Non-exclusive Distribution, Dtd 9/13/94

Exhibit 10.31


NON EXCLUSIVE DISTRIBUTION AGREEMENT
EXCLUSIVE SUPPLY AGREEMENT


This Agreement, entered into as of the 13th day of September, 1994, by and between MOVA PHARMACEUTICAL CORPORATION ("MOVA"), a Puerto Rico corporation, having offices in Caguas, Puerto Rico, and PAR PHARMACEUTICAL, INC., a New York corporation, having offices in One Ram Ridge Road, Spring Valley, New York 10977 ("PAR").


WITNESSETH:


WHEREAS, MOVA manufactures and sells pharmaceutical products and has represented that it has developed a generic version of _____________ (defined hereinafter as the "Product"); and


WHEREAS, PAR distributes a line of generic versions of branded pharmaceutical products such as the Product; and


WHEREAS, PAR would like to distribute the Product as manufactured by MOVA and MOVA is willing to supply the Product to PAR for such purpose, all upon the terms and conditions of this Agreement;


NOW, THEREFORE, in consideration of the foregoing premises, which are hereby incorporated as substantive part of this Agreement, and in consideration of the performance of the mutual covenants and promises herein contained, MOVA and PAR have agreed as follows:


ARTICLE 1 - DEFINITIONS
-----------------------


1.1 The Product. The "Product" shall mean ______________(300mg., 400mg.,
----------- and 800mg.) and any future dosage strength for which the FDA approves an Abbreviated New Drug Application with an AB rating when compared with the corresponding strength of _______________.


1.2 The ANDA. The "ANDA" shall mean the Abbreviated New Drug Application
-------- for the Product which has been submitted to the FDA by MOVA, including any amendments or supplements thereto.


1.3 The FDA. The "FDA" shall mean the United States Food and Drug
------- Administration.


1.4 Patents. The "Patents" shall mean any issued patents or patent rights
------- held by third parties which would be infringed by the manufacture, use or sale of the Product to be sold by MOVA to PAR pursuant to the terms of this Agreement.


1.5 Patents Expiration Day. The "Patents Expiration Day" shall mean the
---------------------- day on which all of the Patents have expired or are no longer in effect.


1.6 Availability Date. The "Availability Date" shall mean the date on
----------------- which MOVA is first legally permitted and able to ship commercial quantities of the Product in the interstate commerce of the USA.


1.7 Approval Date. The "Approval Date" shall mean the date on which MOVA
------------- is in receipt of all required regulatory approvals for the manufacture and sale of the Product.


1.8 Purchase Term. The "Purchase Term" shall mean the five (5) year
------------- period that begins on the date the first order for Product is shipped after the Approval Date.


1.9 Average Selling Price. The "Average Selling Price" shall mean the
--------------------- actual Net Sales of Product by shelf keeping unit sold by PAR to unrelated third parties per calendar quarter divided by the total number of units


of each shelf keeping unit of Product sold in the said calendar quarter.


1.10 Net Sales. "Net Sales" shall mean the gross sales for each shelf
--------- keeping unit of Product less the following:


(i) trade, quantity or cash discounts, if any, allowed
or paid;


(ii) chargebacks, shelf stock adjustments, returns,
credits or allowances, if any, given or made on
account of Products previously delivered; and


(iii) Federal, State or local government rebates whether
in effect now or enacted at any time during the
term of this Agreement.


1.11 Net Profit. "Net Profit" shall mean the Net Sales for each shelf
---------- keeping unit of Product less the Base Price as specified in Exhibit A hereof.


1.12 Purchase Price. The "Purchase Price" shall mean the base price as
-------------- specified in Exhibit A hereof, plus a percent of Actual Net Profits per shelf keeping unit to be determined as follows:


(i) __% in the event the Availability Date occurs by
Patents Expiration Day;


(ii) __% in the event the Availability Date occurs
within the first sixty (60) days following the
Patents Expiration Day;

(iii) __% in the event the Availability Date occurs
during the second sixty (60) days following the
Patents Expiration Day; or

(iv) __% in the event the Availability Date occurs
more than one hundred twenty (120) days
following the Patents Expiration Day.


1.13 Base Price. "The Base Price" shall mean the base price per shelf
---------- keeping unit as specified in Exhibit A hereof. The Base Price set forth in Exhibit A shall remain firm through December 31, 1994. The Base Price will be adjusted on January 1st. every year, commencing on January 1, 1995 for the annual change in the CPI for the previous year.


1.14 USA. The "USA" shall mean the United States of America and the
--- District of Columbia, its territories and possessions, excluding the Commonwealth of Puerto Rico and the U.S. Virgin Islands.


1.16 Affiliate. "Affiliate" shall mean, with respect to either party, all
--------- corporations or other business entities


which, directly or indirectly, are controlled by, control or are under the common control with that party. For this purpose, the meaning of the word "control" shall include, but not be limited to, ownership of more than fifty percent (50%) of the voting shares or interest of such corporation or other business entity.


1.17 CPI. "CPI" shall mean the Consumer Price Index published by the
--- Puerto Rico Department of Labor.


1.18 Competitive Product. "Competitive Product" shall mean versions of the
------------------- Product which are manufactured by other pharmaceutical companies for which the FDA approves an Abbreviated New Drug Application with an AB rating when compared with the corresponding strength of ________________ tablets.


1.19 Active Ingredient. "Active Ingredient" shall mean __________ as defined
----------------- in the USP.


ARTICLE 2 - SUPPLY
------------------


2.1 Purchase and Sale. Subject to the terms and conditions of this
----------------- Agreement, MOVA shall supply and PAR shall purchase from MOVA substantially all of PAR's requirements for the Product in the USA from the Approval Date and throughout the Purchase Term. PAR shall not purchase the Product or any product having the same active ingredient, strength and indication as the Product, from any party other than MOVA after the Approval Date and throughout the Purchase Term except that PAR may purchase the Product or any such product from any party pursuant to Paragraph 2.4 and Article 14 hereunder. It is understood and agreed that PAR may purchase the Product from third parties before the Approval Date, including accepting shipments of the Product made after the Approval Date pursuant to orders submitted by PAR before the Approval Date. PAR shall have the non-exclusive right to sell, market and distribute the Product in the USA. It is understood and agreed further that PAR may, but is not obligated to, purchase the Product for sale in countries outside of the USA. Notwithstanding the foregoing purchase obligations, if as a result of a merger, acquisition or other similar extraordinary corporate transaction PAR becomes an Affiliate of a corporate entity (a "Merger Party") who at the time of such transaction either manufactures or has filed an ANDA for the manufacture of a Competitive Product, then PAR may purchase such Competitive Product from the Merger Party one (1) year after giving MOVA written notice of such intent, and provided further that, within ninety (90) days from the date of the merger, acquisition or other similar extraordinary transaction, PAR notifies MOVA of the occurrence of such transaction and of its intent of purchasing the Competitive Product from the Merger Party. At the time of such notice, the restrictions contained in Paragraph 2.7 hereof, with respect to sales by MOVA to certain parties, shall no longer be applicable.


2.2 Forecasts. As early as reasonably possible (but no later than thirty
--------- (30) days prior to the date which MOVA notifies PAR should be the Availability Date) and thirty (30) days prior to every calendar quarter thereafter, PAR shall give to MOVA a written forecast of the quantities of the Product, including quantities for each strength and unit size of the Product, and delivery dates that PAR anticipates it will order from MOVA during the two (2) calendar quarters following the date of the written forecast. Such forecast shall not create a binding obligation on the part of either MOVA or PAR, except as provided in Paragraph 2.3 hereof. However, PAR shall use all reasonable efforts to make each forecast as accurate as possible. PAR shall promptly advise MOVA of any significant changes in its estimated forecast of Product.


2.3 Orders. PAR shall submit written purchase orders to MOVA for the
------ quantities of the Product, including the quantity of each strength and unit size and delivery dates, which PAR desires to purchase under this Agreement. For the first three (3) month period of each forecast given by PAR pursuant to Paragraph 2.2 hereof, PAR shall submit purchase orders to MOVA for at least the greater of: seventy-five percent (75%) of the forecasted quantities for that period on the then current forecast or fifty percent (50%) of the forecasted quantities for that period as shown on the immediately preceding forecast. If applicable, each purchase order shall specify the country in which the Product is to be resold by PAR. Regardless of the quantities ordered, MOVA shall use all reasonable efforts to deliver the full quantities of the Product (each strength and unit size) ordered by PAR. Deliveries of the Product ordered by PAR to the destination designated by PAR will be made within sixty (60) days following the date on which PAR submitted the purchase order unless a later delivery date has been specified by PAR.


2.4 Inability to Supply. Within thirty (30) days following its receipt of
------------------- each forecast according to Paragraph 2.2 hereof, MOVA shall advise PAR in writing if it is unable to supply the entire quantity forecasted. PAR shall have the right to purchase from third parties such quantities of the Product for which MOVA shall have advised that it will be unable to supply, for as long as MOVA's inability to supply continues.


2.5 Shipments. Delivery shall be f.o.b. Caguas, Puerto Rico, freight and
--------- insurance prepaid by MOVA. Product shall be shipped by MOVA according to PAR's instructions, to PAR's facility at One Ram Ridge Road, Spring Valley, NY 10977; provided, however, that should PAR instruct MOVA to ship to
-------- ------- another location, MOVA shall do so and PAR shall reimburse for any incremental costs involved.


2.6 Purchase Price and Payment. MOVA shall invoice PAR the Base Price for
--------------------------- all shelf keeping units in each shipment of Product delivered to PAR. Such amount shall be payable sixty (60) days from receipt of the invoice therefor. At the end of each calendar quarter, PAR shall determine and advise MOVA of the Actual Net Profits obtained from the sale of the Product by PAR during such calendar quarter. Within twenty (20) days after the end of each such quarter, PAR shall pay to MOVA, the difference between the Base Price and the Purchase Price times the actual number of shelf keeping units actually sold during said calendar quarter. Payment will be made only with respect to Product actually shipped by PAR during such calendar quarter. In addition, within thirty (30) days after the end of each calendar quarter, PAR shall provide MOVA with a report of the number of units of Product shipped and returned, gross sales of Product and Net Sales of Product during such calendar quarter and the number of units of Product inventory remaining under PAR's control at the end of such calendar quarter.


2.7 Sales to certain customers. Throughout the term of this Agreement,
-------------------------- MOVA agrees not to knowingly sell the Product to the customers listed in Exhibit B hereof. MOVA shall not knowingly sell the Product to any third party to whom PAR shall have sold the Product under PAR's label within the sixty (60) day period immediately following the Availability Date, provided
-------- however, that such restriction shall end one (1) year after the end of the - ...