate” shall mean
all corporations or business entities which, directly or indirectly, are controlled
by, control, or are under common control with Novartis or Reliant, as the case
may be. For this purpose, “control” shall mean the possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of a person or entity, whether through the ownership of at least fifty
percent (50%) of the voting shares or interest of such person or entity, by
contract or otherwise.

 

1.2           “Alza License” shall
have the meaning ascribed to it in the Recitals hereof.

 

1.3           “Alza Technical
Information” shall mean Technical Information (as defined in the Alza License);
but only to the extent such Technical Information relates to Isradipine,
DynaCirc CR, or the System (as defined in the Alza License).

 

1.4           “Alza Patents” shall
mean those patents owned by Alza, and licensed by Novartis pursuant to the Alza
License, set forth on Schedule 1.4 hereto, including, without limitation,
reissues, continuations, and continuations in part.

 

1.5           “Change of Control”
means (i) the sale, lease, exchange, license or other disposition of all or
substantially all of a Person’s assets in one transaction or series of related
transactions; (ii) a merger, consolidation, refinancing or recapitalization as
a result of which the holders of a Person’s issued and outstanding voting
securities immediately before such transaction own or control less than a
majority of the voting securities of the continuing or surviving entity
immediately after such transaction and/or (iii) the acquisition (in one or more
transactions) by any Person or Persons acting together or constituting a “group”
under Section 13(d) 

 

3

 

of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), together with any
Affiliates thereof (other than, with respect to Reliant, members of Reliant as
of the date hereof and their respective Affiliates) of beneficial ownership (as
defined in Rule 13d-3 under the Exchange Act) or control, directly or
indirectly, of a least fifty percent (50%) of the total voting power of all
classes of securities entitled to vote generally in the election of a Person’s
board of directors, board of managers or similar governing body.

 

1.6           “Consequential
Damages” shall mean those types of damages variously referred to under
applicable law as “consequential,” “indirect” or “special,” including, without
limitation, lost profits, down time, loss of use and damage to business
reputation.

 

1.7           “DynaCirc
CR” or “Licensed Product” shall mean a controlled release formulation of
isradipine capsules (5 mg. and 10 mg.) marketed pursuant to the NDA under the
brand name DynaCirc CR.

 

1.8           “Effective
Date” shall mean March     , 2003, the date upon which this
Agreement shall become effective.

 

1.9           “GAAP”
shall have the meaning ascribed to it in Section 7.1(c) hereof.

 

1.10         “January
2003 Agreement” shall mean the letter agreement dated as of January 10, 2003
among Novartis, NPC and Reliant, as amended.

 

1.11         “Material
Adverse Effect” shall mean a material adverse effect on the manufacture,
marketing, distribution or sale of the Licensed Products.

 

1.12         “NDA”
shall mean the new drug application 20-336 (DynaCirc CR), as amended and
supplemented, for the Licensed Product and as approved by the FDA, to market
the Licensed Product in the Territory and any materials, documents or
information referred to or relied upon therein including without limitation all
drug master files relating thereto.

 

4

 

1.13         “Net
Sales” shall have the meaning set forth in Section 1.9 of the Alza License.

 

1.14         “NPC”
shall mean Novartis Pharmaceuticals Corporation, a Delaware corporation.

 

1.15         “Option
and Asset Transfer Agreement” shall mean that certain Option and Asset Transfer
Agreement dated July 10, 2000 between Reliant and Novartis and NPC, as amended.

 

1.16         “Person”
shall mean any individual, corporation (including any non-profit corporation),
general or limited partnership, limited liability company, joint venture,
estate, trust, association, organization, labor union, or other entity or
governmental body.

 

1.17         “Term”
shall have the meaning ascribed to it in Article 2.3 hereof.

 

1.18         “Territory”
shall mean the United States of America and Puerto Rico.

 

ARTICLE 2

GRANT OF SUBLICENSE

 

2.1           Grant
of Sublicense. Subject to the terms and conditions of this Agreement and
the Alza License, Novartis grants to Reliant and Reliant accepts an exclusive
sublicense in the Territory during the Term under the Alza License to utilize
the Alza Technical Information and the Alza Patents to make, have made (by a
third-party to which Alza has no reasonable objection), use and sell the
Licensed Product.

 

2.2           Payment
of Earned Royalties.

 

(a)           In
consideration of the sublicense granted to Reliant under Section 2.1 hereof,
Reliant shall pay royalties on Net Sales of the Licensed Product in the
Territory to Alza in accordance with the terms and conditions of the Alza
License. All royalty payments on Net Sales of the Licensed Product in the
Territory subsequent to the Effective Date due under the Alza License shall be
paid by Reliant for the duration of the Term. Payment of the royalties due 

 

5

 

under this
sublicense shall be paid to Alza in accordance with the Alza License. Reliant
shall provide Novartis with proof of payment within thirty (30) days of each
royalty payment date under the Alza License and at such other times as
reasonably requested by Novartis.

 

(b)           From and after such date as Reliant receives
the first shipment of B-1 or B-2 Lots (as such terms are defined in the January
2003 Agreement) and until such time as all of the B-1 and B-2 Lots are sold to
third parties, Reliant shall provide Novartis with a report within thirty (30)
days following the end of each calendar quarter setting forth for such calendar
quarter the number of units of Licensed Product from the B-1 or B-2 Lots sold
to third parties during such calendar quarter (identified by lot). Within
thirty (30) days of its receipt of such report, Novartis shall pay to Reliant
in respect of royalties under the Alza License the amount set forth under the
heading “Royalty Reimbursement from Novartis Per Unit” on Attachment B-1
or Attachment B-2, as applicable, to the January 2003 Agreement, per
unit of Licensed Product from the B-1 or B-2 Lots sold to third parties during
such calendar quarter. With respect to Licensed Product supplied by NPC
to Reliant on or prior to the Effective Date, Novartis represents and warrants
that it has or will pay royalties due to Alza in respect of the sale of such
Licensed Product by NPC to Reliant pursuant to and in accordance with the Alza
License. Except as expressly set forth
in this Section 2.2(b), Novartis shall have no further liability or obligation
with respect to royalties payable to Alza in respect of the manufacture, use,
or sale of Licensed Product constituting B-1 or B-2 Lots.

 

2.3           Term.
This Agreement shall commence on the Effective Date and unless sooner
terminated shall expire on the date on which the Alza License with respect to
the Territory terminates or expires (the “Term”). Notwithstanding the
foregoing, if Reliant is granted a license (including any sublicense by a
Person authorized to grant such sublicense) to utilize Alza 

 

6

 

Technical
Information and the Alza Patents to make, use and sell the Licensed Product, on
terms as or more favorable to Reliant (when taken as a whole) than those set
forth herein, subject to any confidentiality obligation of Reliant, Reliant
shall promptly notify Novartis in writing of such arrangement and the parties
shall negotiate in good faith the termination of this Agreement.

 

2.4           Records.
Reliant shall each maintain true and complete books of account containing an
accurate record of all data necessary for the proper computation of payments
due or charges made that it is responsible for determining under the provisions
of this Agreement or the Alza License. Novartis shall have the right, through
the independent certified public accountant employed by Reliant to conduct its
regular annual audit, or through a firm of independent public accountants
selected by mutual agreement of the parties, to examine the books of account of
Reliant at any time within two years after the date of the payment to which
they relate (but not more than once in each calendar year) for the purpose of
verifying the amount of such payments or charges and the accuracy of such books
of account. Such examination shall be made during normal business hours at the
place of business of Reliant. The parties agree that information furnished as a
result of any such examination shall be limited to a statement by such
certified public accountant to the effect that they have reviewed the books of
account of the party being audited and either (i) that the amounts of the
payments due or charges made under this Agreement are in conformity with such
books of account and the applicable provisions of this Agreement or (ii)
setting forth any required adjustments. The fees and expenses of the
accountants performing such verification shall be borne by the party requesting
the audit; provided, however, that if the audit is requested in connection with
the audited parties regular annual audit by its independent outside auditors,
the cost shall be borne by the party 

 

7

 

being audited. If
an audit shows any underpayment or overpayment a refund shall be made within 30
days of receipt of verification by the appropriate party.

 

ARTICLE 3

REPRESENTATIONS AND WARRANTIES

 

3.1           Representations
and Warranties of Novartis. Novartis hereby represents and warrants to
Reliant as of the date hereof as follows:

 

(a)           Organization.
Novartis is (i) a corporation duly organized and validly existing and in good
standing under the laws of the state or country of its incorporation, and (ii)
has all necessary corporate power and authority to own its properties and to
conduct its business, as currently conducted.

 

(b)           Authorization.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby are within the corporate power of Novartis,
have been or will be, on or prior to the Effective Date duly authorized by all
necessary corporate proceedings and this such Agreement has been, or will be,
prior to the Effective Date duly executed and delivered by Novartis.

 

(c)           Execution
and Delivery. Neither the execution of this Agreement nor the consummation
of the transactions contemplated herein: 
(i) requires Novartis to obtain any material approval, consent or
withholding of objections on the part of any regulatory or governmental body;
(ii) will result in any violation or breach of any term or provision of
Novartis’ internal rules of corporate governance; (iii) will constitute a
breach or default under any material indenture, mortgage, deed of trust,
license agreement, or other contract or agreement to which Novartis or any
Affiliate of Novartis is a party; or (iv) will violate any 

 

8

 

provision of any
judicial, governmental or administrative order, writ, injunction, award,
judgment or decree applicable to Novartis or any Affiliate of Novartis.

 

(d)           Binding
Obligation. As of the Effective Date, this Agreement has been duly and
validly authorized, executed and delivered by Novartis and, when duly executed
and delivered to Reliant as provided hereunder, will constitute the valid and
binding obligations of Novartis enforceable against Novartis in accordance with
its terms, except as such enforcement may be limited by bankruptcy or other
laws of general application affecting creditor rights or general principles of
equity.

 

(e)           Broker.
Neither Novartis nor any officer, director or agent of Novartis has employed
any broker, finder, or agent with respect to this Agreement or the transactions
contemplated hereby.

 

(f)            Right
to Sublicense; Consents. Except as set forth on Schedule 3.1(f), Novartis
has the right to sublicense to Reliant the Alza License.

 

(g)           Litigation.
Except as set forth on Schedule 3.1(g), there is no litigation, arbitration or
proceeding pending by or against Novartis involving the Alza Technical
Information, the Alza Patents, the Alza License or the Licensed Product which
would in any way materially impede, impair, restrict or interfere with the sublicense
granted Reliant hereunder.

 

(h)           No
Default. Novartis is not in breach or default, nor has it received written
notice of breach or default by Alza, under the Alza License.

 

(i)            Alza
License. Novartis shall comply with the terms of the Alza License during
the Term.

 

3.2           Representations
and Warranties of Reliant. Reliant hereby represents and warrants to
Novartis as of the date hereof as follows:

 

9

 

(a)           Organization.
Reliant (i) is a limited liability company duly organized, validly existing and
in good standing under the laws of the state of its formation and (ii) has all
necessary power and authority to own its properties and to conduct its business
as presently conducted.

 

(b)           Authority.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby are within the power of Reliant and have been
or will be, duly authorized by all necessary proceedings, and this Agreement
has been or will be, on or prior to the Effective Date, duly executed and
delivered by Reliant.

 

(c)           Execution
and Delivery. Neither the execution of this Agreement nor the consummation
of the transactions contemplated hereby: 
(i) requires Reliant to obtain the approval, consent or withholding of objection
on the part of any governmental body; (ii) will result in any violation or
breach of any term or provision of Reliant’s Certificate of Formation or
Operating Agreement; (iii) will constitute a default under any indenture,
mortgage, deed of trust, license, agreement, or other contract or agreement to
which Reliant is a party; or (iv) will violate any provision of any judicial,
governmental or administrative order, writ, injunction, award, judgment or
decree applicable to Reliant.

 

(d)           Binding
Obligation. This Agreement has been duly and validly authorized, executed
and delivered by Reliant, and when duly executed and delivered by Novartis will
constitute valid and binding obligations of Reliant, enforceable against
Reliant in accordance with its terms, except as such enforcement may be limited
by bankruptcy or other laws of general application affecting creditor rights or
general principles of equity.

 

10

 

(e)           Broker.
Neither Reliant nor any officer, manager or agent of Reliant, has employed any
broker or finder with respect to this agreement or the transactions
contemplated hereby.

 

(f)            Alza
License. Reliant shall not take any action or fail to take any action which
would cause Novartis to be in breach of the Alza License.

 

(g)           Litigation.
Except as set forth on Schedule 3.2(g), there is no litigation, arbitration or
proceeding pending by or against Reliant involving the Alza Technical
Information, the Alza Patents, the Alza License or the Licensed Product which
would in any way materially impede, impair, restrict or interfere with the
performance of Reliant hereunder.

 

ARTICLE 4

TERMINATION

 

4.1           Prior
Termination by Novartis. This Agreement may be terminated by Novartis
whenever any of the following events occur:

 

(a)           Reliant’s
failure or refusal to pay sums due Alza under the Agreement as and when due,
which failure is not cured within thirty (30) days after Novartis or NPC has
given written notice thereof to Reliant;

 

(b)           Reliant
has breached or failed to perform any of the material obligations under or in
connection with the Agreement or the Alza License (if any) and such breach or
failure is not cured within thirty (30) days after Novartis has given written
notice thereof to Reliant.

 

(c)           any
representation or warranty made herein by Reliant proves to be incorrect when
made which incorrectness would have a material adverse effect on the
performance of Reliant’s obligations under this Agreement;

 

11

 

(d)           a
court of competent jurisdiction enters a decree or order of relief appointing a
receiver, liquidator, assignee, trustee or similar official of Reliant or any
substantial part of its assets and such decree or order is consented to by
Reliant or continuing unstayed and in effect for a period of ninety (90) days;

 

(e)           Reliant
files a voluntary petition or acquiesces in or fails to contest an involuntary
petition under any bankruptcy, insolvency or similar law;

 

(f)            An
insolvency petition is filed against Reliant under any bankruptcy, insolvency
or similar law and is not dismissed within ninety (90) days;

 

(g)           Reliant
makes a general assignment for the benefit of its creditors; or

 

(h)           Reliant
is dissolved or liquidated other than as permitted by Section 8.9.

 

4.2           Prior
Termination by Reliant. This Agreement may be terminated by Reliant
whenever any of the following events occur:

 

(a)           Novartis
has breached or failed to perform any of the material obligations under or in
connection with this Agreement or the Alza License and such breach is not cured
within thirty (30) days after Reliant has given written notice thereof to
Novartis;

 

(b)           any
representation or warranty made herein by Novartis proves to be incorrect when
made which incorrectness would have a Material Adverse Effect;

 

(c)           a
court of competent jurisdiction enters a decree or order of relief appointing a
receiver, liquidator, assignee, trustee or similar official of Novartis or any
substantial part of its assets and such decree or order is consented to by
Novartis or continuing unstayed and in effect for a period of ninety (90) days;

 

(d)           Novartis
files a voluntary petition or acquiesces in or fails to contest an involuntary
petition under any bankruptcy, insolvency or similar law;

 

12

 

(e)           an
insolvency petition is filed against Novartis under any bankruptcy, insolvency
or similar law and is not dismissed within ninety (90) days;

 

(f)            Novartis
makes a general assignment for the benefit of its creditors; or

 

(g)           Novartis
is dissolved or liquidated.

 

ARTICLE 5

INDEMNIFICATION

 

5.1           Indemnification
of Reliant. Novartis will defend, indemnify and hold harmless Reliant, and
its Affiliates and the managers, members, officers, agents, employees,
representatives or consultants or of any of them (individually, a “Reliant
Indemnified Party,” and collectively, the “Reliant Indemnified Parties”), from
and against any and all liabilities, losses, damages, actions, claims and
expenses suffered or incurred by the Reliant Indemnified Parties (including
reasonable attorneys’ fees, court costs and expert witnesses’ fees)
(individually, a “Liability,” and collectively, the “Liabilities”) that result
from, or arise out of (i) a breach by Novartis of any representation, warranty,
covenant or agreement contained in this Agreement; or (ii) Novartis’ failure to
comply with any applicable federal, state or local law, rule or regulation in
connection with the performance of its obligations hereunder.

 

5.2           Indemnification
of Novartis. Reliant will defend, indemnify and hold harmless Novartis and
its Affiliates and the directors, stockholders, officers, agents, employees,
representatives or consultants or any of them (individually, a “Novartis
Indemnified Party,” and collectively, the “Novartis Indemnified Parties”), from
and against any and all Liabilities that result from or arise out of: (i) a
breach by Reliant of any representation, warranty, covenant or agreement
contained in this Agreement; (ii) Reliant’s failure to comply with any applicable
federal, state or local law, rule or regulation in connection with the
performance of its obligations 

 

13

 

hereunder or (iii)
Reliant’s exercise of its rights under this Agreement, including any breach of
the Alza License caused by Reliant.

 

5.3           Conditions
of Indemnification. The obligations of Novartis and Reliant under this
Article 5 shall be subject to the following terms and conditions:

 

(a)           The
party claiming a right to indemnification shall, within ten (10) business days
of receipt of notice of any claim, charge, suit or other action, give, in
accordance with Article 6, written notice to the indemnifying party, of any
such claim, charge, suit or other action which is governed by the indemnity obligations
of this Agreement but the failure to notify the indemnifying party will not
relieve the indemnifying party of any Liability that it may have to the party
claiming a right of indemnification, except to the extent that the defense of
such action by the indemnifying party is prejudiced by the failure to give such
notice;

 

(b)           The
indemnifying party shall conduct, at its own expense, the defense of any and
all such claims, charges, suits or other actions by a third party;

 

(c)           Each
party will offer reasonable assistance to the other party in defending or
settling the claim. Neither party shall settle or admit liability with respect
to any such claims, charges, suits or other actions which could result in
liability to the other party without the prior written consent of the other
party, which consent shall not be unreasonably withheld or delayed; provided
however, neither party may settle a claim or action related to a Liability
without the consent of the other party, if such settlement would impose any monetary
obligation on the other party or require the other party to submit to an
injunction or otherwise limit the other party’s rights under this Agreement.

 

(d)           If
the indemnifying party does not take the steps necessary against any such
claims, charges, suits or other action by a third party, the party claiming
indemnification 

 

14

 

may defend against
or settle such claims, charges, suits or other action, provided, that such
party may not settle such claims, charges, suits or other action without the
prior written consent of the indemnifying party which consent shall not be
unreasonably withheld or delayed; provided however, the defense and/or
settlement under this Article 5 shall not act as a waiver of rights to
indemnification under this Agreement or any other rights or remedies of a party
claiming indemnification and shall not excuse the indemnifying party from its
obligations hereunder, and all reasonable costs and expenses incurred by the
party claiming indemnification shall be subject to indemnity by the
indemnifying party.

 

5.4           Exclusive
Remedy. Notwithstanding any other provision of this Agreement, the
indemnification provided in this Article 5 shall be the exclusive remedy and
the sole recourse of all Liabilities related to or arising at law, under any
statute or in equity, or otherwise, directly or indirectly, out of this
Agreement or the transactions contemplated hereby (other than claims of or
causes of action arising from fraud). In furtherance thereof, each party hereto
waives, to the fullest extent permitted by law, any and all rights, claims,
actions or causes of action (other than claims of or causes of action arising
from fraud), it may have against any other party hereto relating to the subject
matter of this Agreement other than the remedies provided in this
Article 5.

 

5.5           Consequential
Damages. In no event shall any party hereunder or its Affiliates be liable
to any other party hereunder or its Affiliates, whether for breach of contract,
in tort (e.g. negligence, strict liability, etc.) or otherwise, for payment of
any punitive damages or Consequential Damages resulting or arising from this
Agreement or the transactions contemplated hereby, except for fraud or willful
misconduct; provided, however, that any 

 

15

 

damages (including
Consequential Damages) claimed by or paid to a third party in a third party
action shall not be considered Consequential Damages for purposes of this
Agreement.

 

ARTICLE 6

NOTICES

 

6.1           Notices.
All notices required or permitted hereunder shall be given in writing and sent
by facsimile transmission, mailed postage prepaid by certified or registered
mail, or sent by a nationally recognized express courier service or hand-delivered
at the following addresses:

 

TO RELIANT:  at its address shown below or such other
address as it may give to Novartis by notice hereunder:

 

Reliant Pharmaceuticals,
LLC 

110 Allen Road

Liberty Corner, New Jersey  07938

Attention:  President

Fax No.:  (908) 542-9406

 

with copies to:

 

Latham & Watkins

Sears Tower, Suite 5800

Chicago, Illinois  60606

Fax No.:  (312) 993-9767

Attn.:  Michael A. Pucker

 

TO
NOVARTIS, at the addresses shown below or such other address as it may give to
Reliant by notice hereunder:

 

Novartis AG

Postfach

4002 Basel, Switzerland

Attention:  Jürgen Vierkötter

Fax No.:  011-41-61-324-8444

 

16

 

with copies to:

 

Kaye Scholer LLP

425 Park Avenue

New York, New York  10022-3598

Attn:  Adam H. Golden, Esq.

 

All notices shall be
deemed made upon receipt by the addressee as evidenced by the applicable
written receipt.

 

ARTICLE 7

PUBLICITY

 

7.1           (a)    Disclosure
of Agreement Terms. Novartis and Reliant agree not to issue any press
releases or public announcements concerning this Agreement without the prior
written consent of the other party to the form, timing and content of any such
release or announcement, except as such release or announcement may be required
by law. A party who desires to issue a press release or make any other public
disclosure relating to this Agreement shall notify the other in writing at
least seven (7) business days (or such shorter period where legally required)
before the time of the proposed release. Such notice shall include the exact
text of the proposed release and the time and manner of the release. Neither
party shall unreasonably withhold its consent to any such press release or
announcement.

 

(b)           Exceptions.
Novartis and Reliant recognize that disclosure of the terms of this Agreement
to the IRS and other tax and regulatory authorities may be required, and
Novartis and Reliant each waives the requirements of this Section 7.1 with
respect to disclosure to such entities. In disclosing such information as
required in this Section 7.1(b), each party will use its reasonable best
efforts to secure confidential treatment from the applicable regulatory
authority when requested by either party.

 

17

 

(c)           Disclosure
of Financial Terms. Except (i) as required by law, (ii) in connection with
a transaction permitted under Section 8.9(a), and/or (iii) to investment
bankers and/or financing sources in connection with bona fide financing
transactions involving Reliant or an Affiliate (as defined in Section 8.9(b)),
neither party shall disclose to any third party, whether publicly or otherwise,
any financial terms of this Agreement, which have not been previously disclosed
publicly pursuant to this Section 7.1(c) without the prior written consent of
the other party, which consent shall not be unreasonably withheld or delayed. In
disclosing any information covered by this Section 7.1(c), (a) pursuant to a
requirement of law (including a requirement of law in connection with a
transaction permitted under Section 8.9(a)), each party will notify the other
of the proposed disclosure and each party will use its reasonable efforts to
secure confidential treatment from the applicable governmental authority when
requested by such other party and (b) in connection with disclosure permitted
by clauses (ii) and/or (iii) of this Section 7.1(c), Reliant will require the
party to whom it discloses such information to enter into a confidentiality
agreement including terms with respect to the financial terms of this Agreement
not less strict than those set forth in Schedule 7.1(c) attached hereto for a
period of at least two (2) years. Reliant will use reasonable commercial
efforts to enforce its rights under any such confidentiality agreement.

 

ARTICLE 8

MISCELLANEOUS

 

8.1           The
Headings. The titles, headings or captions and paragraphs in this Agreement
are for convenience only and do not define, limit, extend, explain or describe
the scope or extent of this Agreement or any of its terms or conditions and therefore
shall not be considered in the interpretation, construction or application of
this Agreement.

 

18

 

8.2           Invalid
Provisions. Whenever possible, each clause, subclause, provision or
condition of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any clause, subclause,
provision or condition of this Agreement should be prohibited or invalid under
applicable law, such clause, subclause, provision or condition shall be
considered separate and severable from this Agreement to the extent of such
prohibition or invalidity without invalidating the remaining clauses,
subclauses, provisions and conditions of this Agreement, so long as the
remaining Agreement reflects the economic intentions of the parties as
evidenced by this Agreement as a whole.

 

8.3           Entire
Agreement and the Alza License. This Agreement, the Alza License and the
January 2003 Agreement set forth the entire agreement between the parties hereto
pertaining to the subject matter hereof and supersedes all negotiations,
preliminary agreements, memoranda or letters of proposal or intent, discussions
and understandings of the parties hereto in connection with the subject matter
hereof. All discussions between the parties concerning this sublicense of Alza
Technical Information and Alza Patents have been merged into this Agreement,
the Alza License and the January 2003 Agreement and neither party shall be
bound by any definition, condition, understanding, representation, warranty,
covenant or provision other than as expressly stated in or contemplated by this
Agreement, the Alza License and the January 2003 Agreement or as subsequently
shall be set forth in writing and executed by a duly authorized representative
of the party to be bound thereby.

 

8.4           Amendments.
No amendment, change or modification of any of the terms, provisions or
conditions of this Agreement shall be effective unless made in writing and
signed on behalf of the parties hereto by their duly authorized
representatives.

 

19

 

8.5           Counterparts.
This Agreement may be executed in one or more counterparts, each of which shall
be deemed to be an original document, but all such separate counterparts shall
constitute only one and the same instrument.

 

8.6           Waiver.
No waiver of any term, provision, or condition of this Agreement, whether by
conduct or otherwise, in any one or more instances, shall be deemed to be or
construed as a further or continuing waiver of any such or other term,
provision, or condition of this Agreement.

 

8.7           Force
Majeure. Neither party shall be liable hereunder to the other party nor
shall a party be in breach for failure to perform its obligations caused by
circumstances beyond the control of either party, including but not limited to,
acts of God; fires; earthquakes; floods; riots; wars; civil disturbances;
sabotage; accidents; labor disputes; shortages; or government actions
(including but not limited to, priorities, requisitions, allocations and price
restrictions). In the case of any such event, the affected party shall promptly
notify the other party and make commercially reasonable efforts to diligently
pursue resolution of the force majeure event. The affected party shall make
diligent efforts to resume performance and keep the other party informed
thereof. After thirty (30) days of such inability to perform, the parties agree
to meet and in good faith discuss how to proceed. In the event that the
affected party is prevented from performing its obligations pursuant to this
Agreement for a period of six (6) months, the other party shall have the right
to terminate this Agreement.

 

8.8           Successors
and Assigns. Subject to Article 8.9, this Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and assigns permitted under this Agreement.

 

20

 

8.9           Assignment.

 

(a)           Except as otherwise
permitted hereby, neither party shall assign or otherwise transfer this
Agreement or any interest herein or right or obligation hereunder without the
prior written consent of the other party, and any such purported assignment,
transfer or attempt to assign or transfer any interest herein or right
hereunder shall be void and of no effect; provided,
however that (i) each party may
assign its rights and obligations hereunder to (A) an Affiliate or (B) a
transferee or acquiror of, or successor to, its assets or securities in the
event of a Change of Control without the prior written consent of the other
party and/or (ii) Reliant may assign its rights and obligations hereunder to an
acquiror of all or substantially all of Reliant’s assets relating to one or
more of DynaCirc, DynaCirc CR and DynaCirc BXR without the prior consent of
Novartis; provided, further that
(A) the assigning party shall remain responsible for all of its obligations and
agreements set forth herein, notwithstanding such assignment, and (B) in the
case of a Change of Control, such transferee or successor shall assume in
writing the obligations of the party to which it is the transferee or
successor.

 

(b)           For the purposes of the definition of Change of Control in Section 1.5,
Section 7.1(c) and this Section 8.9, with respect to Reliant, the term “Affiliate”
shall include any or all of the following Persons, (i) PharmBay Investors,
L.L.C., (ii) Bay City Capital Fund II, L.P., Bay City Capital Fund III, L.P.
(and their related co-investment and advisory entities), and/or (iii) (A) all
lineal descendants of Nicholas J. Pritzker, deceased, and all spouses and
adopted children of such descendants; (B) all trusts for the benefit of any
Person described in clause (A) and the trustees of such trusts; (C) all legal
representatives of any Person or trust described in clause (A) or (B); and (D)
all Persons controlling, controlled by or under common control with any person
trust or entity described in clause (A), (B), (C) or (D). The terms 

 

21

 

“controlling,” “controlled” and “common control with” mean the ability,
by ownership of voting securities or otherwise, directly or indirectly, to
direct the managerial and operating policies of a Person.

 

(c)           For the purposes of this Section 8.9, the following transactions shall
not constitute an assignment or a transfer (and are therefore permitted
transactions):  (i) conversion of Reliant
from a limited liability company to a corporation following which the
equityholders of Reliant immediately prior to such conversion hold shares in
the resulting corporation in approximately the same relative proportions as
they did in the pre-conversion entity, and (ii) issuance by Reliant of debt or
equity securities (including convertible or exchangeable securities) in connection
with any financing transaction or public offering which does not constitute a
Change of Control.

 

(d)           Nothing
herein shall preclude Reliant from entering into agreements with third parties
to co-promote or assist Reliant in the marketing or promotion of the Licensed
Product (or the Products as defined in the Option Agreement), including,
without limitation, engaging a contract sales organization; provided that the
foregoing shall not relieve Reliant of any of its obligations hereunder.

 

8.10         Survival.
The provisions of Articles 2.4 (to the extent pertaining to periods on or prior
to termination or expiration of this Agreement) 5, 6, 7, 8.12 and 8.15 shall
survive, and remain in effect, after termination or expiration of this
Agreement in accordance with their terms.

 

8.11         Construction.
This Agreement has been prepared jointly and shall not be strictly construed
against either party.

 

8.12         Governing
Law. This Agreement shall be interpreted under and governed by the internal
laws of the State of New Jersey, United States of America.

 

22

 

8.13         Dispute
Resolution. The parties will use their commercially reasonable efforts to
resolve any disputes arising from this Agreement by good-faith negotiation and
mutual discussion for a period of thirty (30) days. Thereafter, each party
shall be entitled to seek any remedy with respect to such dispute, whether
pursuant to this Agreement, at law or otherwise.

 

8.14         Relationship
Between Parties. Novartis and Reliant agree that in all matters relating to
this Agreement they are and shall be acting as independent contractors. Each
party shall bear all of their expenses in connection with the negotiation and
execution of this Agreement. Neither Novartis nor Reliant is, and shall not
hold itself out as, an agent, partner or joint venturer of the other. Neither
Novartis nor Reliant shall have any authority to assume or create any
obligation express or implied on behalf of the other.

 

8.15         Incorporation
by Reference; Conflicts. Sections 4, 10.1, 10.2, 10.3 and 12 of the
Alza License are hereby incorporated by reference as if fully set forth at
length herein.

 

The parties
acknowledge and agree that this Agreement shall be subject in all respects to
and limited by the Alza License and in the event of any conflict between this
Agreement and the Alza License, the provisions of the Alza License will control.

 

IN WITNESS WHEREOF, the
parties have caused this Agreement to be executed in duplicate on the day and
year first above written.

 

 

	
  RELIANT
  PHARMACEUTICALS, LLC

  	
  NOVARTIS
  AG

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
								

 

23

 

Schedule
1.4

U.S. PATENTS COVERING OROS® ISRADIPINE-DYNACIRC

 

	
  ARC No./

  Country

  	
   

  	
  Appln. No.

  	
   

  	
  Filing Date

  	
   

  	
  Patent No.

  	
   

  	
  Issue Date

  	
   

  	
  Expiration Date

  
	
  United States

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARC 1558

  	
   

  	
  07/104,006

  	
   

  	
  10/02/87

  	
   

  	
  4,816,263

  	
   

  	
  03/28/89

  	
   

  	
  March 28, 2006

  
	
  ARC 1558

  Div. 1

  	
   

  	
  07/267,894

  	
   

  	
  11/07/88

  	
   

  	
  4,946,687

  	
   

  	
  08/07/90

  	
   

  	
  Aug. 7, 2007

  
	
  ARC 1558

  Div. 2

  	
   

  	
  07/267,904

  	
   

  	
  11/07/88

  	
   

  	
  4,950,486

  	
   

  	
  08/21/90

  	
   

  	
  Aug. 21, 2007

  
	
  ARC 1558

  Cont. 1

  	
   

  	
  07/516,582

  	
   

  	
  04/30/90

  	
   

  	
  5,030,456

  	
   

  	
  07/09/91

  	
   

  	
  July 9, 2008

  
	
  ARC 1019

  CIP 6

  	
   

  	
  07/595,140

  	
   

  	
  10/09/90

  	
   

  	
  5,082,668

  	
   

  	
  01/21/92

  	
   

  	
  Jan. 21, 2009

  
	
  ARC 1019

  CIP 3

  	
   

  	
  06/912712

  	
   

  	
  09/29/86

  	
   

  	
  4,783,337

  	
   

  	
  11/08/88

  	
   

  	
  Sept. 16, 2003

  
	
  ARC 1019

  CIP 1

  	
   

  	
  06/685092

  	
   

  	
  12/21/84

  	
   

  	
  4,612,008

  	
   

  	
  09/16/86

  	
   

  	
  Sept. 16, 2003

  
	
  ARC 667

  	
   

  	
  06/210176

  	
   

  	
  11/25/80

  	
   

  	
  4,327,725

  	
   

  	
  05/04/82

  	
   

  	
  May 4, 1999

  
	
  ARC 419

  Cont. 1

  	
   

  	
  660219

  	
   

  	
  02/23/76

  	
   

  	
  4,088,864

  	
   

  	
  05/09/78

  	
   

  	
  May 9, 1995

  

 

24

 

Schedule
3.1(f)

Exceptions to Right to Sublicense; Consents

 

None.

 

25

 

Schedule
3.1(g)

Litigation

 

None.

 

26

 

Schedule
3.2(g)

Litigation

 

None.

 

27

 

Schedule
7.1(c)

 

Confidentiality Provisions

 

In order to allow you to
evaluate a possible negotiated business transaction (a “Transaction”) involving Reliant Pharmaceuticals, LLC, a Delaware
limited liability company (the “Company”),
you have requested certain information concerning the Company.

 

As a condition to your
being furnished such information, you agree to treat any information concerning
the Company, its affiliates and subsidiaries that has been or is furnished to
you by or on behalf of the Company, at any time or in any form, together with
all notes, interpretations, analyses, compilations, studies or other documents
prepared by you or any of your directors, officers, employees, agents or
advisors (including, without limitation, attorneys, accountants, consultants,
bankers, financial advisors and any representatives of your advisors)
(collectively, “Representatives”) that contain or otherwise reflect or are
based, in whole or in part, on such information (collectively referred to as
the “Evaluation Material”), in accordance with the provisions of this agreement.
“Evaluation Material” does not include information that (a) was or becomes
generally available to the public other than as a result of a disclosure by you
or your Representatives or (b) was or becomes available to you on a
non-confidential basis from a source other than the Company, or its advisors,
provided that such source was not known by you to be bound by any agreement
with the Company to keep such information confidential or to be otherwise
prohibited from transmitting the information to you by a contractual, legal or
fiduciary obligation.

 

You hereby agree that the
Evaluation Material will be used solely for the purpose of evaluating a
possible Transaction and that such information will be kept confidential. You
and your Representatives shall not disclose any portion of the Evaluation
Material to any person in any manner whatsoever, except to the extent that
disclosure of such information is required by law, regulation, supervisory
authority or other applicable judicial or governmental order. You may disclose
the Evaluation Material to your Representatives on a need to know basis,
however, they should be informed of and bound to this agreement, and you agree
to be responsible for any breach hereof on their part. You agree, at your sole
expense, to take all reasonable measures (including but not limited to court
proceedings) to restrain your Representatives from prohibited or unauthorized
disclosure or use of the Evaluation Material.

 

In addition, without the
prior written consent of the Company, you will not, and will direct your
Representatives not to, disclose to any person (i) that the Evaluation Material
has been made available to you or your Representatives, (ii) that discussions
or negotiations are taking place concerning a possible transaction involving
the Company and you, or (iii) any terms, conditions or other facts with respect
to any such possible Transaction, including the status thereof. Such facts will
be deemed to be included in the Evaluation Material for all purposes of this
agreement.

 

In the event that you are
requested or required by law, regulations or applicable judicial or
governmental order to disclose any Evaluation Material, you will provide the
Company with prompt written notice of such request or requirement. If, failing
the entry of a protective order, you are, in the reasonable opinion of your
counsel, legally compelled to 

 

28

 

disclose any portion of
the Evaluation Material, you may disclose to the entity compelling such
disclosure only that portion of the Evaluation Material that your counsel
advises that you are compelled to disclose, provided that you will exercise
reasonable efforts to obtain assurance that confidential treatment will be
accorded to that portion of the Evaluation Material that is being disclosed and
you will cooperate with any action by the Company to obtain an appropriate
protective order or other reliable assurance that confidential treatment will
be accorded the Evaluation Material.

 

All Evaluation Material
disclosed by or on behalf of the Company shall be and shall remain the property
of the Company. As soon as reasonably practicable after being so requested in
writing by the Company, you shall return or destroy all Evaluation Material,
whether in printed or electronic form (and any copies thereof). Any destruction
of Evaluation Material shall be confirmed by you in writing to the Company.

 

You understand and acknowledge
that any and all information contained in the Evaluation Material is being
provided without any representation or warranty, express or implied, as to the
accuracy or completeness of the Evaluation Material, on the part of the Company.
You agree that none of the Company or any of its affiliates or representatives
shall have any liability to you or any of your Representatives. It is
understood that the scope of any representations and warranties to be given by
the Company will be negotiated along with other terms and conditions in
arriving at a mutually acceptable form of definitive agreement should
discussions progress to such a point and only those representations and
warranties shall have any legal effect.

 

It is understood and
agreed that money damages would not be a sufficient remedy for any breach of
this agreement by you or your Representatives, that any such breach would
result in ongoing and irreparable harm to the Company and that the Company
shall be entitled to specific performance and injunctive or other equitable
relief as a remedy for any such breach and you further agree to waive any
requirement for the security or posting of any bond in connection with any such
remedy. Such remedy shall not be deemed to be the exclusive remedy for breach
of this agreement but shall be in addition to all other remedies available at
law or equity to the Company. In the event of litigation relating to this
agreement, the prevailing party shall be entitled to be paid by the other party
all reasonable legal fees and other expenses such prevailing party has incurred
in connection with such litigation, including any appeal therefrom.

 

This agreement is
governed by the laws of the State of [          ]
without regard to conflict of laws principles. You hereby irrevocably and
unconditionally consent to submit to the non-exclusive jurisdiction of the
courts of the State of [          ]
and the United States of America located in the State of [              ]
for any action, suit or proceeding arising out of or relating to this letter
agreement or the transactions contemplated hereby.

 

This agreement may not be
amended except in writing signed by both parties hereto. No failure or delay by
the Company in exercising any right, power or privilege hereunder or any partial
exercise thereof shall operate as a waiver thereof or preclude any other or
future exercise thereof or the exercise of any other right, power or privilege
hereunder. The invalidity or unenforceability of any provision of this
agreement shall not affect the validity or enforceability of any other
provisions of this agreement, which shall remain in full force and 

 

29

 

effect. For purposes of
this agreement, the term “person” shall be broadly interpreted to include the
media and any individual, corporation, partnership, group or other entity. This
agreement may be executed in counterparts, each of which will be deemed to be
an original, but all of which constitute the same agreement. Please confirm
that the forgoing is in accordance with your understanding of our agreement by
signing and returning to us a copy of this letter.

 

This agreement shall
terminate and be of no further force or effect from and after [     ]
from the date hereof.

 

30

 

Exhibit
A

Alza License

 

[***]

 

[49 pages omitted]

[***]:  Certain information on this page has been
omitted and filed separately with the Commission.  Confidential treatment has been requested
with respect to the omitted portions.

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