Joint Venture Marketing Agreement - Example

Exhibit 10.60

Execution Copy

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

CO-PROMOTION AGREEMENT

This Co-Promotion Agreement (this “Agreement”) is entered into as of the 4th day of September, 2007, between Salix Pharmaceuticals, Ltd., a Delaware corporation, (hereinafter referred to as “SALIX”), and Eisai Inc., a Delaware corporation (hereinafter referred to as “EISAI”).

W I T N E S S E T H:

WHEREAS, SALIX possesses all rights necessary to manufacture, market, promote, sell and distribute the PRODUCTS (as hereinafter defined) in the TERRITORY (as hereinafter defined); and

WHEREAS, EISAI employs or contracts with persons comprising a professional sales force (“EISAI SALES FORCE”) that currently calls on PHYSICIANS (as hereinafter defined) in order to promote pharmaceutical products within the TERRITORY; and

WHEREAS, SALIX desires to appoint EISAI as the exclusive third party promoter and detailer of the PRODUCTS in the TERRITORY, and EISAI desires to accept such appointment, all on the terms and conditions set forth herein.

NOW, THEREFORE, SALIX and EISAI agree as follows:

Unless otherwise specifically provided herein, the following terms shall have the following meanings:

(a)        “AFFILIATE” shall mean any corporation or other business entity that directly or indirectly controls, is controlled by, or is under common control with a PARTY. Control means (i) to possess, directly or indirectly, the power to direct the management or policies of a corporation or other business entity, whether through ownership of voting securities or by contract relating to voting rights or corporate governance, or (ii) to own, directly or indirectly, more than fifty percent (50%) of the outstanding voting securities or other ownership interest of such corporation or other business entity.

(b)        “APPLICABLE LAWS” shall mean all laws, rules, and regulations applicable to the manufacture, marketing, promotion, sale and distribution of pharmaceutical products in the TERRITORY.

(c)        “AVERAGE UNITS PER PRESCRIPTION” shall mean:

(i)        with respect to the 750 mg capsule PRESENTATION for any period, [*], and

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

(ii)        with respect to another PRESENTATION (A) for the initial CONTRACT QUARTER in which such PRESENTATION is first sold in the TERRITORY, (1) [*] for such PRESENTATION for such CONTRACT QUARTER, divided by (2) [*] for such PRESENTATION for such CONTRACT QUARTER; and (B) for any CONTRACT QUARTER after the initial CONTRACT QUARTER in which such PRESENTATION is first sold in the TERRITORY, (1) [*] for such PRESENTATION for such CONTRACT QUARTER and the immediately preceding CONTRACT QUARTER, divided by (2) [*] for such PRESENTATION for such CONTRACT QUARTER and the immediately preceding CONTRACT QUARTER.

(d)        “BASELINE CONVERTED PRESCRIPTIONS” shall mean, with respect to each CONTRACT QUARTER, [*], subject to adjustment in accordance with Section 2.5(b).

(e)        “BIOREX ROYALTIES” shall mean, with respect to a PRESENTATION for any period, the actual amount of royalties payable by SALIX to Biorex Laboratories Limited with respect to sales of such PRESENTATION in the TERRITORY with respect to such period pursuant to the Amended and Restated License Agreement dated April 16, 1993, as amended to the date hereof, between SALIX and Biorex Laboratories Limited (the “BIOREX AGREEMENT”).

(f)        “CONTRACT QUARTER” shall mean the 3-month period beginning on October 1, 2007 and ending December 31, 2007 and each 3-month period thereafter beginning each January 1, March 1, July 1 and October 1; provided that the final CONTRACT QUARTER shall end on the date of termination of this Agreement.

(g)        “CONTRACT YEAR” shall mean each 12-month period beginning January 1 and ending December 31; provided that the first CONTRACT YEAR shall begin on October 1, 2007 and end December 31, 2007 and the final CONTRACT YEAR shall end on the date of termination of this Agreement.

(h)        “CONVERTED PRESCRIPTIONS”, with respect to a PRESENTATION for any period, shall have the meaning set forth on, and shall be determined in accordance with the procedures set forth on, Appendix C.

(i)        “COST OF GOODS SOLD” shall mean, with respect to a PRESENTATION for any period, SALIX’s actual cost of manufacture or acquisition of all quantities of such PRESENTATION sold in the TERRITORY, or with respect to SAMPLES, sold to EISAI, during such period, calculated in accordance with GAAP and consistent with SALIX’s past practice, but expressly excluding (i) any selling, general and administrative expenses of SALIX and (ii) any markup of any kind on amounts paid to THIRD PARTIES.

(j)        “DEBARRED PERSON” shall mean any person (i) debarred or suspended under Section 306 of the FD&C ACT or (ii) listed in the Department of Health and Human Services List of Excluded Individuals/Entities or the General Services Administration’s Listing of Parties excluded from Federal Procurement and Non-Procurement Programs.

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

(k)        “DETAIL” shall mean that part of a sales call by a professional sales representative to a PHYSICIAN in the TERRITORY during which such professional sales representative makes a presentation about a PRODUCT (which sales call may, or may not, include a presentation about other products as well) in which key attributes and characteristics of such PRODUCT are verbally presented to the PHYSICIAN along with MARKETING MATERIALS (as defined below). When used as a verb, “DETAIL” means to engage in a DETAIL.

(l)        “FDA” shall mean the U.S. Food and Drug Administration.

(m)        “FIELDS OF USE” shall mean all indications for the PRODUCTS.

(n)        “GAAP” shall mean generally accepted accounting principles in the United States consistently applied.

(o)        “GRANULATED MESALAMINE PRODUCT” shall mean any pharmaceutical product containing mesalamine as the sole active ingredient in a formulation consisting of granules of coated mesalamine in a capsule shell.

(p)        “NET SALES” shall mean, with respect to a PRESENTATION for any period, the gross invoiced sales price for all quantities of such PRESENTATION sold by SALIX, its AFFILIATES and licensees in the TERRITORY during such period, less (i) sales taxes or other taxes included in the gross invoice price; (ii) actual shipping and insurance costs paid to a THIRD PARTY; (iii) actual credits or refunds for returned or defective PRODUCTS (but excluding any credits or refunds for quantities of such PRESENTATION in connection with any RECALL of such PRESENTATION, unless, and to the extent, that such RECALL results from a breach of this Agreement by EISAI); (iv) trade discounts and quantity discounts or retroactive price reductions; and (v) rebates, credits, and chargeback payments (or the equivalent thereof) actually granted to managed health care organizations, wholesalers, or to federal, state, local and other governments, including their agencies, purchasers, and/or reimbursers, or to trade customers, calculated in accordance with GAAP and consistent with SALIX’s past practice. All PRODUCTS will be considered “sold” upon first use, shipment, invoicing or receipt of payment therefor, whichever shall first occur. Notwithstanding the foregoing, NET SALES shall not include, and shall be deemed zero with respect to, (i) the actual distribution of SAMPLES as provided herein; or (ii) all PRODUCTS provided for clinical trials or research purposes at cost or at no charge.

(q)        “NO-FAULT SUPPLY DISRUPTION” shall mean a failure of SALIX to fulfill customer orders for PRODUCT due to fire, floods, embargoes, war, acts of war (whether war be declared or not), insurrections, riots, civil commotions, strikes, lockouts or other labor disturbances, or acts of God affecting SALIX or a THIRD PARTY that supplies PRODUCTS (or any component thereof) to SALIX.

(r)        “PARTY” shall mean SALIX or EISAI, as the case may be.

(s)        “PHAST” shall mean WOLTERS KLUWER’s Source Pharmaceutical Audit Suite database.

(t)        “PHYSICIAN(S)” shall mean doctors of medicine or osteopathy who are legally authorized to prescribe the PRODUCTS with a primary practice office location in the TERRITORY, which includes the evaluation and treatment of conditions of the gastrointestinal system, including primary care physicians and gastroenterologists. PHYSICIAN(S) shall also include nurse practitioners, physician assistants, and other mid-level practitioners who are legally authorized to prescribe the PRODUCTS and who evaluate and treat conditions of the gastrointestinal system.

(u)        “PRESENTATION” shall mean each separate formulation (or delivery form) of the PRODUCTS in each separate dosage strength of such formulation (or delivery form). For illustrative purposes only, each of the following would be a separate PRESENTATION: (i) PRODUCT in 750 mg capsules, (ii) PRODUCT in 1000 mg capsules, (iii) PRODUCT in 1100 mg tablets, and (iv) PRODUCT in 500 mg per 5 ml oral suspension.

(v)        “PRESENTATION RATIO” shall mean, with respect to a PRESENTATION for any period, (i) CONVERTED PRESCRIPTIONS for such PRESENTATION for such period, divided by (ii) TOTAL PRESCRIPTIONS for such period.

(w)        “PRODUCT” shall mean any pharmaceutical product containing balsalazide disodium as the sole active ingredient thereof, in any dosage, formulation (or delivery form), that is marketed, distributed or sold by SALIX, its AFFILIATES or licensees during the TERM under a TRADEMARK pursuant to a New Drug Application or Abbreviated New Drug Application approved by the FDA, and “PRODUCTS” shall mean all such products collectively. For the avoidance of doubt, “PRODUCT” shall not include any authorized generic version of a PRODUCT marketed, distributed or sold by SALIX, its AFFILIATES or licensees provided that such authorized generic version is not marketed, distributed or sold under a TRADEMARK.

(x)        “PROFIT PER PRESCRIPTION” shall mean, with respect to a PRESENTATION for any period, the product of (i) PROFIT PER UNIT for such PRESENTATION for such period, multiplied by (ii) AVERAGE UNITS PER PRESCRIPTION for such PRESENTATION for such period. An example of this calculation is provided in Appendix A-1.

(y)        “PROFIT PER UNIT” shall mean, with respect to a PRESENTATION for any period, the greater of (i) the quotient of (A) the total of (x) NET SALES for such PRESENTATION, less (y) COST OF GOODS SOLD for such PRESENTATION sold in the TERRITORY, less (z) BIOREX ROYALTIES (if any) for such PRESENTATION, in each case for such period, divided by (B) the actual number of UNITS of such PRESENTATION sold by SALIX, its AFFILIATES and licensees in the TERRITORY during such period and (ii) [*]% of the highest list price per UNIT of such PRESENTATION in the TERRITORY during such period. For the avoidance of doubt, the PROFIT PER UNIT will be calculated for each PRESENTATION. For example the PROFIT PER UNIT for the 750 mg capsule PRESENTATION will be the greater of (i) above as computed for the 750 mg capsule PRESENTATION and (ii) [*]% of the highest list price per UNIT of the 750 mg capsule PRESENTATION for the applicable period. The PROFIT PER UNIT for the 1100 mg tablet

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

PRESENTATION will be the greater of (i) above as computed for the 1100 mg tablet PRESENTATION and (ii) [*]% of the highest list price per UNIT of the 1100 mg tablet PRESENTATION for the applicable period. An example of this calculation is provided in Appendix A-1. Notwithstanding anything herein to the contrary, in the event that any PRESENTATION is not sold by SALIX, its Affiliates or licensees during any CONTRACT QUARTER, the PROFIT PER UNIT for such PRESENTATION for such CONTRACT QUARTER shall be the PROFIT PER UNIT for such PRESENTATION for the immediately preceding CONTRACT QUARTER.

(z)        “RETAIL TRx COUNT” shall mean, with respect to any PRESENTATION for any period, Retail TRx Count for such PRESENTATION for such period as reported on PHAST as determined in accordance with Appendix C.

(aa)        “RETAIL TRx QUANTITY” shall mean, with respect to any PRESENTATION for any period, Retail TRx Qty for such PRESENTATION for such period as reported on PHAST as determined in accordance with Appendix C.

(bb)        “SAMPLE” shall mean, with respect to each PRESENTATION, UNITS of such PRESENTATION which are not intended to be sold or traded, which are intended to be distributed to authorized healthcare professionals, and which are intended to promote the sale of such prescription drug.

(cc)        “SWITCHING DATA” shall mean a single data source to be used to determine the number of prescriptions switched from the PRODUCT to the GRANULATED MESALAMINE PRODUCT, and from the GRANULATED MESALAMINE PRODUCT to the PRODUCT, which shall be mutually selected by the PARTIES from the following three (3) options: (i) IMS Health - NPA Market Dynamics, (ii) Verispan - Vector One (VONA), and (iii) WOLTERS KLUWER Source ^® PatientTrends, Behavior Dynamics - New to Product starts by specialty, Switching within therapeutic class by specialty.

(dd)        “TERRITORY” shall mean the United States of America, including its territories and possessions.

(ee)        “THIRD PARTY” shall mean a party other than EISAI or SALIX or their respective AFFILIATES.

(ff)        “TOTAL PRESCRIPTIONS” shall mean, with respect to any period, the aggregate amount of CONVERTED PRESCRIPTIONS for all PRESENTATIONS for such period.

(gg)        “TRADEMARK” shall mean the mark ‘Colazal’ filed with the United States Patent and Trademark Office and assigned a registration number of 2534845 and any other trademark applicable to a PRODUCT during the TERM.

(hh)        “UNIT” shall mean a PRESENTATION in the smallest identifiable form (e.g., tablet or capsule for solid dosage forms, milliliter for liquid forms, gram for inhaled respiratory products, ointments or creams).

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

(ii)        “WOLTERS KLUWER” shall mean Source Healthcare Analytics, Inc.

(jj)        “WSI AGREEMENT” shall mean that certain Master Professional Services Agreement dated March 20, 2007 by and between SALIX and WSI.

(kk)        “WSI” shall mean WSI PBG, LLC.

(a)        SALIX hereby appoints EISAI as the exclusive co-promoter of the PRODUCTS to PHYSICIANS in the TERRITORY beginning on or about October 1, 2007. The actual date of the commencement by EISAI of its co-promotion activities hereunder (the “START DATE”) shall be confirmed in writing by the PARTIES. EISAI accepts such appointment and agrees to DETAIL the PRODUCTS through the SALES FORCE only to PHYSICIANS in accordance with the terms of this Agreement. Neither PARTY shall authorize any THIRD PARTY to promote the PRODUCTS to PHYSICIANS. SALIX represents and warrants to EISAI that as of the date hereof, no THIRD PARTY is authorized to promote the PRODUCTS to PHYSICIANS, and SALIX covenants that SALIX will not grant any rights to a THIRD PARTY to promote the PRODUCTS in the TERRITORY; provided, however, that EISAI acknowledges and agrees that SALIX is, and may continue to be, a party to the WSI AGREEMENT pursuant to which WSI promotes the PRODUCTS in Department of Veterans Affairs health system facilities (but in no other facilities). SALIX retains all rights to continue to promote the PRODUCTS in the TERRITORY through its own employees.

(b)        Each of SALIX and EISAI shall be legally responsible and liable for the actions, omissions and conduct of all members of its SALES FORCE and its other employees performing activities hereunder. Each of SALIX and EISAI shall ensure that all persons for whom it has legal responsibility and liability in accordance with the foregoing sentence comply with all APPLICABLE LAWS and all requirements of this Agreement, and shall implement and maintain policies and procedures to ensure such compliance; provided that in no event shall EISAI have any responsibility or liability for the MARKETING MATERIALS or the use thereof.

(c)        During the period commencing on the START DATE and ending [*], EISAI shall ensure that no fewer than [*] members of the EISAI SALES FORCE are performing DETAILS in the TERRITORY on an active basis as appropriate, taking into account the circumstances of each sales call to a PHYSICIAN. EISAI shall train all members of the EISAI SALES FORCE who perform DETAILS using the training materials provided by SALIX pursuant to Section 2.4(a)(iii) below. From and after [*], EISAI shall use commercially reasonable efforts, as determined by EISAI, to DETAIL the PRODUCTS in the TERRITORY.

(d)        During each CONTRACT QUARTER, SALIX shall (i) maintain in the TERRITORY [*] employed or contracted professional sales representatives to comprise the SALIX SALES FORCE, subject to ordinary course turnover that does not permanently reduce

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

the size of the SALIX SALES FORCE, and (ii) perform, through the SALIX SALES FORCE, at least [*] DETAILS.

(e)        During (i) the CONTRACT YEAR that ends December 31, 2007, SALIX shall expend at least $[*] for the advertising, marketing and promotion of the PRODUCTS in the TERRITORY, and (ii) each CONTRACT YEAR thereafter, shall expend at least $[*] for the advertising, marketing and promotion of the PRODUCTS in the TERRITORY, in each case which amounts shall be expended in accordance with an annual SALIX marketing plan (the “SALIX PLAN”) to be provided by SALIX to the STEERING COMMITTEE. For the avoidance of doubt, the amounts required to be expended pursuant to this Section 2.1(e) shall not include any costs related to the SALIX SALES FORCE but shall include amounts allocated to EISAI pursuant to Section 2.2(b).

(f)        EISAI, not later than [*] calendar days following the end of each CONTRACT QUARTER, shall provide to SALIX a report, in electronic form, which shall contain the following information with respect to such just ended CONTRACT QUARTER: (i) the number of DETAILS to PHYSICIANS in the TERRITORY made by EISAI, through the EISAI SALES FORCE, as recorded by EISAI’s standard record keeping procedures for details; (ii) the percentage of PHYSICIANS DETAILED who were provided with SAMPLES of the PRODUCTS; and (iii) the number of SAMPLES given to PHYSICIANS. Upon SALIX’s request, EISAI shall provide SALIX with (A) a master list of all PHYSICIANS to which EISAI provides DETAILS and (B) the American Medical Association Medical Education number and state license number of each such PHYSICIAN; provided that EISAI otherwise possesses such information and has the legal right to provide it to SALIX.

(g)        SALIX, not later than [*] calendar days following the end of each CONTRACT QUARTER, shall provide to EISAI a report, in electronic form, which shall contain the following information with respect to such just ended CONTRACT QUARTER: (i) the number of DETAILS to PHYSICIANS in the TERRITORY made by SALIX, through the SALIX SALES FORCE, as recorded by SALIX’s standard record keeping procedures for details; (ii) the percentage of PHYSICIANS DETAILED who were provided with SAMPLES of the PRODUCTS; (iii) the number of SAMPLES given to PHYSICIANS; (iv) gross sales of PRODUCTS and all deductions necessary to calculate NET SALES; (v) COST OF GOODS SOLD for PRODUCTS sold in the TERRITORY; (vi) BIOREX ROYALTIES by PRESENTATION; (vii) CONVERTED PRESCRIPTIONS for each PRESENTATION and TOTAL PRESCRIPTIONS (and supporting PHAST data); (viii) the actual number of UNITS of each PRESENTATION sold by SALIX, its AFFILIATES and licensees in the TERRITORY, (ix) the amount payable to EISAI pursuant to Section 2.5(a) by PRESENTATION; (x) the amount of advertising, marketing and promotional expenses expended by SALIX pursuant to Section 2.1(e), (x) AVERAGE UNITS PER PRESCRIPTION for each PRESENTATION (and supporting PHAST data), and (xi) any changes or adjustments made by WOLTERS KLUWER in such CONTRACT QUARTER to PHAST data for PRODUCTS previously reported by WOLTERS KLUWER. Upon EISAI’s request, SALIX shall provide EISAI with (A) a master list of all PHYSICIANS to which SALIX provides DETAILS and (B) the American Medical Association Medical Education number and state license number of each such PHYSICIAN;

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

provided that SALIX otherwise possesses such information and has the legal right to provide it to EISAI.

(h)        Each PARTY covenants that, in performing its obligations under this Agreement, it shall (i) at all times comply with any and all APPLICABLE LAWS and the PhRMA Code on Interactions with Health Care Professionals ; (ii) at all times perform its obligations under this Agreement in a professional, ethical and competent manner; (iii) make only such statements and claims regarding each PRODUCT, including as to efficacy and safety, as are consistent with the labeling for such PRODUCT approved by the FDA at the time such statements are made and the MARKETING MATERIALS; provided that SALIX may distribute scientific articles and reference publications concerning the PRODUCTS in accordance with APPLICABLE LAWS; (iv) not make any untrue or misleading statements or comments about the PRODUCTS; and (v) not disparage or present in a negative light the PRODUCT, the TRADEMARKS and/or the other PARTY; provided that in no event shall EISAI have any responsibility or liability for the MARKETING MATERIALS or the use thereof.

(i)        Each PARTY shall promote the PRODUCTS only under the applicable TRADEMARK and shall not use any other trademark(s) in the promotion of the PRODUCTS (other than any other trademark of SALIX or its licensors included in the MARKETING MATERIALS and, in the case of EISAI, the corporate name and logos of EISAI). SALIX hereby grants to EISAI a nontransferable, royalty-free, non-exclusive license (without the right to sublicense) to use the TRADEMARKS (and any other trademark of SALIX or its licensors included in the MARKETING MATERIALS) and the MARKETING MATERIALS solely for purposes of performing its obligations hereunder.

(j)        EISAI shall develop a strategy for the DETAILING of the PRODUCTS to PHYSICIANS by the EISAI SALES FORCE hereunder which shall be set forth in an annual promotional plan (the “SALES PLAN”). Prior to the implementation of any SALES PLAN (or any material amendment to a SALES PLAN), SALIX shall be provided with a reasonable opportunity, through the STEERING COMMITTEE to provide input into such SALES PLAN or amendment and EISAI shall give good faith consideration to any comments of SALIX thereon.

(k)        SALIX shall be responsible, in its sole discretion, for developing and producing all sales, promotional, advertising and/or similar materials (the “MARKETING MATERIALS”) for the PRODUCTS; provided that SALIX shall provide to EISAI drafts of all MARKETING MATERIALS developed by SALIX after the date hereof at least [*] days in advance of the date of final approval of such materials by SALIX, and SALIX shall give good faith consideration to any comments thereon provided by EISAI within [*] days after receipt of any such draft. SALIX represents, warrants and covenants that all MARKETING MATERIALS will comply with all APPLICABLE LAWS and will not contain any untrue or misleading statement or comment about the PRODUCTS. Neither PARTY shall use any materials in connection with the marketing and promotion of the PRODUCTS other than the MARKETING MATERIALS. Each PARTY shall ensure that the MARKETING MATERIALS are used only in the form provided and not changed in any way (including by underlining or otherwise highlighting any text or graphics or adding any notes thereto). Subject to Section 2.2(b) and Section 2.3(a), SALIX [*] shall promptly deliver, no more than [*] per CONTRACT [*], to [*]

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

in the continental United States as may be directed by EISAI, the amount of MARKETING MATERIALS requested by EISAI from time to time.

(l)        Each PARTY shall obtain and at all times maintain in full force and effect all necessary licenses, permits and other authorizations or approvals, as required by all APPLICABLE LAWS as may be necessary to perform its duties and obligations as set forth in this Agreement.

(m)        Each PARTY shall have in effect a commercially reasonable, as determined by such PARTY, bonus incentive plan for its SALES FORCE designed to reward sales of the PRODUCTS.

(n)        Subject to Section 2.2(b) and Section 2.3(b), SALIX [*] shall promptly deliver, no more than [*] per CONTRACT [*], to [*] in the continental United States as may be directed by EISAI, the number of SAMPLES requested from time to time by EISAI. The PARTIES acknowledge and agree that such SAMPLES shall be provided by EISAI to PHYSICIANS free of charge in connection with EISAI’s promotion of the PRODUCTS. EISAI shall at all times ensure that its PRODUCT SAMPLE program complies will all APPLICABLE LAWS, including the Prescription Drug Marketing Act.

(o)        If EISAI believes that (i) the use of any MARKETING MATERIALS or (ii) compliance with the training materials provided pursuant to Section 2.4(a)(iii), in each case might potentially violate any APPLICABLE LAWS or EISAI’s ethical business practices and policies, EISAI promptly shall notify SALIX of such belief and the PARTIES promptly shall engage in good faith discussions through their respective legal departments to attempt to resolve such situation. Notwithstanding anything to the contrary in this Agreement, EISAI shall not be required to take, and shall not be penalized for not taking, any action that is not in compliance with EISAI’s ethical business practices and policies or that EISAI reasonably believes is not in compliance with APPLICABLE LAWS.

(p)        During the TERM and for a period of [*] thereafter, neither PARTY shall actively recruit or solicit any member of the other PARTY’s SALES FORCE or any other staff of the other PARTY engaged in the marketing, promotion or DETAILING of the PRODUCTS. For the avoidance of doubt, nothing shall limit a PARTY from engaging in general recruitment through advertisements or recruiting through “head-hunters” so long as the staff of the other PARTY is not specifically targeted in such recruitment effort.

2.2         Sales Steering Committee . SALIX and EISAI shall form a Sales Steering Committee (the “STEERING COMMITTEE”) which shall be comprised of four (4) representatives of each PARTY. The STEERING COMMITTEE shall have the responsibilities set forth below in this Section 2.2 and, in addition, shall review the SALES PLANS and the SALIX PLANS and provide a forum for the PARTIES to discuss the co-promotion of the PRODUCTS in the TERRITORY and issues related thereto.

(a)        The STEERING COMMITTEE shall meet at least two (2) times per CONTRACT YEAR, with a least one (1) of such meetings being in-person and with the location of such in-person meetings alternating between locations designated by EISAI and locations

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

designated by SALIX, with SALIX designating the first such meeting. Each PARTY shall bear its own expenses in connection with attending such meetings.

(b)        The STEERING COMMITTEE shall consider and recommend to SALIX in good faith (i) the quantity of MARKETING MATERIALS to be used in connection with DETAILING each CONTRACT YEAR and the allocation thereof between the PARTIES and (ii) the quantity of SAMPLES to be distributed in connection with DETAILING in such CONTRACT YEAR and the allocation thereof between the PARTIES, in each case taking into account the respective DETAILING efforts to be provided by the PARTIES; provided that SALIX shall provide to EISAI, without cost to EISAI, no less than an aggregate quantity of MARKETING MATERIALS and SAMPLES, in such allocations as shall be determined by EISAI from time to time, for use by EISAI in DETAILING during each CONTRACT YEAR with a value (determined in accordance with Section 2.3) of (i) $[*] for the CONTRACT YEAR ending December 31, 2007, (ii) $[*] for the CONTRACT YEAR ending December 31, 2008; (iii) $[*] for the CONTRACT YEAR ending December 31, 2009, and (iii) $[*] for each CONTRACT YEAR thereafter.

2.3         Additional Materials .

(a)        In the event that EISAI desires MARKETING MATERIALS in excess of its allocation pursuant to Section 2.2(b), SALIX shall sell all such materials EISAI desires to EISAI at SALIX’s actual cost for such materials.

(b)        In the event that EISAI desires SAMPLES in excess of its allocation pursuant to Section 2.2(b), SALIX shall sell such SAMPLES to EISAI at the COST OF GOODS SOLD for such SAMPLES, provided, however, SALIX shall be permitted to reasonably limit the number of SAMPLES sold to EISAI.

(c)        EISAI shall purchase an aggregate quantity of additional MARKETING MATERIALS and SAMPLES, in such allocations as shall be determined by EISAI from time to time, for use by EISAI in DETAILING with a value (determined in accordance with this Section 2.3) of no less than (i) $[*] for the CONTRACT YEAR ending December 31, 2008 and (ii) $[*] for the CONTRACT YEAR ending December 31, 2009.

(d)        SALIX promptly shall invoice EISAI for all SAMPLES and MARKETING MATERIALS sold pursuant to this Section 2.3, and EISAI shall pay each such invoice within [*] days after receipt thereof.

2.4         Sale, Manufacture and Regulatory Maintenance of the PRODUCTS .

(a)        SALIX shall have the sole right and obligation to:

(i)        Manufacture (or having manufactured by its licensees, vendors or AFFILIATES), package, label, ship, warehouse and distribute the PRODUCTS in the TERRITORY; provided, however, that SALIX shall maintain supply chain standards with redundant systems consistent with those in effect during the twelve (12) months preceding the date of this Agreement;

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

(ii)        Accept orders, invoice customers and collect receivables resulting from sales of the PRODUCTS in the TERRITORY;

(iii)        Provide to EISAI, at [*] expense, the PRODUCT training materials and services described on Appendix D;

(iv)        Provide customer service activities and medical information services (including response to medical inquiries);

(v)        Obtain and maintain all FDA and other regulatory or governmental approvals necessary to manufacture, market, promote, sell and distribute the PRODUCTS in the TERRITORY at all times during the TERM;

(vi)        prepare, submit and prosecute all applications, reports, submissions and responses to the FDA and other governmental agencies in connection with the PRODUCTS, including reporting adverse drug experiences and field alerts;

(vii)        Maintain the TRADEMARK registrations in good standing, defend any TRADEMARK challenge and use commercially reasonable efforts to prosecute any TRADEMARK infringement;

(viii)        Respond to all medical inquiries relating to the PRODUCTS; and

(ix)        Subject to clause (d) below, engage in all activities related to managed care (including contracting) concerning the PRODUCTS.

(b)        Any PRODUCT returned to EISAI shall be shipped by EISAI to SALIX, or its designee’s nearest facility, at SALIX’s expense.

(c)        All sales of the PRODUCTS in the TERRITORY shall be invoiced by SALIX.

(d)        All terms of sale, including policies concerning pricing, credit terms, cash discounts and returns and allowances shall be set by SALIX consistent with SALIX’s internal selling practices; provided, however, that the foregoing shall not permit SALIX to set any pricing terms with respect to SAMPLES sold to EISAI which are inconsistent with the terms of this Agreement.

(e)        All customer orders for the PRODUCTS shall be received and executed by SALIX or its designee. If EISAI receives any such orders it shall refer such to SALIX.

(f)        Each PARTY shall promptly notify the other PARTY of any and all governmental notices, actions, inquiries or requests for information relating to the PRODUCTS (including any warning letters). SALIX shall have the sole authority to, and shall, handle all governmental notices, actions, inquiries or requests for information about the PRODUCTS and EISAI shall, upon the reasonable request of SALIX and at SALIX’s expense, provide SALIX with assistance in responding to any such governmental notices, actions, inquiries or requests for

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

information; provided that EISAI may respond to any notice, action, inquiry or request for information from a governmental authority relating to the PRODUCTS or its performance of this Agreement which response, in the reasonable opinion of EISAI’s counsel, is required by law. EISAI shall, to the extent reasonably practicable, provide SALIX notice of such inquiry and consider in good faith any comments of SALIX with respect thereto prior to making such response.

(g)        Not later than sixty (60) days after the date of execution of this Agreement, the PARTIES shall enter into a Safety Data Exchange Agreement with respect to the PRODUCTS containing reasonable and customary terms and conditions. Prior to the date of execution of such Agreement, EISAI shall forward any adverse event reports or complaint reports with respect to the PRODUCTS to SALIX in time for SALIX to comply with regulatory reporting requirements in the TERRITORY.

(h)        EISAI shall refer all medical information requests to SALIX and shall provide assistance as reasonably requested by SALIX at SALIX’s expense in responding to such requests.

(i)        SALIX shall manufacture the PRODUCTS (including SAMPLES) or cause such manufacture in conformance with all APPLICABLE LAWS (including the Federal Food Drug and Cosmetic Act (“FD&C ACT”)) and the rules and regulations thereunder, including current Good Manufacturing Practices). SALIX warrants that at the time of delivery of all PRODUCT to a THIRD PARTY, such PRODUCT (i) will comply with the specifications therefor set forth in the New Drug Application for such PRODUCT approved by the FDA, (b) will have been manufactured in material compliance with all APPLICABLE LAWS, (c) will not be adulterated or misbranded within the meaning of the FD&C ACT, and (d) may be introduced into interstate commerce pursuant to the FD&C ACT.

(j)        SALIX shall furnish and make available, as reasonably requested by EISAI from time to time, all readily available information on the efficacy, clinical development and regulatory status of the PRODUCTS.

(k)        SALIX shall duly and punctually perform all of its obligations under and pursuant to the BIOREX AGREEMENT. SALIX promptly shall provide to EISAI each amendment or modification to the BIOREX AGREEMENT.

(l)        SALIX shall perform all of its obligations under this Section 2.4 in accordance with all APPLICABLE LAWS and the PhRMA Code on Interactions with Health Care Professionals .

2.5         Payment .

(a)        Within [*] days after the end of each CONTRACT QUARTER during the TERM, SALIX shall pay to EISAI an amount with respect to each PRESENTATION for such CONTRACT QUARTER equal to (i) [*] percent ([*]%), multiplied by (ii) the PROFIT PER PRESCRIPTION for such PRESENTATION for such CONTRACT QUARTER, multiplied by (iii) the positive difference, if any, between (A) CONVERTED PRESCRIPTIONS for such

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

PRESENTATION in the TERRITORY for such CONTRACT QUARTER, less (B) the product of (1) the BASELINE CONVERTED PRESCRIPTIONS for such CONTRACT QUARTER, multiplied by (2) the PRESENTATION RATIO for such PRESENTATION for such CONTRACT QUARTER. An example of this calculation is set forth in Appendix A-2.

(b)        Reduction of BASELINE CONVERTED PRESCRIPTIONS.

(i)        For any partial CONTRACT QUARTER (less than three (3) full months) during the TERM, the BASELINE CONVERTED PRESCRIPTIONS for such CONTRACT QUARTER shall be reduced by a percentage equal to [*].

(ii)        Within [*] days after the end of each month during the TERM, SALIX shall deliver to EISAI a report of [*], during such month. If EISAI reasonably believes that any such report indicates that [*], EISAI may, at any time in the then current CONTRACT QUARTER or the following CONTRACT QUARTER, request that SALIX [*]. [*], then the BASELINE CONVERTED PRESCRIPTIONS for such CONTRACT QUARTER shall be reduced by a percentage equal to [*].

(iii)        In the event that in a CONTRACT QUARTER SALIX fails to perform the number of DETAILS required pursuant to Section 2.1(d), then the BASELINE CONVERTED PRESCRIPTIONS for such CONTRACT QUARTER shall be reduced by a percentage equal to [*].

(iv)        In the event that in a CONTRACT YEAR SALIX fails to expend the amount of advertising, marketing and promotional expense for the PRODUCTS required pursuant to Section 2.1(e), then (A) the BASELINE CONVERTED PRESCRIPTIONS for each CONTRACT QUARTER in such CONTRACT YEAR shall be reduced by a percentage equal to [*] and (B) [*].

(v)        In the event that, as of the date of first sale of the GRANULATED MESALAMINE PRODUCT in the TERRITORY, EISAI is not promoting the GRANULATED MESALAMINE PRODUCT in the TERRITORY, the BASELINE CONVERTED PRESCRIPTIONS for each CONTRACT QUARTER shall be reduced by an amount equal to [*]. For example, [*].

(vi)        If, at any time during the TERM, WOLTERS KLUWER changes the methodology used to determine prescriptions for the PRODUCTS from that used by WOLTERS KLUWER on the date hereof (or if another source for determining prescriptions of the PRODUCTS is agreed to by the PARTIES), then the BASELINE CONVERTED PRESCRIPTIONS for each CONTRACT QUARTER after such change in methodology shall be adjusted to reflect such change in methodology such that the adjusted BASELINE CONVERTED PRESCRIPTIONS for future CONTRACT QUARTERS are set in a manner commensurate with the original BASELINE CONVERTED PRESCRIPTIONS as measured against the historical WOLTERS KLUWER data used to derive the original BASELINE CONVERTED PRESCRIPTIONS.

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

(vii)        For the avoidance of doubt, the provisions of this Section 2.5(b) are cumulative and the BASELINE CONVERTED PRESCRIPTIONS may be reduced any number of times with respect to any CONTRACT QUARTER hereunder. If more than one (1) reduction under this Section 2.5(b) applies to any CONTRACT QUARTER, such reductions shall be applied so as to achieve the lowest BASELINE CONVERTED PRESCRIPTIONS possible for such CONTRACT QUARTER.

(c)        In the event that WOLTERS KLUWER reports any changes or adjustments to any PHAST data with respect to any PRESENTATION previously reported by WOLTERS KLUWER (other than changes or adjustments resulting from a change in methodology as described in Section 2.5(b)(vi)), and such changed data (as adjusted in accordance with the procedures set forth on Appendix C) results in any inaccuracy in any amount previously paid by SALIX pursuant to Section 2.5(a), then the appropriate PARTY shall within [*] days of such determination pay to the other PARTY the amount necessary to correct such payment inaccuracy.

(d)        All sums due under this Agreement shall be payable in U.S. Dollars by federal funds wire transfer or by check as instructed in writing by the PARTY to receive such payment from time to time. Any payments or portions thereof due hereunder that are not paid on the date such payments are due under this Agreement shall bear interest at a rate equal to the lesser of the [*] as published by Citibank, N.A., New York, New York, or any successor thereto, at 12:01 a.m. on the first day of each CONTRACT QUARTER in which such payments are overdue, plus [*] percentage points, and the maximum rate permitted by applicable law, calculated on the number of days such payment is delinquent, compounded monthly.

2.6        Each PARTY shall keep complete and accurate records (financial and otherwise) pertaining to the performance of its obligations hereunder in sufficient detail to calculate accurately all amounts payable pursuant to this Agreement and to prepare all reports required hereunder, including, with respect to SALIX, records of gross sales of the PRODUCTS in the TERRITORY and all information necessary to determine NET SALES, COST OF GOODS SOLD, and BIOREX ROYALTIES. Such records (and all related work papers and other information and documents) shall be retained and made available for reasonable review by the other PARTY upon reasonable notice, during normal business hours, no more than once each CONTRACT YEAR and in the twelve (12)-month period following expiration or termination of this Agreement for the purposes of verifying compliance with this Agreement and the accuracy of all reports delivered and payments made hereunder. Each document from which the reports and statements are prepared pursuant to this Agreement shall be retained for three (3) years, and the right of inspection hereunder shall terminate with respect thereto at the end of such three (3) year period.

2.7        SALIX shall promptly notify EISAI in writing of any facts relating to the advisability of a recall, destruction, withholding from the market, market withdrawal or other similar market action relating to any PRODUCT (collectively, “RECALL(s)”). If at any time: (i) any governmental or regulatory authority issues a request, directive or order for a RECALL; (ii) a court of competent jurisdiction orders a RECALL; or (iii) SALIX determines, following

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

consultation with EISAI (except in emergency situations in which there is insufficient time for such consultation), that a RECALL is necessary or advisable, SALIX shall take all appropriate actions to effect the RECALL. EISAI shall provide SALIX with cooperation in connection with any RECALL as reasonably requested SALIX. SALIX shall bear all of the costs of any RECALL (including EISAI’s reasonable costs incurred in cooperating therewith) except to the extent that such RECALL results from a breach of this Agreement by EISAI, in which event EISAI shall bear the c