Document:

Sublicense Agreement

  
 Exhibit 10.76

 Portions of this exhibit marked [*] are requested to be treated confidentially. 

Execution Version 
 Dated September 29, 2010 
  

 
 Salix
Pharmaceuticals, Inc. 
 - and - 
 CDC III, LLC 
 - and - 

A general partnership 
 of 
 Craig Aronchick 

William H. Lipshutz 
 and 
 Scott H. Wright 

- and - 

Novel Laboratories, Inc. 
  

 
 SUBLICENSE
AGREEMENT 
 (Osmoprep®) 

 
  

  
 THIS SUBLICENSE
AGREEMENT (this “Agreement”) is made the 29th day of September, 2010 (the “Execution Date”), between SALIX PHARMACEUTICALS, INC., a California corporation (“Sublicensor”); CDC III,
LLC, a Delaware limited liability company (“CDC III”); a general partnership of Craig Aronchick, William H. Lipshutz, and Scott H. Wright (the “General Partnership”; each of the General Partnership and CDC III,
a “Licensor”, and together, the “Licensors”); and NOVEL LABORATORIES, INC., a Delaware corporation (“Sublicensee”). In this Agreement, Sublicensor, Sublicensee, CDC III and the General
Partnership are referred to together as the “Parties” and each is referred to as a “Party.” 

RECITALS 

WHEREAS, the General Partnership and Sublicensor, as successor in interest to InKine Pharmaceutical Company, Inc. f/k/a Panax
Pharmaceutical Company, Ltd., are parties to that certain License Agreement, dated February 14, 1997, as amended (the “Head License”), under which Sublicensor holds a license in respect of the Original Osmoprep Patent (as
defined herein); 
 WHEREAS, the General Partnership has assigned certain of its rights under the Head License to CDC III
for a certain period; 
 WHEREAS, Sublicensor is the owner of the Additional Osmoprep Patent (as defined herein);

 WHEREAS, Sublicensor and CDC III are parties to certain litigation with Sublicensee with respect to the Product (as
such term is defined in the Head License); 
 WHEREAS, Sublicensor, CDC III, the General Partnership, Sublicensee, and
Actavis Inc., a Delaware corporation (“Actavis”) are entering into that certain Settlement Agreement, dated the Execution Date, to settle such litigation; 

  
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 WHEREAS,
Sublicensor desires to sublicense to Sublicensee, and Sublicensee desires to take a sublicense under, Sublicensor’s rights in respect of the Original Osmoprep Patent, all on the terms and conditions set forth below; 

WHEREAS, CDC III desires to license to Sublicensee, and Sublicensee desires to take a license under, CDC III’s rights in
respect of the Original Osmoprep Patent, all on the terms and conditions set forth below; 
 WHEREAS, the General
Partnership desires to license to Sublicensee, and Sublicensee desires to take a license under, the General Partnership’s rights in respect of the Original Osmoprep Patent, all on the terms and conditions set forth below; and 

WHEREAS, Sublicensor desires to license to Sublicensee, and Sublicensee desires to take a license under, the Additional Osmoprep
Patent, all on the terms and conditions set forth below; 
 NOW, THEREFORE, in consideration of the mutual covenants
contained in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows: 

 

	1.	Definitions 

 Unless
otherwise specifically provided herein, the following terms, when used with a capital letter at the beginning, shall have the following meanings: 
 1.1. “Actavis” has the meaning set forth in the recitals. 

1.2. “Additional Osmoprep Patent” means United States patent number 7,687,075 and any divisions, continuations,
continuations-in-part, re-examinations and reissues thereof. 
 1.3. “Affiliate” means, with respect to
a Person, any Person that Controls, is Controlled by or is under common Control with such first Person. For purposes of this 

  
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definition only, “Control” means (a) to possess, directly or indirectly, the power to direct the management or policies of a Person, whether through ownership of voting
securities, by contract relating to voting rights or corporate governance, or otherwise or (b) to own, directly or indirectly, more than fifty percent (50%) of the outstanding voting securities, or other voting ownership interest, of such
Person. 
 1.4. “Agreement” has the meaning set forth in the preamble hereto. 

1.5. “Applicable Law” means the applicable laws, rules and regulations that may be in effect from time to time.

 1.6. “Approved Product” means the SP product that is approved for distribution under New Drug
Application No. 021-892 as the same exists on the date hereof or may in the future be amended solely for the purpose of effecting non-material modifications to the product that is the subject thereof as of the date hereof so as to permit such
product to be marketed and sold in the Territory in compliance with Applicable Law and the requirements of Regulatory Authorities. 
 1.7. “Authorized Generic Product” means (a) any drug product containing SP distributed under New Drug Application No. 021-892, but not under the trade name Osmoprep®
or, (b) subject to the Head License, any Generic SP Product that is sold in the Territory by a Third Party pursuant to a license or other authorization from Sublicensor, CDC III or the General Partnership. 

1.8. “Business Day” means a day other than a Saturday or a Sunday on which banks in general in New York, New York
are open for the conduct of normal commercial banking business at their counters. 
 1.9. “CDC III” has
the meaning set forth in the recitals. 
 1.10. “Commercialize” means, in respect of a product, all
activities relating to the importation, advertising, promotion and other marketing of the product; pricing and 

  
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reimbursement, Detailing, distribution, storage, and handling of the product; offering the product for sale and selling the product; and customer service and support in respect of the product; in
all cases, post-Marketing Authorization for the product. 
 1.11. “Confidential Information” means
(a) the existence and terms of this Agreement and (b) any and all information or material that, at any time before, on or after the Execution Date, has been or is provided or communicated to the Receiving Party by or on behalf of the
Disclosing Party pursuant to this Agreement or in connection with the transactions contemplated hereby or any discussions or negotiations with respect thereto, including any data, ideas, concepts or techniques contained therein and any modifications
thereof or derivations therefrom. Confidential Information may be disclosed either orally, visually, electronically, in writing, by delivery of materials containing Confidential Information or in any other form now known or hereafter invented.

 1.12. “Consent Judgment Entry Date” has the meaning set forth in the Settlement Agreement.

 1.13. “Courts” has the meaning set forth in Section 7.3. 

1.14. “Detailing” means face to face contact between a field sales force representative and a medical
professional with prescribing authority for the purpose of discussing scientific or medical information about a pharmaceutical product(s). 
 1.15. “Disclosing Party” shall mean the Party disclosing Confidential Information. 
 1.16. “Execution Date” has the meaning set forth in the first paragraph of this Agreement. 
 1.17. “Expiration Date” means the earlier of (a) the later of the date of expiration of the Original Osmoprep Patent and the date of expiration of the Additional Osmoprep
Patent and (b) the date on which a court enters a final decision from which no 

  
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appeal has been or can be taken holding that all claims of the Original Osmoprep Patent and the Additional Osmoprep Patent that would otherwise be infringed by the making, having made, using,
selling, offering for sale or importation of any Generic SP Product are unenforceable or invalid. 
 1.18.
“FDA” means the United States Food and Drug Administration. 
 1.19. “Field of Use”
means the field of colonic purgatives or laxatives. 
 1.20. “General Partnership” has the meaning set
forth in the recitals. 
 1.21. “Generic SP Product” means a solid dosage form or forms of drug product
containing SP that refers to the Approved Product as the reference-listed drug in an Abbreviated New Drug Application or pursuant to an application under 21 U.S.C. § 355(b)(2). 

1.22. “Head License” has the meaning set forth in the recitals. 

1.23. “Indemnification Claim Notice” has the meaning set forth in Section 4.2(a). 

1.24. “Indemnified Party” has the meaning set forth in Section 4.1. 

1.25. “Injunction Failure Date” means, in the event that (a) any Third Party other than Actavis or its
Affiliates sells commercial-scale quantities of an Unlicensed Generic Product in the Territory prior to November 16, 2019, and (b) Sublicensor fails to obtain a temporary restraining order or other preliminary injunctive relief enjoining
the sale of such Unlicensed Generic Product in the Territory within [*] ([*]) Business Days following the date that Sublicensor learns or is notified that such Third Party has sold such Unlicensed Generic Product (the “Knowledge
Date”), then the date that is [*] ([*]) Business Days after the Knowledge Date, provided that notwithstanding the foregoing the Injunction Failure 

  

	[*]	Confidential treatment requested; certain information omitted and filed separately with the SEC. 

  
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Date shall be the date [*] ([*]) Business Days after the Knowledge Date if Sublicensor fails to pursue any such temporary restraining order or other preliminary injunctive relief in the
applicable court within such [*] ([*]) Business Day period. 
 1.26. “Knowledge Date” has the meaning
set forth in Section 1.21. 
 1.27. “Licensors” has the meaning set forth in the recitals.

 1.28. “Losses” means any and all direct or indirect liabilities, damages, losses or expenses,
including interest, penalties, and reasonable lawyers’ fees and disbursements. 
 1.29. “Majority-Controlled
Affiliate” (a) means, with respect to a Person, any Person that owns, directly or indirectly, more than fifty percent (50%) of the outstanding voting securities, or other voting ownership interest, of such Person; any Person of
which the first Person owns, directly or indirectly, more than fifty percent (50%) of the outstanding voting securities, or other voting ownership interest, of such Person; or any Person of which a Person owning, directly or indirectly, more
than fifty percent (50%) of the outstanding voting securities, or other voting ownership interest, of the first Person owns, directly or indirectly, more than fifty percent (50%) of the outstanding voting securities, or other voting
ownership interest, of such Person; and, (b) with respect to Sublicensee, includes GAVIS Pharmaceuticals, LLC. 
 1.30.
“Marketing Authorization” means any approval required from a Regulatory Authority to market and sell a pharmaceutical product in any relevant territory including any form of pricing or reimbursement approval. 

1.31. “Original Osmoprep Patent” means United States patent number 5,616,346 and any divisions, continuations,
continuations-in-part, re-examinations and reissues thereof. 

  

	[*]	Confidential treatment requested; certain information omitted and filed separately with the SEC. 

  
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 1.32.
“Party” and “Parties” have the meanings set forth in the first paragraph of this Agreement. 
 1.33. “Person” means an individual, sole proprietorship, partnership, limited partnership, limited liability partnership, corporation, limited liability company, business trust,
joint stock company, trust, incorporated association, joint venture or similar entity or organization, including a government or political subdivision, department or agency of a government. 

1.34. “Product” means the Generic SP Product approved for distribution under the Sublicensee ANDA, provided that
the formulation used to make such Generic SP Product is substantially similar to the formulation disclosed in the Sublicensee ANDA that was produced to Sublicensor and CDC III in discovery in the action that is the subject of the Settlement
Agreement prior to the Execution Date and the Generic SP Product is sold under the Sublicensee ANDA. 
 1.35.
“Receiving Party” shall mean the Party receiving Confidential Information. 
 1.36.
“Recipients” shall have the meaning set forth in Section 6.1. 
 1.37. “Regulatory
Authority” means any national, supranational, regional, state or local regulatory agency, department, bureau, commission, council or other governmental entity, including the FDA, in any country. 

1.38. “Settlement Agreement” means that certain Settlement Agreement, dated the Execution Date, by and among the
Parties and Actavis. 
 1.39. “SP” means sodium phosphate monobasic monohydrate and sodium phosphate
dibasic anhydrous or either of such compounds. 
 1.40. “Start Date” means the earliest of
(a) November 16, 2019, (b) the date on which any commercial scale quantities of an Authorized Generic Product are sold in the 

  
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Territory, (c) the Injunction Failure Date, and (d) the date on which a court enters a final decision from which no appeal has been or can be taken (other than a petition to the United
States Supreme Court for a writ of certiorari) holding that all claims of the Original Osmoprep Patent and the Additional Osmoprep Patent that would otherwise be infringed by the making, having made, using, selling, offering for sale or importation
of Product in the Territory are unenforceable or invalid. 
 1.41. “Sublicensee” has the meaning set
forth in the first paragraph of this Agreement. 
 1.42. “Sublicensee ANDA” means Sublicensee’s
Abbreviated New Drug Application No. No. 79-247. 
 1.43. “Sublicensor” has the meaning set forth
in the first paragraph of this Agreement. 
 1.44. “Supply Agreement” means that certain Supply
Agreement, dated the Execution Date, between Sublicensor and Sublicensee. 
 1.45. “Term” has the
meaning set forth in Section 5.1. 
 1.46. “Territory” means the United States of America, its
territories and possessions. 
 1.47. “Third Party” means any Person other than the Parties and their
respective Affiliates. 
 1.48. “Third Party Claim” has the meaning set forth in Section 4.1.

 1.49. “Unlicensed Generic Product” means a Generic SP Product that is sold in the Territory, other
than the Product or an Authorized Generic Product. 
  

	2.	Grant of Rights 

2.1. Original Osmoprep Patent. 

  
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 (a) Sublicense.
Subject to the terms and conditions of this Agreement, Sublicensor hereby grants to Sublicensee, effective as of the Start Date, a non-exclusive, non-sublicensable (except to the extent contemplated by Section 2.3), fully paid up sublicense
under Sublicensor’s rights in and to the Original Osmoprep Patent solely in the Field of Use to manufacture, have manufactured, use and sell the Product in the Territory from and after the Start Date. 

(b) License. Subject to the terms and conditions of this Agreement, Licensors hereby grant to Sublicensee, effective as of the
Start Date, a non-exclusive, non-sublicensable (except to the extent contemplated by Section 2.3), fully paid up license under the Original Osmoprep Patent solely in the Field of Use to manufacture, have manufactured, use and sell the Product
in the Territory from and after the Start Date. 
 2.2. Additional Osmoprep Patent. Subject to the terms and
conditions of this Agreement, Sublicensor hereby grants to Sublicensee, effective as of the Start Date, a non-exclusive, non-sublicensable (except to the extent contemplated by Section 2.3), fully paid up license under the Additional Osmoprep
Patent solely in the Field of Use to manufacture, have manufactured, use and sell the Product in the Territory from and after the Start Date. 
 2.3. Sublicenses; Distributor. 
 (a) Sublicensee shall have the
right to sublicense its rights under Section 2.1 and 2.2 to its Majority-Controlled Affiliates, but any such sublicense may continue only for such period as the Majority-Controlled Affiliate receiving the sublicense shall continue as a
Majority-Controlled Affiliate. 
 (b) Sublicensor and Licensors each acknowledges and agrees that appointment by Sublicensee of
Actavis as a distributor of the Product in the Territory shall 

  
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not constitute a sublicense of any rights sublicensed or licensed to Sublicensee pursuant to Sections 2.1 and 2.2. 
 2.4. Waiver and Cooperation. 
 (a) Waiver. 

(i) Sublicensor hereby agrees to waive and hereby waives, for itself and its Affiliates, any and all regulatory exclusivities that may
prevent marketing or sale of the Product within the scope of the sublicense and license granted in Sections 2.1(a) and 2.2, respectively. 
 (ii) Each Licensor hereby agrees to waive and hereby waives, for itself and its Affiliates, any and all regulatory exclusivities that may prevent marketing or sale of the Product within the scope of the
license granted in Section 2.1(b). 
 (b) Start of Sublicense and License. The sublicense and license set forth in
Sections 2.1 and 2.2, respectively, shall commence reasonably in advance of the Start Date solely for the purpose of permitting, and only to the extent necessary to permit, Sublicensee and its Affiliates to make commercially reasonable preparations
to sell Product as of the Start Date by (i) initiating manufacture of Product not more than [*] ([*]) days before the date on which the Start Date can be reasonably anticipated by Sublicensee to occur and (ii) initiating offers for sale of
Product not more than [*] ([*]) days before the date on which the Start Date can be reasonably anticipated by Sublicensee to occur. 
 (c) Confirmation. 
 (i) As Sublicensee may reasonably request, Sublicensor
shall confirm to the FDA the sublicenses and waivers granted by Sublicensor hereunder. 

  

	[*]	Confidential treatment requested; certain information omitted and filed separately with the SEC. 

  
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 (ii) As Sublicensee
may reasonably request, each Licensor shall confirm to the FDA the licenses and waivers granted by Sublicensor hereunder. 
 (d)
Notification. Sublicensor shall provide Sublicensee with notice as soon as practicable of both the expected, and also of the actual, occurrence of the Start Date if other than November 16, 2019. Without limiting the foregoing,
Sublicensor shall provide Sublicensee with not less than [*] ([*]) days’ prior notice of the date on which any commercial scale quantities of an Authorized Generic Product are anticipated to be sold in the Territory. Notwithstanding anything in
this Agreement to the contrary, Sublicensee may provide a copy of any notice received by it from Sublicensor pursuant to this Section 2.4(d) to Actavis. 
 (e) No Challenges. 
 (i) Sublicensor shall not, and shall cause its
Affiliates not to, challenge or cause any Third Party to challenge Sublicensee’s application to the FDA for approval of Product. 
 (ii) Each Licensor shall not, and shall cause its Affiliates not to, challenge or cause any Third Party to challenge Sublicensee’s application to the FDA for approval of Product. 

2.5. Certain Limitations. Notwithstanding anything else contained herein to the contrary: 

(a) Sublicensee shall not (except to the extent contemplated by Section 2.3) further sublicense the rights sublicensed or licensed
to it pursuant to Section 2.1 or sublicense the rights licensed to it pursuant to Section 2.2, in each case without the express 

  

	[*]	Confidential treatment requested; certain information omitted and filed separately with the SEC. 

  
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written consent of the General Partnership and, in respect of any sublicense granted prior to July 1, 2013, CDC III. 
 (b) In connection with the rights sublicensed to Sublicensee pursuant to Section 2.1(a), Sublicensee is subject to the terms and conditions of the Licensed Rights (as such term is defined in the Head
License) granted to Sublicensor pursuant to the Head License and, without releasing Sublicensor from its obligations set forth in the Head License, assumes all of Sublicensor’s obligations under the Head License with the exception of Sections
3(A), 5, 7 and 20(K) thereof. 
  

	3.	Representations, Warranties and Covenants 

 3.1. Representations and Warranties of Each Party. Each Party hereby represents and warrants to each other Party as of the Execution Date as follows: 

(a) Such Party (i) is duly formed and in good standing under the laws of the jurisdiction of its formation, (ii) has the power
and authority and the legal right to enter into this Agreement and perform its obligations hereunder, and (iii) has taken all necessary action on its part required to authorize the execution and delivery of this Agreement and the performance of
its obligations hereunder. 
 (b) This Agreement has been duly executed and delivered on behalf of such Party and constitutes a
legal, valid and binding obligation of such Party and is enforceable against it in accordance with its terms, subject to the effects of bankruptcy, insolvency or other similar laws of general application affecting the enforcement of creditor rights
and judicial principles affecting the availability of specific performance and general principles of equity, whether enforceability is considered in a proceeding at law or equity. 

(c) All necessary consents, approvals and authorizations of all regulatory and governmental authorities and other Persons required to be
obtained by such 

  
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Party in connection with the execution and delivery of this Agreement and the performance of its obligations hereunder have been obtained. 

(d) The execution and delivery of this Agreement and the performance of such Party’s obligations hereunder, (i) to the
knowledge of such Party, do not and will not conflict with or violate any requirement of Applicable Law, (ii) do not and will not conflict with or violate any provision of the articles of incorporation or bylaws of such Party, and (iii) do
not and will not conflict with, violate, or breach, or constitute a default or require any consent under, any contractual obligation or court or administrative order by which such Party is bound. 

Notwithstanding anything else in this Section 3.1 to the contrary, neither Licensor makes the representation set forth in clause (i) of
Section 3.1(d). 
 3.2. Representations and Warranties of Sublicensor. Sublicensor hereby represents and
warrants to Sublicensee as of the Execution Date that 
 (a) it is the exclusive licensee under the Original Osmoprep Patent in
the Field of Use to manufacture, have manufactured, use and sell the Product and has the right to grant the sublicenses set forth in Section 2.1(a); and 
 (b) it is the owner of the Additional Osmoprep Patent and has the right to grant the licenses set forth in Section 2.2. 
 3.3. Representations and Warranties of Licensors. 
 (a) General
Partnership hereby represents and warrants to Sublicensee as of the Execution Date that Sublicensor is the exclusive licensee under the Original Osmoprep Patent in the Field of Use to manufacture, have manufactured, use and sell the Product

  
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 (b) Each Licensor
hereby represents and warrants to Sublicensee as of the Execution Date that, insofar as any agreements between Sublicensor and such Licensor are concerned, Sublicensor has the right to grant the sublicenses set forth in Section 2.1(a).

 3.4. DISCLAIMER OF WARRANTY. EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES SET FORTH HEREIN, NO PARTY MAKES ANY
REPRESENTATIONS OR EXTENDS ANY WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF QUALITY, MERCHANTABILITY OR FITNESS FOR A PARTICULAR USE OR PURPOSE OR ANY WARRANTY AS TO THE VALIDITY OF ANY PATENTS OR THE NON-INFRINGEMENT OF ANY
INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES. 
 3.5. Covenant Not to Sue. 

(a) Covenant. 
 (i) Sublicensor hereby covenants to Sublicensee that Sublicensor (and its Affiliates) shall not sue, and shall not aid, abet or enable any Third Party in suing, the Sublicensee or, in its capacity as
Sublicensee’s distributor, Actavis claiming that the manufacture, having manufactured, use or sale of Product from and after the Start Date or the commercially reasonable preparations to sell Product as of the Start Date as set forth in
Section 2.4(b), in each case in the Field of Use in or for the Territory, infringes the Original Osmoprep Patent or Additional Osmoprep Patent. Sublicensor shall impose the foregoing covenant not to sue on any Third Party to which it or any of
its Affiliates may assign or otherwise transfer, or license or sublicense, any such patent rights. 
 (ii) Each Licensor hereby
covenants to Sublicensee that such Licensor (and its Affiliates) shall not sue, and shall not aid, abet or enable any Third Party in suing, the Sublicensee or, in its capacity as Sublicensee’s distributor, Actavis claiming that the manufacture,
having manufactured, use or sale of Product from and after the 

  
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Start Date or the commercially reasonable preparations to sell Product as of the Start Date as set forth in Section 2.4(b), in each case in the Field of Use in or for the Territory,
infringes the Original Osmoprep Patent. Sublicensor shall impose the foregoing covenant not to sue on any Third Party to which it or any of its Affiliates may assign or otherwise transfer, or license or sublicense, any such patent rights.

 (b) Non-Exclusive License. For any Original Osmoprep Patent or Additional Osmoprep Patent listed now or in the future
in the Orange Book for the Approved Product, the covenants not to sue set forth in Section 3.5(a) shall hereby be treated to also be in the form of a non-exclusive license so that Sublicensee and its Affiliates may continue to maintain or file
for such patents a “Paragraph IV Certification” under 21 U.S.C. § 355(j)(2)(A)(vii)(IV) (as amended or replaced). 
  

	4.	Indemnity; Limitation on Damages 

 4.1. Indemnification. In addition to any other remedy available to Sublicensor or Licensors, Sublicensee shall indemnify, defend and hold harmless each of Sublicensor, its Affiliates and its
and their respective officers, directors, partners, shareholders, employees and agents and each Licensor, its Affiliates and its and their respective officers, directors, partners, shareholders, employees and agents (each, an “Indemnified
Party”) from and against any and all Losses incurred by them to the extent resulting from or arising out of or in connection with any claims made or suits brought by a Third Party (a “Third Party Claim”) that arise out of
or result from the manufacture, distribution, sales, marketing or use of Product pursuant to the sublicense and license granted hereunder. 
 4.2. Indemnification Procedure. 
 (a) An Indemnified Party shall
give Sublicensee prompt written notice (an “Indemnification Claim Notice”) of any Third Party Claim upon which such 

  
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Indemnified Party intends to base a request for indemnification under Section 4.1, but in no event shall Sublicensee be liable for any Losses that result from any delay in providing such
notice. Each Indemnification Claim Notice must contain a description of the Third Party Claim and the nature and amount of the related Loss (to the extent that the nature and amount of such Loss are known at such time). The Indemnified Party shall
furnish promptly to Sublicensee copies of all papers and official documents received in respect of any Third Party Claim. 
 (b)
At its option, Sublicensee may assume the defense of any Third Party Claim by giving written notice to the Indemnified Party seeking indemnification within thirty (30) days after Sublicensee’s receipt of an Indemnification Claim Notice for
such Indemnified Party. The assumption of the defense of a Third Party Claim by Sublicensee shall constitute an acknowledgment that Sublicensee is liable to indemnify the Indemnified Party in respect of the Third Party Claim. Upon assuming the
defense of a Third Party Claim, Sublicensee may appoint as lead counsel in the defense of the Third Party Claim any legal counsel selected by Sublicensee that is reasonably acceptable to the Indemnified Party. In the event Sublicensee assumes the
defense of a Third Party Claim, the Indemnified Party shall promptly deliver to Sublicensee all original notices and documents (including court papers) received by the Indemnified Party in connection with the Third Party Claim. Subject to
Section 4.2(c), if Sublicensee assumes the defense of a Third Party Claim, Sublicensee shall not be liable to the Indemnified Party for any legal expenses subsequently incurred by such Indemnified Party in connection with the analysis, defense
or settlement of the Third Party Claim. 
 (c) Without limiting Section 4.2(b), the Indemnified Party seeking
indemnification shall be entitled to participate in, but not control, the defense of such Third 

  
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Party Claim and to employ counsel of its choice for such purpose; provided, however, that such employment shall be at the Indemnified Party’s own expense unless (i) the
employment thereof at Sublicensee’s expense has been specifically authorized by Sublicensee in writing, (ii) Sublicensee has failed to assume the defense and employ counsel in accordance with Section 4.2(b) (in which case the
Indemnified Party shall control the defense), or (iii) the interests of the Indemnified Party and Sublicensee or any other Indemnified Party with respect to such Third Party Claim are sufficiently adverse to prohibit the representation by a
single counsel of Sublicensee and all relevant Indemnified Parties under Applicable Law, ethical rules or equitable principles. 

(d) With respect to any Losses relating solely to the payment of money damages in connection with a Third Party Claim and that will not
result in the Indemnified Party seeking indemnification becoming subject to injunctive or other relief or otherwise adversely affect the business of the Indemnified Party in any manner, and as to which Sublicensee shall have acknowledged in writing
the obligation to indemnify the Indemnified Party hereunder, Sublicensee shall have the sole right to consent to the entry of any judgment, enter into any settlement or otherwise dispose of such Losses, on such terms as Sublicensee, in its sole
discretion, shall deem appropriate. With respect to all other Losses in connection with Third Party Claims, where Sublicensee has assumed the defense of the Third Party Claim in accordance with Section 4.2(b), Sublicensee shall have authority
to consent to the entry of any judgment, enter into any settlement or otherwise dispose of such Loss; provided that it obtains the prior written consent of the Indemnified Party (which consent shall not be unreasonably withheld or delayed).
If Sublicensee chooses to defend a Third Party Claim, Sublicensee shall not be liable for any settlement or other disposition of any Losses by the Indemnified Party with respect to such Third Party Claim that is reached

  
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without the written consent of Sublicensee (which consent shall not be unreasonably withheld or delayed). 
 (e) If Sublicensee chooses to defend any Third Party Claim, the Indemnified Party seeking indemnification shall cooperate in the defense thereof and shall furnish such records, information and testimony,
provide such witnesses and attend such conferences, discovery proceedings, hearings, trials and appeals as may be reasonably requested in connection therewith. Such cooperation shall include access during normal business hours afforded to
Sublicensee to, and reasonable retention by the Indemnified Party of, records and information that are reasonably relevant to such Third Party Claim, and making employees and agents available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder. Sublicensee shall reimburse the Indemnified Party for all its reasonable out-of-pocket expenses in connection with activities contemplated by this Section 4.2(e). 

(f) Except as provided above, the reasonable and verifiable costs and expenses, including fees and disbursements of counsel, incurred by
an Indemnified Party in connection with any Third Party Claim shall be reimbursed on a monthly basis in arrears by Sublicensee. 

4.3. LIMITATION ON DAMAGES. EXCEPT WITH RESPECT TO 

(a) A BREACH OF A PARTY’S OBLIGATIONS IN SECTION 6; and 

(b) ANY SALE OR OFFER FOR SALE OF THE PRODUCT IN THE TERRITORY PRIOR TO THE START DATE (OTHER THAN AS PERMITTED BY THIS AGREEMENT)

 NO PARTY SHALL BE LIABLE FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL, EXEMPLARY OR PUNITIVE DAMAGES ARISING OUT OF THIS

  
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AGREEMENT OR THE EXERCISE OF ITS RIGHTS HEREUNDER OR FOR ANY LOSS OR INJURY TO A PARTY’S PROFITS OR GOODWILL ARISING FROM OR RELATING TO ANY BREACH OF THIS AGREEMENT, REGARDLESS OF ANY
NOTICE OF SUCH DAMAGES. NOTHING IN THIS SECTION 4.3 IS INTENDED TO LIMIT OR RESTRICT THE INDEMNIFICATION RIGHTS OF ANY INDEMNIFIED PARTY OR THE OBLIGATIONS OF SUBLICENSEE PURSUANT TO SECTIONS 4.1 AND 4.2 WITH RESPECT TO THIRD PARTY CLAIMS.

  

	5.	Term and Termination 

5.1. Term. The term of this Agreement shall commence on the Execution Date and, unless earlier terminated in accordance with
this Section 5, shall expire on the Expiration Date (the “Term”). 
 5.2. Termination for
Breach. This Agreement may be terminated by Sublicensor if Sublicensee shall be in breach of any material obligation hereunder and shall not have cured such breach within (a) [*] ([*]) days for breaches involving non-payment of amounts
payable hereunder that are not the subject of a good faith dispute or (b) [*] ([*]) days for all other breaches, in either case ((a) or (b)), after receipt of a written notice from Sublicensor requesting the cure of such breach. Such
termination shall be effective upon failure of Sublicensee to cure such breach within such period. 
 5.3. Termination
for Bankruptcy. This Agreement may be terminated by Sublicensor upon the filing or institution of any bankruptcy, reorganization, liquidation or receivership proceedings by Sublicensee, or upon the failure by Sublicensee for more than ninety
(90) days to discharge any such involuntary actions against it. Such termination shall be effective upon receipt of notice from Sublicensor. 

  

	[*]	Confidential treatment requested; certain information omitted and filed separately with the SEC. 

  
 19 

  
 5.4. Certain
Events. Upon the occurrence of a Settlement Termination Event (as such term is defined in the Settlement Agreement), this Agreement shall terminate. 
 5.5. Bankruptcy. All rights and licenses granted under or pursuant to this Agreement by Sublicensor and Licensors are, and shall otherwise be deemed to be, for purposes of
Section 365(n) of the U.S. Bankruptcy Code, licenses of right to “intellectual property” as defined under Section 101 of the U.S. Bankruptcy Code. The Parties agree that Sublicensee, as licensee of such rights under this
Agreement, shall retain and may fully exercise all of its rights and elections under the U.S. Bankruptcy Code. 
 5.6.
Effect of Expiration or Termination. Upon the expiration or earlier termination of this Agreement, (a) the licenses and rights granted by Sublicensor and Licensors under Section 2 shall terminate, (b) the covenants
contained in, and the licenses and rights granted by Sublicensor and Licensors under, Section 3.5 shall terminate, and (c) each Party, at the request of the other, shall return all data, files, records and other materials in its possession
or control containing or comprising another Party’s Confidential Information to the Disclosing Party, except the legal department of the Receiving Party may retain one copy solely for archival purposes. 

5.7. Survival. The expiration or earlier termination of this Agreement shall be without prejudice to any rights or
obligations of the Parties that may have accrued prior to such expiration or termination, and the provisions of Sections 4, 5, 6 and 7 shall survive the expiration or termination of this Agreement. 

 

	6.	Confidentiality 

 6.1.
Confidential Information. Subject to the provisions of Sections 6.2 and 6.3, at all times during the Term and for five (5) years following the expiration or termination of this Agreement, the Receiving Party (a) shall keep
completely confidential and 

  
 20 

 
shall not publish or otherwise disclose any Confidential Information furnished to it by the Disclosing Party, except to those of the Receiving Party’s employees, Affiliates, or consultants
who have a need to know such information to perform such Party’s obligations or exercise such Party’s rights hereunder (and who shall be advised of the Receiving Party’s obligations hereunder and who are bound by confidentiality
obligations with respect to such Confidential Information no less onerous than those set forth in this Agreement) (collectively, “Recipients”) or, in respect of Confidential Information received by Sublicensee from Sublicensor, as
otherwise permitted by Section 5.3(d) of the Supply Agreement and (b) shall not use Confidential Information of the Disclosing Party directly or indirectly for any purpose other than performing its obligations or exercising its rights
hereunder. 
 6.2. Exceptions to Confidentiality. The Receiving Party’s obligations set forth in this
Agreement shall not extend to any Confidential Information of the Disclosing Party: 
 (a) that is or hereafter becomes part of
the public domain by public use, publication, general knowledge or the like through no wrongful act, fault or negligence on the part of a Receiving Party or its Recipients; 
 (b) that is received from a Third Party without restriction and without breach of any agreement between such Third Party and the Disclosing Party; 

(c) that the Receiving Party can demonstrate by competent evidence was already in its possession without any limitation on use or
disclosure prior to its receipt from the Disclosing Party; 
 (d) that is generally made available to Third Parties by the
Disclosing Party without restriction on disclosure; or 
 (e) that the Receiving Party can demonstrate by competent evidence was
independently developed by the Receiving Party. 

  
 21 

  
 6.3.
Disclosure. A Party may disclose Confidential Information of another Party to the extent that such disclosure is: 

(a) made in response to a valid order of a court of competent jurisdiction or other governmental body of a country or any political
subdivision thereof of competent jurisdiction; provided, however, that the Receiving Party shall first have given notice to the Disclosing Party and given the Disclosing Party a reasonable opportunity to quash such order or to obtain a
protective order requiring that the Confidential Information or documents that are the subject of such order be held in confidence by such court or governmental body or, if disclosed, be used only for the purposes for which the order was issued; and
provided further that if a disclosure order is not quashed or a protective order is not obtained, the Confidential Information disclosed in response to such court or governmental order shall be limited to that information that is legally
required to be disclosed in such response to such court or governmental order; 
 (b) required or contemplated by
Section 2.4(c) and (e); or 
 (c) otherwise required by Applicable Law, in the opinion of counsel to the Receiving Party.

 6.4. Notification. The Receiving Party shall notify the Disclosing Party immediately, and cooperate with the
Disclosing Party as the Disclosing Party may reasonably request, upon the Receiving Party’s discovery of any loss or compromise of the Disclosing Party’s Confidential Information. 

6.5. Remedies. Each Party agrees that the unauthorized use or disclosure of any information by the Receiving Party in
violation of this Agreement will cause severe and irreparable damage to the Disclosing Party. In the event of any violation of this Section 6, the Receiving Party agrees that the Disclosing Party shall be authorized and entitled to obtain from
any court of competent jurisdiction injunctive relief, whether preliminary or permanent, 

  
 22 

 
without the necessity of proving irreparable harm or monetary damages, as well as any other relief permitted by applicable law. The Receiving Party agrees to waive any requirement that the
Disclosing Party post bond as a condition for obtaining any such relief. 
 6.6. Use of Names. Except as otherwise
expressly permitted under the Settlement Agreement or the Supply Agreement, no Party shall mention or otherwise use the name, insignia, symbol, trademark, trade name or logotype of another Party (or any abbreviation or adaptation thereof) in any
publication, press release, promotional material or other form of publicity without the prior written approval of such other Party in each instance. In no event may Sublicensee use, register or seek to register any trademarks, trade dress or other
indicia of origin that are owned or controlled by Sublicensor or its Affiliates or either Licensor or its Affiliates. The restrictions imposed by this Section 6.6 shall not prohibit any Party from making any disclosure identifying another Party
that is required by Applicable Law; provided, however, that reasonable measures shall be taken to assure confidential treatment of such information. 
 6.7. Press Releases. Except as expressly provided in Section 6.3, no Party shall make a press release or other public announcement regarding this Agreement, the terms hereof or the
transactions contemplated hereby without the prior written approval of the other Parties. 
  

	7.	Miscellaneous 

 7.1.
Assignment. This Agreement shall be binding upon and shall inure to the benefit of each Party hereto, and each of its successors and permitted assigns. Except as otherwise provided herein, no Party shall have the power to assign or
otherwise transfer this Agreement or any interest herein or right hereunder without the prior written consent of the other Parties, and any such purported assignment, transfer or attempt to assign or transfer any interest herein or right hereunder
shall be void and of no effect. Notwithstanding the 

  
 23 

 
foregoing, any Party may, upon written notice to the other Parties but without obtaining the other Parties’ consent, assign its rights and obligations under this Agreement to any of its
Majority-Controlled Affiliates, to any lender providing financing to that Party or its Affiliates for collateral security purposes, or to any successor in interest to that Party’s entire business or, in the case of Sublicensor and Sublicensee,
to its Approved Product or Product business, respectively, provided that (a) notwithstanding any such assignment, such Party shall remain liable for its and its assignee’s performance under this Agreement; (b) no such
assignment shall in any manner limit or impair the obligations of that Party hereunder; and (c) following a transfer by a Party to its Majority-Controlled Affiliate, any subsequent transaction (other than one that would result in the transfer
of this Agreement back to the assigning Party) that would cause such Majority-Controlled Affiliate to cease to be a Majority-Controlled Affiliate of such Party shall be deemed to be an assignment of this Agreement requiring consent hereunder.

 7.2. Severability. To the fullest extent permitted by Applicable Law, the Parties waive any provision of law
that would render any provision in this Agreement invalid, illegal or unenforceable in any respect. If any provision of this Agreement is held to be invalid, illegal or unenforceable, in any respect, then such provision will be given no effect by
the Parties and shall not form part of this Agreement. To the fullest extent permitted by Applicable Law and if the rights or obligations of any Party will not be materially and adversely affected, all other provisions of this Agreement shall remain
in full force and effect and the Parties will use their best efforts to negotiate a provision in replacement of the provision held invalid, illegal or unenforceable that is consistent with Applicable Law and achieves, as nearly as possible, the
original intention of the Parties. 
 7.3. Governing Law. 

  
 24 

  
 (a) This Agreement
shall be governed and interpreted in accordance with the law of the State of New York, excluding any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Agreement to the substantive law of
another jurisdiction. 
 (b) Each Party irrevocably and unconditionally consents to the exclusive jurisdiction of the courts of
general jurisdiction of the State of New York and the United States District Court for the Southern District of New York sitting in the Borough of Manhattan (collectively, the “Courts”) for any action, suit or proceeding (other than
appeals therefrom) concerning any matter arising out of or relating to this Agreement, and agrees not to commence any action, suit or proceeding (other than appeals therefrom) related thereto except in such Courts. 

(c) Each Party hereto further hereby irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or
proceeding (other than appeals therefrom) arising out of or relating to this Agreement in the Courts and hereby further irrevocably and unconditionally agrees not to raise any objection at any time to the laying or maintaining of the venue of any
such action, suit or proceeding in any of such Courts, irrevocably waives any claim that such action, suit or other proceeding has been brought in an inconvenient forum and further irrevocably waives the right to object, with respect to such action,
suit or other proceeding, that such Court does not have any jurisdiction over such Party. 
 (d) Each Party hereto further
agrees that, to the maximum extent permitted by Applicable Law, service of any process, summons, notice or document by United States registered mail to its address and contact person for notices provided for in Section 7.4 shall be effective
service of process for any action, suit or proceeding brought against it under this Agreement in any of the Courts. 

  
 25 

  
 7.4.
Notices. All notices, requests and other communications hereunder must be in writing, specifically reference this Agreement in a prominent manner, and be delivered personally or by recognized international courier to the Parties at the
following addresses: 
 If to Sublicensor to: 
 Salix Pharmaceuticals, Inc. 
 1700 Perimeter Park Drive 

Morrisville, North Carolina 27560 
 Attention: Senior Vice President Business Development 
 with copies (which shall
not constitute notice) to: 
 Salix Pharmaceuticals, Inc. 

1700 Perimeter Park Drive 
 Morrisville, North Carolina 27560 
 Attention: General Counsel 

and 

Covington & Burling LLP 
 1201 Pennsylvania Avenue, N.W. 
 Washington, D. C. 20004 

Attention: Edward C. Britton, Esq. 
 If to CDC III to: 
 CDC III, LLC 

47 Hulfish, Suite 310 
 Princeton, New Jersey 08540 
 U.S.A. 

Attention: General Counsel 
 Fax:                              

If to the General Partnership to: 
 ALW Partnership 
 8th and Spruce Streets 

Philadelphia, Pennsylvania 19107 
 U.S.A. 
 Attention: Craig Aronchick, M.D. 

Fax: (215) 829-3020 

  
 26 

  
 If to Sublicensee to:

 Novel Laboratories, Inc. 
 400 Campus Drive 
 Somerset, New Jersey 08873 

Attention: President 
 with copies (which shall not constitute notice) to: 
 Actavis Inc. 

60 Columbia Road, Bldg. B 
 Morristown, New Jersey 07960 
 Attention: Legal Department 

and 
 Leydig,
Voit & Mayer 
 Two Prudential Plaza 
 180 N. Stetson Avenue, Suite 4900 
 Chicago, IL 60601-6731 

Attention: Steven H. Sklar, Esq. 

All such notices, requests and other communications will (a) if delivered personally to the address as provided in this Section 7.4, be deemed
given upon receipt, and (b) if delivered by courier to the address as provided in this Section 7.4, be deemed given upon receipt. Any Party from time to time may change its address or other information for the purpose of notices to that
Party by giving notice specifying such change to the other Party hereto. 
 7.5. Relationship of the Parties. The
status of a Party under this Agreement shall be that of an independent contractor. Nothing contained in this Agreement shall be construed as creating a partnership, joint venture or agency relationship between the Parties or as granting any Party
the authority to bind or contract any obligation in the name of or on the account of the other Party or to make any statements, representations, warranties or commitments on behalf of the other Party. 

7.6. Entire Agreement; Amendment. This Agreement constitutes the entire agreement between the Parties with respect to the
subject matter hereof and supersedes all prior agreements, whether written or oral, with respect to the subject matter hereof. Each 

  
 27 

 
Party confirms that it is not relying on any representations or warranties of the other Party except as specifically set forth herein. Any amendment or modification of this Agreement must be in
writing and signed by authorized representatives of both Parties. 
 7.7. No Benefit to Third Parties. The
representations, warranties, covenants and agreements set forth in this Agreement are for the sole benefit of the Parties hereto and their successors and permitted assigns, and they shall not be construed as conferring any rights on any other
Persons except as otherwise expressly provided in Sections 4.1 and 4.2. 
 7.8. Waiver and Non-Exclusion of
Remedies. Any term or condition of this Agreement may be waived at any time by the Party that is entitled to the benefit thereof, but no such waiver shall be effective unless set forth in a written instrument duly executed by or on behalf of the
Party waiving such term or condition. No waiver by any Party of any term or condition of this Agreement, in any one or more instances, shall be deemed to be or construed as a waiver of the same or any other term or condition of this Agreement on any
future occasion. The rights and remedies provided herein are cumulative and do not exclude any other right or remedy provided by Applicable Law or otherwise available except as expressly set forth herein. 

7.9. Further Assurance. Each Party shall duly execute and deliver, or cause to be duly executed and delivered, such further
instruments and do and cause to be done such further acts and things, including the filing of such assignments, agreements, documents and instruments, as may be necessary or as the other Party may reasonably request in connection with this Agreement
or to carry out more effectively the provisions and purposes hereof, or to better assure and confirm unto such other Party its rights and remedies under this Agreement. 
 7.10. Construction. Except where the context requires otherwise, whenever used the singular includes the plural, the plural includes the singular, the use of any gender is

  
 28 

 
applicable to all genders and the word “or” has the inclusive meaning represented by the phrase “and/or”. Whenever this Agreement refers to a number of days, unless otherwise
specified, such number refers to calendar days. The headings of this Agreement are for convenience of reference only and do not define, describe, extend or limit the scope or intent of this Agreement or the scope or intent of any provision contained
in this Agreement. The term “including” or “includes” as used in this Agreement means including, without limiting the generality of any description preceding such term. The wording of this Agreement shall be deemed to be the
wording mutually chosen by the Parties and no rule of strict construction shall be applied against any Party. 
 7.11.
Other Agreements. 
 (a) Simultaneously herewith, the Sublicensor and Sublicensee are entering into the Supply Agreement
and the Parties are entering into the Settlement Agreement with Actavis. The effectiveness of this Agreement is explicitly conditioned on the simultaneous execution and delivery of the aforesaid Supply Agreement and Settlement Agreement by each of
the parties thereto. 
 (b) Sections 2 and 3.5 shall become effective only upon the occurrence of the Consent Judgment Entry
Date, as such term is defined in the Settlement Agreement. For the avoidance of ambiguity, in the event there is no Consent Judgment Entry Date, the provisions of Sections 2 and 3.5 shall never become effective. 

7.12. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original
and all of which taken together shall be deemed to constitute one and the same instrument. An executed signature page of this Agreement delivered by facsimile transmission or by electronic mail in “portable document format”
(“.pdf”) shall be as effective as an original executed signature page. 
 [Signature page follows.] 

  
 29 

  
 IN WITNESS WHEREOF,
the Parties have executed this Agreement on the Execution Date. 
  

									
	Salix Pharmaceuticals, Inc.	 		 	Novel Laboratories, Inc.
					
	By:	 	 /s/ Carolyn J. Logan
	 		 	By:	 	 /s/ Veerappan S. Subramanian

					
	Name:	 	 Carolyn J. Logan
	 		 	Name:	 	 Veerappan S. Subramanian

					
	Title:	 	 President and CEO
	 		 	Title:	 	 President and CEO

					
	Date:	 	 September 29, 2010
	 		 	Date:	 	 September 29, 2010

			
	CDC III, LLC	 		 	As partners in a general partnership:
				
	By:	 	 /s/ David Ramsay
	 		 	 /s/ Craig Aronchick

		 		 		 	Craig Aronchick, M.D.
	Name:	 	 David Ramsay
	 		 	  
 Date:
	 	  
 September 29,
2010

					
	Title:	 	  
	 		 		 	
		 		 		 	 /s/ William H. Lipshutz

	Date:	 	 September 29, 2010
	 		 	William H. Lipshutz, M.D.
					
		 		 		 	Date:	 	 September 29, 2010

				
		 		 		 	 /s/ Scott H. Wright

		 		 		 	Scott H. Wright, M.D.
					
		 		 		 	Date:	 	 September 29, 2010

Signature Page to Osmoprep Sublicense AgreementSupply Agreement

  
 Exhibit 10.77

 Portions of this exhibit marked [*] are requested to be treated confidentially. 

Execution Version 
 SUPPLY AGREEMENT 
 between 

SALIX PHARMACEUTICALS, INC. 
 and 
 NOVEL LABORATORIES, INC. 

Dated as of September 29, 2010 
 (Osmoprep®) 

  
 TABLE OF CONTENTS

  

							
	 ARTICLE I.
	  	DEFINITIONS	  	 	1	  
			
	 ARTICLE II.
	  	MANUFACTURING AND SUPPLY	  	 	7	  
	 2.1
	  	Qualification.	  	 	7	  
	 2.2
	  	Purchase and Supply Obligations.	  	 	8	  
	 2.3
	  	Forecasting, Order and Delivery of Product.	  	 	9	  
	 2.4
	  	Materials.	  	 	11	  
	 2.5
	  	Invoice and Payment.	  	 	11	  
	 2.6
	  	Price.	  	 	11	  
	 2.7
	  	Warranty.	  	 	12	  
	 2.8
	  	Failure or Inability to Supply Product.	  	 	13	  
	 2.9
	  	Additional Payments.	  	 	14	  
	 2.10
	  	Current Capacity and Scale-Up Plans.	  	 	15	  
	 2.11
	  	Costs and Expenses	  	 	16	  
	 2.12
	  	Amendment of Specifications.	  	 	16	  
	 2.13
	  	Quality Agreement.	  	 	17	  
	 2.14
	  	Quality Control Analyses and Release.	  	 	17	  
	 2.15
	  	Maintenance of Facility.	  	 	17	  
	 2.16
	  	Regulatory Cooperation of Novel.	  	 	17	  
	 2.17
	  	Inspection by Salix.	  	 	18	  
	 2.18
	  	Notification of Regulatory Inspections; Communications.	  	 	18	  
	 2.19
	  	Recalls and Withdrawals.	  	 	19	  
	 2.20
	  	Compliance with Applicable Laws.	  	 	20	  
	 2.21
	  	Retention of Manufacturing Records and Samples.	  	 	20	  
	 2.22
	  	Exclusive Supply Arrangement.	  	 	21	  
	 2.23
	  	Second Source.	  	 	21	  
			
	 ARTICLE III.
	  	INTELLECTUAL PROPERTY	  	 	21	  
	 3.1
	  	Ownership of Inventions.	  	 	21	  
	 3.2
	  	Prosecution of Invention Patents.	  	 	22	  
	 3.3
	  	United States Law.	  	 	22	  
	 3.4
	  	Corporate Names.	  	 	22	  
			
	 ARTICLE IV.
	  	REPRESENTATIONS AND WARRANTIES; COVENANTS	  	 	23	  
	 4.1
	  	Representations and Warranties of Each Party.	  	 	23	  
	 4.2
	  	Additional Warranties and Covenants of Novel.	  	 	23	  
	 4.3
	  	Disclaimer of Other Warranties.	  	 	24	  
			
	 ARTICLE V.
	  	CONFIDENTIALITY	  	 	24	  
	 5.1
	  	Confidential Information.	  	 	24	  
	 5.2
	  	Exceptions to Confidentiality.	  	 	24	  
	 5.3
	  	Disclosure.	  	 	25	  
	 5.4
	  	Notification.	  	 	26	  

  
 -i-

							
	 5.5
	  	Remedies.	  	 	26	  
	 5.6
	  	Use of Names.	  	 	26	  
	 5.7
	  	Press Releases.	  	 	26	  
			
	 ARTICLE VI.
	  	TERM AND TERMINATION	  	 	26	  
	 6.1
	  	Term.	  	 	26	  
	 6.2
	  	Termination.	  	 	27	  
	 6.3
	  	Effect of Expiration or Termination.	  	 	28	  
			
	 ARTICLE VII.
	  	INDEMNIFICATION	  	 	29	  
	 7.1
	  	Novel Indemnification.	  	 	29	  
	 7.2
	  	Salix Indemnification.	  	 	29	  
	 7.3
	  	Indemnification Procedure.	  	 	30	  
	 7.4
	  	Insurance.	  	 	32	  
	 7.5
	  	Limitation on Damages.	  	 	32	  
			
	 ARTICLE VIII.
	  	MISCELLANEOUS	  	 	34	  
	 8.1
	  	Notices.	  	 	33	  
	 8.2
	  	Force Majeure.	  	 	34	  
	 8.3
	  	Entire Agreement; Amendment.	  	 	34	  
	 8.4
	  	Further Assurances.	  	 	35	  
	 8.5
	  	Successors and Assigns.	  	 	35	  
	 8.6
	  	Dispute Resolution	  	 	35	  
	 8.7
	  	Governing Law; Jurisdiction; Venue; Service.	  	 	35	  
	 8.8
	  	Audit; Late Payments.	  	 	36	  
	 8.9
	  	Third Party Beneficiaries.	  	 	37	  
	 8.10
	  	Export Control.	  	 	37	  
	 8.11
	  	Assignment.	  	 	37	  
	 8.12
	  	Waiver.	  	 	38	  
	 8.13
	  	Severability.	  	 	38	  
	 8.14
	  	Independent Contractors.	  	 	38	  
	 8.15
	  	Construction.	  	 	39	  
	 8.16
	  	Remedies.	  	 	39	  
	 8.17
	  	Counterparts; Facsimile Execution.	  	 	39	  
	 8.18
	  	English Language.	  	 	39	  
	 8.19
	  	Other Agreements.	  	 	39	  

 Schedules and Exhibits

  

			
	 Schedule 1.54
	  	Product Active Ingredients
	 Schedule 1.56
	  	Product Patents
	 Schedule 1.70
	  	Specifications
	 Schedule 2.3(a)
	  	Non-Binding Estimate of Requirements for Calendar Year 2011
	 Schedule 2.3(c)
	  	Full Production Lot Sizes
	 Schedule 2.10(a)
	  	Current Capacity

  
 -ii-

  
 This SUPPLY
AGREEMENT (this “Agreement”), dated as of September 29, 2010 (the “Effective Date”), is made by and between Salix Pharmaceuticals, Inc., a California corporation (“Salix”), and Novel
Laboratories, Inc., a Delaware corporation (“Novel”). Salix and Novel are sometimes referred to herein individually as a “Party” and collectively as the “Parties.” 

RECITALS 

WHEREAS, subject to the terms and conditions set forth in this Agreement, Salix wishes to have Novel manufacture and supply
Product (as defined below) for Salix, and Novel wishes to manufacture and supply Product for Salix; 
 WHEREAS, the
Parties, Actavis Inc., a company incorporated under the laws of Delaware (“Actavis”), CDC III LLC, a Delaware limited liability company (“CDC III”), and a general partnership of Craig Aronchick, William H. Lipshutz,
and Scott H. Wright (the “General Partnership”) are entering into a Settlement Agreement, of even date herewith (the “Settlement Agreement”); and 

WHEREAS, the Parties, CDC III and the General Partnership are entering into a Sublicense Agreement, of even date herewith (the
“Sublicense Agreement”); 
 NOW, THEREFORE, in consideration of the foregoing premises, the mutual
promises and covenants of the Parties contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, do hereby agree as follows: 

ARTICLE I. DEFINITIONS 
 As used herein, the following terms shall have the following meanings: 
 1.1
“Acknowledgement” has the meaning set forth in Section 2.3. 
 1.2 “Actavis” has the
meaning set forth in the recitals hereto. 
 1.3 “Affiliate” of a Person means any other Person that directly,
or indirectly through one or more intermediaries, controls, is controlled by or is under common control with, such first Person. “Control” and, with correlative meanings, the terms “controlled by” and “under
common control with”, means to possess the power to direct the management or policies of a Person, whether through ownership of voting securities or by contract or otherwise. 

1.4 “Agreement” has the meaning set forth in the preamble hereto. 

1.5 “Applicable Law” means applicable laws, rules and regulations, including any rules, regulations, guidelines or other
requirements of the Regulatory Authorities, that may be in effect from time to time. 

  
 1.6 “Business
Day” means a day other than a Saturday or a Sunday on which banks in general in New York, New York are open for the conduct of normal commercial banking business at their counters. 

1.7 “Calendar Year” means each successive period of twelve (12) consecutive calendar months commencing on
January 1 and ending on December 31, except that the first Calendar Year of the Term shall commence on the Effective Date and end on December 31, 2010, and the last Calendar Year of the Term shall commence on January 1 of the
year in which the Term ends and end on the last day of the Term. 
 1.8 “Capacity” means the capacity of
Novel’s plant, equipment and process to conduct the Manufacturing process and to supply Product to Salix in accordance with the terms hereof. 
 1.9 “CDC III” has the meaning set forth in the recitals. 
 1.10
“Certificate of Analysis” has the meaning set forth in the Quality Agreement. 
 1.11 “Certificate of
Compliance” has the meaning set forth in the Quality Agreement. 
 1.12 “CMC Data” means the
chemistry, manufacturing and controls data required by Applicable Law to be included in a New Drug Application (as defined in the FFDCA and the regulations promulgated thereunder) for Product in the Territory. 

1.13 “Commercial Unit” means a one-hundred (100) count bottle of Product for commercial use and sale. 

1.14 “Confidential Information” means any and all information or material that, at any time before or after the
Effective Date, has been or is provided or communicated to the Receiving Party by or on behalf of the Disclosing Party (including by a third party) pursuant to this Agreement or in connection with the transactions contemplated hereby or any
discussions or negotiations with respect thereto; any data, ideas, concepts or techniques contained therein; and any modifications thereof or derivations therefrom. Confidential Information may be disclosed either orally, visually, electronically,
in writing, by delivery of materials containing Confidential Information or in any other form now known or hereafter invented. 

1.15 “Consent Judgment Entry Date” has the meaning set forth in the Settlement Agreement. 

1.16 “Corporate Names” means such Trademarks and corporate names and logos owned or controlled by Novel or its
Affiliates as Novel may designate in writing from time to time, together with any variations and derivatives thereof. 
 1.17
“Courts” has the meaning set forth in Section 0. 

  
 -2-

  
 1.18 “Covered
Product” means the Product and any other pharmaceutical product Covered by United States patents nos. 5,616,346 and 7,687,075 or either of them. For purposes of this definition, “Covered” in respect of a product means where
a claim in a specified patent would be infringed by the making, having made, offering for sale, selling or importation of the product in the United States in the absence of a valid license or other authorization. 

1.19 “Current Capacity” has the meaning set forth in Section 2.10(a). 

1.20 “Data Exclusivity” has the meaning set forth in Section 1.48. 

1.21 “Disclosing Party” means the Party disclosing Confidential Information. 

1.22 “Dispute” has the meaning set forth in Section 8.6. 

1.23 “Effective Date” has the meaning set forth in the preamble hereto. 

1.24 “Excluded Lists” means the Department of Health and Human Service’s List of Excluded Individuals/Entities and
the General Services Administration’s Lists of Parties Excluded from Federal Procurement and Non-Procurement Programs. 

1.25 “Exploit” means to make, have made, import, use, sell, offer for sale or otherwise dispose of a compound, product
or process, including all discovery, research, development, commercialization, registration, modification, enhancement, improvement, Manufacture, storage, formulation, optimization, exportation, transportation, distribution, promotion and marketing
of such compound, product or process. 
 1.26 “Facility” means the Manufacturing facility of Novel located at
400 Campus Drive, Somerset, New Jersey 08873. 
 1.27 “FDA” means the United States Food and Drug
Administration and any successor agency thereto. 
 1.28 “FFDCA” has the meaning set forth in Section 2.7.

 1.29 “Firm Forecast” has the meaning set forth in Section 2.3(b). 

1.30 “Forecast” has the meaning set forth in Section 2.3(b). 

1.31 “General Partnership” has the meaning set forth in the recitals. 

1.32 “GMP” means the current good manufacturing practices applicable from time to time to the Manufacturing of Product
pursuant to Applicable Law. 
 1.33 “Indemnification Claim Notice” has the meaning set forth in
Section 7.3(a). 
 1.34 “Indemnified Party” has the meaning set forth in Section 7.3(a). 

  
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 1.35
“Indemnifying Party” has the meaning set forth in Section 7.3(a). 
 1.36 “Informational
Forecast” has the meaning set forth in Section 2.3(a). 
 1.37 “Invention” means any discovery,
improvement, process, formula, data, invention, know-how, trade secret, procedure, device, or other intellectual property, whether or not patentable, including any enhancement in the manufacture, formulation, ingredients, preparation, presentation,
means of delivery, dosage or packaging of a compound or product or any discovery or development of a new indication for a compound or product. 
 1.38 “Invention Patent” has the meaning set forth in Section 3.2. 
 1.39 “Joint Invention” means any Invention that is conceived, discovered, developed or otherwise made jointly by or on behalf of the Parties as a result of or in connection with this
Agreement. 
 1.40 “Losses” has the meaning set forth in Section 7.1. 

1.41 “Majority-Controlled Affiliate” (a) means, with respect to a Person, any Person that owns, directly or
indirectly, more than fifty percent (50%) of the outstanding voting securities, or other voting ownership interest, of such Person; any Person of which the first Person owns, directly or indirectly, more than fifty percent (50%) of the
outstanding voting securities, or other voting ownership interest, of such Person; or any Person of which a Person owning, directly or indirectly, more than fifty percent (50%) of the outstanding voting securities, or other voting ownership
interest, of the first Person owns, directly or indirectly, more than fifty percent (50%) of the outstanding voting securities, or other voting ownership interest, of such Person; and, (b) with respect to Novel, includes GAVIS
Pharmaceuticals, LLC. 
 1.42 “Manufacture” and “Manufacturing” means the manufacturing,
processing, formulating, packaging, labeling, holding and quality control testing of Product pursuant to Salix’s Marketing Authorization for the Product. 
 1.43 “Marketing Authorization” means an approved New Drug Application as defined in the FFDCA and the regulations promulgated thereunder, or any corresponding foreign application,
registration or certification, necessary or reasonably useful to market Product in a country or regulatory jurisdiction in the Territory other than the United States, including applicable pricing and reimbursement approvals. 

1.44 “Material(s)” means all ingredients, raw materials, packaging and labeling components, and all other supplies of
any kind, required or used in connection with the Manufacturing of Product or any component or intermediate thereof. 
 1.45
“Novel” has the meaning set forth in the preamble hereto. 
 1.46 “Novel Indemnified Parties”
has the meaning set forth in Section 7.2. 

  
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 1.47
“Party” and “Parties” has the meaning set forth in the preamble hereto. 
 1.48
“Patents” means (a) all national, regional and international patents and patent applications, including provisional patent applications, (b) all patent applications filed either from such patents, patent applications or
provisional applications or from an application claiming priority from either of these, including divisionals, continuations, continuations-in-part (other than with respect to new subject matter that would not otherwise be covered in this
Agreement), provisionals, converted provisionals and continued prosecution applications, (c) any and all patents that have issued or in the future issue from the foregoing patent applications ((a) and (b)), including utility models, petty
patents and design patents and certificates of invention, (d) any and all extensions or restorations by existing or future extension or restoration mechanisms, including revalidations, reissues, re-examinations and extensions (including any
supplementary protection certificates and the like) of the foregoing patents or patent applications ((a), (b) and (c)), (e) any similar rights, including so-called pipeline protection or any importation, revalidation, confirmation or
introduction patent or registration patent or patent of additions to any of such foregoing patent applications and patents ((a), (b), (c) and (d)), and (f) any data or market exclusion periods, including any such periods listed in the
FDA’s Orange Book and all international equivalents (“Data Exclusivity”). 
 1.49 “Per-Commercial
Unit Supply Price” means the price paid by Salix to Novel in respect of a particular Commercial Unit of Product pursuant to the provisions of Section 2.6(a). 
 1.50 “Per-Sample Unit Supply Price” means the price paid by Salix to Novel in respect of a particular Sample Unit of Product pursuant to the provisions of Section 2.6(b). 

1.51 “Person” means an individual, sole proprietorship, partnership, limited partnership, limited liability partnership,
corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture or other similar entity or organization, including a government or political subdivision, department or agency of a
government. 
 1.52 “Policies” has the meaning set forth in Section 7.4(a). 

1.53 “PPI” means the United States Producer Price Index for pharmaceutical preparations, as compiled and published by
the Bureau of Labor Statistics of the United States Department of Labor and using the latest version of data published as of the date of adjustment. 
 1.54 “Product” means the pharmaceutical product described in New Drug Application No. 21-892, the active ingredients in which pharmaceutical product are set out in Schedule
1.54. 
 1.55 “Product Inventions” has the meaning set forth in Section 3.1. 

1.56 “Product Patents” means the Patents set forth on Schedule 1.56. 

  
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 1.57 “Purchase
Order” means a written purchase order that sets forth, with respect to the period covered thereby, (a) the quantities of Product to be delivered by Novel to Salix and (b) the required delivery dates therefor. 

1.58 “Qualification” means all activities required or associated with obtaining Regulatory Approval for Novel to
Manufacture Product in accordance with Salix’s Marketing Authorization for the Product. 
 1.59 “Qualification
Date” has the meaning set forth in Section 2.1. 
 1.60 “Quality Agreement” means the quality
assurance agreement to be agreed between the Parties relating to the Manufacture of Product in accordance with Section 2.13, as such agreement shall be amended from time to time. 

1.61 “Receiving Party” means the Party receiving Confidential Information. 

1.62 “Recipients” has the meaning set forth in Section 5.1. 

1.63 “Regulatory Approval” means, with respect to any particular country or other jurisdiction, any and all approvals,
licenses, registrations or authorizations of any Regulatory Authority necessary for the Exploitation of Product in such country or jurisdiction, including, where applicable, (a) approval of Product in such country or jurisdiction, including any
Marketing Authorization and supplements and amendments thereto; (b) pre- and post-approval marketing authorizations (including any prerequisite Manufacturing approval or authorization related thereto); (c) labeling approval; and
(d) technical, medical and scientific licenses. 
 1.64 “Regulatory Authority” means any applicable
supra-national, federal, national, regional, state, provincial or local regulatory agencies, departments, bureaus, commissions, councils or other government entities regulating or otherwise exercising authority with respect to the Exploitation of
Product in any country or other jurisdiction. 
 1.65 “Salix” has the meaning set forth in the preamble hereto.

 1.66 “Salix Indemnified Parties” has the meaning set forth in Section 7.1. 

1.67 “Sample Unit” means a thirty-two (32) count bottle of Product for use as a physician’s sample and not for
commercial sale. 
 1.68 “Scale-Up Plans” has the meaning set forth in Section 2.10(c). 

1.69 “Settlement Agreement” has the meaning set forth in the preamble. 

1.70 “Specifications” means the specifications for Product and Materials set forth on Schedule 1.70, as the same
may be amended from time to time in accordance with the terms hereof. 
 1.71 “Start Date” has the meaning set
forth in the Sublicense Agreement. 

  
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 1.72
“Sublicense Agreement” has the meaning set forth in the preamble. 
 1.73 “Supply Term Commencement
Date” means 1 October 2011. 
 1.74 “Term” has the meaning set forth in Section 6.1.

 1.75 “Territory” means the United States. 

1.76 “Testing Laboratory” has the meaning set forth in Section 2.8(d). 

1.77 “Third Party Claim” has the meaning set forth in Section 7.3(b). 

1.78 “Trademark” shall include any word, name, symbol, color, designation or device or any combination thereof,
including any trademark, trade dress, brand mark, service mark, trade name, brand name, logo or business symbol, whether or not registered. 
 1.79 “United States” means the United States of America, its territories and possessions (including Puerto Rico). 
 1.80 “Valid Claim” means (a) any claim of an issued and unexpired Patent in the Territory that (i) has not been held permanently revoked, unenforceable or invalid by a decision
of a court or governmental agency of competent jurisdiction, which decision is unappealable or unappealed within the time allowed for appeal and (ii) has not been abandoned, disclaimed, denied or admitted to be invalid or unenforceable through
reissue or disclaimer or otherwise; or (b) a claim of a pending Patent application in the Territory that was filed and is being prosecuted in good faith and has not been abandoned or finally disallowed without the possibility of appeal or
re-filing of the application; provided that such prosecution has not been ongoing for more than six (6) years. 

ARTICLE II. MANUFACTURING AND SUPPLY 
 2.1 Qualification. 
 (a) As soon as is practicable after the Effective
Date, Novel and Salix agree to use their commercially reasonable efforts to effect the qualification of Novel, so it may Manufacture and supply Product to Salix by [*], including by (i) undertaking such quality and manufacturing systems reviews
and audits of the Facility and Novel’s other operations as are necessary or advisable in order to prepare for Novel’s qualification, (ii) making all such filings and taking all such other actions as are necessary or advisable to the
obtaining of all Regulatory Approvals necessary for Novel to supply Product hereunder, and (iii) causing Salix’s current supplier to timely assist in this respect by providing Novel the necessary technology transfer, data, information and
other technical assistance reasonably required 

  

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-7- 

 
by Novel to become qualified to Manufacture and supply Product. In any event, and without limitation of the terms of the preceding sentence, Salix and Novel shall at all times following the
Effective Date cooperate and act in good faith to effect the qualification of Novel to Manufacture and supply the Product, including through an initial regulatory submission with appropriate stability data as determined by Salix. The date upon which
Novel’s qualification is effected as contemplated by this Section 2.1(a) shall be referenced herein as the “Qualification Date”. Prior to submission to FDA, Novel shall have the right to review and comment upon
Salix’s proposed regulatory submission to FDA to obtain the Regulatory Approvals necessary to effect the qualification of Novel as a supplier of Product, and Salix shall appropriately consider Novel’s comments when finalizing its
regulatory submission. For clarity, Salix shall have final authority to determine the contents of any and all such regulatory submissions. 
 (b) Notwithstanding anything to the contrary herein, in the event that the Supply Term Commencement Date precedes the Qualification Date, then the purchase and supply obligations set out in
Section 2.2 and the ordering requirements set out in Section 2.3 shall be suspended until the Qualification Date. 

2.2 Purchase and Supply Obligations. 
 (a) Any purchase of Product by Salix from Novel, and supply of Product by Novel to Salix, prior to the Supply Term Commencement Date shall be made only pursuant to mutual agreement of Salix and Novel as
to quantities of Product to be so purchased and supplied. 
 (b) Subject to Section 2.8, from and after the Supply Term
Commencement Date, Salix shall order from Novel, and Novel shall supply to Salix, all of Salix’s requirements of the Product. 
 (c) For each Calendar Year (or part thereof) in which Salix is required pursuant to Section 2.2(b) to order all of its requirements of Product from Novel, Salix shall provide, within thirty
(30) days after the end of that Calendar Year, a certification that it has ordered all its requirements of Product for that Calendar Year (or part thereof) from Novel. Novel shall have the right to audit Salix’s financial records, pursuant
to and in accordance with Section 8.8, to confirm that Salix has, from time to time, ordered such requirements pursuant to Section 2.2(b). 
 (d) The Parties acknowledge and agree that the provisions of this Agreement relating to manufacturing and supply of Product are not intended to apply in respect of any rights to Exploit Product outside of
the Territory and that manufacturing and supply arrangements that may apply to any such rights that may be granted to or acquired by Salix will be governed by a separate supply agreement, any such separate supply agreement to be entirely at the
discretion of the Parties, provided such agreement does not adversely affect Novel’s ability to supply Product for the Territory, and orders for Product in the Territory are given priority over such other orders. 

  
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 (e) In the event that
Salix desires to obtain supply of any pharmaceutical product (other than the Product) that constitutes a Covered Product in respect of rights to Exploit Product in the Territory, Novel shall have the option to act as Salix’s sole supplier for
such product on terms substantially the same as those set forth in this Agreement. Novel shall exercise such option by notice to Salix given within thirty (30) days following notice given by Salix to Novel of its desire to obtain supply of a
pharmaceutical product (other than the Product) that constitutes a Covered Product and providing information in reasonable detail regarding the nature of the contemplated Covered Product, anticipated quantities, timing considerations and other such
matters as are reasonably necessary in order to permit Novel to make an informed evaluation of the opportunity. In the event that Novel should fail to exercise its option in a timely manner and otherwise as contemplated by the preceding sentence,
the option shall terminate and be of no further force and effect in respect of the Covered Product described by Salix in its notice to Novel. 
 (f) During the period between the Effective Date and the latter of the [*] and the [*], Salix shall only purchase or otherwise obtain the quantities of Product [*]. 

2.3 Forecasting, Order and Delivery of Product. 
 (a) Schedule 2.3(a) sets forth Salix’s good faith estimate of its Product purchase requirements for Calendar Year 2011 as a whole and for the final three (3) months of Calendar Year 2011.
The Parties agree and acknowledge that such estimate shall be non-binding and shall be used by Novel for planning purposes only. Not later than the earlier of [*] ([*]) days following [*] and [*], the Parties shall meet and discuss the quantities of
Product that Salix expects to purchase from Novel during Calendar Year 2011 and Calendar Year 2012. At least [*] ([*]) days prior to the first day of each Calendar Year during the Term, beginning with Calendar Year [*], Salix shall deliver to Novel
a written good faith forecast estimating, on a quarterly basis, the quantities of Product that Salix expects to purchase from Novel during such Calendar Year (each, an “Informational Forecast”). Each Informational Forecast shall be
non-binding and shall be used by Novel for planning purposes only. 
 (b) Commencing with a month that is at
least [*] prior to the [*], on the fifteenth
(15th) day of each month (or, at Salix’s
discretion, at any time from the eighth (8th) day of
such month up to and including the twenty-second
(22nd) day of such month), Salix shall deliver to
Novel a written good faith forecast estimating the quantities of Product that Salix expects to 

  

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-9- 

 
purchase from Novel for each month during the following [*] ([*]) months (each, a “Forecast”). The first [*] ([*]) months of each Forecast shall be a “Firm
Forecast”. Except as provided in clause (c) below, each Forecast shall be non-binding and shall be used by Novel for planning purposes only. 
 (c) Without duplication of any previously delivered Purchase Order, each Firm Forecast shall be accompanied by a Purchase Order for Product to be delivered to Salix during each of the first [*] ([*])
months, respectively, set forth in such Firm Forecast. The quantity of Product specified in any Purchase Order for delivery in any month (i) shall be in multiples of [*] set forth on Schedule 2.3(c), (ii) shall not be more than [*]
percent ([*]%) of the quantities specified in the most recent Firm Forecast applicable to such month, without Novel’s consent, and (iii) shall, unless otherwise agreed by Novel in writing, be consistent with Novel’s Current Capacity
(or any increased capacity available to Novel as of the Supply Term Commencement Date (or, if later, the Qualification Date) or as subsequently agreed pursuant to a Scale-Up Plan). 

(d) With respect to each Purchase Order, Salix shall be obligated to purchase, and Novel shall be obligated to deliver, by the required
delivery date and in the form set forth therein such quantities of Product as are set forth therein. The requested delivery date for Product shall not be less than [*] ([*]) days after the Purchase Order is placed. Within [*] ([*]) Business Days
following receipt of a Purchase Order, Novel shall send a written acknowledgment (“Acknowledgment”) of its acceptance or rejection of such Purchase Order, in whole or in part; provided, however, that, if no
Acknowledgment is sent by Novel within [*] ([*]) Business Days following receipt of a Purchase Order, the Purchase Order shall be deemed to be accepted. The Acknowledgement shall either confirm the delivery date set forth in the Purchase Order or
set forth a reasonable alternative delivery date, which shall not, without Salix’s prior written consent, be later than [*] ([*]) Business Days following the delivery date set forth in the Purchase Order. In the event that the terms of any
Purchase Order are not consistent with or are in addition to the terms of this Agreement, the terms of this Agreement shall prevail. Notwithstanding anything in this Section 2.3(d), Novel shall use commercially reasonable efforts to commit to
delivery on the delivery date set forth in each Purchase Order. 
 (e) Novel shall deliver the quantities of Product set forth
in each Purchase Order to Salix by the required delivery date set forth in the related Acknowledgement (or Purchase Order, if no Acknowledgement is sent) EXW the Facility (Incoterms 2000). All Product shall be labeled in accordance with Applicable
Law and packed for shipping in accordance with packing instructions provided by Salix. Title to and risk of loss of Product shall pass to Salix at the time of delivery. 
 (f) Each delivery of Product shall be accompanied by (i) a Certificate of Analysis, (ii) a Certificate of Compliance, (iii) such other documents as may be 

  

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required pursuant to the Quality Agreement, and (iv) such other documents as may be necessary for the sale of the Product. 

2.4 Materials. 
 (a) Novel shall maintain an inventory of Materials in sufficient quantities and shall use commercially reasonable efforts to supply Salix with quantities of Product that are up to [*] percent ([*]%) of
the quantities specified in each Firm Forecast. For the avoidance of doubt, Salix shall not be required to supply any Materials. 
 (b) Novel shall be responsible for auditing and qualifying its supplier(s) of Materials and obtaining supplies of Materials in accordance with the Specifications. All Materials shall conform to the
applicable Specifications. 
 2.5 Invoice and Payment. Novel promptly shall invoice Salix for all quantities of Product
delivered in accordance herewith. Payment with respect to Product delivered shall be due thirty (30) days after receipt by Salix of the invoice with respect thereto; provided that if Salix rejects such Product pursuant to
Section 2.8, then payment shall be due within thirty (30) days after receipt by Salix of notice from the Testing Laboratory that the invoiced Product is conforming or, subject to Section 2.8, receipt by Salix of replacement Product,
as the case may be; provided further, that if Salix disputes any portion of an invoice, it shall pay the undisputed portion and shall provide Novel with written notice of the disputed portion and its reasons therefor, and Salix shall not be
obligated to pay such disputed portion. The Parties shall use good faith efforts to resolve any such disputes promptly. In the event of any inconsistency between an invoice and this Agreement, the terms of this Agreement shall control. Payment of
invoices shall be made by wire transfer to an account designated in writing by Novel in United States Dollars. 
 2.6
Price. 
 (a) The Per-Commercial Unit Supply Price for all Commercial Units of Product to be supplied hereunder shall be
as follows: 
 (i) for all orders of Commercial Units of Product ordered for delivery in [*], [*] United States Dollars ($[*]);

 (ii) for all orders of Commercial Units of Product ordered for delivery in [*], [*] United States Dollars ($[*]);

  

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-11- 

  
 (iii) for all orders
of Commercial Units of Product ordered for delivery in [*], [*] United States Dollars ($[*]); 
 (iv) for all orders of
Commercial Units of Product ordered for delivery in [*], [*] United States Dollars ($[*]); 
 (v) for all orders of Commercial
Units of Product ordered for delivery in [*], [*] United States Dollars ($[*]); and 
 (vi) for all orders of Commercial Units
of Product ordered for delivery in [*] and in each subsequent [*], an amount equal to [*] for the previous [*] increased by an amount equal to [*], provided that the amount of such an increase in respect of any [*] shall not exceed [*] percent
([*]%). 
 (b) The Per-Sample Unit Supply Price for all Sample Units of Product to be delivered hereunder shall be as follows:

 (i) for all orders of Sample Units of Product ordered for delivery in [*], [*] United States dollars ($[*]); 

(ii) for all orders of Sample Units of Product ordered for delivery in [*], [*] United States dollars ($[*]); and 

(iii) for all orders of Sample Units of Product ordered for delivery in [*] and in each subsequent [*], an amount [*] ([*]%) [*] than
[*] for the [*]. 
 2.7 Warranty. In connection with each delivery of Product to Salix hereunder, Novel hereby represents
and warrants to Salix as of the time of the delivery of such Product to Salix as follows: (a) such Product is in conformity with the Specifications and the Certificate of Analysis therefor provided pursuant to Section 2.3(f); (b) such
Product has been Manufactured in conformance with GMP, all other Applicable Law, this Agreement and the Quality Agreement; (c) title to such Product will pass to Salix free and clear of any security interest, lien or other encumbrance;
(d) such Product has been Manufactured in facilities that are in compliance with all Applicable Law at the time of such Manufacture (including applicable inspection requirements of FDA and other Regulatory Authorities); (e) the expiration
date of such Product is no earlier than the later of (i) [*] ([*]) months (or such longer 

  

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-12- 

 
period as may be supported by subsequent stability studies) after the date the Manufacture of such Product commenced and (ii) [*] ([*]) months after the date of delivery; (f) such
Product has not been adulterated or misbranded under the Federal Food, Drug, and Cosmetic Act, as amended (the “FFDCA”), and similar provisions of other Applicable Law; and (g) neither Novel nor any of its Affiliates has been
debarred or is subject to debarment pursuant to Section 306 of the FFDCA or listed on either Excluded List. 
 2.8
Failure or Inability to Supply Product. 
 (a) In the event that Novel, at any time during the Term, shall have reason to
believe that it will be unable to supply Salix with the full quantity of Product forecasted to be ordered or actually ordered by Salix in a timely manner and in conformity with the warranty set forth in Section 2.7 (whether by reason of force
majeure or otherwise), Novel shall, as promptly as possible, notify Salix thereof (and, in any event, shall use its best efforts to provide at least [*] ([*]) days’ advance notice thereof to Salix). Promptly thereafter, the Parties shall meet
to discuss how Salix shall obtain such full quantity of conforming Product. Compliance by Novel with this Section 2.8(a) shall not relieve Novel of any other obligation or liability under this Agreement, including any obligation or liability
under Section 2.8(b) or (b). 
 (b) Subject to Sections 2.8(e) and 8.2, if Novel fails to deliver the full quantity of
Product specified in a Purchase Order by [*] ([*]) days after the required delivery date specified therein and in conformity with the warranty set forth in Section 2.7, then Salix may, at its option, (i) cancel any portion of such Purchase
Order which is not delivered by such date, in which event Salix shall have no liability with respect to the portion of such Purchase Order so cancelled, or (ii) accept late delivery of all or any portion of the Product specified in such
Purchase Order, in which event the Per-Commercial Unit Supply Price or Per-Sample Unit Supply Price, as applicable, otherwise payable by Salix with respect to all Product accepted by Salix at least [*] ([*]) days after the required delivery date
specified under such Purchase Order shall be reduced by [*] percent ([*]%). 
 (c) Subject to Sections 2.8(e) and 8.2, if Novel
fails to deliver the full quantity of Product specified in a Purchase Order by [*] ([*]) days after the required delivery date specified therein and in conformity with the warranty set forth in Section 2.7, then Salix may, at its option,
(i) accept late delivery of all or any portion of the Product specified in such Purchase Order, in which event the Per-Commercial Unit Supply Price or Per-Sample Unit Supply Price, as applicable, otherwise payable by Salix with respect to all
Product accepted by Salix under such Purchase Order shall be reduced by [*] percent ([*]%) or (ii) provide written notice to Novel of its intention to qualify a third party manufacturer for Product, in which event Novel shall use its best
efforts promptly to assist Salix to qualify such third party manufacturer designated by Salix to Manufacture Product, and shall promptly grant to such third party 

  

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manufacturer, on a royalty-free, non-exclusive basis, such licenses, and provide to such third party manufacturer, free of charge, such technical assistance, as such third party manufacturer may
require in order to Manufacture Product to the then-current Specifications in accordance with the then-current Manufacturing process for Product, including full technology transfer of the then-current Manufacturing processes for Product, as well as,
at Salix’s option, sell to Salix, at Novel’s cost, such inventories of Materials as are necessary to effect such qualification and technology transfer and enable Salix to obtain an uninterrupted supply of Product, in all cases solely for
use by Salix in its production of Product. For purposes of clarity, Salix may qualify a third party manufacturer for Product. 

(d) In the event that Salix determines, within [*] ([*]) days after delivery thereof by Novel (or within [*] ([*]) days after discovery
of any nonconformity that could not reasonably have been detected by a customary visual inspection on delivery), that any Product supplied by Novel does not conform to the warranty set forth in Section 2.7, Salix shall give Novel notice thereof
(including a sample of such Product, if applicable). Novel shall undertake appropriate evaluation of such sample and shall notify Salix whether it has confirmed such nonconformity within [*] ([*]) days after receipt of such notice from Salix. If
Novel notifies Salix that it has not confirmed such nonconformity, the Parties shall submit the dispute to an independent testing laboratory or other appropriate expert mutually acceptable to the Parties (the “Testing Laboratory”)
for evaluation. Both Parties shall cooperate with the Testing Laboratory’s reasonable requests for assistance in connection with its evaluation hereunder. The findings of the Testing Laboratory shall be binding on the Parties, absent manifest
error. The expenses of the Testing Laboratory shall be borne by Novel if the testing confirms the nonconformity and otherwise by Salix. If the Testing Laboratory or Novel confirms that a lot of Product does not conform to the warranty set forth in
Section 2.7, Novel, at Salix’s option, promptly shall (i) supply Salix with a conforming quantity of Product at Novel’s expense or (ii) reimburse Salix for the Per-Commercial Unit Supply Price or Per-Sample Unit Supply
Price, as applicable, paid by Salix with respect to such nonconforming Product if already paid. In addition, Novel promptly shall reimburse Salix for all costs incurred by Salix with respect to such nonconforming Product. Salix shall have the right
to offset any such costs against any payments owed by Salix to Novel under this Agreement. Novel immediately shall notify Salix if at any time it discovers that any Product delivered hereunder does not conform to the warranty set forth in
Section 2.7. 
 (e) The rights and remedies provided in this Section 2.8 shall be cumulative and in addition to any
other rights or remedies that may be available to Salix. 
 2.9 Additional Payments. Salix shall make two
(2) payments to Novel for the purposes of scale-up and the qualification of the Facility, and defraying certain legal and other expenses relating to this Agreement, the Settlement Agreement, and the Sublicense Agreement. These payments

  

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shall consist of (a) a payment of [*] United States Dollars ($[*]) no later than [*], and (ii) a payment of [*] United States Dollars ($[*]) on [*]. These payments shall be made by wire
transfer of immediately available funds to an account designated in writing by Novel. 
 2.10 Current Capacity and Scale-Up
Plans. 
 (a) Novel represents and warrants to Salix that Novel’s Capacity as of the Effective Date is as set forth on
Schedule 2.10(a) (the “Current Capacity”). 
 (b) Novel agrees that at all times during the Term it will
not, unless otherwise agreed in writing by Salix, allow its Capacity to be less than the Current Capacity or any increased capacity that Novel may subsequently agree to make available for the Manufacture of the Product. 

(c) In the event that at any time during the Term Salix contemplates that its [*] requirements of Product are likely to exceed the
Current Capacity (or any increased Capacity as of such date), Salix shall promptly notify Novel of that fact and the Parties shall thereafter discuss in good faith plans to increase Novel’s Capacity in respect of the Product so as to meet
Salix’s anticipated needs (as mutually agreed upon in writing, the “Scale-Up Plans”). Novel agrees to implement any mutually agreed upon Scale-Up Plan as promptly as possible. 

(d) Not later than the earlier of [*] ([*]) days following the [*] and [*] ([*]) days prior to the [*], Novel shall provide Salix with a
certificate that, to the best of its knowledge, it will have sufficient Capacity as of the [*] (or, if later, the anticipated [*]) to fulfill its supply obligations hereunder. 
 Within [*] ([*]) Business Days of [*], Salix shall advance to Novel [*] United States Dollars ($[*]) for expenses to be incurred by Novel during [*] solely for the purposes of (i) acquiring
manufacturing, packaging, testing, air handling, and facility-related equipment, (ii) modifying existing equipment and facilities, and (iii) calibrating, qualifying and validating the aforesaid equipment. Within [*] ([*]) days of the date
Novel has outfitted the Facility to meet Salix’s current specific requirements in respect of the Manufacture of the Product, and in any event not later than [*], Novel shall provide Salix with an accounting of the cost of such equipment and
associated out-of-pocket costs of transportation, installation, qualification, validation and site preparation that were incurred by Novel in connection with the activities contemplated by this Section 0, accompanied by appropriate supporting
documentation and a refund of any portion of such advance not spent for such purposes prior to the date of such accounting. 

  

	[*]	Confidential Treatment requested; certain information omitted and filed separately with the SEC. 

-15- 

  
 2.11 Costs and
Expenses. Except as otherwise explicitly set forth herein, Novel shall be solely responsible for all costs and expenses incurred in connection with Qualification and the Manufacture of Product hereunder, including costs and expenses of
personnel, quality control testing, Manufacturing facilities and equipment, and Materials. 
 2.12 Amendment of
Specifications. 
 (a) Salix may amend, modify or supplement the Specifications, the Manufacturing process, or the test
methods for the Product unilaterally and in its sole discretion (i) at any time, for the purpose of complying with any Regulatory Approval, GMP and all other Applicable Law and compendia or, (ii) upon [*] ([*]) days’ prior written
notice (or such longer notice period as may be agreed in writing by the Parties in order to permit Novel sufficient time to implement such changes in a commercially reasonable time frame) for any other purpose. Salix promptly shall provide Novel
with appropriate documentation relating to any such changes. 
 (b) Novel shall not in any respect amend, modify or supplement
the Specifications, the Manufacturing process, or the test methods for Product or any Materials or sources of Materials used in connection with Manufacturing Product without the prior written consent of Salix. 

(c) In the event that any amendment to the Specifications, the Manufacturing process, or the test methods for Product adversely affects
Novel’s ability to maintain its Capacity at the Current Capacity (or any increased capacity available to Novel as of the Supply Term Commencement Date (or, if later, the Qualification Date) or as subsequently agreed pursuant to a Scale-Up Plan)
the Parties shall discuss in good faith a Scale-Up Plan to address such shortfall in Capacity and Novel shall implement any mutually agreed Scale-Up Plan as promptly as possible. 

(d) Salix shall reimburse Novel for reasonable expenses or increased costs that are actually incurred by Novel in connection with any
amendment of the Specifications or the Manufacturing process for the Product required by Salix pursuant to Section 2.12(a), including reasonable costs of capital equipment and process upgrades and obsolescence of Materials, goods-in-process,
and finished goods not suitable for other use in the business or operations of Novel or any of its Affiliates; provided, however, that Salix’s liability for such reimbursement shall be limited to levels of inventory that are
consistent with the most recent Firm Forecast; and further provided, that Salix and Novel shall engage in good faith discussions regarding the amount of such expenses. 
 (e) Novel shall be solely responsible for any and all increased costs or out-of-pocket expenses incurred by it or Salix as a result of any amendment of the Specifications or the Manufacturing process for
Product (i) requested by Novel and 

  

	[*]	Confidential Treatment requested; certain information omitted and filed separately with the SEC. 

-16- 

 
consented to in writing by Salix or (ii) required by Salix as a result of Novel’s failure to Manufacture Product in conformity with the warranty set forth in Section 2.7.

 2.13 Quality Agreement. Within [*] ([*]) days after [*], and in any event prior to any commercial sale of Product,
Salix and Novel shall prepare and enter into a reasonable and customary quality assurance agreement that shall set forth the terms and conditions upon which Novel will conduct its quality activities in connection with this Agreement (the
“Quality Agreement”). Each Party shall duly and punctually perform all of its obligations under the Quality Agreement. 
 2.14 Quality Control Analyses and Release. 
 (a) Novel shall be responsible
for all quality control analyses of Materials and Product. 
 (b) All Product shall be released by Novel, in each case in
accordance with the terms of the Quality Agreement, prior to final release by Salix. 
 2.15 Maintenance of Facility.

 (a) Except as otherwise approved in writing by Salix, Novel shall Manufacture Product exclusively at the Facility.

 (b) Novel shall ensure that any and all licenses, registrations, and Regulatory Authority approvals required by Applicable
Law to be obtained in connection with the Facility and equipment used in connection with the Manufacture of Product by Novel so as to permit Novel to Manufacture Product and supply it to Salix as contemplated hereunder have been obtained and are in
all respects current and in full force and effect. 
 (c) Novel shall at all times during the Term maintain the Facility and
such equipment in a state of repair and operating efficiency consistent with the requirements of the Specifications, GMP and all other Applicable Law. 
 (d) Novel shall maintain in the Facility adequate holding accommodations for Product manufactured for Salix hereunder and the Materials used in Manufacturing Product for Salix hereunder as and to the
extent required by the Specifications, GMP and all other Applicable Law. 
 (e) Novel shall only use disposal services or sites
that have appropriate environmental permits and are in compliance with Applicable Law. 
 2.16 Regulatory Cooperation of
Novel. Novel shall cooperate with any reasonable requests for assistance from Salix with respect to obtaining and maintaining 

  

	[*]	Confidential Treatment requested; certain information omitted and filed separately with the SEC. 

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any and all Regulatory Approvals required in connection with the sourcing of Product by Salix hereunder and the sale of Product in the Territory, including by: 

(a) at Novel’s own cost, making its employees, consultants and other staff available upon reasonable notice during normal business
hours to attend meetings with Regulatory Authorities concerning Materials or Product or any component or intermediate thereof; and 
 (b) at Novel’s own cost, disclosing and making available to Salix, in whatever form Salix may reasonably request, all Manufacturing and quality control data, CMC Data and other information related to
Materials or Product or any component or intermediate thereof and the Manufacturing process therefor as is reasonably necessary or desirable to prepare, file, obtain and maintain any Regulatory Approval required in connection with the sourcing
of Product by Salix hereunder and the sale of Product in the Territory. 
 2.17 Inspection by Salix. Novel agrees that
Salix and its agents (so long as such agents have entered into binding confidentiality agreements with Salix providing for obligations no less strict than Salix’s confidentiality obligations to Novel hereunder) shall have the right, as required
by Applicable Law or otherwise once each Calendar Year, or otherwise for cause, upon reasonable prior notice to Novel and during normal business hours, to inspect the Facility as well as the Manufacturing of Product and any component or intermediate
thereof, including inspection of (a) Materials, (b) the holding facilities for Materials or Product or any component or intermediate thereof, (c) the equipment used in the Manufacture of Product or any component or intermediate
thereof, and (d) all records relating to such Manufacturing and the Facility (to the extent they relate to Product or any component or intermediate thereof). Following such audit, Salix shall discuss its observations and conclusions with Novel
and Novel shall implement such corrective actions as may be reasonably determined by Salix within [*] ([*]) days after notification thereof by Salix or such longer period as may be agreed by the Parties. 

2.18 Notification of Regulatory Inspections; Communications. 

(a) Novel shall notify Salix by telephone within twenty-four (24) hours, and in writing within two (2) Business Days, after
learning of any proposed visit to, or inspection of, the Facility by any Regulatory Authority and immediately by telephone after learning of any unannounced visit to, or inspection of, the Facility by any Regulatory Authority if such visit or
inspection primarily relates to the Facility’s compliance with GMP, the Manufacture of the Product, or the Manufacture of any other product containing sodium phosphate monobasic monohydrate or sodium phosphate dibasic anhydrous as an active
pharmaceutical ingredient. Novel shall also notify Salix by telephone within twenty-four (24) hours, and in writing within two (2) Business Days, if the visit to, or inspection of, the Facility by such Regulatory Authority becomes directed
towards the Facility’s compliance with GMP, the Manufacture of the Product, or the Manufacture of any other product containing sodium phosphate monobasic 

  

	[*]	Confidential Treatment requested; certain information omitted and filed separately with the SEC. 

-18- 

 
monohydrate or sodium phosphate dibasic anhydrous as an active pharmaceutical ingredient. 
 (b) In the case of any such visit or inspection that relates to the Facility’s compliance with GMP in respect of the Manufacture of the Product or directly to the Manufacture of the Product, Novel
shall permit Salix or its agents to be present and participate in such visit or inspection. 
 (c) Novel shall provide to Salix
a copy of (i) any report and other written communication (or the relevant portions thereof) received from such Regulatory Authority in connection with a visit to or inspection of the Facility that relates to compliance with GMP in respect of
the Manufacture of the Product or directly to the Manufacture of the Product; (ii) any warning letters or similar communications from a Regulatory Authority in respect of the Facility; and (iii) any written communications received from a
Regulatory Authority relating to the Facility’s compliance with GMP in respect of the Manufacture of the Product or directly to the Manufacture of the Product or any component or intermediate thereof or any equipment or Manufacturing process
used in connection with the Manufacture of Product or any component or intermediate thereof, in each case within [*] ([*]) Business Days after receipt thereof. Novel shall consult with Salix concerning the response of Novel to each such
communication. Novel shall provide Salix with a copy of all draft responses for comment as soon as possible and all final responses for review and approval, which shall not be unreasonably withheld, conditioned or delayed, within [*] ([*]) Business
Days prior to submission thereof. 
 2.19 Recalls and Withdrawals. 

(a) Novel promptly shall reimburse Salix for any and all documented out-of-pocket costs reasonably incurred by Salix with respect to
recalls and market withdrawals of Product, including associated retrieval of Product, returns of Product, destruction of Product, replacement of Product, and fees and penalties owed to third parties, as and to the extent such recalls or market
withdrawals result from breach of the obligations of Novel under this Agreement or the negligence or willful misconduct of Novel. Salix shall have the right to offset any such costs against any payments owed by Salix to Novel under this Agreement.

 (b) Notwithstanding anything else in this Agreement to the contrary, (i) Novel’s liability to Salix pursuant to
Section 2.19(a) in respect of any one recall or market withdrawal event shall not exceed [*] United States Dollars ($[*]), and (ii) Salix acknowledges and agrees that Novel’s sole liability to Salix for costs of the type identified in
Section 2.19(a) shall be as set forth in this Section 2.19. 
 (c) For the avoidance of doubt, [*] shall be considered
“one recall or market withdrawal event.” 

  

	[*]	Confidential Treatment requested; certain information omitted and filed separately with the SEC. 

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 2.20 Compliance
with Applicable Laws. Novel shall strictly comply, and shall cause each of its Materials suppliers to strictly comply, with GMP and all other Applicable Law in carrying out the Manufacturing of Product and any component or intermediate thereof
and its other duties and obligations under this Agreement. Upon Salix’s request, Novel shall certify in writing its compliance with this Section 2.20 and shall provide all permits, certificates and licenses that may be required for its
performance under this Agreement. 
 2.21 Retention of Manufacturing Records and Samples. 

(a) Novel shall generate, retain and maintain, both during the Term and thereafter: 

(i) all records necessary to comply with GMP and all other Applicable Law relating to the Manufacture of Product or any component or
intermediate thereof. Without limiting the foregoing, records shall be made concurrently with the performance of each step in the Manufacture of Product and in such a manner that at any time successive steps in the Manufacture and distribution of
any batch may be traced by an inspector. Such records shall be legible and indelible, shall identify the Person immediately responsible, shall include dates of the various steps and be as detailed as necessary for a clear understanding of each step
by an individual experienced in the manufacture of pharmaceutical products; 
 (ii) all Manufacturing records, standard
operating procedures, equipment log books, batch manufacturing records, laboratory notebooks and all raw data relating to the Manufacturing of Product and any component or intermediate thereof; 

(iii) samples of each batch and Materials. Samples shall include a quantity of representative material of each batch and Materials
sufficient to perform at least full duplicate quality control testing, and shall specify the dates of Manufacture and packaging thereof. Samples so retained shall be selected at random from either final container material or from bulk and final
containers; provided that they include at least one final container as a final package, or package-equivalent of such filling of each batch. Such sample shall be stored at temperatures and under conditions which will maintain the identity and
integrity of the relevant sample; and 
 (iv) such other records and samples as Salix reasonably may require in order to ensure
compliance by Novel with the terms of this Agreement and Applicable Law. 
 (b) Without prejudice to Novel’s obligations
pursuant to Section 2.21(a), Novel shall diligently complete the master batch record for Product during the Manufacture of such Product. 
 (c) All Materials, samples, records and other items referred to in Sections 2.21(a) and 2.21(b) shall be retained by Novel for the longer of (i) such period as may be required by GMP and all other
Applicable Law and (ii) five (5) years. 

  
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 2.22 Exclusive
Supply Arrangement. For as long as there is at least one Valid Claim in the Territory for any Product Patent, then, to the maximum extent permitted by Applicable Law, except only as and to the extent contemplated by the Settlement Agreement and
the Sublicense Agreement, Novel shall not, and Novel shall cause its Affiliates not to, distribute, market, promote, offer for sale, sell or otherwise supply Product, Covered Product or any generic versions thereof, directly or indirectly, whether
at wholesale or retail, to any Person other than Salix or its Affiliates. The limitation of this Section 2.22 shall terminate as of the end of the Term or upon a Settlement Termination Event, as such term is defined in the Settlement Agreement.

 2.23 Second Source. 
 (a) Salix shall have the right to secure a second source of Product. Novel shall promptly grant to such third party manufacturer as may be designated by Salix as a second source of Product, on a
royalty-free, non-exclusive basis, such licenses, and provide to such third party manufacturer, free of charge, such technical assistance, as such third party manufacturer may require in order to Manufacture Product to the then-current
Specifications in accordance with the then-current Manufacturing process for Product, including full technology transfer of the then-current Manufacturing processes for Product, as well as, at Salix’s option and cost, such excess inventories of
Materials as are necessary to effect such technology transfer and enable Salix to obtain an uninterrupted supply of Product, in all cases solely for use by Salix in its production of Product. 

(b) The qualification of a second source of Product pursuant to this Section 2.23 shall not alter or qualify Salix’s
obligations in respect of the purchase of Product from Novel hereunder.  
 ARTICLE III. INTELLECTUAL PROPERTY

 3.1 Ownership of Inventions. 
 (a) Except as otherwise expressly provided in this Article III, each Party shall own all right, title and interest in and to any Inventions that are conceived, discovered, developed or otherwise made
exclusively by or on behalf of such Party or its Affiliates, employees or contractors in performing such Party’s obligations hereunder or in respect of such Party’s activities in respect hereof. Salix hereby grants to Novel a royalty-free,
non-exclusive license to use all such right, title and interest in and to any such Inventions that Salix may develop for the sole purpose of performing Novel’s obligations hereunder or exercising Novel’s rights hereunder. Novel hereby
grants to Salix an irrevocable, perpetual, fully paid-up, royalty-free, non-exclusive license, with the right to enforce and to grant sublicenses through multiple tiers, to use all such right, title and interest in and to any such Inventions that
Novel may develop relating to the Product (“Product Inventions”). 
 (b) Salix and Novel shall jointly own all
right, title and interest in and to any Joint Inventions; provided that (i) Novel shall, and does hereby, grant to Salix an 

  
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irrevocable, perpetual, fully paid-up, royalty-free, non-exclusive license, with the right to grant sublicenses through multiple tiers, under all of Novel’s right, title and interest in and
to all Joint Inventions to Exploit the Product and (ii) Salix shall, and does hereby, grant to Novel an irrevocable, perpetual, fully paid-up, royalty-free, non-exclusive license, with the right to grant sublicenses through multiple tiers,
under all of Salix’s right, title and interest in and to all Joint Inventions to Exploit the Product. Each of Salix and Novel shall, and shall cause its respective Affiliates to, promptly disclose in writing to the other Party the discovery,
development, making, conception or reduction to practice of any Joint Invention. 
 3.2 Prosecution of Invention Patents.
Salix shall have the first right, but not the obligation, to prepare, file, prosecute and maintain any patent applications and patents covering Joint Inventions and Product Inventions (collectively, the “Invention Patents,” and
each, an “Invention Patent”) and shall be responsible for related interference, re-issuance, re-examination and opposition proceedings; provided, however, that if Salix plans to abandon an Invention Patent, Salix shall
notify Novel in writing at least [*] ([*]) days in advance of the due date of any payment or other action that is required to prepare, file, prosecute or maintain such Invention Patent, and Novel may elect, upon written notice within such [*] ([*])
day period to Salix, to make such payment or take such action, at Novel’s expense, and thereafter to become the sole owner of such Invention Patent. In such event, Salix shall cooperate, without additional consideration, to assign and transfer
all of its right, title and interest in and to such Invention Patent to Novel as the sole owner. 
 3.3 United
States Law. The determination of whether Inventions are conceived, discovered, developed or otherwise made by a Party for the purpose of allocating proprietary rights (including patent, copyright or other intellectual property rights) therein,
shall, for purposes of this Agreement, be made in accordance with applicable law in the United States. In the event that United States law does not apply to the conception, discovery, development or making of any Invention hereunder, each Party
shall, and does hereby, assign, and shall cause its Affiliates to so assign, to the other Party, without additional compensation, such right, title and interest in and to any Inventions, as well as any intellectual property rights with respect
thereto, as necessary to fully effect ownership as contemplated by Section 3.1. 
 3.4 Corporate Names.
Novel shall, and does hereby, grant to Salix a non-exclusive, royalty-free license, with the right to grant sublicenses through multiple tiers, to use such Corporate Names of Novel or its Affiliates, solely as may be required by Applicable Law, in
connection with its sale or documentation of the chain of custody of Product in the Territory. 

  

	[*]	Confidential Treatment requested; certain information omitted and filed separately with the SEC. 

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 ARTICLE IV.
REPRESENTATIONS AND WARRANTIES; COVENANTS 
 4.1 Representations and Warranties of Each Party. Each Party hereby
represents and warrants to the other Party as of the Effective Date as follows: 
 (a) Such Party (i) is duly formed and in
good standing under the laws of the jurisdiction of its formation, (ii) has the power and authority and the legal right to enter into this Agreement and perform its obligations hereunder, and (iii) has taken all necessary action on its
part required to authorize the execution and delivery of this Agreement and the performance of its obligations hereunder. This Agreement has been duly executed and delivered on behalf of such Party and constitutes a legal, valid and binding
obligation of such Party and is enforceable against it in accordance with its terms, subject to the effects of bankruptcy, insolvency or other similar laws of general application affecting the enforcement of creditor rights and judicial principles
affecting the availability of specific performance and general principles of equity, whether enforceability is considered in a proceeding at law or equity. 
 (b) All necessary consents, approvals and authorizations of all regulatory and governmental authorities and other Persons required to be obtained by such Party in connection with the execution and
delivery of this Agreement and the performance of its obligations hereunder have been obtained. 
 (c) The execution and
delivery of this Agreement and the performance of such Party’s obligations hereunder (i) do not and will not conflict with or violate any requirement of applicable law or any provision of the articles of incorporation, bylaws, limited
partnership agreement or other similar documents of such Party and (ii) do not and will not conflict with, violate, or breach, or constitute a default or require any consent under, any contractual obligation or court or administrative order by
which such Party is bound. 
 4.2 Additional Warranties and Covenants of Novel. Novel hereby represents, warrants and
covenants to Salix that: 
 (a) Neither Novel nor any of its Affiliates has been debarred or is subject to debarment pursuant to
Section 306 of the FFDCA or listed on either Excluded List. 
 (b) Neither Novel nor any of its Affiliates will use in any
capacity, in connection with the services to be performed under this Agreement, any Person who has been debarred pursuant to Section 306 of the FFDCA, or who is the subject of a conviction described in such section, or listed on either Excluded
List. 
 (c) Novel will inform Salix in writing immediately if it or any Person who is performing services hereunder is debarred
or is the subject of a conviction described in Section 306 of the FFDCA or listed on either Excluded List, or if any action, suit, claim, investigation or legal or administrative proceeding is pending or, to the best

  
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of Novel’s knowledge, is threatened, relating to the debarment or conviction under Section 306 of the FFDCA, or listing on either Excluded List, of Novel or any Person performing
services hereunder. 
 4.3 Disclaimer of Other Warranties. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE PARTIES
MAKE NO REPRESENTATIONS AND EXTEND NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE OR WARRANTY OF MERCHANTABILITY. 

ARTICLE V. CONFIDENTIALITY 
 5.1 Confidential Information. Subject to the provisions of Sections 5.2 and 5.3, at all times during the Term and for seven (7) years following the expiration or termination of this Agreement,
the Receiving Party (a) shall keep completely confidential and shall not publish or otherwise disclose any Confidential Information furnished to it by the Disclosing Party, except to those of the Receiving Party’s employees, Affiliates, or
consultants who have a need to know such information to perform such Party’s obligations hereunder (and who shall be advised of the Receiving Party’s obligations hereunder and who are bound by confidentiality obligations with respect to
such Confidential Information no less onerous than those set forth in this Agreement) (collectively, “Recipients”) and (b) shall not use Confidential Information of the Disclosing Party directly or indirectly for any purpose
other than performing its obligations or exercising its rights hereunder. The Receiving Party shall be jointly and severally liable for any breach by any of its Recipients of the restrictions set forth in this Agreement. 

5.2 Exceptions to Confidentiality. The Receiving Party’s obligations set forth in this Agreement shall not extend to any
Confidential Information of the Disclosing Party: 
 (a) that is or hereafter becomes part of the public domain by public use,
publication, general knowledge or the like through no wrongful act, fault or negligence on the part of a Receiving Party or its Recipients; 
 (b) that is received from a third party without restriction and without breach of any agreement between such third party and the Disclosing Party; 

(c) that the Receiving Party can demonstrate by competent evidence was already in its possession without any limitation on use or
disclosure prior to its receipt from the Disclosing Party; 
 (d) that is generally made available to third parties by the
Disclosing Party without restriction on disclosure; or 

  
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 (e) that the Receiving
Party can demonstrate by competent evidence was independently developed by the Receiving Party. 
 5.3 Disclosure.

 (a) Each Party may disclose Confidential Information to the extent that such disclosure is: 

(i) made in response to a valid order of a court of competent jurisdiction or other governmental body of a country or any political
subdivision thereof of competent jurisdiction; provided, however, that, if permitted by law, the Receiving Party shall first have given notice to the Disclosing Party and given the Disclosing Party a reasonable opportunity to quash
such order or to obtain a protective order requiring that the Confidential Information or documents that are the subject of such order be held in confidence by such court or governmental body or, if disclosed, be used only for the purposes for which
the order was issued; and provided further that if a disclosure order is not quashed or a protective order is not obtained, the Confidential Information disclosed in response to such court or governmental order shall be limited to that
information that is legally required to be disclosed in such response to such court or governmental order; 
 (ii) made
pursuant to Section 2.23; or 
 (iii) otherwise required by law or regulation, in the opinion of legal counsel to the
Receiving Party. 
 (b) Salix may disclose Confidential Information to the extent that such disclosure is made to Regulatory
Authorities as required in connection with any filing, application or request for Regulatory Approval; provided, however, that reasonable measures shall be taken to assure confidential treatment of such information. 

(c) To the extent, if any, that a Party concludes in good faith that it is required by applicable laws or regulations to file, register
or otherwise disclose this Agreement or Confidential Information to a governmental authority, including the FDA or the U.S. Securities and Exchange Commission, such Party may do so, and the other Party shall cooperate in any such filing or
notification, including by executing all documents reasonably required in connection therewith. In such situation, the filing Party shall request confidential treatment of sensitive provisions of the Agreement, to the extent permitted by Applicable
Law and in consultation with the other Party. The Parties shall promptly inform each other as to the activities or inquiries of any such governmental authority relating to this Agreement, and shall cooperate to respond to any request for further
information therefrom. 
 (d) Novel may disclose Confidential Information to Actavis solely to the extent necessary to keep
Actavis informed with respect to the general status of its facility qualification efforts as contemplated hereby and this Agreement and quantities of Product ordered or purchased under this Agreement and amounts paid or required to be

  
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paid by Salix therefor; provided, however, that, prior to any such disclosure, Novel shall require Actavis to enter into a written agreement requiring confidential treatment of any
Confidential Information so disclosed that is at least as restrictive as this Article V. The foregoing notwithstanding, Novel shall remain liable for any unauthorized use or disclosure of Confidential Information by Actavis. 

5.4 Notification. The Receiving Party shall notify the Disclosing Party immediately, and cooperate with the Disclosing Party as
the Disclosing Party may reasonably request, upon the Receiving Party’s discovery of any loss or compromise of the Disclosing Party’s Confidential Information. 
 5.5 Remedies. Each Party agrees that the unauthorized use or disclosure of any information by the Receiving Party in violation of this Agreement will cause severe and irreparable damage to the
Disclosing Party. In the event of any violation of this Article V, the Receiving Party agrees that the Disclosing Party shall be authorized and entitled to obtain from any court of competent jurisdiction injunctive relief, whether preliminary or
permanent, without the necessity of proving irreparable harm or monetary damages, as well as any other relief permitted by applicable law. The Receiving Party agrees to waive any requirement that the Disclosing Party post bond as a condition for
obtaining any such relief. 
 5.6 Use of Names. Neither Party shall mention or otherwise use the name, insignia, symbol,
trademark, trade name or logotype of the other Party (or any abbreviation or adaptation thereof) in any publication, press release, promotional material or other form of publicity without the prior written approval of such other Party in each
instance. The restrictions imposed by this Section 5.6 shall not prohibit either Party from making any disclosure identifying the other Party that is required by Applicable Law; provided, however, that reasonable measures shall be
taken to assure confidential treatment of such information. 
 5.7 Press Releases. Except as expressly provided in
Section 5.3, neither Party shall make a press release or other public announcement regarding this Agreement, the terms hereof or the transactions contemplated hereby without the prior written approval of the other Party. Each Party shall
provide the other with the proposed text of any such press release or public announcement for review and approval, which approval shall not be unreasonably withheld, conditioned or delayed, as early as possible, but in no event less than four
(4) Business Days in advance of the publication, communication or dissemination thereof; provided, however, that the receiving Party shall be deemed to have approved any such press release or public announcement if it fails to
notify the proposing Party in writing of any objections to such press release or public announcement within three (3) Business Days after receipt by the receiving Party of the text of such public announcement. 

ARTICLE VI. TERM AND TERMINATION 
 6.1 Term. The term of this Agreement (the “Term”) shall commence as of the Effective Date and, unless earlier terminated in accordance with the terms hereof,

  
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shall, unless otherwise directed by notice given by Salix to Novel, expire on the earlier of: 
 (a) the first date on which there is no longer (i) a Product Patent that includes at least one Valid Claim in the Territory or (ii) any Data Exclusivity with respect to the Product in the
Territory; provided, however, that if Salix and, to Salix’s knowledge, CDC III or the General Partnership intend to withdraw all of the Product Patents, Salix shall give Novel [*] ([*]) days’ notice prior to withdrawal; and

 (b) the Start Date (as such term is defined in the Sublicense Agreement). 

6.2 Termination. In addition to any other provision of this Agreement expressly providing for termination of this Agreement, this
Agreement may be terminated as follows: 
 (a) Salix may terminate this Agreement immediately upon notice to Novel in the event
that 
 (i) Regulatory Authorities require or cause the permanent and full withdrawal of Product from the Territory (it being
acknowledged and agreed that in the event that Regulatory Authorities require or cause a temporary withdrawal of Product from the Territory, this Agreement will be suspended until the Product is once again permitted to be marketed, but it will not
in such circumstances be terminated); or 
 (ii) a Settlement Termination Event (as such term is defined in the Settlement
Agreement) occurs. 
 (b) This Agreement may be terminated by either Party: 

(i) immediately upon written notice if the other Party shall 
 (A) file in any court or agency pursuant to any statute or regulation of any state, country or jurisdiction a petition in bankruptcy or insolvency or for reorganization or for arrangement or for the
appointment of a receiver or trustee of that Party or of its assets, 
 (B) propose a written agreement of composition or
extension of its debts, 
 (C) be served with an involuntary petition against it, filed in any insolvency proceeding, and such
petition shall not be dismissed within sixty (60) days after the filing thereof, 
 (D) propose or be a party to any
dissolution or liquidation, 

  

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 (E) make an
assignment for the benefit of its creditors, or 
 (F) admit in writing its inability generally to pay its debts as they fall
due in the general course; 
 (ii) immediately upon written notice in the event of any material breach by the other Party in
the performance of any of its obligations herein contained that (if curable) has not been cured by the defaulting Party within (a) in the case of any material breach other than one involving failure to make a payment required under this
Agreement, [*] ([*]) days after receiving written notice thereof from the nonbreaching Party; and (b) in the case of any material breach involving a failure to make a payment required under this Agreement, [*] ([*]) days after receiving written
notice thereof from the nonbreaching Party. 
 (iii) immediately upon written notice in the event that, as a result of an order
of government or any other official authority, the continued operation of this Agreement in its entirety or in substantial part is prohibited or prevented; or 
 (iv) as provided in Section 8.2. 
 6.3 Effect of Expiration or
Termination. 
 (a) The expiration or earlier termination of this Agreement shall be without prejudice to any rights or
obligations of the Parties that may have accrued prior to such termination, and the provisions of Sections 2.5, 2.7, 0, 2.14, 2.16, 2.19, 2.21, Articles III, IV and V, this Article VI, Article VII and Article VIII shall survive the expiration or
termination of this Agreement. Except as otherwise expressly provided herein, termination of this Agreement in accordance with the provisions hereof shall not limit remedies that may otherwise be available at law or in equity. 

(b) Upon expiration or earlier termination of this Agreement, each Party, at the request of the other, shall return all data, files,
records and other materials in its possession or control containing or comprising the other Party’s Confidential Information except that the legal department of such Party may retain one copy for archival purposes. 

(c) Upon expiration of this Agreement or any earlier termination of this Agreement by Salix pursuant to Section 6.2(b), then, at
Salix’s option, Novel shall use its best efforts promptly to assist Salix to qualify a third party manufacturer designated by Salix to Manufacture Product to meet Salix’s requirements, in which event Novel shall use its best efforts
promptly to assist Salix to qualify such third party manufacturer to Manufacture Product, and shall promptly grant to such third party manufacturer, on a royalty-free, non-exclusive basis, such licenses, and provide to such third party manufacturer,
free of charge in the event of a termination of this Agreement 

  

	[*]	Confidential Treatment requested; certain information omitted and filed separately with the SEC. 

-28- 

 
by Salix pursuant to Section 6.2(b) and at Novel’s standard time and materials cost in the event of an expiration of this Agreement, such technical assistance, as such third party
manufacturer may require in order to Manufacture Product to the then-current Specifications in accordance with the then-current Manufacturing process for Product, including full technology transfer of the then-current Manufacturing processes for
Product, as well as, at Salix’s option and cost, such inventories of Materials as are necessary to effect such qualification and technology transfer and enable Salix to obtain an uninterrupted supply of Product, in all cases solely for the
purposes of Salix’s production of Product. 
 (d) Upon any termination of this Agreement by Salix pursuant to
Section 6.2(a) or by Novel pursuant to Section 6.2(b), Salix shall purchase from Novel the amount of Product that is subject to Purchase Orders outstanding at the time of such termination. Salix shall in addition reimburse Novel for work
in process and Materials that Novel has purchased for the purpose of supplying Product to Salix in accordance with this Agreement. Salix shall pay [*] for any such work in process and [*] for any such Materials. 

(e) Except as and to the extent contemplated by the foregoing Section 6.3(d), upon expiration of this Agreement or any earlier
termination of this Agreement, Novel immediately shall cease all Manufacturing of Product pursuant to this Agreement, and all existing Purchase Orders shall, at Salix’s option, be deemed canceled. 

(f) Following expiration or termination of this Agreement, Novel shall provide such reasonable cooperation and support with respect to
regulatory matters as Salix may require in order to dispose of previously purchased Product. 
 ARTICLE VII. INDEMNIFICATION

 7.1 Novel Indemnification. Novel shall indemnify Salix, its Affiliates and its and their respective directors,
officers, employees and agents (the “Salix Indemnified Parties”), and defend and hold each of them harmless, from and against any and all claims, lawsuits, losses, damages, liabilities, penalties, costs and expenses (including
reasonable attorneys’ fees and disbursements) (collectively, “Losses”) incurred by any of them in connection with, arising from or occurring as a result of (a) the breach by Novel of any of its representations or
warranties set forth in this Agreement, (b) Novel’s material breach of this Agreement, (c) Novel’s negligence or willful misconduct in the performance of this Agreement, (d) the storage, release, or disposal of any hazardous
or regulated material or any waste by Novel, and (e) the enforcement by Salix of its rights under this Section 7.1, except, in each case, for those Losses for which Salix has an obligation to indemnify the Novel Indemnified Parties
pursuant to Section 7.2, as to which Losses each Party shall indemnify the other Party to the extent of its respective liability for such Losses. 
 7.2 Salix Indemnification. Salix shall indemnify Novel, its Affiliates and its and their respective directors, officers, employees and agents (the “Novel Indemnified Parties”), and
defend and hold each of them harmless, from and against any and all Losses 

  

	[*]	Confidential Treatment requested; certain information omitted and filed separately with the SEC. 

-29- 

 
incurred by any of them in connection with, arising from or occurring as a result of (a) the breach by Salix of any of its representations or warranties set forth in this Agreement,
(b) Salix’s material breach of this Agreement, (c) any Third Party Claim made by any Person relating to or arising out of death, personal injury, or other product liability, related to the marketing, sale, distribution or use of the
Product and caused by the Product’s design or the negligence of Salix or its subcontractors, agents or predecessors in interest, (d) any failure by Salix to maintain the Marketing Authorization so that the Specifications are in full
compliance with Applicable Law or to label Product in accordance with Applicable Law (excluding any such failure that is attributable to a breach by Novel of any of its representations, warranties, or other obligations under this Agreement) and
(e) the enforcement by a Novel Indemnified Party of its rights under this Section 7.2, except, in each case, for those Losses for which Novel has an obligation to indemnify the Salix Indemnified Parties pursuant to Section 7.1, as to
which Losses each Party shall indemnify the other Party to the extent of its respective liability for such Losses. 
 7.3
Indemnification Procedure. 
 (a) Notice of Claim. The indemnified party (the “Indemnified
Party”) shall give the indemnifying Party (the “Indemnifying Party”) prompt written notice (an “Indemnification Claim Notice”) of any Losses or discovery of facts upon which such Indemnified Party intends
to base a request for indemnification under Section 7.1 or 7.2, but in no event shall the Indemnifying Party be liable for any Losses that result from any delay in providing such notice. Each Indemnification Claim Notice must contain a
description of the claim and the nature and amount of such Loss (to the extent that the nature and amount of such Loss are known at such time). The Indemnified Party shall furnish promptly to the Indemnifying Party copies of all papers and official
documents received in respect of any Losses. 
 (b) Third Party Claims. The obligations of an Indemnifying Party under
this Article VII with respect to Losses arising from claims of any third Person that are subject to indemnification as provided for in Section 7.1 or 7.2 (a “Third Party Claim”) shall be governed by and be contingent upon the
following additional terms and conditions: 
 (i) Control of Defense. At its option, the Indemnifying Party may assume the
defense of any Third Party Claim by giving written notice to the Indemnified Party within thirty (30) days after the Indemnifying Party’s receipt of an Indemnification Claim Notice. The assumption of the defense of a Third Party Claim by
the Indemnifying Party shall not be construed as an acknowledgment that the Indemnifying Party is liable to indemnify any Indemnified Party in respect of the Third Party Claim, nor shall it constitute a waiver by the Indemnifying Party of any
defenses it may assert against any Indemnified Party’s claim for indemnification. Upon assuming the defense of a Third Party Claim, the Indemnifying Party may appoint as lead counsel in the defense of the Third Party Claim any legal counsel
selected by the Indemnifying Party, which shall be reasonably acceptable to the Indemnified Party. In the event the Indemnifying Party assumes the defense of a Third Party Claim, the Indemnified Party

  
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shall immediately deliver to the Indemnifying Party all original notices and documents (including court papers) received by any Indemnified Party in connection with the Third Party Claim. Subject
to clause (ii) below, if the Indemnifying Party assumes the defense of a Third Party Claim, the Indemnifying Party shall not be liable to the Indemnified Party for any legal expenses subsequently incurred by such Indemnified Party in connection
with the analysis, defense or settlement of the Third Party Claim. In the event that it is ultimately determined that the Indemnifying Party is not obligated to indemnify, defend or hold harmless a Salix Indemnified Party or Novel Indemnified Party,
as applicable, from and against the Third Party Claim, the Indemnified Party shall reimburse the Indemnifying Party for any and all costs and expenses (including reasonable attorneys’ fees and costs of suit) and any Losses incurred by the
Indemnifying Party in its defense of the Third Party Claim with respect to such Salix Indemnified Party or Novel Indemnified Party, as applicable. 
 (ii) Right to Participate in Defense. Without limiting Section 7.3(b)(i), any Indemnified Party shall be entitled to participate in, but not control, the defense of such Third Party Claim and to
employ counsel of its choice for such purpose; provided, however, that such employment shall be at the Indemnified Party’s own expense unless (A) the employment thereof has been specifically authorized by the Indemnifying
Party in writing, (B) the Indemnifying Party has failed to assume the defense and employ counsel in accordance with Section 7.3(b)(i) (in which case the Indemnified Party shall control the defense), or (C) the interests of the
Indemnified Party and the Indemnifying Party with respect to such Third Party Claim are sufficiently adverse to prohibit the representation by the same counsel of both parties under Applicable Law, ethical rules or equitable principles. 

(iii) Settlement. With respect to any Losses relating solely to the payment of money damages in connection with a Third Party Claim and
that will not result in the Indemnified Party’s becoming subject to injunctive or other relief or otherwise adversely affect the business of the Indemnified Party in any manner, and as to which the Indemnifying Party shall have acknowledged in
writing the obligation to indemnify the Indemnified Party hereunder, the Indemnifying Party shall have the sole right to consent to the entry of any judgment, enter into any settlement or otherwise dispose of such Loss, on such terms as the
Indemnifying Party, in its sole discretion, shall deem appropriate. With respect to all other Losses in connection with Third Party Claims, where the Indemnifying Party has assumed the defense of the Third Party Claim in accordance with
Section 7.3(b)(i), the Indemnifying Party shall have authority to consent to the entry of any judgment, enter into any settlement or otherwise dispose of such Loss; provided that it obtains the prior written consent of the Indemnified
Party (which consent shall not be unreasonably withheld, conditioned or delayed). The Indemnifying Party shall not be liable for any settlement or other disposition of a Loss by an Indemnified Party that is reached without the written consent of the
Indemnifying Party. Regardless of whether the Indemnifying Party chooses to defend or prosecute any Third Party Claim, no Indemnified Party shall admit any liability with respect to, or settle, compromise or dispose of, any Third Party Claim without
the prior written consent of the Indemnifying Party (which consent shall not be unreasonably withheld, conditioned or delayed). 

  
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 (iv) Cooperation. If
the Indemnifying Party chooses to defend or prosecute any Third Party Claim, the Indemnified Party shall cooperate in the defense or prosecution thereof and shall furnish such records, information and testimony, provide such witnesses and attend
such conferences, discovery proceedings, hearings, trials and appeals as may be reasonably requested in connection therewith. Such cooperation shall include access during normal business hours afforded to the Indemnifying Party to, and reasonable
retention by the Indemnified Party of, records and information that are reasonably relevant to such Third Party Claim, and making employees and agents available on a mutually convenient basis to provide additional information and explanation of any
material provided hereunder, and the Indemnifying Party shall reimburse the Indemnified Party for all its reasonable out-of-pocket expenses in connection therewith. 
 (v) Expenses. Except as provided above, the reasonable and verifiable costs and expenses, including fees and disbursements of counsel, incurred by the Indemnified Party in connection with any Third Party
Claim shall be reimbursed on a calendar quarter basis in arrears by the Indemnifying Party, without prejudice to the Indemnifying Party’s right to contest the Indemnified Party’s right to indemnification and subject to refund in the event
the Indemnifying Party is ultimately held not to be obligated to indemnify the Indemnified Party. 
 7.4 Insurance.

 (a) Each Party shall maintain (i) comprehensive general liability insurance with a combined single limit for bodily
injury and property damage of not less than [*] United States Dollars ($[*]), (ii) product liability/completed operations coverage with a per claim limit of not less than [*] United States Dollars ($[*]), and (iii) errors and omissions
coverage with a per claim limit of not less than [*] United States Dollars ($[*]) (collectively, the “Policies”). If any Policy is written on a claims-made basis, the retroactive date, if any, shall not be later than the Effective
Date. In addition, such coverage shall be continued in full force from such date until the end of the Term of this Agreement and for a period of five (5) years thereafter and neither Party’s Policies shall be canceled or subject to a
reduction of coverage or any other modification without written notice to the other Party. 
 (b) Each Party shall furnish
certificates of insurance for its Policies to the other Party within ten (10) days following the Effective Date. 
 7.5
Limitation on Damages. EXCEPT WITH RESPECT TO THE GROSS NEGLIGENCE OR INTENTIONAL MISCONDUCT OF A PARTY OR BREACHES OF ARTICLE V, NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR SPECIAL, PUNITIVE, INDIRECT, INCIDENTAL, EXEMPLARY OR
CONSEQUENTIAL DAMAGES, INCLUDING BUSINESS INTERRUPTION OR 

  

	[*]	Confidential Treatment requested; certain information omitted and filed separately with the SEC. 

-32- 

 
LOST PROFITS, WHETHER IN CONTRACT, WARRANTY, NEGLIGENCE, TORT, STRICT LIABILITY OR OTHERWISE; PROVIDED, HOWEVER, THAT THIS EXCLUSION IS NOT INTENDED TO, NOR SHALL IT, EXCLUDE DAMAGES OWED TO
THIRD PARTIES. 
 ARTICLE VIII. MISCELLANEOUS 
 8.1 Notices. All notices, requests and other communications hereunder must be in writing, specifically reference this Agreement in a prominent manner, and be delivered personally or by recognized
international courier to the Parties at the following addresses: 
 If to Salix to: 

Salix Pharmaceuticals, Inc. 
 1700 Perimeter Park Drive 
 Morrisville, North Carolina 27560 

Attention: AVP, Pharmaceutical Development and Manufacturing 
 with copies (which shall not constitute notice) to: 
 Salix Pharmaceuticals, Inc.

 1700 Perimeter Park Drive 
 Morrisville, North Carolina 27560 
 Attention: General Counsel 

and 

Covington & Burling LLP 
 1201 Pennsylvania Avenue, N.W. 
 Washington, D. C. 20004 

Attention: Edward C. Britton, Esq. 
 If to Novel to: 
 Novel Laboratories, Inc. 

400 Campus Drive 

Somerset, NJ 08873 
 Attention: President 
 with copies (which shall not constitute notice) to:

 Actavis Inc. 
 60 Columbia Road, Bldg. B 
 Morristown, NJ 07960 

Attention: Legal Department 

  
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 and 

Leydig, Voit & Mayer 
 Two Prudential Plaza, 
 180 N. Stetson Avenue, Suite 4900 

Chicago, IL 60601-6731 
 Attention: Steven H. Sklar, Esq. 
 All such notices, requests and other communications will
(a) if delivered personally to the address as provided in this Section, be deemed given upon receipt, and (b) if delivered by courier to the address as provided in this Section 8.1, be deemed given upon receipt. Any Party from time to
time may change its address or other information for the purpose of notices to that Party by giving notice specifying such change to the other Party hereto. 
 8.2 Force Majeure. Neither Party shall be liable for delay in delivery or nonperformance in whole or in part (other than a failure to pay any amount due hereunder), nor shall the other Party have
the right to terminate this Agreement except as otherwise specifically provided in this Section 8.2, where delivery or performance has been affected by a condition beyond such Party’s reasonable control, including fires, floods, embargoes,
shortages, epidemics, quarantines, war, acts of war (whether war be declared or not), terrorism, insurrections, riots, civil commotion, strikes, lockouts or other labor disturbances, acts of God or acts, omissions or delays in acting by any
governmental authority; provided that the Party affected by such a condition shall, within [*] ([*]) days of its occurrence, give notice to the other Party stating the nature of the condition, its anticipated duration and any action being
taken to avoid or minimize its effect. The suspension of performance shall be of no greater scope and no longer duration than is reasonably required and the nonperforming Party shall use commercially reasonable efforts to remedy its inability to
perform. Notwithstanding the foregoing, in the event the suspension of performance is not attributable solely to a general shortage of Materials not unique to Novel and continues for [*] ([*]) days, and such failure to perform would constitute a
material breach of this Agreement in the absence of such force majeure event, the nonaffected Party may terminate this Agreement immediately by written notice to the affected Party; provided, however, that if Salix exercises its right to
terminate the Agreement as set forth in this sentence, and Novel then, within [*] ([*]) days after such termination, regains the ability to perform its obligations under this Agreement, then Novel may, at such time and at its option, reinstate this
Agreement and require Salix to resume purchasing Product from Novel under the terms of this Agreement, but only at quantities up to [*] percent ([*]%) of Salix’s requirements for the applicable Calendar Years. 

8.3 Entire Agreement; Amendment. 
 (a) This Agreement, together with the Schedules and Exhibits attached hereto and the Settlement Agreement and the Sublicense Agreement, sets forth and

  

	[*]	Confidential Treatment requested; certain information omitted and filed separately with the SEC. 

-34- 

 
constitutes the entire agreement and understanding between the Parties with respect to the subject matter hereof and all prior agreements, understandings, promises and representations, whether
written or oral, with respect thereto are superseded by this Agreement, the Settlement Agreement, and the Sublicense Agreement. Each Party confirms that it is not relying on any representation, warranty or undertaking of the other Party except as
specifically set forth in this Agreement, the Settlement Agreement, or the Sublicense Agreement. 
 (b) No amendment,
modification, release or discharge shall be binding upon the Parties unless in writing and duly executed by authorized representatives of both Parties. 
 8.4 Further Assurances. Each Party shall duly execute and deliver, or cause to be duly executed and delivered, such further instruments and do and cause to be done such further acts and things,
including the filing of such assignments, agreements, documents and instruments as may be necessary or as the other Party may reasonably request in connection with this Agreement or to carry out more effectively the provisions and purposes hereof or
to better assure and confirm unto such other Party its rights and remedies under this Agreement. 
 8.5 Successors and
Assigns. The terms and provisions hereof shall inure to the benefit of, and be binding upon, Salix, Novel and their respective successors and permitted assigns. 
 8.6 Dispute Resolution. Any dispute, controversy or claim arising out of or relating to this Agreement or the breach, termination or validity thereof (each, a “Dispute”), shall be
referred to a senior executive of each Party; provided that each such senior executive is not involved in such Dispute. Such senior executives shall meet for attempted resolution of such Dispute by good faith negotiations within thirty
(30) days after such Dispute is referred to such senior executives. If the Dispute remains unresolved after such thirty (30)-day negotiation period, then, at the election of either Party, such Dispute shall be decided by litigation. Any such
litigation shall be pursued in accordance with Section 8.7; provided that any dispute regarding the validity, scope, enforceability, inventorship or ownership of intellectual property rights shall be submitted by either Party to a court
of competent jurisdiction in the country in which such rights apply. 
 8.7 Governing Law; Jurisdiction; Venue; Service.

 (a) This Agreement shall be governed and interpreted in accordance with the law of the State of New York, excluding any
conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction. The Parties agree to exclude the application to this Agreement of the United
Nations Convention on Contracts for the International Sale of Goods. 

  
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 (b) Subject to
Section 8.6, each Party irrevocably and unconditionally consents to the exclusive jurisdiction of the courts of general jurisdiction of the State of New York and the United States District Court for the Southern District of New York sitting in
the Borough of Manhattan (collectively, the “Courts”) for any action, suit or proceeding (other than appeals therefrom) concerning any matter arising out of or relating to this Agreement, and agrees not to commence any action, suit
or proceeding (other than appeals therefrom) related thereto except in such Courts. 
 (c) Each Party hereto further hereby
irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or proceeding (other than appeals therefrom) arising out of or relating to this Agreement in the Courts and hereby further irrevocably and
unconditionally agrees not to raise any objection at any time to the laying or maintaining of the venue of any such action, suit or proceeding in any of such Courts, irrevocably waives any claim that such action, suit or other proceeding has been
brought in an inconvenient forum and further irrevocably waives the right to object, with respect to such action, suit or other proceeding, that such Court does not have any jurisdiction over such Party. 

(d) Each Party hereto further agrees that, to the maximum extent permitted by Applicable Law, service of any process, summons, notice or
document by United States registered mail to its address and contact person for notices provided for in Section 8.1 shall be effective service of process for any action, suit or proceeding brought against it under this Agreement in any of the
Courts. 
 8.8 Audit; Late Payments. 
 (a) Each Party shall have the right to have an independent certified public accounting firm of internationally recognized standing, and reasonably acceptable to the other Party, provided with access by
such other Party during normal business hours, and upon reasonable prior written notice, to examine only those records of such other Party (and its Affiliates) as may be reasonably necessary to determine, with respect to any Calendar Year ending not
more than [*] ([*]) years prior to the auditing Party’s request, the correctness or completeness of any payment made or statement submitted under this Agreement. Such examinations may not (i) be conducted more than [*] in any [*] ([*])
month period (unless a previous audit during such [*] ([*]) month period revealed an underpayment with respect to such period or an incorrect statement submitted by the audited Party in respect of such period or the audited Party restates or revises
such books and records for such period) or (ii) be repeated for any Calendar Year. Results of such audit shall (i) be (A) limited to information relating to the Product, (B) made available to both Parties in writing, and
(C) subject to Article V and (ii) not reveal any specific information of the audited Party to the auditing Party other than (A) whether the audited Party is in compliance with its payment obligations under this Agreement or whether
statements submitted by the audited Party under this Agreement 

  

	[*]	Confidential Treatment requested; certain information omitted and filed separately with the SEC. 

-36- 

 
are true and correct, as the case may be, and (B) the amount of any additional payment owed to the auditing Party or excess payment reimbursable to the audited Party or any correction to
statements submitted by the audited Party under this Agreement, as the case may be. Except as provided below, the cost of this examination shall be borne by the [*], unless the audit reveals a variance of more than [*] percent ([*]%) from the
reported amounts, in which case the [*] shall bear the cost of the audit. Unless disputed pursuant to Section 8.8(b), if such audit concludes that additional payments were owed or that excess payments were made during such period, then the
audited Party shall pay the additional amounts, with interest from the date originally due as provided in Section 8.8(c), or the auditing Party shall reimburse such excess payments, with interest from the date of original payment as provided in
Section 8.8(c), within [*] ([*]) days after the date on which such auditor’s written report is delivered to the Parties. 
 (b) In the event of a Dispute of any audit under this Section 8.8, Novel and Salix shall work in good faith to resolve the disagreement. If the Parties are unable to reach a mutually acceptable
resolution of any such Dispute within thirty (30) days, the Dispute shall be resolved in accordance with Section 8.6. 

(c) If any payment due to a Party under this Agreement is not paid when due, then the owing Party shall pay interest thereon (before and
after any judgment) at an annual rate (but with interest accruing on a daily basis) equal to the lesser of (i) one percent (1%) per month, and (ii) the maximum rate permitted by Applicable Law. Interest payable under this
Section 8.8(c) shall run from the date upon which payment of the relevant principal sum became due through the date of payment thereof in full together with such interest. Notwithstanding the provisions of the preceding sentence, no interest
shall be payable on payments disputed in good faith or on payments in respect of Product subject to investigation under Section 2.8(d) . 
 8.9 Third Party Beneficiaries. Nothing in this Agreement shall be construed as giving any Person, other than the Parties hereto and their successors and permitted assigns, any right, remedy or
claim under or in respect of this Agreement or any provision hereof. 
 8.10 Export Control. This Agreement is
made subject to any restrictions concerning the export of products or technical information from the United States or other countries that may be imposed on the Parties from time to time. Each Party agrees that it will not export, directly or
indirectly, any technical information acquired from the other Party under this Agreement or any products using such technical information to a location or in a manner that at the time of export requires an export license or other governmental
approval, without first obtaining the written consent to do so from the appropriate agency or other governmental entity in accordance with Applicable Law. 
 8.11 Assignment. Except as otherwise provided herein, neither Party shall have the power to assign or otherwise transfer this Agreement or any interest herein or right

  

	[*]	Confidential Treatment requested; certain information omitted and filed separately with the SEC. 

-37- 

 
hereunder without the prior written consent of the other Party, and any such purported assignment, transfer or attempt to assign or transfer any interest herein or right hereunder shall be void
and of no effect. Notwithstanding the foregoing, either Party may, upon written notice to the other Party but without obtaining the other Party’s consent, assign its rights and obligations under this Agreement to any of its Majority-Controlled
Affiliates, to any lender providing financing to that Party or its Affiliates for collateral security purposes, or to any successor in interest to that Party’s entire business or, in the case of Salix, to its Product business or, in the case of
Novel, to its polyethylene glycol product manufacturing business, provided that (a) notwithstanding any such assignment, such Party shall remain liable for its and its assignee’s performance under this Agreement; (b) no such
assignment shall in any manner limit or impair the obligations of that Party hereunder; and (c) following a transfer by a Party to its Majority-Controlled Affiliate, any subsequent transaction (other than one that would result in the transfer
of this Agreement back to the assigning Party) that would cause such Majority-Controlled Affiliate to cease to be a Majority-Controlled Affiliate of such Party shall be deemed to be an assignment of this Agreement requiring consent hereunder.

 8.12 Waiver. Any term or condition of this Agreement may be waived at any time by the Party that is entitled to the
benefit thereof, but no such waiver shall be effective unless set forth in a written instrument duly executed by or on behalf of the Party waiving such term or condition. No waiver by either Party of any term or condition of this Agreement, in any
one or more instances, shall be deemed to be or construed as a waiver of the same or any other term or condition of this Agreement on any future occasion. 
 8.13 Severability. If any provision of this Agreement is held to be illegal, invalid or unenforceable under any present or future law, and if the rights or obligations of either Party under this
Agreement will not be materially and adversely affected thereby, (a) such provision shall be fully severable, (b) this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a
part hereof, (c) the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance herefrom, and (d) in lieu of such illegal,
invalid or unenforceable provision, there shall be added automatically as a part of this Agreement a legal, valid and enforceable provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible and reasonably
acceptable to the Parties herein. 
 8.14 Independent Contractors. The status of the Parties under this Agreement shall
be that of independent contractors. Nothing in this Agreement is intended or shall be deemed to constitute a partnership, agency, employer, employee, or joint venture relationship between the Parties. Neither Party shall have the right to enter into
any agreements on behalf of the other Party, nor shall it represent to any Person that it has any such right or authority. 

  
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 8.15
Construction. Unless the context of this Agreement otherwise requires: (a) words of any gender include each other gender; (b) words using the singular or plural number also include the plural or singular number, respectively;
(c) the terms “hereof,” “herein,” “hereby” and derivative or similar words refer to this entire Agreement; (d) the terms “Article,” “Section,” “Schedule,” “Exhibit” or
“clause” refer to the specified Article, Section, Schedule, Exhibit or clause of this Agreement; (e) the term “or” has, except where otherwise indicated, the inclusive meaning represented by the phrase “and/or”;
(f) the term “including” or “includes” means “including without limitation” or “includes without limitation”; and, (g) except where otherwise indicated, references to any agreement, instrument or
other document in this Agreement refer to such agreement, instrument or other document as originally executed or, if subsequently amended, replaced or supplemented from time to time, as so amended, replaced or supplemented and in effect at the
relevant time of reference thereto. Whenever this Agreement refers to a number of days, such number shall refer to calendar days unless Business Days are specified. The captions of this Agreement are for convenience of reference only and in no way
define, describe, extend, or limit the scope or intent of this Agreement or the intent of any provision contained in this Agreement. The language of this Agreement shall be deemed to be the language mutually chosen by the Parties and no rule of
strict construction shall be applied against either Party. 
 8.16 Remedies. The rights and remedies provided herein are
cumulative and do not exclude any other right or remedy provided by applicable law or otherwise available except as expressly set forth herein. 
 8.17 Counterparts; Facsimile Execution. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, and all of which, taken together, shall
constitute one and the same instrument. Delivery of an executed counterpart of a signature page of this Agreement (and each amendment, modification and waiver in respect of it) by facsimile or other electronic transmission shall be as effective as
delivery of a manually executed original counterpart of each such instrument. 
 8.18 English Language. This
Agreement shall be written and executed in, and all other communications under or in connection with this Agreement shall be in, the English language. Any translation into any other language shall not be an official version thereof, and in the event
of any conflict in interpretation between the English version and such translation, the English version shall control. 
 8.19
Other Agreements. 
 (a) Simultaneously herewith, Salix and Novel are entering into the Settlement Agreement with
Actavis, Inc., CDC III, and the General Partnership. The effectiveness of this Agreement is explicitly conditioned on the simultaneous execution and delivery of the Settlement Agreement by each of the parties thereto. 

(b) Articles II and III and Section 7.4 shall become effective only upon the occurrence of the Consent Judgment Entry Date. For the
avoidance of ambiguity, in 

  
 -39-

 
the event there is no Consent Judgment Entry Date, the provisions of Articles II and III and Section 7.4 shall never become effective. 

[The remainder of this page has been intentionally left blank.] 

  
 -40-

  
 IN WITNESS WHEREOF,
the Parties hereto have executed this Agreement to be effective as of the Effective Date. 
  

									
	SALIX PHARMACEUTICALS, INC.	 		 	NOVEL LABORATORIES, INC.
					
	By:	 	 /s/ Carolyn J. Logan
	 		 	By:	 	 /s/ Veerappan S. Subramanian

											
						
	Name:	 	 Carolyn J. Logan
	 		 		 	Name:	 	 Veerappan S. Subramanian

											
						
	Title:	 	 President and CEO
	 		 		 	Title:	 	 President and CEO

  
 Schedule 1.54

 Product Active Ingredients 
 Sodium phosphate dibasic anhydrous 
 Sodium phosphate monobasic monohydrate 

  
 Schedule 1.56

 Product Patents 
  

					
	Country	  	No.	  	Status
			
	 USA
	  	5,616,346	  	Granted
			
	 USA
	  	7,687,075	  	Granted

  
 Schedule 1.70

 Specifications 

  
 Schedule 2.3(a)

 Non-Binding Estimate of Requirements for Calendar Year 2011 

[*] 

  

	[*]	Confidential Treatment requested; certain information omitted and filed separately with the SEC. 

  
 Schedule 2.3(c)

 Full Production Lot Sizes 
 [*] 

  

	[*]	Confidential Treatment requested; certain information omitted and filed separately with the SEC. 

  
 Schedule 2.10(a)

 Current Capacity 
 [*] 

  

	[*]	Confidential Treatment requested; certain information omitted and filed separately with the SEC.

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