Document:

EXHIBIT 10.41

 

MANUFACTURING SERVICES AGREEMENT

 

THIS MANUFACTURING SERVICES AGREEMENT (the “Agreement”) made as of the 6th day of April, 2004

 

BETWEEN:

 

PATHEON PHARMACEUTICALS INC.,

a corporation existing under the laws of Delaware

 

(hereinafter referred to as “Patheon”),

 

- and -

 

RELIANT PHARMACEUTICALS, INC.
 a corporation existing under the laws of Delaware,

 

(hereinafter referred to as the “Client”).

 

THIS AGREEMENT WITNESSES THAT in consideration of the rights conferred
and the obligations assumed herein, and for other good and valuable
consideration (the receipt and sufficiency of which are acknowledged by each
party), and intending to be legally bound the parties agree as follows:

 

ARTICLE 1

 

INTERPRETATION

 

1.1          Definitions.

 

The following terms shall, unless the context otherwise requires, have
the respective meanings set out below and grammatical variations of such terms
shall have corresponding meanings:

 

“Act” shall mean the Federal Food, Drug
and Cosmetics Act, 21 U.S.C. §301 et seq. as may be amended from time to time
and the regulations promulgated thereunder;

 

“Active Compound” or “API” means Isradipine;

 

“Affiliate” means, with respect to any
party, any person or entity that directly or indirectly through one or more
intermediaries’ controls, is controlled by, or is under common control with,
the person or entity specified. For purposes of this definition, “control”
shall mean with respect to an entity the direct or indirect ownership of
(i) greater than fifty percent (50%) or more of the capital stock or share
capital entitled to vote for the election of the directors of the entity or
(ii) greater than 50% of the equity or 

 

 

voting interest of the entity or (iii) the ability to otherwise direct
the management and operations of the entity;

 

“Alza  Technical
Information” shall mean know how, trade secrets, inventions, data,
technology and information relating to the Drug or Drug Product, or the System
which are owned by Alza and sublicensed to Reliant. Technical Information shall
include without limitation, processes and analytical methodology used in
development, testing, analysis and manufacture and medical, clinical,
toxicological or other scientific data;

 

“Applicable Laws” means all applicable
laws, ordinances, rules and regulations of any kind whatsoever of any Authority
relating to the Manufacturing Services;

 

“Authority” means any governmental or
regulatory authority, department, body or agency or any court, tribunal,
bureau, commission or other similar body, whether federal, state, provincial,
county or municipal in the Territory;

 

“Business Day” means a day other than a
Saturday, Sunday on which commercial banks are not authorized to close in the
states of New Jersey or Ohio;

 

“cGMPs” means current good manufacturing
practices as described in Parts 210 and 211 of Title 21 of the United States’
Code of Federal Regulations, together with the latest FDA guidance documents
pertaining to manufacturing and quality control practice, all as updated,
amended and revised from time to time;

 

“Capital Letter” means the agreement
between Patheon and the Client relating to the capital expenditures associated
with the acquisition of certain equipment and Facility improvements which
agreement shall substantially be in the form attached hereto as Schedule H;

 

“Commencement Date” means the date on
which Patheon and/or Client has satisfied all regulatory requirements including
those under the Act necessary for Patheon to commence performance of the
Manufacturing Services hereunder;

 

“Components” means, collectively, all
packaging components, raw materials and ingredients (including labels, product
inserts and other labelling for the Drug Product), required to be used in order
to produce the Drug Product in accordance with the Specifications, other than
the API or Granulations;

 

“Components Costs” shall mean the cost
of Components as set forth in Section 2.1(c) hereto.

 

“Confidentiality Agreement” means the
agreement relating to the non-disclosure of confidential information between
Patheon and the Client dated December 9, 2003;

 

“Contract Year” means the twelve-month
period coinciding with the calendar year. Notwithstanding the foregoing for
purposes of this Agreement the first Contract Year shall mean the period
commencing on the Commencement Date to December 31, 2005. 

 

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Thereafter each Contract Year shall be from January 1 to December 31 of
each calendar year during the Term of this Agreement;

 

“Conversion Costs” shall mean the cost
to convert the Granulations into Drug Product as set forth in Section 4.2(a)
hereto.

 

“Deficiency Notice” shall have the
meaning ascribed thereto in Section 6.1(a);

 

“Drug” shall mean the pharmaceutical
product DynaCirc® CR, whose active ingredient is the Active Compound;

 

“Drug Layer Granulation” shall mean a
granulation of Active Compound, [***] produced by Novartis on behalf of Reliant
and provided to Patheon for use under this Agreement;

 

“Drug Product” shall mean the Drug to be
produced by Patheon in bulk dosage form (DynaCirc® CR tablets 5 mg & 10
mg);

 

“Facilities” or singularly, “Facility” means the facility owned and operated by Patheon
that is located at 2110 East Gaibraith Road, Cincinnati, Ohio;

 

“FCA” means Free Carrier Multimodal, as
that term is defined in INCOTERMS 2000;

 

“FDA” means the United States government
department known as the Food and Drug Administration and any successor agency
performing similar functions;

 

“Firm Orders” has the meaning specified
in Section 5.2(b);

 

“Granulations” shall mean collectively the
Drug Layer Granulation and the Osmotic Layer Granulation

 

“Intellectual Property” includes,
without limitation, rights in patents, patent applications, formulae,
trade-marks, trade-mark applications, trade-names, Inventions, know how,
copyright, industrial designs;

 

“Invention” means information relating
to any innovation, improvement, development, discovery, computer program,
device, trade secret, method, know-how, process, technique or the like, whether
or not written or otherwise fixed in any form or medium, regardless of the
media on which it is contained and whether or not patentable or copyrightable;

 

“Inventory” means all inventories of
Components and work-in-process produced or held by Patheon in connection with
the manufacture of the Drug Product but, for greater certainty, does not
include Granulations;

 

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

 

3

 

“Manufacturing Services” means the
manufacturing, compression, coating, laser drilling and over-coating, quality
control, quality assurance, bulk packaging and related services, as
contemplated in this Agreement, required to produce Drug Product from
Granulations and Components;

 

“Minimum Run Quantity” means the minimum
number of batches of the Drug Product to be produced during the same cycle of
manufacturing as set forth in Schedule B hereto;

 

“NDA” means the New Drug Application
20-336 as amended and supplemented for the Drug Product and as approved by the
FDA to market the Drug Product and any materials, documents or information
referred to or relied upon therein;

 

“Novartis” shall mean Novartis Consumer
Health, Inc.;

 

“Osmotic Layer Granulation” shall mean a
granulate of polyethylene oxide and hydroxypropyl methylcellulose not including
Active Compound produced by Novartis on behalf of Reliant and provided to
Patheon for use under this Agreement;

 

“Packaged Drug Product” shall mean
finished Drug Product packaged by Novartis Pharmaceutical Corporation;

 

“Patheon Manufacturing Responsibilities”
means Patheon’s responsibilities and obligations with respect to the provision
of Manufacturing Services as set forth in Sections 2.1 and 2.2;

 

“Quality Agreement” means the agreement
between the parties hereto setting out the quality assurance standards to be
applicable to the Manufacturing Services provided by Patheon which agreement
shall substantially be in the form attached hereto as Schedule G;

 

“Specifications” means the file, for the
Drug Product, which is provided by the Client to Patheon and which contains
documents relating to the Drug Product, including, without limitation:

 

(a)           specifications
for Granulations and Components;

 

(b)           manufacturing
specifications;

 

(c)           storage
requirements;

 

(d)           all
environmental, health and safety information relating to the Drug Product
including material safety data sheets;

 

(e)           the
finished Drug Product specifications, packaging specifications (if applicable)
and shipping requirements for the Drug Product, which are attached hereto as
Schedule A;

 

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and which comply with the NDA, and all as updated, amended and revised
from time to time by the Client in accordance with the terms of this Agreement;

 

“System” shall mean an oral osmotic
system for the controlled administration of drugs.

 

“Technical Dispute” has the meaning
specified in Section 12.2;

 

“Term” has the meaning specified in
Section 8.1;

 

“Territory” means in the geographic area
of the United States, its territories and possessions including Puerto Rico;
and

 

“Third Party Rights” means the
Intellectual Property or any other rights of any third party.

 

1.2          Currency.

 

Unless otherwise indicated, all monetary amounts are expressed in this
Agreement in the lawful currency of the United States of America.

 

1.3          Sections and Headings.

 

The division of this Agreement into Articles, sections, subsections and
Schedules and the insertion of headings are for convenience of reference only
and shall not affect the interpretation of this Agreement. Unless otherwise
indicated, any reference in this Agreement to a Section or Schedule refers to
the specified Section or Schedule to this Agreement. In this Agreement, the
terms “this Agreement”, “hereof”,
“herein”, “hereunder”
and similar expressions refer to this Agreement and not to any particular part,
Section, Schedule or the provision hereof.

 

1.4          Singular Terms.

 

Except as otherwise expressly provided herein or unless the context
otherwise requires, all references to the singular shall include the plural and
vice versa.

 

1.5          Schedules.

 

The following Schedules are attached to, incorporated in and form part
of this Agreement:

 

Schedule A - Drug Product Specifications 

Schedule B - Minimum Run Quantity, Minimum Annual Volume & Fees 

Schedule C - Intentionally Deleted 

Schedule D - Active Compound and Granulations 

Schedule E - Batch Numbering & Expiration Dates 

Schedule F - Technical Dispute Resolution 

Schedule G - Form of Quality Agreement 

Schedule H - Capital Letter

 

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ARTICLE 2

 

PATHEON’S MANUFACTURING RESPONSIBILITIES 

 

2.1          Manufacturing
Services.

 

Patheon shall provide the Manufacturing Services for the Territory for
the fees specified in Schedules B in order to produce Drug Product for the
Client. Subject to Client’s continuing obligation to purchase certain
quantities of Packaged Drug Product from Novartis Pharmaceutical Corporation,
during the Term and provided that Patheon is not in material default hereunder
and is otherwise capable of meeting all of Client’s demand for the Drug Product
in accordance with forecasts and Firm Orders set forth in Section 5.2 hereof
Client shall purchase all of its other requirements of Drug Product from
Patheon. In providing the Manufacturing Services, Patheon shall perform each of
the following services:

 

(a)           Conversion
of Granulations. Patheon shall convert the Granulations and Components into
Drug Product.

 

(b)           Quality
Control and Quality Assurance. Patheon shall perform the quality control
and quality assurance testing specified in the Quality Agreement. Each time
Patheon ships Drug Product to the Client or Client’s designee, it shall provide
the Client with a certificate of analysis that sets out the test results for
each batch of Drug Product, and that certifies that such batch has been
evaluated by Patheon’s Quality Control/Quality Assurance department and that
the Drug Product complies with the Specifications and a certificate of
conformance certifying that the Drug Product was manufactured in accordance
with cGMP’s.

 

(c)           Components.
Patheon shall purchase and test all Components (with the exception of those
that are supplied by the Client) at Patheon’s expense (the “Components Costs”)
and as specified by the Specifications.

 

(d)           Bulk
Manufacture. Patheon shall manufacture the Drug Product in bulk in
accordance with the terms of this Agreement. If subsequent to the execution of
this Agreement, Client wishes to qualify a secondary source for granulation
and/or packaging of Drug Product, provided that Patheon is not in default of
its obligations hereunder, Client shall give Patheon the first opportunity to
provide those granulation and/or packaging services, subject to the Parties
mutual agreement on the fees for such services and compliance by Patheon with
all applicable laws relating to the provision of granulation and/or packaging
services.

 

2.2          Standard of
Performance.

 

Patheon shall provide the Manufacturing Services for the Drug Product
in accordance with the Specifications, Applicable Laws and cGMPs. Drug Product
manufactured hereunder shall not be adulterated or misbranded within the
meaning of the Act. In performing the Manufacturing Services, Patheon shall maintain
all necessary licenses, permits and other regulatory approvals necessary to
comply with its obligations hereunder.

 

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2.3          Exclusivity.

 

(a)           Patheon
agrees that during the Term and for a period of [***] years from the date of
the expiration of the last patent covering the Drug Product Patheon, its
Affiliates and any successors thereto shall not manufacture or cause to
manufacture for any party in the Territory or for any party outside the
Territory for sale inside the Territory other than Client (i) The Drug Product
(ii) any product indicated for the [***] conditions which contains the Active
Compound.

 

(b)           Patheon
further agrees that in the event this Agreement is terminated by Reliant
pursuant to Sections 8.2 (a) or 8.2 (b), Patheon shall not manufacture or cause
to manufacture for any party in the Territory or for any party outside the
Territory for sale inside the Territory for a period from the date of
termination through December 31, 2010 (i) the Drug Product or (ii) any product
indicated for the [***] conditions which contains the Active Compound.

 

(c)           Notwithstanding
section 2.3 (a) above in the event Patheon terminates this Agreement pursuant
to sections 8.2(b) or 8.2 (d) hereof, the prohibition set forth in section
2.3(a)(ii) shall not apply.

 

(d)           Patheon
agrees that it shall not manufacture and cause its Affiliates and any
successors not to manufacture any products that are manufactured using the Alza
Technical Information unless such party has a valid and existing license to
utilize the Alza Technical Information in the manufacture of the product (s).

 

(e)           Patheon
further agrees it shall not at any time use Client Confidential Information for
any purpose other than to perform its obligations under this Agreement.

 

ARTICLE 3

 

CLIENT’S OBLIGATIONS 

 

3.1          Payment.

 

Pursuant to the terms of this Agreement, the Client shall pay Patheon
for the provision of the Manufacturing Services according to the fees specified
in Schedule B (such fees being subject to adjustment in accordance with the
terms hereof).

 

3.2          Granulations.

 

The Client shall, at its sole cost and expense, deliver or have
delivered the Granulations to Patheon in sufficient quantities and at such
times to facilitate the provision of the Manufacturing Services by Patheon,
which Granulations shall be held by Patheon on behalf of the Client on the
terms and subject to the conditions herein contained. The parties acknowledge 

 

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

 

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and agree that title to the Granulations
shall at all times belong to and remain the property of the Client. Patheon
agrees that any Granulations received by it shall only be used by Patheon to
provide the Manufacturing Services. Patheon’s liability with respect to any
lost or damaged Granulations shall be as set forth in Section 10.2.

 

ARTICLE 4

 

CONVERSION FEES AND COMPONENT COSTS 

 

4.1          First Year Pricing.

 

The fees for the Manufacturing Services (which fees include Conversion
costs and Component costs) listed in Schedule B (the “Manufacturing Fees”) are
intended by the parties to be fixed for the first Contract Year of this
Agreement, subject to the amendments to such fees provided for in this Article
4. Manufacturing Fees may be referred to herein as the “Fee” or “Fees”.

 

4.2          Subsequent Years’
Pricing.

 

For each Contract Year commencing January 1, 2006 the Fees during the
Contract Year shall be determined in accordance with the following:

 

(a)           Manufacturing
Costs. Patheon shall be allowed to adjust the Fees:  (i) for costs associated with the conversion
of Granulations and Components into Drug Product (the “Conversion Costs”) in
respect of the Drug Product based on the most recently available final
Producers’ Price Index for Pharmaceutical Product as published by the U.S. Bureau
of Labor Statistics or any governmental successor thereto (“PPI”) using the procedure set forth in Section 4.3 and (ii)
for Component Costs to pass on the actual amount of any increase or decrease in
such costs without mark-up. For each Contract Year in which Patheon is entitled
to adjust the Fees Patheon shall provide Client with written notice of any
change in the Fees within 30 days of receipt by Patheon of the Annual Forecast.
The Parties agree that the Fees shall not be adjusted more than once per
Contract Year, however this limitation shall not include price adjustments
under section 4.3 or 4.4. In addition, notwithstanding anything herein to the
contrary, Manufacturing Fees associated with Conversion Costs shall not be
increased by greater than [***]% per annum in any Contract Year during the Term.
There shall be no similar limitation in terms of increases in Component Costs
which shall be passed on to Client in an amount equal to the actual increase
paid by Patheon without markup.

 

(b)           Annual
Forecast. By July 1st of each Contract Year of this Agreement, the Client shall
provide Patheon a yearly volume projection for Drug Product. To the extent that
Patheon reasonably determines that the projections contained in that yearly 

 

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

 

8

 

volume forecast necessitate that an
adjustment be made to the Fees for such Contract Year, Patheon shall, within 30
days of receipt by Patheon of the yearly forecast, be entitled to request an
appropriate price adjustment.

 

(c)           Pricing
Basis. The Client acknowledges that the Fees in any Contract Year are
quoted based upon the Minimum Run Quantity and estimated annual volume for the
Drug Product specified in Schedule B or thereafter specified in the forecast
provided pursuant to Section 4.2(b) for the Contract Year and is subject to
change if the specified Minimum Run Quantity and estimated annual volume is not
met. For greater certainty, if Patheon and the Client agree that the Minimum
Run Quantity of the Drug Product shall be reduced whether as a result of a
decrease in estimated annual volume or otherwise and, as a result of such
reduction, Patheon’s Fees materially increase on a per unit basis, then subject
to the limitation set forth in 4.2(a) above Patheon shall be entitled to an
increase in the Fees by an amount sufficient to absorb such increase.

 

In connection with a Fee adjustment pursuant to Section 4.2(a), Patheon
shall deliver to the Client a revised Schedule B and a statement outlining the
percentage increase in the PPI upon which such Fee adjustment is based. In
connection with all Fee adjustment requests pursuant to this Section 4.2(b) and
4.2(c), Patheon shall deliver to the Client a revised Schedule B and such
budgetary pricing information or other documentation reasonably sufficient to
demonstrate that a Fee adjustment is justified, provided that Patheon shall
have no obligation to provide any supporting documents to the extent such
documents are subject to obligations of confidentiality between Patheon and its
suppliers.

 

From the date Patheon submits a written request for a price adjustment
as per the terms described above, Patheon shall continue to perform the
Manufacturing Services while the parties engage in negotiation of revised Fees.
Once a price adjustment has been agreed upon such adjustment shall apply
retroactively to the later of the first day of the relevant Contract Year or
the date in which the written request is received by Client unless the Parties
otherwise agree.

 

4.3          Adjustments to
Pricing.

 

During any Contract Year of this Agreement, the Fees set out in
Schedule B or Schedule C shall be subject to adjustment in accordance with the
following:

 

(a)           Volume
Reduction. If at any time and from time to time Patheon determines, acting
reasonably and based on the forecasts and Firm Orders received from the Client,
that the current yearly volumes (including, without limitation, any permanent
reductions in volumes) relating to the Drug Product will constitute no more
than [***]% of the minimum annual volume for the Drug Product specified in
Schedule B hereto or, if applicable, any revised minimum annual volume
hereinafter agreed to by the parties, then Patheon shall be entitled to request
an 

 

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

 

9

 

adjustment to the Fees to reflect the
demonstrated material increased costs that Patheon will incur as a result of
the reduced volumes.

 

(b)           Extraordinary
Increases in Component Costs. If at any time market conditions result in Patheon’s
cost of Components being materially greater than normal forecasted increases,
then Patheon shall be entitled to request an adjustment to the Fees to
compensate it for such demonstrated material increased in Component costs. For
the purposes of this Section 4.3(b), changes materially greater than normal
forecasted increases shall be considered to have occurred if: (i) the cost of a
Component increases by [***]% of the cost for that Component upon which the fee
quote was based; or (ii) the aggregate cost for all Components required to
manufacture the Drug Product increases by [***]% of the total Component costs
for such Drug Product upon which the fee quote was based. To the extent that
Component costs have been previously adjusted pursuant to Section 4.2(a) or
this Section 4.3(b) to reflect an increase in the cost of one or more
Components, the adjustments provided for in (i) and (ii) above shall operate
based on the costs attributed to such Component (or Components) at the time the
last of such adjustments were made. In the event Component costs decrease so
that they are less than the amount forecasted, such cost reductions shall be
passed through to Client.

 

In connection with a Fee adjustment request pursuant to this Section
4.3, Patheon shall deliver to the Client a revised Schedule B or Schedule C and
such budgetary pricing information, adjusted Component costs or other
documentation reasonably sufficient to demonstrate that a Fee adjustment is
justified, provided that Patheon shall have no obligation to provide any
supporting documents to the extent such documents are subject to obligations of
confidentiality between Patheon and its suppliers. Upon delivery of such a
request, each of the Client and Patheon shall forthwith use all reasonable
efforts to agree on a revised Fee.

 

From the date Patheon submits a written request for a price adjustment
as per the terms described above, Patheon shall continue to perform the
Manufacturing Services while the parties engage in negotiation of revised Fees.
Once a price adjustment has been agreed upon such adjustment shall apply
retroactively to the later of the first day of relevant Contract Year unless
the Parties otherwise agree or the date in which the written request is
received by Client.

 

4.4          Adjustments Due to
Technical Changes.

 

Amendments to the Specifications or the Quality Agreement requested by
the Client will only be implemented following a technical and cost review by
Patheon and are subject to the Client and Patheon reaching agreement as to
revisions, if any, to the Fees specified in Schedules B or C necessitated by
any such amendment. If the Client accepts a proposed fee change, the proposed
change in the Specifications shall be implemented, and the fee change shall
become effective only with respect to those orders of Drug Product that are
manufactured in accordance with the revised Specifications. In addition, the
Client agrees to purchase, at 

 

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

 

10

 

Patheon’s cost therefor (including all costs
incurred by Patheon in connection with the purchase and handling of such Inventory),
all Inventory utilized under the “old” Specifications and purchased or
maintained by Patheon in order to fill Firm Orders or in accordance with
Section 5.3, to the extent that such Inventory can no longer be utilized under
the revised Specifications. Open purchase orders for Components no longer
required under any revised Specifications that were placed by Patheon with
suppliers in order to fill Firm Orders or in accordance with Section 5.3 shall
be cancelled where possible, and where such orders are not subject to
cancellation without penalty, shall be assigned to and satisfied by the Client.

 

ARTICLE 5

 

ORDERS, DELIVERY, INVOICING, PAYMENT

 

5.1          Market Outlook.

 

The Client acknowledges that for optimal production planning, Patheon
requires an understanding of the Client’s strategic vision for the Drug Product
in the market and agrees, to the extent that such information (including, if
any, the Client’s five-year market outlook studies) exists, to share such
information with Patheon, provided that such information may not be relied upon
by Patheon for any purpose and further provided that any information so
provided shall be subject to the confidentiality provisions of Article 11.

 

5.2          Orders and Forecasts.

 

(a)           Rolling
Forecasts. No later than ten (10) days of the Commencement Date, the Client
shall provide Patheon with a written non-binding 18 month forecast of the
volume of the Drug Product that the Client then anticipates will be required to
be produced and delivered to the Client during each month of that 18 month
period. Such forecast will be updated by the Client monthly on a rolling 18
month basis and updated forthwith upon the Client determining that the volumes
contemplated in the most recent of such forecasts has changed by more than 20%.
The most recent 18 month forecast shall prevail.

 

(b)           Firm
Orders. No later than ten (10) days of the Commencement Date and on or
before the 20th day of each calendar month thereafter, the Client shall issue
firm written orders (“Firm Orders”)
for the Drug Product to be produced and delivered to the Client on a date not
less than 90 days from the first day of the calendar month immediately
following the date that the Firm Order is submitted. Such Firm Orders submitted
to Patheon shall specify the Client’s purchase order number, quantities of Drug
Product, monthly delivery schedule and any other elements necessary to ensure
the timely production and delivery of the Drug Product. The quantities of Drug
Product ordered in such written orders shall be firm and binding on the Client
and shall not be subject to reduction by the Client.

 

(c)           Three
Year Forecast. No later than fifteen (15) days of the Commencement Date,
and on or before May 1st in each Contract Year thereafter, the Client shall
provide Patheon with a written non-binding three-year forecast (broken down by
quarters for the second and third years of the forecast) of the volume of the
Drug Product the Client then anticipates will be required to be produced and
delivered to the Client during the three-year period.

 

11

 

5.3          Reliance by Patheon.

 

The Client understands and acknowledges that Patheon will rely on the
Firm Orders and rolling forecasts submitted pursuant to Sections 5.2(a) and (b)
in ordering the Components required to meet such Firm Orders. In addition, the
Client understands that to ensure an orderly supply of such Components and to
achieve economies of scale in the costs, it may be desirable for Patheon to
purchase such Components in sufficient volumes to meet the production
requirements for Drug Product during part or all of the forecasted periods
referred to in Section 5.2(a) or to meet the production requirements of any
longer period agreed to by Patheon and the Client. Accordingly, the Client
authorizes Patheon to purchase Components in order to satisfy the production
requirements for Drug Product for the first six months contemplated in the most
recent forecast provided by the Client pursuant to Section 5.2(a), and agrees
that Patheon may make such other purchases of Components to meet production
requirements during such longer periods as may be agreed to in writing from
time to time by the Client at the request of Patheon. If Components ordered by
Patheon pursuant to Firm Orders or this Section 5.3 are not included in
finished Drug Product purchased by the Client within six months after the
forecasted month in respect of which such purchases have been made (or such
longer period as the parties may agree), the Client shall pay to Patheon its
costs therefor (including all costs incurred by Patheon in connection with the
purchase and handling of such Components) and, in the event such Components are
incorporated into Drug Product subsequently purchased by the Client or into
third party products manufactured by Patheon and subsequently purchased by a
third party, the Client will receive credit for any costs of such Components
previously paid to Patheon by the Client.

 

5.4          Minimum Orders.

 

The Client may only order Drug Product in multiples of the Minimum Run
Quantities set out in Schedule B.

 

5.5          Shipments.

 

Shipments of Client’s Drug Product shall be made FCA (as defined in
INCOTERMS 2000) Patheon’s shipping point unless otherwise mutually agreed. Such
title as Patheon has in Drug Product and risk of loss or of damage to Drug
Product shall remain with Patheon until Drug Product is loaded onto the carrier’s
vehicle by Patheon for shipment at the shipping point at which time title and
risk of loss or damage shall transfer to the Client. Unless otherwise agreed,
Patheon shall, in accordance with the Client’s instructions and as agent for
the Client, (i) arrange for shipping to be paid by the Client and (ii) at the
Client’s risk and expense, obtain any export licence or other official
authorization necessary to export the Drug Product. The Client shall arrange
for insurance and shall select the freight carrier used by Patheon to ship Drug
Product and may monitor Patheon’s shipping and freight practices as they
pertain to this Agreement. Drug Product shall be transported in accordance with
the Specifications.

 

5.6          Invoices and Payment.

 

Patheon shall submit to the Client, with each shipment of Drug Product,
an invoice covering such shipment. Patheon shall also provide the Client with
an invoice covering 

 

12

 

any Inventory or Components which are to be
purchased by the Client pursuant to the terms of this Agreement. Each such
invoice shall, to the extent applicable, identify the Client purchase order
number, Drug Product numbers, names and quantities, unit price, freight charges
and the total amount to be remitted by the Client. The Client shall pay all
such undisputed amounts on invoices within 30 days of the date of the invoice. Any
undisputed amounts not paid by Client when due under this Agreement shall be
subject to interest beginning on the date which is thirty (30) days from the
date of the invoice and including the date upon which such payment is received
at a rate equal to the lesser or (i) one and one half percent (11⁄2 %) per month
or (ii) the highest rate permitted by Applicable Laws. In each case, interest
shall be calculated daily on the basis of a 365 day year.

 

ARTICLE 6

 

PRODUCT CLAIMS AND RECALLS

 

6.1          Product Claims.

 

(a)           Product
Claims. The Client has the right to reject any portion of any shipment of
Drug Product that deviates from the Specifications, cGMPs, or Applicable Laws
without invalidating any remainder of such shipment. The Client shall inspect
the Drug Product manufactured by Patheon upon receipt thereof and shall give
Patheon written notice (a “Deficiency Notice”)
of all claims for Drug Product that deviate from the Specifications, cGMPs, or
Applicable Laws within 30 days after the Client’s receipt thereof (or, in the
case of any defects not reasonably susceptible to discovery upon receipt of the
Drug Product, within 30 days after discovery thereof by the Client, but in no
event after the expiration date of the Drug Product). Should the Client fail to
provide Patheon with the Deficiency Notice within the applicable 30-day period,
then the delivery shall be deemed to have been accepted by the Client on the 30th
day after delivery or discovery, as applicable. Except as set out in Section
6.2, Patheon shall have no liability for any deviations for which it has not
received notice within the applicable 30-day period.

 

(b)           Determination
of Deficiency. Upon receipt of a Deficiency Notice, Patheon shall have 10
days to advise the Client by notice in writing that it disagrees with the
contents of such Deficiency Notice. If the Client and Patheon fail to agree
within 10 days after Patheon’s notice to the Client as to whether any Drug
Product identified in the Deficiency Notice deviates from the Specifications,
cGMPs, or Applicable Laws, then the parties shall mutually select an
independent laboratory to evaluate if the Drug Product deviates from the
Specifications or cGMPs. Such evaluation shall be binding on the parties, and
if such evaluation certifies that Drug Product deviates from the
Specifications, cGMPs, or Applicable Laws, the Client may reject those Drug
Product in the manner contemplated in this Section 6.1. If such evaluation does
not so certify in respect of any such Drug Product, then the Client shall be
deemed to have accepted delivery of such Drug Product on the 40th day
after delivery (or, in the case of any defects not reasonably susceptible to
discovery upon receipt of the Drug Product, on the 40th day after
discovery thereof by the Client, but in no event after the expiration date of
the Drug Product).

 

13

 

(c)           Patheon
Responsibility. In the event the Client rejects Drug Product in accordance
with this Section 6.1 and the deviation is determined to arise from Patheon’s
failure to provide the Manufacturing Services in accordance with the Patheon
Manufacturing Responsibilities, Patheon will credit the Client’s account for
Patheon’s invoice price to the Client for such defective Drug Product. If the
Client shall have previously paid for such defective Drug Product, Patheon
shall promptly, at the Client’s election, either: (i) refund the invoice price
for such defective Drug Product; (ii) offset such amount against other amounts
due to Patheon hereunder; or (iii) replace such Drug Product with conforming
Drug Product without the Client being liable for payment therefor under Section
3.1, contingent upon the receipt from the Client of all Active Compounds or
Granulations (as the case may be) (which shall be paid for by Patheon, subject
to the limitations set out in Section 10.2) required for the manufacture of
such replacement Drug Product.

 

(d)           Shortages.
Claims for shortages in the amount of Drug Product shipped by Patheon shall be
dealt with as may reasonably be agreed to by the parties.

 

6.2          Product Recalls and
Returns.

 

(a)           Records
and Notice. Patheon and the Client shall each maintain such records as may
be necessary to permit a Recall of any Drug Product delivered to the Client or
customers of the Client. Each party shall promptly notify the other by
telephone (to be confirmed in writing) of any information, which might affect
the marketability, safety or effectiveness of the Drug Product and/or which
might result in the Recall or seizure of the Drug Product. Upon receiving any
such notice or upon any such discovery, each party shall cease and desist from
further shipments of such Drug Product in its possession or control until a
decision has been made whether a Recall or some other corrective action is
necessary. The decision to initiate a Recall or to take some other corrective
action, if any, shall be made and implemented by the Client. “Recall” shall
mean any action: (i) by the Client to recover title to or possession of
quantities of the Drug Product sold or shipped to third parties (including, without
limitation, the voluntary withdrawal of Drug Product from the market); or (ii)
by any regulatory authorities to detain or destroy any of the Drug Product. “Recall”
shall also include any action by either party to refrain from selling or
shipping quantities of Drug Product to third parties which would have been
subject to a Recall if sold or shipped.

 

(b)           Recalls.
In the event (i) any governmental or regulatory authority issued a directive,
order or, following the issuance of a safety warning or alert with respect to
Drug Product, a written request that any Drug Product be Recalled, (ii) a court
of competent jurisdiction orders such a Recall, or (iii) the Client determines
that any Drug Product should be Recalled or that a “dear doctor” letter is
required relating the restrictions on the use of any Drug Product, Patheon will
co-operate as reasonably required by the Client, having regard to all
applicable laws and regulations.

 

(c)           Product
Returns. The Client shall have the responsibility for handling customer
returns of the Drug Product. Patheon shall provide the Client with such
assistance as the Client may reasonably require handling such returns.

 

14

 

(d)           Patheon’s
Responsibility. To the extent that a Recall or return results from, or
arises out of, a failure by Patheon to provide the Manufacturing Services in
accordance with the Patheon Manufacturing Responsibilities, Patheon shall be
responsible for the documented out-of- pocket expenses of such Recall or return
and shall use its commercially reasonable efforts to replace the Recalled or
returned Drug Product with new Drug Product, contingent upon the receipt from
the Client of all Granulations (which shall be paid for by Patheon, subject to
the limitations set out in herein) required for the manufacture of such
replacement Drug Product. In the event that Patheon is unable to replace the
Recalled or returned Drug Product (except where such inability results from a
failure to receive the required Granulations), then the Client may request
Patheon to reimburse the Client for:  (i)
the price that the Client paid to Patheon for manufacturing the affected Drug
Product; and (ii) the cost of the Granulations. In all other circumstances,
Recalls, returns or other corrective actions shall be made at the Client’s cost
and expense. Patheon’s maximum liability associated with any Recall or return
of a Drug Product shall be $5,000,000 per Recall or return event.

 

6.3          Disposition of
Defective or Recalled Drug Product.

 

The Client shall not dispose of any damaged, defective, returned or
Recalled Drug Product in relation to which it intends to assert a claim against
Patheon without Patheon’s prior written authorization to do so. Alternatively,
Patheon may instruct the Client to return such Drug Product to Patheon. Patheon
shall bear the cost of disposition with respect to any damaged, defective,
returned or Recalled Drug Product in relation to which it bears responsibility
under Section 6.1 or 6.2 hereof. In all other circumstances, the Client shall
bear the cost of disposition with respect to any damaged, defective, returned
or Recalled Drug Product.

 

6.4          Customer Questions
and Complaints.

 

The Client shall have the sole responsibility for responding to
questions and complaints from the Client’s customers. Questions or complaints
received by Patheon from the Client’s customers shall be promptly referred to
the Client. Patheon shall co-operate as reasonably required to allow the Client
to determine the cause of and resolve any customer questions and complaints. Such
assistance shall include follow-up investigations, including testing. In
addition, within 30 days from the date of request, Patheon shall provide the Client
with all necessary information that will enable the Client to respond properly
to questions or complaints relating to the Drug Product. Unless it is
determined that the cause of any customer complaint resulted from a failure by
Patheon to provide the Manufacturing Services in accordance with the Patheon
Manufacturing Responsibilities, all costs incurred in respect of this Section
6.4 shall be borne by the Client.

 

6.5          Sole Remedy.

 

Except for the Client’s right to terminate this Agreement in accordance
with the applicable provisions of Section 8 hereof and the indemnity provided
in Section 10.3 and subject to the limitations set forth in Sections 10.1 and
10.2, the remedies described in this Article 6 shall be the Client’s sole
remedy for any failure by Patheon to provide the Manufacturing Services in
accordance with the Patheon Manufacturing Responsibilities.

 

15

 

ARTICLE 7

 

CO-OPERATION

 

7.1          Quarterly Review.

 

Each party shall forthwith upon execution of this Agreement appoint one
of its employees to be a relationship manager responsible for liaison between
the parties. The relationship managers shall meet not less than quarterly to
review the current status of the business relationship and manage any issues
that have arisen.

 

7.2          Governmental Agencies.

 

Subject to Section 7.8, each party may communicate with any
governmental agency, including but not limited to governmental agencies
responsible for granting regulatory approval for the Drug Product, regarding
such Drug Product if in the opinion of that party’s counsel, such communication
is necessary to comply with the terms of this Agreement or the requirements of
any law, governmental order or regulation; provided, however, that unless in
the reasonable opinion of its counsel there is a legal prohibition against doing
so, such party shall permit the other party to accompany and take part in any
communications with the agency, and to receive copies of all such
communications from the agency.

 

7.3          Records and
Accounting by Patheon.

 

Patheon shall keep records of the manufacture, testing and shipping of
the Drug Product, and retain samples of such Drug Product as are necessary to
comply with the Act and Applicable Laws applicable to Patheon, as well as to
assist with resolving Drug Product complaints and other similar investigations.
Copies of such records and samples shall be retained for a period of one year
following the date of Drug Product expiry, or longer if required by Applicable
Laws. The Client is responsible for retaining samples of the Drug Product
necessary to comply with regulatory requirements and Applicable Laws applicable
to the Client.

 

7.4          Inspection.

 

The Client may inspect Patheon reports and records relating to this
Agreement during normal business hours and with reasonable advance notice,
provided a Patheon representative is present during any such inspection.

 

7.5          Audit.

 

(a)           Client
or its representatives shall have the right, upon reasonable advance notice,
with reasonable frequency and during regular business hours, to inspect and
audit the Facilities being used by Patheon for production or supply of Drug
Product including all documentation related thereto to assure compliance by
Patheon with the terms of this Agreement, Applicable Laws and cGMP’s. Such
inspection and audit shall be limited to those portions of such facilities as
are involved in the production of Drug Product, and shall be, conducted in a
manner so as to minimize disruption of Patheon’s business operations.

 

16

 

(b)           If
any of such audits reveal that the Facilities do not satisfy the requirements
of this Agreement, Applicable Laws and cGMP’s in any material respect, then
Client shall provide Patheon with written notice of such fact, which notice
shall contain in reasonable detail (including reference to the applicable
standard or criteria which has not been met) the deficiencies found in the
Facilities and, if practicable, those steps which should be undertaken in order
to remedy such deficiencies. Patheon shall use its commercially reasonable
efforts to remedy, within the time to be agreed upon between the parties (the “GMP Remediation Period”), any deficiencies which may be
noted in any such audit. In the event that Patheon does not remedy, or is
incapable of remedying, any of such material deficiencies within such GMP
Remediation Period, then Client shall be entitled to terminate this Agreement
immediately upon written notice to Patheon, in which event Patheon shall, at
its cost and expense, (i) provide such reasonable assistance and grant such
licenses as shall be necessary in order for Client to transfer the manufacture
of the Drug Product to itself or an alternative manufacturer; Client shall be
entitled to deduct and/or set off against any amounts due Patheon under this
Agreement any costs or expenses incurred by Client in connection with Client
obtaining an alternative manufacturer of Drug Product, provided that such
amounts shall not exceed a commercially reasonable amount in accordance with
generally accepted industry standards.

 

(c)           During
the term of this Agreement and for three (3) years after the expiration of the
last lot of Drug Product manufactured pursuant to the Specifications, Client
may audit manufacturing process records, and quality assurance/quality control
records directly relating to the Manufacturing Services and the Drug Product. To
the extent such records are not separable from other Client records, Patheon
shall give reasonable access to an independent auditor selected by Client who
shall audit the records pertaining to the Manufacturing Services and may
disclose the results of the audit only to the extent it relates to this
Agreement. In no event shall other Client information be disclosed to Client.

 

(d)           Patheon
acknowledges that the provisions of this Section 7.5 granting Client certain
audit rights shall in no way relieve Patheon of any of its obligations under
this Agreement, nor shall such provisions require Client to conduct any such
audits.

 

(e)           For
greater certainty, the audit rights provided in this Section 7.5 shall not
include a right to audit or inspect Patheon’s financial records. Patheon shall
notify the Client of any inspections by any governmental agency involving the
Drug Product.

 

7.6          Regulatory Compliance.

 

(a)           Patheon
shall advise Client immediately (within 24 hours) if the FDA or other
regulatory Authority visits or advises Patheon of its intent to visit Patheon’s
Facility in connection with an inquiry or an inspection related to or affecting
the Drug Product. Patheon shall provide Client the opportunity to be present at
any visit or inspection relative to the Drug Product and to review prior to
submission any documentation prepared in response to an inquiry relating to the
Drug Product and Patheon shall immediately (within 24 hours) provide Client with
the final report resulting from any such inspections or inquiries.

 

(b)           Patheon
shall provide Client with immediate notification (within 24 hours) of its
receipt of any of the following related to its manufacturing, production or
testing activities in 

 

17

 

connection with or related to the Drug
Product: (i) a copy of any list of observations (Form FDA483); Warning Letters;
Information Letters; Regulatory Letters or the like issued by the FDA
(collectively “Regulatory Notices”) and, to the
extent practicable, shall provide Client an opportunity to review any written
response relating to the Drug Product prior to submission to the issuing agency.
Patheon shall provide to Client any additional Regulatory Notices received from
the FDA following a response by Patheon to the initial Regulatory Notice. Patheon
shall maintain sole responsibility for any matter pertaining to such
inspections.

 

7.7          Reports.

 

Patheon will supply on an annual basis all Drug Product data, including
release test results, complaint test results, all investigations (in
manufacturing, testing and storage), and the like, that the Client reasonably
requires in order to complete any filing under any applicable regulatory
regime, including any annual product review report that the Client is required
to file with the FDA. At the Client’s request and subject to an additional fee
to be agreed by the parties, Patheon may prepare annual product review reports
on behalf of the Client and in accordance with the Client’s instructions.

 

7.8          FDA Filings.

 

(a)           FDA
Filings. The Client shall have the sole responsibility for filing all
documents with the FDA and taking any other actions that may be required for
the receipt of FDA Approval for the commercial manufacture of the Drug Product.
Patheon shall assist the Client, to the extent consistent with Patheon’s
obligations under this Agreement, to obtain FDA Approval for the commercial
manufacture of the Drug Product as quickly as reasonably possible.

 

(b)           Verification
of Data. At least 7 days prior to filing any documents with the FDA that
incorporate data generated by Patheon, the Client shall provide Patheon with a
copy of the documents incorporating such data so as to give Patheon the
opportunity to verify the accuracy and regulatory validity of such documents as
they relate to the Patheon generated data.

 

(c)           Verification
of CMC. At least 7 days prior to filing with the FDA the Chemistry and
Manufacturing Controls (“CMC”) of the
New Drug Application (“NDA”) or the
Abbreviated New Drug Application (“ANDA”) filing,
as the case may be, the Client shall provide Patheon with a copy of the CMC
portion that relates to the Manufacturing Services provided by Patheon as well
as all supporting documents which have been relied upon to prepare the CMC
portion so as to permit Patheon to verify that the CMC portion accurately
describes the work that Patheon has performed and the manufacturing processes
that Patheon will perform pursuant to this Agreement.

 

(d)           Pre-Approval
Inspection. If Client does not provide Patheon with the documentation
requested under paragraphs (b) and (c) above within the time stipulated in
these paragraphs and if Patheon reasonably believes that Patheon’s standing
with the FDA may be jeopardized, Patheon may, in its sole discretion, delay or
postpone the FDA pre-approval inspection (“PAI”) until
such time Patheon has reviewed the requested documentation and is satisfied
with its contents.

 

18

 

(e)           Deficiencies.
If after discussion with Client, Patheon reasonably determines that any of the
information provided by the Client in accordance with paragraphs (b) and (c)
above is inaccurate or deficient in any manner whatsoever (the “Deficiencies”), Patheon shall promptly notify the Client in
writing of such Deficiencies. Until such Deficiencies have been resolved or
agreement has been reached with the Client, Patheon reserves the right not to
participate in the PAI. In such event, Patheon’s non-participation in the PAI
shall not be construed as a breach of any of its obligations under this
Agreement.

 

(f)            Client
Responsibility. For clarity, the parties agree that in reviewing the
documents referred to in paragraphs (b) and (c) above, Patheon’s role will be
limited to verifying the accuracy of the description of the work undertaken or
to be undertaken by Patheon. As such, Patheon shall not assume any responsibility
for the accuracy of the NDA or the ANDA, as the case may be. The sole
responsibility of the preparation and filing of the NDA shall be borne by the
Client.

 

ARTICLE 8

 

TERM AND TERMINATION

 

8.1          Initial Term.

 

This Agreement shall become effective as of the Commencement Date and
shall continue for a period of five (5) years from such date (the “Initial Term”), unless terminated earlier by one of the
parties, in accordance herewith. This Agreement shall automatically continue
after the Initial Term for successive terms of two (2) years each unless either
party gives written notice to the other party of its intention to terminate
this Agreement at least 18 months prior to the end of the then current term.

 

8.2          Termination for Cause.

 

(a)           Either
party at its sole option may terminate this Agreement upon written notice in
circumstances where the other party has failed to remedy a material breach of
any of its representations, warranties or other obligations under this
Agreement within 60 days following receipt of a written notice (the “Contract Remediation Period”) of said breach that expressly
states that it is a notice under this Section 8.2(a) (a “Breach
Notice”). The aggrieved party’s right to terminate this Agreement
pursuant to this Section 8.2(a) may only be exercised for a period of 60 days
following the expiry of the Contract Remediation Period (in circumstances where
the breach has not been remedied) and if the termination right is not exercised
during this period then the aggrieved party shall be deemed to have waived the
breach of the representation, warranty or obligation described in the Breach
Notice.

 

(b)           Either
party at its sole option may immediately terminate this Agreement upon written
notice, but without prior advance notice, to the other party in the event that:
(i) the other party is declared insolvent or bankrupt by a court of competent
jurisdiction; (ii) a voluntary petition of bankruptcy is filed in any court of
competent jurisdiction by such other party; or (iii) this Agreement is
assigned by such other party for the benefit of creditors.

 

19

 

(c)           The
Client may terminate this Agreement upon 30 days’ prior written notice in the
event that any regulatory Authority takes any action, or raises any objection,
that prevents the Client from importing, exporting, purchasing or selling the
Drug Product.

 

(d)           Patheon
may terminate this Agreement if Client fails to pay undisputed amounts due
hereunder pursuant to Sections 3.1 and 5.6 within thirty (30) days following
receipt of written notice from Patheon.

 

8.3          Product
Discontinuation.

 

The Client shall provide at least six months’ advance notice if it
intends to no longer order the Drug Product due to its discontinuance in the
market.

 

8.4          Obligations on
Termination.

 

If this Agreement expires or is terminated in whole or in part for any
reason, then (in addition to any other remedies Patheon may have in the event
of default by the Client or Client may have in the event of default by
Patheon):

 

(a)           Unless
Patheon has terminated this Agreement pursuant to Section 8.2(d) above, Patheon
shall complete manufacturing of all Firm Orders for Drug Product pending as of
the date of expiration or termination and the Client shall take delivery of and
pay for all undelivered Drug Product that are manufactured and/or packaged
pursuant to a Firm Order, at the price in effect at the time the Firm Order was
placed;

 

(b)           the
Client shall purchase, at Patheon’s cost (including all costs incurred by
Patheon in connection with the purchase and handling of such Inventory), the
Inventory applicable to the Drug Product which was purchased, produced or
maintained by Patheon in contemplation of filling Firm Orders or in accordance
with Section 5.3 prior to notice of termination being given;

 

(c)           the
Client shall satisfy the purchase price payable pursuant to Patheon’s orders
with suppliers of Components, provided such orders were made by Patheon in
reliance on Firm Orders or in accordance with Section 5.3; and

 

(d)           Patheon
shall return to the Client all unused Granulations (with shipping and related
expenses, if any, to be borne by the Client).

 

Any termination or expiration of this Agreement shall not affect any
outstanding obligations or payments due hereunder prior to such termination or
expiration, nor shall it prejudice any other remedies that the parties may have
under this Agreement. For greater certainty, termination of this Agreement for
any reason shall not affect the obligations and responsibilities of the parties
pursuant to Articles 10 and 11 and Sections 13.1, 13.2, 13.3 and 13.15, all of
which survive any termination.

 

20

 

ARTICLE 9

 

REPRESENTATIONS, WARRANTIES AND COVENANTS

 

9.1          Authority.

 

Each party covenants, represents and warrants that it has the full
right and authority to enter into this Agreement and that it is not aware of
any impediment that would inhibit its ability to perform its obligations
hereunder.

 

9.2          Client.

 

The Client covenants, represents and warrants that:

 

(a)           the
Specifications for the Drug Product are its or its Affiliate’s property and
that the Client may lawfully disclose the Specifications to Patheon;

 

(b)           the
Specifications for the Drug Product conform to all cGMPs, and Applicable Laws;

 

(c)           all
Active Compounds or Granulations (as the case may be) and Components supplied
by Client hereunder will comply in all material respects with the
Specifications, cGMP, the Quality Agreement, and Applicable Laws;

 

(d)           it
owns or possesses adequate licenses or other intellectual property that are
necessary for Patheon to perform its obligations under this Agreement and that
it is unaware of any assertion or claim challenging the ownership, use or
validity of any intellectual property of Client to be utilized hereunder. The
use of any formulas, documents, materials, compounds analytical methods or
other intellectual property provided by Client under this Agreement does not
infringe the valid rights of any third party including inter alia
intellectual property rights;

 

(e)           the
provision of the Manufacturing Services by Patheon in respect of the Drug
Product pursuant to this Agreement or use or other disposition of the Drug
Product by Patheon as may be required to perform its obligations under this
Agreement does not and will not infringe any Third Party Rights;

 

(f)            there
are no actions or other legal proceedings, the subject of which is the
infringement of Third Party Rights related to any of the Specifications, or any
of the Active Compounds, Granulations and the Components, or the sale, use or
other disposition of the Drug Product made in accordance with the Specifications;

 

(g)           the
Drug Product, if labelled and manufactured in accordance with the
Specifications and in compliance with applicable cGMPs (i) may be lawfully sold
and distributed in every jurisdiction in which the Client markets such Drug
Product, (ii) will be fit for the purpose intended, and (iii) will be safe for
human consumption;

 

21

 

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

 

(i)            all
necessary corporate and other authorizations, consents and approvals which are
necessary or required for the entering into of this Agreement by Client have
been duly obtained.

 

9.3          Patheon.

 

Patheon covenants, represents and warrants that:

 

(a)           all
Manufacturing Services hereunder shall be performed in accordance with all
Applicable Laws, rules or regulations and that all Drug Product manufactured
for Client will comply in all respects with the Specifications, cGMP’s, the Act
and all other Applicable Laws and the Quality Agreement and all Drug Product
will not at the time of delivery be adulterated or misbranded within the
meaning of the Act;

 

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

 

(c)           it
owns or possesses adequate licenses or other intellectual property that are
necessary for Patheon to perform its obligations under this Agreement and that
it is unaware of any assertion or claim challenging the ownership, use or
validity of any intellectual property of Patheon to be utilized hereunder. The
use of any formulas, documents, materials, compounds analytical methods or
other intellectual property provided by Patheon under this Agreement does not
infringe the valid rights of any third party including inter alia
intellectual property rights;

 

22

 

(d)           it
has never been and is not currently debarred under the Act and that it will not
in the performance of its obligations under this Agreement use the services of
any person debarred or suspended under 21 U.S.C.§335(a) or (b). Patheon
represents that it does not currently have, and covenants that it will not
hire, as an officer or an employee any person who has been convicted of a
felony under the laws of the United States for conduct relating to the
regulation of any drug product under the United States Food, Drug
and Cosmetic Act;

 

(e)           All
necessary corporate and other authorizations, consents and approvals which are
necessary or required for the entering into of this Agreement by Patheon have been
duly obtained;

 

(f)            There
are no actions or legal proceedings pending or threatened which would limit or
prevent Patheon from performing the Manufacturing Services contemplated
hereunder; and

 

(g)           It
possesses all necessary permits, licenses and other authorizations from any
regulatory Authority necessary to perform the Manufacturing Services hereunder.

 

9.4          Permits.

 

The Client shall be solely responsible for obtaining or maintaining, on
a timely basis, any permits or other regulatory approvals in respect of the
Drug Product or the Specifications, including, without limitation, all
marketing and post-marketing approvals. Patheon shall be responsible for
obtaining and maintaining on a timely basis any permits or regulatory approvals
in respect of the Facilities used to perform the Manufacturing Services.

 

9.5          Compliance with Laws.

 

Each party, in connection with its performance under this Agreement,
shall comply with all Applicable Laws.

 

9.6          No Warranty.

 

PATHEON MAKES NO WARRANTY OF ANY KIND, EITHER EXPRESSED OR IMPLIED, BY
FACT OR LAW, OTHER THAN THOSE EXPRESSLY SET FORTH IN THIS AGREEMENT. PATHEON
MAKES NO WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE OR WARRANTY OF
MERCHANTABILITY WITH RESPECT TO THE DRUG PRODUCT.

 

ARTICLE 10

 

REMEDIES AND INDEMNITIES

 

10.1        Consequential Damages.

 

Under no circumstances whatsoever shall either party be liable to the
other in contract, tort, negligence, breach of statutory duty or otherwise for
any (direct or indirect) loss of 

 

23

 

profits, of production, of anticipated
savings, of business or goodwill or for any liability, damage, costs or expense
of any kind incurred by the other party of an indirect or consequential nature,
provided however such limitation shall not apply with respect to the
obligations of either party to indemnify the other in respect of a final
judgment or order obtained by a third party where such third party claim arose
as a result of the actions of the other party.

 

10.2        Limitation of Liability.

 

(a)           Active
Compound and Granulations. Under no circumstances whatsoever shall Patheon
reimburse Client for the cost of the Granulations or the Active Compound
contained within the Granulations (the “Patheon Reimbursement”)
unless the loss of such Granulations occurred as a result of (i) Patheon’s
Negligence, as defined in subsection (f) below; or (ii) Patheon’s gross
negligence, intentional misconduct or fraud.

 

(b)           Subject
to subsections (c), (d) and (e), the amount of the Patheon Reimbursement shall
be $258,200 for each lost batch of Drug Product.

 

(c)           Notwithstanding
subsection (b) above, if (i) the Fees in the Contract Year in which the loss
occurred were less than $2,500,000, and (ii) the loss of the Granulations was
as a result of Patheon’s Negligence, then the Patheon Reimbursement amount
shall be $166,600 for each lost batch of Drug Product.

 

(d)           If
Patheon reimburses the Client $258,200 for one or more lost batches of Drug
Product in any Contract Year due to Patheon’s Negligence and, subsequently, it
is determined that the Fees in that Contract Year were less than $2,500,000,
then Client shall credit Patheon for the difference between $258,200 and
$166,600 per each batch of Drug Product lost due to Patheon’s Negligence.

 

(e)           The
maximum Reimbursement amount Patheon shall pay to Client for all lost batches
in any Contract Year shall be $5,000,000 in aggregate in all circumstances.

 

(f)            For
the purposes of this Section 10.2 “Negligence” shall be limited to the
following conduct and nothing else: (i) mishandling or improper storage of the
Active Compound or Granulations (as the case may be) or excipients, packaging
materials, pre-blend or blended formulations, work in process, finished Drug
Product, or containers in which any of the foregoing are stored or transported;
(ii) mishandling, improper operation of, or failure to maintain equipment; or
(iii) failure to follow batch records, standard operating procedures or Client’s
Specifications or Applicable Laws rules and regulations or (iv) such other
conduct determined to be negligent by a court of competent jurisdiction
(collectively, “Negligence”).

 

 (g)          The Parties shall work
together using commercially reasonable efforts to develop in-process and other
controls to limit or avoid, to the extent feasible, any financial loss for
either Party due to the loss of Granulations and Active Compounds during
processing, including the use of Process Analytical Technologies (“PAT”) where possible.

 

(h)           Drug
Product. Except to the extent that Patheon has failed to provide the
Manufacturing Services in accordance with the Patheon Manufacturing
Responsibilities and as set forth in section 6.2 hereof, Patheon shall not be
liable nor have any responsibility for any 

 

24

 

deficiencies in, or other liabilities
associated with, any Drug Product manufactured by it, including, without
limitation, the costs and expenses of any Recall (collectively, “Drug Product Claims”). For greater certainty, Patheon shall
have no obligation for any Drug Product Claims to the extent such Drug Product
Claim (i) is caused by deficiencies with respect to the Specifications, the
safety, efficacy or marketability of the Drug Product or any distribution
thereof, (ii) results from a defect in a Component that is not reasonably
discoverable using the test methods set forth in the Specifications, (iii)
results from a defect in the Active Compounds or Granulations (as the case may
be) or Components supplied by the Client, (iv) is caused by actions of third
parties occurring after such Drug Product is shipped by Patheon pursuant to
Section 5.5, (v) is caused by actions or omissions of third party suppliers of
Components in which deficiencies or defects were not detected or were not
detectable by Patheon after conducting tests in accordance with the
Specifications, (vi) is due to packaging or labelling defects or omissions for
which Patheon has no responsibility, or (vii) is due to any other breach by the
Client of its obligations under this Agreement.

 

10.3        Indemnification of
Client.

 

Subject to Sections 10.1 and 10.2, Patheon agrees to defend, indemnify
and hold the Client, its officers, employees and agents harmless against any
and all losses, damages, costs, claims, demands, judgments and liability to,
from and in favour of third parties (other than Affiliates) resulting from, or
relating to any claim of personal injury or property damage to the extent that
such injury or damage is the result of a failure by Patheon to provide the
Manufacturing Services in accordance with the Patheon Manufacturing
Responsibilities except to the extent that any such losses, damages, costs,
claims, demands, judgments and liability are due to the negligence, wrongful
act(s) or breach of this Agreement by the Client, its officers, employees or
agents or Affiliates.

 

In the event of a claim, the Client shall:  (a) promptly notify Patheon of any such claim;
(b) use commercially reasonable efforts to mitigate the effects of such claim;
(c) reasonably cooperate with Patheon in the defence of such claim; (d)
permit Patheon to control the defence and settlement of such claim, all at
Patheon’s cost and expense.

 

10.4        Indemnification of
Patheon.

 

Subject to Sections 10.1 and 10.2, the Client agrees to defend,
indemnify and hold Patheon, its officers, employees and agents harmless against
any and all losses, damages, costs, claims, demands, judgments and liability
to, from and in favour of third parties (other than Affiliates) resulting from,
or relating to any claim of infringement or alleged infringement of any Third
Party Rights in respect of the Drug Product, and any claim of personal injury
or property damage to the extent that such injury or damage is the result of a
breach of this Agreement by the Client, including, without limitation, any representation
or warranty contained herein, except to the extent that any such losses,
damages, costs, claims, demands, judgments and liability are due to the
negligence, wrongful act(s) or breach of this Agreement by Patheon, its
officers, employees or agents.

 

In the event of a claim, Patheon shall: (a) promptly notify the Client
of any such claims; (b) use commercially reasonable efforts to mitigate the
effects of such claim; 

 

25

 

(c) reasonably cooperate with the Client
in the defence of such claim; (d) permit the Client to control the defence and
settlement of such claim, all at the Client’s cost and expense.

 

10.5        Reasonable Allocation
of Risk.

 

The parties acknowledge and agree that the provisions of this Agreement
(including, without limitation, this Article 10) are reasonable and create a
reasonable allocation of risk having regard to the relative profits the parties
respectively expect to derive from the Drug Product, and that Patheon, in its
Fees for the provision of the Manufacturing Services, has not accepted a
greater degree of the risks arising from the manufacture, distribution and use
of the Drug Product, based on the fact that the Client has developed and holds
the marketing approval for the Drug Product and requires Patheon to manufacture
and label the Drug Product strictly in accordance with the Specifications, and
that the Client and not Patheon is in a position to inform and advise potential
users of the Drug Product as to the circumstances and manner of use of the Drug
Product.

 

ARTICLE 11

 

CONFIDENTIALITY

 

11.1        Confidentiality.

 

Subject to Section 11.2 below, the parties agree that the provisions of
the Confidentiality Agreement shall apply to all confidential information
disclosed by the parties under this Agreement, which agreement remains in
effect in accordance with its terms; provided, however, that in the event the
Confidentiality Agreement expires or is terminated prior to the expiration or
termination of this Agreement, the terms of the Confidentiality Agreement shall
continue to govern the parties’ obligations of confidentiality with respect to
any confidential or proprietary information disclosed by the parties hereunder,
for the term of this Agreement, as though such agreement remained in full force
and effect.

 

11.2        Publicity.

 

Except as may be required by Applicable Laws, rules or regulations
neither party will originate any publicity, news release, or other public
announcement, written or oral, whether to the public press or otherwise,
relating to this Agreement, any amendment hereto or to performance hereunder,
or the existence of an arrangement between the parties, without the prior
written approval of the other party, which consent shall not be unreasonably
withheld or delayed (it being understood that such obligation is not intended
to restrict either party’s ability to promote, market and sell the Drug Product
in a commercially reasonable manner). In the event disclosure is required by
applicable law, rules or regulations, then the party required to so disclose
such information shall, to the extent possible, provide to the other party for
its approval (such approval not to be unreasonably withheld) a written copy of
such public announcement at least three (3) business days prior to disclosure. Client
agrees that Patheon may refer to Client as a customer in public documents but
without information as to the nature and extent of the services provided to
Client.

 

26

 

ARTICLE 12

 

DISPUTE RESOLUTION

 

12.1        Commercial Disputes.

 

In the event of any dispute arising out of or in connection with this
Agreement (other than a dispute determined in accordance with Section 6.1(b) or
a Technical Dispute), the parties shall first try to solve it amicably. In this
regard, any party may send a notice of dispute to the other, and each party
shall appoint, within 10 Business Days from receipt of such notice of dispute,
a single representative having full power and authority to solve the dispute. The
representatives so designated shall meet as necessary in order to solve such
dispute. If these representatives fail to solve the matter within one month
from their appointment, or if a party fails to appoint a representative within
the 10 Business Day period set forth above, such dispute shall immediately be
referred to the Chief Operating Officer or Executive Vice President, Operations
(or such other officer as they may designate) of each party who will meet and
discuss as necessary in order to try to solve the dispute amicably. Should the
parties fail to reach a resolution under this Section 12.1, their dispute will
be referred to the arbitration in accordance with Section 13.15.

 

12.2        Technical Dispute
Resolution.

 

In the event of a dispute (other than disputes in relation to the
matters set out in Sections 6.1(b) and 12.1) between the parties that is
exclusively related to technical aspects of the manufacturing, packaging,
labelling, quality control testing, handling, storage or other activities under
this Agreement (a “Technical Dispute”),
the parties shall make all reasonable efforts to resolve the dispute by
amicable negotiations. In this regard, senior representatives of each party
shall, as soon as practicable and in any event no later than 10 Business Days
after a written request from either party to the other, meet in good faith to
resolve any Technical Dispute. If, despite such meeting, the parties are unable
to resolve a Technical Dispute within a reasonable time, and in any event within
30 Business Days of such written request, the Technical Dispute shall, at the
request of either party, be referred for determination to an expert in
accordance with the provisions of Schedule F. In the event that the parties
cannot agree whether a dispute is a Technical Dispute, Section 12.1 shall
prevail. For greater certainty, the parties agree that the release of the Drug
Product for sale or distribution pursuant to the applicable marketing approval
for such Drug Product shall not by itself indicate compliance by Patheon with
its obligations in respect of the Manufacturing Services and further that
nothing in this Agreement (including Schedule F) shall remove or limit the
authority of the relevant qualified person (as specified by the Quality Agreement)
to determine whether the Drug Product is to be released for sale or
distribution.

 

27

 

ARTICLE 13

 

MISCELLANEOUS

 

13.1        Inventions.

 

(a)           All
Inventions relating to the Drug Product which are conceived, reduced to
practice, or created solely by Patheon and/or its Affiliates or agents in the
course of performing the Manufacturing Services under this Agreement (including
any pre-existing technology of Patheon which Patheon so employs without use of
any of Client’s Confidential Information or AlzaTechnical Information), shall
be owned by Patheon (“Patheon Owned Invention”).
Patheon shall and hereby does grant to the Client and its Affiliates a
perpetual, royalty-free, non- exclusive, worldwide, irrevocable license to use
and/or practice all such Patheon-owned Inventions (which are used by Patheon
hereunder to supply Drug Product to the Client) to manufacture the Drug Product
and to use and sell the same, with the right to sub-license to any third party
with whom the Client or an Affiliate contracts to manufacture the Drug Product
using, any such Patheon Owned Invention.

 

(b)           All
Inventions relating to the Drug Product which are conceived, reduced to
practice, or created solely by the Client and/or its Affiliates or agents
(including any pre-existing technology of the Client which the Client shares
with Patheon hereunder), shall be owned by the Client (“Client Owned
Invention”). The Client shall and hereby does grant to Patheon and
its Affiliates a limited royalty-free, non-exclusive license during the term of
this Agreement, without the right to sublicense, to use and/or practice all
such Client Owned Inventions solely to manufacture the Drug Product hereunder.

 

(c)           All
Inventions relating to the Drug Product which are conceived, reduced to
practice, or created jointly by: (i) the Client and/or its Affiliates or
agents; and (ii) Patheon and/or its Affiliates or agents pursuant to this
Agreement shall be owned be a Client Owned Invention, unless the parties have agreed
to a different arrangement in another consulting or services agreement which is
more specific to the services provided by Patheon in connection with such
Invention. The Client shall and hereby does grant to Patheon and its Affiliates
a perpetual, royalty-free, non-exclusive, worldwide, irrevocable license during
the term of this Agreement, without the right to sublicense, to use and /or
practise such Client Owned Invention solely to manufacture the Drug Product
hereunder.

 

(d)           All
Inventions created while performing the Manufacturing Services which are
conceived, reduced to practice, or created jointly by: (i) the Client and/or
its Affiliates or agents; and (ii) Patheon and/or its Affiliates or agents
pursuant to this Agreement which are independent of the Drug Product or the
Granulations, and have application to drug product manufacturing or delivery
systems shall be owned by the Client (“Broader Inventions”).
Subject to the limitations set forth in Section 2.3 hereof, the Client shall
and hereby does grant to Patheon and its Affiliates a perpetual, royalty-free,
non-exclusive, worldwide, irrevocable license to use and/or practise such
Broader Inventions with the right to sublicense to any third party.

 

(e)           Each
party shall be solely responsible for the costs of filing, prosecution and
maintenance of patents and patent applications on its own Inventions.

 

28

 

(f)            Either
party shall give the other party written notice, as promptly as practicable, of
all Inventions which can reasonably be deemed to constitute improvements or
other modifications of the Drug Product or processes or technology owned or
other wise controlled by such party.

 

13.2        Intellectual Property.

 

Subject to Section 13.1, all Intellectual Property of the Client shall
be owned by the Client and all Intellectual Property of Patheon shall be owned
by Patheon. The Client and Patheon hereby acknowledge that neither party has,
nor shall it acquire, any interest in any of the other party’s Intellectual
Property unless otherwise expressly agreed to in writing. Each party agrees not
to use any Intellectual Property of the other party, except as specifically
authorized by the other party or as required for the performance of its
obligations under this Agreement.

 

13.3        Insurance.

 

Each party shall maintain commercial general liability insurance,
including blanket contractual liability insurance covering the obligations of
that party under this Agreement through the term of this Agreement and for a
period of 1 year after the expiration date of the Drug Product produced under
this Agreement, which insurance shall afford limits of not less than (i)
$5,000,000 for each occurrence for personal injury or property damage liability
and (ii) $5,000,000 in the aggregate per annum with respect to product and
completed operations liability. If requested each party will provide the other
with a certificate of insurance evidencing the above and showing the name of
the issuing company, the policy number, the effective date, the expiration date
and the limits of liability. The insurance certificate shall further provide
for a minimum of 30 days’ written notice to the insured of a cancellation of,
or material change in, the insurance. If a party is unable to maintain the insurance
policies required under this Agreement through no fault on the part of such
party, then such party shall forthwith notify the other party in writing and
the parties shall in good faith negotiate appropriate amendments to the
insurance provision of this Agreement in order to provide adequate assurances.

 

13.4        Independent Contractors.

 

The parties are independent contractors and this Agreement shall not be
construed to create between Patheon and the Client any other relationship such
as, by way of example only, that of employer-employee, principal agent,
joint-venturer, co-partners or any similar relationship, the existence of which
is expressly denied by the parties hereto.

 

13.5        No Waiver.

 

Either party’s failure to require the other party to comply with any
provision of this Agreement shall not be deemed a waiver of such provision or
any other provision of this Agreement.

 

13.6        Assignment.

 

(a)           Patheon
may not assign this Agreement or any of its rights or obligations hereunder
except with the written consent of the Client, such consent not to be 

 

29

 

unreasonably withheld; provided, however,
that Patheon may arrange for subcontractors to perform specific single tests on
excipients and/or compendial products testing services arising under this
Agreement without the consent of the Client provided that Patheon shall remain
primarily liable to Client, and such subcontracted testing shall be in
accordance with the terms of this Agreement.

 

(b)           The
Client may assign this Agreement or any of its rights or obligations hereunder
without approval from Patheon; provided, however, that: i) the Client shall
give prior written notice of any assignment to Patheon; ii) any assignee shall
covenant in writing with Patheon to be bound by the terms of this Agreement;
and iii) such Assignee has a market capitalization or net worth of not less
than $300 million dollars. In all other cases, Client may assign this Agreement
with the consent of Patheon, which consent shall not be unreasonably withheld.

 

For purposes of this Section 13.6(b), none of the following shall
constitute an assignment by Client: (a) conversion of Client from a limited
liability company to a corporation (whether such conversion is effected by
statutory conversion provisions, merger or otherwise) or (b) the issuance of
debt or equity securities by Client in connection with any financing
transaction.

 

(c)           Notwithstanding
the foregoing provisions of this Section 13.6, either party may assign this
Agreement to any of its Affiliates or to a successor to or purchaser of all or
substantially all of its business or in the case of Client to a purchaser of
the Drug Product, provided that such assignee executes an agreement with the
non-assigning party hereto whereby it agrees to be bound hereunder.

 

13.7        Force Majeure.

 

Neither party shall be liable for the failure to perform its
obligations under this Agreement if such failure is occasioned by a cause or
contingency beyond such party’s reasonable control, including, but not limited
to, strikes or other labour disturbances, lockouts, riots, quarantines,
communicable disease outbreaks, wars, acts of terrorism, fires, floods, storms,
interruption of or delay in transportation, defective equipment, lack of or
inability to obtain fuel, power or components or compliance with any order or
regulation of any government entity acting within colour of right (a “Force Majeure Event”). A party claiming a right to excused
performance under this Section 13.7 shall immediately notify the other party in
writing of the extent of its inability to perform, which notice shall specify
the occurrence beyond its reasonable control that prevents such performance. Neither
party shall be entitled to rely on a Force Majeure Event to relieve it from an obligation
to pay money (including any interest for delayed payment) which would otherwise
be due and payable under this Agreement.

 

13.8        Additional Product.

 

Additional product may be added to this Agreement and such additional
products shall be governed by the general conditions hereof with any special
terms (including, without limitation, price) governed by an addendum hereto.

 

30

 

13.9        Notices.

 

Any notice, approval, instruction or other written communication
required or permitted hereunder shall be sufficient if made or given to the
other party by personal delivery, by telecopier or facsimile communication or
by sending the same by first class mail, postage prepaid to the mailing address
or telecopier number set forth below:

 

If to the Client:

 

Reliant Pharmaceuticals, LLC 

Attn:  Mr. Joseph Krivulka,
President 

110 Allen Road 

Liberty Corner, NJ 07938

 

Telecopier No.:  908-542-9405

 

With a copy to:  General Counsel (same contact information)

 

If to Patheon:

 

Patheon Pharmaceuticals Inc. 

2110 East Gaibraith Road 

Cincinnati, Ohio

Attention:  Site Director 

Telecopier No.: 513-948-7854

 

	
  With a copy to:

  	
  President,
  Patheon North America

  
	
   

  	
  by
  telecopier: 905-812-6705

  

 

or to such other addresses or telecopier numbers provided to the other
party in accordance with the terms of this Section 13.9. Notices or written
communications made or given by personal delivery or by telecopier number shall
be deemed to have been sufficiently made or given when sent (receipt acknowledged),
or if mailed, five days after being deposited in the United States or Canadian
mail, postage prepaid or upon receipt, whichever is sooner.

 

13.10      Severability.

 

If any provision of this Agreement is determined by a court of
competent jurisdiction to be invalid, illegal or unenforceable in any respect,
such determination shall not impair or affect the validity, legality or
enforceability of the remaining provisions hereof, and each provision is hereby
declared to be separate, severable and distinct.

 

13.11      Entire Agreement.

 

This Agreement, together with the Quality Agreement, the Capital Letter
and the Confidentiality Agreement, constitutes the full, complete, final and
integrated agreement between the parties hereto relating to the subject matter
hereof and supersedes all previous written or oral negotiations, commitments,
agreements, transactions or understandings with 

 

31

 

respect to the subject matter hereof. Any
modification, amendment or supplement to this Agreement must be in writing and
signed by authorized representatives of both parties. In case of conflict, the
prevailing order of documents shall be this Agreement, the Quality Agreement,
the Capital Letter and the Confidentiality Agreement.

 

13.12      Other Terms.

 

The parties agree that no terms, provisions or conditions of any
purchase order or other business form or written authorization used by the
Client or Patheon will have any effect on the rights, duties or obligations of
the parties under or otherwise modify this Agreement, regardless of any failure
of the Client or Patheon to object to such terms, provisions, or conditions
unless such document specifically refers to this Agreement and is signed by
both parties.

 

13.13      No Third Party Benefit or
Right.

 

For greater certainty, nothing in this Agreement shall confer or be
construed as conferring on any third party any benefit or the right to enforce
any express or implied term of this Agreement.

 

13.14      Execution in Counterparts.

 

This Agreement may be executed in two counterparts, by original or
facsimile signature, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.

 

13.15      Governing Law & Venue.

 

(a)           This
Agreement shall be construed in accordance with and governed by the laws of the
State of New York excluding the conflict of laws rules thereof.

 

(b)           Any
disputes or disagreements between Client and Patheon under this Agreement
except as set forth below, shall be submitted to arbitration pursuant to the
commercial arbitration rules of the American Arbitration Association and
judgment upon the award rendered by the arbitrator may be entered in any court
having jurisdiction thereof. Notwithstanding the foregoing, to the extent either
Party, in its sole discretion, determines that it needs injunctive relief such
party may seek such injunctive relief in a court of competent jurisdiction
applying the substantive law of the state of New York.

 

(c)           The
arbitration shall be held before a single arbitrator, to be selected by Patheon
and Client or, if Patheon and Client cannot agree on such arbitrator, in
accordance with the applicable arbitration rules. Arbitration shall be in the
State of New York, and the arbitrator shall apply the substantive law of the
State of New York. It shall be the duty of the arbitrator to set dates for
preparation and hearing of any dispute and to expedite the resolution of such
dispute. The arbitrator shall permit and facilitate discovery, taking into
account the needs of the parties and the desirability of making discovery
expeditious and cost-effective. The arbitrator will set a discovery schedule
with which the parties will comply and attend depositions if requested by
either party. The arbitrator will entertain such presentation of sworn
testimony or 

 

32

 

evidence, written briefs and/or oral argument
as the parties may wish to present; however, no testimony or exhibits will be
admissible unless the adverse party was afforded an opportunity to examine such
witness and to inspect and copy such exhibits during the pre-hearing discovery
phase. The arbitrator shall among his other powers and authorities, have the
power and authority to award interim or preliminary relief.

 

(d)           A
qualified court reporter will record and transcribe the proceedings. The
decision of the arbitrator will be in writing and judgment upon the award by
the arbitrator may be entered into any court having jurisdiction thereof. Prompt
handling and disposal of the issue is important, accordingly, the arbitrator is
instructed to assume adequate managerial initiative and control over discovery
and other aspects of the proceeding to schedule discovery and other activities
for substantially continuous work, thereby expediting the arbitration as much
as is deemed reasonable to him, but in all events to effect a final award
within 365 days of the arbitrator’s selection or appointment and within 20 days
of the close of evidence.

 

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

 

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

 

	
   

  	
  PATHEON PHARMACEUTICALS INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  RELIANT PHARMACEUTICALS, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  

 

33

 

SCHEDULE A

 

Specification Sheet

25 MAR 2004
10:37 AM

	
  Spec
  Code  70011051        Title  DYNACTRC 10 MG CR TABLET PREP        Spec
  Vers.  1        Spec
  Status  Issued

  
	
  Protocol  X7966PB        Prof
  Vers.  2        Prof.
  Status  Issued        Effective
  Date  24 MAR 2004        Datagroup  GLOBAL

  
	
  Material Code  700011051        Material
  Class  SEMI        [___]
  Class  0

  

Proto Test             Protocol
for Registration batch and first validation batch.

[***]

Stage      0 D BLE  Lab  OCONTROL Regular?  Y

Stage Text             SAMPLES:  [***]

QANDEV: 
[***]

OCONTROL: 
[***]

Routine Acceptance
Range                      Quality
Control Acceptance Range                      Market
Limits

	
  Method

  	
   

  	
  Test
  Desc

  	
   

  	
  Task

  	
  Reps

  	
  Group

  
	
  P14100

  	
   

  	
  Description

  	
  N/A

  	
  1

  	
  PT

  
	
  Unit

  	
   DESCRIPTION

  	
  Component    Description

  	
   

  	
  Official
  Requirement

  
	
   

  	
   Limits

  	
  Conforms

  	
   

  
	
   

  	
   Modifier

  	
  Comparison

  	
   

  
	
   

  	
   TX

  	
  CONFORMS

  	
   

  
	
   

  	
   Yellow, free flowing, granular powder.

  	
   

  
	
  Method

  	
   

  	
  Test
  Desc

  	
   

  	
  Task

  	
  Reps

  	
  Group

  
	
  P19510

  	
   

  	
  Bulk Density – Tapped

  	
  N/A

  	
  1

  	
  FP

  
	
  Unit

  	
   G/ML

  	
   

  	
  Component   Bulk Density – Tapped

  	
   

  	
  Official
  Requirement

  
	
  Method

  	
   

  	
  Test
  Desc

  	
   

  	
  Task

  	
  Reps

  	
  Group

  
	
  P19510

  	
   

  	
  Bulk Density – Untapped

  	
  N/A

  	
  1

  	
  FP

  
	
  Unit

  	
   G/ML

  	
   

  	
  Component   Bulk Density – Untapped

  	
   

  	
  Official
  Requirement

  
	
  Method

  	
   

  	
  Test
  Desc

  	
   

  	
  Task

  	
  Reps

  	
  Group

  
	
  166710

  	
   

  	
  Loss on Drying

  	
  N/A

  	
  1

  	
  FP

  
	
  Unit

  	
   % W/W

  	
   

  	
  Component   Loss on Drying

  	
   

  	
  Official
  Requirement

  
	
  Method

  	
   

  	
  Test
  Desc

  	
   

  	
  Task

  	
  Reps

  	
  Group

  
	
  134610

  	
   

  	
  Water

  	
  N/A

  	
  1

  	
  FP

  
	
  Unit

  	
   % W/W

  	
   

  	
  Component   Water

  	
   

  	
  Official
  Requirement

  
								

 

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

 

 

SCHEDULE B

 

Minimum Run Quantity, Minimum Annual Volume
& Fees 

 

Pricing is based on the following annual requirements, in no. of bulk
batches, provided by Reliant:

 

	
   

  	
   

  	
  Theoretical Batch Size

  (Tablets)

  	
   

  	
  Phase 1

  2004

  	
   

  	
  Phase 1

  2005

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Bulk Pack

  	
   

  	
  Bulk Pack

  	
   

  
	
  5mg

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  10mg

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  

 

Phase 1 –
Bulk Tablets

 

	
  Strength

  	
   

  	
  5 mg

  	
   

  	
  10 mg

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  
								

 

Manufacturing
Assumptions 

 

1.             The
commercial process at Patheon will closely follow the manufacturing information
provided by Reliant.

2.             The
proposed theoretical batch sizes are [***] tablets for the 5 mg and [***]
tablets for the 10mg.

3.             A
manufacturing campaign of [***] batches is assumed for both strengths.

 

Granulation

 

4.             Drug
and Osmotic granulations will be furnished by Reliant.

 

Compression

 

5.             The
target compressed tablet weights are [***] mg, for the 5 and 10 mg,
respectively.

 

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

 

 

Coating 

 

6.             Both
coating processes ([***]) will be performed in the [***].

7.             [***]

 

Laser
Drilling

 

8.             This
quotation assumes [***]

 

Tablet
Drying

 

9.             Drying
of tablets will be performed in [***].

 

Tablet
Printing

 

10.           No
tablet inspection is included in this quotation.

 

Packaging
Assumptions 

 

11.           Only
bulk packing is required for Phase I tablets. Appropriate amount of bulk
tablets will be put into each 30-gallon fiber drum, with liners, desiccant,
bubble pack and security seal.

 

Testing
Assumptions 

 

12.           Patheon
will fully test all raw materials to USP standards, as appropriate.

13.           Full
product release testing will be performed based on the given product
specifications.

14.           No
method validation cost is included in this pricing proposal.

15.           No
capital requirement of any testing equipment is assumed.

 

General
Assumptions, Terms & Conditions 

 

1.             Commercial
unit pricing is based on the annual volumes provided and run quantities noted
in the Pricing Tables.

2.             Each
price includes the costs of raw materials and applicable packaging components. Drug
arid Osmotic granulations will be furnished by Reliant during Phase 1.

3.             Process
qualification and validation costs are not included in this proposal.

4.             Post-commercial
stability cost is not included in these prices.

5.             Reliant
will be responsible for the art work related charges, such as die, film and
plate costs.

6.             Unit
pricing will be subject to review and change upon finalization of product and
component specifications, manufacturing and packaging processes, and equipment
run rates.

 

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

 

36

 

SCHEDULE C 

 

INTENTIONALLY
DELETED

 

 

SCHEDULE D

 

ACTIVE COMPOUNDS GRANULATIONS

 

	
  Granulations

  	
   

  	
  Supplier

  
	
  Osmotic Layer Granulation

  	
   

  	
  Novartis Consumer Health, Inc.

  
	
  Drug Layer Granulation

  	
   

  	
  Novartis Consumer Health, Inc.

  

 

 

SCHEDULE E 

 

BATCH NUMBERING AND EXPIRATION DATES

 

Drug Product manufactured at Patheon will bear lot numbers as described
in Patheon SOP H045 and will have expiry dates as described in Patheon SOP Q100.

 

 

SCHEDULE F

 

TECHNICAL DISPUTE RESOLUTION

 

Technical Disputes which cannot be resolved by negotiation as provided
in Section 12.2 shall be resolved in the following matter:

 

1.             Appointment of Expert. Within 10
Business Days after a party requests pursuant to Section 12.2 that an expert be
appointed to resolve a Technical Dispute, the parties shall jointly appoint a
mutually acceptable expert with experience and expertise in the subject matter
of the dispute. If the parties are unable to so agree within such 10 Business
Day period, or in the event of disclosure of a conflict by an expert pursuant
to paragraph 2 hereof which results in the parties not confirming the
appointment of such expert, then an expert (willing to act in that capacity
hereunder) shall be appointed by an experienced arbitrator on the roster of the
American Arbitration Association.

 

2.             Conflicts of Interest. Any person
appointed as an expert shall be entitled to act and continue to act as such
notwithstanding that at the time of his appointment or at any time before he
gives his determination, he has or may have some interest or duty which
conflicts or may conflict with his appointment provided that before accepting
such appointment (or as soon as practicable after he becomes aware of the
conflict or potential conflict) he fully discloses any such interest or duty
and the parties shall after such disclosure have confirmed his appointment.

 

3.             Not Arbitrator. No expert shall be
deemed to be an arbitrator and the provisions of the American Arbitration Act or of any other applicable statute (foreign
or domestic) and the law relating to arbitration shall not apply to any such
expert or the expert’s determination or the procedure by which the expert
reaches his determination to be made pursuant to this Schedule F.

 

4.             Procedure. Where an expert is
appointed:

 

(a)           Timing.
The expert shall be so appointed on condition that (i) he promptly fixes a
reasonable time and place for receiving representations, submissions or
information from the parties and that he issues such authorizations to the
parties and any relevant third party for the proper conduct of his
determination and any hearing and (ii) he renders his decision (with full
reasons) within 15 Business Days (or such other date as the parties and the
expert may agree) after receipt of all information requested by him pursuant to
paragraph 4(b) hereof.

 

(b)           Disclosure
of Evidence. The parties undertake one to the other to provide to any
expert all such evidence and information within their respective possession or
control as the expert may reasonably consider necessary for determining the
matter before him which they shall disclose promptly and in any event within
five Business Days of a written request from the relevant expert to do so.

 

(c)           Advisors.
Each party may appoint such counsel, consultants and advisors as it feels
appropriate to assist the expert in his determination and so as to present
their 

 

 

respective cases so that at all times the
parties shall co-operate and seek to narrow and limit the issues to be
determined.

 

(d)           Appointment
of New Expert. If within the time specified in paragraph 4(a) above the
expert shall not have rendered a decision in accordance with his appointment, a
new expert may (at the request of either party) be appointed and the
appointment of the existing expert shall thereupon cease for the purposes of
determining the matter at issue between the parties save that if the existing
expert renders his decision with full reasons prior to the appointment of the
new expert, then such a decision shall have effect and the proposed appointment
of the new expert shall be withdrawn.

 

(e)           Final
and Binding. The determination of the expert shall, save in the event of
fraud or manifest error, be final and binding upon the parties.

 

(f)            Costs.
Each party shall bear its own costs in connection with any matter referred to
an expert hereunder and, in the absence of express provision in the Agreement
to the contrary, the costs and expenses of the expert shall be shared equally
by the parties.

 

For greater certainty, the parties agree that the release of the Drug
Product for sale or distribution pursuant to the applicable marketing approval
for such Drug Product shall not by itself indicate compliance by Patheon with
its obligations in respect of the Manufacturing Services and further that
nothing in this Agreement (including this Schedule F) shall remove or limit the
authority of the relevant qualified person (as specified by the Quality
Agreement) to determine whether the Drug Product are to be released for sale or
distribution.

 

 

SCHEDULE G 

 

FORM OF QUALITY AGREEMENT 

 

COMMERCIAL

QUALITY AGREEMENT

 

 

Between

 

 

[LOGO]

 

 

And

 

 

Patheon
Pharmaceuticals Inc.

 

 

For the manufacture of:

 

 

DynaCirc CR

Controlled Release Tablets, 5 mg and 10 mg GITS

 

 

 

	
  Commercially
  Quality Agreement

  	
   

  	
  DynaCire CR controlled release tablets

  
	
  Between
  Reliant Pharmaceuticals and Patheon Pharmaceuticals Inc.

  	
   

  	
  5 mg and 10 mg GITS

  

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  I.

  	
  QUALITY AGREEMENT AND TERM

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
  II.

  	
  PRODUCTS

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
  III

  	
  CONTACT INFORMATION

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
  IV

  	
  MANUFACTURING COMPLIANCE

  	
  2

  
	
   

  	
  1.

  	
  Premises

  	
  2

  
	
   

  	
  2.

  	
  Equipment

  	
  2

  
	
   

  	
  3.

  	
  Personnel

  	
  2

  
	
   

  	
  4.

  	
  Materials

  	
  3

  
	
   

  	
  5.

  	
  Documentation

  	
  3

  
	
   

  	
  6.

  	
  Lot Numbers

  	
  3

  
	
   

  	
  7.

  	
  Product Storage and Shipment

  	
  3

  
	
   

  	
   

  	
   

  	
   

  
	
  V.

  	
  QUALITY CONTROL

  	
  4

  
	
   

  	
  1.

  	
  Premises

  	
  4

  
	
   

  	
  2.

  	
  Equipment

  	
  4

  
	
   

  	
  3.

  	
  Personnel

  	
  4

  
	
   

  	
  4.

  	
  Out-of-Specification (OOS) Investigations

  	
  4

  
	
   

  	
  5.

  	
  Reference Standards

  	
  4

  
	
   

  	
  6.

  	
  Product Release

  	
  5

  
	
   

  	
  7.

  	
  Stability

  	
  5

  
	
   

  	
   

  	
   

  	
   

  
	
  VI.

  	
  QUALITY ASSURANCE

  	
  5

  
	
   

  	
  1.

  	
  Documentation

  	
  5

  
	
   

  	
  2.

  	
  Samples

  	
  6

  
	
   

  	
  3.

  	
  Investigations

  	
  6

  
	
   

  	
  4.

  	
  Products Complaints or Adverse Events

  	
  7

  
	
   

  	
  5.

  	
  Annual Product Review

  	
  8

  
	
   

  	
  6.

  	
  Product Recalls

  	
  8

  
	
   

  	
  7.

  	
  Audits by Reliant Pharmaceuticals

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
  VII.

  	
  REGULATORY

  	
  9

  
	
   

  	
  1.

  	
  Inspections by Regulatory Agencies

  	
  9

  
	
   

  	
  2.

  	
  Annual Reports

  	
  9

  
	
   

  	
  3.

  	
  Drug Listing

  	
  10

  
	
   

  	
   

  	
   

  	
   

  
	
  VIII.

  	
  VALIDATION

  	
  10

  
	
   

  	
  1.

  	
  Process

  	
  10

  
	
   

  	
  2.

  	
  Equipment Cleaning Validation

  	
  10

  
	
   

  	
  3.

  	
  Analytical Test Methods

  	
  10

  

 

i

 

	
   

  	
  4.

  	
  Computer

  	
  10

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Revision History and Approval

  	
  12

  

 

ii

 

I               QUALITY AGREEMENT AND TERM

 

1.             It
is deemed necessary by Reliant Pharmaceuticals and Patheon Pharmaceuticals Inc.
(Patheon) to allocate the responsibilities of current good manufacturing
practice (cGMP), as defined in 21 CFR part 210-211, by which DynaCirc CR
extended release tablets 5 mg and 10 mg GITS [the drug product] shall be
manufactured using granulations provided by Novartis Lincoln [NVS] and shipped
to NVS as bulk finished product.

 

2.             This
agreement, in conjunction with the Supply Agreement, shall define the
responsibilities of the parties involved, and the levels of interaction
necessary for the delivery of a compliant drug product.

 

3.             This
Quality Agreement shall expire with the termination of the Supply Agreement. The
agreement can be modified with the written approval of Reliant and Patheon. A
revision history shall be maintained.

 

II             PRODUCTS

 

Patheon has agreed to manufacture the drug product in accordance with
all cGMP’s, specifications detailed in the NDA, and local laws and ordinances.

 

III                                    CONTACT
INFORMATION

 

Communication pertaining to the manufacture of the drug product shall
flow between the established channels detailed below.

 

	
  DEPARTMENT

  	
   

  	
  RELIANT CONTACT

  	
   

  	
  PATHEON CONTACT

  
	
  QUALITY

  	
   

  	
  Name: 

  Phone: 

  Fax: 

  e-mail:

  	
   

  	
  Name: 

  Phone: 

  Fax: 

  e-mail:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  OPERATIONS

  	
   

  	
  Name: 

  Phone: 

  Fax: 

  e-mail:

  	
   

  	
  Name: 

  Phone: 

  Fax: 

  e-mail:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  REGULATORY

  	
   

  	
  Name: 

  Phone: 

  Fax: 

  e-mail:

  	
   

  	
  Name: 

  Phone: 

  Fax: 

  e-mail:

  

 

1

 

IV            MANUFACTURING COMPLIANCE

 

The drug product will be manufactured by Patheon according to the
Supply Agreement at the facilities located at 2110 E. Galbraith Rd.,
Cincinnati, OH. The FDA facility number for this location is 1510437.

 

The drug product shall be manufactured according to cGMP’s (21 CFR Part
210-211) as well as all additional requirements detailed in the batch records
or approved Supplement. All computer systems used to control manufacturing
processes shall be validated, and shall comply with 21 CFR Part 11.

 

1.             Premises

 

1.1           The
manufacturing facility shall comply with all aspects of 21 CFR Part 210 and 211
Subpart C, as well as all additional requirements detailed in the batch records
or approved Supplement.

 

2.             Equipment

 

2.1           Equipment
used to manufacture the drug product shall comply with 21 CFR part 211 Subpart
D, as well as all additional requirements detailed in the NDA.

 

2.2           Patheon
shall maintain written records for equipment usage, cleaning, maintenance and
calibration of all equipment used in the processing of the drug product.

 

2.3           Patheon
shall only use equipment that is detailed in the approved Supplement for the
manufacture and processing of the drug product. Use of equipment other than
that stipulated in the mutually agreed to Master Batch production records shall
not be permitted without prior written consent from Reliant Quality and
Regulatory, irrespective of FDA guidance’s detailing equipment class and
subclass equivalencies.

 

2.4           Installation
qualification (IQ)/operational qualification (OQ)/performance qualification
(PQ) shall be performed on all equipment used in manufacture of the Products,
and the same equipment shall be placed on a calibration and/or preventive
maintenance schedule, as appropriate.

 

3.             Personnel 

 

3.1           Personnel
used to process the drug product shall be appropriately trained in cGMP’s, as
well as the process they perform. Training shall be documented and available
for review.

 

3.2           There
shall be an adequate number of qualified personnel to perform and supervise the
processing of the drug product.

 

2

 

4.             Materials

 

4.1           The
manufacturer shall use active and osmotic granulations provided by NVS, and
inactive ingredients specified in the approved Supplement.

 

4.2           Patheon
shall sample all materials according to approved procedures, and test and
release the materials according to approved analytical methodology and
specifications as detailed in the Supplement.

 

4.3           Patheon
shall store all granulations, inactive ingredients, as well as released
materials in a suitable environment so as not to impact the materials’ quality.
Certificates of Analysis shall be generated by Patheon as requested by Reliant,
for all materials used to process the drug product.

 

5.             Documentation

 

5.1           Patheon
shall provide written documentation in the form of a Production Batch Record
for all processes used in the manufacture of the drug product.

 

5.2           Patheon
shall maintain and follow all Standard Operating Procedures (SOP) required to
manufacture, package bulk, analyze, release, and store the drug product as
detailed in the Supplement, and required by cGMP.

 

5.3           Patheon
shall follow a suitable Change Control Procedure for all documentation. All
changes to batch records, manufacturing specifications, or test methods must be
submitted to Reliant Quality Assurance for review and approval prior to
implementation.

 

6.             Lot Numbers 

 

6.1           Patheon
shall assign unique lot numbers to bulk drug product to ensure complete product
traceability.

 

7.             Product Storage and Shipment

 

7.1           Patheon
shall store all drug product in suitable containers, labeled with lot specific
information, as detailed in the Supplement, and in a controlled environment to
remove possibility of tampering, theft, adulteration, or contamination.

 

7.2           Product
shall be labeled with all D.O.T. and O.S.H.A. information, as required, and
suitably packaged to minimize damage during transit.

 

7.3           Only
approved finished product may be shipped by Patheon to NVS. Materials may be
shipped under Quarantine only with the prior written consent from the Quality
Department from Reliant and Patheon.

 

3

 

7.4           Product
should be segregated by lot number prior to shipment.

 

V             QUALITY CONTROL

 

All testing shall be done in accordance with the NDA and approved
Supplements. Patheon shall maintain a cGMP laboratory suitable to test and
release granulations, inactive ingredients, in-process test samples, and finished
product according to the analytical methods and specifications detailed in the
NDA. This laboratory is the only qualified laboratory to perform the analytical
testing unless otherwise specified in the NDA.

 

1.             Premises

 

1.1           The
quality control laboratory shall comply with all aspects of 21 CFR Part 210 and
211, as well as all additional requirements detailed in the NDA.

 

2.             Equipment

 

2.1           Installation
qualification (IQ)/operational qualification (OQ)/performance qualification
(PQ) shall be performed on all equipment used in analysis of the drug product,
and the same equipment shall be placed on a calibration schedule.

 

2.2           Patheon
shall maintain written records for equipment usage, maintenance and
calibration.

 

3.             Personnel

 

3.1           Personnel
used to test and release the product shall be appropriately trained in cGMP’s,
as well as the methods and techniques they utilize. Training shall be
documented and available for review.

 

4.             Out-of-Specification (OOS)
Investigations

 

4.1           Patheon
is responsible for following an SOP to investigate any test results that fail
to meet specifications. An OOS investigation should be conveyed to Reliant
Quality within 48 hours. These OOS investigations are open to review during an
audit.

 

5.             Reference Standards 

 

5.1           All
testing of granulation and finished drug product shall use primary reference
standards, or appropriately qualified secondary reference standards. Qualification
of secondary reference standards must comply with current ICH guidelines.

 

4

 

6.             Product Release

 

6.1           Reliant
shall only accept finished product that complies with the NDA or approved
Supplement, and with the Manufacturing Agreement

 

7.             Stability

 

In the event that Reliant should contract with Patheon to perform
stability testing, the stability program will be conducted in accordance with
Patheon Standard Operating Procedures. The currently approved Regulatory
stability protocols will be followed as written. Changes to the protocols must
be approved by Reliant QA.

 

7.1           Drug
product shall be stored in qualified, temperature and humidity mapped chambers
that are consistent with the conditions specified in the NDA.

 

7.2           Patheon
shall have a contingency plan in the event that a stability chamber has a
sustained temperature or humidity excursion. All drug product shall be
immediately removed from the suspect chamber. All drug product shall be stored
in another qualified chamber within 48 hours of the excursion, and stability
time points modified accordingly.

 

7.3           All
testing shall be performed according to the analytical methods and
specifications detailed in the NDA.

 

VI            QUALITY ASSURANCE

 

Patheon shall assure that the drug product was manufactured, tested,
released, and stored in accordance with cGMP’s, and all requirements as
detailed in the NDA.

 

1.             Documentation

 

1.1           Patheon
will provide both a Certificate of Analysis indicating all regulatory test
results and their specifications, and a Certificate of Compliance indicating
the drug product has been manufactured, tested, and stored according to cGMP’s
and all requirements as detailed in the NDA.

 

1.2           Patheon
shall retain all Batch Production Records for the drug product for a period of
not less than one year past the product expiration date.

 

1.3           Any
deviation to the manufacturing process or analytical test methods must be
documented, reviewed versus the respective validation, and approved by Patheon’s
Quality department prior to release of the drug product.

 

5

 

1.4           Patheon
is responsible for maintaining all documentation supporting all manufacturing
processes, analytical testing, and storage of the drug product.

 

2.             Samples

 

2.1           Patheon’s
Quality Department shall assure that all test samples are taken in accordance
with approved SOP’s and as detailed in the NDA.

 

2.2           Patheon
shall maintain Sample Retains for a period of not less than one year past the
expiration date for the drug product. At least twice as much material shall be
retained as is needed to conduct all specification release testing.

 

2.3           Reserve
samples shall be retained and stored under conditions consistent with product
labeling. The reserve sample shall be stored in the same immediate
container-closure system in which the Product is marketed or in one that has
essentially the same characteristics.

 

3.             Investigations

 

3.1           Patheon
shall notify Reliant Quality in writing within one business day after
confirmation of any situation that impacts product that has already been
released. Patheon shall also provide Reliant with verbal communication of any
such investigation prior to the confirmation so that appropriate action can be
implemented to restrict continued distribution of product until the
investigation can be finalized.

 

3.2           All
results of major manufacturing or analytical deviations shall be investigated,
and copies of said investigations shall be conveyed to Reliant Quality with the
issuance of the bulk product certificate of analysis. Copies of minor
deviations shall be provided only upon request.

 

A Major Deviation is defined as: A departure from normal
operating conditions that is determined to have a significant
or unknown impact on the identity,
strength, quality, and purity of the drug product. Examples include, but are
not limited to: failure of a batch or lot to meet any analytical specification
that is not determined to be a laboratory error; or, compounding errors such as
dispensing incorrect quantities of material; or processing errors such as using
equipment that is outside of approved calibration dating or processing a batch
outside the tolerances set forth in the batch record; or observation of foreign
materials in a batch; or packaging or labeling errors.

 

A Minor Deviation is defined as: A departure from normal
operating conditions that is determined to have no impact on the identity,
strength, 

 

6

 

quality, and purity of the drug product. Examples include, but are not
limited to: low gross yields; or calculation or rounding errors that have no impact
on the batch.

 

3.3           All
minor deviations to the manufacturing process or analytical test methods must
be documented and reviewed versus the respective validation, and approved by
Patheons Quality department prior to release of the drug product.

 

3.4           Rework/Reinspection:
Patheon shall obtain written approval from Reliant QA in advance of performing
any rework/reinspection procedures.

 

4.             Product Complaints or Adverse Events 

 

4.1           All
individuals reporting a product related complaint should be immediately
directed to contact Reliant’s Customer Complaints Group as directed by Reliant.

 

4.2.1        Reliant
shall maintain a system to receive, log, evaluate, categorize, communicate, and
follow-up each complaint received.

 

4.2.2        Reliant
shall report any product complaints to Patheon in writing within seven days of
receipt of the complaint.

 

4.2.3        Upon
receiving a product complaint for which the subject bottle is still available,
Reliant shall issue a return mailer to have the complaint sample returned.

 

4.2.4        Patheon
shall perform a thorough investigation of each product complaint for operations
performed at Patheon, and shall make every reasonable effort to provide Reliant
with a written report within 45 days, unless a more urgent need is identified
and mutually agreed upon (i.e. NDA Field Alert).

 

4.2.5        Reliant
shall be responsible for communication and final correspondence with the
complainant, and/or regulatory authorities.

 

4.2           All
individuals reporting an Adverse Event (AE) should be immediately directed to
contact Reliant’s Medical Affairs Department as directed by Reliant.

 

4.2.1        Reliant
shall maintain a system to receive, log, evaluate, categorize, communicate, and
follow-up each AE received.

 

4.2.2        Reliant
shall maintain all AE files and is responsible for forwarding all appropriate
information to Regulatory Agencies.

 

7

 

4.3           Reliant
shall be the only authorized group to provide product related responses to the
public.

 

4.4           Should
Reliant discover a product related problem, Reliant Quality Department shall
provide a written complaint notification to Patheon within 2 business days of
the occurrence.

 

5.             Annual Product Review

 

5.1           Patheon
shall perform an annual product review for the Product detailing all drug product
lots manufactured, product investigations, stability updates (as required),
lots released or rejected, and process or method revisions (including
validation reports) for all drug product lots manufactured in the previous
Manufacturing Agreement year. All critical release data shall be trended to
evaluate the process.

 

5.2           The
written Annual Product Review report for each year shall be sent to Reliant
Quality Department as specified in the table below. 

 

	
  Product

  	
   

  	
  Period Closes By

  	
   

  	
  PAR Issues By

  
	
  DynaCirc CR

  	
   

  	
   

  	
   

  	
   

  

 

6.             Product Recalls

 

6.1           It
shall be the sole responsibility of Reliant to issue a FDA Field Alert
Notification pertaining to a product quality issue discovered by Patheon or
Reliant. An alert shall only be issued with substantive evidence of a quality
issue, for which Patheon shall have 5 business days from obtaining knowledge of
the substantial evidence of a quality issue to initiate an investigation
report, with updates as needed.

 

6.2           It
shall be the sole responsibility of Reliant to issue a product recall, and
discuss with FDA the extent or type of action that should occur. Decisions to
initiate a product recall shall be based on product medical reviews and the
investigation report used to support the FDA Field Alert.

 

7.             Audits by Reliant Pharmaceuticals

 

7.1           Reliant
Pharmaceuticals shall have the right to perform periodic audits of departments
responsible for the manufacture of the drug product. Patheon shall provide
Reliant Quality, or representative, access to all facilities and records pertaining
to the manufacture of the drug product.

 

7.2           Reliant
Quality, or representative, shall provide an exit meeting to Patheon to provide
significant observations. A written report of observations shall be issued to
Patheon.

 

8

 

7.3           Patheon
shall provide a written response to the audit observations within 20 business
days. The response shall include details of the corrective actions to the
observations, and the expected completion date of the action. Reliant Quality
shall follow-up on the progress of the corrective actions based on the expected
completion dates provided.

 

VII          REGULATORY

 

Patheon shall provide a cGMP compliant facility in order to supply the
drug product to Reliant Pharmaceuticals.

 

1.             Inspections by Regulatory Agencies

 

1.1           Patheon
shall inform Reliant Pharmaceuticals of any Regulatory Agency performing an
inspection of the drug product, or a facilities inspection affecting the drug
product within the same business day of notification. Reliant Quality
Department may be present at any drug product specific inspections and exit
meetings.

 

1.2           All
drug product specific regulatory correspondence, or facilities correspondence
affecting the manufacturing of the drug product shall be conveyed to Reliant
Quality Department within 2 business days of receipt. Patheon shall provide
written responses to all drug product related observations for Reliant review
prior to commitment to any regulatory authority.

 

1.3           Patheon
shall provide copies of all regulatory agency inspection documentation (i.e.
483’s, EIR’s, etc.) or any other regulatory correspondence pertaining to the
drug product to Reliant Quality Department within two business days of receipt.
A redacted copy may be provided to protect other customer’s products.

 

2.             Annual Reports

 

2.1           It
shall be the sole responsibility of Reliant Pharmaceuticals to maintain all
regulatory communication and updates (Supplements, CBE, Annual Reports, etc.)
pertaining to the drug product as outlined in ICH and FDA regulatory guidance
documents. All necessary CMC documentation updates will be conveyed to Patheon,
who shall provide the necessary documentation to Reliant Regulatory not less
than 45 days prior to filing date. 

 

	
  Product

  	
   

  	
  Filing date

  
	
  DynaCirc CR

  	
   

  	
   

  

 

9

 

3.             Drug Listing

 

3.1           It
shall be the responsibility of Reliant Regulatory to submit FDA Form #2657
every June and December updating the Drug Product Listing. When no changes have
occurred since the previously submitted list, no report is required.

 

VIII                           VALIDATION

 

Patheon shall assure that all systems used to manufacture, test,
release, and distribute the drug product shall have been appropriately
transferred, qualified, and/or validated prior to using that system to process
the Product.

 

1.             Process

 

1.1           Patheon
shall be responsible for performing and documenting process validation to
comply with cGMP’s and to ensure consistency of quality Product. A process
validation protocol shall be forwarded to Reliant for review and approval prior
to carrying out the validation.

 

2.             Equipment Cleaning Validation

 

2.1           Patheon
is responsible for following internal procedures for all products they
manufacture to set appropriate cleaning limits to ensure there are no cross
contamination issues between products. Patheon shall demonstrate, through
approved protocol and final report, that cleaning validation has been performed
for the Product(s).

 

3.             Analytical Test Methods

 

3.1           Patheon
shall be responsible for demonstrating the validity of all methodology used for
in-process control, and release of all materials, Active Compound, components
and the Product. This validation, or verification in the case of a compendial
raw material item, will be demonstrated. This validation shall be established,
through approved protocol and final report, based on the current ICH and FDA
validation guidance documents. Method validation shall be performed. Suitability
of all compendia methodology will be demonstrated, and written in a report,
prior to use for release of materials, Active Compound, components, or the
Product(s).

 

4.             Computer

 

4.1           Patheon
is responsible for compliance as it pertains to systems validation, electronic
records, electronic records retention, and electronic signatures for those systems
used in the control of the manufacturing processes, analytical testing,
receipt, release and distribution of materials, API’s, 

 

10

 

components,
and Product(s) as prescribed by 21 CFR part 11, and any other current, approved
FDA Guidance requirements.

 

11

 

REVISION
HISTORY

 

	
  Revision 

  Date

  	
   

  	
  Revision Approval

  (Reliant)

  	
   

  	
  Revision Approval

  (Patheon)

  	
   

  	
  Revision 

  Description

  
	
  2/6/04

  	
   

  	
  See below

  	
   

  	
  See below

  	
   

  	
  New Agreement

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

	
  Reliant Pharmaceuticals Approval 

  	
  Patheon Pharmaceuticals, Inc. Approval

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature/Date

  	
  Signature/Date 

  
			

 

12

 

SCHEDULE H

 

CAPITAL LETTER AGREEMENT 

 

                    ,
2004

 

Reliant
Pharmaceuticals, LLC 

110 Allen Road 

Liberty Corner, NJ 

U.S.A. 07938

 

Attention:

 

Dear
                             :

 

Re:          Capital
Expenditure for Commercial Manufacture of DynaCirc CR

 

Reliant Pharmaceuticals, LLC (“RELIANT”), and
Patheon Pharmaceuticals Inc. (“Patheon”) have
entered into a Manufacturing Services Agreement dated March              ,
2004 (the “MSA”) whereby Patheon agreed,
among other things, to provide certain manufacturing services (the “Services”) with respect to DynaCirc CR (the “Product”).

 

In order for Patheon to perform the Services, certain capital equipment
will be provided by RELIANT and installed at Patheon’s Cincinnati Operations
facility (the “Facility”). As well, certain
modifications will be made to the Facility to accommodate such equipment.

 

The purpose of this Letter
Agreement is to set out the parties’ mutual agreement with respect to the
equipment and capital expenditures required under the MSA.

 

1.             Equipment

 

Until this Letter Agreement is terminated in accordance with paragraph
7 below, the Parties agree to purchase certain manufacturing equipment (the “Equipment”) and to implement certain facility upgrades for
use in connection with the manufacture of the Product in accordance with the
terms of this Letter Agreement.

 

A detailed description of the Equipment is outlined in Schedule A
attached hereto.

 

2.             Expenditures

 

The responsibility for the payment of the estimated costs associated
with the Equipment and the Facility Modifications (the “Capital
Expenditures”) will be allocated between Patheon and RELIANT in the
manner set out in Schedule A hereto.

 

Each Party shall make all necessary arrangements, at its sole expense,
for the purchase and shipping of the Equipment it has agreed to purchase, as
indicated on Schedule A, to the Facility.

 

 

To the extent possible (i.e. where Equipment is not being physically
installed at the Facility) all Equipment for which RELIANT is responsible under
Schedule A shall be purchased by way of purchase order with instructions
indicating that the Equipment be shipped to Reliant Pharmaceuticals, LLC
Headquarters and billed to Accounts Payable, Reliant Pharmaceuticals, LLC.

 

Where certain Equipment cannot be shipped to Reliant Pharmaceuticals,
LLC Headquarters, the invoice may be billed to Patheon and RELIANT agrees to
forward payment for the invoice to Patheon by wire transfer within the payment
terms indicated by the supplier of the Equipment which shall be forward to
RELIANT by Patheon.

 

Notwithstanding the above, RELIANT agrees to pay Patheon directly by
wire transfer for the costs associated with Item 12 under Schedule A (Coating
Pan) as Patheon has already purchased this particular piece of Equipment.

 

Patheon shall make all necessary arrangements for the installation,
qualification and testing of the Equipment at the Facility. Patheon represents
that it shall install and test the Equipment in a good and workmanlike manner,
including following the manufacturer’s written instructions.

 

Patheon warrants that the Equipment shall be cleaned in a good and
workmanlike manner, in accordance with cGMP (as such term is defined in the
Agreement) and applicable Laws (as such term is defined in the Agreement).

 

3.             Facility Modifications

 

Certain modifications must be made to the Facility in order to
accommodate the Equipment and are listed on Schedule A attached hereto.

 

4.             Maintenance of Equipment

 

(a)           Patheon
shall operate and use the Equipment in accordance with the instructions set
forth in the Equipment manufacturer’s service manual provided by RELIANT, if
any.

 

(b)           While
the Equipment is in Patheon’s possession, Patheon shall assume the costs for
all routine and preventative maintenance of the Equipment.

 

(c)           The
costs of any repairs required as a result of the use of the Equipment for
RELIANT products, other than routine and preventative maintenance costs, not
covered by applicable manufacturer warranties shall be equitably allocated by
the parties. In the event of any such repairs, Patheon shall promptly provide
written notice of estimated cost of the repairs and the parties shall agree
upon the allocation of such costs within 10 business days of RELIANT’s receipt
of such notice.

 

 

(d)           In
the event of any repairs required as a result of the use of the Equipment for
products of other clients of Patheon not covered by applicable manufacturer
warranties shall be the responsibility of Patheon.

 

5.             Title, Risk of Loss and Insurance

 

The parties agree that title to the Equipment shall reside with the
Party who has paid for such Equipment and the other Party shall have no legal
or equitable interest in such Equipment whatsoever. The Equipment shall be
clearly marked to indicate the ownership of the Equipment and shall not be
subject to the liens or claims of the other Party’s creditors. While the Equipment
is in Patheon’s possession, risk of loss shall reside with Patheon and Patheon
shall insure the Equipment under its policy of standard all-risk insurance and
name Reliant as the loss-payee.

 

Notwithstanding the above, title to the Abatement Equipment listed
under Schedule A shall reside with Patheon once it has been installed at the
Facility.

 

6.             Warranty

 

RELIANT represents and warrants that: (i) RELIANT is the sole legal and
beneficial owner of the Equipment it has purchased as set out in Schedule A
hereto; (ii) RELIANT has the full right and authority to loan the Equipment to
Patheon in accordance with the terms and conditions hereof; and (iii) prior to
delivery of the Equipment to Patheon, such Equipment was in good working order.

 

7.             Indemnification

 

Patheon shall indemnify, defend and hold RELIANT harmless from and
against any claims, damages, expenses or liabilities to, from and in favor of
third parties (other than affiliates) (“Claims”)
resulting from Patheon’s use of the Equipment while such Equipment is situated
at the Facility other than those Claims that arise from a defect in the
Equipment.

 

8.             Return of Equipment

 

If, after the expiry of the Term of the MSA or after the MSA has been
terminated in accordance with Article 8 of the MSA, RELIANT desires the return
of the Equipment it has purchased under this Letter Agreement, then RELIANT
shall notify Patheon in writing at least six months prior to the effective date
of removal and, following delivery of the Equipment, within forty-five (45) days
of the invoice, RELIANT shall pay Patheon for all reasonable costs relating to:

 

(a)           disconnecting,
packaging and shipping the Equipment in a good and workmanlike manner;

 

(b)           repairing
any damage resulting from such removal; and

 

(c)           restoring
the Facility to remove the modifications made hereunder.

 

 

9.             Reimbursement

 

If, upon RELIANT prior approval, Patheon utilizes any of the Abatement
Equipment (as listed in Schedule A) to provide commercial manufacturing
services to any of its other clients, then Patheon shall reimburse RELIANT
$5,000 for each batch of product produced and paid for by its other clients
until such time as it has fully reimbursed RELIANT for the costs RELIANT has
contributed to the cost of the Abatement Equipment, as listed on Schedule A
hereto.

 

If Patheon is able to utilize any of the other Equipment (other than
the Abatement Equipment) for the commercial manufacturing of products for any
of its other clients and RELIANT has contributed towards the costs of that
particular Equipment as set out in Schedule A hereto, then the Parties shall
work together to agree on a reimbursement arrangement which is mutually
agreeable to both Parties.

 

In no event shall Patheon use any of the Equipment listed on Schedule A
(other than the Abatement Equipment) which RELIANT has contributed towards the
cost of without RELIANT’s consent.

 

RELIANT may elect to appoint, at its own cost, an independent
accounting firm to confirm the accuracy of the production volumes Patheon has
achieved for its other clients utilizing the Abatement Equipment, provided that
the independent accounting firm shall be required to restrict its report to
RELIANT to the accuracy of the calculation supporting the reimbursement payment
under this Section 9. Such audit shall take place after reasonable advance
written notice, during normal business hours and with a representative of
Patheon present.

 

Within 60 days of June 30th and December 31st of each Contract Year,
Patheon shall:

 

i)              reconcile
all reimbursement amounts owing to RELIANT for the six month period ending from
January lst to June 30th or from July 1st to
December 31st, as the case may be, of each Contract Year (the “Reimbursement Amount”); and

 

ii)             confirm
the Reimbursement Amount to RELIANT in writing (“Confirmation
Date”).

 

Patheon shall forward payment for the Reimbursement Amount within 30
days of the Confirmation Date.

 

10.          Currency

 

All monetary amounts are expressed in the lawful currency of the United
States of America.

 

 

11.          Incorporation of Agreement

 

The Equipment shall be deemed to be part of the “Approved Facility” (as
such term is defined in the Agreement) and Patheon shall comply with the terms
of the Development Agreement and the MSA in performing services for RELIANT’s
on the Equipment as part of the Project. In the event of any inconsistency
between the terms of the MSA and the terms of this Letter Agreement, the terms
of this Letter Agreement shall govern with respect to the subject matter
hereof.

 

This Letter Agreement may be signed by facsimile or in two
counterparts, each of which when executed and delivered or transmitted, shall
be considered an original and both of which together shall constitute one and
the same instrument. This Letter Agreement shall be governed by and construed
in accordance with the laws of the State of New York.

 

If the above terms are acceptable to you, please indicate your
acceptance below.

 

Yours truly,

 

PATHEON PHARMACEUTICALS INC.

 

	
   

  	
   

  
	
  Ronald B. Mitchell

  	
   

  
	
  Sr. VP, Finance & Treasurer

  

 

 

ACCEPTED and AGREED
to this           day of March,
2004.

 

RELIANT PHARMACEUTICALS, LLC

 

	
   

  	
   

  
	
  Name:

  	
   

  
	
  Title:EXHIBIT
10.42

 

 

AMENDED
AND RESTATED PROMOTION AGREEMENT

 

 

BETWEEN

 

 

NOVARTIS
PHARMACEUTICALS CORPORATION

 

 

AND

 

 

RELIANT
PHARMACEUTICALS, INC.

 

 

TABLE OF
CONTENTS

 

	
   

  	
  Page

  
	
   

  	
   

  
	
  ARTICLE I
  DEFINITIONS

  	
  1

  
	
   

  	
   

  
	
  ARTICLE II
  TERM

  	
  7

  
	
   

  	
   

  
	
  ARTICLE III
  GRANT

  	
  7

  
	
   

  	
   

  
	
  ARTICLE IV
  SERVICES OF RELIANT

  	
  10

  
	
   

  	
   

  
	
  ARTICLE V
  ADDITIONAL AGREEMENTS OF NOVARTIS

  	
  17

  
	
   

  	
   

  
	
  ARTICLE VI
  COMPENSATION

  	
  21

  
	
   

  	
   

  
	
  ARTICLE VII
  TERMINATION

  	
  26

  
	
   

  	
   

  
	
  ARTICLE VIII
  WARRANTIES, REPRESENTATIONS AND COVENANTS

  	
  29

  
	
   

  	
   

  
	
  ARTICLE IX
  INTELLECTUAL PROPERTY

  	
  33

  
	
   

  	
   

  
	
  ARTICLE X
  INDEMNITIES

  	
  35

  
	
   

  	
   

  
	
  ARTICLE XI
  CONFIDENTIALITY

  	
  37

  
	
   

  	
   

  
	
  ARTICLE XII
  NOTICES

  	
  38

  
	
   

  	
   

  
	
  ARTICLE XIII
  PUBLICITY

  	
  39

  
	
   

  	
   

  
	
  ARTICLE XIV
  INSURANCE

  	
  40

  
	
   

  	
   

  
	
  ARTICLE XV
  MISCELLANEOUS

  	
  40

  

 

 

AMENDED
AND RESTATED PROMOTION AGREEMENT

 

This AMENDED AND RESTATED PROMOTION AGREEMENT, dated
and effective the      day of April, 2005 (this “Agreement”), is made by and between
Novartis Pharmaceuticals Corporation, a Delaware corporation, having offices at
59 Route 10, East Hanover, New Jersey 07936 (hereinafter “Novartis”) and Reliant Pharmaceuticals,
Inc., a Delaware corporation (f/k/a Reliant Pharmaceuticals, LLC), having
offices at 110 Allen Road, Liberty Corner, New Jersey 07938 (hereinafter “Reliant”).

 

WHEREAS, on November 16, 2000, Novartis and Reliant
entered into a Promotion Agreement (as previously amended by letter agreement
dated August 23, 2001, Amendment No. 2 to Promotion Agreement dated February
22, 2002, and letter agreement dated February 22, 2002; as so amended, the “Original Promotion Agreement”), pursuant to which Novartis
granted to Reliant certain rights to promote the Product in the Territory (as
such terms are hereinafter defined) on the terms and conditions set forth in
the Original Promotion Agreement; and

 

WHEREAS, Novartis and Reliant desire to amend and restate
the Original Promotion Agreement as set forth herein.

 

NOW, THEREFORE, in consideration of the following
mutual promises and obligations, the parties hereby agree that Original
Promotion Agreement is hereby amended and restated in its entirety as follows:

 

ARTICLE I

DEFINITIONS

 

As used in this Agreement, the following terms shall
be defined as follows:

 

1.1           “Act” shall mean the Federal Food, Drug and
Cosmetic Act, 21 U.S.C. 301, as it may be amended from time to time, and the
regulations promulgated thereunder.

 

1.2           “Affiliate” shall mean all corporations or
business entities which, directly or indirectly, are controlled by, control, or
are under common control with Novartis or Reliant, as the case may be. For this
purpose, control shall mean direct or indirect ownership of at least fifty
percent (50%) of the voting shares or interest of such corporation or business
entity.

 

1.3           “Agreement Half Year” shall mean each six
(6) month period beginning either on January 1 or July 1 of any
Agreement Year including Agreement Year 2005.

 

1.4           “Agreement Year” shall mean each twelve (12)
month period of the Term of this Agreement beginning on the first day of the
calendar year, including “Agreement Year 2005”,
which shall mean the period commencing on January 1, 2005 and ending on
December 31, 2005.

 

1.5           “Alternate Sales Channels” shall mean
promotional services such as telemarketing, peer meetings, medical symposia and
direct mail.

 

 

1.6           “ANDA” shall mean an Abbreviated New Drug
Application as defined in the Act.

 

1.7           “Annual Net Sales Baseline” shall mean the
Annual Net Sales Baseline for Agreement Year 2005 as set forth on Exhibit 1 attached hereto, as
adjusted from time to time in accordance with this Agreement.

 

1.8           “Annual Net Sales Forecast” shall mean the
Annual Net Sales Forecast for Agreement Year 2005 as set forth on Exhibit 1 attached hereto.

 

1.9           Intentionally
Omitted.

 

1.10         “Change of Control” shall mean any
transaction or series of related transactions in which  (i)(x) Reliant merges or consolidates
with another party, (y) equity interests of Reliant are acquired by
another party, or (z) Reliant enters into any other business combination
transaction with another party, and immediately following any such transaction
the equityholders of Reliant immediately prior to the consummation of such
transaction do not own at least a majority of the shares or other equity
interest of the surviving entity immediately following such transaction, or
(ii) all or substantially all of Reliant’s assets are acquired by another
party.

 

1.11         “Competitor” shall mean any entity other
than Novartis and its Affiliates which, (a) 
alone or together with its Affiliates, is commercially selling or
promoting a Statin Product and (b) generates, together with its Subsidiaries,
annual ethical pharmaceutical sales in the Territory of more than $[***] in the
branded and generic market, as reported under United States generally accepted
accounting principles or, in  the event
that such entity does not use United States generally accepted accounting
principles, the International Accounting Standards, in each case with respect
to the then most recently ended fiscal year for which such financial
information is available.

 

1.12         “Coordinator” shall have the meaning ascribed in
Article 3.5(a) hereof.

 

1.13         “Detail” and “Detailing” shall mean an interactive face-to-face contact by a
Sales Representative with a Professional, during which a promotional message
involving the Product is given in accordance with the terms of this Agreement.

 

1.14         “Effective Date” shall mean November 16,
2000.

 

1.15         “Expert” shall have the meaning ascribed in
Article 6.6(a) hereof.

 

1.16         “FDA” shall mean the United States Food and
Drug Administration or any successor agency performing comparable functions.

 

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

 

2

 

1.17         “Field of Use” shall mean the approved
indications for the Product set forth in an NDA as of the Effective Date and as
may be approved by the FDA subsequent to the Effective Date.

 

1.18         “First Position Detail” shall mean a Detail
in which the Product is the first product discussed and the primary focus of
such Detail.

 

1.19         “Liability” or “Liabilities”
shall have the meaning ascribed in Article 10.1 hereof.

 

1.20         “Make Whole Amount” shall have the meaning
ascribed in Article 7.8 hereof.

 

1.21         “Marketing Committee” shall have the meaning
ascribed in Article 3.5(b) hereof.

 

1.22         “Marketing Plan” shall have the meaning
ascribed in Article 4.7 hereof.

 

1.23         “Maximum Quarterly Reserve Account Balance” shall have the
meaning ascribed in Article 6.3(b)(ii) hereof.

 

1.24         “Month” shall mean a calendar month.

 

1.25         “Monthly Payment” shall have the meaning ascribed in
Article 6.2(a) hereof.

 

1.26         “Monthly Payment Amount” shall have the meaning ascribed in
Article 6.3(a) hereof.

 

1.27         “NDA” shall mean the following approved New
Drug Applications (a) 20-261 [Lescol]
and (b) 21-192 [Lescol XL],
each as filed by Novartis, and all subsequent submissions, supplements and/or
amendments thereto, in each case as approved by FDA.

 

1.28         “Negotiation Termination Date” shall have the meaning
ascribed in Article 6.6(a) hereof.

 

1.29         “Net Sales” shall mean the gross invoice
price of Product sold by or on behalf of Novartis to independent,
non-Affiliated, third party customers in bona fide, arm’s-length transaction,
less the following deductions in respect of the Product, if not previously
deducted in the amount invoiced or received:

 

(a)           quantity
and/or cash discounts actually allowed or taken;

 

(b)           freight,
postage and shipping insurance invoiced to the customer;

 

(c)           customs
duties and taxes, if any, directly related to the sale;

 

(d)           amounts
repaid or credited by reason of rejections, return of goods, in each case
specifically identifiable as relating to Product;

 

(e)           amounts
incurred resulting from governmental (or an agency thereof) mandated rebate
programs;

 

3

 

(f)            third
party rebates and chargebacks clearly and directly related to the sale of
Product during the Term to the extent actually allowed;

 

(g)           rebates
related to the Novartis discount card programs similar to the Novartis CareCardSM
discount program; and

 

(h)           as
agreed by the parties in writing, any other specifically identifiable amounts
included in Product’s gross sales that were or ultimately will be credited and
that are substantially similar to those listed hereinabove;

 

1.30         “New Effective Date” shall mean the date first shown above.

 

1.31         “Nonparticipating Party” shall have the meaning ascribed in
Article 9.7 hereof.

 

1.32         “Notice of Termination” shall have the meaning ascribed in
Article 7.1 hereof.

 

1.33         “Novartis Claims”
shall have the meaning ascribed in Article 8.1(i) hereof.

 

1.34         “Novartis Indemnified Claims” shall have the meaning ascribed
in Article 9.3 hereof.

 

1.35         “Novartis Indemnified Party” or “Novartis
Indemnified Parties” shall have the meaning ascribed in
Article 10.2 hereof.

 

1.36         “Novartis Infringement Indemnitees” shall have the meaning
ascribed in Article 9.4 hereof.

 

1.37         “Novartis IP” shall have the meaning ascribed in
Article 8.1(g) hereof.

 

1.38         “Original Promotion Agreement” shall have the meaning
ascribed in the Recitals hereto.

 

1.39         “OTC Product” shall mean any pharmaceutical
product for therapeutic use in humans containing fluvastatin as the sole
pharmaceutically active substance or in combination with one or more active substances
that can lawfully be sold to customers and/or patients without being prescribed
by Professionals.

 

1.40         “Patents” shall mean those patents relating
to the Product owned by or licensed to Novartis or its Affiliates set forth on Schedule 1.40 hereto, including,
without limitation, reissues and extensions thereof.

 

1.41         “PDMA” shall have the meaning ascribed in Article 4.14
hereof.

 

1.42         “Primary Detail Equivalent” shall mean
either (i) a First Position Detail or (ii) two and one-half (2.5) Second Position
Details.

 

1.43         “Product” shall mean any dosage form covered
by the NDA containing fluvastatin sodium as the sole pharmaceutically active
substance, which is not an OTC Product.

 

4

 

1.44         “Professionals” shall mean physicians and
other health care practitioners who are permitted by law to prescribe Product.

 

1.45         “Promotional Materials” shall have the
meaning ascribed in Article 4.4 hereof.

 

1.46         “Promotion Effort” shall have the meaning ascribed in Article 4.1
hereof.

 

1.47         “Proprietary Information” shall mean any
proprietary or confidential information communicated from one party to the
other in connection or relating to this Agreement, which is identified as
confidential or proprietary, or which the other party knows or has reason to
know is confidential or proprietary, including, without limitation, financial,
marketing, business, technical and scientific information or data, whether
communicated in writing, orally or electronically.

 

1.48         “PSME” shall mean promotional, selling and
marketing expenses including, but not limited to, clinical studies, market
research, product samples, advertising, promotion and costs of and associated
with the training of the Sales Force, but excluding costs to hire and manage
the Sales Force.

 

1.49         “Quarter” shall mean a calendar quarter.

 

1.50         “Quarterly Payment Amount” shall have the meaning ascribed in
Article 6.3(b) hereof.

 

1.51         “Quarterly Reserve Account” shall have the meaning ascribed
in Article 6.3(b)(i) hereof.

 

1.52         “Quarterly Shortfall Payment Amount” shall
have the meaning ascribed in Article 6.3(b) hereof.

 

1.53         “Quarterly Total Net Compensation” shall
have the meaning ascribed in Article 6.3(b) hereof.

 

1.54         “Reliant Claims”
shall have the meaning ascribed in Article 8.2(h) hereof.

 

1.55         “Reliant Indemnified Claims” shall have the meaning ascribed
in Article 9.4 hereof.

 

1.56         “Reliant Indemnified Party” or “Reliant
Indemnified Parties” shall have the meaning ascribed in
Article 10.1 hereof.

 

1.57         “Reliant Infringement Indemnitees” shall have the meaning
ascribed in Article 9.3 hereof.

 

1.58         “Reliant Promotion Techniques” shall have
the meaning ascribed in Article 9.3 hereof.

 

1.59         “Reliant Split Percentage” shall have the meaning ascribed in
Article 6.3(a) hereof.

 

1.60         “Sales Calls” shall mean any office visits
to Professionals made by Sales Representatives for the purpose of Detailing the
Product.

 

5

 

1.61         “Sales Force” shall mean Reliant’s field
force of Sales Representatives and any additional personnel (full and/or
part-time) hired by or on behalf of Reliant for the same purpose before or
during the Term.

 

1.62         “Sales Representatives” shall mean sales
representatives employed directly or indirectly by or under contract to Reliant
who make Sales Calls, and who have been trained and equipped to make Sales
Calls.

 

1.63         “Seasonalized Net Sales Baselines” shall
mean the Seasonalized Net Sales Baselines for Agreement Year 2005 as set forth
on Exhibit 2 attached
hereto.

 

1.64         “Second Position Detail” shall mean a Detail
in which the Product is the second product discussed and the secondary focus of
such Detail.

 

1.65         “Staffing Baseline” shall have the meaning ascribed in
Article 4.3(a) hereof.

 

1.66         “Statin Product” shall mean a pharmaceutical
product not sold by Novartis or any of its Affiliates which contains an HMG CoA
reductase inhibitor (as the sole pharmaceutically active substance or in
combination with one or more other pharmaceutically active substances).

 

1.67         “Term” shall have the meaning ascribed in
Article II hereof.

 

1.68         “Termination Date” shall have the meaning ascribed in
Article 6.3(c) hereof.

 

1.69         “Termination Payment Amount” shall have the
meaning ascribed in Article 6.3(c) hereof.

 

1.70         “Termination Shortfall Payment Amount” shall
have the meaning ascribed in Article 6.3(c) hereof.

 

1.71         “Territory” shall mean the United States of
America, and its territories and possessions, including without limitation, the
Commonwealth of Puerto Rico.

 

1.72         “Third Party Infringement” shall have the meaning ascribed in
Article 9.7 hereof.

 

1.73         “Trademarks” shall mean Lescol®
and/or such other trademarks as Novartis or an Affiliate of Novartis shall duly
register with the United States Patent and Trademark Office which are utilized
by Novartis and/or its Affiliates in the Territory to identify the Product,
including, without limitation, the trademarks set forth on Schedule 1.73 hereto, and all trade
names used by Novartis in the Territory to identify the Product.

 

1.74         “VA” shall mean the U.S. Department of
Veterans Affairs.

 

6

 

1.75         “VA Adjustment Factor” shall mean $[***] per
capsule and per tablet of the Product, which amount may be increased by
Novartis every Agreement Half Year commencing July 1, 2005, in Novartis’ good
faith and in its sole and reasonable discretion, to reflect Novartis’ material
increased costs relating to the manufacture of the Product, including, without
limitation, inflation, exchange rate fluctuations, material increases in the
cost of raw materials or Product components and proportional changes in the
utilization among the three dosage forms of the Product; provided, however that
any increase in the Adjustment Factor shall not be greater than [***] percent
([***]%) in any given twelve (12) month period. Any proposed increase to the
Adjustment Factor in excess of [***] percent ([***]%)  in any given twelve (12) month period shall
require the prior written consent of Reliant following review of applicable
documentation submitted by Novartis in support of such proposed adjustment.

 

1.76         “VA Contract” shall mean the letter
agreement, dated July 28, 2003, between VA and Novartis, a copy of which is
attached hereto as Schedule 1.76.

 

1.77         “VA Net Sales” shall mean the gross invoice
price of Product sold by or on behalf of Novartis to the VA under the VA
Contract, less the following deductions in respect of the Product, if not
previously deducted in the amount invoiced or received:

 

(a)           the
VA Adjustment Factor, as adjusted from time to time; and

 

(b)           the
items described in subsections (a), (b) and (f) of the definition of Net Sales
in Article 1.29 hereof.

 

ARTICLE II

TERM

 

The term of this Agreement (the “Term”) shall be the period commencing on
the New Effective Date and terminating on December 31, 2007, unless
terminated earlier pursuant to the provisions herein. Notwithstanding the
above, Reliant shall have the right, upon written notice to Novartis prior to
October 1, 2007, to elect to extend the Term for one (1) additional Agreement
Year terminating on December 31, 2008. If Reliant elects to extend the Term for
an additional Agreement Year, the parties will in good faith negotiate staffing
levels, number of Details, PSME, compensation and any other material terms not
otherwise addressed herein for Agreement Year 2008.

 

ARTICLE III

GRANT

 

3.1           Grant
of Promotion Rights. During the Term, subject to the terms of this
Agreement, and subject to rights specifically retained by Novartis hereunder to
promote, market, Detail 

 

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

 

7

 

and sell the
Product, Novartis hereby grants Reliant the exclusive right to promote, market
and Detail (but not to sublicense, subcontract or otherwise transfer or
delegate its obligation to promote, market and Detail except as may be
authorized by the Marketing Plan, as set forth on Schedule 3.1 attached hereto or as provided in
Article 15.9 below) the Product in the Field of Use under the Trademarks
through its Sales Force or Alternate Sales Channels to Professionals in the
Territory. Subject to the last sentence of this Article 3.1, Novartis
(i) reserves the exclusive right, upon prior written notice to Reliant, to
enter into any agreements with managed care entities and institutional
customers (e.g., mail order houses, pharmacy benefit management companies and
the U.S. Government, including but not limited to, the VA program) with regard
to the Product, (ii) retains the right, upon prior written notice to
Reliant, to conduct Phase IV development for the Product; provided that Reliant
shall only be obligated to fund any such Phase IV development projects as are
approved in advance and in writing by the Marketing Committee,
(iii) retains the right to promote, market and detail the Product at its
own cost and expense, (iv) retains all other rights in and to the Product,
including, but not limited to, the NDA, all pre-clinical and clinical data, the
Drug Master File and all manufacturing, patent and trademark rights and
(v) retains the right to institute, administer and maintain discount
programs of the type described in Article 1.29(g) above, and except as
(a) required to comply with its obligations hereunder and (b) may be
agreed to by the parties, nothing herein shall give Reliant the right to use or
reference the NDA or to market the Product as anything other than a Novartis
product, or to use or reference the NDA to market a similar product. The
foregoing notwithstanding, Novartis shall (A) coordinate with Reliant the
exercise of the rights that Novartis has retained hereunder, including, without
limitation, the rights enumerated in clauses (i), (ii), (iii), (iv) and (v) of
this Article 3.1, (B) provide Reliant with reasonable prior written
notice of Novartis’ intention to exercise such retained rights (or any of
them), (C) permit Reliant to have an active role in the exercise of such
retained rights, including without limitation, allowing Reliant to actively
participate in Novartis’ relationships with managed care entities and
institutional customers and (D) only exercise such rights in a manner
consistent with the Marketing Plan, as in effect from time to time.

 

3.2           Non-compete.
During the Term and for any period after the Term in which Novartis is
obligated to compensate Reliant pursuant to Article 6.2(b), except for the
Product in accordance with this Agreement and except as otherwise agreed by the
parties, Reliant shall not market, promote, Detail, advertise or otherwise sell
any product containing fluvastatin.

 

3.3           Retention
of Rights. Except as otherwise provided herein, nothing in this Agreement
shall, during or after the Term hereof, give Reliant any of Novartis’ rights in
or to the Product, including, but not limited to, Novartis’ rights in or to
trademarks, copyrights, the NDAs, ANDAs, Drug Master Files, patent rights,
preclinical or clinical data, manufacturing rights relating to the Product, or
any supply of the Product or the active ingredient thereof. Novartis may, in
its sole discretion or as required by applicable laws, on reasonable prior
written notice to Reliant, supplement the NDA, or change package inserts at any
time during the Term or thereafter. Reliant recognizes Novartis’ title to the
Trademarks, and shall not at any time, during or after the Term, do or
knowingly suffer to be done any act or thing which will in any way impair the
rights of Novartis in or to said 

 

8

 

Trademarks. Notwithstanding
the foregoing, Novartis hereby grants to Reliant the exclusive right and
license (except as to Novartis and its Affiliates) to use said Trademarks in
connection with the promotion, marketing and Detailing of the Product during
the Term, or as required by law and to discharge its obligations under this
Agreement, in accordance with the terms hereof. It is understood that Reliant
shall not acquire and shall not claim any title to said Trademarks adverse to
Novartis by virtue of the rights granted under this Agreement or through
Reliant’s use of the Trademarks, it being the intention of the parties that all
goodwill and improved reputation generated by Reliant and use of the Trademarks
shall inure to the benefit of Novartis and any use of the Trademarks by Reliant
shall cease at the end of the Term hereof.

 

3.4           OTC
Products. Novartis retains the right, at its sole discretion, to
commercialize or to have commercialized any OTC Product during Agreement Year
2005 without any payment obligation to Reliant for such commercialization,
except as expressly set forth in this Agreement. Thereafter, as provided in
Article 5.11, there shall be no restriction on Novartis’ right to commercialize
or have commercialized any product, whether such product would constitute a
Product, an OTC Product or otherwise.

 

3.5           Cooperation
Structure.

 

(a)           Coordinator.
Each Party shall appoint an authorized representative (“Coordinator”) for the exchange of all
communications related to the promotion, marketing, Detailing and selling of
the Product.

 

(b)           Marketing
Committee. The Coordinators shall establish a Marketing Committee (the “Marketing Committee”) directed and chaired
by Novartis and consisting of equal number of representatives from each party
which will meet at least once per Quarter, to formulate, coordinate, and
implement the Marketing Plan. The Marketing Committee shall act based on the
agreement of a majority of the members of the full Marketing Committee
regardless of the number present when voting occurs. Any component of the
Marketing Plan may be amended during the relevant Agreement Year by agreement
of a majority of the members of the Marketing Committee and with the approval of
the Steering Committee.

 

(c)           Steering
Committee. In addition to the Marketing Committee, a Steering Committee
consisting of three (3) members of senior management from each of Novartis and
Reliant shall meet at least twice annually for the purposes of approving,
discussing and, if necessary, modifying the Marketing Plan.

 

(d)           Disputes.
The parties will use their commercially reasonable efforts to resolve any
disputes arising with respect to issues directly related to the Marketing Plan
by good-faith negotiation and mutual discussion. Upon written request of either
party, a Reliant senior executive shall meet with a senior executive from
Novartis to attempt to resolve any such disputes. In the event the parties fail
to resolve their dispute by the foregoing methods and such dispute relates to
issues which, in the reasonable opinion of counsel to Novartis, (i) could
reasonably present (A) material legal issues that adversely impact the NDA
or have an adverse effect 

 

9

 

on Novartis or (B)
material regulatory compliance issues or (ii) could reasonably give rise
to a material liability of Novartis, then in such instances, Novartis shall
retain the right to ultimately decide disputes escalated to this level.

 

3.6           Reliant
Intellectual Property. Except as expressly set forth herein, nothing in
this Agreement shall be deemed to grant Novartis any rights in or to, and
Novartis shall have no rights in or to, any trademarks, trade names, trade
dress, service marks, service names, logos, designs or other intellectual
property of Reliant, including, without limitation, right in the trademarks “Reliant
Pharmaceuticals,” “Reliant” or any variations thereof.

 

ARTICLE IV

SERVICES OF RELIANT

 

4.1           Product
Promotion. In accordance with the Marketing Plan, and subject to the Act
and any applicable state laws and regulations, as well as the provisions of
this Agreement, Reliant shall, at its sole expense (as between Reliant and
Novartis), use its commercially reasonable efforts to promote the Product to
Professionals, and to persuade such Professionals to prescribe and use the
Product, through the use of verbal, graphic, written and promotional materials.
All such statements, core selling messages and materials to be utilized by
Reliant to promote the Product shall be consistent with the annual Marketing
Plan jointly developed by Reliant and Novartis and, if applicable, shall be
subject to the prior approval of the FDA in accordance with Article 4.8 below. Prior
to January 1 of each of Agreement Years 2006 and 2007, Novartis shall provide
to Reliant a list of Professionals to whom to promote the Product; provided,
however, that Novartis shall have the right, in its sole discretion, to revise
such list no more than two times during each of Agreement Years 2006 and 2007
by providing a revised list to Reliant prior to May 1 and/or November 1 of each
such Agreement Year. In performing its obligations pursuant to this Agreement,
Reliant will exercise the same diligence it employs with respect to the other
products it promotes in the Territory (“Promotion
Effort”). Reliant will cause the Sales Force and Reliant employees
and agents acting on Reliant’s behalf to comply with this Agreement and all
applicable state and federal laws and regulations in connection with the
promotion, marketing and Detailing of the Product. It is understood, and
Reliant agrees, that it will be accountable for any act or omission of the
Sales Force to comply with Reliant’s obligations under this Agreement.

 

4.2           Representations
to Customers. Reliant will not make any false or misleading representations
to customers or others regarding Novartis or the Product and will not make any
representations, warranties or guarantees with respect to the specifications,
features or capabilities of the Product that are not consistent with the
applicable current FDA approved labeling, package insert or other documentation
accompanying or describing the Product, including Novartis’ standard limited
warranty and disclaimers, and that has been provided to Reliant by Novartis or
otherwise approved by Novartis pursuant to Article 4.8. Reliant shall not
make any negative statements about any other Novartis products in an effort to
promote the Product; provided that Reliant, may, in compliance with applicable
law promote and market products competitive with products of Novartis other
than the Product.

 

10

 

4.3           Staffing.

 

(a)           Agreement
Year 2005. During Agreement Year 2005, subject to Article 6.6(a), the
Sales Force will be staffed with a total number of Sales Representatives representing
at least [***] full time equivalents, of which an appropriate number (as
reasonably determined by Reliant) will be field managers. Except as otherwise
set forth herein, at no time during Agreement Year 2005 will the Sales Force be
staffed with less than [***] percent ([***]%) of [***] full time equivalent
Sales Representatives (the “Staffing Baseline”),
whereby [***] Sales Representatives detailing the Product full-time in the
second position shall equal [***] Sales Representative detailing the Product
full time in the first position. For the avoidance of doubt, no less than [***]
percent ([***]%) of the promotional effort will be provided by First Position
Details. The ratio of Sales Representatives working part time shall at no time
exceed [***]percent ([***]%). Reliant shall use commercially reasonable efforts
to promptly fill all vacant positions within the Sales Force resulting from
terminations or resignations. In the event that Reliant fails to maintain the
Staffing Baseline and Novartis provides Reliant with written notice of such
failure to comply which failure is uncured by Reliant after sixty (60) days of
receipt of Novartis’ written notice, Reliant’s share of incremental profit
above the Annual Net Sales Baseline for Agreement Year 2005 will be reduced by
the amount equal to the difference between (a) the amount that would have
been expended by Reliant had Reliant maintained the Staffing Baseline during Agreement
Year 2005 and (b) the amount actually expended by Reliant to provide the
actual level of Sales Force staffing in Agreement Year 2005, in each case using
a cost per Sales Representative of [***]dollars ($[***]). Such reduction of
Reliant’s share of the incremental profit over the Annual Net Sales Baseline
will be in the form of a payment from Reliant to Novartis within ninety (90)
days of receipt of Novartis’ written notice referred to in the preceding
sentence and will not be subject to limitations applicable to payments by
Reliant to Novartis under Article 6.3. Such reduction in Reliant’s share
of the incremental profit over the Annual Net Sales Baseline shall be Novartis’
exclusive remedy for breach by Reliant of its obligation to maintain the
Staffing Baseline, provided, however that this limitation shall not apply in
the event that the Reliant’s full time equivalent Sales Representatives for
Agreement Year 2005 is less than [***] percent ([***]%).

 

(b)           Primary
Detail Equivalents. Subject to Article 6.6, in each Agreement Year
commencing with Agreement Year 2006, Reliant Sales Representatives shall make
not less than [***]  and not more
than [***] Primary Detail Equivalents for each such Agreement Year, with at
least [***] ([***]%) of all such Primary Detail Equivalents in each Agreement
Year being First Position Details. For Agreement Years 2006 and 2007 only, Novartis shall reimburse Reliant on a monthly
basis for each Primary Detail Equivalent that occurred during such 

 

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

 

11

 

Month at a rate of
[***] dollars [***] ($[***]) per Primary
Detail Equivalent for Agreement Year 2006 and [***] dollars [***]
($[***]) per Primary Detail Equivalent for
Agreement Year 2007. Notwithstanding the above, Novartis shall not reimburse
Reliant for any Primary Detail Equivalents in excess of the aggregate maximum
Primary Detail Equivalents established for the applicable Agreement Year. Such reimbursement shall to be made within
thirty (30) days following the receipt by Novartis of an invoice
therefor, including satisfactory documentation of such Primary Detail
Equivalents.

 

4.4           Promotional
Materials. In addition to Reliant’s obligations pursuant to Articles 4.1
and 4.2 hereunder, and except as otherwise provided in this Agreement, Reliant,
at its sole expense, will create, develop, produce or otherwise obtain, and
utilize promotional, marketing, educational and training materials (“Promotional Materials”) which are necessary
to support fully the Promotion Effort for the Product. Such Promotional
Materials shall include, by way of example, Detailing aids; leave items;
journal advertising; educational programs; formulary binders; appropriate
reprints and reprint carriers; product monographs; patient support kits;
materials to support the handling of physician requests; convention exhibit
materials; direct mail; market research survey and analysis; training materials
(except as set forth in Article 5.3 hereunder); and scripts for
telemarketing and teleconferences. At a minimum, such Promotional Materials
shall include at least one Detailing aid and one leave item. Subject to
Article 3.6 above, Novartis shall own all right, title and interest in and
to any Promotional Materials produced by Reliant pursuant to this
Article 4.4 including applicable copyrights and, if applicable, trademarks.
Reliant shall provide assistance, as reasonably requested by Novartis, in
connection with the filing by Novartis, at Novartis’ expense, of appropriate
copyright and trademark applications with respect to the Promotional Materials.
Novartis hereby grants to Reliant the exclusive right (except as to Novartis),
during the Term, to use in the Territory all Promotional Materials produced by
Novartis or Reliant with respect to the Product, subject to Novartis’ prior
approval (which approval will not be unreasonably withheld, conditioned or
delayed) of said Promotional Materials pursuant to Article 4.8 below. Subject
to Article 4.8 and to applicable law, Reliant shall have the right to use
Reliant’s trademarks, and include the name “Reliant” or any variation thereof
on the Promotional Materials developed by Reliant subsequent to the Effective
Date and on Product labels and packaging. In order to assist Reliant in
adapting Novartis-produced material for promotion, marketing and Detailing of
the Product to Professionals, Novartis shall provide Reliant with timely access
to and use of Novartis’ relevant mechanicals and print production materials,
which, subject to the approval of Novartis (which approval will not be
unreasonably withheld conditioned or delayed), Reliant may duplicate or have
duplicated at its own cost. Alternatively, at Reliant’s request, Novartis may
agree to have duplicated such materials for Reliant at Reliant’s cost. Following
final approval by Novartis of all Promotional Materials, as described above,
Reliant shall provide Novartis, consistent with Reliant’s obligations under
Articles 4.11 and 5.3 hereof, with the requisite 

 

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

 

12

 

number of copies
so as to allow Novartis to satisfy its obligation to file same with the FDA
simultaneously with their first use by Reliant.

 

4.5           PSME.

 

(a)           Agreement
Year 2005. For Agreement Year 2005, subject to Article 6.6(a), Reliant
will contractually commit PSME of no less than twenty five million dollars
($25,000,000), and during the first Agreement Half Year of Agreement Year 2005,
Reliant will contractually commit PSME of no less than [***] dollars ($[***]). In
the event that the PSME commitment for Agreement Year 2005 falls more than
[***] percent ([***]%) below twenty five million dollars ($25,000,000) and
Novartis provides Reliant with written notice of such failure to comply with
the terms of this Article 4.5(a), which failure is uncured by Reliant,
Reliant’s share of the incremental profit over the Annual Net Sales Baseline
for Agreement Year 2005 will be reduced by the amount equal to the difference
between (a) the amount that would have been expended by Reliant had
Reliant complied with its obligations under this Article 4.5(a) during
Agreement Year 2005 and (b) the amount actually expended by Reliant in
connection with this Article 4.5(a) (the “PSME Shortfall Amount”). Such reduction of Reliant’s share of
the incremental profit over the Annual Net Sales Baseline will be in the form
of a payment from Reliant to Novartis within ninety (90) days of receipt of
Novartis’ written notice referred to in the preceding sentence and will not be
subject to limitations applicable to payments by Reliant to Novartis under
Article 6.3. Such reduction shall be Novartis’ exclusive remedy for breach
by Reliant of its obligations under this Article 4.5(a); provided, however
that this limitation shall not apply in the event that (i) the
contractually committed PSME in the first Agreement Half Year of Agreement Year
2005 (January 1 through June 30) is less than [***] dollars ($[***])
and/or (ii) the PSME Shortfall Amount is greater than [***] dollars
($[***]). Novartis shall have no obligation to reimburse Reliant for PSME for
Agreement Year 2005.

 

(b)           Agreements
Years 2006 and 2007. For each Quarter during Agreement Years 2006 and 2007,
Novartis, after consultation with Reliant, will determine and advise Reliant in writing of the appropriate required
PSME amount for the Product, which shall be subject to adjustment pursuant to
Article 6.6. It is currently anticipated that the total annual required PSME
amount for each such Agreement Year will be [***] dollars ($[***]). Novartis shall reimburse Reliant on a
monthly basis for all PSME actually expended by Reliant during Agreement
Years 2006 and 2007 which does not
exceed in the aggregate the required PSME amount established by Novartis for
the applicable period, such reimbursement to be made within ten (10) days
following the receipt by Novartis of a monthly non-personal PSME report.

 

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

13

 

4.6           Requests
for Information.

 

(a)           Requests
from Professionals. The parties acknowledge that each may receive requests
for medical information concerning the Product from medical professionals. The
parties agree to coordinate all professional services activities through
Novartis, who shall be the responsible party for responding to all such
requests. Novartis shall promptly provide Reliant with (i) copies of all
written materials and (ii) written summaries of all oral advice, provided
by Novartis in response to such inquiries.

 

(b)           Requests
from Others. The parties also agree to establish a working group of
representatives from each party who will discuss procedures to address medical
inquiries relating to managed healthcare customers, trade relations, customer
service and indigent patients, but Novartis shall have sole responsibility for
taking or not taking any such recommended actions at Novartis’ expense.

 

4.7           Marketing
Plan. At a time consistent with the Novartis business planning process of
each Agreement Year, Reliant and Novartis shall prepare the marketing plan for
the upcoming Agreement Year (the “Marketing
Plan”) in accordance with the process set forth in Article 3.5
hereof. Novartis shall provide Reliant with timelines for development of
business plans and the Marketing Plan for the following Agreement Year no later
than January 31 of then current Agreement Year. The Marketing Plan shall
be in sufficient detail to allow Novartis to evaluate Reliant’s strategy and
tactics for promotion of the Product and to allow Novartis to reasonably
determine that Reliant intends (i) to support fully its Promotion Effort
as required by this Article IV and (ii) to otherwise comply with its
obligations pursuant to this Article IV. Each Marketing Plan will include,
without limitation, a mutually agreed framework for dealing with managed care
accounts.

 

4.8           Promotional
Material Review Process. Reliant will submit all Promotional Materials
developed pursuant to Article 4.4 to the Novartis promotional review core
team for review, comment and approval at least ten (10) working days prior to
scheduled core team meetings to finalize such materials. Reliant shall not use
any such materials not approved by Novartis, and, if applicable, the FDA. Reliant’s
obligation hereunder applies regardless of the intended usage or audience of
the materials. Novartis shall provide its comments and its determination to
Reliant within three (3) weeks of Novartis’ receipt of each such item of
promotional material, unless otherwise agreed. If such comments or
determination is not received by Reliant within such three (3) week period, the
Promotional Materials shall be deemed approved by Novartis and Reliant shall be
authorized to finalize and use same, subject to any required approval by FDA. To
facilitate such review and approval process, upon execution of this Agreement,
Novartis shall appoint its Coordinator as Reliant’s contact for this purpose. The
parties also agree to attempt to facilitate the review process through the use
of teleconferencing and videoconferencing, where appropriate.

 

14

 

4.9           Intentionally
Omitted.

 

4.10         Reporting
Requirements.

 

(a)           Agreement
Year 2005. Within forty-five (45) days after the close of each six (6)
month period of Agreement Year 2005, appropriate representatives of Reliant
shall meet with appropriate representatives of Novartis. At least five (5) days
before such meeting, Reliant will present to Novartis a written status report
summarizing Reliant’s activities pursuant to this Agreement for that prior six
(6) month period, including (a) Sales Representative and field manager
turnover, (b) the total number of Sales Calls, (c) the number of days
in the field per Sales Representative, (d) the number of calls per day per
Sales Representative, (e) the number of Details per Sales Call, (f) the
ratio of Sales Calls to targeted Professionals compared to total Sales Calls,
(g) the percentage of targeted Professionals actually Detailed  and (h) if applicable, a summary of all other
Alternative Sales Channels activities engaged in by Reliant in order to support
fully the Promotion Effort pursuant to this Article IV.

 

(b)           Agreement
Years 2006 and 2007.

 

(i)            Within
twenty-five (25) days after the close of each Month of Agreement Years 2006 and
2007, Reliant shall provide Novartis with a status report in electronic format
in the form attached hereto as Schedule 4.10(b)(i),
which status report will summarize Reliant’s activities pursuant to this
Agreement for such prior Month and on an Agreement Year-to-date basis,
including (a) the amount of PSME spent to date, (b) the total number
of Sales Calls, (c) the number of days in the field per Sales
Representative, (d) the number of Sales Calls per day to targeted
Professionals, (d) the number of Sales Calls which resulted in an actual
Detail of a targeted Professional, including (i) the number of times each
targeted Professional is actually Detailed and (ii) the percentage of
targeted Professionals actually Detailed, in each case providing separate
numbers for First Position Details and Second Position Details, (f) a
comprehensive summary of the Sales Representative vacancy rate for the
Territory, including the number of days and specific dates in which each sales
territory has been vacant, (g) information pertaining to the Sales
Representatives including (A) the number of Sales Representatives, (B) a breakout
of sales teams and (C) the Sales Representative turnover (including the number
of reassignments) and (h) if applicable, a summary of all other Alternative
Sales Channels activities engaged in by Reliant in order to support fully the
Promotion Effort pursuant to this Article IV.

 

(ii)           Within
the later of (A) forty-five (45) days after the close of each Month of
Agreement Years 2006 and 2007 or (B) promptly following receipt by Reliant of
the applicable data from the vendor, Reliant shall provide Novartis with
physician level data in electronic AFCII flat file format as specified on Schedule 4.10(b)(ii) attached
hereto.

 

(c)           Call
Reports. During the Term, in addition to Reliant’s reporting requirements
in Articles 4.10(a) and (b), Reliant will provide Novartis with call activity
reports on a Monthly and Agreement Year-to-date basis.

 

15

 

(d)           Retention
of Records. Reliant shall maintain full and accurate records of call
reports and other promotional activities for no less than three (3) years after
the end of each Agreement Year. Reliant shall permit Novartis to have such
records examined by an independent auditor retained by Novartis and acceptable
to Reliant during regular business hours and upon reasonable advance notice,
but not later than three (3) years following the rendering of any such reports,
and no more often than twice per Agreement Year during the Term or calendar
year thereafter. Such independent auditor shall keep confidential any
information obtained during such examination, shall report to Novartis only the
results of the audit of the items listed in clauses (a) through (h) of Articles
4.10(a) and (b) and the amount of PSME incurred pursuant to Article 4.5
and shall not unreasonably interfere with Reliant’s operations. Any such
information so reviewed and any such information reported to Novartis shall be
considered the Proprietary Information of Reliant. The fees and expenses
relating to the services of the said independent auditor in accordance with
this Article 4.10(d) shall be borne by Novartis, provided, however, that
Reliant shall reimburse Novartis for such fees and expenses in the event the
audit reveals an error equal to or exceeding five percent (5%) of (i) any
of the items listed in clauses (a) through (h) of Article 4.10(a) or (b), as
applicable, and/or (ii) the amount of PSME incurred pursuant to
Article 4.5 (so long as the magnitude of the error with respect to such
amount of PSME exceeds fifty thousand dollars ($50,000)).

 

4.11         Assistance.
Each party agrees to provide to the other all reasonable assistance and take
all actions reasonably requested by the other party that are necessary to
enable the other party to comply with any law or regulation applicable to the
Product, including, but not limited to, Novartis meeting its reporting and
other obligations under Article 5.3. Such assistance and actions shall
include, among other things: (a) both parties promptly reporting to the
other adverse drug reactions of which it becomes aware, so as to permit
Novartis to meet its FDA reporting and other obligations in a timely fashion;
and, in this regard, Novartis will provide Reliant with all applicable internal
procedures, reporting forms and contacts to allow Reliant to promptly report to
Novartis any adverse drug reactions, (b) each party carrying out any
FDA-mandated notifications relating to the Product, (c) Reliant timely
transmitting to the appropriate Novartis personnel copies of all Promotional
Materials required to be filed with the FDA, so as to permit Novartis to meet
its FDA reporting and other obligations in a timely fashion, (d) each
party immediately notifying the other of any material inquiry or other contact
by the FDA or any other governmental agency or authority with such party or its
Affiliates relating to the Product, except that Novartis will notify Reliant of
all such inquiries or contacts which, in the reasonable opinion of counsel to
Novartis, may affect or impact Reliant’s rights and/or obligations under this
Agreement and (e) Novartis promptly notifying Reliant of any regulatory
action with respect to the Product.

 

4.12         Sales
Tax Reporting Requirements. Reliant shall provide to Novartis a periodic
accounting (but not more than twice per year) of the distribution of Promotional
Materials on a state-by-state basis for the purpose of Novartis complying with
its state sales tax reporting requirements.

 

16

 

4.13         Compliance.
Reliant, through its Sales Force and Alternate Sales Channels or otherwise,
shall make no statements, claims or undertakings to any person with whom they
discuss or promote the Product that are inconsistent with the Marketing Plan,
Promotional Materials and the FDA approved labeling for the Product. Reliant,
its employees, representatives and agents shall not offer, pay, solicit or
receive any remuneration to or from Professionals, in order to induce referrals
of or purchase of the Product. The Sales Force shall have no direct contact
with, nor shall the Sales Force be involved with the delivery of Product to
patients of Professionals, other than delivery of samples directly to
Professionals authorized to prescribe the Product. The Sales Force shall be
trained in connection with compliance with Sec. 1128B(b) of the Social
Security Act and the AMA Guidelines on Gifts to Physicians from Industry, prior
to engaging in promotion of the Product.

 

4.14         Compliance
with PDMA. Reliant shall require all Sales Representatives to comply with
applicable Sections of the Prescription Drug Marketing Act of 1987, as amended,
the applicable regulations promulgated thereunder (“PDMA”), state laws and regulations governing the storage and
distribution of pharmaceutical samples. Sales Representatives shall also comply
with the Sample Accountability Policies and Procedures of Novartis including
those set forth in Schedule 4.14.
All such policies in effect as of the New Effective Date are attached to this
Agreement as Schedule 4.14,
and any modifications thereto shall be delivered to Reliant promptly, and in
any event not less than seven (7) days prior to effectiveness of such
modifications.

 

ARTICLE V

ADDITIONAL AGREEMENTS OF NOVARTIS

 

5.1           Obligations
of Novartis. In accordance with the provisions of this Agreement and all
applicable laws and regulations, Novartis shall, at its cost and expense,
(a) use commercially reasonable efforts to perform or cause to be
performed all Product manufacture, labeling, packaging, warehousing,
distribution, order entry, customer services and all other activities to supply
and distribute the Product in order to fill all orders generated by Reliant
activities hereunder in a timely and efficient manner, and (b) maintain
Product inventory at levels sufficient to satisfy at least one hundred percent
(100%) of the annual Net Sales forecast set forth on Exhibit 1 for Agreement Year 2005 and
the annual Net Sales forecasts developed by Novartis for each Agreement Year
thereafter, plus a “safety stock” at levels comparable to other Novartis
products, but in any event no less than a [***] supply based on the then
current Net Sales forecast. Prior to Agreement Year 2006, should demand for the
Product either fall short of or exceed the parties’ joint forecast, neither
party will be responsible to compensate the other in any way for such shortfall
or excess, except as provided in Article VI. From and after Agreement Year
2006 should demand for the Product either fall short of or exceed the then
current Net Sales forecast, neither party will be responsible to compensate the
other 

 

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

 

17

 

in any way for
such shortfall or excess, except as provided in Article VI. However,
should Novartis encounter supply problems which cause the Product to remain on
backorder for [***], upon written notice from Reliant, the Term shall be
extended for a period of time equal to the period of sustained backorder and
Reliant shall not be responsible for any shortfall which may arise during the
period of sustained backorder or as a direct result thereof. Novartis shall
accept all orders for the Product in conformity with the pricing determined by
Novartis pursuant to Article 5.6, subject to Novartis’ standard sales term
and conditions. Such standard sales terms and conditions in effect as of the
Effective Date are attached to this Agreement as Schedule 5.1, and any modifications thereto shall be
delivered to Reliant promptly, and in any event not less than fifteen (15) days
prior to effectiveness of such modifications. Novartis shall promptly provide
Reliant with written notice in the event that its supply of “safety stock” of
the Product falls below the levels required by this Article 5.1.

 

5.2           Manufacturing
Activities. The Product to be manufactured by or for Novartis for sale in
the Territory shall be manufactured to meet all specifications for the Product
in accordance with the NDA, cGMP’s and in compliance with all other applicable
federal, state and local laws, rules, regulations and requirements of the
Territory and at the time of shipment shall not be adulterated or misbranded
within the meaning of the Act. It is understood, and Novartis agrees, that it
will be accountable for any act or omission of any third party acting for or on
behalf of Novartis to comply with Novartis’ obligations under this Agreement.

 

5.3           Compliance
with Regulatory Requirements. Unless otherwise required by law, Novartis
will retain exclusive authority and responsibility for complying with all
regulatory requirements and maintaining all government agency contacts relating
to the Product, including, but not limited to, maintaining and updating of the
NDA, the development and submission of applications for new indications (if
any, and at its sole discretion based on its reasonable business judgment), the
reporting of any adverse drug reactions to the FDA, the compliance of
Promotional Materials with FDA rules and regulations, the filing of Promotional
Materials with the FDA, and payment of Medicaid and other governmental rebates
which in Novartis’ sole judgment are due and owing. Novartis shall comply in a
timely manner with all of its obligations hereunder, including the filing of
all necessary reports and other required documentation with the FDA. Nothing
herein shall obligate Novartis to seek FDA approval for additional Product
indications. Nothing herein shall relieve Reliant of its obligations pursuant
to this Agreement, including, but not limited to, Article 4.10.

 

5.4           Intentionally
Omitted.

 

5.5           Training.
During the Term, Novartis will have no obligation to train the Sales Force;
provided, however, that from time to time Novartis may request that Reliant’s
training and/or Promotional Materials be updated within sixty (60) days of such
request to reflect new developments in connection with the Product, and Reliant’s
consent to make any 

 

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

 

18

 

such updates shall
not be unreasonably withheld or delayed. Reliant may request Novartis’
assistance in training on new developments in connection with the Product. Any
such request shall be made with reasonable notice to Novartis, and any
additional training pursuant to this Article 5.5 shall be entirely at
Reliant’s expense. Novartis shall use commercially reasonable efforts to comply
with any such request by Reliant.

 

5.6           Sales;
Pricing. Novartis shall book all sales of the Product in the Territory, and
shall be responsible for the pricing of the Product, including, but not limited
to, the timing of pricing changes and any discounting, shall be at Novartis’
sole discretion; provided, however, that in establishing the price of the
Product, Novartis will attempt to price the Product in such a way as to ensure
that it remains competitive in the marketplace; and provided, further, that the
Product will not be bundled or integrated with other products or services in a
way which does not result in the Product being sold for its fair arm’s length
market value. Reliant will be notified by Novartis of any price changes prior
to such changes becoming effective. During the Term, Novartis will notify
Reliant promptly, but in any event at least seven (7) business days prior to
the effective date of any new pricing for the Product. With regard to managed
care/institutional contracting, Novartis’ obligation under the preceding
sentence shall be discharged when Novartis provides to the Marketing Committee
the range of discounted pricing that its National Account Managers are
authorized to provide to managed care and other institutional customers.

 

5.7           Sales
Reports. During the Term, Novartis shall provide Reliant with the following
reports:

 

(a)           A
Monthly update of Net Sales in Novartis’ standard accounting format (a sample
of which is attached hereto as Schedule 5.7(a)),
as it becomes available to Novartis’ employees with responsibility for the
Product and this Agreement in the normal course of business, but in no event
later than the 7th
day of the Month immediately following the Month in which the Net Sales that
are the subject of the update were booked;

 

(b)           No
later than seven (7) days after
the close of each Month, Novartis shall provide Reliant with a report in
electronic format in the forms attached hereto as Schedules 5.7(b), which reports will summarize
instances in which the Product has remained on backorder for at least [***]
successive weeks;

 

(c)           No
later than seven (7) days after
the close of each Month, Novartis shall provide Reliant with a report in
electronic format in the forms attached hereto as Schedules 5.7(c), which reports will set forth (i)
the net sales price per tablet for the Product during the immediately preceding
Month and (ii) the shipments and Net Sales by SKU for the Product during the
immediately preceding Month; and

 

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

 

19

 

(d)           No
later than one (1) business day following each day on which Novartis books
sales of the Product, Novartis shall provide Reliant with a report in
electronic format in the form attached hereto as Schedule 5.7(d), which report will set for the Net
Sales for the immediately preceding day.

 

5.8           Intentionally
Omitted.

 

5.9           Sales
Force. Reliant shall select the name and the logo for the Sales Force and
shall own all title and interest in and to such name and/or logo.

 

5.10         Samples.
Novartis will provide Product samples to Reliant at the net costs set forth on Exhibit 3 attached hereto. Novartis
will ship, at Reliant’s cost, samples to a warehouse facility designated by
Reliant upon receipt of a purchase order from Reliant. A batch quantity of
Product samples will be the minimum requirement specified on each purchase
order. For the purposes of this Article 5.10 batch quantities shall mean
the following: (i) 20 mg — [***] capsules, (ii) 40 mg — [***]
capsules and (iii) 80 mg XL — [***] tablets.

 

5.11         Exclusivity.
During Agreement Year 2005 and in the event that this Agreement is terminated
by Reliant during Agreement Year 2005 pursuant to Articles 7.1, 7.2, 7.3, 7.4,
7.5 or 7.7, for a period of two (2) years from such termination (the “Exclusivity Period”), other than with respect to the OTC
Product and the Product (which during the Term shall be limited to the extent
required and/or permitted under this Agreement), Novartis shall not, directly
or indirectly, develop, seek to develop, manufacture, cause to manufacture,
market, promote or otherwise sell in the Territory, any product containing
fluvastatin nor during such period shall any successor to Novartis or any
business enterprise acquired by Novartis after the Effective Date (whether by
merger or asset acquisition or otherwise) develop, seek to develop,
manufacture, cause to manufacture or market in the Territory any product
containing fluvastatin not approved by the FDA as of the date of the merger or
acquisition. In the event that any Affiliate of, or successor to Novartis takes
any action during the Exclusivity Period that is prohibited by the foregoing
(other than with respect to the development, manufacture or marketing of any
non-branded product) it shall constitute a breach of this Agreement to the same
extent as if Novartis had taken such action itself. From and after the end of
the Exclusivity Period, Novartis, itself or through any of its Affiliates or
any third party within and without the Territory, shall have the right to
develop, seek to develop, manufacture, cause to manufacture, market, promote or
otherwise sell products containing fluvastatin, and Reliant shall have no
rights with respect to any such products other than the rights of Reliant
specifically provided herein with respect to the Product.

 

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

 

20

 

ARTICLE VI

COMPENSATION

 

6.1           Intentionally
Omitted.

 

6.2           Compensation
to Reliant.

 

(a)           Agreement
Year 2005. For Agreement Year 2005, subject to Article 6.2(b), Reliant
shall be compensated based upon a percentage of incremental Net Sales achieved
above a pre-set and fixed Annual Net Sales Baseline. Exhibit 1 outlines the Annual Net
Sales Baseline for Agreement Year 2005 and the agreed percentage of Net Sales
above the baseline that will be paid to Reliant by Novartis for Agreement Year
2005. Exhibit 2
presents a Seasonalized Net Sales Baseline on a Monthly basis for Agreement
Year 2005. During Agreement Year 2005, Reliant will be compensated on a Monthly
basis for Net Sales above the Seasonalized Net Sales Baseline using the annual
percentages outlined in Exhibit 1
(each a “Monthly Payment”), as
further described in Article 6.3 hereof.

 

(b)           After
Agreement Year 2005 and/or Termination. From and after the earlier to occur
of the date of the termination of this Agreement (subject to the last sentence
of this Article 6.2(b)) or December 31, 2005, Novartis shall continue to
compensate Reliant at the rate of twenty percent (20%) of Net Sales in the
first twelve (12) months after such date and ten percent (10%) of Net Sales in
the subsequent twelve (12) months after such date. For purposes of calculating
the compensation to Reliant payable pursuant to this Article 6.2(b), Net Sales
shall include VA Net Sales. Payment of such compensation for all such periods
shall be made within thirty (30) days following the end of each Month during
such periods by wire transfer of immediately available funds to an account
designated by Reliant. Thereafter, Novartis will not be obligated to further
compensate Reliant, except as otherwise set forth herein. The foregoing
notwithstanding, (i) in the event that this Agreement is terminated by Novartis
under Article 7.5 or 15.7 hereof prior to December 31, 2005, the compensation
amounts due to Reliant under this Article 6.2(b) shall be calculated by
multiplying the amount otherwise due under this Article 6.2(b) by a fraction
the numerator of which equals the number of months elapsed since the Effective
Date as of the date of termination and the denominator of which equals sixty
(60) and (ii) Reliant shall not be entitled to any compensation under this
Article 6.2(b) following the termination of this Agreement prior to
December 31, 2005 in the event that prior to December 31, 2005 (A) Reliant has
not performed all material duties and obligations under this Agreement or (B)
this Agreement was terminated by Novartis pursuant to Article 7.1, 7.2 or
7.4 or by either party pursuant to Article 7.3 hereof.

 

(c)           VA
Net Sales. Until the earlier to occur of the date of the termination of
this Agreement or December 31, 2005, unless the VA Contract is earlier
terminated, 

 

21

 

Reliant shall
receive additional compensation in an amount equal to [***] percent ([***]%) of
VA Net Sales. For the avoidance of doubt, other than with respect to Article
6.2(b) above, the amount of VA Net Sales will be excluded from the calculation
of Net Sales and will not entitle Reliant to receive any other compensation
pursuant to this Article VI. Payment of such compensation shall be made
within thirty (30) days following the end of each Month during the Term by wire
transfer of immediately available funds to an account designated by Reliant. Such
monthly payments shall be calculated based on the VA claims made during the
applicable Month, with a “true-up” to occur, for a period of six (6) months
following the earlier of the termination of the VA Agreement or the expiration
of the Term, with respect to each such Month to account for any lag in
chargeback submissions. Any such “true-up” amounts due hereunder shall be paid
by Reliant to Novartis within thirty (30) days following invoice by Novartis. The
parties acknowledge that Reliant owes Novartis an amount equal to $[***] with
respect to VA Net Sales for periods prior to March 1, 2005, as provided on Schedule 6.2(c) attached hereto. Novartis
shall have the right to offset said amount against any Monthly Payment Amount
calculated and payable following the New Effective Date pursuant to Article
6.3(a) below. Such offset by Novartis shall be the sole recourse by Novartis in
respect of such $[***] unless this Agreement is terminated before such amount
is offset in full, in which event the unpaid balance of such amount shall be
payable in full by Reliant within thirty (30) days following the date of
invoice by Novartis.

 

6.3           Payment
in Agreement Year 2005.

 

(a)           For
the first two Months of each Quarter during Agreement Year 2005, the Monthly
Payment will be calculated according to the following formula:  [***] (the “Reliant
Split Percentage”)} = the “Monthly
Payment Amount”. If the Monthly Payment Amount is negative, no
Monthly Payment Amount will be paid to Reliant or Novartis. Each Monthly
Payment Amount will be paid by Novartis to Reliant within thirty (30) days of
the last day of each Month.

 

(b)           Within
fifteen (15) days of the last day of each Quarter of Agreement Year 2005, a
quarterly reconciliation will be calculated according to the following
formula:  [***] (the “Quarterly Total Net Compensation”) less
(the sum of Monthly Payment Amounts 

 

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

 

22

 

paid by Novartis
to Reliant with respect to the first two Months of the relevant Quarter) (the “Quarterly Payment Amount”). The Quarterly
Payment will be made by Novartis to Reliant, if the Quarterly Payment Amount is
greater than zero ($0.00). The Quarterly Payment Amount will be paid by Reliant
to Novartis, if the Quarterly Payment Amount is less than zero ($0.00) (the “Quarterly Shortfall Payment Amount”),
provided that such Quarterly Shortfall Payment Amount, which shall be deemed to
be a positive number, will be capped at an amount equal to the sum of
(i) the Monthly Payment Amounts paid by Novartis to Reliant with respect
to the first two Months of the relevant Quarter, if any, and (ii) the
Quarterly Reserve Account balance (as defined below) as of the beginning of the
relevant Quarter. Any Quarterly Payment Amount or Quarterly Shortfall Payment
Amount due hereunder shall be paid within thirty (30) days of the last day of
the relevant Quarter.

 

(i)            Creation
of the Quarterly Reserve Account. In the first Quarter of 2002, Reliant
will create a notional reserve account (the “Quarterly
Reserve Account”) to be used for purposes of determining the payment
obligation, if any, to Novartis in subsequent Quarters as a result of the
Quarterly Payment Amount calculation yielding an amount less than zero ($0.00).
As of the end of the first Quarter of 2002, the Quarterly Reserve Account will
be deemed to have an initial balance equal to the lesser of (i) $[***],
and (ii) [***]

 

(ii)           Mechanism
for Adjusting the Quarterly Reserve Account Balance. At the end of the
second Quarter of 2002, and at the end of each Quarter thereafter, the maximum
possible balance in the Quarterly Reserve Account (the “Maximum Quarterly Reserve Account Balance”)
will be equal to the greater of (i) $[***]and (ii) [***]

 

Beginning with the second Quarter of 2002, and in each
Quarter thereafter, in the event the balance in the Quarterly Reserve Account
at the beginning of the relevant Quarter is less than the Maximum Quarterly
Reserve Account Balance as updated at the end of such Quarter, the balance in
the Quarterly Reserve Account will be increased at the end of such Quarter by
an amount equal to the lesser of (a) the Quarterly Total Net Compensation
due to Reliant for the relevant Quarter, if a positive number, otherwise $0.00,
and (b) an amount equal to the difference between the Maximum Quarterly
Reserve Account Balance as updated at the end of such Quarter and the Quarterly
Reserve Account balance at the beginning of such Quarter. Any compensation due
Reliant in the relevant Quarter in excess of the amount required to increase
the balance in the Quarterly Reserve Account to the Maximum Quarterly Reserve
Account Balance will be irrevocably earned by Reliant.

 

Beginning with the
second Quarter of 2002, and in each Quarter thereafter, to the extent a
Quarterly Shortfall Payment Amount is due from Reliant to Novartis, the
Quarterly Reserve Account balance as of the beginning of the relevant Quarter
will be reduced at the end of such Quarter by the amount by which the Quarterly
Shortfall Payment Amount exceeds the sum of Monthly Payment Amounts paid by Novartis
to Reliant during the first two months of such Quarter, if any; provided, 

 

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

 

23

 

however, that in
no event shall the balance in the Quarterly Reserve Account at the end of such
Quarter be less than zero ($0.00).

 

(c)           Within
thirty (30) days after the earlier of December 31, 2005 or the last day of the
Month in which this Agreement is terminated, a final reconciliation will be
calculated according to the following formula: 
{[(Net Sales for the Quarter in which such expiration or termination
occurs up to and including the date of such expiration or termination (the “Termination Date”)) [***] less (the sum of
the Monthly Payment Amounts paid by Novartis to Reliant in the relevant
Quarter) (the “Termination Payment Amount”).
The Seasonalized Net Sales Baseline for the Month in which the Termination Date
occurs will be prorated for the number of days in the Month in which the
Termination Date occurs. The Termination Payment Amount will be paid by
Novartis to Reliant, if the Termination Payment Amount is greater than zero
($0.00). The Termination Payment Amount will be paid by Reliant to Novartis, if
the Termination Payment Amount is less than zero ($0.00) (the “Termination Shortfall Payment Amount”),
provided that such Termination Shortfall Payment Amount, which shall be deemed
to be a positive number, will be capped at an amount equal to the sum of
(i) the Monthly Payment Amounts paid by Novartis to Reliant with respect to
the first two Months of the relevant Quarter, if any, and (ii) the
Quarterly Reserve Account balance as of the beginning of such Quarter. Any
Termination Payment Amount or Termination Shortfall Payment Amount due
hereunder shall be paid within forty-five (45) days of the last day of such
Quarter.

 

6.4           Record
Keeping. Novartis shall keep full and accurate books, records and invoices
with respect to Net Sales and the amount of compensation payable to Reliant
hereunder for no less than three (3) years after the end of the last year in
which compensation is payable pursuant to this Article VI. Novartis shall
permit Reliant, at Reliant’s expense, to have such books and records examined
by an independent auditor retained by Reliant and acceptable to Novartis,
during regular business hours and upon reasonable advance notice, but no later
three (3) years following the rendering of such reports, accounting and
payments, and no more often than two (2) times per Agreement Year during the
Term or calendar year thereafter. Such independent auditor shall keep
confidential any information obtained during such examination, shall report to
Reliant only the Net Sales and the amounts of compensation that the independent
auditor believes to be due and payable thereunder and shall not unreasonably
interfere with Novartis’ operations. Any such information so reviewed and any
such information reported to Reliant shall be considered the Proprietary
Information of Novartis. The fees and expenses relating to the services of the
said independent auditor in accordance with this Article 6.4 shall be
borne by Reliant, provided however that Novartis shall reimburse Reliant, for
such fees and expenses in the event the audit reveals an error equal to or
exceeding five percent (5%) of Net Sales or amounts of compensation due to
Reliant, so long as the amount of the error exceeds fifty thousand dollars ($50,000).

 

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

 

24

 

6.5           Intentionally
Omitted.

 

6.6           Adjustment.

 

(a)           Upon
the occurrence of any of the events set forth in clauses (i) through (vii) of
this Article 6.6(a), and upon Reliant’s request therefor, members of
senior management of each of Reliant and Novartis will convene without undue
delay to assess in good faith the impact of such event and, if deemed
necessary, attempt to agree on equitable adjustments to the Annual Net Sales
Baseline for Agreement Year 2005, compensation to Reliant in respect of Net
Sales, PSME levels, the Staffing Baseline and/or required Details provided for
in Articles 4.3 and 4.5, commensurate with the parties’ projected
assessment of such impact. In the event that Reliant and Novartis are unable to
reach agreement with respect to such equitable adjustments (including, without
limitation, whether any such adjustments are necessary) within ten (10)
business days of Reliant’s request for a meeting pursuant to this
Article 6.6(a), then the matters still in dispute shall, not later than
twenty (20) business days after the first date on which one of the parties
affirmatively terminates discussions in writing with respect to such equitable
adjustments (the “Negotiation Termination
Date”), be submitted for resolution to one of the entities listed on
Schedule 6.6(a)
attached hereto as selected by Novartis (the “Expert”)
who, acting as an expert and not as an arbitrator, shall resolve the matters
still in dispute. Any reference to the Expert shall be deemed to include a
reference to any member or employee thereof that such firm may designate as the
Expert to act on its behalf. In the event that Novartis fails to notify Reliant
in writing of its selection of Expert from the choices set forth in this
Article 6.6(a) within five (5) business days following the Negotiation
Termination Date, then Reliant shall select the Expert by written notice to
Novartis. The Expert’s resolution of the matters in dispute shall be final and
binding on the parties. The Expert shall make a determination as soon as
practicable and in any event within thirty (30) days (or such other time as the
parties hereto shall agree in writing) after its engagement. The fees and
expenses of the Expert shall be divided equally between Reliant and Novartis. Reliant
and Novartis shall each make readily available to the Expert all relevant books
and records requested by the Expert and shall otherwise cooperate with the
Expert in connection with the resolution of any matters in dispute arising
under this Article 6.6(a). In the event that the Expert shall be unable or
unwilling to perform the services called for under this Article 6.6(a),
the Expert shall be selected in accordance with the commercial rules of the
American Arbitration Association.

 

(i)            Any
contracts of the type described in Article 3.1(i) to which Novartis
is a party on the New Effective Date are (A) terminated by Novartis,
(B) terminated by any other party to such contract due to a breach by
Novartis of such contract or (C) not renewed by Novartis in accordance
with their terms;

 

(ii)           An
OTC Product is commercialized by or on behalf of Novartis or pursuant to a
license to the Patents granted by Novartis;

 

25

 

(iii)          Clinical studies are published by or on
behalf of Novartis that reveal results materially different from the data
submitted to the FDA in support of the NDA;

 

(iv)          An
amendment to the Product label required by the FDA and involving a so-called
Black Box Warning;

 

(v)           Novartis
materially increases or expands its discounting practices with respect to the
Product;

 

(vi)          Novartis
elects to reduce the price (Wholesale Acquisition Cost [WAC]) of the Product
below a price equal to the price for such Product on the Effective Date;

 

(vii)         Novartis bundles or integrates the Product
with other products in a way that results in the Product being sold a price
which is less than its fair arm’s length market value.

 

(b)           In
the event that, at any time during the Term, Reliant or Novartis develops a
good faith belief that the requirements for staffing, Primary Detail
Equivalents and/or PSME commitments pursuant to Articles 4.3 and 4.5
should be adjusted downward in order to optimize (right-size) Reliant’s
promotional effort for the Product, then upon such party’s request, members of
senior management of each of Reliant and Novartis will convene without undue
delay to assess in good faith such party’s belief and attempt to agree on
appropriate adjustments to any or all of the requirements for staffing, Primary
Detail Equivalents and/or PSME commitments pursuant to Articles 4.3 and
4.5. In the event that Reliant and Novartis are unable to reach agreement with
respect to such downward adjustments (including, without limitation, whether
any such adjustments are necessary) within ten (10) business days of the
request for a meeting pursuant to this Article 6.6(b), then Novartis shall
retain the right to ultimately determine whether any such adjustments shall be
made and the extent of such adjustments.

 

ARTICLE VII

TERMINATION

 

7.1           Termination
for Material Breach. Either party may terminate this Agreement in the event
that the other party materially breaches or materially fails to perform any
material covenants, duties or obligations under this Agreement, where such
breach remains uncured, or such failure to perform continues, for at least
sixty (60) days after the aggrieved party shall have given written notice of
the breach or failure to perform to the other party. If, after the sixty (60)
day period for cure and/or performance, such breach remains uncured or such
failure to perform continues, the aggrieved party may provide written notice to
the other party of termination of this Agreement (“Notice of Termination”). Such termination shall be effective
seven (7) days from receipt of said Notice of Termination.

 

26

 

7.2           Termination
for Failure to Make Payments. Either party may terminate this Agreement in
the event that the other party fails or refuses to pay amounts due to such
other party as and when due, which failure or refusal to pay is not cured
within thirty (30) days after the other party gives written notice of
non-payment to the defaulting party.

 

7.3           Termination
for Withdrawal. Each party agrees to notify the other immediately of any
pending or threatened event of which the party is aware, which may lead to
withdrawal of the Product from the market, including without limitation:
(a) actual or threatened regulatory action by the FDA or other
governmental entity; (b) safety concerns relating to the Product; or
(c) entry of an injunction or other court order prohibiting or enjoining
Novartis or Reliant from marketing the Product in the Territory. The final
decision as to whether to withdraw the Product shall be within Novartis’ sole
discretion, although Reliant may make recommendations regarding any such
proposed action. This Agreement may be terminated at any time with written
notice by either party if the Product is withdrawn from the market in the
Territory, but, in any such event, settlement of any amounts owed by either
party to the other shall be promptly made. Any such withdrawal and/or
termination shall not impact on either party’s rights and/or remedies accrued
prior thereto.

 

7.4           Termination
for Breach of Warranty. Either party may terminate if any representation or
warranty made herein by the other party proves to be materially false or
misleading when made.

 

7.5           Termination
for Insolvency, etc. Either party may terminate this Agreement effective
immediately upon written notice in the event (a) a court of competent
jurisdiction enters a decree or order of relief appointing a receiver,
liquidator, assignee, trustee or similar official of the other party or any
substantial part of its assets and such decree or order is consented to by the
other party or continues unstayed and in effect for a period of seventy five
(75) days, (b) the other party files a voluntary petition or acquiesces in
or commences a case, proceeding or other action or fails to contest an
involuntary petition, case, proceeding or other action under any bankruptcy,
insolvency, reorganization or similar law, (c) an insolvency petition,
case, proceeding or other action is filed against the other party under any
bankruptcy, insolvency, reorganization or similar law which is not dismissed
within seventy five (75) days, (d) the other party makes a general
assignment for the benefit of its creditors or (e) the other party is
dissolved or liquidated.

 

7.6           Termination
Without Cause. Either party may terminate this Agreement without cause as
of January 1, 2006 or any date thereafter during the Term upon at least ninety
(90) days prior written notice specifying the date of termination, which notice
may be given prior to January 1, 2006.

 

7.7           Additional
Termination Rights. This Agreement may be terminated by Reliant upon the
occurrence of any one or more of the following:

 

(a)           Novartis’
rights to use the Trademarks (or any of them if there are more than one) is
lost, diminished, limited or restricted in any way and such loss, diminution,
limitation or restriction is materially detrimental to Reliant;

 

27

 

(b)           Novartis
is enjoined, prohibited or restricted from making, using or selling a Product
or granting Reliant the rights granted to it by Novartis hereunder, in any such
case, pursuant to an award, judgment, decree or other order of any court or
other governmental, administrative or regulatory authority;

 

(c)           Reliant
is enjoined or prohibited from marketing the Product in the Territory (and such
injunction or prohibition was not caused by an action or omission of Reliant);

 

(d)           One
or more patents issue in the United States that prohibit, limit or otherwise
adversely impact the Net Sales of the Product;

 

(e)           Novartis
is (i) unwilling or (ii) unable (other than as a result of an event
that qualifies as a force majeure event under Article 15.7 hereof), to
perform its obligations under Article 5.1(a) and or (b) hereof (which
is not cured within fifteen (15) days following written notice thereof by
Reliant to Novartis); provided that for the purposes of this Article 7.7,
Novartis’ obligation shall not be qualified by “commercially reasonable efforts”;
and/or

 

(f)            Novartis
or an Affiliate of Novartis fails to take reasonable action within a reasonable
period of time to abate the infringement by a third party of any Patent and/or
any Trademark, and such failure is materially detrimental to Reliant’s exercise
of its rights or performance of its obligations under this Agreement.

 

Reliant shall provide written notice to Novartis of
its intent to terminate under this Article 7.7, which termination shall become
effective thirty (30) days after delivery of such notice; provided that such
notice delivered in connection with Article 7.7(e) shall become effective
fifteen (15) days after delivery of such notice.

 

7.8           Effect
of Reliant Termination. In the event Reliant elects to terminate this
Agreement prior to December 31, 2005 pursuant to Article 7.1, 7.4 or 7.7,
Novartis shall, upon demand, pay to Reliant (a) all amounts due to Reliant
under Article VI hereof and (b) the Make Whole Amount. For the
purposes of this Article 7.8, the “Make
Whole Amount” means an amount equal to [***] dollars ($[***])
multiplied by a fraction the numerator of which equals the number of months
left in the period from the date of termination through December 31, 2005,
including the month in which the termination occurs and the denominator of
which equals sixty (60).

 

7.9           Obligations
Upon Termination or Expiration. Upon termination or expiration of this
Agreement, the mutual rights and obligations of the parties hereunder shall
forthwith terminate; provided, however, that (a) no such expiration or
termination shall terminate or otherwise affect any right or obligation
accruing hereunder prior to such expiration or termination, or accruing
thereafter in respect of any event occurring prior thereto and (b) except
if this Agreement is terminated by Novartis pursuant to Article 7.1, 7.2 or
7.4, 

 

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

 

28

 

Reliant shall have
the right to sell to Novartis and Novartis shall purchase from Reliant, at
Reliant’s cost, Reliant’s existing inventory of sample Product (including
sample Product ordered prior to termination but delivered after termination). Upon
termination of this Agreement, Reliant shall deliver to Novartis all
Promotional Materials developed pursuant to this Agreement.

 

7.10         Ownership
of Name of Sales Force. Upon termination or expiration of this Agreement,
Reliant shall retain ownership of the name and logo of the Sales Force.

 

ARTICLE VIII

WARRANTIES, REPRESENTATIONS AND COVENANTS

 

8.1           Representations
and Warranties of Novartis. Novartis hereby represents and warrants to
Reliant as of the New Effective Date as follows:

 

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

 

(b)           Authorization.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby are within the corporate power of Novartis,
have been duly authorized by all necessary corporate proceedings of Novartis,
and this Agreement has been duly executed and delivered by Novartis.

 

(c)           Execution
and Delivery. Neither the execution of this Agreement nor the consummation
of the transactions contemplated herein: 
(i) requires Novartis to obtain any material approval, consent or
withholding of objections on the part of any regulatory or governmental body or
any other third party (including, without limitation, any Affiliate of
Novartis), other than those already obtained by Novartis; (ii) will result
in any violation or breach of any term or provision of Novartis’ Certificate of
Incorporation, Bylaws or similar charter documents; (iii) will constitute
a breach or default under any material indenture, mortgage, deed of trust,
license agreement or other contract or agreement to which Novartis or any
Affiliate of Novartis may be subject, which breach or default would have a
material adverse effect on the Product, the Novartis IP or Reliant’s ability to
exploit the rights granted to it under this Agreement; or (iv) will
violate any provision of any judicial, governmental or administrative order,
writ, injunction, award, judgment or decree applicable to Novartis or any
Affiliate of Novartis.

 

(d)           Binding
Obligation. This Agreement constitutes the valid and binding obligation of
Novartis, enforceable against Novartis in accordance with its terms, subject to
bankruptcy, reorganization, insolvency and other similar laws affecting the
enforcement of creditors’ rights in general and to general principles of equity
(regardless of whether considered in a proceeding in equity or an action at
law).

 

29

 

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

 

(f)            Patents
and Trademarks. The trademark Lescol is the only Trademark under which the
Product is being marketed, promoted, detailed or sold in the Territory. The
Lescol Trademarks are currently being used commercially by Novartis, and with
the exception of any trade names included in the definition of Trademarks have
been properly filed and registered with the U.S. Patent and Trademark Office
and are valid and in full force and effect. The Patents that cover or the
Products and, to Novartis’ knowledge, the other Patents that relate to the Products
are valid and in full force and effect.

 

(g)           Product
Related Intellectual Property. (i) Novartis owns or possesses adequate
licenses or other valid rights to use all Patents, patent applications, patent
rights, Trademarks, trademark rights, trade names, trade dress, trade name
rights, copyrights and copyright registrations and applications, copyright
rights, service marks, trade secrets, applications for trademarks and for
service marks, know-how and other proprietary rights and information used or held
for use in connection with the Products that are necessary to permit Novartis
to discharge its obligations under this Agreement with respect to the Products,
including, without limitation, granting the rights and licenses granted to
Reliant under this Agreement (collectively, the “Novartis IP”), free and clear of  any liens, licenses, obligations, transfer
agreements, transfer restrictions, enforceable claims, royalties or
encumbrances that would prevent Novartis from discharging its obligations under
this Agreement for the Products, and (ii) Novartis is unaware of any
assertion or claim challenging the ownership, use or validity of any of the
foregoing. Any licenses associated with the Novartis IP are valid and binding
and are enforceable in accordance with their respective terms, and there are no
material breaches or defaults thereunder. To the extent that any of the Patents
and Trademarks are not owned by Novartis, such Patents and Trademarks are owned
by an Affiliate of Novartis, and Novartis licenses or has the right to use such
Patents and Trademarks from such Affiliate of Novartis. Novartis will not take
any action to terminate, and Novartis will prevent its Affiliates from taking
any action to terminate, any license or grants of rights from an Affiliate of
Novartis to Novartis with respect to the Patents and Trademarks. Novartis has
the right to grant to Reliant all of the rights and licenses granted to Reliant
under this Agreement.

 

(h)           No
Infringement. The manufacture, use or sale of the Product by Novartis or
the use of the Trademarks and any other Novartis IP used to promote the Product
in the Territory for the sale of the Product do not and to Novartis’ knowledge
will not infringe any valid rights of any third party including inter  alia
intellectual property rights (other than such rights as to which Novartis is
directly or indirectly licensed). To Novartis’ knowledge, at the New Effective
Date, Novartis is unaware of any third party infringement of the Patents,
Trademarks or other intellectual property 
rights relating to the Product.

 

30

 

(i)            Adverse
Drug Experiences. Novartis has informed Reliant of all relevant adverse
drug experiences related to the Product of which it has knowledge.

 

(j)            Litigation.
Except as set forth on Schedule 8.1(j),
there is no litigation, arbitration proceeding, governmental investigation,
action or claims of any kind, pending or, to the knowledge of Novartis,
threatened, (collectively “Novartis Claims”),
by or against Novartis or any of its Affiliates relating to the Product,
including, without limitation, any Claims regarding breach of express or
implied warranty or representation or failure to warn or relating to personal
injury, property damage or other liability arising from or caused by the
Product which would in anyway impede, impair, restrict or interfere with the
rights granted Reliant hereunder or the ability of Reliant or Novartis to
perform their respective obligations hereunder.

 

(k)           Promotional
Materials. All Promotional Materials relating to the Product supplied by
Novartis are in material compliance with all applicable laws and regulations.

 

(l)            Regulatory
Approvals. Novartis has obtained and will obtain all material regulatory
approvals, licenses and permits which are required to be obtained for in order
to permit (i) sales of the Product in the Territory and (ii) Novartis
to discharge its obligations hereunder.

 

8.2           Representations
and Warranties of Reliant. Reliant hereby represents and warrants to
Novartis as of New Effective Date as follows:

 

(a)           Organization
and Conversion. Reliant is (i) a corporation duly organized, validly
existing and in good standing under the laws of the state of its incorporation,
and (ii) has all necessary corporate power and corporate authority to own
its properties and to conduct its business, as currently conducted. Following
the conversion of Reliant from a limited liability company to a corporation,
the equityholders of Reliant immediately prior to such conversion held shares in
the resulting corporation in approximately the same relative proportions as
they did in the pre-conversion entity.

 

(b)           Authority.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby are within the corporate power of Reliant,
have been duly authorized by all necessary corporate proceedings of Reliant,
and this Agreement has been duly executed and delivered by Reliant.

 

(c)           Execution
and Delivery. Neither the execution of this Agreement nor the consummation
of the transactions contemplated hereby: 
(i) requires Reliant to obtain the approval, consent or withholding
of objection on the part of any regulatory or governmental body or any other
third party (including, without limitation, any Affiliate of Reliant);  (ii) will result in any violation or
breach of any term or provision of Reliant’s Certificate of Incorporation,
Bylaws or similar charter documents; (iii) will constitute a default under
any material indenture, 

 

31

 

mortgage, deed of
trust, license agreement, or other contract or agreement to which Reliant is a
party, which breach or default would have a material adverse effect on Reliant’s
ability to perform its obligations under this Agreement; or (iv) will
violate any provision of any judicial, governmental or administrative order,
writ, injunction, award, judgment or decree applicable to Reliant.

 

(d)           Binding
Obligation. This Agreement constitutes the valid and binding obligation of
Reliant, enforceable against Reliant in accordance with its terms, subject to
bankruptcy reorganization, insolvency and other similar laws affecting the
enforcement of creditors’ rights in general and to general principles of equity
(regardless of whether considered in a proceeding in equity or an action at
law).

 

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

 

(f)            Adverse
Drug Experiences. Reliant has informed Novartis of all relevant adverse
drug experiences related to the Product of which it has knowledge.

 

(g)           Litigation.
Except as set forth on Schedule 8.2(g),
there is no litigation, arbitration proceeding, governmental investigation, action
or claims of any kind, pending or, to the knowledge of Reliant, threatened,
(collectively “Reliant Claims”),
by or against Reliant or any of its Affiliates relating to the Product,
including, without limitation, any Reliant Claims regarding breach of express
or implied warranty or representation or failure to warn or relating to
personal injury, property damage or other liability arising from or caused by
the Product.

 

8.3           Covenants.

 

(a)           Compliance
with Laws. Each party covenants to the other that it will comply with all
applicable local, state and federal laws and regulations in carrying out its
obligations pursuant to this Agreement.

 

(b)           Quality
Control. Novartis covenants that the Product to be manufactured, packaged,
distributed and sold by Novartis will, at the time of shipment by or on behalf
of Novartis, not be misbranded or adulterated under the terms of the Act.

 

(c)           Cooperation.
Each party covenants that it will use its commercially reasonable efforts,
consistent with applicable law, to maximize Net Sales by supporting and
cooperating with the other party in its efforts under this Agreement. Novartis
further agrees that in the event Novartis elects to (i) stop or slow
shipping of Product, (ii) ”load” sales of the Product,
(iii) encourage or require customers to “buy in” Product, in each case,
during the fourth Quarter of any Agreement Year in a manner that could
reasonably be expected to have the effect of reducing or increasing Net Sales
and thereby disadvantage Reliant under this Agreement, then for the purposes of
this Agreement, such reduced or increased sales will be deemed booked by
Novartis in a manner that does not so detriment Reliant.

 

32

 

(d)           Compliance
with Certain Agreements. Novartis shall comply with, and shall cause its
Affiliates to comply in all material respects with the terms of any agreements
through which Novartis or its Affiliates are granted rights or licenses
relating to the Novartis IP, except where the failure to so comply with such
agreements could not reasonably be expected to adversely effect Reliant’s
ability to perform its obligations under this Agreement. Novartis shall use
commercially reasonable efforts to (i) cause the counterparty to any such
agreements to perform under such agreements and (ii) retain its rights to
the Novartis IP to the extent necessary to discharge its obligations under this
Agreement with respect to the Products, including, without limitation, granting
the rights and licenses granted to Reliant under this Agreement.

 

8.4           Novartis
Disclaimer. EXCEPT AS EXPRESSLY PROVIDED
HEREIN, NOVARTIS DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, WITH
REGARD TO THE PRODUCT, INCLUDING, WITHOUT LIMITATION, THE WARRANTY OF
MERCHANTABILITY AND WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE.

 

8.5           Reliant
Disclaimer. EXCEPT AS EXPRESSLY PROVIDED
HEREIN, RELIANT DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED.

 

ARTICLE IX

INTELLECTUAL PROPERTY

 

9.1           Maintenance.
Novartis shall be responsible for and promptly pay when due, all fees necessary
to maintain the Patents and Trademarks in full force and effect during the Term.
Novartis shall promptly inform Reliant of any re-examination, reissue, term
extension or other proceeding of similar force and effect relating to the
Patents or Trademarks.

 

9.2           Notice
of Infringement. If either party shall learn of a claim or assertion that
the manufacture, use or sale of the Product in the Territory infringes or
otherwise violates the intellectual or industrial property rights of any third
party, or that any third party violates the intellectual or industrial property
rights of Novartis in the Product in the Territory, then the party becoming so
informed shall promptly, but in all events within fifteen (15) business days
thereof, notify the other party to this Agreement of the claim or assertion.

 

9.3           Infringement
of Third Party Intellectual Property by Novartis. In the event a claim of
infringement of a third party’s intellectual property right arising out of
(i) the promotion, marketing, Detailing, manufacture, distribution, use or
sale of Product by Novartis, its Affiliates or Agents (other than Reliant, its
Affiliates and agents) or (ii) to the extent such claim arises as a result
of the fact that Reliant, its Affiliates or agents are promoting, marketing or
Detailing the Product or using the Novartis IP (but expressly excluding claims
arising from the techniques or systems not included in the Novartis IP that are
used to promote, market or Detail the Product (“Reliant Promotion Techniques”)) is brought by a third party
against either party (together, “Novartis
Indemnified Claims”)), 

 

33

 

Novartis shall
defend such action at its own cost and expense and, at its own cost and expense,
indemnify and hold harmless Reliant, its Affiliates, officers, managers,
employees, representatives, consultants and agents (the “Reliant Infringement Indemnitees”) as set
forth in Article 9.5 below.

 

9.4           Infringement
of Third Party Intellectual Property by Reliant. In the event a claim of
infringement of a third party’s intellectual property right arising out of the
promotion, marketing and Detailing of Product by Reliant is brought by a third
party against either party to the extent arising on account of Reliant’s, its
Affiliate’s or agents (other than Novartis, its Affiliates and agents) use of
Reliant Promotion Techniques (“Reliant
Indemnified Claims”), Reliant shall defend such action at its own
cost and expense and, at its own cost and expense, indemnify and hold harmless
Novartis, its Affiliates, officers, managers, employees, representatives,
consultants and agents (the “Novartis
Infringement Indemnitees”) as set forth in Article 9.6 below.

 

9.5           Infringement
Indemnification by Novartis. Notwithstanding any other provisions of this
Agreement, but subject to Article 10.4, Novartis will defend, indemnify
and hold harmless the Reliant Infringement Indemnitees from and against any and
all liabilities, losses, damages, actions, claims and expenses suffered or
incurred by Reliant Infringement Indemnitees (including reasonable attorneys’
fees, court costs and expert witnesses’ fees) resulting from any Novartis
Indemnified Claims so long as any such claim does not arise from Reliant’s
breach of this Agreement, violation of law or its negligent or intentionally
wrongful conduct (it being expressly understood that Reliant’s reasonable
exercise of its rights hereunder in accordance with this Agreement shall not be
deemed a violation of law or its negligent or intentional wrongful conduct as
pertaining to violation of another party’s intellectual property rights).

 

9.6           Infringement
Indemnification by Reliant. Notwithstanding any other provisions of this
Agreement, but subject to Article 10.4, Reliant will defend, indemnify and
hold harmless the Novartis Infringement Indemnitees from and against any and
all liabilities, losses, damages, actions, claims and expenses suffered or
incurred by Novartis Infringement Indemnitees (including reasonable attorneys’
fees, court costs and expert witnesses’ fees) resulting from any Reliant
Indemnified Claims so long as any such claim does not arise from Novartis’
breach of this Agreement, violation of law or its negligent or intentionally
wrongful conduct (it being expressly understood that Novartis’ reasonable
exercise of its rights hereunder with respect to the use of any Reliant
intellectual property in accordance with this Agreement shall not be deemed a
violation of law or its negligent or intentional wrongful conduct as pertaining
to violation of another party’s intellectual property rights).

 

9.7           Third
Party Infringement. In the event either party believes that a third party
is infringing or otherwise violating Novartis’ intellectual or industrial
property rights in the Product (a “Third
Party Infringement”), Novartis and Reliant shall consult with each
other and their respective counsel in order to develop a strategy for
addressing the Third Party Infringement. In the event the parties agree to take
legal action to stop the Third Party Infringement, they shall agree upon legal
counsel to prosecute such action. Unless the parties agree upon a different
formula for sharing the expenses (including attorney and 

 

34

 

expert fees) of such
action and for sharing any award or settlement, they shall share them equally. In
the event that one of the parties does not desire to participate in the action
(the “Nonparticipating Party”),
the other shall be free to bring the action in its own name, at its own expense
and retain any award or settlement in its entirety. If necessary, the
Nonparticipating Party shall join as a party to the suit but shall be under no
obligation to participate except to the extent that such participation is
required as the result of being a named party to the suit. The Nonparticipating
Party shall offer reasonable assistance in connection therewith at no charge to
the other party except for reimbursement of reasonable out-of-pocket expenses
including reasonable attorney’s fees. If either party desires to retain counsel
independently, at its own expense, the party may do so, but it shall not
relieve the party of its obligations under this Article.

 

ARTICLE X

INDEMNITIES

 

10.1         Indemnification
of Reliant. Novartis will defend, indemnify and hold harmless Reliant and
its Affiliates, officers, directors, agents, representatives, consultants and
employees (individually, a “Reliant
Indemnified Party,” and collectively, the “Reliant Indemnified Parties”), from and
against any and all liabilities, losses, damages, actions, claims and expenses,
including reasonable attorneys’ fees, court costs and expert witnesses’ fees,
(individually, a “Liability,” and
collectively, the “Liabilities”)
suffered or incurred by the Reliant Indemnified Parties that result from, or
arise out of: (a) the manufacture, storage, packaging, production,
transportation, distribution, sale or other disposition of the Product by
Novartis, including, without limitation, liability related to or arising out of
product liability and/or product tampering claims; (b) the acts or
omissions of Novartis or any of its affiliates with respect to the manufacture
or quality of the Product supplied by Novartis and/or its affiliates;
(c) breach by Novartis of any representation, warranty, covenant or
agreement contained in this Agreement; (d) any recall of the Product, or
any seizure of the Product by any governmental agency, in either case, arising
out of, relating to, or occurring as a result of, any failure of Novartis to
manufacture or package the Product in accordance with any applicable government
regulation or current Good Manufacturing Practices (cGMP’s); (e) Novartis’
failure to comply with any applicable law or regulation and (f) Novartis’
intentionally wrongful or negligent act, except to the extent any such
Liability arises from (i) Reliant’s intentional malfeasance or negligence,
(ii) Reliant’s breach of this Agreement or (iii) Reliant’s violation
of any applicable law or regulation. The foregoing right of indemnification
will not limit Novartis’ rights under Articles 9.6 and 10.2.

 

10.2         Indemnification
of Novartis. Reliant will defend, indemnify and hold harmless Novartis and
its Affiliates, directors, officers, agents, representatives, consultants and
employees (individually, a “Novartis
Indemnified Party,” and collectively, the “Novartis Indemnified Parties”), from and
against any and all Liabilities suffered or incurred by the Novartis
Indemnified Parties that result from or arise out of (a) breach by Reliant
of any representation, warranty, covenant or agreement contained in this
Agreement; (b) Reliant’s failure to comply with any applicable law or
regulation or (c) Reliant’s intentionally wrongful or negligent act,
except to the extent any such Liability arises from 

 

35

 

(i) Novartis’
intentional malfeasance or negligence, (ii) Novartis’ breach of this
Agreement or (iii) Novartis’ violation of any applicable law or regulation.
The foregoing right of indemnification will not limit Reliant’s rights under
Articles 9.5 and 10.1.

 

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

 

(a)           The
party claiming a right to indemnification shall, within ten (10) business days
of receipt of any claim, charge, suit or other action, give, in accordance with
Article XII, written notice to the indemnifying party, of any such claim,
charge, suit or other action received from a third party which is governed by
the indemnity obligations of this Agreement;

 

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

 

(c)           Neither
party shall settle or admit liability with respect to any such claims, charges,
suits or other actions which could result in liability to the other party
without the prior written consent of the other party, which consent shall not
be unreasonably withheld or delayed;

 

(d)           If
the indemnifying party does not take the steps necessary against any such
claims, charges, suits or other action by a third party, the party claiming
indemnification may defend against or settle such claims, charges, suits or
other action provided that that party may not settle such claims, charges,
suits or other action without the prior written consent of the indemnifying
party which consent shall not be unreasonably withheld or delayed; however, the
defense and/or settlement under this Article 10.3(d) shall not act as a
waiver of rights to indemnification under this Agreement, or any other rights
or remedies of a party claiming indemnification and shall not excuse the
indemnifying party from its obligations hereunder and all reasonable costs and
expenses incurred by the party claiming indemnification shall be subject to
indemnity by the indemnifying party; and

 

(e)           Each
party will offer reasonable assistance to the other party in defending or
settling the claim, at the expense of the indemnifying party.

 

10.4         Consequential
Damages. Neither Reliant nor Novartis (which for the purposes of this
Article 10.4 shall include their respective Affiliates, directors,
managers, officers, employees, consultants, equity holders, representatives and
agents) shall have any liability to the other for any punitive damages,
special, incidental, consequential or indirect damages, relating to or arising
from the loss of commercial or business opportunity, revenue or profit, in
connection with or arising out of this Agreement, even if such damages may have
been foreseeable; provided that such limitation shall not apply in the case of
(a) fraud, (b) intentional misconduct and (c) any damages
(including, 

 

36

 

without
limitation, the types enumerated in this Article 10.4) claimed by or paid
to a third party in a third party action.

 

ARTICLE XI

CONFIDENTIALITY

 

11.1         Proprietary
Information. Pursuant to this Agreement, a party receiving Proprietary
Information from the other, directly or indirectly, will treat such Proprietary
Information as confidential, will use such Proprietary Information only for the
purposes of this Agreement and will not disclose, and will take all reasonable
precautions to prevent disclosure of, such Proprietary Information to third
parties or to any of its officers, directors, managers, equity holders,
employees, agents, representatives, Affiliates or consultants who are not
required to know such Proprietary Information or who are not bound by a like
obligation of confidentiality.

 

11.2         Exemptions.
Nothing contained herein will in any way restrict or impair each party’s right
to use, disclose or otherwise deal with any information deemed by the other
party to be Proprietary Information which:

 

(a)           at
the time of disclosure is publicly available or in the public knowledge;

 

(b)           after
disclosure, lawfully becomes part of the public knowledge through publication
or otherwise, but through no fault of either party;

 

(c)           the
receiving party possesses at the time of disclosure by the other party and
which was not acquired, directly or indirectly, from the other party;

 

(d)           is
acquired by the receiving party from a third party who has a right to disclose
such Proprietary Information;

 

(e)           as
evidenced by written records, is independently developed by the receiving party
without use of the Proprietary Information; or

 

(f)            is
compelled to be disclosed by legal process, provided the party so compelled
shall notify the other party and cooperate in any judicial proceeding initiated
to contest compelling such disclosure.

 

11.3         Return
of Proprietary Information. Each party agrees, at the request of the other
party, at the end of the Term to either:

 

(a)           return
to the other party all originals and copies of the other party’s Proprietary
Information; or,

 

(b)           at
the other party’s option, destroy all originals and copies of the other party’s
Proprietary Information and to certify in writing such destruction to the other
party.

 

37

 

11.4         Maintenance
of Copies. Each party may maintain one (1) copy of any document containing
Proprietary Information in its Law Department or with its outside legal counsel
solely for archival purposes.

 

11.5         Expiration.
The obligations of this Article XI shall expire ten (10) years after the
end of the Term.

 

ARTICLE XII

NOTICES

 

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

 

Novartis Pharmaceuticals
Corporation

59 Route 10

East Hanover, New Jersey  07936

ATTN:  Larry Perlow, Senior Vice
President and General Manager

 

With a copy to:

Novartis Pharmaceuticals Corporation

59 Route 10

East Hanover, New Jersey  07936

ATTN:  General Counsel

 

Reliant Pharmaceuticals,
Inc.

110 Allen Road

Liberty Corner, New Jersey  07938

ATTN:  Chief Operating Officer

 

With a copy to:

Latham & Watkins LLP

Sears Tower, Suite 5800

Chicago, Illinois  60606

ATTN:  Michael A. Pucker

 

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

 

38

 

ARTICLE XIII

PUBLICITY

 

13.1         Disclosure
of Agreement Terms. Novartis and Reliant agree not to issue any press
releases or public announcements concerning this Agreement without the prior
consent of the other party to the form, timing and content of any such release
or announcement, except as such release or announcement may be required by law.
A party who desires to issue a press release or make any other public
disclosure relating to this Agreement shall notify the other in writing at
least ten (10) business days (or such shorter period where legally required)
before the time of the proposed release. Such notice shall include the exact
text of the proposed release and the time and manner of the release. The
non-disclosing party shall respond promptly to the disclosing party with
respect to such press release or other disclosure, and neither party shall
unreasonably withhold its consent to any such press release or disclosure. This
Article 13.1 applies to all disclosures concerning this Agreement
including, without limitation, by way of the following: press releases,
educational and scientific conferences, governmental filings, discussions with
investment bankers (except for either party’s financial advisors who are
obligated to keep the information confidential) public officials and the media.
Novartis and Reliant recognize that disclosure of the terms of this Agreement
to the IRS and other tax authorities may be required, and Novartis and Reliant
each waives the requirements of this Article 13.1 with respect to
disclosure to such entities. In disclosing any information covered by this
Article 13.1 pursuant to a requirement of law, each party will use its
reasonable efforts to secure confidential treatment from the applicable
governmental authority when requested by either party.

 

13.2         Disclosure
of Financial Terms. Except (i) as required by law, (ii) subject
to the next sentence of this Article 13.2, to another Person in connection
with a proposed merger, acquisition, or sale of all or substantially all of the
assets of the disclosing party, and/or (iii) subject to the next sentence
of this Article 13.2, to investment bankers and/or financing sources in
connection with bona fide financing transactions involving Reliant or an
Affiliate, neither party shall disclose to any third party, whether publicly or
otherwise, any financial terms of this Agreement which have not been previously
disclosed publicly pursuant to this Article 13.2 without the prior written
consent of the other party, which consent shall not be unreasonably withheld or
delayed. Notwithstanding anything to the contrary in this Agreement, under no
circumstances shall Reliant directly or indirectly disclose any financial terms
of this Agreement, which have not been previously disclosed publicly pursuant
to this Article 13.2, (A) to any Competitor, or (B) to any
pharmaceutical contract sales force organization. In disclosing any information
covered by this Article 13.2(a) pursuant to a requirement of law, whether
in connection with an Approved Transaction or otherwise, each party will notify
the other of the proposed disclosure and each party will use its reasonable
efforts to secure confidential treatment from the applicable governmental
authority when requested by such other party and (b) in connection with
disclosure permitted by clauses (ii) and/or (iii) of this
Article 13.2, Reliant will require the party to whom it discloses such
information to enter into a confidentiality agreement including terms with
respect to disclosure of the financial terms of this Agreement not less strict
than those set forth in 

 

39

 

Schedule 13.2
attached hereto for a period ending not earlier than termination or expiration
of the Term. Reliant will use reasonable commercial efforts to enforce its
rights under any such confidentiality agreement.

 

ARTICLE XIV

INSURANCE

 

14.1         Insurance.
Reliant and Novartis shall each at its own expense obtain and maintain
insurance of the type and amount described in Article 14.2. Neither party
shall do or omit to do any act, matter or thing which could prejudice or render
voidable any such insurance. The insurance obligations hereunder may be met by
a program of self-insurance.

 

14.2         Amount
of Insurance. The parties agree that each will maintain during the
performance of this Agreement the following insurance in amounts no less than
that specified for each type:

 

(a)           General
liability insurance with combined limits of one million dollars ($1,000,000)
per occurrence and one million dollars ($1,000,000) per accident for bodily
injury, including death and property damage;

 

(b)           Worker’s
Compensation and disability insurance in the amount required by the law of the
State in which the Reliant employees are located and employers liability
insurance with limits of one million dollars ($1,000,000) per occurrence;

 

(c)           Auto
liability insurance with combined limits of 
one million dollars ($1,000,000) per occurrence and one million dollars
($1,000,000) per accident for bodily injury, including death and property
damage; and

 

(d)           Excess
liability insurance with combined limits of five million dollars ($5,000,000)
per occurrence and five million dollars ($5,000,000) per accident for bodily
injury, including death and property damage.

 

14.3         Evidence
of Insurance. Each party will provide to the other party reasonable
evidence of its insurance and thirty (30) days prior written notice of any
cancellation of its coverage or reduction in coverage from the minimum requirements
stated herein.

 

ARTICLE XV

MISCELLANEOUS

 

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

 

40

 

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

 

15.3         Entire
Agreement. Subject to the last sentence of this Article 15.3, this
Agreement (including all schedules and exhibits attached hereto, which are
incorporated herein by this reference) sets forth the entire agreement between
the parties hereto pertaining to the subject matter hereof and supersedes the
Original Promotion Agreement and all negotiations, preliminary agreements,
memoranda or letters of proposal or intent, discussions and understandings of
the parties hereto in connection with the subject matter hereof. Subject to the
last sentence of this Article 15.3, all discussions between the parties have
been merged into this Agreement and neither party shall be bound by any
definition, condition, understanding, representation, warranty, covenant or
provision other than as expressly stated in or contemplated by this Agreement
or as subsequently shall be set forth in writing and executed by a duly
authorized representative of the party to be bound thereby. Notwithstanding
anything in this Agreement, (i) all of the terms and provisions of the Original
Promotion Agreement shall continue to apply with respect to any period prior to
the New Effective Date and (ii) nothing herein shall relieve either party for
failure to comply with the Original Promotion Agreement prior to the New
Effective Date.

 

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

 

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

 

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

 

15.7         Force
Majeure. Neither party shall be liable hereunder to the other party nor
shall be in breach for failure to perform its obligations caused by
circumstances beyond the control of either party, including, but not limited
to, acts of God; fires; earthquakes; floods; riots; wars; civil disturbances;
sabotage; accidents; labor disputes; shortages; government actions (including,
but not limited to, priorities, requisitions, allocations and price adjustment
restrictions). In the case of any such event, the affected party shall promptly
notify the other party, and shall keep the other party informed of the efforts
to resume performance. After sixty (60) days of such inability to perform, the
parties agree to meet 

 

41

 

and in good faith
discuss how to proceed. In the event that the affected party is prevented from
performing its obligations pursuant to this Article 15.7 for a period of
six (6) months, the other party shall have the right to terminate this
Agreement.

 

15.8         Successors
and Assigns. Subject to Article 15.9, this Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns permitted under this Agreement.

 

15.9         Assignment.
Except as expressly provided below, neither party may assign this Agreement or
delegate the performance of its obligations hereunder without the express prior
written consent of the other party, except to an Affiliate of the assigning
party, provided, however, that the assignor shall remain liable, together with
the assignee, for the fulfillment of any and all obligations assigned. Any
attempted assignment in violation of this provision shall be null and void. For
the purposes of this Agreement, none of the following transactions (each an “Approved Transaction”) shall constitute an
assignment or a delegation, but shall require prior written notice to
Novartis:  (a) issuance by Reliant
of securities in connection with any financing transaction or public offering,
(b) Reliant consummating a Change of Control transaction and/or
(c) assignment, transfer or delegation of this Agreement or Reliant’s
obligations hereunder to one or more of the following persons or entities:  (A) PharmBay Investors, LLC,
(B) Bay City Capital Fund II, L.P. or (C) any of the lineal
descendants of Nicholas J. Pritzker, deceased, trusts primarily for the benefit
of such lineal descendants, entities controlled by such lineal descendants
and/or trusts for their benefit, in each case described in clauses (a),
(b) and (c) so long as any such party agrees to be bound by all the terms and
conditions of this Agreement and Reliant also remains responsible to Novartis
for such party’s performance hereunder. During Agreement Year 2005, nothing
herein shall preclude Reliant from entering into agreements with third parties
to co-promote or assist Reliant in the marketing or promotion of the Product,
including, without limitation, engaging a contract sales organization; provided
that the foregoing shall not relieve Reliant of any of its obligations
hereunder.

 

15.10      Survival.
The provisions of Articles 3.2, 3.3, 3.4, 3.6, 4.10, 4.11, 4.12, 5.11, VI, VII,
IX, X, XI, XII, XIII, XIV and XV shall survive, and remain in effect, after
termination or expiration of this Agreement.

 

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

 

15.12       Governing Law. This Agreement shall be interpreted
under and governed by the laws of the State of New Jersey, without giving
effect to the conflicts of laws provisions thereof.

 

15.13       Relationship Between Parties. In the
performances of the Services hereunder, Reliant shall be deemed to be and shall
be an independent contractor and, as such, Reliant employees shall not be
entitled to any benefits applicable to employees of Novartis. No provision of
this Agreement shall be deemed to create or imply any contract of employment
between Novartis and any employee of Reliant. None of the provisions of this
Agreement are intended (i) to be for the benefit of any creditor or other
person 

 

42

 

(including any
employee of Reliant) to whom any debts, liabilities or obligations are owed by
any party hereto, or (ii) to create any debt, liability or obligation in
favor of any creditor or other person (including any employee of Reliant),
except the parties hereto. No such creditor or other person shall obtain any
benefit from the provisions of this Agreement or shall, by reason of any such
provisions, make any claims in respect of any debt, liability or obligation
against any of the parties hereto or the Affiliates of either of them. Nothing
contained in this Agreement shall be deemed to create any association,
partnership, joint venture, or other relationship of principal and agent or
master and servant between the parties to this Agreement or Affiliates thereof,
or to provide either party with the right, power or authority, whether express
or implied, to create any such duty or obligation on behalf of the other party.

 

15.14       Compliance with Laws. Reliant and
Novartis agree to undertake all their respective obligations under this
Agreement in material conformance with all applicable local, state and federal
laws and regulations, as amended, including the Food Drug and Cosmetics Act,
Section 1128B(b) of the Social Security Act, the Prescription Drug
Marketing Act and similar state laws. By entering into this Agreement, it is
not the intent of the parties to enter into any financial relationship or
arrangement prohibited under state or federal fraud or abuse regulations,
including but not limited to Sec. 1128B(b) of the Social Security Act, and
any regulations promulgated thereunder, nor do the parties hereto have any
belief that the relationship and compensation arrangement provided in this
Agreement is prohibited. Neither party shall assert against the other that the
compensation arrangement provided in this Agreement is grounds for voiding the
Agreement or rendering the Agreement unenforceable.

 

15.15       Dispute Resolution. Subject to
Articles 3.5(d) and 6.6(a), the parties will use their commercially
reasonable efforts to resolve any disputes arising from this Agreement by good
faith negotiation and mutual discussion for a period of thirty (30) days. Thereafter,
each party shall be entitled to seek any remedy with respect to such dispute,
whether pursuant to this Agreement, at law, equity or otherwise. During the
pendency of any bona fide dispute, the parties shall continue to perform their
respective obligations under this Agreement until such time as (i) the
matter in dispute is finally resolved or (ii) this Agreement is terminated
in accordance with its terms.

 

[Remainder of Page Intentionally Left Blank]

 

43

 

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

 

	
  RELIANT PHARMACEUTICALS, INC.

  	
  NOVARTIS PHARMACEUTICALS

  
	
   

  	
  CORPORATION

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  

 

44

 

Exhibit 1:  Compensation to Reliant for Agreement Year
2005

 

	
  AGREEMENT YEAR

  	
   

  	
  Annual Net Sales Baseline

  ($ MILLIONS)

  	
   

  	
  Annual Net Sales Forecast

  ($ MILLIONS)

  	
   

  	
  Compensation to Reliant of Actual

  NET SALES ABOVE ANNUAL NET SALES

  BASELINE

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2005

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
  %

  

 

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

 

1

 

Exhibit 2:  Seasonalization of Baseline 

 

	
   

  	
   

  	
  Actual TRXs

  	
   

  	
  Actual Net Sales

  	
   

  
	
  Month

  	
   

  	
  2004
  (000’s)

  	
   

  	
  % of
  Total

  	
   

  	
  2003 +
  2004 (000’s)

  	
   

  	
  % of
  Total

  	
   

  
	
  JAN

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
  %

  	
  $

  	
   [***]

  	
   

  	
  [***]

  	
  %

  
	
  FEB

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
  %

  	
  $

  	
   [***]

  	
   

  	
  [***]

  	
  %

  
	
  MAR

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
  %

  	
  $

  	
  [***]

  	
   

  	
  [***]

  	
  %

  
	
  APR

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
  %

  	
  $

  	
  [***]

  	
   

  	
  [***]

  	
  %

  
	
  MAY

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
  %

  	
  $

  	
  [***]

  	
   

  	
  [***]

  	
  %

  
	
  JUN

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
  %

  	
  $

  	
  [***]

  	
   

  	
  [***]

  	
  %

  
	
  JUL

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
  %

  	
  $

  	
  [***]

  	
   

  	
  [***]

  	
  %

  
	
  AUG

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
  %

  	
  $

  	
  [***]

  	
   

  	
  [***]

  	
  %

  
	
  SEP

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
  %

  	
  $

  	
  [***]

  	
   

  	
  [***]

  	
  %

  
	
  OCT

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
  %

  	
  $

  	
  [***]

  	
   

  	
  [***]

  	
  %

  
	
  NOV

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
  %

  	
  $

  	
  [***]

  	
   

  	
  [***]

  	
  %

  
	
  DEC

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
  %

  	
  $

  	
  [***]

  	
   

  	
  [***]

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
  %

  	
  $

  	
  [***]

  	
   

  	
  [***]

  	
  %

  

 

Annual Net Sales Baseline $ :

 

	
   

  	
   

  	
  2005

  	
   

  
	
   

  	
   

  	
  $

  	
  [***]

  	
   

  
					

 

	
  Month

  	
   

  	
   

  	
   

  
	
  JAN

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  FEB

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  MAR

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  APR

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  MAY

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  JUN

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  JUL

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  AUG

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  SEP

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  OCT

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  NOV

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  DEC

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  Total

  	
   

  	
  $

  	
  [***]

  	
   

  

 

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

 

2

 

Exhibit 3:  Sample Costs

 

Cost per unit of Product delivered to Reliant in 2005:

 

	
  Unit

  	
   

  	
  Cost per Unit

  	
   

  
	
  [***]

  	
   

  	
  $[***]

  	
   

  
	
  [***]

  	
   

  	
  $[***]

  	
   

  

 

Cost per unit of Product
delivered to Reliant in 2005 and in each subsequent Agreement Year will be [***]

 

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

 

1

 

Schedule
1.40

 

Patents

 

	
  Patent No.

  	
   

  	
  Inventor

  	
   

  	
  Assignee

  	
   

  	
  Date Filed

  	
   

  
	
  4,571,428

  	
   

  	
  Prasad K.
  Kapa

  	
   

  	
  Novartis
  Pharmaceuticals Corp.

  	
   

  	
  July 8, 1983

  	
   

  
	
  4,739,073

  	
   

  	
  Faizulla G.
  Kathawala

  	
   

  	
  Novartis
  Pharmaceuticals Corp.

  	
   

  	
  March 4,
  1985

  	
   

  
	
  5,118,853

  	
   

  	
  George T.
  Lee and Oljan Repic

  	
   

  	
  Novartis AG

  	
   

  	
  February 26,
  1991

  	
   

  
	
  5,189,164

  	
   

  	
  Prasad K.
  Kapa and Kau-Ming Chen

  	
   

  	
  Novartis AG

  	
   

  	
  February 20,
  1990

  	
   

  
	
  5,290,946

  	
   

  	
  George T.
  Lee, Prasad K. Kapa and Oljan Repic

  	
   

  	
  Novartis AG

  	
   

  	
  November 23,
  1992

  	
   

  
	
  5,354,772

  	
   

  	
  Faizulla G.
  Kathawala

  	
   

  	
  Novartis
  Pharmaceuticals Corp.

  	
   

  	
  November 24,
  1993

  	
   

  
	
  5,356,896

  	
   

  	
  Mohan B.
  Kabadi and Richard V. Vivilecchia

  	
   

  	
  Novartis AG

  	
   

  	
  December 22,
  1992

  	
   

  

 

1

 

Schedule
1.73

 

Trademarks

 

	
  Word Mark

  	
   

  	
  Registrant

  	
   

  	
  Registration No.

  	
   

  	
  Filing Date

  	
   

  
	
  LESCOL

  	
   

  	
  Novartis AG

  	
   

  	
  1639501

  	
   

  	
  June 8, 1990

  	
   

  
	
  LESCOL (Stylized)

  	
   

  	
  Novartis AG

  	
   

  	
  2171358

  	
   

  	
  June 26,
  1997

  	
   

  

 

1

 

Schedule 1.76

 

VA Contract

 

 

DEPARTMENT OF VETERANS AFFAIRS

Office of Acquisition and Material Management

National Acquisition Center

P.O. Box 76

Hines IL 60141

 

July 28, 2003

 

Serafina Oxner, Director

Novartis Pharmaceuticals Corporation

One Health Plaza

East Hanover, NJ  07936

 

Dear Ms. Oxner:

 

Your firm’s offer, dated June 30, 2003, in response to Solicitation No.
RFP-797-NC-03-0022, for Fluvastatin Capsules, and Final Proposal Revision
submission of July 16, 2003, are accepted. Contract number V797P-9110, has been
assigned. This contract has a total yearly estimated value of $[***], for the
base contract performance period of 8/7/03 – 8/6/04, and the contract includes
four one-year options. Below is a list of the bottle sizes for all strengths
and bottle prices that will be posted to the PPV and the field:

 

 

	
  20 mg, Caps, 100s

  	
   

  	
  00078-0176-05

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  20 mg, Caps, 30s

  	
   

  	
  00078-0176-15

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  40 mg, Caps, 100s

  	
   

  	
  00078-0234-05

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  40 mg, Caps, 30s

  	
   

  	
  00078-0234-15

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  80 mg, Caps, 100s

  	
   

  	
  00078-0354-05

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  80 mg, Caps, 30s

  	
   

  	
  00078-0354-15

  	
   

  	
  $

  	
  [***]

  	
   

  

 

 

These prices awarded in this National Contract apply to purchases made
by all facilities purchasing through the VA PPV Program:

 

a)             All
Department of Veterans Affairs (DVA) facilities

b)            All
Indian Health Service (IHS) Regions

c)             All
Bureau of Prisons (BOP) facilities

d)            Department
of Health & Human Service Supply Service Center at Perry Point (HHS)

e)             All
Option 2 State Veteran Homes (see paragraph 2.2 State Veteran Homes).

 

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

 

1

 

Upon mutual agreement between your company and the Government, other
Government entities (OGA), such as Immigration and Naturalization Services
(INS), may be added to the contract by contract modification. A list of the
facilities currently eligible for contract pricing can be accessed at the
following address http://www.va.gov/pa&mm/nac/pharm/pharmpv.htm.

 

As with your FSS contract, quarterly sales reports (form available
electronically), need to be submitted for the items purchased against this
national contract, 60 days after completion of the applicable quarter, however,
no IFF is collected on National Contract sales. The Government’s fiscal year is
October 1st through September 30th, therefore, your first
report will be for sales of August (4th Quarter of 2003), and is due no later
than October 31, 2003.

 

Please do not hesitate to call me if you have any questions regarding
this award.

 

Sincerely,

 

 

Pharmaceutical Team

National Contract Service (049A1N2PH)

 

2

 

SOLICITATION/CONTRACT ORDER FOR COMMERCIAL
ITEMS

 

2.             Contract
No.: V797P-9110

 

3.             Award
Effective Date:

 

4.             Order
Number:

 

5.             Solicitation
Number:  RFP-797-NC-03-0022

 

a.             Solicitation
Issue Date:  6/2/03

 

7.             For Solicitation
Information Call:                  Name:  Deborah Koval

 

8.             Offer
Due Date Local Time:  7/2/03  4:00 PM

 

9.             Issued By:                                    Code:  797

VA National Acquisition Center, PO Box 76, Hines, IL  60141

Handcarried bids may be delivered to the front

desk of the location indicated in Block 16

 

10.           This Acquisition Is:                                                                                       SIC:  325412

Size Standard:  [***]

 

11.           Delivery
for FOB Destination Unless Block is Marked: 
See Schedule

 

12.           Discount
Terms:  None

 

13.           Deliver
to:                                         DVA
Pharmaceutical Prime Vender (See Attachment “A”)

 

16.           Administered By:                                                     VA
National Acquisition Center

National Contract Service (049AIN2PH)

1st Avenue, 1 Block North of Cermak Rd., Bldg 37

Hines, IL  60141

 

17A.        Contractor  Offeror:                                        DUNS
# 002147023

Novartis Pharmaceuticals Corporation

One Health Plaza

East Hanover, NJ  07936

 

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

 

3

 

18A.        Payment
Will Be Made By:                Pharmaceutical
Prime Vender

(See PPV Address – Attachment “A”)

 

	
  19.

  Item 

  No.

  	
   

  	
  20.

  Schedule of Supplies/Service

  	
   

  	
  21.

  Quantity

  	
   

  	
  22.

  Unit

  	
   

  	
  23.

  Unit Price

  	
   

  	
  24.

  Amount

  	
   

  
	
  1.

  	
   

  	
  Fluvastatin

  	
   

  	
  Weighted Avg.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1a.

  	
   

  	
  20 mg. Cap

  	
   

  	
  [***]

  	
  %

  	
  Tab. 100’s

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  30’s

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Package Sizes 100, 30

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  NDC#s        00078-0176-05

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  00078-0176-15

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1b

  	
   

  	
  40 mg. Cap

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Package Sizes 100, 30

  	
   

  	
  [***]

  	
  %

  	
  Tab. 100’s

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  
	
   

  	
   

  	
  NDC#s        00078-0234-05

  	
   

  	
   

  	
   

  	
  30’s

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  
	
   

  	
   

  	
  00078-0234-15

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1c

  	
   

  	
  80 mg. XLTab.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Package Sizes: 100, 30

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  NDC#         00078-0354-05

  	
   

  	
  [***]

  	
  %

  	
  Tab. 100’s

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  
	
   

  	
   

  	
  00078-0354-15

  	
   

  	
   

  	
   

  	
  30’s

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  

 

28.           Contractor
Is Required To Sign This Document and Return                        1              Copies

 

29.           Award
of Contract:   Reference Original Officer
Dated    6/30/03   and FPR dated 7/16/03

... is accepted as to items    1a,
1b, & 1c

 

 

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

 

4

 

Summary of Award

 

Page 1(a)

ADDENDA TO CONTRACT SF-1449

 

Company Name:  Novartis
Pharmaceuticals Corporation

Contract Number:  V797P-9110

 

The following are incorporated into and made a part of this Award:

 

1.             Standard
Form 1449 and Summary of Award

 

2.             Novartis’
Offer dated 6/30/03.

 

3.             Final
Proposal Revision dated 7/16/03

 

4.             Part
I – Continuation of Standard Form 1449

 

5.             Part
II – All Contract Terms and Conditions of Solicitation RFP-797-NC-03-0022,
whether in full or by reference

 

6.             Performance
Period of this contract shall be for one year, August 7, 2003, through August
6, 2004, plus 4 one-year option years.

 

7.             Novartis’
Company-wide Subcontracting Plan for the period of 10/1/02 – 9/30/03.

 

Contract Administrator(s):

 

[***]

Novartis Pharmaceuticals Corporation

One Health Plaza

East Hanover, NJ  07936

 

 

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

 

5

 

Schedule 4.10(b)(i)

 

Form of Reliant Status Report

 

	
  Summary Information

  Schedule 4.10(b)(i)

  	
   

  
	
   

  	
   

  	
  Month

  	
   

  	
  QTD

  	
   

  	
  YTD

  	
   

  
	
  PSME Spend

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Samples

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Advertising and Promotion

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Other

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  # Sales Representative

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  # of Reps in Field

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Avg. Days in Field/Rep

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  % Rep Turnover

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total # Territory

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Number Vacant

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  # of Days Vacant

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Territory 1

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Territory 2

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Territory 3

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  etc...

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

1

 

Lescol Sample Information Month XX

 

Lescol Actual Number of Samples

 

	
   

  	
   

  	
  Month

  	
   

  	
  QTD

  	
   

  	
  YTD

  	
   

  
	
  Decile

  	
   

  	
  with P1 call

  	
   

  	
  with P2 call

  	
   

  	
  with P1 call

  	
   

  	
  with P2 call

  	
   

  	
  with P1 call

  	
   

  	
  with P2 call

  	
   

  
	
  10

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  0 (Non-Writer)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total Samples

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Lescol Samples Planned

 

	
   

  	
   

  	
  Month

  	
   

  	
  QTD

  	
   

  	
  YTD

  	
   

  
	
  Decile

  	
   

  	
  with P1 call

  	
   

  	
  with P2 call

  	
   

  	
  with P1 call

  	
   

  	
  with P2 call

  	
   

  	
  with P1 call

  	
   

  	
  with P2 call

  	
   

  
	
  10

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  0 (Non-Writer)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total Samples

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

2

Lescol Sample Information Month xx
(continued)

 

Lescol Sample % Achieved

 

	
   

  	
   

  	
  Month

  	
   

  	
  QTD

  	
   

  	
  YTD

  	
   

  
	
  Decile

  	
   

  	
  with P1 call

  	
   

  	
  with P2 call

  	
   

  	
  with P1 call

  	
   

  	
  with P2 call

  	
   

  	
  with P1 call

  	
   

  	
  with P2 call

  	
   

  
	
  10

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  0 (Non-Writer)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total Samples

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

3

 

Lescol Physicians Reach

 

Schedule 4.10(b)(i)  (continued)

 

Lescol P1 Physicians Contacted

 

	
   

  	
   

  	
  Month

  	
   

  	
  QTD

  	
   

  	
  YTD

  	
   

  
	
  Decile

  	
   

  	
  # P1
  Targets

  	
   

  	
  #
  Contacted

  	
   

  	
  %
  Achieved

  	
   

  	
  # P1
  Targets

  	
   

  	
  #
  Contacted

  	
   

  	
  %
  Achieved

  	
   

  	
  # P1
  Targets

  	
   

  	
  #
  Contacted

  	
   

  	
  %
  Achieved

  	
   

  
	
  10

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  0 (Non-Writer)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total Number
  Contacted

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  % Contacted
  Targets

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Lescol P2 Physicians Contacted

 

	
   

  	
   

  	
  Month

  	
   

  	
  QTD

  	
   

  	
  YTD

  	
   

  
	
  Decile

  	
   

  	
  # P2
  Targets

  	
   

  	
  #
  Contacted

  	
   

  	
  % Achieved

  	
   

  	
  # P2
  Targets

  	
   

  	
  #
  Contacted

  	
   

  	
  % Achieved

  	
   

  	
  # P2
  Targets

  	
   

  	
  #
  Contacted

  	
   

  	
  % Achieved

  	
   

  
	
  10

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  0 (Non-Writer)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total Number
  Contacted

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  % Contacted
  Targets

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

4

 

Lescol Frequency of Calls

 

Schedule 4.10(b)(i)  (continued)

 

Lescol Actual Number of Calls

 

	
   

  	
   

  	
  Month

  	
   

  	
  QTD

  	
   

  	
  YTD

  	
   

  
	
  Decile

  	
   

  	
  P1

  	
   

  	
  P2

  	
   

  	
  P1E

  	
   

  	
  P1

  	
   

  	
  P2

  	
   

  	
  P1E

  	
   

  	
  P1

  	
   

  	
  P2

  	
   

  	
  P1E

  	
   

  
	
  10

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  0 (Non-Writer)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total Calls

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Lescol Call Planned

 

	
   

  	
   

  	
  Month

  	
   

  	
  QTD

  	
   

  	
  YTD

  	
   

  
	
  Decile

  	
   

  	
  P1

  	
   

  	
  P2

  	
   

  	
  P1E

  	
   

  	
  P1

  	
   

  	
  P2

  	
   

  	
  P1E

  	
   

  	
  P1

  	
   

  	
  P2

  	
   

  	
  P1E

  	
   

  
	
  10

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  0 (Non-Writer)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total Calls

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

5

Lescol Frequency of Calls (continued)

 

Lescol Plan Achieved

 

	
   

  	
   

  	
  Month

  	
   

  	
  QTD

  	
   

  	
  YTD

  	
   

  
	
  Decile

  	
   

  	
  P1

  	
   

  	
  P2

  	
   

  	
  P1E

  	
   

  	
  P1

  	
   

  	
  P2

  	
   

  	
  P1E

  	
   

  	
  P1

  	
   

  	
  P2

  	
   

  	
  P1E

  	
   

  
	
  10

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  0 (Non-Writer)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total Calls

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

6

 

Schedule 4.10(b)(ii)

 

Form of Reliant Physician Level Data
Report

 

Physician Level Xponent Data with Call and Sample Information

Schedule 4.10(b)(ii)

 

	
  IMS # or ME Num

  	
   

  	
  Product
  {i} TRx by Month

  	
   

  	
  Product
  {i} NRx Month

  	
   

  	
  Lescol
  Calls P1 by Month

  	
   

  	
  Lescol
  Calls P2 by Month

  	
   

  	
  Lescol
  Samples by Month

  	
   

  
	
  Unique Physician identifier

  	
   

  	
  TRx for Competitive products (ex. Lipitor etc.) and
  Lescol

  	
   

  	
  NRx for Competitive products (ex. Lipitor etc.) and
  Lescol

  	
   

  	
  Lescol P1 Calls made by Sales Rep by month

  	
   

  	
  Lescol P2 Calls made by Sales Rep by month

  	
   

  	
  Lescol Samples by month

  	
   

  

 

1

 

Schedule
4.14

 

Sample
Accountability

 

[***]

 

 

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

 

1

 

Schedule
5.1

 

Novartis’
Standard Sales Terms and Conditions

 

	
  [***]

  	
  [2 pages omitted]

  

 

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

 

1

 

Schedule
5.7(a)

Standard Sales Reporting Format

 

	
  MONTHLY NET SALES

  	
   

  	
  200X

  Actual

  January

  	
   

  	
  200X

  Actual

  February

  	
   

  	
  200X

  Actual

  March

  	
   

  	
  200X

  Actual

  April

  	
   

  	
  200X

  Actual

  May

  	
   

  	
  200X

  Actual

  June

  	
   

  	
  200X

  Actual

  July

  	
   

  	
  200X

  Actual

  August

  	
   

  	
  200X

  Actual

  September

  	
   

  	
  200X

  Actual

  October

  	
   

  	
  200X

  Actual

  November

  	
   

  	
  200X

  Actual

  December

  	
   

  	
  Total

  Jan Dec

  	
   

  
	
  Lescol Net Sales 

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $          0
  

  	
   

  
	
  Lescol XL Net
  Sales

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $          0

  	
   

  
	
  Total
  Net Sales

  	
   

  	
  $            0

  	
   

  	
  $            0

  	
   

  	
  $            0

  	
   

  	
  $            0

  	
   

  	
  $            0

  	
   

  	
  $            0

  	
   

  	
  $             0

  	
   

  	
  $             0

  	
   

  	
  $             0

  	
   

  	
  $             0

  	
   

  	
  $             0

  	
   

  	
  $             0

  	
   

  	
  $          0

  	
   

  
	
  Contract Net
  Sales Baseline

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $          0

  	
   

  
	
  Net
  Sales Above Baseline

  	
   

  	
  $            0

  	
   

  	
  $            0

  	
   

  	
  $            0

  	
   

  	
  $            0

  	
   

  	
  $            0

  	
   

  	
  $            0

  	
   

  	
  $             0

  	
   

  	
  $             0

  	
   

  	
  $             0

  	
   

  	
  $             0

  	
   

  	
  $             0

  	
   

  	
  $             0

  	
   

  	
  $          0

  	
   

  
	
  Compensation Rate

  	
   

  	
  00

  	
  %

  	
  0.0

  	
  %

  	
  0.0

  	
  %

  	
  0.0

  	
  %

  	
  0.0

  	
  %

  	
  0.0

  	
  %

  	
  0.0

  	
  %

  	
  0.0

  	
  %

  	
  0.0

  	
  %

  	
  0.0

  	
  %

  	
  0.0

  	
  %

  	
  0.0

  	
  %

  	
  0.0

  	
  %

  
	
  Compensation to
  Reliant

  	
   

  	
  $            0

  	
   

  	
  $            0

  	
   

  	
  $            0

  	
   

  	
  $            0

  	
   

  	
  $            0

  	
   

  	
  $            0

  	
   

  	
  $             0

  	
   

  	
  $             0

  	
   

  	
  $             0

  	
   

  	
  $             0

  	
   

  	
  $             0

  	
   

  	
  $             0

  	
   

  	
  $          0

  	
   

  

 

1

 

Schedules
5.7(b)

Example of Backorder Reporting Format

 

	
  SKU

  	
   

  	
  No. of Units

  	
   

  	
  Net Sales Value of Units

  	
   

  	
  Date of Back Order

  	
   

  	
  Estimated Fill Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

1

 

Schedules
5.7(c)

Example of Monthly Sales Reporting Format

 

	
  MONTHLY NET SALES

  	
   

  	
  2005 Actual

  January

  	
   

  	
  2005 Actual

  February

  	
   

  	
  2005 Actual

  March

  	
   

  	
  2005 Actual

  April

  	
   

  	
  2005 Actual

  May

  	
   

  	
  2005 Actual

  June

  	
   

  	
  2005 Actual

  July

  	
   

  	
  2005 Actual

  August

  	
   

  
	
  Lescol

  	
   

  	
  Nets Sales

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lescol XL

  	
   

  	
  Net Sales

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Total Net
  Sales

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  
	
   

  	
   

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
  %

  	
  [***]

  	
  %

  	
  [***]

  	
  %

  	
  [***]

  	
  %

  	
  [***]

  	
  %

  	
  [***]

  	
  %

  	
  [***]

  	
  %

  
	
   

  	
   

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  *[***]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  *[***]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  *[***]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  *[***]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  *[***]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

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

 

1

 

Schedule
5.7(d)

Example of Daily Sales Reporting Format

 

 

	
  PL Profit Center

  	
   

  	
  LESCOL Total

  	
   

  	
  LESCOL XL Total

  	
   

  
	
  Posting date

  	
   

  	
  Balance Units

  	
   

  	
  Balance Units

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  

 

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

 

1

 

Schedule
6.2(c)

 

Amount
Owed by Reliant 

with Respect to VA Net Sales

 

	
  Agreement Year

  	
   

  	
  Total Reliant Compensation

  	
   

  	
  Revised Compensation

  with VA 

  adjustment

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2003

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  2004

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  2005

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  

 

The above represents the agreed final one time
adjustment for VA Net Sales with respect to calendar years 2003, 2004, and
through February 28, 2005.

 

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

 

1

 

Schedule
6.6(a)

 

Dispute
Resolution Experts

 

McKinsey & Co.

 

Boston Consulting Group (BCG)

 

Bain & Company

 

1

 

Schedule
8.1(j)

 

Threatened
Claims by or Against Novartis

Relating to the Products

 

[***]

 

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

 

1

 

Schedule
8.2(g)

 

Threatened
Claims by or Against Reliant

Relating to the Products

 

[***]

 

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

 

2

 

Schedule
13.2

 

Confidentiality
Provisions

 

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

 

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

 

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

 

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

 

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

 

i

 

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

 

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

 

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

 

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

 

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

 

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

 

ii

 

and any individual, corporation,
partnership, group or other entity. This agreement may be executed in
counterparts, each of which will be deemed to be an original, but all of which
constitute the same agreement. Please confirm that the foregoing is in
accordance with your understanding of our agreement by signing and returning to
us a copy of this letter. This agreement shall terminate and be of no further
force or effect from and after [     ] from the date
hereof.

 

iii

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