Commercial Services Agreement

EXHIBIT 10.5


COMMERCIAL SERVICES AGREEMENT


This Commercial Services Agreement ("AGREEMENT"), dated as of April 1, 2004, is between Cardinal Health PTS, LLC, a Delaware limited liability company ("CARDINAL") and Adams Laboratories, Inc., a Texas corporation d/b/a Adams Respiratory Therapeutics ("ADAMS").


RECITALS


WHEREAS, Cardinal and Adams are parties to that certain Asset Purchase Agreement (the "PURCHASE AGREEMENT") dated March 24, 2004, pursuant to which Adams agreed to sell and Cardinal agreed to purchase certain assets on the terms and conditions set forth therein; and


WHEREAS, in connection with the Purchase Agreement, Cardinal and Adams are entering into a Supply Agreement (the "SUPPLY AGREEMENT"), pursuant to which Cardinal is agreeing to manufacture and sell and Adams is agreeing to purchase certain products on the terms and conditions set forth therein; and


WHEREAS, as a material inducement for Cardinal to consummate the transactions contemplated by the Purchase Agreement and to commit to perform the services contemplated by the Supply Agreement, Adams has agreed that Cardinal shall be Adams' preferred provider of marketing, sales, logistics, development, analytical and other services and as a material inducement for Adams to consummate the transactions contemplated by the Purchase Agreement and to commit to purchase products as contemplated by the Supply Agreement, Cardinal has agreed to provide favorable pricing to Adams for certain services, in each case on the terms and conditions set forth in this Agreement.


AGREEMENT


NOW, THEREFORE, in consideration of the premises and the promises set forth in this Agreement, the parties agree as follows:


1. Definitions.


(a) "ADAMS PRODUCT" means all products for which Adams now has or during the term of this Agreement obtains the rights to market or sell including without limitation products currently marketed under the Mucinex(R) brand, the ALLERx(R) brand, the Aquatab(R) brand or any replacement or successor brand of such brands and also includes any experimental (pre-commercial) product.


(b) "AFFILIATE" as applied to Cardinal or Adams shall mean any legal entity other than Cardinal or Adams, as the case may be, in whatever country organized, controlling, controlled by or under common control with Cardinal or Adams. An entity is deemed to be in control of another entity (controlled entity) if the former owns directly or indirectly at least fifty percent (50%), or the maximum percentage allowed by law in the country of the controlled entity, of the outstanding voting equity securities of the controlled entity (or other equity or ownership interest if such controlled entity is other than a corporation) or otherwise has the power to direct or cause the direction of the management of the controlled entity.


(c) "COMMERCIAL OUTSOURCE ACTIVITY" means marketing, sales, logistics, development, analytical and other services that support or are intended to support the


commercialization of Adams Products if such services (a) are services of the type that Cardinal (together with its Affiliates) possesses (or can reasonably be expected to possess within the applicable timeframe) the means to provide and (b) are not Excluded Activities. Notwithstanding anything contained herein, Commercial Outsource Activities do not include development or analytical services provided by Cardinal with respect to Mucinex(R) or any Mucinex(R) line extension pursuant to the Transition Services Agreement between Adams and Cardinal dated as of the date of this Agreement. Without limiting the generality of the foregoing, a "Commercial Outsource Activity" includes: (i) product formulation; (ii) product development (including activities to develop an enhanced, next-generation or line extension of an Adams Product); (iii) manufacture of samples or products for clinical testing or commercial sale; (iv) packaging of samples or products for clinical testing or commercial sale; (v) supply or distribution of samples or products for clinical testing or commercial sale; (vi) product sales and marketing services; (vii) funding or other risk-sharing arrangement with respect to the conduct of clinical trials of an Adams Product; and (viii) other goods or services related to the development, manufacture or distribution of pharmaceutical or health care products of a type regularly provided by Cardinal or its Affiliates.


(d) "EXCLUDED ACTIVITY" means services relating to an Adams Product that are performed by employees of Adams in the ordinary course of business or product sales and marketing services set forth in Section 1(c)(vi) performed by a Major Pharmaceutical Enterprise that acquires exclusive righ ...