Document:

Exhibit 10.29

 

CONFIDENTIAL TREATMENT REQUESTED:

Portions of this Exhibit have been redacted pursuant to a request
for confidential treatment under Rule 24b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended.  Such
redacted portions have been replaced with “{***}” in this
Exhibit.  An unredacted version of this document has
been filed separately with the Securities and Exchange Commission along with
the request for confidential treatment.

 

(1) CAMBRIDGE
LABORATORIES LIMITED

trading as

CAMBRIDGE LABORATORIES
IRELAND

 

and

 

(2) LABORATOIRES
FOURNIER SA

 

 

CONTRACT MANUFACTURE
AGREEMENT

 

 

 

CONTRACT MANUFACTURE
AGREEMENT

 

THIS AGREEMENT is made the 9th day of May 2005 (the “Effective Date”)

 

BETWEEN

 

(1)                                  Cambridge Laboratories
Limited, a company incorporated in England whose registered office is located
at 17 Hanover Square, London WIS 1HU trading as Cambridge Laboratories Ireland
with offices at Alexandra House, The Sweepstakes, Ballsbridge, Dublin 4,
Ireland (“Cambridge”)

 

and

 

(2)                                  Laboratoires
Fournier SA a company incorporated in France whose registered office is at 42
rue de Longvic, 21300 Chenôve, France (“Manufacturer”)

 

RECITALS:

 

(A)                              Manufacturer is
a pharmaceutical company, with activities in the area of the manufacture,
assembly and packaging of pharmaceutical products.

 

(B)                                Cambridge is a
pharmaceutical company, with activities in the marketing and sales of
pharmaceutical products, including the Product as defined hereunder.

 

(C)                                Cambridge
wishes Manufacturer to manufacture the Product on its behalf and Manufacturer
is willing to Manufacture the Product on the terms and conditions hereinafter
set out.

 

THE PARTIES AGREE AS
FOLLOWS:

 

1                                         Definitions

 

1.1                                 In this Agreement the following terms
shall have the following meanings unless the context otherwise requires:

 

	
   

  	
  “Active
  Substance”

  	
  means
  tetrabenazine

  
	
   

  	
   

  	
   

  
	
   

  	
  “Affiliates”

  	
  means
  in respect of each party any company which at the relevant time is
  controlled, controlling or under common control with such party. For the
  purposes of this definition, control means the direct or indirect ownership
  of: (a) a majority of the voting rights in such party; or (b) the
  right to appoint or remove a majority of its board of directors;

  

 

 

	
   

  	
  “Agreement”

  	
   

  	
  means
  this Contract Manufacture Agreement, along with its recitals and Schedules
  hereto.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  “Batch”

  	
   

  	
  means
  a uniquely identified or identifiable quantity of raw materials, starting
  materials, packaging materials or Product which has been processed in one
  process or series of processes to the extent that such quantity could be
  expected to be homogeneous;

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  “Certificate of Analysis”

  	
   

  	
  means
  a document stating that the results of the laboratory analysis of the
  Product, packaging materials or Raw Materials conforms with the Specifications;

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  “Certificate of Conformance”

  	
   

  	
  means
  a document signed by a Qualified Person stating and confirming that the
  Product or product to which such document refers has been Manufactured in
  accordance with the Specifications (and referencing the Regulatory Approval
  number, if applicable) and GMP;

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  “Cost of Production”

  	
   

  	
  means,
  as relevant to the context in which the phrase is used, both the individual
  and overall cost of material, equipment, labour and direct overheads to
  Manufacturer in Manufacturing the Product;

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  “Defect”

  	
   

  	
  means
  a non-compliance of the Product with the Specifications caused by the failure
  by Manufacturer to comply with GMP, the Specifications or the Technical
  Conditions;

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  “Firm Period”

  	
   

  	
  means
  the binding element of the Vendor’s Schedule, being the first {***}† months
  thereof;

  	
   

  

 

† Represents material which has been redacted
and filed separately with the Securities and Exchange Commission pursuant to a
request for confidential treatment pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934, as amended.

 

2

 

	
   

  	
  “Force Majeure”

  	
   

  	
  means,
  in relation to either party, any strike, lock-out or other form of industrial
  action, civil commotion, Act of God, fire, explosion, flood, failure of
  utilities, war or hostilities, acts of Government or Government appointed
  agents, embargoes or other export restrictions, or perils of the sea, or any
  circumstance beyond the reasonable control of that party;

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  “Forecast”

  	
   

  	
  means
  the non-binding element of the Vendor’s Schedule, being the last eight months
  thereof;

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  “GMP”

  	
   

  	
  means,
  as relevant to the Product, the principles and guidelines of good
  manufacturing practice as contained in a directive 2003/94/EC (medicinal
  products for human use), as such principles and guidelines are interpreted
  and expanded in “The Rules Governing Medicinal Products in the European
  Community, Volume IV. Good Manufacturing Practice for Medicinal Products”,
  together with those rules and guidelines contained in the United States
  Code of Federal Regulations (Title 21, Parts 210-211, 600 and 610);

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  “Information”

  	
   

  	
  means
  any information, technology, know how, data or commercial information of a
  confidential and proprietary nature relating to a party’s business, products,
  intellectual property or services, including without limiting the foregoing,
  the Technical Information, Specifications and Product price data;

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  “Manufacture”

  	
   

  	
  means,
  following Validation, the production of the Product from the Raw Materials
  and the Active Substance and includes manufacturing, formulating, assembling,
  packaging, labelling, storage, handling, use, testing and quality control;

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  “Manufacturing Specifications”

  	
   

  	
  means
  the processes, instructions, assays, in process testing requirements,
  finished product testing requirements and other information required to
  Manufacture the Product as set forth in the Specifications

  	
   

  

 

3

 

	
   

  	
  “Packaging Specifications”

  	
   

  	
  means
  the specifications for the labelling and packaging of the Product set forth
  in the Specifications. The parties acknowledge that there are a number of
  different Packaging Specifications that relate to the Product to be supplied;

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  “Product”

  	
   

  	
  means
  the product containing the Active Substance and described in the
  Specifications;

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  “Product Specifications”

  	
   

  	
  means
  the specifications for the Product set forth in the Specifications;

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Protocol

  	
   

  	
  means
  the document setting forth the rules, standards, performances and goals
  expected of the Validation as determined by Manufacturer after transfer of
  the Technical Information referred to in Article 2.3 hereof and agreed
  and approved by Cambridge.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  “Qualified Person”

  	
   

  	
  means
  the person so designated in accordance with EEC Directive 75/319;

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  “Raw Materials”

  	
   

  	
  means
  the raw materials specified in the Specifications;

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  “Raw Materials Specifications”

  	
   

  	
  means
  the specifications or requirements for the Raw Materials as set forth in the
  Specifications.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  “Regulatory Approval”

  	
   

  	
  means
  any product licence, marketing authorisation or clinical trials certificate
  or equivalent issued for the Product by the relevant Regulatory Authority and
  in terms permitting, as appropriate, the importation, distribution, sale,
  marketing or use of the Product;

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  “Regulatory Authority”

  	
   

  	
  means
  the Irish Medicines Board and the French Regulatory Authority or any
  equivalent competent body in any jurisdiction as relevant to the Product and
  the territories in which the Product is to be marketed or used with the
  exception of Japan;

  	
   

  

 

4

 

	
   

  	
  “Specifications”

  	
   

  	
  means
  the Manufacturing Specifications, the Packaging Specifications, the Raw
  Materials Specifications and the Product Specifications set forth in the
  document entitled “Schedule 2 Specification” signed on even date and amended
  from time to time in accordance with the terms of this Agreement;

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  “Technical Conditions”

  	
   

  	
  means
  the Technical Conditions setting out or otherwise identifying the
  Specifications for the Product which are annexed as Schedule 1 hereto. The
  Technical Conditions may be modified from time to time by mutual written
  agreement between the parties;

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  “Technical Information”

  	
   

  	
  means
  all know-how, registration data, experience, instructions, standards,
  methods, test and trial results, manufacturing processes, hazard assessments,
  quality control standards, formulae, specifications, storage data, samples,
  drawings, designs, descriptions of packaging materials and all other relevant
  information relating to the Product, the Raw Materials, the Active Substance
  or the Manufacture, storage, packaging, shipping, handling or use of the
  Product, Raw Materials and Active Substance;

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  “Trade Mark(s)”

  	
   

  	
  means
  the trade mark(s) set out in Schedule 4 which are either owned by
  Cambridge or to which Cambridge has the necessary right of use;

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  “Validation”

  	
   

  	
  means
  the process of proving the reproducibility, efficacy, and repeatability of
  all procedures, processes, equipment, materials, testing equipment, tests,
  activity or system and the ability thereof to Manufacture the Product in
  accordance with the principles of GMP, the Specifications and the Protocol to
  the satisfaction of the Manufacturer;

  	
   

  

 

5

 

	
   

  	
  “Vendor’s Schedule”

  	
   

  	
  means
  Cambridge’s 12 months rolling requirements for supply of the Product for the
  period of twelve (12) calendar months as from the date on which it is sent to
  Manufacturer, and which shall be comprised of a binding Firm Period and a
  non-binding Forecast. The Vendor Schedule shall specify requirements for both
  the 12.5 mg and the 25 mg strengths of the Product and the different
  packaging for the Product.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  “Commercial Packs”

  	
   

  	
  means
  all Product for which Manufacturer has carried out the Manufacture, including
  primary and secondary packaging, destined for the territories as indicated on
  the list set forth in Schedule 5 hereto.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  “Export Packs”

  	
   

  	
  means
  all Product for which the Manufacturer has not done secondary packaging and
  which is intended for the territories indicated on the list set forth in
  Schedule 5 hereto.

  	
   

  

 

1.2                                 Any reference in this Agreement to “writing”
or cognate expressions includes a reference to mail, telex, cable, facsimile
transmission or comparable means of communication.

 

1.3                                 Words in this Agreement importing the
singular meaning shall where the context so admits include the plural meaning
and vice versa.

 

1.4                                 The headings in this Agreement are for
convenience only and shall not affect its interpretation.

 

2                                         Technology Transfer

 

2.1                                 Within 2 weeks after
the signature of this Agreement, and prior to Manufacturer’s obligations to
Manufacture the Product hereunder arising, Cambridge will supply and transfer
to Manufacturer all the Technical Information that it has in its possession or
control to enable Manufacturer to Manufacture and adequately transport the
Product, the Raw Materials and the Active Substance in accordance with the Specifications,
GMP and this Agreement and more generally to fulfil all of its obligations
hereunder.

 

2.2                                 As from the date of signature hereof and
throughout the Validation process, Cambridge will promptly provide such
technical assistance as may reasonably be requested to enable the effective
transfer of the Technical Information referred to in clause 2.1 and to enable
the Manufacturer to carry out the Validation and Manufacture the Product.

 

2.3                                 Upon receipt of such Technical
Information and technical assistance, Manufacturer shall carry out Validation
of the process of Manufacture in accordance with the Protocol.

 

6

 

2.4                                 In accordance with the Protocol,
Manufacturer shall Manufacture three (3) Validation Batches of the Product
in accordance with the Specifications for use in the Validation process. This
Validation process may include Stability Studies to current ICH standards.

 

2.5                                 Notwithstanding anything else herein
contained, should (i) Validation of the process of Manufacture not be
proven in accordance with the Protocol; (ii) should Manufacturer be unable
for whatever reason to Manufacture the Product in accordance with the Technical
Conditions, the Specifications, or this Agreement, or (iii) the Regulatory
Authorities not approve the Product, the parties shall meet and discuss the
issues and the means by which any problems may be resolved. If the issues
preventing the Validation are not able to be overcome to the satisfaction of
Cambridge, Cambridge may terminate this Agreement on provision of at least 1
month’s written notice and the provisions set forth in Article 13 shall
apply. Manufacturer may terminate this Agreement during or at the end of the
Validation process in the event that Validation is not carried out to
Manufacturer’s satisfaction and the provisions set forth in Article 13
shall apply.

 

2.6                                 Cambridge shall pay Manufacturer for the
Validation in accordance with Part A of Schedule 3. For the sake of
clarity, if the Validation is unsuccessful Cambridge shall only be required to
pay for those modules of the Validation process that were completed by
Manufacturer prior to the failure, plus those other costs as set forth in Article 13
hereof.

 

3                                         Supply and use of the Active Substance

 

3.1                                 Cambridge will supply to Manufacturer in
a timely manner, and at least 4 weeks in advance of Manufacturer’s requirement
of any Active Substance, to enable Manufacturer to fulfil its obligations
hereunder, free of charge, such quantities of the Active Substance as
Manufacturer requires to Manufacture the quantities of the Product indicated in
the Vendor’s Schedule.

 

3.2                                 Manufacturer shall keep full and accurate
records of its inventory of the Active Substance and shall provide to
Cambridge, on the last working day of each month, a report of its stock of the
Active Substance, including work in progress and utilisation in the period.
Cambridge has informed Manufacturer that Cambridge will over the course of the
following years be moving to a fully integrated CFR 21 compliant electronic
system. Cambridge will keep Manufacturer informed of its activities in this
respect, in particular in the event that such activities may have an impact on
Manufacturer’s activities hereunder. The parties agree to make their best
efforts to ensure that their activities are CFR 21 compliant. In the event that
there is a problem and Cambridge’s and Manufacturer’s CFR 21 systems are
incompatible, Cambridge and Manufacturer will come together to discuss how to
address such situation. If agreement as to how to address this situation cannot
be reached between operational representatives of each party, either party may
refer the matter for further discussion between the respective Chief Executive
Officers.

 

3.3                                 Active Substance provided by Cambridge
shall comply with the Specifications for such and shall be accompanied by a
Certificate of Analysis from Cambridge’s Active Substance manufacturer.
Cambridge warrants that the Active Substance manufacturer is a 

 

7

 

qualified pharmaceutical company, entitled to carry on its business and
manufacture the Active Substance.

 

3.4                                 Manufacturer will store the Active Substance
supplied by Cambridge in accordance with the Specifications and GMP and shall
use such solely for the Manufacture of the Product in accordance with GMP, the
Specifications and the Technical Conditions, for the purposes hereof.
Notwithstanding the foregoing, to the extent possible given the Manufacturer’s
needs for the purposes hereof, on Cambridge’s written request, Manufacturer
will supply Active Substance to third parties designated by Cambridge for
research and development work.

 

3.5                                 Manufacturer acknowledges that Cambridge
is supplying the Active Substance for the Manufacture free of charge and agrees
to compensate Cambridge for any costs incurred by Cambridge in replacing any
Active Substance that has been rendered unusable due to the failure of Manufacturer
to store the Active Substance in accordance with the Specifications and GMP,
the negligence or wilful default of Manufacturer or in the event of waste in
failing to comply with the Specifications, GMP and the Technical Conditions in
the Manufacture of the Product. Following Validation, the parties may, by
mutual agreement recorded in writing, adjust the acceptable waste percentage
set forth in Article 12 of the Technical Conditions. The parties shall
review the acceptable waste percentage annually. In the event that the
Manufacturer has complied with the Specifications, the Technical Agreement and
GMP but in doing so Manufacturer has exceeded the acceptable wastage percentage
of Active Substance set forth in the Technical Conditions the parties shall
review the reason for the excess and, if the parties agree that the Active
Substance waste level of the Batch in question is an anomaly, they shall agree
upon an equitable sharing of the cost of replacement of the excess Active
Substance used in that Batch over the agreed waste percentage. In the event
that Manufacturer has manufactured a Batch of Product in accordance with the
Specifications, GMP and the Technical Agreement but the Batch nonetheless
fails, the parties shall meet, as soon as is practicable after the Batch
failure, to determine whether there is any solution aside from Manufacturing a
replacement Batch from scratch. The parties shall agree upon an equitable
sharing of the costs of whatever remedial action is agreed upon. Cambridge
acknowledges that the requirement on Manufacturer to reimburse Active Substance
that has been wasted will not apply in respect of Active Substance used in the
Validation save in the event of negligence or wilful malfeasance on the part of
Manufacturer.

 

3.6                                 In the event that Cambridge requests, in
writing, that Manufacturer provide Active Substance to a third party for
research and development work Cambridge shall pay Manufacturer for its
reasonable and documented handling, storage and transportation costs, and shall
hold Manufacturer harmless from any claims resulting from or relating to the
use of the Active Substance in such context.

 

3.7                                 Cambridge shall retain title in any
Active Substance until such Active Substance becomes incorporated in the
Manufacture of the Product subject to Cambridge’s insurance obligations set
forth in Article 10 hereof, save that such shall not limit Cambridge
rights under clause 3.5 to seek compensation for the cost of replacement for
wasted or misused Active Substance.

 

8

 

4                                         Contract Manufacture

 

4.1                                 Cambridge hereby appoints Manufacturer to
Manufacture Cambridge’s requirement for the Product and Manufacturer accepts
such appointment. During the period of this Agreement Manufacturer will Manufacture
for Cambridge the Product in accordance with this Agreement.

 

4.2                                 Except as otherwise provided herein or
specifically requested otherwise by Cambridge, Manufacturer shall source, at
its cost, all Raw Materials other than the Active Substance.

 

4.3                                 Manufacturer represents, warrants and
covenants that:

 

4.3.1                        it has and will use all best endeavours to maintain
during the term of this Agreement, such authorisations from the Regulatory
Authority in France as are necessary to enable it to manufacture the Product;

 

4.3.2                        it will conduct the Manufacture in accordance with
GMP, the Specifications and the Technical Conditions;

 

4.3.3                        it will ensure that any Raw Materials employed by
Manufacturer in the Manufacture and not supplied by or on behalf of Cambridge
will at the time of use comply with the Specifications and that it has
Certificates of Conformance to confirm such where applicable;

 

4.3.4                        In the event that Manufacturer receives, in relation
to the Product, any 483 Notice, warning letter from FDA or any similar notice
from any other Regulatory Authority or government agency where a failure to
comply with such could result in Manufacturer being unable to perform its
obligations under this Agreement or any other communication from any Regulatory
Authority pertaining directly or indirectly to the manufacture of the Product
(hereinafter “Regulatory Notices”), Manufacturer shall use commercially
reasonable endeavours to send to Cambridge, within five (5) working days
following receipt of such Regulatory Notice and in any event no later than ten (10) working
days following receipt of such, edited copies of such Regulatory Notices
(removing only those words which would result in breach of confidentiality
obligations to any third party) and to notify Cambridge of any requirements set
forth in those Regulatory Notices that it is going to be unable to rectify
within the time frame set forth for rectification in the Regulatory Notice.
Manufacturer shall, save as set forth above, use commercially reasonable endeavours
to rectify any matters set forth in any Regulatory Notice in the time frame set
forth for rectification of the issue in the Regulatory Notice or other time
frame, if and as agreed upon with the Regulatory Authority or government
agency. If Cambridge has received notification from Manufacturer that it is
going to be unable to rectify certain matters raised in any Regulatory Notice
within the time frame for rectification and that this would render Manufacturer
unable to further Manufacture the Product within a reasonable timeframe,
Cambridge shall have the right to terminate this Agreement.

 

9

 

4.4                                 Cambridge represents, warrants and
covenants that:

 

4.4.1                        it will be responsible for assessing and confirms that
it has assessed the competence of Manufacturer to carry out the Manufacture of
the Product in accordance with GMP;

 

4.4.2                        it has notified Manufacturer of any special
requirements in respect of record- keeping that may be necessary to comply with
Cambridge’s adverse event/defect/recall procedure;

 

4.4.3                        it shall notify Manufacturer of any hazards to the
health or safety of any personnel of Manufacturer and Cambridge shall keep
Manufacturer so advised throughout the continuance of this Agreement.

 

4.4.4                        the Technical Information that it will provide to the
Manufacturer is to the best of its knowledge true, exact, complete and
sufficient for the purposes hereof and has been used successfully by two other
manufacturers in the manufacture of the Product,

 

4.4.5                        the Specifications are to the best of its knowledge
true, exact and complete and sufficient to Manufacture the Product in
accordance with the purposes hereof and have been successfully used by two
other manufacturers in the manufacture of the Product;

 

4.4.6                        it holds the rights in and to the Technical
Information, the Product, the Active Substance and the Product packaging to
enable the Manufacturer to Manufacture the Product and to perform its
obligations hereunder,

 

4.4.7                        that, to the best of its knowledge and belief, the
Technical Information, Product, Product packaging, Active Substance,
Manufacture and Raw Materials do not infringe the rights of any third party,
and that the Manufacturer may freely use them for the purposes hereof and that
it has not at any time in the past 10 years received any claim from any third
party that any of the aforementioned items or actions infringe their
intellectual property rights.

 

5                                         Technical Conditions

 

5.1                                 The respective responsibilities of
Manufacturer and Cambridge relating to the Manufacture of the Product, the way
in which each Batch of the Product is to be Manufactured and checked for
compliance with and adherence to the appropriate Specifications and GMP, the
responsibility for purchasing materials, testing and releasing materials and
undertaking production and quality control including in-process controls as
well as sampling and analysis shall be as specified in the Technical
Conditions.

 

5.2                                 Subject to Cambridge complying in all
respects with its obligations under this Agreement, Manufacturer shall be
responsible for ensuring the safe operation of the process of Manufacture of
the Production in its premises.

 

10

 

5.3                                 Any alteration to the Technical
Conditions must be agreed between the parties and such agreement will include
but not be limited to agreeing the implications of such alterations on the Cost
of Production and the cost of Validation thereof. Should no agreement be
reached, the escalation provisions of clause 15 shall apply.

 

6                                         Duration

 

6.1                                 Unless sooner terminated as hereinafter
provided, this Agreement shall come into force on the Effective Date hereof and
shall continue in force for a minimum period of seven (7) years. This
Agreement may be renewed for an open-ended term by either party providing
notice of renewal to the party at least 18 months prior to the end of such
seven-year period. If either party wishes to terminate on the seventh
anniversary of the Effective Date it must provide no less than 18 months’
written notice of such to the other party to expire on the seventh anniversary
of the Effective Date. Notwithstanding the foregoing, in the event that no
notice of renewal or of termination is sent by either party by the deadlines
set forth in this Article, the Agreement shall expire at the end of such seven (7) year
period. If renewed, it shall continue until terminated by either party giving
to the other not less than 18 months’ notice.

 

7                                         Vendor’s Schedule Forecast and Supply

 

7.1                                 During the term of this Agreement and
following Validation Cambridge will submit to Manufacturer Vendor’s Schedules.
The first Vendor’s Schedule shall be submitted to Manufacturer within seven (7) days
of the successful completion of that Validation and shall cover the twelve (12)
calendar months from that date. Thereafter Vendor’s Schedules will be submitted
each month by no later than the twentieth (20th) day of each calendar month,
specifying Cambridge’s anticipated requirements for Product in calendar monthly
periods for the relevant twelve (12) month period covered by the Vendor’s
Schedule.

 

7.2                                 The first Vendor’s Schedule submitted to
Manufacturer shall be accompanied by purchase orders covering the Firm Period
of such Vendor’s Schedule. All subsequent Vendor’s Schedules submitted shall be
accompanied by purchase orders covering the relevant amount of Product
indicated as being required in the last month of the Firm Period and stating a
date for delivery consistent with the Firm Period and which delivery date must
be at least thirteen (13) weeks from the date of receipt by Manufacturer of
such purchase order. The quantity set forth in the Firm Period may not be
altered. The quantity set forth in the Forecast may be altered by Cambridge
within a range of plus or minus {***}† for months {***}†, plus or minus {***}†
for the months thereafter. Manufacturer shall notify Cambridge of its receipt
of any purchase order and acceptance of such delivery date in writing within
five (5) working days of receipt. Unless inconsistent with the
aforementioned restrictions on the Firm Period and agreed percentage changes in
the Forecast, all such purchase orders (“Firm Period Orders”) shall be
confirmed by Manufacturer and shall be binding on Manufacturer. If Cambridge
requires and orders 

 

† Represents material which has been redacted
and filed separately with the Securities and Exchange Commission pursuant to a
request for confidential treatment pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934, as amended.

 

11

 

additional quantities of the Product over and above those set forth in
the Firm Period, Manufacturer shall use reasonable endeavours to fulfil that
order. Notwithstanding the foregoing, the parties acknowledge that, within two (2) weeks
of the end of Validation, Manufacturer will notify Cambridge in writing of the
maximum quantity of the Product Manufacturer can Manufacture in any year
and/or, if applicable, per purchase order (hereinafter “Manufacturer’s Annual
Production Capacity”) and Manufacturer shall not be obliged to fulfil any
orders, whether Firm Period Orders or other orders, for quantities ordered in
excess of Manufacturer’s Annual Production Capacity”. If Manufacturer receives
an order from Cambridge where the quantity ordered or any part of that quantity
would result in Manufacturer’s Annual Production Capacity being exceeded it
shall notify Cambridge of such as soon as is commercially practical. Each order
placed by Cambridge must be for one full batch or any whole number multiple of
full batches of Product. Manufacturer shall not be obliged to fulfil orders for
partial batches of Product.

 

7.3                                 The Product is supplied by Manufacturer
Ex-works (EXW) (Incoterms 2000). Time for delivery in respect of Firm Period Orders
is of the essence. Manufacturer shall deliver EXW any Firm Period Orders on or
before the delivery date. Manufacturer shall make its commercially reasonable
efforts to deliver the Products ordered other than in Firm Period Orders on or
before the delivery date set forth in the relevant order. Notwithstanding the
foregoing, Manufacturer’s obligation of delivery is contingent upon
Manufacturer having received Cambridge’s notice provided under clause 7.5. Upon
the earlier of (a) receipt by Manufacturer of Cambridge’s notice to be
provided under clause 7.5 or (b) the agreed delivery date for any order,
Manufacturer may deliver the Product and render to Cambridge an invoice for the
quantity of the Product ordered. Title to the Product shall be and remain with
Manufacturer unless and until Cambridge has paid in full for the Product and
any other Product supplied hereunder.

 

7.4                                 Each batch of the Product Manufactured
shall be numbered in accordance with Manufacturer’s batch numbering SOP full
written details of which shall be provided to Cambridge and each Batch supplied
shall be identified with its Batch number.

 

7.5                                 Prior to delivery of each Batch of Export
Pack to be supplied, Manufacturer shall supply to Cambridge a Certificate of
Analysis and a Certificate of Conformance signed by the Manufacturer’s
Qualified Person, the samples and a summary of the Batch Manufacturing records.
Prior to delivery of each Batch of Commercial Pack to be supplied, Manufacturer
shall supply to Cambridge a Certificate of Analysis, a Certificate of
Conformance and a release statement signed by the Manufacturer’s Qualified
Person, the samples and a summary of the Batch Manufacturing records. Cambridge
will, at least 5 business days prior to scheduled delivery date of each Batch,
notify Manufacturer whether, based on the information provided by Manufacturer
pertaining to that Batch as set forth above in this clause, Cambridge is
prepared without prejudice to its rights hereunder to take delivery of that
Batch.

 

7.6                                 Any Defects shall be reported to
Manufacturer in writing promptly after discovery. Unless there is a dispute
between the parties as to the cause of the Defect in the Product (in which case
clauses 7.7 and 7.8 shall apply) Manufacturer shall use its commercially
reasonable efforts to Manufacture and deliver to Cambridge within six (6) weeks
of such 

 

12

 

reporting by Cambridge, at no charge, a sufficient quantity of the
Product to replace the defective Batch or Batches.

 

7.7                                 If there is any dispute concerning
whether Product complies with the Specifications or whether such failure is due
(in whole or in part) to acts or omissions of Cambridge after delivery of
Product, a sample of the rejected Product and a sample retained by Manufacturer
as set forth above shall be exchanged between Cambridge and Manufacturer for a
counter-check. If such counter-check does not resolve the dispute, a sample of
the rejected Product and a sample retained by Manufacturer shall be submitted
to an independent, qualified third-party laboratory that is mutually acceptable
and selected by the Parties promptly in good faith. The test result obtained by
such laboratory shall determine whether the rejected Product fails to comply
with the Specifications due to acts or omissions of Cambridge after delivery of
the Product or acts or omissions of Manufacturer prior to delivery of the
Product and such laboratory’s determinations shall be final and determinative
for purposes of this Agreement save for manifest error on the face of decision.
The Party against whom the laboratory rules shall bear all costs of the
third party laboratory activities.

 

7.8                                 If it is determined pursuant to clause
7.7 above that the Product does not conform to the Specifications due to the default
of Manufacturer then Manufacturer shall Manufacture and deliver to Cambridge,
at no charge, a sufficient quantity of the Product to replace the defective
Batch or Batches. For the sake of clarity the provisions of clause 3.5 shall
apply in respect of the cost of replacement of wasted Active Substance. If
Cambridge accepts that the relevant Batches of Product were Manufactured in
accordance with the Specifications or that any defect did not arise due to
Manufacturer’s default Manufacturer shall Manufacture and deliver to Cambridge,
at the usual cost, a sufficient quantity of the Product to replace the
defective Batch or Batches.

 

7.9                                 After the period of Validation,
Manufacturer agrees to maintain a safety stock of Export Pack Product. The
amount of such safety stock shall be determined at the beginning of each
calendar year as an amount equal to one month’s average Product requirements as
stipulated in Cambridge’s Forecast for such calendar year.

 

8                                         Intellectual Property and Improvements

 

8.1                                 Cambridge hereby authorises Manufacturer
to use the Trade Marks and Cambridge’s other intellectual property on or in
relation to the Product for the purpose only of exercising its rights and
performing its obligations under this Agreement. All data and intellectual property
and other rights pertaining to the data arising from the Validation work and
on-going stability and quality conformance work carried out by Manufacturer
shall be the property of Cambridge.

 

8.2                                 Each party hereby acknowledges that it
shall not acquire any rights in respect of any of the other party’s
intellectual property in relation to the Product or the Manufacture thereof or
of the goodwill associated therewith.

 

13

 

8.3                                 Except as is necessary for the proper
performance of this Agreement by the parties, no licence, express or implied,
is granted by this Agreement by either party to the other under any of its
intellectual property rights.

 

8.4                                 Cambridge authorises the Manufacturer to
place Manufacturer’s company name and address on the Product packaging and
leaflet with an indication that it is the manufacturer of the Product if so
required by law.

 

9                                         Prices

 

9.1                                 All orders for the Product for the
eighteen (18) months following validation will be at the prices set forth in
part B of Schedule 3.

 

9.2                                 Following the period set forth in clause
9.1, Manufacturer may review the price annually in accordance with the INSEE
index number 064688387 (pharmacy perfumery and maintenance industries salaries
index) for the preceding month of June (published the following
September). In the event that the increase in Cost of Production and Raw
Material costs exceed the amount of such index, Manufacturer shall provide
written evidence to Cambridge of such increases in the Costs of Production and
Raw Materials and the parties shall meet to discuss that increase, the impact
on the Costs of Production and ways in which that increase might be off-set
including but not limited to, for example, alternative sources of supply of the
Raw Material in question. If, after going through that process the parties find
that the exceptional increase cannot be fully offset, the matter shall be
referred for further discussion initially to the Chief Financial Officers of
both parties and, if necessary, to the Chief Executive Officers of both
parties. If resolution as to how to deal with the exceptional cost increase has
not been reached following discussion between the Chief Executive Officers,
either party may terminate this Agreement on provision of ninety (90) days
written notice.

 

9.3                                 Invoices will be submitted to Cambridge
when the Product has been delivered in accordance with clauses 7.3 and 7.5.
Cambridge will, save as set forth below, pay to Manufacturer the full invoice
value for the Product within forty five (45) days after the date of the invoice
or forty five (45) days after the date of delivery of the Product, whichever is
the later. Payment will be made direct into Manufacturer’s bank account by bank
transfer and Manufacturer will provide Cambridge with the necessary details of
Manufacturer’s bank account and will take whatever actions are necessary to
facilitate payment by bank transfer.

 

10                                  Limitation of Liability, Indemnity and
Insurance

 

10.1                           Manufacturer indemnifies and shall keep
Cambridge and its Affiliates indemnified against all third party claims,
actions, judgments, damages or lawsuits (including costs or expenses or
professional fees) brought against Cambridge and or its Affiliates to the
extent and arising out of any breach of this Agreement by Manufacturer or any
wilful or negligent act or omission of Manufacturer or its employees in the
Manufacture of the Product.

 

14

 

10.2                           Cambridge and/or its Affiliates
indemnifies and shall keep Manufacturer and its Affiliates indemnified against
all third party claims, actions, judgments, damages or lawsuits (including
costs or expenses or professional fees) brought against Manufacturer and/or its
Affiliates to the extent and arising out of (i) any breach of this
Agreement by Cambridge and/or its Affiliates; (ii) or any negligent or
wilful act or omission of Cambridge and/or its Affiliates, its employees or
agents (including but not limited to in researching and developing the Product
or in supplying the Active Substance and Raw Materials); (iii) any
intellectual property rights covering the Product, Product packaging, Active
Substance and/or Raw Materials; and (iv) any error, inaccuracy,
inexactitude, or incompleteness in the Specifications.

 

10.3                           Manufacturer shall indemnify, defend and
hold harmless, Cambridge and/or its Affiliates from and against all third party
claims, actions, judgments, damages, lawsuits, and related costs and expenses
made or brought against Cambridge and/or its Affiliates in respect of bodily
injury or death caused by or attributed to the Product insofar as they arise
out of: (a) the contamination of the Product manufactured by Manufacturer
while in the custody or control of Manufacturer, (b) the failure of
Manufacturer to manufacture, store, handle or ship the Product in accordance
with the Specifications or the GMPs.

 

10.4                           Cambridge and/or its Affiliates shall
indemnify, defend and hold harmless Manufacturer and/or its Affiliates against
all third party claims, actions, judgments, damages, lawsuits and related costs
and expenses made or brought against Manufacturer and/or its Affiliates in
respect of bodily injury or death caused by or attributed to the Product, the
Raw Materials or the Active Substance, including but not limited to product
liability claims, the sale of the Product, Product labelling, and any claims
related to the inherent physiological properties of such substances, except and
to the extent provided in Articles 10.1 and 10.3 above.

 

10.5                           NO OTHER WARRANTY. EXCEPT AS SET FORTH IN CLAUSES 4, 7 AND
THIS CLAUSE 10, MANUFACTURER IS MANUFACTURING AND SUPPLYING THE PRODUCT
HEREUNDER ON AN “AS IS” BASIS WITHOUT REPRESENTATION OR WARRANTY WHETHER
EXPRESS OR IMPLIED INCLUDING WARRANTIES OF SATISFACTORY QUALITY OR FITNESS FOR
A PARTICULAR PURPOSE, OR INFRINGEMENT OF THIRD PARTY RIGHTS, AND ALL SUCH
WARRANTIES ARE EXPRESSLY DISCLAIMED TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAWS.

 

10.6                           The party claiming the benefit of any
indemnity hereunder must promptly notify the other of any claim, not accept any
compromise or settlement of such claim or take any material steps in relation
to such claim without the prior consent of the other party and shall co-operate
fully with the other party in the handling of any such claim.

 

10.7                           Without prejudice to the obligation of
either party to indemnify the other against claims by a third party, under no
circumstance shall either party be liable to the other in contract, tort
(including negligence or breach of statutory duty) or otherwise howsoever to
the other (i) for any increased costs or expenses, (ii) for any loss
of profit, business, contracts revenues or anticipated savings, or (iii) for
any special, indirect, incidental, punitive or 

 

15

 

consequential loss or damage of any nature whatsoever, whether
occasioned by the negligence of the respective parties, their employees or
agents or otherwise. Notwithstanding the foregoing, in the event that
Manufacturer breaches clause 11 by intentionally or negligently (a) using
Cambridge’s Information pertaining to the Manufacture of the Product to
Manufacture the Product and sell it or otherwise provide it to a third party
other than with Cambridge’s express written consent, or (b) using
Cambridge’s Information pertaining to the Manufacture, of the Product or any
part of it to manufacture a competing product containing tetrabenazine, or (c) providing
Cambridge’s Information pertaining to the Manufacture of the Product or any
part of it to a third party to enable them to manufacture the Product or a
competing product containing tetrabenazine, the limitations of liability set
forth in clause 10.7 above shall not apply in respect of such a breach but
Manufacturer’s liability shall be limited to a maximum amount of {***}†. The
parties also acknowledge that the limitations of liability mentioned in this
clause 10.7(i), (ii) and (iii) shall, when the losses, damages,
costs, liabilities or expenses incurred by a party arise from the grossly negligent
or wilfully malfeasant acts of the employees of the other party, (y) not
apply in respect of bodily injury or death or (z) apply up to a maximum of
{***}† Euro in respect of all other claims other than bodily injury or death.

 

10.8                           The parties undertake to ensure that they
have in place and maintain throughout the Term and for a period of 5 years
thereafter, product liability insurance with a reputable insurer or self
insurance in an amount which the parties agree is appropriate for their
business, the type of product which is the subject of this Agreement and the
territories in which the Product will be sold and for their obligations under
this Agreement. Further to the preceding sentence (a) Fournier shall hold
product liability insurance of no less than 50 million Euros in respect of
Product sold in the United States and 20 million Euros in respect of Product
sold outside the United States, and (b) in respect of Product sold in the
United States, Cambridge shall ensure it holds product liability insurance of
no less than 20 million Euros and shall use 
commercially reasonable endeavours to ensure its US Distributor holds no
less than 30 million Euros product liability insurance and (c) in respect
of Product sold outside the United States Cambridge shall ensure it holds
product liability insurance of no less than 10 million Euros and shall use
commercially reasonable endeavours to ensure its distributors in those
countries hold no less than 10 million Euros. Cambridge shall provide adequate
insurance with a reputable insurer or self insurance to cover the Active
Substance while on the Manufacturer’s premises. Manufacturer will fully
co-operate with Cambridge in respect of permitting access for inspections and
providing information to Cambridge or its insurer for the purposes of acquiring
and maintaining such insurance. Each party shall provide to the other on
request evidence of the existence and maintenance of such cover.

 

10.9                           Each party shall provide the other party
with a certificate or certificates from the insurance company verifying the
above and shall notify the other party in writing at least 30 days prior to the
expiration or termination of such coverage.

 

† Represents material which has been redacted
and filed separately with the Securities and Exchange Commission pursuant to a
request for confidential treatment pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934, as amended.

 

16

 

10.10       Three
(3) months prior to the renewal of each party’s product liability
insurance the parties shall share information about product liability risk in
relation to the Product and shall discuss the extent of each others product
liability coverage in respect of the Product.

 

10.11       In
the event that the Active Substance is placed on the substance exclusion list
and/or the Product is placed on the product exclusion list of the reinsurance
treaties of either Swiss Re or Munich Re resulting in either or both
parties being unable to obtain product liability insurance in respect of the
Product or the cost of such product liability insurance to either or both
parties significantly increasing, whichever party first becomes aware of that
listing shall notify the other within two (2) working days and the parties
shall, as soon as is practical but in any event no later than fifteen (15) days
from the receipt of notice about the listing, meet to discuss the commercial
risks to the parties from such a listing and whether the commercial risks are
such that the parties no longer wish to continue with this Agreement. If
agreement as to whether or not to continue with this Agreement cannot be
reached within seven (7) days of the meeting between the parties the
matter shall be referred to the Chief Executive Officers of both parties for
discussion who shall discuss such within seven (7) days of referral of the
matter to them. If the Chief Executive Officers are unable to reach agreement
as to whether or not to continue with this Agreement within seven (7) days
of them meeting, either party may terminate this Agreement on the provision of
written notice. Throughout the duration of this consultation process the
obligations on the parties under this Agreement shall be suspended.

 

11           Confidentiality

 

11.1         Each party (“Recipient”) agrees to
maintain as secret and confidential all Information of the other party or its
Affiliates obtained from or on behalf of the other (“Discloser”) pursuant to
this Agreement or prior to and in contemplation of it, to respect Discloser’s
proprietary rights therein, to use the same exclusively for the purpose of this
Agreement and for no other use and to disclose the same only to those of its
professional advisers, including legal financial and risk assessment advisers,
authorised sub-contractors and employees to whom and to the extent that such
disclosure is reasonably necessary for the purpose of this Agreement. For the
sake of clarity the Specifications, the Certificates of Conformance, all
Product related data arising from the Validation and all Batch documentation
generated by Manufacturer in the Manufacture is confidential Information of
Cambridge and shall not be used or disclosed by Manufacturer other than for the
purposes of this Agreement and where necessary for disclosing to the relevant
Regulatory Authorities in order to comply with regulatory requirements relating
to the Product and its Manufacture by Manufacturer.

 

11.2         The foregoing obligations of clause 11.1
above shall not apply to Information which:

 

11.2.1      the
Recipient can prove by documentary evidence was already in its possession or
the possession of its Affiliates and not covered by any obligations of
confidentiality to the other party before disclosure by Discloser. For the sake
of clarity this exception shall not apply to any Information pertaining to the
Product 

 

17

 

or the Active Substance or the business of Cambridge provided to
Manufacturer by Cambridge or Synkem prior to the Effective Date;

 

11.2.2      is
subsequently lawfully disclosed to the Recipient by a third party who has not
derived it directly or indirectly from the Discloser or any of the Discloser’s
Affiliates;

 

11.2.3      is or
becomes generally available to the public (in printed publications in general
circulation) through no act or default of Recipient or its agents or employees;

 

11.2.4      was
independently developed by Discloser without any reference to the Information
of the other party; and

 

11.2.5      Discloser
is required to disclose by law.

 

11.3         Recipient shall allow access to the
Discloser’s Information exclusively to those of its employees who have
reasonable need to see and use it for the purposes of this Agreement and shall
inform each of the said employees of the confidential nature of the Information
and of the obligations on Recipient in respect thereof and ensure that each of
its employees having access to the Information is contractually bound by
obligations of confidentiality and shall take all reasonable steps to enforce
such obligations.

 

11.4         In the event that Manufacturer accepts a
contract from a third party to manufacture a competing product it shall ensure
that appropriate measures are undertaken to ensure that Cambridge’s Information
is not disclosed to such third party.

 

12           Termination

 

12.1         Either party may forthwith terminate this
Agreement by written notice to the other if:

 

12.1.1      that
other party is in material breach of any of the provisions of this Agreement
and, in the case of a breach capable of remedy, fails to remedy the same within
30 days of receipt of a written notice specifying the breach and requiring its
remedy; or

 

12.1.2      an
encumbrancer takes possession or an administrator, liquidator or receiver is
appointed over the property or assets of that other party; or

 

12.1.3      that
other party makes any voluntary arrangement with its creditors or becomes
subject to an administration order; or

 

12.1.4      that
other party goes into liquidation except for the purposes of amalgamation or
reconstruction and in such manner that the company resulting there from
effectively agrees to be bound by or assume the obligations imposed on that
other party under this Agreement.

 

12.2         Any waiver by either party of a breach of
any provision of this Agreement shall not be considered a waiver of any
subsequent breach of the same or any other provision.

 

18

 

12.3         The rights to terminate this Agreement
given by this clause 12 shall be without prejudice to any other right or remedy
of either party in respect of the breach concerned (if any) or any other
breach.

 

13           Consequences of Termination

 

13.1         Termination of this Agreement for any
reason shall not bring to an end any provisions of this Agreement which, in
order to give effect to their meaning, need to survive its termination and such
provisions shall remain in full force and effect thereafter and in particular
but without limiting the scope of the foregoing obligations of the parties
under clauses 8, 9,10,11,13 a15, 17 and 19.

 

13.2         On termination of this Agreement for any
reason:

 

13.2.1      Cambridge
shall notify Manufacturer whether it wishes Manufacturer to complete any
ongoing Manufacture;

 

13.2.2      In
the event that this Agreement is being terminated by Cambridge for failure by
Manufacture to Manufacture in accordance with GMP and the Specifications and
such failure has been either accepted by Manufacturer or objectively verified
by a Regulatory Authority or independent laboratory, Cambridge shall be under
no obligation to purchase or take delivery of or pay for any further Product.

 

13.2.3      subject
to clause 13.2.1 each party shall deliver up to the other or destroy all
materials, reports, and other documents (including copies thereof) in its
possession or control containing Information of the other party, and each will
cease to make use of the other’s Information;

 

13.2.4      Manufacturer
shall return to Cambridge, at Cambridge’s cost, any unused and still viable
Active Substance (other than the amount required to complete any orders in
process if Cambridge so elects);

 

13.2.5      Subject
to clauses 13.2.1 and 13.2.2, Cambridge shall pay for all the Product which has
been ordered or is as listed in the Firm Period of the Vendor’s Schedule at
prices then prevailing and shall take delivery of such Product as soon as
possible when it is notified by Manufacturer that it is available for
collection;

 

13.2.6      Cambridge
may request to purchase at Manufacturer’s cost, and, if it exercises that
option, Manufacturer will be obliged to supply all stocks of Raw Materials
remaining in Manufacturer’s possession and which will not be used in the
completing of any orders in process. Cambridge shall also be responsible for
paying the Manufacturer’s storage, quality control and transportation costs it
had incurred in relation to such Raw Materials following termination.

 

13.2.7      With
respect to any capital expenditures on machines and equipment which may have
been made for the Manufacturer to fulfil its obligations hereunder:

 

19

 

13.2.7.1           Manufacturer
shall have first option to retain title to such machines and equipment. If
Manufacturer exercises that option, no further amortization payments thereon
shall be owing from Cambridge.

 

13.2.7.2           If
Manufacturer does not exercise such option, and Cambridge wants to acquire the
equipment then title and possession to the machines should pass to Cambridge
and Cambridge shall pay to Manufacturer the unamortized amounts remaining on
such machines and equipment as well as any related transfer costs (shipping,
disassembly, etc.) and upon payment in full, such machines and equipment shall
be transferred to Cambridge.

 

13.3         If neither party wishes to take or retain
ownership of the machines:

 

13.3.1      Manufacturer
shall use commercially reasonable efforts to sell the machines and obtain the
best possible price for the machines.

 

13.3.2      If
the sale is successful then following receipt of the proceeds of that sale,
depending on the extent of the proceeds of sale either Cambridge shall pay to
Manufacturer a sum equal to the unamortized amounts remaining on the machines
less the proceeds from the sale of the machines or Manufacturer will pay to
Cambridge a sum equal to the proceeds of sale less the unamortized amounts.

 

13.3.3      In
the event that Manufacturer does not manage to sell the machines, Cambridge
shall pay to Manufacturer the unamortized amounts remaining on such machines
and equipment and related transfer costs and upon payment in full, title and
possession to the machines shall pass to Cambridge.

 

14           Affiliates and Assignment

 

14.1         Manufacturer shall be entitled to perform
any of the obligations undertaken by it and to exercise any of the rights
granted to it under this Agreement through any of its Affiliates, and any act
or omission of any such Affiliate shall for the purposes of this Agreement be
deemed to be the act or omission of Manufacturer. For the purposes of such
delegated performance Manufacturer shall be entitled to disclose only on a need
to know basis Cambridge’s Information to employees of relevant Affiliates.

 

14.2         Cambridge is establishing a branch office
in Ireland that will become an Affiliate of Cambridge. Manufacturer agrees to
the obligations of Cambridge under this Agreement being performed by Cambridge
Laboratories Ireland and, following incorporation of the Irish branch as an
Affiliate, to have those obligations assigned to and performed by that
Affiliate, provided that Cambridge remains liable to Manufacturer for the acts
and omissions of the Affiliate and its compliance herewith. Cambridge shall
notify Manufacturer once the Irish branch has been incorporated as an
Affiliate. In addition Cambridge shall be entitled to perform any of the
obligations undertaken by it and to exercise any of the rights granted to it
under this Agreement through any of its Affiliates, and any act or omission of
any such Affiliate shall for the purposes of this Agreement be deemed to be the
act or omission of Cambridge.

 

20

 

14.3         Save as set forth above neither party
shall be entitled to assign any of its rights or duties under this Agreement
without the prior written consent of the other which consent shall not be
unreasonably withheld or delayed. For the sake of clarity if Manufacturer
assigns the Agreement to a party to whom Cambridge has reasonable objections
and has refused its consent Cambridge shall be entitled to terminate this
agreement on provision of thirty (30) days written notice.

 

15           Escalation Provisions

 

15.1         The parties shall attempt to amicably
resolve any dispute or disagreement arising in relation hereto before
submitting such dispute or disagreement to the courts as follows:

 

15.1.1      the
parties shall as soon as reasonably practicable commence good faith
negotiations to resolve the dispute or disagreement;

 

15.1.2      should
such good faith negotiations not take place or should such good faith
negotiations not resolve the dispute or disagreement within a reasonable
period, but in any event within twenty one (21) days of commencement of the
negotiations, the dispute or disagreement shall immediately be referred to the
respective Chief Executive Officers of the parties for their resolution;

 

15.1.3      should
the respective Chief Executive Officers of the parties fail to resolve the
dispute or disagreement within fourteen (14) days of it being referred to them,
then either party may refer the dispute to the courts. Notwithstanding the
foregoing, in the event that the dispute in question relates to whether the
Product satisfies the Specifications or GMPs, then in accordance with Article 7.7
hereof, the dispute shall be referred to a qualified third party laboratory
prior to submission to the courts.

 

16           Force Majeure

 

16.1         If either party is affected by Force
Majeure it shall forthwith notify the other party of the nature and extent
thereof.

 

16.2         Each party shall be deemed not to be in
breach of this Agreement, nor otherwise be liable to the other by reason of any
delay in performance, or non-performance, of any of its obligations hereunder
to the extent that such delay or non-performance is due to any Force Majeure of
which it has notified the other party and the time for performance of that
obligation shall be extended accordingly.

 

16.3         If the Force Majeure in question prevails
for a continuous period in excess of six months, the parties shall enter into
bona fide discussions with a view to agreeing upon such alternative
arrangements as may be fair and reasonable. If the parties cannot agree such
alternative arrangements then either party shall be entitled to terminate this
Agreement immediately by written notice.

 

21

 

17           Notices

 

17.1         Any notice or other information required
or authorised by this Agreement to be given by either party to the other may be
given by hand or sent to the other by first class registered pre-paid post,
telex, facsimile transmission or comparable means of communication to the
following addresses:

 

If to Cambridge:

 

The Chief Financial Officer

Cambridge Laboratories
Ireland

Alexandra House

The Sweepstakes

Ballsbridge

Dublin 4

Ireland

Fax (+) 353 631 9452

 

If to Fournier:

 

The Customer Services
Manager

Laboratoires Fournier SA

Rue des Prés Potets

21121 Fontaine-les-Dijon

 

with a copy to

 

Director of Legal Affaires

Laboratoires Fournier SA

42 rue de Longvie

21300 Chenôve

Fax: 33 (0)3 80 44 7262

 

17.2         Any notice or other information given by
post pursuant to clause 17.1 which is not returned to the sender as undelivered
shall be deemed to have been given on the third day after the envelope
containing the same was so posted. Proof that the envelope containing any such
notice or information was properly addressed, pre-paid, registered and posted,
and that it has not been so returned to the sender, shall be sufficient evidence
that such notice or information has been duly given.

 

17.3         Any notice or other information sent by
telex, cable, facsimile transmission or comparable means of communication shall
be deemed to have been duly sent on the date of transmission, provided that a
confirming copy thereof is sent by first class pre-paid post to the other party
at the address referred to in clause 17.1 within 24 hours after transmission.

 

22

 

18           Liaison

 

18.1         Upon signature of this Agreement the
parties will each identify in writing the person responsible for the day to day
operation of this Agreement including production planning relating to forecast
requirements.

 

19           General

 

19.1         Nothing in this Agreement shall create,
or be deemed to create, a partnership, joint venture or other common interest
grouping between the parties.

 

19.2         The Schedules and Recitals hereto form an
integral part of this Agreement. This Agreement, its Schedules and Recitals
contain the entire agreement between the parties with respect to its subject
matter, supersedes all previous agreements and understandings between the
parties, with the exception of the Confidentiality Agreement entered into on 19
February 2004, and may not be modified except by an instrument in writing
signed by the duly authorised representatives of the parties

 

19.3         Each party acknowledges that, in entering
into this Agreement, it does not do so on the basis of or in reliance on any
representation, warranty or other provision except as expressly provided in
this Agreement, and accordingly all conditions, warranties or other terms
implied by statute or common law are hereby excluded to the fullest extent
permitted by law.

 

19.4         If any provision of this Agreement is
agreed by the parties to be or is held by any court or other competent
authority to be void or unenforceable in whole or part, the other provisions of
this Agreement and the remainder of the affected provisions shall continue to
be valid save that such illegal void or unenforceable provision or part thereof
shall be deemed to be excised herefrom.

 

19.5         This Agreement shall be governed by and
construed in all respects in accordance with the laws of England, and the
parties hereby submit to the exclusive jurisdiction of the English courts.

 

IN
WITNESS whereof this Agreement has been executed by the duly authorised
representatives of the parties the day and year first above written

 

For
and on behalf of

CAMBRIDGE
LABORATORIES LIMITED

trading
as

CAMBRIDGE
LABORATORIES IRELAND

 

 

	
  Signed:

  	
  /s/ MARK P. EVANS

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  MARK P. EVANS

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  CEO

  	
   

  

 

23

 

For
and on behalf of

LABORATOIRES FOURNIER S.A.

 

 

	
  Signed:

  	
  /s/ Pierre Noustial

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  Pierre Noustial

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  CEO

  	
   

  

 

24

 

Schedule 1

 

Technical Conditions

 

1.             Raw
Materials

 

Manufacturer will be
responsible for ensuring that each batch of Raw Materials (other than those
supplied by or on behalf of Cambridge) complies with the Raw Materials
Specifications. Manufacturer shall be responsible for testing all Raw Materials
(other than those supplied by or on behalf of Cambridge) to determine
compliance of such with the Raw Materials Specifications. Cambridge will be
responsible for ensuring that each batch of Raw Materials that it may provide
to Manufacturer complies with the Raw Materials Specifications, and that it has
obtained a Certificate of Conformance signed by a Qualified Person of each Raw
Materials supplier, if applicable. Cambridge shall ensure that the Manufacturer
(either directly or through a third party consultant, if so required by the
suppliers) may audit the suppliers of Active Substance and any Raw Materials
supplied by Cambridge.

 

Manufacturer will ensure
that Raw Materials (other than those supplied by or on behalf of Cambridge) are
only sourced from the list of approved suppliers listed in the Specifications,
which list may be amended from time to time by mutual agreement between the
parties. Notwithstanding the foregoing, in the event that Manufacturer is
unable to obtain sufficient Raw Materials from such suppliers, it shall inform
Cambridge and the parties shall come together to find another source of supply
thereof. In the event of such shortage of Raw Materials, Manufacturer shall not
be liable for any delay in supplying the Product to Cambridge.

 

Manufacturer shall store all
Raw Materials in accordance with GMP and the storage requirements of the
supplier of such Raw Materials.

 

Manufacturer shall use Raw
Materials on the basis of shortest Expiry/Retest Date first.

 

2.             Manufacturing,
Packaging and Product Specifications

 

The Specifications are set
forth in Schedule 2 to the Agreement. Any changes to the Specifications must be
the subject of a written amendment agreed between the parties prior to
implementation. The Specifications shall be treated as confidential Information
of Cambridge.

 

Cambridge will inform
Manufacturer promptly of any changes that are to be made to the terms of the
Marketing Authorisations for the Product which may require a change to the
Specifications.

 

Cambridge is responsible for
ensuring that each batch of Active Substance it supplies complies with the
Specifications.

 

Manufacturer may make
propositions to Cambridge regarding Product’s primary and secondary packaging.
Notwithstanding the foregoing, Cambridge is responsible for ensuring that the
Product primary and secondary packaging and labelling complies with the
Specifications, does not infringe any third party rights, and complies with all
applicable rules and regulations.

 

 

 

3.             Quality Control

 

Manufacturer shall be
responsible for carrying out appropriate quality control of the Raw Materials
(other than those supplied by or on behalf of Cambridge) it uses in the
Manufacture of the Product to ensure that the same comply with the
Specifications.

 

Manufacturer shall be
responsible for the quality control of any intermediate and finished Product in
accordance with the Manufacture Specifications to ensure that the same comply
with the Product Specifications.

 

4.             Reworked Product

 

Manufacturer will not
subject any Product manufactured by it under this Agreement to any
re-processing unless it uses a method agreed by Cambridge. Notwithstanding the
foregoing, Manufacturer may rework the Product, provided that it notifies
Cambridge in advance of such reworking.

 

5.             Product Release

 

Manufacturer is responsible
for releasing the Commercial Packs on the market by providing:

 

· a
Certificate of Analysis

· a Certificate
of Conformance

· a release
statement signed by a Qualified Person.

 

Manufacturer is responsible
for certifying that the Export Packs are suitable for further packaging
operations by providing:

 

· a
Certificate of Analysis

· a
Certificate of Conformance

 

6.             Batch Documentation

 

Manufacturer shall retain at
its premises Manufacturing records (including the Specifications and the
manufacturing, packaging and quality control and quality assurance records for
each batch of Product) in order to comply with GMP and this Agreement.
Notwithstanding the forgoing all title in the Manufacturing records shall be
owned by Cambridge, shall be treated by Manufacturer as confidential
Information of Cambridge and shall not be used or disclosed by Manufacturer
other than for the purposes of this Agreement and where necessary for
disclosing to the relevant Regulatory Authorities.

 

Manufacturer will keep under
safe and secure storage the Manufacturing records for each batch of Product for
a period of five years or such other period as required by GMP. Manufacturer
must ensure this documentation is available for inspection by authorised
Cambridge personnel a maximum of 3 times a year on reasonable notice. Upon
expiry of the period it is required to keep the Manufacturing records
Manufacturer shall notify Cambridge in writing that it intends to destroy such
and, in the absence of any response from Cambridge within three months of 

 

2

 

notification, Manufacturer
may destroy or otherwise dispose of the said records or such samples in a safe
and controlled manner.

 

Manufacturer will submit to
Cambridge, as soon as practicable following a written request from Cambridge,
copies of all the Manufacturing records.

 

7.             Audits

 

Manufacturer will allow,
once a year during normal business hours and upon reasonable notice, authorised
representatives of Cambridge to inspect the relevant parts of its premises
where the Manufacture of the Product is carried out or the Product or Raw
Materials are stored and to inspect the process of Manufacture. Manufacturer
will permit Cambridge to conduct additional such inspections in the event that
such are required due to a Product safety or manufacturing problem.
Notwithstanding, the foregoing, Manufacturer’s obligation to allow such
visitors is on condition that: (a) Cambridge procures that such visitors
agree in writing to observe the requirements of Manufacturer regarding
security, health and safety, confidentiality or any other applicable
regulations at the relevant premises and (b) any visit shall be under the
specific supervision of Manufacturer.

 

Manufacturer will allow
representatives of any Regulatory Authority to inspect the relevant parts of
its premises where the Manufacture of the Product is carried out or the Product
or Raw Materials are stored and to inspect the process of Manufacture.
Cambridge must promptly inform Manufacturer (i) of any request of any
Regulatory Authority to carry out such an inspection, and (ii) of each new
marketing application, change thereto or other document filed with Regulatory
Authorities which might trigger an inspection.

 

Each party shall provide the
other party with full written reports of any inspection by a Regulatory
Authority pertaining to the Manufacture of the Product and shall obtain the
other party’s prior written approval to any written responses to any issues
raised by any Regulatory Authority pertaining to the Manufacture of the
Product.

 

8.             Customer Complaints

 

Each party shall promptly
inform the other party of all material complaints or problems relating to the
Product of which it becomes aware. Upon the request of the other party, each
party shall promptly supply to the other party all reasonable and relevant
information needed for the investigation of customer complaints or other
concerns with respect to the quality of the Product. The responsibility to
reply to the customer/patient will be with Cambridge.

 

9.             Recalls

 

Cambridge shall be
responsible for conducting any recall of defective Product and Manufacturer
shall co-operate with and give all reasonable assistance to Cambridge in
conducting any such recall, at Cambridge’s expense.

 

Cambridge shall keep
Manufacturer informed of any Adverse Event involving the Product or products
containing the same active ingredient as the Product coming to their attention.

 

3

 

Cambridge shall keep
Manufacturer informed of any material change or event in the market relevant to
the Product coming to their attention and able to be disclosed to the other.

 

10.          Samples

 

Manufacturer shall, with
each Batch of Product supplied to Cambridge, provide to Cambridge, at no
additional costs, the quantities of samples of the Product as set forth in the
Specifications to enable Cambridge to perform quality control or address any
issue arising under clause 7 of the Agreement.

 

A sample of finished Product
and Raw Materials (excluding solvents, gasses and water) will be retained and
stored by Manufacturer under conditions consistent with the Product and Raw
Materials labelling and GMP. Manufacturer will allow Cambridge access to these
samples once a year on reasonable written notice in normal business hours.
Exceptional access may also be granted in the event of a problem in the
Manufacture of the Product. The sample size of each batch of finished Product
and Raw Materials will be as defined in the Specifications.

 

Samples of finished Product
will be stored for one year beyond the expiry of the formulated Product.

 

Samples of Raw Materials
will be kept for a minimum of five years if their stability allows and
Manufacturer will notify Cambridge of any instability likely to affect the
ability to store such samples for the stated minimum period.

 

11.          Disposal Of Samples Printed Packaging Materials And
Rejected Product

 

Samples, printed packing
materials and rejected Product will be disposed of by Manufacturer in a safe
and controlled manner.

 

12.          Acceptable Waste Levels

 

Cambridge and Manufacturer
agree that during Manufacture of the Product, a certain level of Raw Materials
and Active Substance waste is unavoidable, and therefore agree that the level
of acceptable waste shall be a yearly batch average of 5%. Such percentage
shall be confirmed by the parties after Validation.

 

4

 

Schedule 3

 

Prices

 

Part A

 

Validation costs

 

Upon completion of
Validation, for supply of completed validation data on 12.5mg and 25mg tablets
of Product, Cambridge to pay Manufacturer: 
{***}† broken down as follows:

 

·                                          {***}† for
purchasing Raw Material and specific equipment and analytical transfer report

·                                          {***}† for
setting-up the process and manufacturing the regulatory batches

·                                          {***}† for
manufacturing the validation batches and providing the 3 months stability data
of regulatory batches

·                                          {***}† for 6
months stability data

·                                          {***}† for 12
months stability data

·                                          {***}† for 18
months stability data

·                                          {***}† for 24
months stability data

·                                          {***}† for 36
months stability data

·                                          {***}† for 48
months stability data

·                                          {***}† for 60
months stability data

 

Cambridge shall pay
Manufacturer such amounts upon receipt of the corresponding invoices.

 

Part B

 

Product Supply price

 

For supply of packs of
12.5mg and 25mg tablets of Product following Validation, Cambridge shall pay
Manufacturer the amounts, as set out below:

 

† Represents material which
has been redacted and filed separately with the Securities and Exchange
Commission pursuant to a request for confidential treatment pursuant to Rule 24b-2
under the Securities Exchange Act of 1934, as amended.

 

 

	
  Pack
  Presentation

  	
   

  	
  Price/Pack of 112 tablets € EXW

  	
   

  
	
  HDPE bottles with 

  	
   

  	
  Where
  total tablet quantity per annum** is

  	
   

  
	
  induction sealed CRC

  	
   

  	
  up to 20
  million

  	
   

  	
  more
  than 20 million

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Export
  Pack 

  	
   

  	
  {***}†

  	
   

  	
  {***}†

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  100
  packs in labeled shipper

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Commercial
  Pack 

  Xenazine 25 etc 

  With label/leaflet 

  combination 

  10 packs in labeled 

  shrink-wrap, 10 x 10 in 

  labeled shipper

  	
   

  	
  {***}†

  	
   

  	
  {***}†

  	
   

  

 

	
  Additional Work

  	
   

  	
  5,000
  packs pa

  	
   

  	
  20,000
  packs pa

  	
   

  	
  50,000
  packs pa

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Over
  labeling Export 

  Packs 

  presenting as 10 packs in 

  labeled shrink-wrap 10 x 

  10 in labeled shipper

  	
   

  	
  {***}†

  	
   

  	
  {***}†

  	
   

  	
  {***}†

  	
   

  

 

·                  Annual Quantities calculated
at submission of January Vendor Schedule each year.

 

Part C

 

Amortization of Capital
Expenditures

 

The investment for the
initial equipment and machine purchases and installation of the packaging line
is estimated at {***}†.

 

Cambridge agrees to
reimburse Manufacture for such capital expenditures pursuant to the
amortization following schedule.

 

The amortization will be
spread out over 5 years on a straight line basis, the first payment being made
by Cambridge on the signature date of the Agreement and each following
anniversary date thereof as indicated below:

 

2005        {***}†

2006        {***}†

2007        {***}†

2008        {***}†

2009        {***}†

 

In the event that for the
purposes of the Manufacture of the Product, Manufacturer is required to make
any other additional equipment or machines purchases, it shall submit such
planned 

 

† Represents material which
has been redacted and filed separately with the Securities and Exchange
Commission pursuant to a request for confidential treatment pursuant to Rule 24b-2
under the Securities Exchange Act of 1934, as amended.

 

2

 

expenditures to Cambridge
and after approval by Cambridge, Cambridge shall reimburse Manufacture for such
expenditures in the same manner as set forth above.

 

Notwithstanding the
foregoing, in the event that Manufacturer is able to use such equipment and
machines for the manufacture of products other than the Products and
Manufacturer is able to recover the amortization of the machines from a third
party, Manufacturer will apply a reduction to the above-indicated amortization
rates based on the percentage such machines and equipment are used for such
third party client (taking into account the percentage of time used for such
third party as compared to the use for Cambridge and the comparative volume of
product manufactured for such third party). Cambridge shall have the right, not
more than twice in any twelve month period and on reasonable notice and during
normal working hours and in such manner as to limit disruption to Manufacturer’s
activities, to inspect the machine log of the packaging line to confirm usage
by parties other than Cambridge.

 

3

 

Schedule 4

 

Trade Marks

 

	
  Mark

  	
   

  	
  Territory

  	
   

  	
  Class

  	
   

  	
  Number

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  NITOMAN

  	
   

  	
  CTM

  	
   

  	
  5

  	
   

  	
  Pending
  application

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XENAZINE

  	
   

  	
  CTM

  	
   

  	
  5

  	
   

  	
  1832047

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XENAZINA

  	
   

  	
  CTM

  	
   

  	
  5

  	
   

  	
  2733327

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  NITOMAN

  	
   

  	
  US

  	
   

  	
  5

  	
   

  	
  Pending
  application

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XENAZINE

  	
   

  	
  US

  	
   

  	
  5

  	
   

  	
  2839404

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ZENAZINE

  	
   

  	
  US

  	
   

  	
  5

  	
   

  	
  Pending
  applicationExhibit 10.30

 

	
   

  	
  U.S. Department of Justice

  
	
   

  	
   

  
	
   

  	
  Michael J. Sullivan

  
	
   

  	
  United States Attorney

  
	
   

  	
  District of Massachusetts

  
	
   

  	
   

  
	
  Main Reception: (617) 748-3100

  	
  John Joseph Moakley United States
  Courthouse

  
	
   

  	
  Suite 9200

  
	
   

  	
  1 Courthouse Way

  
	
   

  	
  Boston, Massachusetts 02210

  

 

May 16,
2008

 

By Mail and Fax

202-778-5281

 

Geoffrey Hobart, Esq.

Covington & Burling

1210 Pennsylvania Avenue, NW

Washington, DC 20004-3401

 

Re:                               United States v. Biovail Pharmaceutical, Inc.

 

Dear Mr. Hobart:

 

This letter sets
forth the Agreement between the United States Attorney for the District of
Massachusetts (“the U.S. Attorney”) and your client, Biovail Pharmaceuticals, Inc.
(“BPI” or “Defendant”), in the above-captioned case. The Agreement is as
follows:

 

1.                                       Plea

 

On a date no earlier
than July 31, 2008 and no later than September 15, 2008, Defendant
agrees to waive indictment and plead guilty pursuant to Fed R. Crim. P.
11(c)(1)(C) and 11(c)(1)(A) to the seven count Information attached
as Exhibit A. The Information charges that:

 

(1)                                  BPI violated 18 U.S.C. § 371 by conspiring with others to knowingly and
willfully make payments to induce another party to recommend purchasing or
ordering BPI’s drug Cardizem, L.A. in violation of 42 U.S.C. §
1320a-7b(b)(2)(B); and

 

(2)                                  BPI violated 42 U.S.C. § 1320a-7(b)(2)(B) by knowingly and
willfully making payments to induce another party to recommend purchasing or
ordering BPI’s drug Cardizem, L.A.

 

Defendant expressly
and unequivocally admits that it in fact knowingly, intentionally and willfully
committed the crimes charged in Counts One through Seven of the Information,
and is in fact guilty of those offenses. BPI agrees to waive venue, any
applicable statutes of limitations and any legal or procedural defects in the
Information.

 

 

2.                                       Penalties

 

With respect to its
violation of 18 U.S.C. § 371 (Count One), BPI is subject to a maximum possible
fine of $500,000, twice the gross gain derived from the offense or twice the
gross loss, whichever is greatest. See 18 U.S.C.
§§ 3571(c) and (d). The loss from this offense is $12,357,550, and thus
the maximum possible fine on Count One is $24,715,100.

 

With respect to its
violations of 42 U.S.C. § 1320a-7b(b)(2) (Counts Two through Seven), for
each separate count, BPI is subject to a maximum possible fine of $500,000,
twice the gross gain derived from the offense or twice the gross loss,
whichever is greatest. See 18 U.S.C.
§§ 3571(c) and (d). For each of these counts, twice the gross gain or
gross loss is less than $500,000, and thus the maximum possible fine on each of
Counts Two through Seven is $500,000.

 

BPI may also be
sentenced to a term of probation of not less than one year and not more than
five years. See 18 U.S.C. § 3561(c)(1). BPI shall
also pay a mandatory special assessment of $400 per count of the Information, a
total of $2,800.

 

3.                                       Sentencing Guidelines

 

The parties agree to
jointly take the following positions at sentencing under the United States
Sentencing Guidelines:

 

a.                                       The parties agree
that the United States Sentencing Guideline Manual in effect as of November 1,
2002 should be used in determining Defendant’s sentence.

 

b.                                      The parties agree
that there is no basis for a departure or deviation under the factors set forth
in 18 U.S.C. § 3553(a) from the sentencing range established by the United
States Sentencing Guidelines.

 

c.                                       The parties agree
that the Counts involve substantively the same harm, and thus group under
U.S.S.G. § 3D1.2.

 

The U.S. Attorney’s
agreement that the disposition set forth below is appropriate in this case is
based, in part, on Defendant’s acceptance of responsibility for the offenses of
conviction in this case.

 

The U.S. Attorney
specifically may, at his sole option, be released from his commitments under
this Agreement, including, but not limited to, his agreement that paragraph 4
constitutes the appropriate disposition of this case, if at any time between
his execution of this Agreement and sentencing, Defendant:

 

(a)                                  Fails to admit a
complete factual basis for the plea;

 

(b)                                 Fails to
truthfully admit its conduct in the offenses of conviction;

 

(c)                                  Falsely denies,
or frivolously contests, relevant conduct for which Defendant is accountable
under U.S.S.G. § 1B1.3;

 

2

 

(d)                                 Gives false or
misleading testimony in any proceeding relating to the criminal conduct charged
in this case and any relevant conduct for which Defendant is accountable under
U.S.S.G. § 1B1.3;

 

(e)                                  Engages in acts
which form a basis for finding that Defendant has obstructed or impeded the
administration of justice under U.S.S.G, § 3C1.1;

 

(f)                                    Attempts to
withdraw its plea.

 

Defendant expressly
understands that it may not withdraw its plea of guilty, unless the Court
rejects this Agreement under Fed. R. Crim. P. 11(c)(5).

 

4.                                       Agreed Disposition

 

The U.S. Attorney and
Defendant agree pursuant to Fed. R. Crim. P. 11(c)(1)(C) that the
appropriate disposition of this case is as follows and that this fine is within
the statutory maximums:

 

a.                                       A criminal fine
in the amount of twenty two million two hundred forty three thousand five
hundred ninety dollars ($22,243,590), as follows:

 

Defendant shall pay
this fine within five business days of the date of sentencing.

 

The parties agree
that the basis for this fine is as follows:

 

i.                                          The parties agree
that the base fine is $12,357,550, which is the amount of payments to
physicians and others paid by or on behalf of BPI through the PLACE program. See U.S.S.G. §§ 8C2.3, 8C2.4(b) and 2B4.1(c)(1)(A).

 

ii.                                       Pursuant to
U.S.S.G. § 8C2.5, the culpability score is seven (7) as determined as
follows:

 

(a)                                  Base culpability score is five (5) pursuant to U.S.S.G. § 8C2.5(a);

 

(b)                                 Add 3 points in that the unit of the organization within which the
offense was committed had 200 or more employees, and an individual within the
high level personnel of this unit participated in or condoned the offense;

 

(c)                                  Deduct one (1) point pursuant to U.S.S.G. § 8C2.5(g)(3).

 

iii.                                    Pursuant to
U.S.S.G. § 8C2.6, the appropriate multiplier range associated with a
culpability score of seven (7) is 1.4 to 2,8.

 

iv.                                   Thus, the
Guideline Fine Range is $17,300,570 to $34,601,140.

 

v.                                      The parties agree
that (1) disgorgement pursuant to U.S.S.G. §8C2.9 is not necessary, (2) there
is no basis for a downward departure or deviation 

 

3

 

under the U.S.S.G.; (3) the proposed fines are within the statutory
maximums pursuant to 18 U.S.C. §§ 3571(c) and (d) because the gross
gain from Count One exceeded $10,000,000; and (4) a fine within the
guideline range will result in a reasonable sentence taking into consideration
all of the factors set forth in 18 U.S.C. §§3553(a), 3572.

 

b.                                      Mandatory special
assessments totaling $2,800. Pursuant to 18 U.S.C. § 3013(a)(2)(B), to be
imposed as $400 per count.

 

c.                                       Restitution:
Because 42 U.S.C. §1320a-7b(b)(2)(B) prohibits remuneration to induce the
ordering or recommending, inter alia, of an item “for which payment may be made
in whole or in part under a Federal health care program,” the victims of the
crimes set forth in the Information attached as Exhibit A are the federal
health insurance programs. Restitution to the federal health insurance programs
will be addressed by a Civil Settlement Agreement to be entered into between
Defendant and the United States on or before July 31, 2008. To satisfy its
restitution obligations, Defendant agrees to pay or cause to be paid
$2,404,286, plus interest at the Medicare Trust Fund Rate from May 1, 2008
to the date of payment. Defendant acknowledges that any settlement and/or
release of civil liability must be approved by the Civil Division of the United
States Department of Justice and the Department of Health and Human Services,
Office of Inspector General.

 

5.                                       Payment of Mandatory Special Assessment

 

Defendant agrees to
pay the mandatory special assessment to the Clerk of the Court on or before the
date or sentencing.

 

6.                                       No Further Prosecution of Defendant

 

Other than the
charges set forth in the Information attached as Exhibit A, the Government
agrees not to bring any additional federal criminal non-tax charges against
Defendant with respect to the conduct covered by the Information. This
agreement is expressly contingent upon:

 

a.                                       the guilty plea
of Defendant to the information attached hereto as Exhibit A being
accepted by the Court and not withdrawn or otherwise challenged; and

 

b.                                      Defendant’s
performance of all of its obligations as set forth in this Agreement.

 

If Defendant’s guilty
plea is not accepted by the Court or is withdrawn for any reason, or if
Defendant should fail to perform any obligation under this Agreement, this
declination of prosecution shall be null and void.

 

The United States
expressly reserves the right to prosecute any individual, including but not
limited to former officers, directors, employees and agents of Biovail
Corporation and/or Biovail Pharmaceuticals, Inc. for the conduct set forth
in the attached Information.

 

4

 

7.                                       Waiver of Rights to Appeal and to Bring Collateral Challenge

 

Defendant is aware
that it has the right to challenge its sentence and guilty plea on direct
appeal. Defendant is also aware that it may, in some circumstances, be able to
argue that its plea should be set aside, or its sentence set aside or reduced,
in a collateral challenge such as pursuant to a motion under 28 U.S.C. § 2255.

 

In consideration of
the concessions made by the U.S. Attorney in this Agreement, Defendant
knowingly and voluntarily waives its right to appeal or collaterally challenge:

 

(a)                                  Defendant’s
guilty plea and any other aspect of Defendant’s conviction, including, but not
limited to, any rulings on pretrial suppression motions or any other pretrial
dispositions of motions and issues; and

 

(b)                                 The imposition by
the District Court of the sentence agreed to by the parties, as set out in paragraph
4 and, even if the Court rejects one or more positions advocated by the parties
with regard to the application of the U.S. Sentencing Guidelines.

 

Defendant’s waiver of
rights to appeal and to bring collateral challenges shall not apply to appeals
or challenges based on new legal principles in First Circuit or Supreme Court
cases decided after the date of this Agreement which are held by the First
Circuit or Supreme Court to have retroactive effect.

 

This Agreement does
not affect the rights or obligations of the United States as set forth in l8
U.S.C. § 3742(b), and the U.S. Attorney therefore retains his appeal rights.

 

8.                                       Cooperation

 

(a)                                  Terms of
Cooperation

 

Defendant shall
cooperate completely and truthfully in any trial or other proceeding arising
out of any federal investigation of its current and former officers, agents,
employees or other persons or entities relating to the conduct set forth in the
Information. Defendant shall make reasonable efforts to facilitate access to,
and to encourage the cooperation of, its current and former officers, agents,
and employees for interviews sought by law enforcement agents, upon request and
reasonable notice. Defendant shall also take reasonable measures to encourage
its current and former officers, agents, and employees to testify truthfully
and completely before any grand jury, and at any trial or other hearing, at
which they are requested to do so by any government entity.

 

In addition,
Defendant shall furnish to law enforcement agents, upon request, all documents
and records in its possession, custody or control relating to the conduct that
is within the scope of any ongoing grand jury investigation, trial or other
criminal proceeding in the District of Massachusetts, and that are not covered
by the attorney-client privilege or work product doctrine.

 

5

 

Provided, however,
notwithstanding any provision of this Agreement, that: (1) Defendant is
not required to request of its current or former officers, agents, or employees
that they forego seeking the advice of an attorney nor that they act contrary
to that advice; (2) Defendant is not required to take any action against
its officers, agents, or employees for following their attorney’s advice; and (3) Defendant
is not required to waive any privilege or claim of work product protection
except to the extent set forth in the succeeding paragraph.

 

Defendant
specifically agrees to continue to waive and/or waive any attorney-client
privilege and/or work product protections regarding the legality of the PLACE
program and/or the decision to enter into, implement and/or continue the PLACE
program as to any such advice or communications,

 

Defendant
acknowledges that it expressly and unequivocally admits that it knowingly,
intentionally and willfully committed the crime charged in the Information and
is in fact guilty of that offense. Defendant agrees that it will not make
statements inconsistent with this explicit admission of guilt to the crimes
charged in the Information,

 

9.                                       Probation Department Not Bound By Agreement

 

The sentencing
disposition agreed upon by the parties and their respective calculations under
the Sentencing Guidelines are not binding upon the United States Probation
Office.

 

10.                                 Fed. R. Crim. P. 11(c)(1)(C) Agreement

 

Defendant’s plea will
be tendered pursuant to Fed. R. Crim. P. 11(c)(1)(C). Defendant cannot withdraw
its plea of guilty unless the sentencing judge rejects this Agreement. If the
sentencing judge rejects this Agreement, this Agreement shall be null and void
at the option of either the United States or Defendant, with the exception of
paragraphs 12-13, which shall remain in effect.

 

11.                                 Civil and Administrative Liability

 

By entering into this
Agreement, the United States does not compromise any civil or administrative
liability, including but not limited to any False Claims Act or tax liability
which BPI may have incurred or may incur as a result of its conduct and its
plea of guilty to the attached Information.

 

12.                                 Waiver of Defenses

 

If this Plea
Agreement or Defendant’s guilty plea is not accepted by the Court for any
reason, or is later withdrawn or otherwise successfully challenged by Defendant
for any reason, Defendant hereby waives, and agrees it will not interpose any
defense to any charges brought against it which defenses Defendant might
otherwise have under any statute of limitations, the Speedy Trial Act, or the
United States Constitution with respect to preindictment delay, except that
Defendant may raise any such defense that Defendant may have for conduct
occurring before April 1, 2003, as further described in the parties
tolling agreement attached hereto as Exhibit B.

 

6

 

13.                                 Withdrawal of Plea By Defendant

 

Should Defendant move
to withdraw its guilty plea at any time, this Agreement shall be null and void
at the option of the U.S. Attorney, with the exception of this paragraph. In
this event, Defendant understands and agrees that the Government may pursue any
and all charges that might otherwise have been brought but for this Agreement,
and Defendant hereby waives, and agrees that it will not interpose, any defense
to any additional charges brought against it which might otherwise have under
any statute of limitations, the Speedy Trial Act, or the United States
Constitution with respect to pre-indictment delay, except any such defense that
Defendant may already have for conduct occurring before April 1, 2003.

 

14.                                 Breach of Agreement

 

If the U.S. Attorney
determines that Defendant has failed to comply with any provision of this
Agreement, or has committed any crime following its execution of this
Agreement, the U.S. Attorney may, at his sole option, be released from his
commitments under this Agreement in their entirety by notifying Defendant,
through counsel or otherwise, in writing. The U.S. Attorney may also pursue all
remedies available to him under the law, irrespective of whether he elects to
be released from his commitments under this Agreement. Further, the U.S. Attorney
may pursue any and all charges which have been, or are to be, dismissed
pursuant to this Agreement. Defendant recognizes that no such breach by it of
an obligation under this Agreement shall give rise to grounds for withdrawal of
its guilty plea. Defendant understands that, should it breach any provision of
this agreement, the U.S. Attorney will have the right to use against Defendant
before any grand jury, at any trial or hearing, or for sentencing purposes, any
statements which may be made by it, and any information, materials, documents
or objects which may be provided by it to the government subsequent to this
Agreement, without any limitation. In this regard, Defendant hereby waives any
defense to any charges which it might otherwise have under any statute of
limitations or the Speedy Trial Act.

 

15.                                 Who Is Bound By Agreement

 

This Agreement is
limited to the U.S. Attorney for the District of Massachusetts, and cannot and
does not bind the Attorney General of the United States or any other federal,
state or local prosecutive authorities.

 

16.                                 Corporate Authorization

 

Defendant shall
provide to the Government and the Court a copy of a resolution of the Board of
Directors of Biovail Pharmaceuticals, Inc. affirming that the Board of
Directors has authority to enter into the Plea Agreement and has (1) reviewed
the Information in this case and the proposed Plea Agreement; (2) consulted
with legal counsel in connection with the matter; (3) voted to enter into
the proposed Plea Agreement; (4) voted to authorize Biovail
Pharmaceuticals, Inc. to plead guilty to the charges specified in the Plea
Agreement and (5) voted to authorize the corporate officer identified
below to execute the Plea Agreement and all other documents necessary to carry
out the provisions of the Plea Agreement. A copy of the resolution is attached
as Exhibit C. Defendant agrees that either a duly authorized corporate
officer or a duly authorized attorney for Biovail Pharmaceuticals, Inc.,
at the discretion of the Court, shall appear 

 

7

 

on
behalf of Biovail Pharmaceuticals, Inc. and enter the guilty plea and will
also appear for the imposition of sentence.

 

17.                                 Complete Agreement

 

This letter and the
attachments thereto (Exhibit A - the Information, Exhibit B - the
Tolling Agreement and Exhibit C - the Corporate Resolution) contains the
complete agreement between the parties to this Agreement relating to the
disposition of this criminal case. No promises, representations or agreements
have been made other than those set forth in this letter.  This Agreement supersedes prior
understandings, if any, of the parties, whether written or oral, other than
those set forth in the attachments hereto. This Agreement can be modified or
supplemented only in a written memorandum signed by the parties or on the
record in court.

 

If this letter
accurately reflects the Agreement between the U.S. Attorney and Defendant,
please have Defendant sign the Acknowledgment of Agreement below. Please also
sign below as Witness. Return the original of this letter to Assistant U.S.
Attorney Sara Bloom.

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  MICHAEL J. SULLIVAN

  
	
   

  	
  United States Attorney

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ DIANE C. FRENIERE

  
	
   

  	
   

  	
  DIANE C. FRENIERE, Chief

  
	
   

  	
   

  	
  White
  Collar Crime Section

  

 

8

 

Acknowledgment
of Plea Agreement

 

The Board of
Directors has authorized me to execute this Plea Agreement on behalf of Biovail
Pharmaceuticals, Inc.  The Board has
read this Plea Agreement, the attached criminal Information, the tolling
agreement and the corporate authorization or has been advised of the contents
thereof and has discussed them fully with Biovail Pharmaceuticals, Inc.’s
attorney.  The Board acknowledges that
this letter fully sets forth Biovail Pharmaceuticals, Inc.’s agreement
with the Government.  The Board further
states that no additional promises or representations have been made to Biovail
Pharmaceuticals, Inc. by any officials of the United States in connection
with the disposition of this matter, other than those set forth in the Plea
Agreement.

 

 

	
  Dated: May 16, 2008

  	
  /s/ NANCY SELL

  
	
   

  	
  NANCY SELL

  
	
   

  	
  Title: President and Secretary

  
	
   

  	
  Biovail Pharmaceuticals, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
  Dated: 05/16/08

  	
  /s/ GEOFFREY HOBART

  
	
   

  	
  GEOFFREY HOBART, ESQ,

  
	
   

  	
  Covington & Burling, LLP.

  
	
   

  	
  Attorney
  for Biovail Pharmaceuticals, Inc.

  

 

9

 

EXHIBIT
A

 

 

UNITED
STATES DISTRICT COURT

DISTRICT OF MASSACHUSETTS

 

	
  UNITED STATES OF AMERICA,

  	
  )

  	
  Criminal Number

  
	
   

  	
  )

  	
   

  
	
   

  	
  )

  	
   

  
	
  v.

  	
  )

  	
  VIOLATION:

  
	
   

  	
  )

  	
   

  
	
   

  	
  )

  	
  18 U.S.C. § 371 — Conspiracy to Offer and 

  
	
  BIOVAIL PHARMACEUTICALS, INC.

  	
  )

  	
  Pay Illegal Remunerations to Physicians

  
	
   

  	
  )

  	
   

  
	
   

  	
  )

  	
  42 U.S.C. § 1320a-7(b)(b)(2) — Offers of 

  
	
   

  	
  )

  	
  Remuneration to Physicians

  
	
  Defendants.

  	
  )

  	
   

  
	
   

  	
  )

  	
   

  
	
   

  	
  )

  	
   

  

 

INFORMATION

 

THE UNITED STATES
ATTORNEY CHARGES THAT:

 

PRELIMINARY
ALLEGATIONS

 

At all times material
hereto, unless otherwise alleged:

 

1.                                       Defendant BIOVAIL PHARMACEUTICAL, INC. (“BPI”),
a Delaware corporation, had corporate headquarters in Morrisville, North
Carolina.

 

The
Drug Cardizem, L.A.

 

2.                                       In January 2001,
BPI acquired the Cardizem line of drugs
from another company for $409.5 million dollars.

 

3.                                       Cardizem is the
brand name of a drug known as diltiazem, which is a heart medication used to
control high blood pressure.

 

4.                                       In or before
2003, the patent ran out on Cardizem, the then brand name version of diltiazem,
and the drug faced generic competition.

 

5.                                       In the late 2002
and early 2003, BPI was preparing to introduce the
product Cardizem, L.A. (CLA) to the market. Cardizem, L.A. was BPI’s proprietary name for a new 24 hour time release, or
long acting (L.A.), formulation of the brand name drug Cardizem.

 

 

6.                                       BPI began selling
Cardizem, L.A. on or about March 23, 2003. At that time, the generic
version of Cardizem cost about one third less than the new drug, Cardizem, L.A.

 

The
PLACE Program

 

7.                                       As part of their
promotion of Cardizem, L.A., beginning in March 2003, BPI
implemented a program known as the PLACE (Proving Long Acting Through
Experience) program.

 

8.                                       The PLACE program
paid physicians and other prescribers up to $1,000 for enrolling between 11-15
patients in the program, causing patients to fill prescriptions for Cardizem,
L.A. These included prescriptions that were paid for by Medicaid.

 

9.                                       The first phase
of the PLACE program required the prescribing medical professionals (e.g.
physicians, nurse practitioners, physician’s assistants) to enroll in the
program by signing a business reply card by which they agreed to participate,
and by completing a 2 page, 10 multiple choice questionnaire. This
questionnaire was not expected to take, and did not usually take, the
prescribing professional more than 10 minutes to complete.

 

10.                                 Under this
initial part of the program, the prescribing medical professionals were paid
$250 if they (a) signed the business reply card and thus agreed to
participate in the program and write Cardizem, L.A. prescriptions for their
patients, and (b) completed this brief questionnaire.

 

11.                                 A payment of $250
for 10 to 15 minutes of these medical professionals’ time exceeded the
reasonable fair market value of their time.

 

12.                                 In addition, if
the business reply card was signed and the questionnaire completed and
returned, an office manager or assistant received $50.00. In some cases, these
assistants simply put the materials in an envelope. In other cases, the
assistants did nothing at this stage.

 

13.                                 The payments of
$50 to these office assistants exceeded the reasonable fair market value of the
assistants’ actual time spent.

 

2

 

14.                                 The second phase
of the PLACE program provided that if the medical prescriber returned the final
questionnaire, they would be paid, in addition to the initial $250 payment, as
follows:

 

(1)                                  an additional
$250 if they enrolled between 1 and 5 patients;

 

(2)                                  an additional
$500 if they enrolled between 6 and 10 patients; and

 

(3)                                  an additional $750
if they enrolled between 11 and 15 patients.

 

15.                                 These payments of
$250-$750 exceeded the reasonable fair market value of the medical prescribers’
time necessary to enroll these patients and complete the final questionnaire.

 

16.                                 In addition, if
the final questionnaire was returned, the office assistant also received an
additional $100.00. This payment also exceeded the fair market value of the
office assistants’ time necessary to complete the program.

 

17.                                 To enroll a
patient, the physician or other medicine prescriber was required to write a 30
day prescription for the patient and the patient had to fill the prescription. BPI provided a coupon or voucher, however, so that first
thirty days of the drug would be free.

 

18.                                 The physicians
and other medicine prescribers were told that in order to receive the payment
they also had to track the patients experience on Cardizem, L.A. for three
regularly scheduled visits. These visits were nothing more than the routine
visits and required no additional work for the prescriber.

 

19.                                 BPI did not design
or implement the PLACE program in a way calculated to provide new or meaningful
scientific data about whether Cardizem, L.A. worked better than other available
drugs.

 

20.                                 BPI employees
responsible for the PLACE program reported regularly on the number of
prescriptions generated by the PLACE program and congratulated those involved
for their success in using the PLACE program to generate prescriptions for
Cardizem, L.A.

 

3

 

21.                                 BPI paid and caused
full payments to be made to medical prescribers and office assistants even if
the information provided in the final study questionnaire was incomplete and/or
not usable.

 

22.                                 According to the
final study report, nearly 64 percent of the final study questionnaires were
not complete or contained inconsistent data.

 

23.                                 The senior
management of BPI and BPI’s
parent company communicated to the sales force that a successful launch of
Cardizem, L.A. was critical to BPI’s success
and growth as a company, as well as to their own financial well-being. On February 28,
2003, a BPI parent company Vice President sent
an email to the sales force with respect to the launch of Cardizem, L.A that
stated:

 

We have to deliver growth to Wall Street and everyone
knows exactly what is expected from us. If we ever don’t deliver, my net worth
will shrink dramatically. I will suffer tremendously if this were to happen . .
.. We have made a huge upfront commitment and now we expect you (the reps) to
make a commitment in return.

 

24.                                 BPI and its parent
company management also congratulated the sales team on its success in using
the PLACE program to drive prescriptions for Cardizem, L.A.

 

25.                                 Thus, on or about
April 11, 2003, the BPI Product
Manager in charge of the PLACE program sent an email to all district sales
managers that stated:

 

Congratulations on doing an incredible job with the
PLACE Program. The prescription generation has been phenomenal — Currently, we
have 10,505RXs!!

 

26.                                 Similarly, on June 23,
2003, this BPI Product Manager sent another
email, including higher level sales and marketing managers, as follows:

 

To date, a total of 89,092 Rxs have been recorded for
Cardizem LA, as of June 6th 2003. Congratulations once again on all the
success the PLACE Program is having in driving prescriptions and market share!!

 

27.                                 In addition, on April 5,
2003, the CEO of BPI’s parent company responded to
a report of increasing Cardizem, L.A. prescriptions from the PLACE program with
the following:

 

4

 

This is a GREAT start. Now, who would care to venture
a guess (don’t we call them forecasts?) on what conversion we can expect to
paying customers. I would really like to know what you think. Thanks and nice
work.

 

28.                                 Likewise, on April 8,
2003, the CEO of BPI’s parent company responded to
reports of 8356 faxed in prescription forms with “I have to tell you, I have
NEVER seen this type of response!! CONGRATS!!!”

 

29.                                 In preparing to
launch Cardizem, L.A., BPI also contracted
with R-Corp. to acquire a additional contracted sales representatives to
promote Cardizem, L.A. at the time of its launch. Under the agreement, R-Corp.
sales representatives were hired to help BPI sales
representatives promote Cardizem, L.A. at its launch.

 

30.                                 Prior to the
launch of Cardizem, L.A., R-Corp. representatives raised a concern about
whether the PLACE program complied with all laws, and specifically the
Anti-Kickback laws and indicated that R-Corp. was unwilling to proceed without
assurances that the program complied with the Anti-Kickback Act.

 

31.                                 On or about March 21,
2003, an attorney for R-Corp. spoke with counsel for BPI’s
parent company and informed the counsel for BPI’s
parent company about R-Corp.’s internal guidelines regarding the Anti-Kickback
Act, These included the following:

 

The purpose of the study cannot be to induce
physicians to prescribe the product...

 

The compensation cannot take into account the volume
or value of any referrals or business generated between the parties . . .

 

The recruitment of investigators needs to be aimed at
practitioners that are experts in the field or leading researchers.

 

Recruitment of investigators is not to be aimed at
high prescribers... Participation in the research and any payments cannot be made
contingent upon a practitioner prescribing a Reliant product.

 

[Emphasis in original]

 

The
Medicaid Program

 

32.                                 Title XIX of the
Social Security Act, 42 U.S.C. §§ 1396 et seq.,
established a program to enable the states to furnish medical assistance to
certain categories of persons whose 

 

5

 

income and resources were insufficient to meet
the costs of necessary medical services. Commonly called Medicaid, the program
was administered by the states, but was funded jointly by the federal and state
governments.

 

33.                                 To participate in
the Medicaid program, a state was required to develop a plan that was approved
by the Secretary of Health and Human Services as meeting federal requirements.
The state paid qualified providers for furnishing necessary services covered by
the state plan to individuals who were eligible for medical assistance. The
federal government contributed a portion of the costs that each participating
state incurred in purchasing items and services from qualified providers on
behalf of eligible persons. The state bore the remainder of the costs. At all
times relevant hereto, Massachusetts was among the states that had Medicaid
programs receiving federal funding.

 

34.                                 Medicaid
programs, including that in Massachusetts, were “federal health care programs”
within the meaning of 18 U.S.C. § 24, in that they were public plans affecting
commerce under which medical benefits, items and services were provided to
individuals under the plans.

 

35.                                 The federal
government contributed to the costs of prescription drugs for persons who were
Medicaid beneficiaries, including but not limited to persons receiving
prescriptions for blood pressure treatment, such as Cardizem, L.A.

 

36.                                 As discussed in
this Information, prescribers D, E, G, R, S and W were each medical providers
in Massachusetts who provided care and treatment for Medicaid-eligible patients
for high blood pressure. Each of these prescribers prescribed Cardizem, L.A.
for one or more patients who were Medicaid program beneficiaries in 2003. At
all times relevant to this Information, the Medicaid program in Massachusetts
reimbursed the Cardizem, L.A. prescriptions for the physicians’ Medicaid
eligible patients.

 

37.                                 At all times
relevant to this Information, federal law provided that it was illegal to
knowingly and willfully offer or pay any remuneration (including any kickback,
bribe or rebate) directly or indirectly, overtly or covertly, in cash or in
kind to any person to 

 

6

 

induce such person to order, or arrange for or recommend purchasing,
any item for which payment may be made in whole or in part under a Federal
health care program.

 

38.                                 BPI employees knew
that Cardizem, L.A. prescriptions, including those induced through the PLACE
program, would include prescriptions for Medicaid patients.

 

39.                                 In 2003, Medicaid
paid in excess of $3 million in reimbursement for prescriptions for Cardizem,
L.A. nationwide.

 

7

 

COUNT
ONE

(CONSPIRACY -18 U.S.C. § 371)

 

The
Conspiracy

 

40.                                 The allegations
set forth in Paragraphs 1- 39 are herein realleged and incorporated by
reference.

 

41.                                 Commencing on or
before August 2002, and continuing thereafter until in or about at least December 2003,
the exact dates being unknown to the Grand Jury, in the District of
Massachusetts and elsewhere, defendants

 

BIOVAIL
PHARMACEUTICALS INC.,

 

and
others known and unknown to the Grand Jury, did knowingly and willfully
combine, conspire, and agree to commit an offense against the United States, to
wit, 42 U.S.C. § 1320a-7b(b)(2)(A), by knowingly and willfully offering and
paying remuneration, directly and indirectly, overtly and covertly, in cash and
in kind, to physicians to induce them to prescribe Cardizem, L.A. for
individuals, including Medicaid patients, for which payments were made in whole
and in part under Medicaid and other Federal health care insurance programs.

 

Purpose
of the Conspiracy

 

42.                                 The purpose of
the conspiracy was to target medical prescribers who were potential high
prescribers of Cardizem, L.A. and to offer them payments and to pay them to
induce them to prescribe Cardizem, L.A. for their patients, including their
Medicaid patients.

 

Manner
and Means of the Conspiracy

 

It was part of the
conspiracy that :

 

43.                                 From March 2003
through at least December 2003, BPI implemented
the PLACE program to induce medical prescribers to prescribe Cardizem, L.A. for
their patients.

 

8

 

44.                                 From March 2003
through at least December 2003, BPI presented
the PLACE program to medical prescribers and others as a scientific study of
the performance of Cardizem, L.A., when the program was actually designed to
induce prescribers to prescribe the product for their patients by paying
prescribers up to $ 1,000.

 

45.                                 From November 2002
through at least on or about March 2003, BPI
confirmed their objectives for the Cardizem, L.A. program to include the
following:

 

(1)                                  Accelerate uptake
among high prescribing PCPs;

 

(2)                                  Engage physicians
in evaluation of Cardizem [L.A.]; and

 

(3)                                  Provide sales
reps with an opportunity to reinforce/build relationships with key prescribers.

 

46.                                 From March 2003
through at least December 2003, BPI paid the
participants in the PLACE program more than the fair market value of their time
in order to induce them to try Cardizem, L.A. on their patients.

 

47.                                 From in or about October 2002
through on or about February 2003, BPI increased
the payments to the physicians from the originally proposed honorarium of $100
(or a medically relevant item) to $300, then $500 and then $1,000 per
prescriber.

 

48.                                 In furtherance of
the conspiracy, BPI paid the physicians up to
$1,000 for their participation, without seeking attorney
advice regarding the legality of the payments, even though BPI was advised by Q-Corp., the company helping BPI to help design and implement the PLACE program, that BPI would have to consult its own attorneys as to the
appropriateness and permissibility of increasing the payment to such a high
honorarium.

 

49.                                 From in or about March 2003
through at least July 2003, BPI created
25,000 PLACE kits and targeted approximately 17,000 prescribers for
participation in the program and provided these target lists to their sales
representatives.

 

50.                                 From in or about March 2003
through at least July 2003, BPI targeted
prescribers based upon their projected potential and likelihood of prescribing
Cardizem, L.A.

 

9

 

51.                                 From in or about March 2003
through at least May 2003, BPI falsely
assured other participants, and specifically representatives of R-Corp., that
the PLACE program had been reviewed by attorneys for compliance with the
Anti-Kickback statutes as well as other laws, when in fact no such review had
been done.

 

52.                                 In or about March 2003,
a Vice President of BPI’s parent
company dismissed R-Corp’s concern about compliance with the Anti-Kickback Act
as whining, indicated he did not really care what R-Corp had to say about it,
and insisted that the program had to proceed to meet BPI’s
objectives.

 

53.                                 In or about March 2003,
this Vice President, when questioned further about how to deal with the
objections concerning the program’s potential lack of compliance with the
Anti-Kickback Act, caused the program to go forward, concluding: “This is a
formality anyway. The program has to proceed.”

 

54.                                 On or about April 10,
2003, BPI and a Vice President of its parent
corporation signed a letter to R-Corp. in which BPI
confirmed to R-Corp. the following:

 

You have indicated, and assured us, that Biovail and
[Q-Corp.] have carefully reviewed the program from
an anti-kickback perspective . . .  and
firmly believe that the program does not present an unreasonable
risk of enforcement action. Further, you have indicated that the program has
been reviewed by expert counsel well versed in these regulatory and enforcement
matters and that counsel has confirmed your position. It is on the basis of
your assurances, therefore, that we have agreed to enter an agreement directly
with [Q-Corp]. to implement the Project.

 

You have agreed to indemnify and hold R-Corp. . .
harmless from any losses . . . arising from or relating to the Project
including any losses relating to any governmental or enforcement actions
relating to the same.

 

55.                                 On or about April 10,
2003, BPI executed this letter to persuade
R-Corp. to go forward with the PLACE program, even though BPI
had not obtained any review of the PLACE program’s compliance with the Anti-Kickback
Act, much less an expert counsel review of the PLACE program from an
anti-kickback perspective.

 

56.                                 From in or about March 2003
through in or about July 2003, BPI made the
false representation that they had a legal advice as to the lawfulness of the
PLACE program 

 

10

 

from an anti-kickback perspective in order to
persuade R-Corp. to proceed with the program.

 

57.                                 From in or about April 2003
through at least December 2003, BPI caused
health insurers, including federal health care programs such as Medicaid, to
pay for Cardizem, L.A. prescriptions generated by the PLACE program.

 

Overt
Acts

 

58.                                 In furtherance of
the conspiracy, and to effect its objects, BPI and other
co-conspirators known and unknown to the Grand Jury, committed numerous overt
acts, including, but not omitted to, the following:

 

59.                                 On various dates
between March 2003 and in or about July 2003, BPI
enrolled and caused to be enrolled approximately 15,000 prescribers in the
PLACE program, including the six prescribers identified in the chart below.

 

60.                                 On various dates
between March 2003 and in or about September 2003, BPI caused approximately 5,000 prescribers, including the
prescribers identified in the chart below, to be paid $250 for filling out the
initial questionnaire.

 

61.                                 On or about the
dates set forth below and thereafter, BPI caused
approximately 10,000 prescribers, including the prescribers identified in the
chart below, to be paid and additional $750 for enrolling 11-15 patients.

 

62.                                 In 2003, each of
the prescribers identified in the chart below prescribed Cardizem, L.A. for
patients for whom the prescriptions were reimbursed by Medicaid:

 

	
  Prescriber

  	
   

  	
  Enrollment Date

  On or About

  	
   

  	
  $750 Payment Date

  On or About

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Prescriber D 

  Dartmouth MA

  	
   

  	
  May 6, 2003

  	
   

  	
  November 5, 2003

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Prescriber E 

  Braintree, MA

  	
   

  	
  April 9, 2003

  	
   

  	
  November 5, 2003

  

 

11

 

	
  Prescriber
  G

  Bridgewater, MA

  	
   

  	
  June 2,
  2003

  	
   

  	
  November 5,
  2003

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Prescriber R

  Springfield, MA

  	
   

  	
  April 28, 2003

  	
   

  	
  November 5, 2003

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Prescriber S

  Agawam, MA

  	
   

  	
  April 29, 2003

  	
   

  	
  November 5, 2003

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Prescriber W

  Long Meadow, MA

  	
   

  	
  April 14, 2003

  	
   

  	
  November 5, 2003

  

 

All
in violation of Title 18, United States Code, Section 371.

 

12

 

COUNTS
TWO - SEVEN

(OFFER OF REMUNERATION TO PHYSICIANS)

(42 U.S.C. § 1320a-7(b)(2)(A))

 

63.                                 Paragraphs 1-62
are realleged and incorporated as if fully set forth herein.

 

64.                                 From on or about March 21,
2003 through January 1, 2005, in the District of Massachusetts and
elsewhere, defendant

 

BIOVAIL
PHARMACEUTICALS, INC.,

 

did
knowingly and willfully cause to be offered remuneration, directly and
indirectly, overtly and covertly, in cash and in kind, to the physicians and
other medical prescribers listed below to induce those prescribing medical
professionals to prescribe Cardizem, L.A. for their patients, including their
Medicaid patients, for which payments for prescriptions beyond the first month
of free drug, would be made in whole and in part under state Medicaid programs,
as follows:

 

	
  Count

  	
   

  	
  Date of Offer

  	
   

  	
  Medical Prescriber

  
	
   

  	
   

  	
  (On or About)

  	
   

  	
   

  
	
  2

  	
   

  	
  May 6, 2003

  	
   

  	
  Medical Prescriber D

  
	
  3

  	
   

  	
  April 9, 2003

  	
   

  	
  Medical Prescriber E

  
	
  4

  	
   

  	
  June 2, 2003

  	
   

  	
  Medical Prescriber G

  
	
  5

  	
   

  	
  April 28, 2003

  	
   

  	
  Medical Prescriber R

  
	
  6

  	
   

  	
  April 29, 2003

  	
   

  	
  Medical Prescriber S

  
	
  7

  	
   

  	
  April 14, 2003

  	
   

  	
  Medical Prescriber W

  

 

All in violation of
Title 42, United States Code, Section 1320a-7b(b)(2)(A).

 

13

 

	
   

  	
  MICHAEL
  J. SULLIVAN

  
	
   

  	
  UNITED
  STATES ATTORNEY

  
	
   

  	
  DISTRICT
  OF MASSACHUSETTS

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  SARA BLOOM

  
	
   

  	
   

  	
  SARA
  MIRON BLOOM

  
	
   

  	
   

  	
  ASSISTANT
  UNITES STATES ATTORNEY

  
	
   

  	
   

  	
   

  
	
  Date:

  	
  5/16/08

  	
   

  	
   

  
					

 

14

 

EXHIBIT B

 

 

	
   

  	
  U.S. Department of Justice

  
	
   

  	
   

  
	
   

  	
  United States Attorney

  
	
   

  	
  District of Massachusetts

  
	
   

  	
   

  
	
  Main Reception: (617) 748-3100

  	
  United States Courthouse,
  Suite 9200

  
	
   

  	
  1 Courthouse Way

  
	
   

  	
  Boston, Massachusetts 02210

  

 

April 2,
2008

 

By TELEFAX

202-778-5281

 

Geoffrey Hobart, Esq.

Covington & Burling

1210 Pennsylvania Avenue, NW

Washington, DC 20004-3401

 

Re:          Biovail: Tolling Agreement on Statute of Limitations

 

Dear Mr. Hobart:

 

This letter confirms
and sets forth an agreement between the Office of the United States Attorney
for the District of Massachusetts and your clients, Biovail Corporation,
Biovail Pharmaceuticals, Inc. and ail parents, subsidiaries, successors
and assigns (hereinafter “Biovail”). The terms of the agreement arc as follows:

 

1.             As you are aware, this Office is
presently conducting a joint criminal and civil investigation of your client,
Biovail, and its officers, employees and agents. That conduct includes, without
limitation, allegations that Biovail and certain of its officers, employees and
agents, may have violated various federal criminal statutes, including but not
limited to 18 U.S.C. §371 (conspiracy to defraud the United States), 18 U.S.C.
§ 1341 and 1343 (mail and wire fraud), 342 U.S.C. § 1320(a)-7(b) (criminal
penalties for acts involving the Medicare and State health care programs),
certain civil statutes including but not limited to 31 U.S.C. § 3729 (civil
False Claims Act); and certain administrative statutes such as 42 U.S.C. §
1320a-7 (exclusion) and 42 U.S.C. § 1320a-7a (civil monetary penalties), in
connection with Biovail’s activities in connection with the distribution, sale,
marketing, approval, and promotion of the drug Cardizem, L.A.

 

2.             In the course of our discussions,
this Office has expressed its intention to afford you and your client the
further opportunity to provide information to this Office which you deem
relevant to matters relating to that investigation. In response, you have
advised us that you intend to provide certain information to this Office, and
that you wish such information be considered prior to a prosecution decision
concerning potential criminal charges resulting from that investigation. You
have requested further time to prepare any materials and gather information for
presentation to this Office, and to consider and evaluate further information
as may be provided by this Office. As a result, this Office and your client
have agreed, as more fully set 

 

 

forth
below, to toll the applicable statutes of limitations for the offenses
described in paragraph one for the time period April 2, 2008 through October 30,
2008 for that conduct described in paragraph one.

 

3.             This Office and your client
Biovail, hereby agree that your client will not at any time interpose a statute
of limitations defense or any constitutional claim based upon pre-indictment
delay to any indictment or count thereof, or to any civil complaint or count
thereof, or to any administrative action, which charges or alleges that your
client committed any federal offense or violation related to the conduct
described in paragraph one, that includes the time period April 2, 2008 to
October 30, 2008 in the calculation of the limitations period. Nothing
herein shall affect, or be construed as any waiver of, any applicable statute
of limitations defenses that Biovail may have with respect to the time period
prior to and including April 1, 2008, and your client expressly reserves
its right to raise any such defense, any provisions of this agreement
notwithstanding, except to the extent that your client has waived certain
statute of limitation defenses in any waiver agreement(s) with other
United States Attorney’s Offices or the Department of Justice, which agreement(s) remain
in effect.

 

4.             Your client, Biovail, enters into
this agreement knowingly and voluntarily. Biovail acknowledges that the statute
of limitations and United States Constitution regarding prejudicial
pre-indictment delay confers benefits on it, and it is not required to waive
those benefits, and that Biovail is doing so after consulting with you because
Biovail believes it is in its best interest to do so. Biovail also acknowledges
its understanding that it may be charged with the foregoing criminal offenses
and civil and administrative violations and/or any other offenses or violations
at any time prior to and including October 30, 2008.  Biovail further acknowledges its
understanding that it may be charged with any offenses or violations not
specifically described above, at any time during the relevant statute of
limitations period.

 

5.             This agreement relates only to the
allegations described in paragraph one above and any charges or claims based on
those allegations. This writing contains the entire agreement between this
Office and your client concerning the statute of limitations with respect to
these matters and can be modified or supplemented only by means of a writing
signed by this Office and your client.

 

If your client is
willing to enter into this agreement on the terms set forth above, Biovail
should indicate the same by signing on the spaces provided below.

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  MICHAEL J. SULLIVAN

  
	
   

  	
  United States Attorney

  
	
   

  	
   

  
	
   

  	
  /s/ SARA BLOOM

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Sara Miron Bloom

  
	
   

  	
   

  	
  Sara M. Bloom

  
	
   

  	
   

  	
  Assistant
  U.S. Attorney

  

 

2

 

	
  /s/
  GEOFFREY HOBART

  	
   

  	
  Dated:
  5/14/08

  
	
  Geoffrey
  Hobart

  	
   

  	
   

  
	
  Covington &
  Burling

  	
   

  	
   

  
	
  Attorney
  for Biovail Corporation and Biovail Pharmaceuticals, Inc.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ WILLIAM WELLS

  	
   

  	
  Dated: 5/14/08

  
	
  William
  Wells

  	
   

  	
   

  
	
  Chief
  Executive Officer

  	
   

  	
   

  
	
  Biovail
  Corporation

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/
  WENDY KELLY

  	
   

  	
  Dated:

  
	
  Wendy
  Kelly

  	
   

  	
   

  
	
  Director
  and Authorized Representative

  	
   

  	
   

  
	
  Biovail
  Pharmaceuticals, Inc.

  	
   

  	
   

  

 

3

 

EXHIBIT
C

 

 

May 16,
2008

 

UNANIMOUS
WRITTEN CONSENT OF

THE DIRECTORS OF

BIOVAIL PHARMACEUTICALS, INC.

 

THE UNDERSIGNED,
being the sole director of Biovail Pharmaceuticals, Inc., a Delaware
corporation (the “Corporation”), does hereby give her written consent in
accordance with Section 141(f) of the General Corporation Law of the
State of Delaware, in lieu of action in a meeting of the board of directors of
the Corporation, to the adoption of the following resolutions:

 

WHEREAS, the United
States Attorney for the District of Massachusetts has been conducting an
investigation into the Corporation’s conduct alleging that the Corporation
offered remuneration to physicians to recommend the purchase one of the
Corporation’s drug products (the “Investigation”):

 

WHEREAS, the
Corporation’s legal counsel has been negotiating a resolution of the Investigation;
and

 

WHEREAS, the
Corporation’s legal counsel has reported to the board the terms and conditions
of a proposed resolution of the Investigation;

 

NOW, THEREFORE, IT
IS:

 

RESOLVED, that the
Corporation is hereby authorized to enter into the Plea Agreement dated May 16,
2008, between the United States Attorney for the District of Massachusetts and
the Corporation (the “Agreement”);

 

FURTHER RESOLVED,
that Nancy Sell, President & Secretary, is hereby authorized and
directed in the name and on behalf of the Corporation to take all actions and
deliver any agreements, certificates and documents and instruments with respect
to or contemplated by the Agreement and matters set forth above, including,
without limitation, the payment of all amounts, fees, costs and other expenses
necessary or appropriate to effectuate the purpose and intent of the foregoing
resolutions and to effectuate and implement the settlements contemplated
hereby;

 

FURTHER RESOLVED,
that any actions taken by the officers of the Corporation prior to the adoption
of these resolutions that are within the authority conferred hereby are hereby
fully ratified, confirmed and approved as the act and deed of the Corporation;
and

 

FURTHER RESOLVED,
that this Written Consent be filed with the minutes of the Board of Directors
of the Corporation.

 

 

IN WITNESS WHEREOF, the
undersigned has set her hand as of the day and year first written above.

 

	
   

  	
  /s/ NANCY SELL

  
	
   

  	
  Nancy
  Sell

  

 

2

 

	
   

  	
  U.S. Department of Justice

  
	
   

  	
   

  
	
   

  	
  Michael J. Sullivan

  
	
   

  	
  United States Attorney

  
	
   

  	
  District of Massachusetts

  
	
   

  	
   

  
	
  Main Reception: (617) 748-3100

  	
  John Joseph Moakley United States
  Courthouse

  
	
   

  	
  1 Courthouse Way

  
	
   

  	
  Suite 9200

  
	
   

  	
  Boston, Massachusetts 02210

  

 

May 16,
2008

 

By Mail and Fax

202-778-5281

 

Geoffrey Hobart, Esq.

Covington & Burling

1210 Pennsylvania Avenue, NW

Washington, DC 20004-3401

 

Re:          Side Letter Agreement with Biovail
Corporation

 

Dear Mr. Hobart:

 

This letter (“Side
Letter Agreement”) will confirm that, in exchange for full performance of the
Plea Agreement entered into by and among the United States Attorney for the
District of Massachusetts (“U.S. Attorney”) and your client, Biovail
Pharmaceuticals Inc. (“BPI”), a copy of which Plea Agreement is attached hereto
as Exhibit One, and in exchange for certain other promises made herein
between and among the U.S. Attorney and your client, Biovail Corporation
(collectively, Biovail Corporation and BPI as “Biovail”), the U.S. Attorney and
Biovail Corporation hereby agree as follows:

 

a.                                       No Criminal
Prosecution of Biovail Corporation

 

The U.S. Attorney
hereby declines prosecution of Biovail Corporation for conduct by or
attributable to Biovail Corporation that:

 

(1)                                  falls within the scope of the Information to which BPI is pleading
guilty;

 

(2)                                  was a subject of the grand jury investigation by the U.S. Attorney in
Massachusetts including allegations that Biovail directly or indirectly offered
or paid remuneration, in the form of payments through a program known as the
PLACE program, to customers including but not limited to physicians to induce
these individuals to recommend, prescribe and/or purchase Biovail’s drug
Cardizem, L.A.;

 

The U.S. Attorney
does not decline criminal prosecution of Biovail Corporation or any of Biovail’s
related entities for any other conduct beyond that set forth above.

 

 

This Side Letter
Agreement is not intended to and does not affect the criminal liability of any
individual.

 

It is understood
among the parties to this Side Letter Agreement that the U.S. Attorney’s
promise not to prosecute Biovail Corporation is dependent upon and subject to (a) BPI’s
Fulfilling its material obligations in the Plea Agreement, (b) BPI and
Biovail Corporation entering into a Civil Settlement Agreement acceptable to the
Department of Justice prior to July 31, 2008, and (e) Biovail
Corporation entering into a Corporate Integrity Agreement acceptable to the
Office of Inspector General of the United States Department of Health and Human
Services by no later than September 30, 2008. If any of these conditions
are not met, Biovail Corporation agrees to waive any defenses regarding
pre-indictment delay, statute of limitations, or Speedy Trial Act with respect
to any and all criminal charges that could have been timely brought or pursued
as of April 1, 2008.

 

b.                                      Cooperation of
Biovail Corporation

 

Biovail shall
cooperate completely and truthfully in any trial or other proceeding arising
out of any ongoing federal grand jury investigation of its current and former
officers, agents, and employees. Biovail shall make reasonable efforts to
facilitate access to, and to encourage the cooperation of, its current and
former officers, agents, and employees for interviews sought by law enforcement
agents, upon request and reasonable notice. Biovail shall also take reasonable
measures to encourage its current and former officers, agents, and employees to
testify truthfully and completely before any grand jury, and at any trial or
other hearing, at which they are requested to do so by any government entity.

 

In addition, Biovail
shall furnish to law enforcement agents, upon request, all documents and
records in its possession, custody or control relating to the conduct that is
within the scope of any ongoing grand jury investigation, trial or other
criminal proceeding in the District of Massachusetts, and that are not covered
by the attorney-client privilege or work product doctrine.

 

Provided, however,
notwithstanding any provision of this Agreement, that: (1) Biovail is not
required to request of its current or former officers, agents, or employees
that they forego seeking the advice of an attorney nor that they act contrary
to that advice; (2) Biovail is not required to take any action against its
officers, agents, or employees for following their attorney’s advice; and (3) Biovail
is not required to waive any privilege or claim of work product protection
except to the extent set forth in the succeeding paragraph.

 

Biovail specifically
agrees to continue to waive and/or waive any attorney-client privilege and/or
work product protections regarding the legality of the PLACE program and/or the
decision to enter into, implement and/or continue the PLACE program as to any
such advice or communications.

 

Biovail Corporation
acknowledges that BPI expressly and unequivocally admits that it knowingly,
intentionally and willfully committed the crime charged in the Information and
is in fact guilty of that offense. Biovail Corporation agrees that it will not
make statements inconsistent with this explicit admission of guilt by BPI to
the crime charged in the Information.

 

2

 

c.                                       Who Is Bound By
Agreement

 

This Agreement is
limited to the U.S. Attorney for the District of Massachusetts, and cannot and
does not bind the Attorney General of the United States or any other federal,
state or local prosecutive authorities.

 

d.                                      Complete
Agreement

 

This Side Letter
Agreement and the Plea Agreement with BPI and its attachments are the complete
and only agreements between the parties. No promises, agreements or conditions
have been entered into other than those set forth or referred to in the
above-identified documents. This agreement supersedes prior understandings, if
any, of the parties, whether written or oral. This agreement cannot be modified
other than in a written memorandum signed by the parties or on the record in
court.

 

If this letter accurately
reflects the agreement entered into between the U.S. Attorney and Biovail
Corporation and its Board of Directors has authorized you to enter into this
agreement, please sign below and return the original of this letter to
Assistant U.S. Attorney Sara Miron Bloom.

 

	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  
	
   

  	
  MICHAEL J. SULLIVAN

  
	
   

  	
  United States Attorney

  
	
   

  	
   

  
	
   

  	
  /s/ DIANE C. FRENIERE

  
	
   

  	
  DIANE FRENIERE, Chief

  
	
   

  	
  White Collar Section

  
	
   

  	
  District of Massachusetts

  
	
   

  	
   

  
	
   

  	
  /s/ SARA BLOOM

  
	
   

  	
  SARA MIRON BLOOM

  
	
   

  	
  Assistant U.S. Attorney

  
	
   

  	
  District of Massachusetts

  

 

3

 

NON-PROSECUTION
AGREEMENT WITH BIOVAIL CORP.

 

ACKNOWLEDGMENT
OF AGREEMENT

 

The Board of
Directors of Biovail Corp. has been generally advised of the Plea Agreement
with Biovail Pharmaceuticals, Inc., and the criminal Information charging
Biovail Pharmaceuticals, Inc. and has discussed this matter with
counsel.  I acknowledge that this Side
Letter Agreement accurately reflects the agreement entered into between the
United States Attorney’s Office for the District or Massachusetts and Biovail
Corp., and I am duly authorized to enter into this agreement on behalf of
Biovail Corp.  Biovail Corp. expects to
enter into a civil settlement agreement with the United States Attorney’s
Office for the District of Massachusetts, the Department of Justice and the
Department of Health and Human Services, Office of Inspector General.  I further acknowledge that no additional
promises or representations have been made to Biovail Corp. by the United
States Attorney’s Office for the District of Massachusetts in connection with
the disposition of this matter other than as set forth in this Side Letter
Agreement.

 

	
   

  	
  /s/ WENDY KELLEY

  	
   

  
	
   

  	
  Wendy Kelley

  
	
   

  	
  Senior Vice President, General Counsel and Corporate
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
  Dated:

  	
  5/16/08

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ GEOFFREY E. HOBART

  
	
   

  	
  Geoffrey E. Hobart

  
	
   

  	
  Covington & Burling LLP

  
	
   

  	
  Counsel for Biovail Corp.

  
	
   

  	
   

  	
   

  
	
   

  	
  Dated:

  	
  5/16/08

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00169-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00169-of-00352.parquet"}]]