Document:

Exhibit 10.2

REGISTRATION RIGHTS AGREEMENT

This
Registration Rights Agreement (this “Agreement”) is made and entered
into as of October 23, 2006, among Callisto Pharmaceuticals, Inc., a Delaware
corporation (the “Company”), and the purchasers signatory hereto (each
such purchaser is a “Purchaser” and all such purchasers are,
collectively, the “Purchasers”).

This Agreement is
made pursuant to the Securities Purchase Agreement, dated as of the date hereof
among the Company and the Purchasers (the “Purchase Agreement”).

The Company and
the Purchasers hereby agree as follows:

1. Definitions

Capitalized
terms used and not otherwise defined herein that are defined in the Purchase
Agreement shall have the meanings given such terms in the Purchase Agreement.
As used in this Agreement, the following terms shall have the following
meanings:

“Advice” shall
have the meaning set forth in Section 6(d).

“Effectiveness Date”
means, with respect to the initial Registration Statement required to be filed
hereunder, 120 calendar days after the Closing Date and, with respect to any
additional Registration Statements which may be required pursuant to Section
3(c), the 120th calendar day following the date on which the Company first
knows, or reasonably should have known, that such additional Registration
Statement is required hereunder; provided, however, in the event
the Company is notified by the Commission that one of the above Registration
Statements will not be reviewed or is no longer subject to further review and
comments, the Effectiveness Date as to such Registration Statement shall be the
fifth Trading Day following the date on which the Company is so notified if
such date precedes the dates required above.

“Effectiveness Period” shall have the meaning
set forth in Section 2(a).

“Event” shall have
the meaning set forth in Section 2(b).

“Event Date” shall
have the meaning set forth in Section 2(b).

“Filing Date”
means, with respect to the initial Registration Statement required hereunder,
the 60th calendar day following the Closing Date and,
with respect to any additional Registration Statements which may be required
pursuant to Section 3(c), the 60th day following the date on which the Company
first knows, or reasonably should have known that such additional Registration
Statement is required hereunder.

“Holder” or “Holders” means the holder
or holders, as the case may be, from time to time of Registrable Securities.

“Indemnified Party” shall have the meaning set
forth in Section 5(c) hereof.

“Indemnifying Party” shall have the meaning set
forth in Section 5(c) hereof.

“Losses” shall
have the meaning set forth in Section 5(a).

“Proceeding”
means an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or threatened.

“Prospectus” means
the prospectus included in a Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted from
a prospectus filed as part of an effective registration statement in reliance
upon Rule 430A promulgated under the Securities Act), as amended or
supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Registrable Securities covered by a Registration
Statement, and all other amendments and supplements to the Prospectus,
including post-effective amendments, and all material incorporated by reference
or deemed to be incorporated by reference in such Prospectus.

“Registrable
Securities” means, as of the date in question, (i) all of the shares of
Common Stock issuable upon conversion in full of the shares of Preferred Stock,
(ii) all Warrant Shares, (iii) any securities issued or issuable upon any stock
split, dividend or other distribution recapitalization or similar event with
respect to the foregoing and (iv) any additional shares issuable in connection
with any anti-dilution provisions associated with the Preferred Stock and
Warrants.

“Registration
Statement” means the registration statements required to be filed hereunder
and any additional registration statements contemplated by Section 3(c),
including (in each case) the Prospectus, amendments and supplements to such
registration statement or Prospectus, including pre- and post-effective amendments,
all exhibits thereto, and all material incorporated by reference or deemed to
be incorporated by reference in such registration statement.

“Rule 415” means
Rule 415 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same purpose and
effect as such Rule.

“Rule 424” means
Rule 424 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same purpose and
effect as such Rule.

2. Shelf Registration

(a)  On or prior to each Filing
Date, the Company shall prepare and file with the Commission a “Shelf”
Registration Statement covering the resale of the Registrable Securities on
such Filing Date for an offering to be made on a continuous basis pursuant to
Rule 415.  The Registration Statement
shall be on Form S-3 (except if the Company is not then eligible to register
for resale the Registrable Securities on Form S-3, in which case such
registration shall be on another appropriate form in accordance herewith) and
shall contain (unless otherwise directed by the Holders) substantially the “Plan
of Distribution” attached hereto as Annex A.  Subject to the terms of this Agreement, the
Company shall use its commercially reasonable efforts to cause the Registration
Statement to be declared effective under the Securities Act as promptly as
possible after the filing thereof, but in any event prior to the applicable
Effectiveness Date, and shall use its commercially reasonable efforts to keep
such Registration Statement continuously effective under the Securities Act
until the earliest of (i) the date that is two (2) years after the last day of
the calendar month following the month in which the relevant Effective Date
occurs, (ii) the date when the Holder may sell all Registrable Securities under
Rule 144 without volume or other restrictions or limits or (iii) the date the
Holders no longer own any of the Registrable Securities (the “Effectiveness
Period”).  The Company shall
immediately notify the Holders via facsimile or e-mail of the effectiveness of
the Registration Statement on the same day that the Company receives
notification of the effectiveness from the Commission.

(b) If: (i) a Registration Statement is not filed on or prior to its
Filing Date, or (ii) the Company fails to file with the Commission a request
for acceleration in accordance with Rule 461 promulgated under the Securities
Act, within five Trading Days of the date that the Company is notified (orally
or in writing, whichever is earlier) by the Commission that a Registration
Statement will not be “reviewed,” or not subject to further review, (iii) a
Registration Statement filed or required to be filed hereunder is not declared
effective by the Commission by its Effectiveness Date, or (iv) after the
Effectiveness Date, the availability of the Registration and Prospectus is
suspended for more than 75 days in any 12-month period (any such failure or
breach being referred to as an “Event”,
and for purposes of clause (i) or (iii) the date on which such Event occurs, or
for purposes of clause (ii) the date on which such five Trading Day period is
exceeded being referred to as “Event
Date”), then in addition to any other rights the Holders may have
hereunder or under applicable law, on each monthly anniversary of each such
Event Date (if the applicable Event shall not have been cured by such date)
until the applicable Event is cured, the Company shall pay to each Holder an
amount in cash, as partial liquidated damages and not as a penalty, equal to 1%
of the aggregate purchase price paid by such Holder pursuant to the Purchase
Agreement for any Registrable Securities then held by such Holder. The partial
liquidated damages pursuant to the terms hereof shall apply on a daily pro-rata
basis for any portion of a month prior to the cure of an Event and shall not
exceed an aggregate of 8% of the aggregate purchase price paid by the Investors
pursuant to this Agreement.

3. Registration
Procedures

In connection with
the Company’s registration obligations hereunder, the Company shall:

(a)           Not
less than four Trading Days prior to the filing of each Registration Statement
or any related Prospectus or any amendment or supplement thereto (including any
document that would be incorporated or deemed to be incorporated therein by
reference), the Company shall, (i) furnish to each Holder copies of all such
documents proposed to be filed, which documents (other than those incorporated
or deemed to be incorporated by reference) will be subject to the review of
such Holders, and (ii) cause its officers and directors, counsel and
independent certified public accountants to respond to such inquiries as shall
be necessary, in the reasonable opinion of respective counsel to conduct a
reasonable investigation within the meaning of the Securities Act. The Company
shall not file the Registration Statement or any such Prospectus or any
amendments or supplements thereto to which the Holders of a majority of the
Registrable Securities shall reasonably object in good faith, provided that,
the Company is notified of such objection, including the substance of such
objection, in writing no later than two Trading Days after the Holders have
been so furnished copies of such documents. Each Holder, severally and not
jointly agrees to furnish to the Company a completed Questionnaire in the form
attached to this Agreement as Annex B (a “Selling
Holder Questionnaire”) not less
than ten Trading Days prior to the Filing Date.

(b)           (i)
Prepare and file with the Commission such amendments, including post-effective
amendments, to a Registration Statement and the Prospectus used in connection
therewith as may be necessary to keep a Registration Statement continuously
effective as to the applicable Registrable Securities for the Effectiveness
Period and prepare and file with the Commission such additional Registration
Statements in order to register for resale under the Securities Act all of the
Registrable Securities; (ii) cause the related Prospectus to be amended or
supplemented by any required Prospectus supplement (subject to the terms of
this Agreement), and as so supplemented or amended to be filed pursuant to Rule
424; (iii) respond as promptly as reasonably possible to any comments received
from the Commission with respect to a Registration Statement or any amendment
thereto; and (iv) comply in all material respects with the provisions of the
Securities Act and the Exchange Act with respect to the disposition of all
Registrable Securities covered by a Registration Statement during the
applicable period in accordance (subject to the terms of this Agreement) with
the intended methods of disposition by the Holders thereof set forth in such
Registration Statement as so amended or in such Prospectus as so supplemented.

(c)           If
during the Effectiveness Period, the number of Registrable Securities at any
time exceeds the number of shares of Common Stock then registered in a
Registration Statement, then the Company shall file as soon as reasonably
practicable but in any case prior to the applicable Filing Date, an additional
Registration Statement covering the resale by the Holders of such additional
Registrable Securities.

(d)           Notify
the Holders of Registrable Securities to be sold (which notice shall, pursuant
to clauses (ii) through (vi) hereof, be accompanied by an instruction to
suspend the use of the Prospectus until the requisite changes have been made)
as promptly as reasonably possible (and, in the case of (i)(A) below, not less
than five Trading Days prior to such filing) and (if requested by any such
Person) confirm such notice in writing no later than one Trading Day following
the day (i)(A) when a Prospectus or any Prospectus supplement or post-effective
amendment to a Registration Statement is proposed to be filed; (B) when the
Commission

notifies
the Company whether there will be a “review” of such Registration Statement and
whenever the Commission comments in writing on such Registration Statement; and
(C) with respect to a Registration Statement or any post-effective amendment,
when the same has become effective; (ii) of any request by the Commission or
any other Federal or state governmental authority for amendments or supplements
to a Registration Statement or Prospectus or for additional information; (iii)
of the issuance by the Commission or any other federal or state governmental
authority of any stop order suspending the effectiveness of a Registration
Statement covering any or all of the Registrable Securities or the initiation
of any Proceedings for that purpose; (iv) of the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction, or the initiation or threatening of any Proceeding for such
purpose; (v) of the occurrence of any event or passage of time that makes the
financial statements included in a Registration Statement ineligible for
inclusion therein or any statement made in a Registration Statement or
Prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires any revisions to a
Registration Statement, Prospectus or other documents so that, in the case of a
Registration Statement or the Prospectus, as the case may be, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading; and
(vi) the occurrence or existence of any pending corporate development with
respect to the Company that the Company believes may be material and that, in
the determination of the Company, makes it not in the best interest of the
Company to allow continued availability of the Registration Statement or
Prospectus; provided that any and all of such information shall remain
confidential to each Holder until such information otherwise becomes public,
unless disclosure by a Holder is required by law; provided, further,
notwithstanding each Holder’s agreement to keep such information confidential,
the Holders make no acknowledgement that any such information is material,
non-public information.

(e)           Use its commercially reasonable efforts to
avoid the issuance of, or, if issued, obtain the withdrawal of (i) any order
suspending the effectiveness of a Registration Statement, or (ii) any
suspension of the qualification (or exemption from qualification) of any of the
Registrable Securities for sale in any jurisdiction, at the earliest
practicable moment.

(f)            Furnish
to each Holder, without charge, at its request, at least one conformed copy of
each such Registration Statement and each amendment thereto, including
financial statements and schedules, all documents incorporated or deemed to be
incorporated therein by reference to the extent requested by such Person, and
all exhibits to the extent requested by such Person (including those previously
furnished or incorporated by reference) promptly after the filing of such
documents with the Commission.

(g)           Promptly
deliver to each Holder, without charge, as many copies of the Prospectus or
Prospectuses (including each form of prospectus) and each amendment or
supplement thereto as such Persons may reasonably request in connection with
resales by the Holder of Registrable Securities.  Subject to the terms of this Agreement, the
Company hereby consents to the use of such Prospectus and each amendment or
supplement thereto by each of the selling Holders in connection with the
offering and sale of the Registrable Securities covered by

such
Prospectus and any amendment or supplement thereto, except after the giving on
any notice pursuant to Section 3(d).

(h)           Prior
to any resale of Registrable Securities by a Holder, use its commercially
reasonable efforts to register or qualify or cooperate with the selling Holders
in connection with the registration or qualification (or exemption from the
Registration or qualification) of such Registrable Securities for the resale by
the Holder under the securities or Blue Sky laws of such jurisdictions within
the United States as any Holder reasonably requests in writing, to keep each
registration or qualification (or exemption therefrom) effective during the
Effectiveness Period and to do any and all other acts or things reasonably
necessary to enable the disposition in such jurisdictions of the Registrable
Securities covered by each Registration Statement; provided, that the Company
shall not be required to qualify generally to do business in any jurisdiction
where it is not then so qualified, subject the Company to any material tax in any
such jurisdiction where it is not then so subject or file a general consent to
service of process in any such jurisdiction.

(i)            If
requested by the Holders, cooperate with the Holders to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be delivered to a transferee pursuant to a Registration Statement, which
certificates shall be free, to the extent permitted by the Purchase Agreement,
of all restrictive legends, and to enable such Registrable Securities to be in
such denominations and registered in such names as any such Holders may
request.

(j)            Upon
the occurrence of any event contemplated by this Section 3, as promptly as
reasonably possible under the circumstances taking into account the Company’s
good faith assessment of any adverse consequences to the Company and its
stockholders of the premature disclosure of such event, prepare a supplement or
amendment, including a post-effective amendment, to a Registration Statement or
a supplement to the related Prospectus or any document incorporated or deemed
to be incorporated therein by reference, and file any other required document
so that, as thereafter delivered, neither a Registration Statement nor such
Prospectus will contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. If the Company notifies the Holders in accordance with clauses
(ii) through (v) of Section 3(d) above to suspend the use of any Prospectus
until the requisite changes to such Prospectus have been made, then the Holders
shall suspend use of such Prospectus. 
The Company will use its commercially reasonable efforts to ensure that
the use of the Prospectus may be resumed as promptly as is practicable.  The Company shall be entitled to exercise its
right under this Section 3(j) to suspend the availability of a Registration
Statement and Prospectus, for a period not to exceed 75 days (which need not be
consecutive days) in any 12 month period.

(k)           Comply
with all applicable rules and regulations of the Commission.

(l)            The
Company may require each selling Holder to furnish to the Company a certified
statement as to the number of shares of Common Stock beneficially owned by such
Holder and, if required by the Commission, the person thereof that has voting
and dispositive control over the Shares. During any periods that the Company is
unable to meet its obligations

hereunder
with respect to the registration of the Registrable Securities solely because
any Holder fails to furnish such information within five Trading Days of the
Company’s request, any liquidated damages that are accruing at such time as to
such Holder only shall be tolled and any Event that may otherwise occur solely
because of such delay shall be suspended as to such Holder only, until such
information is delivered to the Company.

4. Registration
Expenses. All fees and expenses incident to the performance of or
compliance with this Agreement by the Company shall be borne by the Company
whether or not any Registrable Securities are sold pursuant to the Registration
Statement. The fees and expenses referred to in the foregoing sentence shall
include, without limitation, (i) all registration and filing fees (including,
without limitation, fees and expenses (A) with respect to filings required to
be made with the Trading Market on which the Common Stock is then listed for
trading, and (B) in compliance with applicable state securities or Blue Sky
laws reasonably agreed to by the Company in writing (including, without
limitation, fees and disbursements of counsel for the Company in connection
with Blue Sky qualifications or exemptions of the Registrable Securities and determination
of the eligibility of the Registrable Securities for investment under the laws
of such jurisdictions as requested by the Holders), (ii) printing expenses
(including, without limitation, expenses of printing certificates for
Registrable Securities), (iii) messenger, telephone and delivery expenses, (iv)
fees and disbursements of counsel for the Company, (v) Securities Act liability
insurance, if the Company so desires such insurance, and (vi) fees and expenses
of all other Persons retained by the Company in connection with the
consummation of the transactions contemplated by this Agreement.  In addition, the Company shall be responsible
for all of its internal expenses incurred in connection with the consummation
of the transactions contemplated by this Agreement (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties), the expense of any annual audit and the fees and
expenses incurred in connection with the listing of the Registrable Securities
on any securities exchange as required hereunder.  In no event shall the Company be responsible
for any broker or similar commissions or any legal fees or other costs of the
Holders.

5. Indemnification

(a) Indemnification by the Company.
The Company shall, notwithstanding any termination of this Agreement, indemnify
and hold harmless each Holder, the officers, directors, agents and employees of
each of them, each Person who controls any such Holder (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act) and the
officers, directors, agents and employees of each such controlling Person, to
the fullest extent permitted by applicable law, from and against any and all
losses, claims, damages, liabilities, costs (including, without limitation,
reasonable attorneys’ fees) and expenses (collectively, “Losses”), as
incurred, arising out of or relating to any untrue or alleged untrue statement
of a material fact contained in a Registration Statement, any Prospectus or any
form of prospectus or in any amendment or supplement thereto or in any
preliminary prospectus, or arising out of or relating to any omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein (in the case of any Prospectus or form of
prospectus or supplement thereto, in light of the circumstances under which
they were made) not misleading, except to the extent, but only to the extent,
that (i) such untrue statements or omissions are based solely upon information
regarding such Holder furnished in writing to the Company by such

Holder expressly for use
therein, or to the extent that such information relates to such Holder or such
Holder’s proposed method of distribution of Registrable Securities and was
reviewed and expressly approved in writing by such Holder expressly for use in
a Registration Statement, such Prospectus or such form of Prospectus or in any
amendment or supplement thereto (it being understood that the Holder has
approved Annex A hereto for this purpose) or (ii) in the case of an occurrence
of an event of the type specified in Section 3(d)(ii)-(vi), the use by such
Holder of an outdated or defective Prospectus after the Company has notified
such Holder in writing that the Prospectus is outdated or defective and prior
to the receipt by such Holder of the Advice contemplated in Section 6(d).  The Company shall notify the Holders promptly
of the institution, threat or assertion of any Proceeding arising from or in
connection with the transactions contemplated by this Agreement of which the
Company is aware.

(b) Indemnification by Holders. Each
Holder shall, severally and not jointly, indemnify and hold harmless the
Company, its directors, officers, agents and employees, each Person who
controls the Company (within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act), and the directors, officers, agents or
employees of such controlling Persons, to the fullest extent permitted by
applicable law, from and against all Losses, as incurred, to the extent arising
out of or based solely upon: (x) such Holder’s failure to comply with the
prospectus delivery requirements of the Securities Act or (y) any untrue or
alleged untrue statement of a material fact contained in any Registration
Statement, any Prospectus, or any form of prospectus, or in any amendment or
supplement thereto or in any preliminary prospectus, or arising out of or
relating to any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein not misleading (i)
to the extent, but only to the extent, that such untrue statement or omission
is contained in any information so furnished in writing by such Holder to the
Company specifically for inclusion in such Registration Statement or such
Prospectus or (ii) to the extent that (1) such untrue statements or omissions
are based solely upon information regarding such Holder furnished in writing to
the Company by such Holder expressly for use therein, or to the extent that
such information relates to such Holder or such Holder’s proposed method of
distribution of Registrable Securities and was reviewed and expressly approved
in writing by such Holder expressly for use in the Registration Statement (it
being understood that the Holder has approved Annex A hereto for this purpose),
such Prospectus or such form of Prospectus or in any amendment or supplement
thereto or (2) in the case of an occurrence of an event of the type specified
in Section 3(d)(ii)-(vi), the use by such Holder of an outdated or defective
Prospectus after the Company has notified such Holder in writing that the
Prospectus is outdated or defective and prior to the receipt by such Holder of
the Advice contemplated in Section 6(d). In no event shall the liability of any
selling Holder hereunder be greater in amount than the dollar amount of the net
proceeds received by such Holder upon the sale of the Registrable Securities
giving rise to such indemnification obligation.

(c) Conduct of Indemnification Proceedings.
If any Proceeding shall be brought or asserted against any Person entitled to
indemnity hereunder (an “Indemnified Party”), such Indemnified Party
shall promptly notify the Person from whom indemnity is sought (the “Indemnifying
Party”) in writing, and the Indemnifying Party shall have the right to
assume the defense thereof, including the employment of counsel reasonably
satisfactory to the Indemnified Party and the payment of all fees and expenses
incurred in connection with defense thereof;

provided, that the
failure of any Indemnified Party to give such notice shall not relieve the
Indemnifying Party of its obligations or liabilities pursuant to this
Agreement, except (and only) to the extent that it shall be finally determined
by a court of competent jurisdiction (which determination is not subject to
appeal or further review) that such failure shall have prejudiced the
Indemnifying Party.

An Indemnified
Party shall have the right to employ separate counsel in any such Proceeding
and to participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Party or Parties
unless:  (1) the Indemnifying Party has
agreed in writing to pay such fees and expenses; (2) the Indemnifying Party
shall have failed promptly to assume the defense of such Proceeding and to
employ counsel reasonably satisfactory to such Indemnified Party in any such
Proceeding; or (3) the named parties to any such Proceeding (including any
impleaded parties) include both such Indemnified Party and the Indemnifying
Party, and such Indemnified Party shall reasonably believe that a material
conflict of interest is likely to exist if the same counsel were to represent
such Indemnified Party and the Indemnifying Party (in which case, if such
Indemnified Party notifies the Indemnifying Party in writing that it elects to
employ separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense thereof and
the reasonable fees and expenses of one separate counsel shall be at the
expense of the Indemnifying Party).  The
Indemnifying Party shall not be liable for any settlement of any such
Proceeding effected without its written consent, which consent shall not be
unreasonably withheld.  No Indemnifying
Party shall, without the prior written consent of the Indemnified Party, effect
any settlement of any pending Proceeding in respect of which any Indemnified
Party is a party, unless such settlement includes an unconditional release of
such Indemnified Party from all liability on claims that are the subject matter
of such Proceeding.

(d) Contribution. If a claim for
indemnification under Section 5(a) or 5(b) is unavailable to an Indemnified
Party (by reason of public policy or otherwise), then each Indemnifying Party,
in lieu of indemnifying such Indemnified Party, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such Losses, in such
proportion as is appropriate to reflect the relative fault of the Indemnifying
Party and Indemnified Party in connection with the actions, statements or
omissions that resulted in such Losses as well as any other relevant equitable
considerations.  The relative fault of
such Indemnifying Party and Indemnified Party shall be determined by reference
to, among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission of
a material fact, has been taken or made by, or relates to information supplied
by, such Indemnifying Party or Indemnified Party, and the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent
such action, statement or omission.  The
amount paid or payable by a party as a result of any Losses shall be deemed to
include, subject to the limitations set forth in this Agreement, any reasonable
attorneys’ or other reasonable fees or expenses incurred by such party in
connection with any Proceeding to the extent such party would have been
indemnified for such fees or expenses if the indemnification provided for in
this Section was available to such party in accordance with its terms.

The parties hereto
agree that it would not be just and equitable if contribution pursuant to this
Section 5(d) were determined by pro rata allocation or by any other method of
allocation

that does not take into
account the equitable considerations referred to in the immediately preceding
paragraph.  Notwithstanding the
provisions of this Section 5(d), no Holder shall be required to contribute, in
the aggregate, any amount in excess of the amount by which the proceeds
actually received by such Holder from the sale of the Registrable Securities
subject to the Proceeding exceeds the amount of any damages that such Holder
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission, except in the case of fraud by such
Holder.

The indemnity and
contribution agreements contained in this Section are in addition to any
liability that the Indemnifying Parties may have to the Indemnified Parties.

6.         Reports
Under Exchange Act.  With a view to
making available to the Holder the benefits of Rule 144 promulgated under the
Securities Act and any other rule or regulation of the SEC that may at any time
permit a Holder to sell Registrable Shares of the Company to the public without
registration, the Company agrees to:

(a)          Make and keep public
information available, as those terms are used in SEC Rule 144, at all times;

(b)         File with the SEC in a
timely manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act;

(c)          Furnish to any Holder,
so long as the Holder owns any Registrable Shares, forthwith on request, (i) a
written statement by the Company that it has complied with the reporting
requirements of SEC Rule 144, the Securities Act and the Exchange Act, (ii) a
copy of the most recent annual or quarterly report of the Company and such
other reports and documents so filed by the Company, and (iii) such other
information as may be reasonably requested in availing any Holder of any rule
or regulation of the SEC that permits the selling of any such securities
without registration; and

(d)         Undertake any additional
actions reasonably necessary to maintain the availability of the use of Rule
144.

7. Miscellaneous

(a)       Remedies.  In the event of a breach by the Company or by
a Holder, of any of their obligations under this Agreement, each other Holder
or the Company, as the case may be, in addition to being entitled to exercise
all rights granted by law and under this Agreement, including recovery of
damages, will be entitled to specific performance of its rights under this
Agreement.  The Company and each Holder
agree that monetary damages would not provide adequate compensation for any
losses incurred by reason of a breach by it of any of the provisions of this
Agreement and hereby further agrees that, in the event of any action for
specific performance in respect of such breach, it shall waive the defense that
a remedy at law would be adequate.

(b)       Compliance. Each Holder,
severally and not jointly, covenants and agrees that it will comply with the
prospectus delivery requirements of the Securities Act as applicable to it in
connection with sales of Registrable Securities pursuant to the Registration
Statement.

(c)       Discontinued Disposition. Each
Holder, severally and not jointly, agrees by its acquisition of such
Registrable Securities that, upon receipt of a notice from the Company of the
occurrence of any event of the kind described in Section 3(d), such Holder will
forthwith discontinue disposition of such Registrable Securities under a
Registration Statement until such Holder’s receipt of the copies of the supplemented
Prospectus and/or amended Registration Statement, or until it is advised in
writing (the “Advice”) by the Company that the use of the applicable
Prospectus may be resumed, and, in either case, has received copies of any
additional or supplemental filings that are incorporated or deemed to be
incorporated by reference in such Prospectus or Registration Statement.  The Company will use its commercially
reasonable efforts to ensure that the use of the Prospectus may be resumed as
promptly as it practicable.  The Company
agrees and acknowledges that any periods during which the Holder is required to
discontinue the disposition of the Registrable Securities hereunder shall be
subject to the provisions of Section 2(b).

(d)       Amendments and Waivers. The provisions
of this Agreement, including the provisions of this sentence, may not be
amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, unless the same shall be in writing and
signed by the Company and each Holder of the then outstanding Registrable
Securities.  Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with
respect to a matter that relates exclusively to the rights of Holders and that
does not directly or indirectly affect the rights of other Holders may be given
by Holders of all of the Registrable Securities to which such waiver or consent
relates; provided, however, that the provisions of this sentence
may not be amended, modified, or supplemented except in accordance with the
provisions of the immediately preceding sentence.

(e)       Notices. Any and all notices or
other communications or deliveries required or permitted to be provided
hereunder shall be delivered as set forth in the Purchase Agreement.

(f)        Successors and Assigns. This
Agreement shall inure to the benefit of and be binding upon the successors and
permitted assigns of each of the parties and shall inure to the benefit of each
Holder. The Company may not assign its rights or obligations hereunder without
the prior written consent of all of the Holders of the then-outstanding
Registrable Securities. Each Holder may assign their respective rights
hereunder in the manner and to the Persons as permitted under the Purchase
Agreement.

(g)       No Inconsistent Agreements. Neither the Company
nor any of its subsidiaries has entered, as of the date hereof, nor shall the
Company or any of its subsidiaries, on or after the date of this Agreement,
enter into any agreement with respect to its securities, that would have the
effect of impairing the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. 

(h)       Execution and Counterparts. This
Agreement may be executed in any number of counterparts, each of which when so
executed shall be deemed to be an original and, all of which taken together
shall constitute one and the same Agreement. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid
binding obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile
signature were the original thereof.

(i)        Governing Law.  All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be determined with the provisions of the Purchase
Agreement.

(j)        Cumulative Remedies. The remedies
provided herein are cumulative and not exclusive of any remedies provided by
law.

(k)       Severability. If any term, provision,
covenant or restriction of this Agreement is held by a court of competent
jurisdiction to be invalid, illegal, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions set forth herein shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated, and the parties hereto shall use their commercially reasonable
efforts to find and employ an alternative means to achieve the same or
substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may
be hereafter declared invalid, illegal, void or unenforceable.

(l)        Headings. The headings in this
Agreement are for convenience of reference only and shall not limit or
otherwise affect the meaning hereof.

(m)      Independent Nature of Holders’ Obligations
and Rights. The obligations of each Holder hereunder are several and
not joint with the obligations of any other Holder hereunder, and no Holder
shall be responsible in any way for the performance of the obligations of any
other Holder hereunder. Nothing contained herein or in any other agreement or
document delivered at any closing, and no action taken by any Holder pursuant
hereto or thereto, shall be deemed to constitute the Holders as a partnership,
an association, a joint venture or any other kind of entity, or create a
presumption that the Holders are in any way acting in concert with respect to
such obligations or the transactions contemplated by this Agreement. Each
Holder shall be entitled to protect and enforce its rights, including without
limitation the rights arising out of this Agreement, and it shall not be
necessary for any other Holder to be joined as an additional party in any
proceeding for such purpose.

********************

IN WITNESS
WHEREOF, the parties have executed this Registration Rights Agreement as of the
date first written above.

 

	
  

  	
  CALLISTO
  PHARMACEUTICALS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

[SIGNATURE PAGE OF
HOLDERS FOLLOWS]

[PURCHASER’S
SIGNATURE PAGE]

	
  Name of Investing Entity:

  	
   

  	
   

  
	
  Signature of Authorized Signatory of Investing
  Entity:

  	
   

  	
   

  
	
  Name of Authorized Signatory:

  	
   

  	
   

  
	
  Title of Authorized Signatory:

  	
   

  	
   

  
								

 

 

[SIGNATURE PAGES
CONTINUE]Exhibit
10.1

(Redacted portions subject to confidential
treatment request)

DISTRIBUTION SERVICES AGREEMENT

This
Distribution Services Agreement (“Agreement”) is made as of the 1st day
of January, 2006 (the “Effective Date”), by and between AmerisourceBergen Drug
Corporation (“AmerisourceBergen”), with an address at 1300 Morris Drive,
Chesterbrook, PA  19087-5594 and Sciele
Pharma, Inc. formerly known as First Horizon Pharmaceutical Corporation, with
an address of Five Concourse Parkway, Suite 1800, Atlanta, Georgia 30328, (“Supplier”).

NOW,
THEREFORE, for and in consideration of the mutual promises and obligations
contained in this Agreement, the parties agree as follows:

1.             APPOINTMENT OF SUPPLIER

a.               Engagement.  AmerisourceBergen and Supplier agree to a nonexclusive
arrangement where Supplier agrees to sell products (“Products”) to
AmerisourceBergen on the terms and conditions set forth in this Agreement and
any amendment or addendum thereto so that AmerisourceBergen may distribute the
Product to AmerisourceBergen customers ( “Customer” or “Customers”).  Supplier hereby appoints AmerisourceBergen
(and all of its distribution centers) as an authorized non-exclusive
distributor of record for all of its Products. 
Furthermore, Supplier will comply with all federal and state laws
requiring Supplier to publicly identify all of its authorized distributors.

b.              Term. 
This Agreement is effective as of the date set forth above (the “Effective
Date”) and will continue in effect for two years.  Thereafter, this Agreement will automatically
renew for subsequent terms of one additional year, unless otherwise terminated
by a party as allowed herein.

c.               Breach and Termination.  Either party may terminate this Agreement for
cause, upon 30 days’ written notice of a material default to the other party of
the reason for termination, and failure of that party to cure the default
within the 30 day period.  Either party
may terminate this Agreement with or without cause upon forty-five (45) days
prior written notice to the other party. 
Any amounts due shall be payable within 30 days of termination.

2.             PRICE,
PAYMENT AND INVENTORY LEVELS

a.               Terms of Payment.  Unless otherwise agreed, AmerisourceBergen
will pay all Supplier invoices for undisputed orders in accordance with the due
dates specified; provided, in no instances shall be less than 2% 30 days, net
31 days.  From time to time
AmerisourceBergen may request that a duly authorized officer of Supplier sign a
certificate that Supplier is in full compliance with the terms and conditions
of this paragraph.

b.              Electronic
Payments.  Supplier will provide
AmerisourceBergen float days equivalent to 2% 35 days net 36 days for all
electric fund transfers (“EFTs”). Without AmerisourceBergen’s prior written
consent, the Supplier shall not have the right to debit any AmerisourceBergen
account electronically. AmerisourceBergen shall not be deemed in default or
lose any cash discount by reason of any delay in receipt or non-receipt by
Supplier of funds transferred by EFT unless the delay or non-receipt is the
result of the negligence or willful misconduct of AmerisourceBergen. Supplier
shall immediately remit any monies due to AmerisourceBergen in the event of a
debit balance situation that persists for more than five (5) days.

c.                Services Fees.  Supplier shall pay a Services Fee to
AmerisourceBergen for primary distribution services, which consist of the
stocking, packing and shipment of Products, providing inventory and sales  data, credit and billing processing, accounts
receivables management, contracts and chargeback administration and the 

 1
 

 

fulfillment
of the obligations set forth in Paragraph 3 below (collectively referred to as “Primary
Distribution Services”).  The Services
Fee amount is set forth in Exhibit C (Services Fee).

   
d.                          Post Price Increase Buy In Allocations. Supplier may elect to provide AmerisourceBergen, in its
sole discretion, allocations of Product at the price prior to a price increase.
The Economic Benefit (defined in Exhibit C) 
realized by AmerisourceBergen for such purchases at the old price will
be calculated as a Credit to the Service Fee as set forth in Exhibit C.  Products purchased for customers that receive Federal Statutory
Pricing(1) (“Federal Customers”) shall not be included in the Post Price
Increase Buy In Allocation or any other discounts or price allowance offered to
AmerisourceBergen by Supplier.

  e.                                 Inventory Levels.   During the term of this Agreement,
AmerisourceBergen shall maintain at all times a stock of Product(s) sufficient
to supply the demand of its customers provided, however, such stock shall be
not less than forty **** **** **** nor more than ********* **** **** of
AmerisourceBergen’s expected sales to customers as determined by its Customary
Practice unless otherwise agreed to by Supplier in writing.  The term “Customary Practice” means, at any
given time, the average of the total quantity of Products (by NDC number) sold
by AmerisourceBergen to Customers over the immediate preceding ***** ***
*****.  The Inventory Levels set forth in
this section reflect an additional *** *** ***** stock of Product(s) for
Supplier’s Disaster Recovery plan.

AmerisourceBergen
shall have no obligation to maintain the minimum Inventory Level of a
particular Product if such Product is unavailable from Supplier.

f.                 Inventory and Sales Reports.  AmerisourceBergen shall prepare Inventory and
Sales Reports and, for the duration of this Agreement, provide Supplier with
such Inventory Reports (an “852”) on a weekly basis and  Sales Reports (an “867”) monthly.  All such Inventory and Sales Reports shall be
transmitted in EDI format  each Monday no
later then 8:00 AM (Eastern Standard Time) and shall include the information
set forth in Exhibit A.   Within 30 days
after the execution of this Agreement, the parties shall examine and test the
capability of their respective EDI systems and complete implementation of a
mutually agreeable system whereby transfers of information can be made
effectively and on a consistent basis. 
In the event that critical internal support systems and electronic
communication links, including EDI, are not available for three (3) consecutive
business days, the parties will cooperate to promptly implement substitute
procedures to document the information customarily sent by EDI and prevent
interruptions to each other’s business.

AmerisourceBergen shall include sufficient data in the Inventory and
Sales Reports and Data Reports so that Supplier can determine and evaluate the
on-hand and on-order inventory, purchases, returns and chargebacks made by Federal
Customers.

In
addition to the Inventory and Sales Reports above, AmerisourceBergen agrees to
provide the following EDI reports: 
820-Electronic Funds Transfer; 
844 -Electronic Chargeback;  and
849-Electronic Chargeback reconciliation (collectively, “Data Reports”).  The foregoing Data Reports shall be provided
to Supplier on a weekly basis.

3.             AMERISOURCEBERGEN OBLIGATIONS

a.               Stock
Product.  AmerisourceBergen will maintain
sufficient stock of Products to satisfactorily supply customer base demand.

b.              Legal
Compliance.  AmerisourceBergen will
comply with federal, state and local laws governing the purchase, handling,
sale, and distribution of Products.

(1) Customers that
receive Federal Statutory Pricing include but not limited to Department of
Defense (DOD), Veterans Administration (VA), Disproportionate Share Hospitals
(DSH), and Public Health Services (PHS).

 2
 

 

c.               Documentation.  Upon request with respect to any order for
controlled substances, AmerisourceBergen will furnish Supplier with commercially
reasonable assurances that (1) AmerisourceBergen is authorized to possess and
distribute such controlled substances under federal law, and (2)
AmerisourceBergen is in compliance with all federal regulations and guidelines
promulgated under the Controlled Substances Act of 1970, as amended, with respect to the
purchase, handling, storage, repackaging, sale, and distribution of the
controlled substance ordered.

d.              Electronic
Orders.  AmerisourceBergen will submit
orders electronically in industry standard format.

e.               Drop
Shipments.  AmerisourceBergen will honor
all invoices billed to AmerisourceBergen for drop shipments authorized by
AmerisourceBergen, provided that the Product has been delivered and the invoice
is not disputed by customer.

f.                 Storage Conditions.  AmerisourceBergen will maintain Products
under proper conditions, both in storage and in transit to AmerisourceBergen
customers.  Product requiring special
storage conditions may be subject to an additional handling fee.

g.              Short Dated
Product.  AmerisourceBergen will accept
short dated Product in its sole discretion and on a case-by-case basis.

h.              Internal
Controls.  AmerisourceBergen will
maintain internal controls to facilitate compliance with its obligations under
this Agreement.

i.                  AmerisourceBergen
agrees to purchase 100% of its requirements of Products directly from First
Horizon.  Furthermore, AmerisourceBergen
agrees to order the minimum quantities for each Product set forth in the
attached Exhibit D.

       j.    [Intentionally Deleted]

k.               Within thirty (30) days of signing this
Agreement, AmerisourceBergen shall provide to Supplier the names and contact
information of the AmerisourceBergen employee primarily responsible for
managing and maintaining this Agreement and current Customer contracts that
effect this Agreement.

4.             SUPPLIER
OBLIGATIONS

a.               Electronic
Orders.  Supplier will accept
AmerisourceBergen orders electronically in the industry standard format.

b.              Set-up
Sheets.  Upon the request of
AmerisourceBergen, Supplier will provide AmerisourceBergen with completed New
Vendor Set-Up form.  Supplier will
provide AmerisourceBergen with a completed HDMA Form for all new items, in
addition to any promotional fact sheets for all promotions. Supplier is responsible
for the accuracy of the form. 
AmerisourceBergen will not be responsible for Supplier’s errors.  Incomplete forms will not be processed.

c.               Delivery
Times.  Supplier will make commercially
reasonable efforts to ship all AmerisourceBergen orders completely and to
deliver them within a mutually agreeable schedule.  Notification of Products identified as
backordered, discontinued or unavailable must be provided to AmerisourceBergen,
in writing, within forty eight (48) 
hours.

d.              [Intentionally
Omitted]

e.               [Intentionally
Omitted]

 3
 

 

f.                 Shipping
Labels.  Supplier agrees to clearly label
all cartons and pallets with the following shipping information:

AmerisourceBergen Purchase Order Number

Ship-From Address

Ship-To Address

g.              Drop Ship Orders.  In the event AmerisourceBergen or Supplier
elects to drop ship Product(s) to an AmerisourceBergen customer, all other
provisions of the Agreement, including returns, remain in effect. Supplier must
verify in advance that customer is in good standing with the servicing
AmerisourceBergen division.

h.              Invoicing. 
The Supplier will not invoice orders until the Product has been shipped
to AmerisourceBergen.  If orders are not
released on the date of the invoice, Supplier will add additional float days to
the payment terms.  Invoices transmitted
electronically will be sent in the industry standard format.

i.                  Shipment Charges, Title and Risk of
Loss.  All orders are to be shipped by
Supplier to AmerisourceBergen FOB destination, freight prepaid by
Supplier.  Supplier shall pay for insurance.    Title to and risk of loss of Products sold
hereunder will pass to AmerisourceBergen upon delivery at the designated
destination by Supplier.

j.                  Short
Dated Product.  Supplier agrees to ship
Products with not less than 12 months’ shelf life remaining, unless Product is
manufactured with a limited shelf life less than the above, in which case such
Product will be shipped per Supplier’s/manufacturer’s guidelines.  At AmerisourceBergen’s discretion, short
dated Product may be accepted on a case-by-case basis in individual purchase
situations.

k.               Notice of
Promotional Activities/Buy-in Opportunities. 
Supplier agrees to provide AmerisourceBergen prior notice of marketing
activities to AmerisourceBergen customers involving guaranteed sale provisions
and/or other distribution and promotional activities.

l.                  Price Protection.  Supplier agrees to provide price protection
to AmerisourceBergen and to adjust on-hand and in-transit inventory in the
event of a product price reduction.

m.            Accounts
Receivable Statement.  Supplier agrees to
provide AmerisourceBergen with accounts receivable electronic statements of all
open transactions.

n.              Date of
Price.  Supplier agrees to accept
purchase orders at the prices in effect on the day the order is
transmitted.  Supplier will notify
AmerisourceBergen within seventy-two (72) hours of the order date of any
Product adjustments or held purchase order delays.

o.              Price
Changes.  Supplier agrees to
electronically communicate all price changes to AmerisourceBergen no later than 4:00 p.m. Eastern
Standard Time the business day prior to the effective date of price change to:  PDM@amerisourcebergen.com and the Director,
Brand Rx Product Development and the Analyst, Brand Rx. p.

p.              Credits.  Supplier will pay AmerisourceBergen all
undisputed compensation due (including without limitation, payments, credits,
product allocations, and/or bill-back program amounts) within 30 days of
determination.  Exceptions shall be
resolved with AmerisourceBergen  Accounts
Payable Department. AmerisourceBergen reserves the right to take deductions.

 4
 

 

 q.           Allocation.  Supplier agrees to work with
AmerisourceBergen to ensure that any allocation program does not cause an
out-of-stock situation.  If
AmerisourceBergen validates to Supplier a potential out-of-stock condition,
Supplier will adjust AmerisourceBergen’s allocation to meet demand.

r.                 Product Recall
Reimbursement.  Supplier agrees to abide
by all HDMA published guidelines for product recall reimbursement.

s.               Legal
Compliance.  Supplier will comply with
all applicable federal, state and local laws including but not limited to those
laws governing the manufacture, purchase, handling, sale, marketing and
distribution of Products purchased under this Agreement.

t.                 Supporting Information.  Supplier shall provide any documentation or
instructions to AmerisourceBergen             
reasonably necessary for full compliance with federal, state and local
laws with respect to the handling, storage and distribution of the Products.  Supplier shall maintain federal, state and
local registrations necessary for the lawful handling of all Products and
immediately notify AmerisourceBergen of any denial, revocation or suspension of
any such registration or any changes in the Products which AmerisourceBergen is
authorized to distribute. Supplier shall report final judgments against
Supplier in any administrative, civil or criminal action by local, state or
federal authorities against Supplier, its officers or employees, regarding
violations of the Controlled Substances Act of 1970, as amended, or other comparable
legislation, and provide AmerisourceBergen with complete information concerning
the disposition of such action.

u.              Guaranty of Sale for New Product
Launches.  Recognizing the uncertainty
associated with new Product launches, the parties agree that prior to the
delivery of the initial stocking order, AmerisourceBergen and Supplier will
jointly determine the amount of the initial stocking order that will be sold to
AmerisourceBergen in a mutually agreed upon time frame.

5.             RETURNS

a.               AmerisourceBergen
will have the right to return to Supplier Products in accordance with the
Return Goods Policy, as amended.  The
current Return Goods Policy is attached as Exhibit E.

b.              Supplier will
accept AmerisourceBergen returned Products from a third party reverse
distribution processor.  Any fees or
expenses associated with the third party reverse distribution processor shall
be paid by AmerisourceBergen.

6.             DAMAGED
PRODUCTS

Should Products sold to AmerisourceBergen be received in damaged
condition (whether noted at receipt or hidden), AmerisourceBergen will note on
the delivery slip the apparent damage and shall request that the Supplier
remedy the situation by accepting prompt return of Product and issuance of a
credit. Damage will be reported promptly to Supplier’s customer service
department to determine the disposition instructions. AmerisourceBergen shall
hold such damaged Products for inspection by the insurer, the carrier, or
Supplier’s designated representative for up to forty-five (45) days.

7.             SHIPMENT
ERRORS

In the event of an incomplete shipment, a shortage in shipment, the
misdirection of any delivery, or any overshipment  resulting from  or caused by Supplier’s error, the Supplier
shall immediately contact the AmerisourceBergen purchasing department upon
discovery  and  the parties shall mutual agree upon the
appropriate action to take.   If the
shipment error is caused by or resulting from Supplier’s error, then Supplier
will be responsible for related freight or accessorial charges.

8.             SUPPLIER
DIRECT-TO-CUSTOMER CONTRACTS

 5
 

 

a.               Participating Customers.  Any customer having a current direct purchase
contract with Supplier (the “Participating Customer”) may request that such
purchases be made through AmerisourceBergen
as a vendor.  Such request must be made
by the Participating Customer to AmerisourceBergen
in writing. AmerisourceBergen
reserves the right to accept or refuse any such request in its sole discretion.
Supplier shall inform AmerisourceBergen
of the terms, pricing, and other relevant details of its contract with the
Participating Customer.  Contract updates
and changes should immediately be submitted to the AmerisourceBergen Contract
Department for prompt application.

b.              Termination/Modification. AmerisourceBergen reserves the right
to terminate participation in the Supplier’s direct-to-customer programs within
forty (45) days notice to Participating Customer and Supplier.  In the event of such termination, AmerisourceBergen shall receive credit
for sales made prior to the date of termination, provided that all such sales
are reported within the periods indicated above.  AmerisourceBergen reserves the right to
return to Supplier any excess inventory of product(s) resulting from program
termination. 

9.             INSPECTION
OF RECORDS

Supplier and
AmerisourceBergen agree to
maintain complete and accurate records of all transactions related to the
conduct of business.  During the term of
this Agreement and for a period of one year thereafter following termination or
expiration of the Agreement, both parties will permit inspection of records
upon reasonable notice during regular business hours for the purpose of
resolving business disputes. If based on any such inspection or audit it is
determined that either party has received excess credits or taken any unearned
discounts, the party shall immediately pay any excess amount.

10.          CONFIDENTIALITY

All
documents and other information provided to a party by the other party pursuant
to this Agreement, including any information concerning prices, quantities
purchased by any customer, data or other terms and conditions, shall be held by
the receiving party  in strict confidence
and not disclosed either directly or indirectly to any third party and shall
only be used for purposes of fulfilling the receiving party’s obligations under
this Agreement.  Both parties
acknowledges that money damages alone may not be a sufficient remedy for any
violation by it of the terms of this Agreement addressing use or disclosure of  confidential information of the disclosing
party and that the disclosing party  may
be entitled (in addition to any other remedies which may be available to it at
law or in equity) to specific performance and injunctive relief as remedies for
any such violation.  Each party shall
keep the terms and conditions of this Agreement and any amendments or addenda
thereto confidential.

Notwithstanding anything to
the contrary in this Agreement, the receiving party shall have no liability to
the disclosing party for the use or disclosure of  such information as the receiving party can
establish by written documentation to:

(a)                                  have been publicly known prior to disclosure
by the disclosing party of such information to the receiving party;

(b)                                 have become publicly known without fault on
the part of the receiving party, subsequent to disclosure to the receiving
party;

(c)                                  have been received by the receiving party at
any time from a source, other than the disclosing party, lawfully having
possession of and the right to disclose such information;

(d)                                 have been otherwise known by the receiving
party prior to disclosure by the disclosing party to the receiving party of
such information; or

 6
 

 

(e)
                               have been independently developed by the
receiving party without use of such information.

A party receiving Confidential Information may disclose
such Confidential Information if required to do so by a court (or other
tribunal of competent jurisdiction), any governmental body or as required under
any applicable laws, rules or regulations provided that (i) the party required
to disclose such Confidential Information provides prompt notice of such
pending disclosure to the disclosing party so that the disclosing party can
seek a protective order, and (ii) the party required to disclose such
Confidential Information shall exercise reasonable efforts to ensure that the
information is accorded confidential treatment by the court or other tribunal.

The
provisions of this Section shall survive for a period of two (2) years
following the termination of this Agreement.

11.                               WARRANTY

Supplier
warrants that Product shipped from Supplier will not be adulterated or
misbranded within the meaning of the Federal Food, Drug and Cosmetic Act, as
amended, and the regulations promulgated thereunder (“Act”), or within the
meaning of any applicable state or municipal law in which the definition of
adulteration and misbranding are substantially the same as those contained in
the Act. (collectively the “Applicable Laws”)  
THIS WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES, EXPRESSED OR IMPLIED
AND SUPPLIER EXPRESSLY DISCLAIMS ANY AND ALL OTHER WARRANTIES INCLUDING
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE EXCEPT AS
OTHERWISE CONTAINED HEREIN AND IN ANY CONTINUING GUARANTY AND INDEMNIFICATION
AGREEMENT DELIVERED BY SUPPLIER TO AMERISOURCEBERGEN.

12.  RELATION OF PARTIES

a.               Except as otherwise specified, AmerisourceBergen is acting pursuant
to this Agreement in the capacity of an independent contractor distributing the
Products of Supplier as well as products of other manufacturers.

b.              AmerisourceBergen shall not have the authority to bind
Supplier unless otherwise agreed to between Supplier and AmerisourceBergen.

c.               Supplier shall not use AmerisourceBergen’s name, trademarks
or commercial symbols without the prior written consent of AmerisourceBergen.

d.              Nothing contained in this Agreement shall
be interpreted or construed so as to characterize the relationship between the
parties as a joint venture, partnership, agency or franchise for any purposes
whatsoever.

13.          INDEMNIFICATION

a.             AmerisourceBergen  shall indemnify, defend and hold harmless the Supplier, its agents, servants,
employees, officers, directors, attorneys, subsidiaries, affiliates, parent and
assigns from and against all claims (including, but not limited to, product
liability claims) losses, damages, liabilities and expenses (including, but not
limited to, reasonable attorneys’ fees and court costs) (collectively, “Claims”)
to the extent arising from negligence, willful misconduct, illegality,  material breach of this Agreement or
wrongdoing of any kind alleged or actual on the part of AmerisourceBergen.  This is in addition to any remedies
specifically set forth elsewhere in this Agreement. Notwithstanding the foregoing
indemnification obligation, AmerisourceBergen shall have no obligation to
indemnify Supplier for Claims to the extent resulting from or caused by
negligence, willful misconduct or breach of this Agreement by Supplier or its
agents, representatives or subsidiaries. 
Supplier hereby agrees to defend, indemnify and hold AmerisourceBergen
and each of its subsidiaries harmless against any Claims  to the extent arising as a result 

 7
 

 

of
(a) actual or alleged violation of Applicable Laws by virtue of which Products
at the time of shipment from Supplier are 
adulterated, misbranded or otherwise not in full compliance with or in
contravention of Applicable Laws, (b) possession, distribution, sale and/or use
of any Products of Supplier, including any prosecution or action by any
governmental body or agency or by any private party for misbranded or
adulterated Product within the meaning of Applicable Laws, including claims of
bodily injury, death or property damage, (c) any actual or asserted claim that
Supplier’s Products infringe any proprietary or intellectual property rights of
any person, including infringement of any trademarks or service names, trade
names, trade secrets, inventions, patents or violation of any copyright laws or
any other applicable federal, state or local laws, and (d) any actual or
asserted claim of negligence, willful misconduct or material breach of this
Agreement.  Notwithstanding the foregoing
indemnification obligation, Supplier shall have no obligation to indemnify
AmerisourceBergen for Claims to the extent resulting from or caused by
negligence, willful misconduct or breach of this Agreement by AmerisourceBergen
or its agents, representatives or subsidiaries.

Supplier
further agrees to maintain primary and noncontributing Products Liability
Insurance of not less than U.S. $5,000,000.00 per occurrence, Combined Single
Limit (Bodily Injury and Property Damage) including AmerisourceBergen
Corporations and its subsidiary companies as Additional insureds, including a
Broad Form Vendors Endorsement, with provision for at least 30 days’ prior
written notice to the additional insureds in the event of cancellation or
material reduction of coverage, and upon request promptly submit satisfactory
evidence of such insurance.  All
insurance coverage must be with a carrier with at least an A. M. Best rating of
A VII including any deductible or self-insurance risk retained by
Guarantors.  In combination with
significant excess liability insurance, any retained risk must be commercially
reasonable, actuarially sound, and acceptable to AmerisourceBergen Corporation,
at its sole discretion.  . 
In combination with liability insurance, any retained risk must be
commercially reasonable and actuarially sound. 
Supplier warrants that its assets are sufficient to cover any
self-insurance liability it assumes under this Agreement.

14.          MISCELLANEOUS

a.               Notice. Any notice required or permitted
hereunder shall be deemed given when deposited, postage prepaid, certified,
return receipt requested, in the United States mail addressed to the receiving
party at its address indicated on page 1 of this Agreement or to such other
address as such party shall have indicated by written notice. A copy of any
notice provided to AmerisourceBergen
must also be sent to AmerisourceBergen’s
General Counsel at the AmerisourceBergen
address listed on page 1.

b.              Assignment. This Agreement may not be
assigned by either party without the prior written consent of the other
party.  Notwithstanding the foregoing,
either party  may assign its rights and
obligations hereunder without the consent of the other party  to a subsidiary or affiliate or to an entity
which purchases all or substantially all of 
the assigning party’s stock or assets or acquires control of the
assigning party , whether by merger, consolidation or any other means.

c.               Governing
Law/Interpretation. The Agreement shall be governed by and construed in
accordance with the internal laws of the Commonwealth of Pennsylvania. The parties have jointly negotiated this
Agreement and, thus, neither this Agreement nor any provision will be
interpreted for or against any party on the basis that it or its attorney
drafted the Agreement or the provision at issue.  Headings of the various Sections are not part
of the context of this Agreement, and are only labels to assist in locating
those Sections, and will be ignored in construing this Agreement.  When this Agreement requires approval of one
or more parties, such approval may not be unreasonably withheld or
delayed.  Words, regardless of the number
and gender specifically used, will be construed to include any other number,
singular or plural, and any gender, masculine, feminine, or neuter, as the
context requires.  “And” includes “or.”  “Or” is disjunctive but not necessarily
exclusive.  “Including” means “including
but not limited to.”  The parties hereby
consent to jurisdiction of Pennsylvania’s courts and, for any litigation that
may arise out of this Agreement, stipulate to venue in the state and federal
courts serving Chester County, Pennsylvania, as the sole proper venue.

 8
 

 

d.              Legal Compliance. It is the intent of the
parties to this Agreement to comply now, and hereafter during the term of this
agreement, with all federal, state, professional and other laws, statutes,
regulations, rules, policies and protocols applicable to the subject matter of
the Agreement and the relationship of the parties, including, without
limitation, any reporting obligations (such as Average Selling Price) under any
state or federal law. In the event there is any change in law, regulation or
interpretation thereof that has the effect of prohibiting any right or
obligation of a party under the agreement or materially affects such right or
obligation, then such party may upon notice to the other party immediately
terminate this agreement in whole or in part.

e.               Force Majeure. Each party’s obligation
under this Agreement will be excused to the extent any delay is caused by
strikes or other labor disturbance, acts of God, war, or other conditions
beyond the reasonable control of that party, but only during the duration of
such condition.

f.                 Benefits. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective successors
and permitted assigns.

g.              Complete Agreement. This Agreement
contains the entire agreement between the parties and supersedes any prior
agreement or understanding concerning the subject matter herein between the
parties.

h.  Modification. This
Agreement may be modified, or rights hereunder waived, only in a writing signed
by both parties that expressly references this Agreement.

i                     Publicity. 
Neither party shall have the right to issue a press release, statement
or publication regarding the terms and conditions of or the existence of this
Agreement.

IN WITNESS
WHEREOF, the parties have executed this Agreement by their duly authorized
representatives.

	
  SCIELE PHARMA, INC.

  	
   

  	
  AMERISOURCEBERGEN
  DRUG CORPORATION

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By: 

  	
  /s/ Darrell
  Borne

  	
   

  	
  By:

  	
  /s/ Anthony T.
  Jackson

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  Darrell Borne,
  CFO

  	
   

  	
  Title:

  	
  VP Brand RX

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date: 

  	
  07/12/06

  	
   

  	
  Date:

  	
  07/19/06

  	
   

  

 

 9

 

 

Exhibit A

Data
Elements for Inventory and Sales Reports

1.                                       Current
inventory quantity available - indicates the quantity available to be sold or
shipped by distribution center for All Distribution Centers

2.                                       Quantity
on order, not yet received - total quantity expected to be received from
Supplier for current reporting period, but not yet received by distribution
center for All Distribution Centers

3.                                       Quantity
sold by distribution center for All Distribution Centers

4.                                       Quantity
out of stock

5.                                       Additional
demand quantity - sums the last three months of order quantity from order
detail file, subtracts the sum of the last three months of credit quantity from
credit detail file, and divides by number of days over past three months

6.                                       Planned
inventory quantity for replenishment purposes

7.                                       Morgue
Reports shall be generated monthly and sent to First Horizon by distribution
center for All Distribution Centers

 10
 

 

EXHIBIT C - Services Fee

A
Service Fee will be paid annually based on purchases made by AmerisourceBergen
during the term of the Agreement at the price of the Product at the time of
purchase.

The
term “Service Fee” shall mean the ****
******* **** fee that will be paid to AmerisourceBergen by Supplier in each
year based upon the total dollar volume of Product purchased by
AmerisourceBergen during such year.

Credits on Service Fee:

Supplier
will receive Credits towards the Service Fee for the Economic Benefit received
or realized by AmerisourceBergen.  “Economic Benefit” means the total savings received or realized
by Amerisource Bergen including the economic benefit derived from price
appreciation on Aggregate Inventory after a Supplier’s pricing action.  In the event AmerisourceBergen elects to
participate in Post Price Increase Buy In Allocations; discounts; off invoice
allowances; or any other promotional deals or discounts offered by Supplier
(collectively “Discounts”) , any economic benefit
received or realized by AmerisourceBergen from Discounts shall be credited
toward the Service Fee.

Service
Fee shall be calculated based upon the following formula:

Service
Fee Formula:

(Total
AmerisourceBergen purchases) X **** less Credits

AmerisourceBergen shall invoice Supplier
semi-annually for the previous two calendar quarters.  Such invoices shall be delivered to Supplier
on or before the July 15th and
January 15th.

Invoices shall include sufficient detail to
allow Supplier to verify and audit AmerisourceBergen’s calculation set forth in
the invoice. Supplier shall pay undisputed invoice amounts within forty-five (45)
days of Supplier’s receipt of invoice.

 

 11
 

 

Exhibit D

Minimum Order Quantities

 

	
  Product

  	
   

  	
  NDC #

  	
   

  	
  Order Qty

  
	
  Robinul 100’s

  	
   

  	
  5963020010

  	
   

  	
  **

  
	
  Robinul Forte

  	
   

  	
  5963020510

  	
   

  	
  **

  
	
  Nitrolingual Pumpspray 200

  	
   

  	
  5963030020

  	
   

  	
  ***

  
	
  Nitrolingual Pumpspray 60

  	
   

  	
  5963030065

  	
   

  	
  **

  
	
  Ponstel 100’s

  	
   

  	
  5963040010

  	
   

  	
  **

  
	
  Tanafed DP 4oz

  	
   

  	
  5963046504

  	
   

  	
  **

  
	
  Tanafed DP 16oz

  	
   

  	
  5963046516

  	
   

  	
  **

  
	
  Tanafed DMX 4 oz

  	
   

  	
  5963047004

  	
   

  	
  **

  
	
  Tanafed DMX 16oz

  	
   

  	
  5963047016

  	
   

  	
  **

  
	
  Sular 10mg

  	
   

  	
  5963044010

  	
   

  	
  **

  
	
  Sular 20mg

  	
   

  	
  5963044110

  	
   

  	
  **

  
	
  Sular 30mg

  	
   

  	
  5963044210

  	
   

  	
  **

  
	
  Sular 40mg

  	
   

  	
  5963044310

  	
   

  	
  **

  
	
  Cognex 10

  	
   

  	
  5963019012

  	
   

  	
  **

  
	
  Cognex 20

  	
   

  	
  5963019112

  	
   

  	
  **

  
	
  Cognex 30

  	
   

  	
  5963019212

  	
   

  	
  **

  
	
  Cognex 40

  	
   

  	
  5963019312

  	
   

  	
  **

  
	
  Furadantin 470 mL

  	
   

  	
  5963045016

  	
   

  	
  *

  
	
  Prenate Elite 90’s

  	
   

  	
  5963041190

  	
   

  	
  **

  
	
  Optinate 30s

  	
   

  	
  5963041230

  	
   

  	
  **

  
	
  Zoto

  	
   

  	
  5963013503

  	
   

  	
  **

  
	
  Fortamet 1000mg

  	
   

  	
  6202257560

  	
   

  	
  **

  
	
  Fortamet 500mg

  	
   

  	
  6202257460

  	
   

  	
  **

  
	
  Altoprev 20mg

  	
   

  	
  6202262830

  	
   

  	
  **

  
	
  Altoprev 40mg

  	
   

  	
  6202262930

  	
   

  	
  **

  
	
  Altoprev 60mg

  	
   

  	
  6220226303

  	
   

  	
  **

  
	
  Triglide 50mg

  	
   

  	
  5963048090

  	
   

  	
  **

  
	
  Triglide 160mg

  	
   

  	
  5963048590

  	
   

  	
  **

  

 

 

 12
 

 

Exhibit E

RETURN GOODS POLICY

 

 13

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