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Exhibit 10.1    
    

 
 

Subscription Agreement    
    

Gemini
Partners, Inc.

721B Slaters Lane

Alexandria, Virginia 22314 

Attn:
Howard W. Attarian, Chairman and Chief Executive Officer 

        Re:
Prospectus, dated                        , 2003 

Dear
Mr. Attarian: 

        The
undersigned investor ("Investor") in this Subscription Agreement ("Agreement") hereby acknowledges receipt of the prospectus ("Prospectus"),
dated                        , 2003, of Gemini
Partners, Inc. ("Gemini"), a Delaware corporation, and subscribes for the following number of units upon the terms and conditions set forth in
the Prospectus. The Investor agrees that this Agreement is subject to acceptance by Gemini, to availability and to certain other conditions. 

        The
Investor hereby subscribes for            units of Gemini's securities at $5.25 per unit, for an aggregate purchase price of
$                        . Enclosed is the Investor's check made payable to the "Riggs Bank, N.A./Gemini Partners, Inc.
Escrow Account" and has been forwarded to the escrow account in the
self-addressed stamped envelope that has been provided for convenience. The Investor may also elect to submit his subscription funds to the escrow account  via wire transfer as provided in this
Agreement. 

	 	 	ACCEPTED AND AGREED:
	

 	
 	

 Signature of Investor
	

 	
 	

 Print Full Name
	

 	
 	

 Street Address
	

 	
 	

 City, State, Zip
	

 	
 	

 Area Code and Telephone Number
	

 	
 	

ACCEPTED AND AGREED:

GEMINI PARTNERS, INC.
	

 	
 	

By:	

 
	 	 	 	

	 	 	 	Howard W. Attarian

Chairman of the Board

WIRING
INSTRUCTIONS:

        Gemini
Partners, Inc. Escrow Account 

Riggs
Bank, N.A.

Washington, D.C. 20006

ABA No. 054000030

Account No. 25-727-492 

QuickLinks

Exhibit 10.1

Subscription AgreementExhibit 10.3

 

AGREEMENT

 

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

 

Background Information

 

Company develops, distributes and sells pharmaceutical
products, and Vendor provides medical representatives who Detail (as
hereinafter defined) pharmaceutical products for third parties. The Company
desires Vendor to provide representatives to Detail certain products as
determined and directed by Company in the geographical territory hereinafter
specified, pursuant to the terms and conditions of this Agreement, and Vendor
desires to provide the Representatives and perform such services pursuant to
the terms and conditions set forth in this Agreement.

 

The parties hereby agree as follows:

 

ARTICLE I

DEFINITIONS AND REFERENCES TO VENDOR

 

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

 

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

 

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

 

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

 

(d)                                 “Clinical
Science Liaison” means an individual hired by and retained as an employee of
Vendor to educate physicians, sonographers and nurses on new technology and
ultrasound techniques.

 

1

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

2

 

[****]    Represents
material which has been redacted pursuant to a request for confidential
treatment pursuant to Rule 24B-2 under the Securities Exchange act of
1934, as amended.

 

retained
as an employee of Vendor to conduct Detailing of Products in connection with
the Program. As sometimes used in this Agreement where the connotation is
appropriate, “Representatives” shall include “Clinical Science Liaisons” and
“Managers.”

 

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

 

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

 

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

 

ARTICLE II

APPOINTMENT OF VENDOR; GENERAL SCOPE OF ACTIVITIES

 

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

 

Vendor shall
assign Representatives for such Target Customers, in such numbers, and in such
Territories as shall be designated by Joint Commercialization Committee (as
hereinafter defined) during the term of this Agreement. Each Representative
shall make Product Details on his or her assigned Target Customers based on the
general direction given by the Joint Commercialization Committee. The duties of
such Representatives shall be exclusively to Detail the Products and perform
other related activities deemed necessary for the establishment and maintenance
of new and existing customers of the Products in the Territory.

 

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

 

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

 

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

 

3

 

ultimate
responsibility for the marketing and sales of the Product, direction of the
Representatives regarding the Product, manufacturing of the Product, providing
medical affairs services (including physicians and staff) to support the
marketing and sale of the Product, management of the clinical development of
the Product (including phase IV studies) and regulatory affairs.

 

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

 

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

 

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

 

2.3.                              Scope
of Activities. The parties shall perform the following activities as
applicable to each in connection with the Program:

 

(a)                                  Vendor
will recruit, interview and hire as its employees, the Representatives. Vendor
will use its best efforts to ensure that Representatives have experience in the
medical/pharmaceutical industry, preferably with a sonography background and
experience in performing cardiac sonography in a hospital setting; prior
experience and training in ultrasound equipment sales preferred; or such other
sales experience deemed mutually acceptable by Company and Vendor. The
Representatives shall have a minimum of a four (4) year degree from a college or
university, professional in manner and appearance, and shall be hired in
accordance with all applicable state and federal laws. Each Representative
shall have a valid driver’s license for purposes of performing his/her
obligations under this Agreement. Vendor shall use its best efforts to ensure
that the Representatives have satisfactory references from prior employers.
Vendor shall have the sole authority to reject any applicant for employment as
a Representative. Company may, at its sole cost and expense, participate with
Vendor in the interviewing of Representatives; provided, however, in the event
that Vendor rejects an applicant for Representative and thereafter hires such
applicant at the request of Company, Company shall indemnify and hold Vendor harmless
from any Damages (as defined in Section 16.1) arising as a result of such
Representative’s breach of this Agreement, or any wrongful or negligent acts or
omissions.

 

4

 

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

 

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

 

(d)                                 Company
shall provide Vendor without cost with sufficient quantities of the Product
Promotional Materials and Product Labeling for the performance and supervision
of Detailing. Company shall be solely responsible for the preparation, content,
and method of distribution of the Product Promotional Materials and the Product
Labeling. In connection with the Detailing of the Products, the Representatives
shall use only the Product Labeling and the Product Promotional Materials provided
by Company; and under no circumstances shall Vendor or the Representatives
develop, create, or use any other promotional material or literature for the
Detailing of the Products. Company shall advise Vendor immediately of any
inaccuracy or incompleteness of the Product Promotional Materials or the
Product Labeling, and upon such notice, Vendor and the Representatives shall
immediately cease the use of any portion or all of the Product Promotional
Materials or Product Labeling so identified by Company.

 

(e)                                  Vendor
shall instruct the Representatives to limit their verbal statements and claims
regarding the Products, including efficacy and safety, to those that are
consistent with the Product Labeling and the Product Promotional Materials. The
Representatives shall not add, delete, or modify claims of efficacy or safety
in the Detailing of the Products, nor make any changes (including underlining
or otherwise highlighting any language or adding any notes thereto) in the
Product Promotional Materials. Representatives shall utilize only printed
materials provided by Company. Representatives shall not make any disparaging,
untrue, or misleading statements about any of Company or its Affiliates,  employees, competitors, or
competing products. Representatives shall Detail the Products in strict
adherence to all applicable laws, regulations, and professional requirements,
including, but not limited to, the Act, the Medicare and Medicaid Anti-Kickback
Statute, and the American Medical Association Gifts to Physicians from Industry
Guidelines.

 

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

 

5

 

and
direction related to Detail activities on the Products from Company and Vendor
mutually through the JCC. Company shall make all decisions with respect to the
overall strategy in connection with the Detailing of the Products. Any Company
personnel interacting with Vendor Representatives shall not discipline the
Representatives or implement terms or conditions of employment or personnel
policies and/or practices with respect to the Representatives or otherwise
control the daily activities of Representatives. Company shall provide Vendor
with copies of all reports, memoranda, audits and other data it develops
pertaining to the Representatives, Detailing, and the Program within fifteen
(15) days of the preparation of such documents. Provided, however, that any
such documents claiming negligent or wrongful acts or omissions of
Representatives shall, as provided in Section 2.5, be sent to Vendor as
promptly as practicable.

 

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

 

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

 

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

 

2.4.                              Orders
for Products. Company shall be solely responsible for establishing the
terms and conditions of the sale of the Products, including without limitation,
the price at which the Products will be sold, whether sales of the Products
will be subject to any discounts, the method of distribution of the Products,
and whether any credit will be granted or refused in connection with the sale
or return of any Product. Company shall be exclusively responsible for
accepting and filling all purchase orders for the Products, billing and returns
for the Products, and all other activities in connection with the sale and
delivery of the Products, other than Detailing. If Vendor or the
Representatives receive an order for the Products, they shall immediately
transmit such order to Company for further handling and communications with the
submitter of the order, including acceptance or rejection, which shall be in
Company’s sole discretion.

 

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

 

6

 

[****]    Represents
material which has been redacted pursuant to a request for confidential treatment
pursuant to Rule 24B-2 under the Securities Exchange act of 1934, as
amended.

 

pursuant
to this Agreement shall be deemed to be negligent or wrongful acts or omissions
of Vendor. Provided, however, that any acts or omissions of the Representatives
pursuant to the direction, control or supervision of Company or its employees
or agents shall not be deemed to be negligent or wrongful acts or omissions of
Vendor. Each party shall notify the other in writing as promptly as practicable
of any such material alleged negligent or wrongful acts or omissions on the
part of the Representatives of which it becomes aware along with a plan to
remedy such acts or omissions, and Company shall provide Vendor with a
reasonable opportunity to remedy such acts or omissions, and if indicated, to
replace the involved Representatives.

 

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

 

2.7                                 Management
Reports. Vendor shall provide Company with monthly reports in the form set
forth in Schedule 2.7 within fifteen (15) days after the end of each
month. At the request of Company, Vendor shall furnish Company at reasonable
times such documentation as Company reasonably requests for purposes of
verifying the accuracy of any monthly report.

 

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

 

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

 

7

 

[****]    Represents
material which has been redacted pursuant to a request for confidential
treatment pursuant to Rule 24B-2 under the Securities Exchange act of
1934, as amended.

 

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

 

Company shall
provide Vendor with a right of first negotiation with respect to the marketing
and sales services, including but not limited to expansion of the number of
Representatives, related to promotion of the Products for uses in the
cardiology area. Company shall grant Vendor an exclusive right of negotiation
with respect to such additional services for a period of sixty (60) days after
Company’s notice to Vendor that it desires to obtain additional marketing and
sales services and/or expand the number of Representatives. If the parties have
not reached an agreement with respect to the marketing and sales services or
expansion of the number of Representatives within sixty (60) days from the date
of Company’s notice, and entered into a definitive amendment to this Agreement
within sixty (60) days thereafter, or if Vendor notifies Company in writing at
any point during such negotiation period that it is not interested or unable to
provide such services, then Company shall have no further obligation with
respect to such additional marketing and sales services and/or additional
Representatives under this Section 2.9.

 

2.10                           Marketing
and Medical Education Services. Company will hire inChord to provide the
following marketing services for the Program:

 

•                  Sales Training

•                  Presentations
and Symposia

•                  Scientific
Advisory Board

•                  Commercial
Advisory Panels

•                  Publication
Program

•                  Journal
Advertising

•                  Direct Mail

•                  Product
Monograph

•                  Promotional
Literature

•                  Market Research
and Pharmacoeconomics

•                  Telemarketing
Symposia

•                  Tradeshows

 

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

 

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

 

8

 

 

[****]    Represents
material which has been redacted pursuant to a request for confidential
treatment pursuant to Rule 24B-2 under the Securities Exchange act of
1934, as amended.

 

access during ordinary
business hours to records of such costs and expenses in order to verify the
amounts paid by Company or reimbursed by Vendor hereunder.

 

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

 

ARTICLE III

COMPENSATION

 

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

 

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

 

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

 

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

 

9

 

[****]    Represents
material which has been redacted pursuant to a request for confidential
treatment pursuant to Rule 24B-2 under the Securities Exchange act of
1934, as amended.

 

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

 

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

 

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

 

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

 

(b)                                 Vendor
shall submit monthly invoices to Company for all Service Fees, Territory
Operating Expenses and Deferred Fees set forth above and any other amounts due
under this Agreement and Company shall pay such amounts within thirty (30) days
of the invoice date.

 

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

 

(d)                                 Without
limiting Vendor’s rights under law or equity, Vendor and its Affiliates, parent
or related entities, may exercise a right of set off against Company for any
and all amounts due under this Agreement including, but not limited to, the
Deferred Fees, against any amounts owed to Company by Vendor, or its
Affiliates, parent, or related entity, if Vendor deems Company, during the term
of this Agreement, in default of any of its loan covenants with its third party
lenders, or their assignees, which default remains uncorrected for a period of
ten (10) days.

 

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

 

10

 

[****]    Represents
material which has been redacted pursuant to a request for confidential
treatment pursuant to Rule 24B-2 under the Securities Exchange act of
1934, as amended.

 

in
Section 14.1, Company shall pay Vendor a Service Fee for the extension as
further negotiated by the parties.

 

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

 

3.3                                 Company’s
Termination, Removal, or Hiring of Representatives or Managers.

 

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

 

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

 

11

 

[****]    Represents
material which has been redacted pursuant to a request for confidential
treatment pursuant to Rule 24B-2 under the Securities Exchange act of
1934, as amended.

 

contractor any
Representatives and Managers that are not Targeted Employees or are not
actually hired by Company during the Employee Selection Period, and (b) Vendor
agrees not to solicit for hire as an employee, agent or independent contractor
any Targeted Employee hired by Company during the Employee Selection Period.

 

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

 

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

 

3.5                                 Past
Due Amounts. Failure of the Company to timely make any payment to Vendor
under this Agreement will constitute a material breach of this Agreement by
Company. All amounts owing by Company to Vendor pursuant to this Agreement that
are not timely paid by Company will bear interest at the rate of [****] from
the due date.

 

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

 

	
  Actual Gross Sales of
  Product/Gross Sales 

  Threshold

  	
   

  	
  Royalty

  	
   

  
	
  101%-115%

  	
   

  	
  [****]

  	
   

  
	
  116%-125%

  	
   

  	
  [****]

  	
   

  
	
  125% - greater

  	
   

  	
  [****]

  	
   

  

 

The Gross Sales
Threshold for each twelve (12)-month period of this Agreement beginning on the
Product Launch Date is as follows:

 

	
  Twelve (12)-Month 

  Period

  	
   

  	
  Gross
  Sales 

  Threshold

  	
   

  
	
  1

  	
   

  	
  $

  	
  [****]

  	
   

  
	
  2

  	
   

  	
  $

  	
  [****]

  	
   

  
	
  3

  	
   

  	
  $

  	
  [****]

  	
   

  
	
  4

  	
   

  	
  $

  	
  [****]

  	
   

  
	
  5

  	
   

  	
  $

  	
  [****]

  	
   

  

 

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

 

12

 

period.
All Royalty payments shall be made as set forth in the preceding sentence. At
no time shall the Royalty owed to Vendor by Company be financed by Company
(i.e., added to the Deferred Fees).

 

ARTICLE IV

REPRESENTATIONS, WARRANTIES AND COVENANTS

 

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

 

(a)                                  that
Vendor and the Representatives shall perform the Detailing in a professional
and timely manner;

 

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

 

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

 

(d)                                 that
Vendor is under no obligation to any third party that would prevent the
execution of this Agreement or interfere with its performance under this
Agreement.

 

4.2.                              By
Company.  Company represents,
warrants, and covenants to Vendor, as of execution of this Agreement and during
the term of this Agreement, as follows:

 

(a)                                  that
Company is under no obligation to any third party that would prevent the
execution of this Agreement or interfere with its performance under this
Agreement;

 

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

 

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

 

13

 

(d)                                 that
the manufacture, sale, and distribution of the Products do not and will not
during the term of this Agreement, in any material respect, infringe any patent
or other proprietary rights of third parties, and the Products have all
necessary governmental approvals and may be lawfully Detailed and sold by
Company and the Representatives;

 

(e)                                  that
Company has the right and authority to market and sell the Product in the
Territory and to grant Vendor the exclusive right and authority to market and
sell the Product in the Territory.

 

ARTICLE V

STATUS OF VENDOR AND THE REPRESENTATIVES

 

5.1.                              Vendor
Independent Contractor. Vendor is being retained and shall perform
hereunder strictly as an independent contractor. Representatives performing
services hereunder shall not be, and shall not be considered to be, employees
of Company for any purpose, and shall at all times remain employees of Vendor, subject
to Section 3.3. Neither party shall have any responsibility for the
hiring, termination, compensation, benefits or other conditions of employment
of the other party’s employees, except as otherwise provided in this Agreement.

 

5.2.                              No
Company Benefits. While employees of Vendor, the Representatives are not
eligible to participate in any benefits programs or sales bonuses offered by
Company to its employees, or in any pension plans, profit sharing plans, stock
purchase plans, insurance plans or any other employee benefit plans offered
from time to time by Company to its employees, provided that the
Representatives shall be eligible to participate in Company sales contests if
so requested by Company and approved by Vendor. Vendor acknowledges and agrees
that Company does not, and will not, maintain or procure any worker’s
compensation or unemployment compensation insurance for or on behalf of the
Representatives while they are employees of Vendor. Vendor acknowledges and
agrees that it shall be solely responsible for paying all salaries, wages,
benefits and other compensation which its employees (including Representatives)
may be entitled to receive in connection with the performance of the services
hereunder.

 

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

 

5.4.                              No
Joint Venture. Nothing contained in this Agreement shall be construed as
creating a joint venture or, except as otherwise provided herein, as granting
to either party the authority to bind or contract any obligations in the name
of or on the account of the other party or to make any guarantees or warranties
on behalf of the other party.

 

14

 

ARTICLE VI 

TRAINING

 

6.1.                              Training
Programs.

 

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

 

(b)                                 In
order to qualify for assignment in a Territory, a Representative must
demonstrate thorough knowledge of the Products by passing Company approved
Product tests at a level of proficiency agreed upon by Company and Vendor.

 

(c)                                  Vendor
shall conduct a selling skills training program for the Representatives prior
to commencement of the Program.

 

6.2.                              Training
Materials. With the advice and assistance of Vendor, Company shall prepare
written training materials for the Training Program and an up-to-date
programmed learning unit for the Products, to be sent to each Representative
for “at home” study a minimum of five (5) days prior to the commencement of the
Training Program.

 

ARTICLE VII

SAMPLES

 

7.1.                              Provision
of Samples. Company shall provide samples of the Products to the
Representatives at Company’s option and at its expense. Company shall determine
the quantity and types of samples to be provided to the Representatives and the
method of distribution of the samples. In the event Company elects to have
Vendor manage the storage and distribution of samples, Vendor shall pass on to
Company the actual invoice costs for storage, distribution and other related
costs and use prudent business sense in costs incurred. All samples shall be
stored and handled by Company and Vendor in compliance with the PDMA and other
applicable law.

 

7.2                                 Sample
Accountability.  Vendor shall
prepare and provide to Company for approval a sample accountability program
applicable to the samples provided by Company.

 

7.3.                              Return
of Samples. Within thirty (30) days following the termination or expiration
of this Agreement or within thirty (30) days from the termination or removal
from the Program of a Representative (unless such Representative has been hired
or retained by Company), Vendor shall cause the Representatives to return to
Company all unused Product samples provided to Vendor or the Representatives by
Company. Company shall pay or reimburse Vendor for all costs and expenses in
connection with the storage and shipment of returned samples.

 

15

 

ARTICLE VIII

TRADEMARKS AND INTELLECTUAL PROPERTY RIGHTS

 

The Products shall
be Detailed by Vendor’s Representatives under trademarks owned by Company or an
Affiliate of Company. This Agreement does not constitute a grant to Vendor of
any property right or interest in the Products or any trademarks which Company
or an Affiliate of Company uses with respect to the Products or to the name or
business style of Company. Vendor and the Representatives shall use the Product
Promotional Materials only for the purposes of this Agreement, and all
copyright and other intellectual property rights in the Product Promotional
Materials shall remain with Company.

 

ARTICLE IX

COMMUNICATIONS;  MONITORING
THE PROGRAM

 

9.1.                              Communications
from Third Parties. Vendor and its Representatives shall use their best
efforts to advise Company of all comments, statements, requests and inquiries
of the medical profession or any other third parties relating to the Products
that are not addressed by either Product Labeling or the Product Promotional
Materials, of which Vendor becomes aware. All responses to such communications
to the medical profession or such other third parties shall be handled solely
by Company. Vendor shall provide reasonable assistance to Company to the extent
requested by Company, and at Company’s cost and expense, to fully respond to
such communications.

 

9.2.                              Government
Agencies. All communications with government agencies, including the FDA,
concerning the Products shall be the sole responsibility of Company. Company
shall supply Vendor with a copy of all such communications. Vendor shall assist
Company with respect to such communications with government agencies to the
extent requested by Company, and at Company’s cost and expense. Vendor shall use
its best efforts to provide Company with any documents or information
reasonably requested by Company for purposes of responding to any
communications with government agencies within seventy-two (72) hours of
Company’s request.

 

9.3.                              Customer
Communications. In addition to Detailing, Vendor shall assist Company with
respect to customer communications (as reasonably requested by Company and at
Company’s cost and expense) within the Territory and shall regularly advise
Company of market, economic, regulatory and other developments of which Vendor
may become aware which may affect the sale of the Products in the Territory.

 

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

 

9.5.                              Review
of Results. The parties shall review and discuss the actual results
compared to the marketing plans for Detailing of the Products at the JCC
meetings, or as otherwise mutually agreed upon by the parties. Company shall
regularly and promptly 

 

16

 

[****]    Represents
material which has been redacted pursuant to a request for confidential
treatment pursuant to Rule 24B-2 under the Securities Exchange act of
1934, as amended.

 

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

 

ARTICLE X 

INSURANCE

 

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

 

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

 

(b)                                 Commercial
General Liability insurance, including completed operations and products
liability, with a combined single limit of [****];

 

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

 

10.2.                        Company
Insurance Coverage. Company shall maintain Commercial General Liability
insurance (primary and secondary coverage combined), including completed
operations and products liability, with a combined single limit of at least
[****].

 

10.3                           Certificates
of Insurance. All of the foregoing insurance shall be
maintained with responsible carriers and such terms of coverage shall be
evidenced by certificates of insurance furnished by one party to the other.
Such certificates of insurance shall provide for at least thirty (30) days’
written notice to the other party prior to cancellation or modification of any
of the material terms of such coverage, and include a loss payable clause
naming the other party as a beneficiary of such insurance or as an additional
insured.

 

ARTICLE XI

ADVERSE REACTION REPORTING AND REGULATORY MATTERS

 

11.1.                        Immediate
Notification. Vendor and Company agree to notify the other party as soon as
reasonably practicable of any information that each may obtain or learn
concerning any Product or package complaint or any serious unexpected side
effect, injury, toxicity, or sensitivity reaction or any unexpected incidence
of severity thereof associated with the clinical uses, studies, investigations,
tests and marketing of the Products, whether or not determined to be
attributable to the Products. “Serious” as used in this Section 11.1
refers to an experience which results in death, permanent or substantial disability,
in-patient hospitalization, prolongation of existing in-patient
hospitalization, a congenital anomaly or cancer, or a result of an overdose or
life threatening condition. “Unexpected” as used in this Section 11.1
refers to (i) conditions or developments not previously submitted to
governmental Agencies or encountered during clinical studies of the Products
and not reflected in the Product Promotional Materials or the Product Labeling,
or (ii) conditions or developments occurring with greater frequency, severity,
or specificity than shown by information previously submitted to governmental
Agencies or encountered during clinical studies of the Products and not
reflected in the Product Promotional Materials or the Product Labeling. Each
party shall also notify the other in a timely manner of any other adverse
experience, i.e., any unfavorable and unintended change in the structure
(signs), function 

 

17

 

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

 

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

 

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

 

ARTICLE XII

RETURN/RECALL

 

12.1.                        Returned
Products.

 

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

 

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

 

ARTICLE XIII

CONFIDENTIAL INFORMATION

 

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

 

18

 

information
that:

 

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

 

(b)                                 Was
lawfully obtained by the receiving party from a third party without any
obligation of confidentiality;

 

(c)                                  Is, at the time of disclosure, in the public
domain;

 

(d)                                 Becomes
part of the public domain after disclosure by publication or otherwise, except
by breach of this Agreement;

 

(e)                                  Is
developed by or for the receiving party independently and apart from this
Agreement; or

 

(f)                                    Is
otherwise knowledge possessed by the receiving party or its employees as the
result of their industry experience or education.

 

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

 

ARTICLE XIV

TERM AND TERMINATION

 

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

 

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

 

19

 

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

 

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

 

14.5                           Termination
Due To Delay in Product Launch. If the Product Launch Date does not occur
within ninety (90) days after FDA approval, either party may terminate this
Agreement upon sixty (60) days written notice to the other.

 

14.6                           Termination
Due To Regulatory And Other Problems. If the Product is not being marketed
due to regulatory problems, court or administrative proceedings, product
liability claims, recalls, raw materials shortages, or similar factors beyond
the control of Company, then, subject to Section 3.2, Vendor may terminate
this Agreement upon thirty (30) days written notice to Company.

 

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

 

14.8                           Termination
Due to Failure to Reach Sales Minimums. Upon expiration of the twelve
(12)-month period beginning on the Product Launch Date, either party may
terminate this Agreement upon providing at least one hundred eighty (180) days
prior written notice to the other party if sales of the Product are less than
the minimum levels specified by the JCC; provided, however, Company may not
terminate this Agreement pursuant to this Section 14.8 until all amounts
owed to Vendor by Company are paid in full.

 

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

 

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

 

20

 

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

 

14.11                     Termination:
Return of Materials. Within sixty (60) days following the termination or
expiration of this Agreement, Vendor shall return to Company all Confidential
Information, Product Promotional Materials, marketing plans, forms, territory
lists, reports and any and all other tangible items provided to Vendor by
Company.

 

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

 

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

 

During the term of
this Agreement and thereafter as long as residual payments are due to Vendor
pursuant to this Section 14.13, Company shall provide to Vendor monthly
sales reports in a mutually agreed upon format. Such sales reports shall be
provided to Vendor electronically within ten (10) days of the end of each
month.

 

During the term of
this Agreement and for a period of one (1) year after the final residual
payment owed to Company is made by Vendor, Company shall permit Vendor’s
designated employees or agents to have access during ordinary business hours to
records of all Product sales information in order to verify the accuracy of
amounts paid to Vendor by Company.

 

21

 

ARTICLE XV

RECORDKEEPING; AUDIT RIGHTS

 

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

 

ARTICLE XVI

INDEMNIFICATION

 

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

 

16.2.                        Indemnification
by Vendor. Subject to the extent of any indemnification from Company
pursuant to Section 16.3 hereof, Vendor shall indemnify and hold Company,
its Affiliates, directors, officers, employees and agents harmless from and
against any and all Damages, except to the extent such damages arise from the
negligence or intentional wrongful actions of Company, arising directly or
indirectly from:

 

(a)                                  Vendor’s
breach of or failure to comply with any of its obligations under this
Agreement;

 

(b)                                 any
inaccuracy in or breach or failure of any representation, warranty, or covenant
made by Vendor in this Agreement;

 

(c)                                  any
negligent or wrongful act or omission on the part of Vendor or its employees or
agents;

 

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

 

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

 

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

 

22

 

employees of Vendor.

 

16.3.                        Indemnification
by Company. Subject to the extent of any indemnification from Vendor
pursuant to Section 16.2 hereof, Company shall indemnify and hold Vendor
and its Affiliates, directors, officers, employees and agents harmless from and
against any and all Damages, except to the extent such damages arise from the
negligence or intentional wrongful actions of Vendor, arising directly or
indirectly from:

 

(a)                                  Company’s
breach of or failure to comply with any of its obligations under this
Agreement;

 

(b)                                 any
inaccuracy in or breach or failure of any representation, warranty, or covenant
made by Company in this Agreement;

 

(c)                                  any
negligent or wrongful act or omission on the part of Company or its employees
or agents;

 

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

 

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

 

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

 

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

 

(h)                                 Company’s
failure to pay when due or to reimburse Vendor for any Taxes (as defined in
Section 5.3);

 

(i)                                     any
negligent or wrongful acts or omissions on the part of Company with respect to
Vendor’s employees or Representatives or those individuals who have made
application to be Representatives of Vendor;

 

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

 

23

 

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

 

(1)                                  any
decision or action of the JCC.

 

16.4.                        Indemnification
Procedures. A party (the “Indemnitee”) which intends to claim
indemnification under this Article 16 shall promptly notify the other
party (the “lndemnitor”) in writing of any action, claim or liability in
respect of which the lndemnitee or any of its employees or agents are entitled
to indemnification. The Indemnitee shall permit, and shall cause its employees
and agents to permit, the Indemnitor at its discretion, to settle any such
action, claim or liability and agrees to the complete control of such defense
or settlement by the Indemnitor; provided, however, that such settlement or
defense does not adversely affect the Indemnitee’s rights hereunder or impose
any obligations on the Indemnitee in addition to those set forth in this
Agreement. The Indemnitee, its employees, and agents, shall cooperate fully
with the Indemnitor and its legal representatives in the investigation and
defense of any action, claim or liability subject to indemnification. The
Indemnitee shall have the right, but not the obligation, to be represented by
counsel of its own selection and at its own expense in connection with any
indemnified claim.

 

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

 

16.6                           No
Consequential Damages. Notwithstanding any provision of this Agreement to
the contrary, and except with regard to claims by third parties, neither party
shall be liable to the other for any special, indirect, incidental or
consequential damages (other than liability for personal injury as provided in
this Article 16), including lost profits.

 

ARTICLE XVII

MISCELLANEOUS

 

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

 

17.2.                        Captions.  Article and
Section headings used in this Agreement are for convenience only and shall
not affect the construction of this Agreement.

 

24

 

17.3.                        Governing
Law. This Agreement shall be construed and the respective rights of the
parties hereto determined according to the substantive laws of the State of
Ohio, exclusive of conflict of laws principles.

 

17.4.                        Severability.
If any provision of this Agreement or any other document delivered under this
Agreement is prohibited or unenforceable in any jurisdiction, it shall be ineffective
in such jurisdiction only to the extent of such prohibition or
unenforceability, and such prohibition or unenforceability shall not invalidate
the balance of such provision to the extent it is not prohibited or enforceable
nor the remaining provisions hereof, nor render unenforceable such provision in
any other jurisdiction. In the event any provisions of this Agreement shall be
held to be invalid, illegal or unenforceable, the parties hereto shall use
their best efforts to substitute a valid, legal and enforceable provision
which, insofar as practical, implements the purposes hereof.

 

17.5.                        Entire
Agreement: Modification. This Agreement contains the entire and exclusive
agreement between the parties in respect of the subject matter hereof and supersedes
and cancels all previous agreements, negotiations, commitments and writings
between the parties hereto in respect of the subject matter hereof. Except as
provided herein, this Agreement may not be changed or modified in any manner or
released, discharged, abandoned or otherwise terminated unless in writing and
signed by the duly authorized officers or representatives of the parties.

 

17.6.                        Notices.
Any notice or request required or desired to be given in connection with this
Agreement shall be deemed to have been sufficiently given if sent by pre-paid
registered or certified mail or facsimile transmission to the intended
recipient at the address set forth below or such other address as may have been
furnished in writing by the intended recipient to the sender. The date of
mailing or facsimile transmission shall be deemed to be the effective date on
which notice was given, provided that all facsimile transmissions shall contain
a provision requiring the intended recipient to confirm receipt and no facsimile
transmission shall be effective unless confirmation of its receipt is received
within twenty-four hours of its transmission.

 

All notices shall
be addressed to:

 

If to Company, to:

Alliance Pharmaceutical
Corp. 

3040 Science Park Road San 

Diego, California 92121
Fax:

(858) 410-5306

Attention:

President

 

If to Vendor, to:

Cardinal Health Sales and
Marketing Services 

7000 Cardinal Place

Dublin, Ohio 43017 

Fax: (614) 757-6000

 

25

 

Attention:

President

 

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

 

17.8.                        Assignment.
This Agreement may not be assigned or transferred by a party without the prior
written consent of the other party hereto, and any such assignment by Company
shall be specifically subject to the continued obligation to pay the residual
payments pursuant to Section 14.13 of this Agreement. Any such assignment
shall not materially or adversely affect the rights or obligations of either
party to this Agreement.

 

17.9.                        Public
Announcements. Neither party shall issue any press release or other public
announcement, verbally or in writing, referring to the other party or any
entity which controls, is controlled by or under common control of such party,
without the prior written consent of such party. Nothing contained herein shall
limit the right of either party to issue a press release or public announcement
if, in the opinion of such party’s counsel, such press release or public
announcement is required pursuant to state or federal securities laws, rules or
regulations, or other applicable laws, in which case the party required to make
the press release or public announcement shall use its commercially reasonable
efforts to obtain the approval of the other party as to the form, nature and
extent of the press release or public announcement prior to issuing the press
release or making the public announcement.

 

17.10.                  Maintenance
of Records. Vendor and Company each agree that throughout the term of this
Agreement and for a period of six years after the termination of this
Agreement. each will maintain records and otherwise establish procedures to
assure compliance with all regulatory, professional, and other applicable legal
requirements which relate to the Detailing and marketing of the Products and if
applicable, with the other services and activities to be performed hereunder.

 

17.11.                  Force
Majeure. Failure of either party hereto to fulfill or perform its
obligations under this Agreement shall not subject such party to any liability
if such failure is caused or occasioned by, without limitation, acts of God,
acts of the public enemy, fire, explosion, flood, drought, war, riot, sabotage,
embargo, strikes or other labor disputes (which strikes or disputes need not be
settled), compliance with any order, regulation, or request of government, or
by any other event or circumstance of like or different character to the
foregoing beyond the reasonable control and without the fault or negligence of
such party (a “Force Majeure Event”) provided such party uses reasonable
efforts to remove such Force Majeure Event and gives the other party prompt
notice of the existence of such Force Majeure Event. Provided, further, that no
Force Majeure Event shall serve to delay or excuse any payment by one party to
the other then due and owing.

 

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

 

26

 

IN WITNESS
WHEREOF, the parties have caused this Agreement to be executed by their duly
authorized officers.

 

	
  REDKEY, INC. dba

  CARDINAL HEALTH SALES AND 

  MARKETING SERVICES

  	
  ALLIANCE PHARMACEUTICAL 

  CORP

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Don Wetherhold

  	
   

  	
  By:

  	
  /s/ Duane J. Roth

  	
   

  
	
   

  	
   

  
	
  Name:

  	
  Don Wetherhold

  	
  Name:

  	
  Duane J. Roth

  
	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  President

  	
  Title:

  	
  Chairman and Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
  February 28, 2002

  	
  Date:

  	
  February 28, 2002

  
								

 

27

 

Schedule 1.1(m)

 

List of Products

 

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

 

28

 

 

Schedule 2.3(i)

 

DRUG POLICY

 

I.                                       PURPOSE

 

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

 

II.                                   POLICY

 

A.                                   The
Company expressly prohibits the use, sale, dispensing, possession or
manufacture of illegal drugs and narcotics on its premises.

 

B.                                     The
employee will be subject to disciplinary action up to and including immediate
Involuntary Termination for bringing non-prescribed drugs or narcotics to the
workplace; being under the influence of drugs or alcohol while working; using
illegal drugs or alcohol while working; or dispensing, distributing or
illegally manufacturing or selling such substances on Company premises or work
sites in the Company workplace.

 

C.                                     As
a condition of employment, the employee is required to sign a consent form
allowing the Company the right to test the employee for suspected substance
abuse. All testing procedures shall confirm to local, state and federal
regulations.

 

D.                                    The
Company reserves the right to inform appropriate law enforcement agencies of
any activity prohibited by this policy, including the name of the person known
or suspected to be involved.

 

E.                                      Nothing
in this statement of policy is to be interpreted as constituting a waiver of
Management’s responsibility to maintain discipline or the right to take
disciplinary measures in the case of poor performance or misconduct.

 

F.                                      Upon
approval of the President, the Company may allow the use of alcohol at
Company-sponsored events.

 

III.                                 PROCEDURE

 

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

 

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

 

29

 

C.                                     The
employee experiencing problems relating from drug, narcotic or alcohol abuse or
dependency shall be encouraged to seek outside counseling. Such substance
abuse-related counseling in and of itself shall have no influence on work
performance evaluations.

 

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

 

30

 

Schedule 2.7

 

Form of
Management Report

 

	
  Report
  Name

  	
   

  	
  Description

  	
   

  	
  Frequency

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Territory Assignment Report

  	
   

  	
  Lists the individuals covering each region and
  territory.  If a territory is vacant,
  the report will indicate the date when the territory became vacant and what
  alternate coverage is being applied (i.e. District Manager,  Adjacent Rep, etc.)

  In addition, the report will indicate the current turnover rate.

  	
   

  	
  Monthly

  
	
  Territory Coverage Report

  	
   

  	
  For each territory, the
  report provides the call statistics:

  •                       Percentage
  of call to target audience 

  •                       Percentage
  of samples delivered to target audience 

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

  The report is
  summarized at the Regional and National levels.

  	
   

  	
  Monthly 

  Quarterly

  
	
  Sales Statistics Report

  	
   

  	
  For each territory, based on actual sales, the
  report will show:

  •                       New Rx

  •                       Total Rx

  •                       Percent
  Change for New Rx

  •                       Percent
  Change for Total Rx

  •                       New
  Market Share Percent Change

  •                       Total
  Market Change Percent Change

  The report is
  summarized at the Regional and National levels.

  	
   

  	
  Monthly 

  Quarterly

  
	
  Inventory Report

  	
   

  	
  For each Territory, the report will document all the
  sample distribution activities. The report will reflect the following:  

  For each SKU:

  •                       Period
  beginning balance

  •                       Total
  shipments received

  •                       Total
  samples dropped

  •                       Total
  adjustments

  •                       Period
  ending balance

  •                       Total
  variance (units / percent)

  The report is
  summarized at the Regional and National levels.

  	
   

  	
  Monthly

  
	
  Inventory Exception Report

  	
   

  	
  The report will provide details on variances and adjustments
  related to the distribution of samples if any has occurred.

  	
   

  	
  Monthly

  

 

31

 

[****]    Represents
material which has been redacted pursuant to a request for confidential treatment
pursuant to Rule 24B-2 under the Securities Exchange act of 1934, as
amended.

 

Schedule 3.1

 

Service Fees

 

The monthly
Service Fee per Representative is as follows:

 

	
  Period

  	
   

  	
  Monthly
  Service Fee per 

  Representative

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Execution of
  this Agreement - twelfth (12th) month following Product Launch
  Date

  	
   

  	
  $

  	
  [****]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Thirteenth (13th)
  month following Product Launch Date - twenty-fourth (24th) month
  following Product Launch Date

  	
   

  	
  $

  	
  [****] 

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Twenty-fifth (25th)
  month following Product Launch Date - thirty-sixth (36th) month
  following Product Launch Date

  	
   

  	
  $

  	
  [****] 

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Thirty-seventh
  (37th) month following Product Launch Date - forty-eighth (48th)
  month following Product Launch Date

  	
   

  	
  $

  	
  [****] 

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Forty-ninth (49th)
  month following Product Launch Date - sixtieth (60th)month
  following Product Launch Date

  	
   

  	
  $

  	
  [****] 

  	
   

  

 

The Service Fee
shall be effective as of the first (1st) day of the month after
Company receives written authorization to staff the position.

 

The Service Fees
shall include the following:

 

•
Representative Salary

•
Representative Payroll Taxes and Benefits

•
Administrative Costs (supplies, printing, postage)

•
Call Reporting

•
Program Management

•
Recruiting

•
Representative Background Check and Drug Testing

•
Expense Reporting and Travel Administrative

 

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

 

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

•
Promotional Expenses

 

32

 

•
Automobile-Related Expenses and/or Allowances

•
Cellular Telephone Expenses

•
Bonuses, including related payroll taxes and benefits costs

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

•
Other Representative Prizes or Awards

 

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

 

33

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