DISTRIBUTORSHIP AGREEMENT

CONFIDENTIAL TREATMENT REQUESTED
Confidential Portions Of This Agreement
Which Have Been Redacted Are Marked
With Brackets ("[***]"). The Omitted Material
Has Been Filed Separately With The Securities
And Exchange Commission.


DISTRIBUTORSHIP AGREEMENT


This Agreement is entered into and effective as of December 12, 2001 by and between Bayer AG, having its principal place of business at D-51368 Leverkusen, Federal Republic of Germany (hereinafter: "BAYER").


And


First Horizon Pharmaceutical Corporation having its principal place of business at 660 Hembree Parkway, Suite 106, Roswell, GA 30076, USA (hereinafter: "FIRST HORIZON).


WHEREAS, BAYER and Zeneca Limited, UK had concluded on a Distributorship
Agreement on different strengths of a drug containing the active
ingredient Nisoldipine (INN) marketed under BAYER`s trademark Sular(R)
in the United States of America;


WHEREAS, AstraZeneca Limited, UK, the legal successor of Zeneca Limited -
hereinafter referred to as AZ - has decided, and - subject to certain
conditions - BAYER has agreed thereto, to divest its business
concerning the PRODUCTS to FIRST HORIZON; and


WHEREAS, the cooperation of the parties under this Distributorship Agreement
("AGREEMENT") is established with the intent of governing the exclusive
marketing, distribution, use and sales of Nisoldipine (INN) coat-core
tablets in the United States of America by FIRST HORIZON.


Now, therefore, the parties hereto agree as follows:


ARTICLE 1
DEFINITIONS


Whenever used in this AGREEMENT the following words, when written in capitals, shall have the following meaning:


1.1 ACT shall mean the Federal Food Drug and Cosmetics Act of the United States of America, United States Code Title 21, Chapter I, as amended.


1.2 AE(s) (adverse event) shall mean any untoward medical occurrence in a patient or clinical investigation subject to whom a pharmaceutical product has been administered and which does not necessarily have to have a causal relationship with this treatment. AE can therefore be any unfavorable and unintended sign (including an abnormal laboratory finding, for example), symptom, or disease temporarily associated with the use of a medicinal product, whether or not considered related to the medicinal product. [ICH; Guideline on Clinical Safety Data Management: Definitions and Standards for Expedited Reporting March1 , 1995; Federal Register Vol. 60, No. 40, p. 11285; CPMP: Note for Guidance - "Clinical Safety Data Management) - Definitions and Standards for Expedited Reporting 111/3375/93 - Final.]


1.3 AFFILIATE shall mean any business entity which directly or indirectly controls, is controlled by, or is under common control with either PARTY to this Agreement. A business entity shall be deemed to "control" another business if it owns, directly or indirectly, in excess of fifty percent of the outstanding voting securities or capital stock of such business entity or other comparable equity or owner ship interest.


1.4 APPOINTMENT means BAYER'S appointment of FIRST HORIZON set forth in Section 2.1.


1.5 cGMP means United States of America current Good Manufacturing Practices as established from time to time by the FDA.


1.6 COMMERCIAL INFORMATION shall mean information relating to sales forecasts, PRODUCTS orders, actual NET SALES, NET SALES payments (as defined in Article 10.6, below), sample usage and similar information relating to sales and marketing of FINISHED PRODUCTS as may be exchanged pursuant to this AGREEMENT.


1.7 COMMERCIALLY REASONABLE EFFORTS shall mean efforts and resources normally used by a Party for a compound or product owned by it or to which it has rights, which is of similar market potential at a similar stage in its product life, taking into account the competitiveness of the marketplace, the proprietary position of the compound or product, the regulatory structure involved, the profitability of the applicable products, and other relevant factors.


1.8 DATE OF AGREEMENT shall mean the date first written above.


1.9 EFFECTIVE DATE means the date upon which the following conditions have been satisfied: (i) First Horizon (or an AFFILIATE thereof) consummates its acquisition of the assets of AZ relating to the PRODUCT and (ii) the respective GOVERNMENTAL AUTHORITIES of the TERRITORY, including the Federal Trade Commission and the FDA, have approved, to the extent required, the transactions contemplated hereby. The PARTIES agree to provide copies of these approvals to each other prior to the EFFECTIVE DATE and to inform AZ accordingly.


1.10 EURO shall mean the Euro, the official currency of the European Union.


1.11 FDA means the United States Food & Drug Administration.


1.12 FINISHED PRODUCTS shall mean the finished pharmaceutical preparations for human use in cardiovascular indications containing ready for sale PRODUCTS, as hereinafter defined and including samples thereof.


1.13 GOVERNMENTAL AUTHORITY shall mean (i) any domestic or foreign national, federal, provincial, state, municipal or other government or body, (ii) any international or multilateral body, (iii) any subdivision, ministry, department, secretariat, bureau, agency, commission, board, instrumentality or authority of any of the foregoing governments or bodies, (iv) any quasi-governmental or private body exercising any regulatory, expropriation or taxing authority under or for the account of any of the foregoing governments or bodies, or (v) any domestic, foreign, international, multilateral, or multinational judicial, quasi-judicial, arbitration or administrative court, grand jury, tribunal, commission, board or panel.


1.14 INN shall mean International Non-Proprietary Name.


1.15 LAWS shall mean (i) all constitutions, treaties, laws, statutes, codes, ordinances, orders, decrees, rules, regulations, and municipal by-laws, whether domestic, foreign or international; (ii) all judgments, orders,


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writs, injunctions, decisions, rulings, decrees, and awards of any GOVERNMENTAL AUTHORITY; and (iii) all policies, practices and guidelines of any GOVERNMENTAL AUTHORITY; in each case binding on or affecting the PARTY referred to in the context in which such word is used; and LAW shall mean any one of them.


1.16 NDA shall mean the New Drug Application filed with the FDA for FINISHED PRODUCTS, as defined in the ACT and the REGULATIONS.


1.17 NET SALES shall mean the gross sales of the FINISHED PRODUCTS in the TERRITORY by FIRST HORIZON, to unrelated third parties, including but not limited to, pharmaceutical wholesalers, pharmacies, hospitals, hospital GPOs, Health Maintenance Organizations, Preferred Provider Organization, Individual Practice Associations, Pharmacy Services Administrative Organizations, Pharmacy Benefit Companies, or dispensing physicians, less, as properly evidenced, any of the following charges or expenses that are incurred in connection with the sales of FINISHED PRODUCTS:


(I) any statutory or contractual liability for rebates to be paid to any governmental entity including, but not limited to, rebates to be paid pursuant to the Medicaid Rebate legislation and state and local government rebate programs;


(II) cash discounts made at the rate in effect at the time of sale;


(III) any adjustments accrued for: allowances or credits for returned FINISHED PRODUCTS, free FINISHED PRODUCTS, damaged FINISHED PRODUCTS, commercial rebates, or trade discounts, whether or not such commercial rebates, or trade discounts are paid directly to the customer and any adjustment granted for any brokerage fees paid;


(IV) the sum of two percent (2%) of gross sales to reflect the cost of handling, distribution including freight, and insurance;


(V) any sales, use, excise or similar taxes or duties included in the gross sales price involved.


1.18 PARTY (PARTIES) shall mean BAYER and/or FIRST HORIZON


1.19 PATENTS means those patents and patent applications covering PRODUCTS and FINISHED PRODUCTS in the TERRITORY including, but not limited to, those listed in Appendix 2, and any and all reissues, reexaminations, extensions, substitutions, confirmations, registrations, revalidations, additions, continuations, continuations-in-part or divisions of or to any of the aforesaid patents or patent applications.


1.20 PRODUCTS shall mean the pharmaceutical preparation in bulk tablets containing Nisoldipine (INN) as the sole active ingredient as specified in Appendix 1 hereto.


1.21 PURCHASED AMOUNT means the amount of PRODUCTS purchased by FIRST HORIZON from BAYER or a third party appointed by or affiliated with BAYER.


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1.22 REGULATIONS shall mean regulations and guidelines adopted or promulgated pursuant to the ACT.


1.23 QUALITY AGREEMENT shall mean the Quality Assurance Agreement to be entered into between BAYER and FIRST HORIZON prior to the EFFECTIVE DATE and made an integral part of this AGREEMENT.


1.24 SERIOUS ADVERSE EVENT (SAE) shall mean any adverse drug experience occurring at any dose that results in any of the following outcomes: Death, a life-threatening adverse drug experience, inpatient hospitalization or prolongation of existing hospitalization, a persistent or significant disability/incapacity, or a congenital anomaly/birth defect. Important medical events that may not result in death, be life-threatening, or require hospitalization may be considered a serious adverse drug experience when, based upon appropriate medical judgment, they may jeopardize the patient or subject and may require medical or surgical intervention to prevent one of the outcomes listed in this definition. Examples of such medical events include allergic bronchospasm requiring intensive treatment in an emergency room or at home, blood dyscrasias or convulsions that do not result in inpatient hospitalization, or the development of drug dependency or drug abuse [21 CFR Parts 20, 310, 312, 314, and 600-Expedited Safety Reporting Requirements for Human Drug and Biological Products; Federal Register Vol. 62, No. 194, pp. 52237-52253; Tuesday, October 7, 1997.]


1.25 SPECIFICATIONS shall mean the specifications for PRODUCTS attached hereto as Exhibit 1.


1.26 TECHNICAL INFORMATION means proprietary materials, documents, data and other scientific, medical and technical information, including all pre-clinical and clinical testing and studies, including, but not limited to, all data or information, whether or not published, regarding procedures, tests, dosage, criteria for patient selection and safety and efficacy and other study protocols, validation reports now owned or hereinafter acquired by BAYER, or which BAYER does not own, but is entitled to transfer, or thereafter acquired with the right to transfer by either PARTY and related to Nisoldipine, PRODUCTS and FINISHED PRODUCTS to the extent relevant for the execution and performance of the AGREEMENT. TECHNICAL INFORMATION shall comprise, but shall not be limited to documentation and data required for the quality control of FINISHED PRODUCT, as contemplated in the QUALITY AGREEMENT and the NDA including SPECIFICATIONS and Packaging Information for FINISHED PRODUCTS. TECHNICAL INFORMATION shall not include pricing, marketing or promotional information developed by FIRST HORIZON except as may be required pursuant to Article 10.


1.27 TERRITORY shall mean the United States of America and its territories and possessions, including Puerto Rico.


1.28 $US means United States Dollars, the official currency of the United States of America.


ARTICLE 2
APPOINTMENT


2.1 BAYER hereby appoints FIRST HORIZON exclusively to have PRODUCTS packaged and to sell and distribute FINISHED PRODUCTS in the TERRITORY under the provisions, terms and conditions


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stipulated in this AGREEMENT and with the reservations made hereinafter. FIRST HORIZON accepts the appointment and undertakes to safeguard BAYER's interests in every reasonable respect and, in particular, to use COMMERCIALLY REASONABLE EFFORTS to promote the sale of FINISHED PRODUCTS in the TERRITORY. BAYER during the term of this AGREEMENT shall not directly or indirectly sell or cause any third party to sell FINISHED PRODUCTS or PRODUCTS in the TERRITORY.


FIRST HORIZON undertakes to promote the FINISHED PRODUCTS with COMMERCIALLY REASONABLE EFFORTS in a priority consistent with FIRST HORIZON's practice for products coming from FIRST HORIZON'S own research and development.


2.2 BAYER hereby grants to FIRST HORIZON the exclusive right and license, including the right to grant sublicenses, in the TERRITORY, to use, have used, package, and have packaged, sell, and have sold PRODUCTS and FINISHED PRODUCTS under the PATENTS and the TECHNICAL INFORMATION. In accordance with Article 2.1 above, FIRST HORIZON shall promote, sell and distribute the FINISHED PRODUCTS in the TERRITORY as a distributor, namely in its own name and on its own account.


2.3 In consideration for the rights and the APPOINTMENT granted under this Article 2, FIRST HORIZON shall pay to BAYER, within thirty (30) days after EFFECTIVE DATE, the sum of Ten Millions Dollars ($US 10,000,000) (the "Lump Sum Payment").


2.4 Following the initial transfer of TECHNICAL INFORMATION to FIRST HORIZON from BAYER and/or AZ, the PARTIES shall thereafter during the term of this Agreement mutually exchange available TECHNICAL INFORMATION.


ARTICLE 3
SALE OF OTHER PRODUCTS


3.1 While this Agreement is in effect, the representation and sale of any pharmaceutical product containing Nisoldipine other than PRODUCTS or FINISHED PRODUCTS pursuant to this AGREEMENT may be undertaken by FIRST HORIZON in the TERRITORY only after having obtained BAYER's prior written approval in each individual case, which consent shall not unreasonably be withheld or delayed.


ARTICLE 4
NDA/TECHNICAL INFORMATION


4.1 During the term of this AGREEMENT each PARTY will update the TECHNICAL INFORMATION as soon as such update is available to the respective PARTY. The PARTIES shall discuss the legal consequences of such updates and their impact to the NDA.


4.2 BAYER and FIRST HORIZON shall in advance communicate with each other in respect of future clinical studies relating solely to the PRODUCT or FINISHED PRODUCT in the TERRITORY. BAYER and FIRST HORIZON shall have the right to comment on such future clinical studies of the other PARTY.


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4.3 Within thirty (30) days after the DATE OF AGREEMENT the parties shall each appoint a medical affairs liaison ("the MEDICAL AFFAIRS LIAISON") to communicate with each other regarding information required to be furnished by each party pursuant to this Article 4.


ARTICLE 5
REPORTING OF ADVERSE EVENTS/RECALL


5.1 Adverse Event Reporting


Each PARTY shall ensure that, in the marketing of the PRODUCTS and the FINISHED PRODUCTS all AE's and SAE's are recorded, investigated, summarized and reviewed.


With regard to information required pursuant to this Article, each PARTY shall report to:


for BAYER: Bayer AG
Pharmaceuticals Business Group
Global Drug Safety (GDS)
Tel.: + 49-202-36-8034
Fax: + 49-202-36-8228
E-mail: gds.ae-managementteam@bayer-ag.de


for FIRST HORIZON: First Horizon Pharmaceutical Corporation
660 Hembree Parkway, Suite 106
Roswell, GA 30076, USA
Attn: Director of Regulatory Affairs
Tel.: +1-770-442-9707
Fax: +1-770-442-9594


In order that each PARTY may be fully informed of the hereinabove referred experiences, each PARTY shall report hereunder to the other PARTY all SAEs and AEs occurred anywhere in the world. Either PARTY may change its information for notice under this Section by written notice to the other PARTY.


5.1.1 Serious Adverse Events (SAEs)


BAYER and FIRST HORIZON shall use the CIOMS-I form or Form FDA 3500A as standard for expedited SAE reporting. Each PARTY shall use all reasonable efforts to exchange SAE information by e-mail.


Clinical Trials


All SAEs shall be reported within such timeframe as to allow BAYER or FIRST HORIZON sufficient time to evaluate, process and comply with worldwide regulatory requirements; FIRST HORIZON shall report within two (2) calendar days for fatal or life-threatening AE reports (initial and follow-up) and within four (4) calendar days for all other serious AEs of receipt of the information by FIRST HORIZON or any agent of FIRST HORIZON to BAYER. BAYER will send the assessed report from these events to FIRST HORIZON within day six (6) from clock start for fatal or life-threatening AEs and on day thirteen (13) for all other SAEs for notification to the FDA of the TERRITORY. All other SAEs from in or outside the TERRITORY will be notified by BAYER to FIRST HORIZON for information only.


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Spontaneous reports


All SAEs shall be reported within such timeframe as to allow BAYER or FIRST HORIZON sufficient time to evaluate, process and comply with worldwide regulatory requirements; FIRST HORIZON shall report usually within four (4) calendar days for SAE reports (initial and follow-up) of receipt of the information by FIRST HORIZON or any agent of FIRST HORIZON to BAYER. BAYER will send the assessed report to FIRST HORIZON on day thirteen (13) for notification to the National Health Authorities. All other SAEs from in or outside the TERRITORY will be notified by BAYER to FIRST HORIZON for information only.


5.1.2 Non-Serious Adverse Events


Clinical Trials


Non-serious AEs are sent after termination of the clinical trial within the clinical trial report without delay, that is, immediately after completion of the clinical trial report.


Spontaneous Reports


Non-serious AEs from spontaneous source are sent as separate line-listing within the respective "Periodic Safety Update Report" (see 5.1.3.).


5.1.3 Periodic Safety Update Report (PSUR) and Safety Requests from
Health Authority


PSURs


BAYER and FIRST HORIZON shall use the ICH format as standard for the compilation of PSURs [ICH Topic E 2 C; Clinical Safety Data Management: Periodic Safety Update Reports for Marketed Drugs; Step 4, Consensus Guideline, 6 November 1996; Note for Guidance on Clinical Safety Data Management: Periodic Safety Update Reports for Marketed Drugs (CPMP/ICH/288/95); Date for coming into operation: 18 June 1997]. BAYER and FIRST HORIZON shall provide each other with copies of all PSURs at time of submission. During the preparation of the report, if significant safety issues arise, BAYER and FIRST HORIZON will telephone each other in order to discuss these issues. The agreed reporting intervals for PSURs are periodically according to the legal requirements by BAYER to submit a PSUR in the TERRITORY and to ensure that FIRST HORIZON will be able to fulfill the legal requirements for the NDA renewals in the TERRITORY in a timely manner.


Safety Requests from Health Authorities


BAYER and FIRST HORIZON shall immediately provide each other with copies of the Health Authority requests. Proposed answers will be exchanged between PARTIES before submission. The answer will be submitted by the PARTY who initially received the request from the Health Authority.


5.1.4 Complaints and Regulatory Actions


Each PARTY shall promptly notify the other PARTY of any complaints received by it in sufficient detail and in sufficient time to allow such PARTY to comply with any and all applicable laws and regulations imposed upon it. Without prejudice of the provisions of Article 4 hereinunder, BAYER shall also advise FIRST HORIZON of any regulatory action (e.g. proposed labeling or other registrational dossier changes, and recalls) which would affect any PRODUCT and/or FINISHED PRODUCT in any country. These procedures may be modified from time to time by written agreement of the PARTIES.


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5.1.5 FIRST HORIZON and BAYER agree to consult in general no less frequently than annually on the need for changes in the particular appearance in labeling of packaging and containers of FINISHED PRODUCTS or in the FINISHED PRODUCT information supplied to end users, the medical profession or patients.


In addition to the annual review an emergency review can be implemented at any time at the request of FIRST HORIZON or BAYER. FIRST HORIZON and BAYER agree to negotiate in good faith to their mutual benefit with respect to such changes and FIRST HORIZON shall promptly, in advance, communicate to BAYER the basis for any proposed changes to the local label in the TERRITORY and BAYER shall have the right to comment on any such changes in advance. In addition, BAYER shall be able to propose changes to the local label in the TERRITORY for FIRST HORIZON's consideration.


5.1.6 BAYER and FIRST HORIZON shall keep each other informed in advance of any scheduled meetings or discussions with regulatory authorities that involve product safety. Each PARTY shall cooperate with the other by providing, promptly upon request, the appropriate statistics concerning FINISHED PRODUCT use so as to permit calculations of increased frequency of AEs as required by actual regulations and laws.


5.1.7 Articles 5.1.1 through 5.1.7 may be modified through written agreement of the PARTIES to this AGREEMENT as necessary to assure that both PARTIES are able to comply with worldwide regulations. Safety information involving other formulations of Nisoldipine marketed by BAYER or agents of BAYER anywhere in the world, e.g., immediate release shall be provided by BAYER if required by the ACT and REGULATIONS (e.g. 21 CFR, part 312 and 314.80).


5.2 Product Recall


5.2.1 In the event that either PARTY decides for a medical reason at its free discretion or the FDA requires a recall, or takes any other action, in connection with FINISHED PRODUCTS promoted by FIRST HORIZON, FIRST HORIZON shall effect such recall. However, if a recall of FINISHED PRODUCTS is to be effected upon the discretion of either PARTY, the PARTY desiring to initiate the recall shall thoroughly consult with the other PARTY prior to the recall, to the extent reasonably possible under the circumstances.


5.2.2 In the event that any FINISHED PRODUCTS are recalled as a result of an event that is attributable to an act or omission of BAYER, BAYER shall bear all costs and expenses of such recall, including, without limitation, expenses or obligations to third parties, the cost of notifying end users and costs associated with shipment of any recalled FINISHED PRODUCTS from end users and destruction of such FINISHED PRODUCTS.


5.2.3 In the event that any FINISHED PRODUCTS are recalled as a result of an event that is attributable to an act or omission of FIRST HORIZON, then FIRST HORIZON shall bear all costs and expenses of such recall, including, without limitation, expenses or obligations to third parties, the cost of notifying end users and costs associated with shipment of any recalled FINISHED PRODUCTS from end users and destruction of such FINISHED PRODUCTS.


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5.2.4 In the event a recall of FINISHED PRODUCTS is necessary for reasons attributable in part to each of the PARTIES, then FIRST HORIZON and BAYER shall be responsible for a proportionate share of such recall costs to be agreed between FIRST HORIZON and BAYER.


5.2.5 In the event of a recall of FINISHED PRODUCTS, each PARTY shall cooperate in a manner which is appropriate and reasonable under the circumstances. Each PARTY shall notify the other as soon as possible but in no event later than (a) forty-eight (48) hours after receipt of any contract or communication from the FDA or other governmental or regulatory authority in the Territory and (b) five (5) business days after receipt of any contract or communication with any other third party in the Territory which in any way suggests the need for a recall of the Finished Product or otherwise calls into question the quality or safety of the Finished Product.


5.3 FIRST HORIZON shall maintain complete and accurate records for such periods as may be required by the ACT and the REGULATIONS, but in no event for less than three (3) years for all FINISHED PRODUCTS sold by it, including distribution data related to sales of FINISHED PRODUCTS to end users by lot number; provided that in satisfying its obligations under this Section 5.3, FIRST HORIZON may rely on the records of BAYER, as manufacturer, and other third parties to the extent such reliance is reasonable.


5.4 FIRST HORIZON shall be entitled to discontinue its distribution and sale of FINISHED PRODUCTS or to take other reasonable action, in case that new toxicity and/or safety findings or side effects of PRODUCTS or FINISHED PRODUCTS shall occur that are so severe as to warrant such discontinuation or other action. If FIRST HORIZON deems it necessary to stop marketing FINISHED PRODUCTS in the TERRITORY because of the reasons mentioned above, the PARTIES will analyze the situation and will try to find an amicable solution. If, however, BAYER does not reasonably agree with FIRST HORIZON's decision to discontinue permanently the distribution of FINISHED PRODUCTS, FIRST HORIZON, if requested by BAYER, will use COMMERCIALLY REASONABLE EFFORTS to sell its rights under this AGREEMENT including the NDA in the TERRITORY without any charge to BAYER. BAYER will indemnify FIRST HORIZON for all loss, damage, cost or expense reasonably incurred by FIRST HORIZON, including reasonable attorneys' fees, arising out of or relating to PRODUCTS or FINISHED PRODUCTS manufactured, marketed or sold by BAYER or a partner of BAYER in the TERRITORY after receipt of FIRST HORIZON's notice of discontinuation.


5.5 Except as may be expressly provided in this Agreement including without limitation any indemnification obligations hereunder, no claim for compensation, losses or damages including incidental or consequential damages may be made between the PARTIES hereto under this AGREEMENT as a result of any act arising under this Article 5.


ARTICLE 6
SUPPLY AND PURCHASE


6.1 FIRST HORIZON shall purchase from BAYER and BAYER shall sell to FIRST HORIZON FIRST HORIZON's requirements according to FIRST HORIZON's orders of PRODUCTS. ...