Document:

EXHIBIT 10.39(a)

 

Amendment No. 1 to Development, License &
Supply 

Agreement between Eurand America, Inc. and Reliant 

Pharmaceuticals, LLC for Extended Release Propranolol

 

This Amendment
No. 1 to the Development, License and Supply Agreement, dated as of February 5,
2003, by and between Reliant Pharmaceuticals, LLC (f/k/a Reliant
Pharmaceuticals, Inc.), a Delaware limited liability company and Eurand
America, Inc., a Nevada corporation (“Eurand”).

 

WHEREAS,
Reliant and Eurand are parties to the Development, License and Supply Agreement
dated as of January 27, 2000 for Extended Release Propranolol (the “Original
Agreement”); and

 

WHEREAS,
Reliant and Eurand wish to amend certain terms of the Original Agreement.

 

NOW
THEREFORE, in consideration of the foregoing promises
and the mutual covenants and agreement made herein and for other good and
valuable consideration, the receipt and sufficiency and hereby acknowledged,
the parties hereto agree as follows:

 

1.                                      Amendment
to Preamble. The preamble of the Original Agreement shall be amended by
deleting “RELIANT PHARMACEUTICALS, INC., a corporation organized under the
laws of the State of Delaware, with its principal office at 125 W. 55th Street,
11 Floor, New York, New York” and substituting “RELIANT PHARMACEUTICALS, LLC, a
Delaware limited liability company with its principal office at 110 Allen Road,
Liberty Corner, New Jersey 07938” in lieu thereof.

 

2.                                      Amendment
to Article 1. Article 1 of the Original Agreement shall be
amended by adding the following definitions to the existing text thereof:

 

1.28                           “Quality
Agreement” means an agreement between the parties which describes the quality
and regulatory responsibilities relating to the manufacture and release of the
Product by Eurand to Reliant or its designee.

 

1.29                           “Designated
Facility” means a location for delivery of Product set forth by Reliant in the
applicable purchase order.

 

1.30                           “NDA”
means New Drug Application Number 21,438 as filed by Reliant with the FDA and
all subsequent submissions, supplements or amendments thereto.

 

1.31                           “Sample(s)”
means those quantities of Product manufactured as Finished Dosage Form solely
for promotional sampling.

 

1.32                           “Trade”
means those quantities of Product manufactured as Finished Dosage Form other
than as Samples.

 

 

3.                                      Amendment
to Article 6.1. Article 6.1 of the Original Agreement shall
be amended by deleting the existing text thereof in its entirety and
substituting the following in lieu thereof:

 

6.1                                 Manufacturing.
Eurand shall manufacture, package, label, test and release, and prepare for
shipment Product to Reliant or to the Designated Facility from Eurand’s
facilities at the agreed upon date and in the quantities set forth by Reliant
in a purchase order pursuant to Section 6.7(b) below. Each shipment
of Product (i) will include a certificate of analysis confirming that the
Product therein meets the Specifications as then in effect; (ii) will have
been manufactured in accordance with cGMP in effect at the time of manufacture;
(iii) will not be adulterated or misbranded by Eurand within the meaning
of the Act; and (iv) will have been manufactured, sold and shipped in
compliance with Applicable Laws, the NDA and all applicable FDA guidelines. Eurand
agrees that it shall make no changes in the manufacture or production of the
Product without the specific written prior approval of a duly authorized
representative of Reliant unless expressly required by cGMP or the Act. Reliant
shall have the sole responsibility for obtaining any and all necessary
approvals from the FDA for modifications to the Specifications and for
reporting any modification to the Specifications to the FDA as appropriate.

 

4.                                      Amendment
to Article 6.7. Article 6.7 of the Original Agreement shall
be amended by deleting the existing text thereof in its entirety and
substituting the following in lieu thereof:

 

6.7(a)                   Forecasts.
Commencing on the Approval Date and on or before the tenth (10th) day of each
Calendar Month thereafter, Reliant shall provide Eurand with a twelve month
rolling forecast covering its estimate of the total quantity of Product (by
dosage strength and estimated number of Samples and Trade for each dosage
strength for the succeeding twelve (12) months (the “Forecast”). Reliant shall
be obligated to purchase the quantities of Product forecasted for the
immediately succeeding ninety (90) days and Eurand will be obligated to supply
Reliant with such quantity ordered provided that such orders do not exceed 130%
of the Forecast of Samples and Trade in total for such ninety (90) day period. In
the event such purchase orders exceed 130% of the Forecast for such ninety (90)
day period, Eurand shall make commercially reasonable efforts to manufacture
such quantities ordered. Eurand shall maintain minimum Product inventory at
levels equal to thirty (30) days supply based on the most recent Forecast for
the relevant succeeding sixty (60) days and shall make commercially reasonably
efforts to maintain Product inventory at levels equal to sixty (60) days supply
based on the most recent Forecast for the relevant succeeding sixty (60) day. If
feasible and commercially reasonable, Reliant shall maintain inventory of
Product equal to sixty (60) days supply.

 

6.7(b)                  Purchase
Orders. Reliant will purchase Product by written purchase orders which
shall be placed at least ninety (90) days prior to the desired date of shipment
from Eurand.

 

5.                                      Amendment
to Article 6.8. Article 6.8 of the Original Agreement shall
be amended by adding the following additional sentence at the end of said Article 6.8:

 

“Product will
be F.O.B. from 845 Center Dr., Vandalia, OH 45377.”

 

2

 

6.                                      Amendment
to Article 6. Article 6 of the Original Agreement shall be
further amended by adding the following:

 

6.9                       Quality
Control and Assurance. Eurand will manufacture the Product in compliance
with the NDA, the Specifications, cGMP and the Quality Agreement. Eurand will
perform quality control testing on the Product to be delivered to Reliant
or the Designated Facility in accordance with the NDA, the Specifications, cGMP
and the Quality Agreement.

 

7.                                      Amendment
to Article 7.1. Article 7.1 of the Original Agreement shall
be amended by deleting the existing text thereof in its entirety and
substituting the following in lieu thereof:

 

7.1(a)                   Price/Volume
Adjustment:  For each year during the
term of the Agreement and subject to any increases as set forth in Section 7.1(b) below,
Eurand shall sell and Reliant shall buy, the Product at the prices set forth
below.

 

Tier 1
Price: [***]

 

	
   

  	
   

  	
  Sample Price

  	
   

  	
  Trade Price

  
	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  
	
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  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  
	
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  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  

 

Tier 2
Price: [***]: 

 

	
   

  	
   

  	
  Sample Price

  	
   

  	
  Trade Price

  
	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  
	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  
	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  

 

7.1 (b)               Annual
Price/Volume Increases. Commencing January 1, 2003, during the last
quarter of each calendar year during the term of this Agreement, the parties
shall negotiate in good faith to determine the revised volume and pricing set
forth in Section 7.1(a) above for the succeeding calendar year. Such
volume and price revisions shall be based upon demonstrated increases and
decreases in Eurand’s manufacturing costs set forth in Exhibit C to the
Original Agreement. In addition any such changes in volume and price shall be
in accordance with generally accepted accounting principles. If the parties are
unable to agree upon the revised volume and pricing changes, then the matter
will be referred to their respective corporate officers or most senior
management for resolution. In addition, Eurand may at any time during the
calendar year, on sixty (60) days written notice to Reliant adjust the prices
set 

 

[***]: 
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

 

forth in Section 7.1(a) if
Eurand can demonstrate (i) there has been a material increase in
manufacturing costs as defined in Exhibit C due to (x) a change in
manufacturing techniques or materials requested by Reliant or (y) a change in
Applicable Laws (including cGMP) or (ii) a material increase in the cost
of raw materials.

 

7.1 (c)                Cost Reduction.
Reliant and Eurand agree to work together in good faith to reduce the costs of
manufacturing, and shipping, and improve utilization and yield of API and
Materials, including, by way of example, increase of lot size and modification
of packaging. Reliant and Eurand shall meet every six (6) months to review
manufacturing and shipping procedures and cooperate in good faith to reduce
costs.

 

8.                                      Amendment
to Article 7.2. The first sentence of Article 72 of the
Original Agreement shall be amended by deleting the existing text thereof in
its entirety and substituting the following in lieu thereof:

 

7.2 (a)                Payment Terms:  Eurand shall invoice Reliant for Product
shipped to Reliant or Designated Facility at the price for Samples set forth in
7.1(a) above. Reliant shall pay Eurand the amount due by wire transfer to
a bank designated by Eurand within thirty (30) days of the date of invoice. Eurand
will receive Incremental Payments (as defined below) due for Product packaged
as Trade as defined in Trade & Sample Report in Section 7.2(b) concurrent
with the issuance of the Trade & Sample Report.

 

7.2 (b)               Trade &
Sample Report:  Within thirty (30)
days of the end of each calendar month, Reliant shall provide to Eurand a
report (“Trade & Sample Report”) detailing the packaging of the
Finished Dosage Form received by Reliant for the previous calendar month
which shall contain, i) the quantity of capsules of Product packaged as Trade
(by batch), ii) the quantity of capsules of Product packaged as Samples (by
batch), iii) the quantity of capsules of Product lost or destroyed during the
packaging of the Finished Dosage Form (by batch), and iv) the resultant
incremental Payments due to Eurand. The Incremental Payments shall be
calculated as [the quantity of capsules of Product packaged as Trade minus the
quantity of capsules lost or destroyed during packaging] multiplied by the
difference between Trade and Sample price(s) for each dosage strength as
defined in Article 7.1(a).

 

9.                                      No Other Amendments. Except as
expressly amended hereby the Original Agreement shall continue in full force
and effect.

 

10.                               Governing Law. This Amendment shall
be governed by, and construed in accordance with, the laws of New Jersey
without giving effect to the choice of law provisions thereof.

 

11.                               Counterparts. For the convenience
of the parties hereto, this Amendment may be executed in any number of
counterparts, each such counterpart being deemed to be an original
instrument, and all such counterparts shall together constitute the same
agreement.

 

12.                               Successors and Assigns. For the
avoidance of doubt, this Amendment shall be binding upon and inure to the
benefit of the parties hereto and each of their successors and assigns,
including, without limitation, any successors or surviving entities thereto by
operation of merger.

 

4

 

13.                               Entire Agreement. The Original
Agreement, as amended hereby, constitutes the entire agreement of all parties
hereto with respect to the subject matter hereof and supersedes all prior
agreements and undertakings, both written and oral, among the parties hereto with
respect to the subject matter hereof. All references in the Original Agreement
to “this Agreement”, “hereof”, “hereby” and words of similar import shall refer
to the Original Agreement as amended hereby.

 

14.                               Defined
Terms. Capitalized terms used but not otherwise defined herein shall
have the meanings ascribed to them in the Original Agreement.

 

[Remainder
of Page Intentionally Left Blank]

 

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  Reliant Pharmaceuticals, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Eurand America, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name

  
	
   

  	
  Title

  

 

6EXHIBIT 10.40

 

AMENDED AND RESTATED

MANUFACTURING AND PACKAGING AGREEMENT

 

This Manufacturing and Packaging Agreement (“Agreement”)
is made this    day of March, 2007 by and between Cardinal Health
PTS, LLC, having a place of business at 2725 Scherer Drive, St Petersburg,
Florida 33716 (“Cardinal Health”) and Reliant Pharmaceuticals, Inc. (“Reliant”),
having its principal place of business at 110 Allen Road, Liberty Corner, New
Jersey 07938. (Cardinal Health and Reliant are each a “Party” and shall
collectively be referred to herein as the “Parties.”)

 

BACKGROUND

 

A.            Cardinal
Health provides contract pharmaceutical development, manufacturing, packaging,
analytical, and sales and marketing services to the pharmaceutical industry.

 

B.            Reliant
has rights to market certain pharmaceutical products and wants Cardinal Health
to assist in the formulation, filling, packaging and testing of such products
as provided in this Agreement and the attachments hereto.

 

C.            In
April 2005, Cardinal Health and Reliant entered into that certain
Manufacturing and Packaging Agreement under which Reliant engaged Cardinal
Health to provide certain services to Reliant in connection with the processing
of the Product (defined below) (the “Initial
Agreement”) on a non-exclusive basis.

 

D.            The
Parties wish to amend and restate the Initial Agreement as set forth below.

 

E.             THEREFORE,
in consideration of the mutual conditions and covenants set forth herein, the
Parties hereby agree as follows:

 

ARTICLE 1

DEFINITIONS

 

The
following terms have the following meanings in this Agreement:

 

1.1                                 “Affiliate(s)” means any corporation,
firm, partnership or other entity that controls, is controlled by or is under
common control with a Party. For purposes of this definition, “control” shall
mean the ownership of at least fifty percent (50%) of the voting share capital
of such entity or any other comparable equity or ownership interest.

 

1.2                                 “API” means the active pharmaceutical
ingredient described in the Manufacturing Specifications, which have been
released by Reliant and provided to Cardinal Health as raw material, along with
a certificate of analysis, as provided in this Agreement.

 

1.3                                 “API
Cap” shall have the meaning set forth in Section 15.1.

 

 

1.4                                 “Applicable Laws” means all laws,
ordinances, rules and regulations within the Territory applicable to the
Manufacturing and Packaging of the Product or any aspect thereof and the
obligations of Cardinal Health or Reliant, as the context requires under this
Agreement, including, without limitation, (A) all applicable federal,
state and local laws and regulations of each Territory; (B) the U.S.
Federal Food, Drug and Cosmetic Act, and (C) the current Good
Manufacturing Practices promulgated by the Regulatory Authorities, as amended
from time to time (“cGMPs”).

 

1.5                                 “Batch” means defined quantity of
finished drug product that has been or is being Manufactured and Packaged in
accordance with the Specifications.

 

1.6                                 “Calendar Quarter” means a period of
three (3) consecutive months commencing on January 1, April 1, July 1
or October 1 of any calendar year.

 

1.7                                 “Cardinal Health Technology” shall have
the meaning set forth in Article 12.

 

1.8                                 “Change Order” shall have the meaning
set forth in Section 4.5(A).

 

1.9                                 “Confidential Information” shall have
the meaning set forth in Section 11.2.

 

1.10                           “Contract Year” means each consecutive
twelve (12) month period beginning on January 1, 2007.

 

1.11                           “Defective Product” shall have the
meaning set forth in Section 5.2.

 

1.12                           “Delivery
Date” shall mean the date on which Cardinal Health tenders the relevant
Batch(es) to the carrier in accordance with Section 6.1. Each Delivery
Date shall be specified by Reliant on the relevant Purchase Order and confirmed
by Cardinal Health as set forth in Section 4.4.

 

1.13                           “Dispute” shall have the meaning set
forth in Section 19.9.

 

1.14                           “Effective Date” means January 1,
2007.

 

1.15                           “Facility
or Facilities” means Cardinal
Health’s facilities located in St. Petersburg, Florida or such other facility
as agreed by the Parties.

 

1.16                           “FDA” means the United States Food and
Drug Administration and any successor agency thereto.

 

1.17                           “Firm Commitment” shall have the
meaning set forth in Section 4.3.

 

1.18                           “Manufacture”
or “Manufacturing” means the compounding, filling, encapsulation, producing
and/or inspection of the API and Raw Materials into Product in accordance with
the Specifications and the terms and conditions set forth in this Agreement.

 

 

1.19                           “Manufacturing Date” means the day on which the
Product is to be compounded by Cardinal Health, which shall not be more than
forty-five (45) days prior to the Delivery Date.

 

1.20                           “Manufacturing
Related Reference Documents” means (a) all completed production/Batch
records; (b) all quality control test/request forms (result worksheets)
and associated data; (c) dynamic monitoring performed during processing; (d) any
alert/action notifications generated during processing; (e) any planned or
unplanned deviations associated with the Product; (f) any out of
Specification result investigations associated with the Product; (g) the
Certificate of Analysis for the Batch comparing testing to Specifications; (h) the
appropriate disposition notification for the Batch, and (i) a Yield
statement.

 

1.21                           “Manufacturing
Sample” shall have the meaning set forth in Section 5.1.

 

1.22                           “Minimum
Requirement” shall have the meaning set forth in Section 4.1.

 

1.23                           “Package”
or “Packaging” means the labeling and the packaging of the Product onto the
bulk product packaging in accordance with the Specifications and the terms and
conditions of this Agreement.

 

1.24                           “Product” means Omacor® as fully
compounded API Manufactured and Packaged in accordance with the Specifications,
including both Sample Product and Trade Product.

 

1.25                           “Product
Maintenance Fee” shall have the meaning set forth in Section 7.2.

 

1.26                           “Product
Maintenance Services” shall have the meaning set forth in Section 2.3.

 

1.27                           “Purchase Order” shall have the meaning
set forth in Section 4.4.

 

1.28                           “Raw Materials” means all raw
materials, supplies, components and packaging, not including API, necessary to
Manufacture, Package and ship the Product in accordance with the
Specifications.

 

1.29                           “Regulatory Authority” means any
governmental regulatory authority within a Territory involved in regulating any
aspect of the development, manufacture, market approval, sale, distribution,
packaging or use of the Product.

 

1.30                           “Reliant Technology” shall have the
meaning set forth in Article 12.

 

1.31                           “Review Period” shall have the meaning
set forth in Section 5.1.

 

1.32                           “Rolling Forecast” shall have the
meaning set forth in Section 4.3.

 

1.33                           “Sample Product” shall mean Product
supplied to physicians and other permitted recipients without charge in
accordance with all Applicable Laws.

 

1.34                           “Softgel
Technology” means Cardinal Health’s proprietary technology for the manufacture
of softgels for the oral administration of pharmaceutical active ingredients
having 

 

 

certain solubility
characteristics and includes proprietary know-how including without limitation
know-how relating to (i) the development of fill and shell formulations; (ii) the
design and use of the encapsulation process to enhance stability, solubility,
bioavailability, and manufacturability of active ingredient chemical entities
in softgels; (iii) the selection and preparation of solvents, vehicles,
excipients, surfactants, stabilizers, gelatin, plasticizers and other
components of the liquid fill and the gelatin shell; (iv) certain
encapsulation, drying and related manufacturing techniques and machinery for
making commercial quantities of softgels, and (v) Cardinal Health’s
proprietary [***] technique.

 

1.35                           “Specifications” means the procedures,
requirements, standards, quality control testing and other data and the scope
of services as set forth in Exhibit A, which are hereby
incorporated by reference into this Agreement, along with any valid amendments
or modifications thereto, subject to the terms and conditions of Article 9.

 

1.36                           “Term” shall have the meaning set forth
in Section 15.1.

 

1.37                           “Territory” means the United States of
America, its territories and possessions.

 

1.38                           “Trade
Product” means any Product which has been designated and packaged for
commercial sale in the Territory.

 

1.39                           “Unit”
means each individual unit of Product, as described more fully in the Specifications.

 

1.40                           “Unit Pricing” shall have the meaning
set forth in Section 7.1.

 

1.41                           “Yield”
shall have the meaning set forth in Section 3.4.

 

ARTICLE 2

VALIDATION, MANUFACTURING, PACKAGING &
RELATED SERVICES

 

2.1                                 Validation
Services. During the Term, Cardinal Health shall perform the
qualification and validation services described in Exhibit D of
this Agreement for the prices specified therein.

 

2.2                                 Supply
and Purchase of Product. During the Term, Cardinal Health shall Manufacture
and Package the Products in accordance with the Specifications, Applicable Laws
and the terms and conditions of this Agreement. Reliant shall purchase Product
from Cardinal Health in accordance with the terms and conditions of this
Agreement, including but not limited to the obligations set forth in Section 4.1
and Section 4.2 hereof.

 

2.3                                 Product
Maintenance Services. During the Term and subject to Reliant’s payment of
the Product Maintenance Fee as set forth in Section 7.2, if applicable,
Reliant shall be entitled to the Product maintenance services set forth below
(collectively, the “Product Maintenance Services”). For the avoidance of doubt,
in the event that, in accordance with the terms of Section 7.2, Reliant 

 

[***]:  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.

 

 

is not required to pay
the Product Maintenance Fee, Reliant shall nonetheless be entitled to the
Product Maintenance Services:

 

•                  Administration
of Foreign Trade Zone;

•                  One
annual audit;

•                  Annual
Product review;

•                  Access to document library over and
above the Quality Agreement, including additional copies of batch paperwork or
other batch documentation;

•                  Annual
Drug Master File update;

•                  Preparation of Product licenses or
permits under United States local, state or Federal regulations (in each case
as more fully set forth in Article 10);

•                  Product
Document and Manufacturing Sample Storage relating to cGMP requirements;

•                  Vendor
re-qualification;

•                  Maintenance
and storage of Audit Reports; and

•                  Bulk
stability (6 months, warehouse conditions).

 

ARTICLE 3

MATERIALS

 

3.1           API.

 

A.                                   Reliant
shall supply to Cardinal Health for Manufacturing and Packaging, at Reliant’s
sole cost, the API and applicable reference standards in quantities sufficient
to meet Reliant’s requirements for each Product as further set forth in Article 4.
Prior to delivery of any of the API or reference standard to Cardinal Health
for Manufacturing and Packaging, Reliant shall provide to Cardinal Health a
copy of the API Material Safety Data Sheet (“MSDS”), as amended, and any
subsequent revisions thereto. Reliant shall supply the API, reference
standards, and Certificate of Analysis FOB the Facility no later than thirty
(30) days before the scheduled Manufacture Date upon which such API will be
used by Cardinal Health. Upon receipt of the API, Cardinal Health shall conduct
identification testing of the API. Cardinal Health shall use the API solely and
exclusively for Manufacturing and Packaging under this Agreement. The maximum
volume of API that Reliant supplies to Cardinal Health shall not exceed the
amount reflected in the Firm Commitment and the next six (6) months of the
Rolling Forecast.

 

B.                                     All
API provided by Reliant shall meet applicable Specifications that apply
thereto, and shall be produced in accordance with all applicable federal, state
and local laws and regulations, including, without limitation, cGMPs.

 

C.                                     Cardinal
Health shall inspect API as received to verify its identity and shall give
Reliant oral and written notice of any nonconformity with Specifications within
thirty (30) calendar days of receipt of API by Cardinal Health. Reliant shall
provide a Certificate of Analysis with each delivery of API and such
certificate shall be the basis for drug potency.

 

D.                                    Reliant
shall retain title to API at all times and shall bear the risk of loss thereof;
provided, however, subject to Section 15.1, from the time
API is received at Cardinal Health’s Facility to the time API is returned (or
Product is delivered) to Reliant’s designated carrier at 

 

 

Cardinal Health’s loading
dock, Cardinal Health shall bear the risk of loss of API arising from Cardinal
Health’s negligence or failure to comply with cGMPs or failure to comply with
all Specifications.

 

3.2                                 Raw
Materials. Cardinal Health shall be responsible for procuring, inspecting
and releasing adequate Raw Materials as necessary to meet the Firm Commitment,
unless otherwise agreed to by the Parties in writing. All Raw Material supplier
changes must be agreed by the Parties by amending the Specifications in
writing.

 

3.3                                 Reimbursement
for Materials. In the event of (A) a Specification change requested by
Reliant or Cardinal Health for Reliant’s benefit and agreed by the Parties, or
to comply with any new requirement of a Regulatory Authority, (B) termination
of this Agreement by Reliant without cause or expiration of this Agreement; or (C) unforeseeable
obsolescence of any Raw Material, Reliant shall bear the cost of any unused Raw
Materials that cannot be used by Cardinal Health or returned for credit,
provided that Cardinal Health purchased such Raw Materials in quantities
consistent with Reliant’s most recent Firm Commitment and the supplier’s
minimum purchase obligations.

 

3.4                                 Yield
and Inventory Reconciliation. Cardinal Health will achieve a minimum Yield
in Manufacturing the Product. “Yield” means the relation between the API
content of the Product Manufactured over a certain time period and the actual
quantity of API used to Manufacture such quantity of Product. The minimum Yield
was determined after the Manufacture of the greater of twenty (20) batches or
the number of batches Manufactured during the first three (3) months of
production and is set forth in Exhibit C. In the event the minimum
yield falls below [***]% at any time during the Term, the Parties agree to
discuss remedies to elevate the minimum yield in good faith and amend the
Agreement as the Parties deem appropriate, provided, however, the
foregoing discussions shall not relieve Cardinal Health of its obligations to
pay for quantities of API consumed in excess of the minimum Yield under this Section 3.4.
In the event the Parties have not agreed on remedies to elevate the Yield to [***]%
within three (3) months of determining the minimum Yield as set forth
above, the Parties expressly agree that for purposes of this Section 3.4
and the obligations set forth herein, the minimum Yield shall be no less than [***]%,
unless the Parties discuss and agree that it is commercially impracticable
under the circumstances. After the Parties have established the minimum Yield,
Cardinal Health shall, after Manufacture of each Batch, compare actual Yield
for such batch with the minimum Yield. Cardinal Health shall prepare a
quarterly report that sets forth all Yields by lot numbers that exceed the
minimum Yield. Cardinal Health will reimburse or credit Reliant an amount that
is equal to the current price that Reliant actually paid for API per kilo in
the Contract Year (currently [***] dollars ($[***])[***]) consumed in excess of
the minimum Yield, as evidenced by written documentation submitted to Cardinal
by Reliant. The Parties agree that for specific written orders Reliant may provide
Cardinal Health with instructions for Manufacturing that result in Yields lower
than the minimum Yield. Reliant will not be entitled to reimbursement or credit
for API to the extent that API loss is attributable solely to Reliant’s
specific instructions. Within three (3) business days of the end of each
quarter Cardinal Health shall notify Reliant of the quantities of API (both raw
material and in-process) in inventory. Upon reasonable advance notice to
Cardinal Health and at mutually agreeable times but not more than twice in any
twelve 

 

 [***]: 
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) month period,
Reliant shall be permitted to inspect API inventory at Cardinal Health’s
Facility.

 

ARTICLE 4

COMMITMENT OF THE PARTIES, PURCHASE ORDERS &
FORECASTS

 

4.1                                 Minimum
Requirement. During each Contract Year, Reliant shall purchase the minimum
dollar volume of Product (the “Minimum Requirement”) set forth on Exhibit B.
If Reliant does not purchase such Minimum Requirement during any Contract Year,
within thirty (30) days after the end of such Contract Year and upon receipt of
an invoice from Cardinal Health, Reliant shall pay Cardinal Health the
difference between (A) the Minimum Requirement and (B) the sum of all
purchases from Cardinal Health for the Product during the just concluded
Contract Year.

 

4.2                                 Commitment
of the Parties.

 

(a) INTENTIONALLY
OMITTED

 

(b)                                 Reliant
commits to purchase a minimum of [***]% of its Manufacturing requirements for [***]
in the Territory per Contract Year from Cardinal Health during the Term of this
Agreement, subject to Section 4.2 (c) and (d) below. For the
avoidance of doubt, Reliant may, in its sole discretion, purchase any or all of
its [***] from any third party. Further, for the avoidance of doubt, the
pricing for all Product will be at the level assuming that Reliant purchases [***]%
of its requirements for [***] from Cardinal Health, and, in the event Reliant
purchases less than [***]% of its requirements from Cardinal Health the Parties
will conduct a reconciliation of pricing at the conclusion of that Contract
Year.

 

Within
sixty (60)
days following the end of each Contract Year during the Term of this Agreement,
and within sixty
(60) days following the termination or expiration of this Agreement for
any reason, Reliant shall submit to Cardinal Health a written report (each, an “Annual
Report”), certified by an officer of Reliant, setting forth, with respect to
the immediately preceding Contract Year: (i) Reliant’s Manufacturing
requirements for Trade Product in the Territory, (ii) the aggregate Units
of Trade Product purchased from Cardinal Health; (iii) the calculation of
the percentage of its Manufacturing requirements for Trade Product purchased
from Cardinal Health, and (iv) the amount, if any, to be paid to Cardinal
Health in accordance with the terms and conditions set forth in Exhibit B
based on the actual percentage of Reliant’s Manufacturing requirements
purchased from Cardinal Health. In the event that such Annual Report indicates
that Cardinal Health is owed an additional amount for Trade Product purchased
in the immediately preceding Contract Year, Cardinal Health shall invoice
Reliant for such amount, and Reliant shall pay such invoice within thirty (30)
days of the date of receipt of such invoice.

 

(c)                                  In
the event Cardinal Health (i) determines it cannot meet any of Reliant’s
Rolling Forecasts delivered in accordance with Section 4.3 below, or (ii) fails
to deliver any Product within ten (10) days of a respective Delivery Date
for three (3) consecutive months during the Term, such that at the end of
any three month period Cardinal Health has failed to deliver the total number
of lots for which Reliant has issued Purchase Orders, Reliant’s obligations
under 

 

 [***]: 
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.

 

 

4.2(b) shall be
reduced in direct proportion to the percentage such unfulfilled Purchase Orders
represent as measured against Reliant’s obligations in Section 4.2(b), provided,
however, Reliant shall use commercially reasonable efforts to return to
the purchase requirement level set forth in Section 4.2(b) following
resolution of any technical issues.

 

(d)                                 Any
quantity of Product which is not delivered to Reliant by Cardinal Health within
ten (10) days of any Delivery Date, for any reason whatsoever, during the
Term shall give Reliant the option to purchase such quantity of Trade Product,
but only such quantity, from a qualified third-party supplier.

 

(e)                                  In
the event Cardinal Health’s Facility undergoes expansion and subsequent FDA
approval of such expansion, Reliant shall have the option, but not the
obligation, to have its Product Manufactured and Packaged in such new wing,
provided, however, that Reliant shall bear the cost of relocating to such new
wing, up to a cap of $[***].

 

4.3                                 Forecast.
On the Effective Date and on or before the first (1st) day of each
calendar month following the Effective Date, 
Reliant shall furnish to Cardinal Health in writing, an eighteen (18)
month rolling forecast of the quantities of Product that Reliant intends to
order from Cardinal Health during such period (“Rolling Forecast”). The first
three (3) months of such Rolling Forecast shall constitute a binding order
for the quantities of Product specified therein (“Firm Commitment”) and the
following fifteen (15) months of the Rolling Forecast shall be non-binding,
good faith estimates.

 

4.4                                 Purchase
Orders. On or before the first (1st) day of each calendar month,
Reliant shall submit a purchase order for the Firm Commitment, which specifies
the actual number of Batches to be Manufactured and Packaged, the approximate
number of Units in each Batch, and the requested Delivery Dates for each Batch
(“Purchase Order”). Reliant shall submit each Purchase Order to Cardinal Health
at least ninety (90) days in advance of the earliest Delivery Date requested in
the Purchase Order. Cardinal Health shall confirm Delivery Dates to Reliant. In
the event of a conflict between the terms of any Purchase Order and this
Agreement, this Agreement shall control. Notwithstanding the foregoing,
Cardinal Health shall supply Reliant with quantities of Product that exceed by
not more than [***] percent ([***]%)  the
quantities specified in the Firm Commitment (“Excess Quantities”), and shall
use best commercial efforts to supply additional quantities of Product
requested by Reliant (“Additional Quantities”). Cardinal Health’s supply of
Excess Quantities and Additional Quantities are both subject to (i) receipt
of a Purchase Order for such Additional Quantities and Excess Quantities at
least ninety (90) days in advance of the requested Delivery Date for such
Additional Quantities and Excess Quantities, and (ii) Cardinal Health’s
possession of sufficient quantities of API to Manufacture Excess Quantities and
Additional Quantities. Cardinal Health’s failure to supply Reliant with Additional
Quantities shall not constitute a failure to supply under Section 2.2 and
4.2. Should Cardinal Health fail to supply Reliant with its requirements for
the Product, specifically excluding Additional Quantities, for any particular
month hereunder, Cardinal Health shall be required to make up the difference in
the immediately subsequent month.

 

 [***]: 
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.

 

 

4.5                                 Cardinal
Health’s Cancellation of Purchase Orders. Notwithstanding the terms and
conditions set forth in Section 4.6 below, Cardinal Health reserves the
right to cancel all, or any part of, a Purchase Order upon written notice
to Reliant (and Cardinal Health shall have no further obligations or liability
with respect to such Purchase Order) if Reliant refuses or fails to make
scheduled deliveries of the API.

 

4.6                                 Reliant’s
Modification or Cancellation.

 

A.                                   Reliant
may modify the delivery date, Specifications or quantity of Product in
such Purchase Order only by submitting a written change order (“Change Order”)
to Cardinal Health at least thirty (30) business days in advance of the
earliest scheduled Manufacturing Date for the Manufacturing and Packaging
covered by the change order. Such change order shall be effective and binding
upon Cardinal Health only upon the written acceptance by Cardinal Health and,
notwithstanding the foregoing, Reliant shall remain responsible for the Firm
Commitment portion of the Rolling Forecast.

 

B.                                     Notwithstanding
any amounts due to Cardinal Health under Section 4.1 or Section 4.4,
if Reliant fails to place Purchase Orders sufficient to satisfy the Firm
Commitment, Reliant shall, within thirty (30) days of receipt of invoice, pay
to Cardinal Health the difference between the (i) Unit Price for all Units
that would have been Manufactured and Packaged if Reliant had placed Purchase
Orders sufficient to satisfy the Firm Commitment, and (ii) Cardinal Health’s
cost of any Raw Materials that would have been used in such Units, provided,
however, that Cardinal Health is not in default of any of its supply
obligations hereunder. In the event Cardinal Health has an opportunity to
mitigate its damages hereunder, the Parties shall meet in good faith to discuss
an appropriate reduction.

 

4.7                                 Unplanned
Delay or Elimination of Manufacturing and Packaging. Cardinal Health shall
timely fill each Purchase Order, subject to the terms and conditions of this
Agreement applicable to both Parties. Cardinal Health shall notify Reliant as
soon as possible after the receipt of a Firm Commitment or Purchase Order if
Cardinal Health determines that any Manufacturing or Packaging related to the
Firm Commitment or Purchase Order will be delayed or eliminated for any reason.

 

4.8                                 Inspection
of Manufacturing and Packaging. Reliant may base up to two (2) representatives
at the Facilities to observe the Manufacturing and Packaging provided that
Reliant provide Cardinal Health at least ten (10) days’ advance written
notice of the attendance of such Reliant representatives. Reliant shall
indemnify and hold harmless Cardinal Health for any action or activity of such
representatives while on Cardinal Health’s premises.

 

ARTICLE 5

TESTING; MANUFACTURING SAMPLES; RELEASE

 

5.1                                 Manufacturing
Samples; Testing. Within seven (7) days after Cardinal Health’s
completion of Manufacturing and Packaging of each Batch, Cardinal Health shall
deliver to Reliant, or its designee, a sample of the Product (“Manufacturing
Sample”) and the Manufacturing Related Reference Documents for such Batch. No
later than thirty (30) days after receipt of the Manufacturing Sample and a
complete set of the Manufacturing Related Reference 

 

 

Documents (“Review Period”),
Reliant or its designee shall review the Manufacturing Related Reference
Documents and notify Cardinal Health whether the Manufacturing Sample conforms
to the warranty set forth in Section 13.1 of this Agreement. Upon receipt
of notice from Reliant that a Batch meets the warranty in Section 13.1, or
upon failure of Reliant to respond by the end of the Review Period, Cardinal
Health will invoice Reliant for such Batch in accordance with Section 7.5
below.

 

5.2                                 Non-Conforming
Product. If Reliant notifies Cardinal Health during the Review Period that
the Manufacturing Sample does not conform to the warranty set forth in Section 13.1
and Cardinal Health agrees with Client’s determination, Client shall not be
responsible to pay for such batch (the “Defective Product”), and Cardinal
Health shall, at Reliant’s option, either (A) replace any Batch of
non-conforming Product, or (B) credit any payments made by Reliant for
such Batch. If Cardinal Health does not agree with Reliant’s determination that
such Product fails to meet the warranty set forth in Section 13.1, then
after reasonable efforts to resolve the disagreement, the Parties shall cause a
mutually acceptable independent third party to review records, test data and to
perform comparative tests and/or analyses on the Manufacturing Sample. The
results of the independent review shall be final and binding. Unless otherwise
agreed to by the Parties in writing, the costs associated with such testing and
review shall be borne by the non-prevailing Party.

 

THE OBLIGATION OF
CARDINAL HEALTH TO (A) REPLACE DEFECTIVE PRODUCT IN ACCORDANCE WITH THE
SPECIFICATIONS OR CREDIT PAYMENTS MADE BY RELIANT FOR DEFECTIVE PRODUCT AND (B) REIMBURSE
RELIANT FOR API LOST IN THE DEFECTIVE BATCH, SUBJECT TO THE LIMITATIONS IN ARTICLE 15.1,
SHALL BE RELIANT’S SOLE AND EXCLUSIVE REMEDY (WITHOUT PREJUDICE TO ANY
INDEMNIFICATION OBLIGATIONS UNDER SECTION 14.1 OR THE OBLIGATIONS OF SECTION 10.6
(RECALL)) UNDER THIS ARTICLE FOR DEFECTIVE PRODUCT AND IS IN LIEU OF ANY
OTHER WARRANTY, EXPRESS OR IMPLIED.

 

5.3                                 Supply
of Material for Defective Product. In the event Cardinal Health is required
to replace Product pursuant to Section 5.2, above, in no instance shall
Cardinal Health be liable for damage in excess of fees paid for Defective
Product and API, subject to the limitation of liability in Section 15.1
and the indemnification obligations under Section 14.1.

 

ARTICLE 6

DELIVERY

 

6.1                                 Delivery.
Cardinal Health shall segregate and store all Product until such Product has
been Manufactured and Packaged to the Product Specifications. Upon such
acceptance, Cardinal Health shall tender the Product for delivery, F.O.B. the
Facility. Reliant shall be responsible for all costs and risk of loss
associated with shipment of the Product. Reliant shall qualify at least one (1) carrier
to ship the Product, and if Reliant qualifies more than one carrier Reliant
shall designate the priority of such qualified carriers to Cardinal Health.

 

6.2                                 Failure
to Take Delivery. If Reliant fails to take delivery within seven (7) days
of any scheduled delivery date solely with respect to Product that has been
deemed acceptable by 

 

 

Reliant, Reliant shall be
invoiced for such Product pursuant to Section 7.5   On the first day of each subsequent month
Reliant shall be invoiced for the stored Product at a rate of [***] of Batch
price per month for administration and storage costs. For each such batch of
accepted but undelivered Product, Reliant agrees that: (A) Reliant has
made a fixed commitment to purchase such Product, (B) title and risk of
loss for such Product passes to Reliant, (C) such Product shall be on a
bill and hold basis for legitimate business purposes, (D) if no delivery
date is determined at the time of billing, Cardinal Health shall have the right
to ship the Product to Reliant or Reliant’s designee within four months after
billing, and (E) Reliant will be responsible for any decrease in market
value of such Product that relates to factors and circumstances outside of
Cardinal Health’s control. Within five (5) days following a written
request from Cardinal Health, Reliant shall provide Cardinal Health with a
letter confirming items (A) through (E) of this Section for each
Batch of undelivered Product.

 

ARTICLE 7

PRICING AND PAYMENT

 

7.1                                 Unit
Pricing. Reliant shall pay to Cardinal Health the unit pricing set forth on
Exhibit B (“Unit Pricing”) for all Product. When a Purchase Order
is placed, Reliant shall specify in such Purchase Order whether each lot is
designated for Sample Product or Trade Product. For lots designated for Sample
Product, Reliant shall pay the Unit Pricing for Sample Products as set forth on
Exhibit B. For lots designated for Trade Product, Reliant shall pay
the tiered Unit Price based on the number of Units set forth in its Rolling
Forecast for the then-current Contract Year. By way of example, as of the date
a Purchase Order is submitted, if Reliant’s Rolling Forecast for then current
Contract Year estimates a unit volume in excess of One Hundred Million Units,
Reliant shall pay the Unit Pricing for such volume indicated on Exhibit B.
The Parties shall reconcile all accounts annually, no later than thirty (30)
days after the beginning of each Contract Year hereunder, including
verification by Reliant of its sampling program. In the event Reliant shall desire
to make a Sample Product lot out of a lot otherwise forecast and purchased as
Trade Product, the Parties shall reconcile such transfer and Cardinal Health
shall credit the difference to Reliant within thirty (30) days of such
notification. Unit Pricing for Sample Product to be used by Reliant for
physician sampling shall be extended for two (2) years from the Effective
Date. In the event Reliant shall receive FDA approval for a new indication for
the Product, the Parties agree to discuss in good faith an extension of the
Sample Product pricing program at the original sample price. In the event
Reliant requests services other than Manufacturing and Packaging Product,
Cardinal Health shall provide a written quote of the fee for such additional
services and Reliant shall advise Cardinal Health whether it wishes to have
such additional services performed by Cardinal Health.

 

7.2                                 Product
Maintenance Fee. In partial consideration of the Product Maintenance
Services set forth in Section 2.3, Reliant shall pay Cardinal Health an
annual Product Maintenance Fee of [***] dollars ($[***]) for any Contract Year
wherein Reliant purchases less than [***] Units of Product from Cardinal Health.
For any year in which the Product Maintenance Fee is applicable, it shall be payable
by December 31 of such Contract Year. For the avoidance of doubt, no
Maintenance Fees are due and owing as of the Effective Date.

 

 [***]: 
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.

 

 

7.3                                 Price
Increase. The Unit Pricing may be adjusted on an annual basis,
effective on the first day of each Contract Year beginning January 1,
2008, upon ninety (90) days’ written notice from Cardinal Health to Reliant. Such
adjustment shall be based on actual increases or decreases in Raw Material or
Manufacturing and Packaging costs, subject to the following limitations: The
Unit Pricing for Product shall include only: (a) the cost of Raw Materials
and (b) Cardinal Health’s Manufacturing and Packaging costs, including
without limitation Cardinal Health’s labor, utilities and overhead. Any price
adjustment shall limit the increase in component (b) to [***] ([***]%); provided,
however, Cardinal Health shall use its best commercial efforts to limit
any increases hereunder as much as possible and Cardinal Health agrees to
provide backup documentation for all annual increases, if any, and such costs
and related documentation shall be auditable upon reasonable notice by an
independent third party reasonably acceptable to Cardinal Health and Reliant. Reliant
shall bear all costs associated for such audit, unless such audit reveals that
Cardinal Health exceeded the permitted increase, in which case Cardinal Health
shall bear the costs of the audit and shall credit such overpayment to Reliant.

 

7.4                                 Taxes;
Duty. All taxes, duties and other amounts assessed on the Raw Materials,
API or the Product prior to or upon sale to Reliant are the responsibility of
Reliant, and Reliant shall reimburse Cardinal Health for any such taxes, duties
or other expenses paid by Cardinal Health, upon receipt of reasonable
documentation.

 

7.5                                 Payment
Terms. Cardinal Health shall invoice Reliant for all Product as provided in
Section 7.1, and for any amounts due pursuant to Section 4.1 or Section 4.2
and payment for such undisputed invoices shall be due within thirty (30) days
after the date of such invoice. In the event payment is not received by
Cardinal Health, for any amounts due under this Agreement, on or before the
thirtieth (30th) day after the date of the invoice, or in the case
of the Product Maintenance Fee, upon the date set forth in Sections 7.2, then
such unpaid amounts shall accrue interest at the rate of percent (1.0%) per
month until paid in full.

 

ARTICLE 8

INTENTIONALLY OMITTED

 

ARTICLE 9

CHANGES TO SPECIFICATIONS

 

All
Specifications and any changes thereto agreed to by the Parties from time to
time shall be in writing, dated and signed by the Parties. No change in the
Specifications shall be implemented by Cardinal Health, whether requested by
Reliant or requested or required by any Regulatory Authority, until the Parties
have agreed in writing to such change, the implementation date of such change,
and any increase or decrease in costs, expenses or fees associated with such
change. Cardinal Health shall respond promptly to any request made by Reliant
for a change in the Specifications, and both Parties shall use commercially
reasonable, good faith efforts to agree to the terms of such change in a timely
manner. If after initial Product qualification, Reliant requests a change in
the Specifications for its own benefit or to comply with the requirements of a
Regulatory Authority, the Specifications shall be amended as soon as 

 

 [***]: 
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.

 

 

possible after a request
is made for any change in Specifications, and Cardinal Health shall notify
Reliant of the costs associated with such change and shall provide such
supporting documentation as Reliant may reasonably require. Reliant shall
pay all costs associated with such Reliant-requested changes or changes
required by a Regulatory Authority as may be agreed upon by the Parties.
Changes, agreed to between the Parties, for the benefit of Cardinal Health,
shall be at the expense of Cardinal Health. If there is a conflict between the
terms of this Agreement and the terms of the Specifications, this Agreement
shall control.

 

ARTICLE 10

RECORDS; REGULATORY MATTERS

 

10.1                           Batch
Records and Data. Within thirty (30) days following the completion of
Manufacturing and Packaging of each batch, Cardinal Health shall provide
Reliant with properly completed copies of Manufacturing Related Reference
Documents prepared in accordance with the Specifications; provided, however,
that if testing reveals an out-of-Specification result, Cardinal Health shall
provide such Batch records within ten (10) days following resolution of
the out-of Specification result.

 

10.2                           Recordkeeping.
Cardinal Health shall maintain true and accurate books, records, test and
laboratory data, reports and all other information relating to Manufacturing
and Packaging under this Agreement, including all information required to be
maintained by all Applicable Laws. Such information shall be maintained in
forms, notebooks and records for a period of at least two (2) years from
the relevant finished Product expiration date or longer if required under
Applicable Laws.

 

10.3                           Regulatory
Compliance. Cardinal Health, with the assistance of Reliant, shall obtain
all permits and licenses required by any United States federal, state or local
regulatory agency with respect to the Product and the Manufacturing and
Packaging under this Agreement, including any product licenses, applications
and amendments in connection therewith. Cardinal Health will be responsible to
maintain all permits and licenses required by any Regulatory Authority with
respect to the Facility. During the Term, Cardinal Health will assist Reliant
with all regulatory matters relating to Manufacturing and Packaging under this
Agreement, at Reliant’s request and at Reliant’s expense. Each Party intends
and commits to cooperate to satisfy all Applicable Laws relating to
Manufacturing and Packaging under this Agreement. Cardinal Health shall provide
a Certificate of Compliance to Reliant annually during the Term.

 

10.4                           Governmental
Inspections and Requests. Cardinal Health shall immediately advise Reliant
if an authorized agent of any Regulatory Authority visits the Facility
concerning the Manufacturing or Packaging of the Product. Cardinal Health shall
furnish to Reliant a copy of the report by such Regulatory Authority, if any,
within ten (10) days of Cardinal Health’s receipt of such report. Further,
upon receipt of a Regulatory Authority request to inspect the Facilities or
audit Cardinal Health’s books and records with respect to Manufacturing or Packaging
under this Agreement, Cardinal Health shall immediately notify Reliant, and
shall provide Reliant with a copy of any written document received from such
Regulatory Authority. Cardinal Health shall permit Reliant to have a
representative present for any such Product-specific Facility inspection unless
such presence would be unreasonable under the circumstances. To the extent
specifically related to the Manufacturing or Packaging hereunder, Cardinal
Health shall provide Reliant with 

 

 

a copy of any proposed
written response prior to submission and a reasonable opportunity for Reliant
to review and approve, provided such approval is not unreasonably withheld,
conditioned or delayed.

 

10.5                           Reliant
Inspections and Audits.

 

A.                                   Except
for circumstances as set forth in Section 10.4, during the term of this
Agreement, duly-authorized employees, agents and representatives of Reliant
shall be granted access upon at least twenty-four (24) hours prior notice,
unless more time is reasonably requested by Cardinal Health, and at reasonable
times during regular business hours to only the portion of the Facilities where
Cardinal Health Manufactures or Packages API for the purpose of inspecting and
verifying that Cardinal Health is Manufacturing and Packaging API in accordance
with cGMPs, the Specifications and the Product Master Batch Record. For
purposes of this Section 10.5, duly-authorized agents and representatives
shall be required to sign Cardinal Health’s standard Confidential Disclosure
Agreement prior to being allowed access to Cardinal Health’s Facilities.

 

B.                                     With
due regard to information and operations which constitute Proprietary
Information of Cardinal Health, duly-authorized employees, agents and
representatives of Reliant shall have the right to inspect Cardinal Health
Batch Records relating to Product and those portions of Cardinal Health’s
Facilities used for Manufacturing and Packaging Product. Reliant’s Quality
Assurance Manager will arrange audit visits with Cardinal Health Quality
Management.

 

10.6                           Recall.
In the event Cardinal Health believes a recall, field alert, Product withdrawal
or field correction may be necessary with respect to any Product provided
under this Agreement, Cardinal Health shall immediately notify Reliant in
writing. Cardinal Health will not act to initiate a recall, field alert,
Product withdrawal or field correction without the express prior written
approval of Reliant, unless otherwise required by Applicable Laws. In the event
Reliant believes a recall, field alert, Product withdrawal or field correction may be
necessary with respect to any Product provided under this Agreement, Reliant
shall immediately notify Cardinal Health in writing and Cardinal Health shall
provide all necessary cooperation and assistance to Reliant. Reliant shall
solely control the implementation of such recall, filed alert, Product
withdrawal or field correction. The cost of any recall, field alert, Product
withdrawal or field correction shall be borne by Reliant unless such recall,
field alert, Product withdrawal or field correction is caused solely by
Cardinal Health’s breach of its representations, warranties and obligations
under this Agreement or Applicable Laws or its negligence or willful
misconduct, then such cost shall be borne by Cardinal Health. For purposes
hereof, such cost shall be limited to reasonable, actual and documented
administrative costs incurred by Reliant for such recall, withdrawal or
correction, and replacement of the Defective Product to be recalled, in
accordance with Article 5.

 

10.7                           Quality
Agreement. Within thirty (30) days following the execution of this
Agreement, the Parties shall execute a Quality Agreement in substantially the form attached
to this Agreement as Exhibit E. The Quality Agreement shall in no
way determine liability or financial responsibility of the Parties for the
responsibilities set forth therein. In the event of a conflict between the
terms of this Agreement and the Quality Agreement, this Agreement shall
control.

 

 

10.8                           Qualification
of Additional Facilities. In the event Reliant requests that Cardinal
qualify additional Facilities to Manufacture and Package the Product, Reliant
shall be solely responsible for any costs associated therewith which shall be
limited to technology transfer and technology transfer service costs. In the event that Cardinal Health desires to qualify
additional Facilities to Manufacture and Package the Product, Cardinal Health
shall be solely responsible for any costs associated therewith.

 

ARTICLE 11

CONFIDENTIAL INFORMATION

 

11.1                           Confidentiality
Agreement. The use and disclosure of confidential information exchanged
between the Parties shall be governed by the Confidentiality Agreement by and
between Cardinal Health, Reliant and Pronova Biocare, a.s., dated July 29,
2004 (the “Confidentiality Agreement”).

 

11.2                           No
Implied License. Except as otherwise set forth herein, the Party receiving
Confidential Information (as such is defined in the Confidentiality Agreement)
will obtain no right of any kind or license under any patent application or
patent by reason of this Agreement. All Confidential Information will remain
the sole property of the Party disclosing such information or data.

 

11.3                           Return
of Confidential Information. Upon termination or expiration of this
Agreement, the Party to which Confidential Information has been disclosed will,
upon request, promptly return within thirty (30) days, all such Confidential
Information, including any copies thereof, and cease its use or, at the option
of the receiving Party,  promptly destroy
the same and certify such destruction to the disclosing Party, except for a
single copy thereof which may be retained for the sole purpose of
determining the scope of the obligations incurred under this Agreement.

 

11.4                           Disclosure
of Confidential Information. Notwithstanding the terms set forth this Article 11
or the Confidentiality Agreement, each of the Parties shall have the right to
disclose the existence and terms of this Supply Agreement to those of its
directors, managers, officers, employees, accountants, attorneys, advisers,
agents, investment bankers, lenders and potential lenders, financing sources,
acquirers or business combination candidates who need to know such terms for
the purpose of evaluating or entering into a potential business arrangement (“Third
Parties”); provided, that such Third Parties are required to maintain the
confidentiality of this Supply Agreement to the same extent as if they were
Parties hereto Notwithstanding the foregoing, each of the Parties shall have
the right to disclose the existence and terms of this Supply Agreement as may be
required by applicable laws or rules of any stock exchange to which a
Party or any Affiliate of a Party is subject, in which case the disclosing
Party shall provide the non-disclosing Party with prompt advance notice of such
disclosure so that the non-disclosing Party shall have the opportunity if it so
desires to seek a protective order or other appropriate remedy and, in
connection with any disclosure required by the Securities and Exchange
Commission or the rules of any stock exchange to which a Party or any
Affiliate of a Party is subject, the disclosing Party shall use reasonable
efforts to obtain confidential treatment for such disclosure.

 

 

11.5                           Survival.
The obligations of this Article 11 shall terminate five (5) years
from the expiration or termination of this Agreement.

 

ARTICLE 12

INTELLECTUAL PROPERTY

 

All
Cardinal Health Technology, including, without limitation, all improvements,
developments, derivatives or modifications to the Cardinal Health Technology,
shall be owned exclusively by Cardinal Health and, except as set forth herein
no right or license in Cardinal Health Technology is transferred or granted to
Reliant. All Reliant Technology, including, without limitation, all
improvements, developments, derivatives or modifications to the Reliant
Technology shall be owned exclusively by Reliant. Reliant hereby grants to
Cardinal Health a non-exclusive, royalty-free license for the term of this
Agreement to use Reliant Technology, but solely for the purpose of carrying out
Cardinal Health’s obligations under this Agreement. For purposes hereof, “Cardinal
Health Technology” means all Softgel Technology, Cardinal Health Confidential
Information, intellectual property, and developments (including, all patents,
patent applications, know-how, inventions, designs, concepts, improvements,
technical information, manuals, instructions or specifications), owned,
licensed or used by Cardinal Health in developing, formulating, manufacturing,
filling, processing or packaging of pharmaceuticals and the packaging
equipment, processes or methods of packaging, or any improvements to any of the
foregoing, including any container, pouch, vial, ampoule, blister pack or other
form of container developed by Cardinal Health. For purposes hereof, “Reliant
Technology” means all proprietary information, intellectual property and
developments owned, developed, licensed or used by Reliant relating to the API,
including, without limitation, patents, patent applications, know-how,
inventions, designs, concepts, improvements, technical information, trademarks
or trade names.

 

ARTICLE 13

REPRESENTATIONS AND WARRANTIES

 

13.1                           Cardinal
Health. Cardinal Health represents and warrants to Reliant that:

 

A.                                   At
the time of delivery of the Product as provided in Section 6.1, such
Product will conform to and will have been Manufactured and Packaged in
conformance with the Product Specifications and Applicable Laws;

 

B.                                     Cardinal
Health will be solely responsible for and will obtain all governmental
approvals, permits and licenses necessary or desirable in connection with the
Manufacturing and Packaging of the API in the Territory.

 

C.                                     It
has, and shall have, good, complete and valid rights to utilize the Cardinal
Health Technology utilized in connection with the Product and as contemplated
by this Agreement. There are no patents owned by others related to the Cardinal
Health Technology used with the Product which would be infringed or misused by
Cardinal Health’s performance of the Agreement and, to its knowledge, no trade
secrets or other proprietary rights of others related to the Cardinal Health
Technology used with the Product which would be infringed or misused by
Cardinal Health’s performance of this Agreement.

 

 

F.                                      THE
LIMITED WARRANTY SET FORTH IN THIS SECTION 13.1 IS IN LIEU OF ALL OTHER
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY AND
ANY WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE. EXCEPT FOR THE WARRANTY
EXPRESSED IN THIS SECTION 13.1, CARDINAL HEALTH MAKES NO OTHER WARRANTY,
EITHER EXPRESS OR IMPLIED, WITH RESPECT TO THE MANUFACTURING AND PACKAGING OR
THE PRODUCT.

 

13.2                           Reliant.
Reliant represents, warrants and covenants to Cardinal Health that:

 

A.                                   The
API and any other materials supplied by Reliant to Cardinal Health (“Reliant-supplied
Materials”) will comply with all applicable Specifications, will have been
produced in compliance with the Applicable Laws, and will be provided in
accordance with the terms and conditions of this Agreement;

 

B.                                     It
has all necessary authority and all right, title and interest in and to any
Reliant Technology related to the API or any other Reliant supplied materials;

 

C.                                     No
specific safe handling instructions are applicable to the Product, the API or
any other Reliant supplied materials, except as disclosed to Cardinal Health in
writing by the Reliant in sufficient time for review and training by Cardinal
Health prior to delivery;

 

D.                                    All
Product delivered to Reliant by Cardinal Health will be held, used and/or
disposed of by the Reliant in accordance with all applicable laws, rules and
regulations;

 

E.                                      Reliant
will comply with all laws, rules, regulations and guidelines applicable to
Reliant’s performance under this Agreement and its use of Product provided by
Cardinal Health under this Agreement;

 

F.                                      If
release testing is conducted by Reliant, Reliant will not release any Batch of
Product if the required Certificates of Analysis indicate that the Product does
not comply with the Specifications;

 

G.                                     The
content of all artwork provided to Cardinal Health complies with all Applicable
Laws;

 

H.                                    Reliant
has all necessary authority and right, title and interest in and to any
copyrights, trademarks, trade secrets, patents, inventions and developments
related to the API, the manufacture thereof, and any Product artwork;

 

I.                                         To
the knowledge of Reliant, the work to be performed by Cardinal Health under
this Agreement will not violate or infringe upon any trademark, tradename,
copyright, patent or other rights held by any person or entity; and

 

 

J.                                        Reliant
will be solely responsible for and will obtain all governmental approvals,
permits and licenses necessary or desirable in connection with the testing,
marketing, sale, advertising or distribution of the Product in the Territory.

 

13.2                           Mutual.
Each Party hereby represents and warrants to the other Party that:

 

A.                                   Such
Party (1) is duly organized, validly existing and in good standing under
the laws of the state in which it is organized, (2) has the power and
authority and the legal right to own and operate its property and assets, and
to carry on its business as it is now being conducted, and (3) is in
compliance with all requirements of applicable law, except to the extent that
any noncompliance would not materially adversely affect such Party’s ability to
perform its obligations under the Agreement;

 

B.                                     Such
Party (1) has the power and authority and the legal right to enter into
this Agreement and to perform its obligations hereunder and thereunder and
(2) has taken all necessary action on its part to authorize the
execution and delivery of the Agreement and the performance of its obligations
hereunder;

 

C.                                     This
Agreement is validly executed and delivered on behalf of such Party, and
constitutes a legal, valid, binding obligation, enforceable against such Party
in accordance with its terms;

 

D.                                    All
necessary consents, approvals and authorizations of all agencies and other
persons required to be obtained by such Party in connection with the Agreement
have been obtained; and

 

E.                                      The
execution and delivery of this Agreement and the performance of such Party’s
obligations hereunder (1) do not conflict with or violate any requirement
of applicable laws or regulations or any material contractual obligation of
such Party and (2) do not materially conflict with, or constitute a
material default or require any consent under, any material contractual
obligation of such Party.

 

ARTICLE 14

INDEMNIFICATION

 

14.1                           Indemnification
by Cardinal Health. Cardinal Health shall indemnify and hold harmless
Reliant, its Affiliates, directors, officers, employees and agents from and
against any and all suits, claims, losses, demands, liabilities, damages, costs
and expenses (including reasonable attorney’s fees) in connection with any
suit, demand or action by any third party (“Losses”) arising out of or
resulting from (A) any breach of its representations, warranties or
obligations under this Agreement; (B) any negligence or willful misconduct
by Cardinal Health, except to the extent that any of the foregoing arises out
of or results from the negligence, willful misconduct or breach of this
Agreement by of Reliant; or (C) any actual or alleged infringement or
violation of any patent, trade secret, copyright, trademark or other
proprietary rights used by Cardinal Health in Manufacturing and Packaging the
Product, except to the extent such was provided by Reliant.

 

 

14.2                           Indemnification
by Reliant. Reliant shall indemnify and hold harmless Cardinal Health, its
Affiliates, directors, officers, employees and agents from and against all
Losses arising out of or resulting from (A) any breach of its
representations, warranties or obligations under this Agreement; (B) any
manufacture, sale, promotion, distribution, use (other than by Cardinal Health)
of or exposure to the Product, the API or any Reliant-supplied materials,
including, without limitation, product liability or strict liability; (C) Reliant’s
exercise of control over the Manufacturing and Packaging under this Agreement,
to the extent that Reliant’s written instructions or directions violate
applicable law or regulation; (D) any actual or alleged infringement or
violation of any patent, trade secret, copyright, trademark or other
proprietary rights provided by Reliant and used by Cardinal Health in
Manufacturing and Packaging the Product; or (E) any negligence or willful
misconduct by Reliant, except to the extent that any of the foregoing arises
out of or results from the negligence, willful misconduct or breach of this
Agreement by Cardinal Health.

 

14.3                           Indemnification
Procedures. All indemnification obligations in this Agreement are
conditioned upon the Party seeking indemnification (the “Indemnified Party”): (A) promptly
notifying the indemnifying Party (the “Indemnifying Party”) of any claim or
liability of which the Party seeking indemnification becomes aware (including a
copy of any related complaint, summons, notice or other instrument), provided,
however, that failure to provide such notice within a reasonable period of time
shall not relieve the Indemnifying Party of any of its obligations hereunder
except to the extent the Indemnifying Party is materially prejudiced by such
failure; (B) cooperating with the Indemnifying Party in the defense of any
such claim or liability (at the Indemnifying Party’s expense), and (C) not
compromising or settling any claim or liability without prior written consent
of the Indemnifying Party. The liability of an Indemnifying Party under this Article XIV
with respect to Losses arising from claims of any Third Party which are subject
to the indemnification provided for in this Article XIV (“Third Party Claims”) shall be governed by and contingent
upon the following additional terms and conditions. If an Indemnified Party
shall receive notice of any Third Party Claim, the Indemnified Party shall give
the Indemnifying Party notice of such Third Party Claim within thirty (30) days
of the receipt by the Indemnified Party of such notice; provided,
however, that the failure to provide such notice shall not release the
Indemnifying Party from any of its obligations under this Article XIV
except to the extent the Indemnifying Party is materially prejudiced by such
failure. The Indemnifying Party shall be entitled to assume and control the
defense of such Third Party Claim at its expense and through counsel of its
choice if it gives notice of its intention to do so to the Indemnified Party
within thirty (30) days of the receipt of such notice from the Indemnified
Party; provided, however, that if there exists a material conflict of interest that
would make it inappropriate for the same counsel to represent both the
Indemnified Party and the Indemnifying Party, then the Indemnified Party shall
be entitled to retain its own counsel, at the expense of the Indemnifying Party,
provided that the Indemnifying Party shall not be obligated to pay the
reasonable fees and expenses of more than one separate counsel for all
Indemnified Parties, taken together. In the event the Indemnifying Party
exercises the right to undertake any such defense against any such Third Party
Claim as provided above, the Indemnified Party shall cooperate with the
Indemnifying Party in such defense and make available to the Indemnifying
Party, all witnesses, pertinent records, materials and information in the
Indemnified Party’s possession or under the Indemnified Party’s control
relating thereto as is reasonably required by the Indemnifying Party. Similarly,
in the event the Indemnified Party is, directly or indirectly, conducting the
defense against any such Third Party Claim, the 

 

 

Indemnifying Party shall
cooperate with the Indemnified Party in such defense and make available to the
Indemnified Party, all such witnesses, records, materials and information in
the Indemnifying Party’s possession or under the Indemnifying Party’s control
relating thereto as is reasonably required by the Indemnified Party. The
Indemnifying Party shall not, without the written consent of the Indemnified
Party (which shall not be unreasonably withheld or delayed), (a) settle or
compromise any Third Party Claim or consent to the entry of any judgment which
does not include as an unconditional term thereof the delivery by the claimant
or plaintiff to the Indemnified Party of a written release from all liability
in respect of such Third Party Claim or (b) settle or compromise any Third
Party Claim if the settlement imposes equitable remedies or material
obligations on the Indemnified Party other than financial obligations for which
such Indemnified Party will be indemnified hereunder and which contains no
admission of fault or wrongdoing. No Third Party Claim shall be settled or
compromised by the Indemnified Party without the written consent of the
Indemnifying Party (which shall not be unreasonably withheld or delayed) if
such settlement or compromise would result in an obligation of the Indemnifying
Party to indemnify such Indemnified Party, or would otherwise result in
liability of, or have an adverse impact upon, such Indemnifying Party.

 

ARTICLE 15

LIMITATION OF LIABILITY

 

15.1                           CARDINAL
HEALTH’S LIABILITY UNDER THIS AGREEMENT FOR ANY AND ALL CLAIMS FOR LOST,
DAMAGED OR DESTROYED API OR OTHER RELIANT-SUPPLIED MATERIALS WHETHER OR NOT
SUCH API OR RELIANT-SUPPLIED MATERIALS ARE INCORPORATED INTO PRODUCT IS SET
FORTH IN EXHIBIT B. THE LIMITATION OF LIABILITY, WITH RESPECT TO ANY GIVEN
CONTRACT YEAR, SHALL NOT EXCEED THE APPLICABLE AMOUNTS SET FORTH IN EXHIBIT B
(THE “API CAP”). IN THE EVENT THAT CARDINAL HEALTH LIABILITY FOR LOST API SHALL
EXCEED THE API CAP FOR ANY CONTRACT YEAR DURING THE TERM, THE PARTIES SHALL
MEET WITHIN THIRTY (30) DAYS FROM THE DATE CARDINAL HEALTH’S LIABILITY FOR LOST
API EXCEEDS THE API CAP AND NEGOTIATE IN GOOD FAITH WHETHER (A) CARDINAL
HEALTH INCREASES THE API CAP FOR SUCH CONTRACT YEAR, OR (B) WHETHER RELIANT’S
OBLIGATIONS UNDER SECTION 4.2(B) SHALL BECOME NULL AND VOID. IN THE
EVENT THAT THE PARTIES CANNOT REACH AN AGREEMENT WITH REGARD TO THE FOREGOING
SENTENCE WITHIN SUCH THIRTY (30) DAY PERIOD, RELIANT SHALL HAVE THE SOLE OPTION
TO (X) CONTINUE WITH THE AGREEMENT WITH CARDINAL HEALTH HAVING NO LIABILITY IN
EXCESS OF THE API CAP FOR LOST, DAMAGED OR DESTROYED API FOR THE THEN CURRENT
CONTRACT YEAR, OR (Y) HAVE PRODUCT MANUFACTURED AND PACKAGED BY A QUALIFIED
THIRD-PARTY SUPPLIER WITHOUT REGARD TO ITS OBLIGATIONS UNDER SECTION 4.2(B).
ANY AMOUNTS OWING BY CARDINAL HEALTH HEREUNDER SHALL NOT COUNT AGAINST THE
LIABILITY CAP SET FORTH IN SECTION 15.2 BELOW.

 

15.2                           NOTWITHSTANDING,
AND SPECIFICALLY EXCLUDING, ANY AMOUNTS OWED BY CARDINAL HEALTH TO RELIANT UNDER
SECTION 15.1 ABOVE, AND SPECIFICALLY EXCLUDING LOSSES RESULTING FROM
CARDINAL HEALTH’S GROSS NEGLIGENCE, FRAUD OR WILLFUL MISCONDUCT, CARDINAL
HEALTH’S 

 

 

 

TOTAL LIABILITY UNDER
THIS AGREEMENT OTHER THAN FOR LOST, DAMAGED OR DESTROYED API, SHALL IN NO EVENT
EXCEED FIVE MILLION DOLLARS ($5,000,000).

 

15.3                           NEITHER
PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR INDIRECT, INCIDENTAL, SPECIAL OR
CONSEQUENTIAL DAMAGES (EXCEPT FOR THOSE INDEMNITY OBLIGATIONS UNDER ARTICLE 14
THAT ARE DEEMED CONSEQUENTIAL DAMAGES) ARISING OUT OF PERFORMANCE UNDER THIS
AGREEMENT, INCLUDING WITHOUT LIMITATION, LOSS OF REVENUES, PROFITS OR DATA,
WHETHER IN CONTRACT OR TORT, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES.

 

15.4                           Limitation
of Liability for Operation of Foreign Trade Subzone. Cardinal Health has
been granted a special purpose subzone (the “FTZ”) that includes the main plant of Cardinal Health’s US
Facility. Reliant may recognize a number of economic benefits resulting
from Cardinal Health’s operation of the FTZ. However, notwithstanding anything
to the contrary contained herein, including but not limited to the provisions
of Section 14.1, Cardinal Health’s liability to the Reliant, if any, as a
result of any and all liabilities, losses, claims, demands, damages, costs,
expenses, settlements made or reasonably approved by Cardinal Health, and money
judgments (including attorneys’ fees and other costs of litigation), related to
Cardinal Health’s operation of the FTZ, including, but not limited to: (A) Cardinal
Health acting as Reliant’s agent for duty drawback purposes pursuant to 19 CFR
§191.9 with respect to the Product; and (B) the suspension or closing of
the FTZ (whether voluntary or not)), incurred by or rendered against the
Reliant for personal injury, sickness, disease or death and other damages shall
in no event exceed Fifty Thousand United States Dollars ($50,000).

 

ARTICLE 16

INSURANCE

 

16.1                           Cardinal
Health. Cardinal Health shall, at its own cost and expense, obtain and
maintain in full force and effect the following insurance during the term of
this Agreement: (A) Commercial General Liability insurance with
per-occurrence and general aggregate limits of not less than $1,000,000; (B) Products
and Completed Operations Liability Insurance with per-occurrence and general
aggregate limits of not less than $5,000,000; (C) Workers’ Compensation
and Employer’s Liability Insurance with statutory limits for Workers’
Compensation and Employer’s Liability insurance limits of not less than
$1,000,000; and (D) Professional Services Errors & Omissions
Liability Insurance with per claim and aggregate limits of not less than
$1,000,000 covering sums that Cardinal Health becomes legally obligated to pay
as damages resulting from claims made by Reliant for errors or omissions
committed in the conduct of the services outlined in the Agreements. In lieu of
insurance, Cardinal Health may self-insure any or a portion of the above
required insurance. In the event that any of the required policies of insurance
are written on a claims made basis, then such policies shall be maintained
during the entire Term and for a period of not less than three (3) years
following the termination or expiration of this Agreement. Cardinal Health
shall obtain a waiver from any insurance carrier with whom Cardinal Health
carries Workers’ Compensation insurance releasing its subrogation rights
against Reliant. Reliant shall be named as an additional insured under the
Commercial 

 

 

General Liability and
Products and Completed Operations Liability insurance policies as respects the
manufacturing services outlined in this Agreement. Cardinal Health shall
furnish certificates of insurance for all of the above noted policies and
required additional insured status to Reliant as soon as practicable after the
Effective Date of the Agreement and upon renewal of any such policies. Each
insurance policy that is required under this Section shall be obtained
from an insurance carrier with an A.M. Best rating of at least A- VII.

 

16.2                           Reliant
Insurance. Reliant shall, at its own cost and expense, obtain and maintain
in full force and effect the following insurance during the term of this
Agreement: (A) Products and Completed Operations Liability Insurance with
per-occurrence and general aggregate limits of not less than $10,000,000; (B) Workers’
Compensation and Employer’s Liability Insurance with statutory limits for
Workers’ Compensation and Employer’s Liability insurance limits of not less
than $1,000,000; (C) All Risk Property Insurance in an amount equal to
full replacement value covering Reliant’s property while it is at Cardinal
Health’s facility; and (D) transit coverage in an amount not less than
$1,000,000 while Reliant’s property is in transit to or from Cardinal Health’s
facility. In the event that any of the required policies of insurance are
written on a claims made basis, then such policies shall be maintained during
the entire Term and for a period of not less than three (3) years
following the termination or expiration of this Agreement. Reliant shall obtain
a waiver from any insurance carrier with whom Reliant carries Workers’
Compensation insurance releasing its subrogation rights against Cardinal
Health. Reliant shall obtain a waiver from any insurance carrier with whom
Reliant carries Property Insurance releasing its subrogation rights against
Cardinal Health. Reliant shall not seek reimbursement for any property claim,
or portion thereof, which is not fully recovered from Reliant’s Property
Insurance policy. Cardinal Health and its Subsidiaries and Parent Corporation
shall be named as additional insureds under the Products and Completed
Operations Liability insurance policies as respects the products and completed
operations outlined in this Agreement. Reliant shall furnish certificates of insurance
for all of the above noted policies and required additional insured status to
Cardinal Health as soon as practicable after the Effective Date of the
Agreement and upon renewal of any such policies. Each insurance policy that is
required under this Section shall be obtained from an insurance carrier
with an A.M. Best rating of at least A- VII.

 

ARTICLE 17

TERM AND TERMINATION

 

17.1                           Term.
This Agreement shall commence on the Effective Date and shall continue for a
period of five (5) Contract Years (January 1, 2007 through December 31,
2011), unless earlier terminated under Section 17.2 (the “Initial Term”). After
the Initial Term, this Agreement may be automatically extended for further
periods of one (1) year each (the “Renewal Term”), unless terminated by
either Party upon written notice given to the other Party at least twelve (12)
months prior to the end of the Initial Term. The Initial Term and any Renewal
Term shall constitute the Term.

 

17.2                           Termination
by Either Party.

 

A.                                   Material
Breach. Either Party may terminate this Agreement effective upon sixty
(60) days prior written notice to the other Party, if the other Party commits a
material breach of this Agreement and fails to cure such breach by the end of
such sixty (60) day period; provided, 

 

 

however, that failure to
pay amounts due under this Agreement within thirty (30) days after such
payments are due (as set forth in Section 7.5) more than two (2) times
in any Contract Year shall constitute cause for immediate termination of this
Agreement, provided, however, that Reliant’s Chief Operating
Officer, or his designee, and Cardinal’s Facility General Manager from each
Party shall discuss such nonpayment in advance of termination.

 

B.                                     Bankruptcy.
Either Party may terminate this Agreement effective upon written notice to
the other Party, if the other Party becomes insolvent or admits in writing its
inability to pay its debts as they become due, files a petition for bankruptcy,
makes an assignment for the benefit of its creditors or has a receiver, trustee
or other court officer appointed for its properties or assets.

 

17.3                           Without
Cause. Either Party may terminate this Agreement without cause upon
thirty-six (36) months’ written notice to the other Party, following the date
which is twenty-four (24) months from the Effective Date.

 

17.4                           Effect
of Termination.

 

A.                                   Expiration
or termination of this Agreement shall be without prejudice to any rights or
obligations that accrued to the benefit of either Party prior to such
expiration or termination.

 

B.                                     In
the event of any termination, Cardinal Health shall promptly return (1) any
remaining inventory of materials received from Reliant, (2) all remaining
inventories of API and Product, and (3) any other Product, or API being
stored for Reliant, to Reliant at Reliant’s expense. Cardinal Health shall have
no obligation to return the foregoing until all outstanding undisputed invoices
sent by Cardinal Health to Reliant have been paid in full. For termination
initiated by Reliant, Reliant shall also be required to pay for (Y) completed
but not yet shipped Product and (Z) Product in process and Product shipped but
not yet invoiced in the event that this Agreement is terminated for reasons
other than Cardinal Health’s default. In the event Reliant breaches or terminates
this Agreement (other than as a result of a breach of this Agreement by
Cardinal Health) or if Cardinal Health terminates this Agreement under Section 17.2
hereof, Reliant will also be required to pay Cardinal Health for its direct
cost of all materials purchased by Cardinal Health for Processing. Reliant
shall specify the location in the continental United States to which delivery,
at Reliant’s expense, of the foregoing is to be made.

 

ARTICLE 18

NOTICE

 

All
notices and other communications hereunder shall be in writing and shall be
deemed given:    (A) when delivered
personally; (B) when delivered by facsimile transmission (receipt
verified);   (C) when received or
refused, if mailed by registered or certified mail (return receipt requested),
postage prepaid; or (D) when delivered if sent by express courier service,
to the Parties at the following addresses (or at such other address for a Party
as shall be specified by like notice; provided, that notices of a change of
address shall be effective only upon receipt thereof):

 

 

	
  To Reliant:

  	
  Reliant
  Pharmaceuticals, Inc.

  
	
   

  	
  110 Allen Road

  
	
   

  	
  Liberty Corner,
  NJ 07938

  
	
   

  	
  Attention:
  Robert Polster, Ph.D., Vice President,

  
	
   

  	
  Commercial
  Operations

  
	
   

  	
  Facsimile:
  908.542.9405

  
	
   

  	
   

  
	
  With a copy to:

  	
  Reliant Pharmaceuticals, Inc.

  
	
   

  	
  110 Allen Road

  
	
   

  	
  Liberty Corner,
  NJ 07938

  
	
   

  	
  Attention: Legal
  Department

  
	
   

  	
  Facsimile:
  908.542.9405

  
	
   

  	
   

  
	
  To Cardinal
  Health:

  	
  Cardinal Health
  PTS, LLC

  
	
   

  	
  2725 Scherer
  Drive

  
	
   

  	
  St. Petersburg,
  Florida 33716

  
	
   

  	
  Attention:
  General Manager, Encapsulation,

  
	
   

  	
  North America

  
	
   

  	
  Facsimile: (727)
  803-1632

  
	
   

  	
   

  
	
  With a copy to:

  	
  Cardinal Health, Inc.

  
	
   

  	
  14 Schoolhouse
  Road

  
	
   

  	
  Somerset, New
  Jersey 08873

  
	
   

  	
  Attn: General
  Counsel

  
	
   

  	
  Facsimile: (732)
  537-6491

  

 

ARTICLE 19

MISCELLANEOUS

 

19.1                           Entire
Agreement; Amendments. This Agreement including the attachments, as well as
the Confidentiality Agreement dated July 29, 2004, constitute the entire
understanding between the Parties and supersedes any contracts, agreements or
understanding (oral or written) of the Parties with respect to the subject
matter hereof; provided, however, that this Agreement does not supersede the
Initial Agreement with respect to events that happened prior to January 1,
2007. For the avoidance of doubt, as of January 1, 2007, other than
payments due and owing of which both parties are aware, there are no payments
of any kind due and owing to either party. No term of this Agreement may be
amended except upon written agreement of both Parties, unless otherwise
provided in this Agreement.

 

19.2                           Captions.
The captions in this Agreement are for convenience only and are not to be
interpreted or construed as a substantive part of this Agreement.

 

19.3                           Further
Assurances. The Parties agree to execute, acknowledge and deliver such
further instruments and to take all such other incidental acts as may be
reasonably necessary or appropriate to carry out the purpose and intent of this
Agreement.

 

 

19.4                           No
Waiver. Failure by either Party to insist upon strict compliance with any
term of this Agreement in any one or more instances will not be deemed to be a
waiver of its rights to insist upon such strict compliance with respect to any
subsequent failure.

 

19.5                           Severability.
If any term of this Agreement is declared invalid or unenforceable by a court
or other body of competent jurisdiction, the remaining terms of this Agreement
will continue in full force and effect.

 

19.6                           Independent
Contractors. The relationship of the Parties is that of independent
contractors, and neither Party will incur any debts or make any commitments for
the other Party except to the extent expressly provided in this Agreement. Nothing
in this Agreement is intended to create or will be construed as creating
between the Parties the relationship of joint ventures, co-partners,
employer/employee or principal and agent.

 

19.7                           Successors
and Assigns. This Agreement will be binding upon and inure to the benefit
of the Parties, their successors and permitted assigns. Neither Party may assign
this Agreement, in whole or in part, without the prior written consent of the
other Party (which consent shall not be unreasonably withheld, conditioned or
delayed), except that either Party may, without the other Party’s consent,
assign this Agreement to an Affiliate or to a successor to substantially all of
the business or assets of the assigning company (or the assigning company’s
business unit responsible for the performance of this Agreement), or, in the
case of Reliant, to a successor to all of the assets relating to the Product.

 

19.8                           Governing
Law. This Agreement shall be governed by and construed under the laws of
the State of New York, excluding its conflicts of law provisions.

 

19.9                           Alternative Dispute Resolution. If a dispute, controversy or disagreement (“Dispute”)
arises between the Parties in connection with this Agreement, then the Dispute
shall be presented to the respective presidents or senior executives of
Cardinal Health and Reliant for their consideration and resolution. If such
Parties cannot reach a resolution of the Dispute, then such Dispute shall be
resolved by binding alternative dispute resolution in accordance with the then
existing commercial arbitration rules of The CPR Institute for Dispute
Resolution (“CPR”), 366 Madison Avenue, New York, NY 10017. Arbitration shall
be conducted in New York, New York.

 

19.10                     Counterparts.
This Agreement may be executed in one or more counterparts, each of which
will be deemed an original but all of which together will constitute one and
the same instrument.

 

19.11                     Publicity.
Neither Party will make any press release or other public disclosure regarding
this Agreement or the transactions contemplated hereby without the other Party’s
express prior written consent (which shall not be unreasonably withheld,
conditioned or delayed), except as required under applicable law or by any
governmental agency, in which case the Party required to make the press release
or public disclosure shall use commercially reasonable efforts to obtain the
approval of the other Party (which shall not be unreasonably withheld, conditioned
or delayed) as to the form, nature and extent of the press release or public
disclosure prior to issuing the press release or making the public disclosure.

 

 

19.12                     Survival.
The rights and obligations of the Parties shall continue under Articles 5
(Testing; Manufacturing Samples; Release), 7 (Payment Terms), , 10 (Records;
Regulatory Matters), 11 (Confidential Information), 12 (Intellectual Property),
14 (Indemnification), 15 (Limitations of Liability), 16 (Insurance) to the
extent expressly stated therein, 18 (Notice), 19 (Miscellaneous), and Sections 4.2,
6.2 and 17.4 (Effect of Termination), notwithstanding expiration or termination
of this Agreement.

 

19.13                     Force
Majeure. Except as to payments required under this Agreement, neither Party
shall be liable in damages for, nor shall this Agreement be terminable or
cancelable by reason of, any delay or default in such Party’s performance
hereunder if such default or delay is caused by events beyond such Party’s
reasonable control including, but not limited to, acts of God, regulation or
law or other action or failure to act of any government or agency thereof, war
or insurrection, civil commotion, destruction of production facilities or
materials by earthquake, fire, flood or storm, labor disturbances, epidemic, or
failure of suppliers, public utilities or common carriers;  provided however, that the Party seeking
relief hereunder shall immediately notify the other Party of such cause(s)
beyond such Party’s reasonable control. The Party that may invoke this section shall
use all reasonable endeavors to reinstate its ongoing obligations to the other.
If the cause(s) shall continue unabated for sixty (60) days, then both Parties
shall meet to discuss and negotiate in good faith what modifications to this
Agreement should result from this force majeure.

 

The
Parties are executing this Agreement on the date stated in the introductory
clause.

 

	
  CARDINAL
  HEALTH PTS, LLC

  	
  RELIANT
  PHARMACEUTICALS, INC.

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Name: David J.
  Heyens

  	
  Name: Joseph S.
  Zakrzewski

  
	
  Its: President,
  Encapsulation North America

  	
  Its: Chief
  Operating Officer

  
						

 

 

EXHIBIT A

SPECIFICATIONS

 

 

EXHIBIT B

UNIT PRICING, LIMITS OF LIABILITY, AND MINIMUM
REQUIREMENT

 

UNIT PRICING FOR TRADE PRODUCT– [***]% Requirements Level

 

	
  Units
  (millions)

  	
   

  	
  Price per thousand Units

  
	
  [***]

  	
   

  	
  [***]

  
	
  [***]

  	
   

  	
  [***]

  
	
  [***]

  	
   

  	
  [***]

  
	
  [***]

  	
   

  	
  [***]

  

 

UNIT PRICING FOR TRADE PRODUCT– [***]% Requirements Level

 

	
  Units
  (millions)

  	
   

  	
  Price per thousand Units

  
	
  [***]

  	
   

  	
  [***]

  
	
  [***]

  	
   

  	
  [***]

  
	
  [***]

  	
   

  	
  [***]

  
	
  [***]

  	
   

  	
  [***]

  

 

In the event Reliant
purchases less than [***] percent ([***]%) but more than [***] ([***]%) of its [***]
from Cardinal in any given Contract Year, an additional [***] dollars ($[***])
shall be added to the amounts set forth in the “Price per thousand Units”
column, in accordance with the first chart above i.e., if Reliant purchases up
to [***] units in a Contract Year, and such [***] Units amount represents less
than [***]% of Reliant’s commercial requirement for that given Contract Year,
the price shall be $[***] per [***] Units ([***]).

 

This is a “tiered”
pricing system. Therefore, for example, if Reliant purchases [***] Units from
Cardinal Health in a given Contract Year, and this represents [***] percent ([***]%)
of Reliant’s Manufacturing requirement levels for [***] for that Contract Year,
the price for the first [***] Units shall be $[***] per [***] Units, the price
for [***] Units through [***] Units shall be $[***] per [***] Units, the price
for [***]Units through [***] Units shall be $[***] per [***] Units, and the
price for [***] Units through [***] Units shall be $[***]. In the event the [***]
Units purchased from Cardinal Health does not represent [***] percent ([***]%)
of Reliant’s Manufacturing requirement levels for [***] for that Contract Year,
the Unit Pricing shall be modified in accordance with the paragraph and
applicable chart above.

 

The price for [***] shall
be $[***] per [***] Units for any Contract Year wherein Reliant purchases less
than [***] percent ([***]%) of its Manufacturing requirement levels for [***] from
Cardinal Health. For any Contract Year wherein Reliant purchases [***] percent
([***]%) of its Manufacturing requirement levels for [***] from Cardinal
Health, the price of the [***] shall be the same as the price for the [***] for
that Contract Year as reflected in the applicable above chart.

 

 [***]: 
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.

 

 

For the avoidance of
doubt, the price for all Product purchased by Reliant from Cardinal Health from
July 1, 2006 through and including December 31, 2006 shall be [***]dollars
($[***]) per [***] Units.

 

LIMITATIONS OF LIABILITY

 

	
  Units

  	
   

  	
  Liability Limit per Each Contract Year

  
	
  Up to and
  including 200 million

  	
   

  	
  $ 1 million

  
	
  201 million up
  to and including 500 million

  	
   

  	
  $ 2 million

  
	
  501 million up
  to and including 750 million

  	
   

  	
  $ 3 million

  
	
  751 million up
  to and including 1 billion

  	
   

  	
  $ 4 million

  
	
  1 billion up to
  and including 1.25 billion

  	
   

  	
  $ 5 million

  
	
  1.251 billion up
  to and including 1.50 billion

  	
   

  	
  $6 million

  
	
  1.51 billion up
  to and including 1.750 billion

  	
   

  	
  $7 million

  
	
  1.751 billion
  and above

  	
   

  	
  $8 million

  

 

MINIMUM REQUIREMENT

 

	
  Contract
  Year

  	
   

  	
  Product / Dosage Form

  	
   

  	
  Minimum 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.

 

 

EXHIBIT C

 

MINIMUM YIELD SCHEDULE

 

[FORTHCOMING]

 

 

EXHIBIT D

 

QUALIFICATION, VALIDATION AND STABILITY SERVICES

 

EXHIBIT E

 

FORM OF QUALITY AGREEMENT

 

[FORTHCOMING]

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00128-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00128-of-00352.parquet"}]]