10-Q

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

	Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended September 30, 2001
	Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from            to

Commission File Number 0-24424

CIMA LABS INC.
(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)	41-1569769 (I.R.S. Employer Identification Number)
10000 Valley View Road, Eden Prairie, MN 55344-9361 (Address of principal executive offices and zip code)	(952) 947-8700 (Registrant’s telephone number, including area code)

         Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days.

                  Yes     No  

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practical date.

Common Stock, $.01 par value	14,729,938
(Class)	(Outstanding at November 5, 2001)

INDEX

CIMA LABS INC.

	Page No.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Balance Sheets – September 30, 2001 and December 31, 2000.		3
Statements of Operations — Three and nine months ended September 30, 2001 and September 30, 2000.		4
Statements of Cash Flows — Nine months ended September 30, 2001 and September 30, 2000.		5
Notes to Financial Statements.		6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.		10
Item 3. Quantitative and Qualitative Disclosures about Market Risks.		24
PART II. OTHER INFORMATION
Items 1, 2, 3, 4 and 5 have been omitted since all items are inapplicable or answers negative.
Item 6. Exhibits and Reports on Form 8-K		25
Signature		26

CIMA and the CIMA logo are trademarks of CIMA. All other trademarks used in this report are the property of their respective owners. We have registered “CIMA®,” “CIMA LABS INC.®,” and “OraSolv®” as trademarks with the U.S. Patent and Trademark Office. We also use the trademarks “OraSolvSR™,” “DuraSolv™,” “PakSolv™,” “OraVescent™SL/BL” and “OraVescent™SS.” “Triaminic®” and “Softchews®” are trademarks of Novartis. “Zomig®,” “Zomig-ZMT™” and “Rapimelt™” are trademarks of AstraZeneca. “Remeron®” and “SolTab™” are trademarks of Organon. “Tempra®” is a registered trademark of a Canadian affiliate of Bristol-Myers Squibb. “FirsTabs™” is a trademark of Bristol-Myers Squibb. “NuLev™” is a trademark of Schwarz Pharma.

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TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION
	Item 1. Financial Statements
		Balance Sheets
		Statements of Operations
		Statements of Cash Flows
		Notes to Financial Statements
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 3. Quantitative and Qualitative Disclosures about Market Risks
PART II — OTHER INFORMATION
	Item 6. Exhibits and Reports on Form 8-K
SIGNATURE
Supply Agreement, dated 8/31/01
Supply Agreement, dated 1/1/01
License Agreement #1, executed 9/2/01

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

Balance Sheets
CIMA LABS INC.

		September 30,			December 31,
		2001			2000
		(Unaudited)			(See note)
Assets
Current assets:
	Cash and cash equivalents	$	19,567,075		$	91,587,716
	Available-for-sale securities		54,408,214			10,425,456
	Trade accounts receivable, net		7,785,268			7,679,617
	Interest receivable		2,325,748			970,997
	Inventories, net		2,963,854			1,381,476
	Prepaid expenses		236,196			226,908
Total current assets			87,286,355			112,272,170
Other assets:
	Available-for-sale securities		92,970,423			61,149,019
	All other, net		4,729,766			299,033
Total other assets			97,700,189			61,448,052
Property and equipment:
	Property, plant and equipment		35,493,678			23,268,688
	Accumulated depreciation		(9,290,310	)		(7,527,218	)
			26,203,368			15,741,470
Total assets		$	211,189,912		$	189,461,692
Liabilities and stockholders’ equity
Current liabilities:
	Accounts payable	$	1,823,366		$	976,576
	Accrued expenses		1,847,554			1,484,931
	Deferred revenue		95,833			75,000
Total current liabilities			3,766,753			2,536,507
Stockholders’ equity:
	Convertible preferred stock, $.01 par value; 5,000,000 shares authorized; - -0- shares issued and outstanding		—			—
	Common Stock, $.01 par value; 60,000,000 shares authorized; 14,722,342 and 14,358,370 shares issued and outstanding		147,223			143,584
	Additional paid-in capital		235,605,048			228,631,594
	Accumulated deficit		(31,478,652	)		(41,990,951	)
	Accumulated other comprehensive income		3,149,540			140,958
Total stockholders’ equity			207,423,159			186,925,185
Total liabilities and stockholders’ equity		$	211,189,912		$	189,461,692

Note: The balance sheet at December 31, 2000 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

See accompanying notes.

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Statements of Operations
CIMA LABS INC.
(Unaudited)

			For the Three Months Ended						For the Nine Months Ended
			September 30,			September 30,			September 30,			September 30,
			2001			2000			2001			2000
Revenues:
	Net sales		$	5,376,046		$	3,195,075		$	13,273,155		$	9,291,430
	Product development fees and licensing			1,971,880			1,983,676			5,883,197			6,374,889
	Royalties			1,469,448			187,500			3,675,859			1,166,500
				8,817,374			5,366,251			22,832,211			16,832,819
Operating expenses:
	Cost of goods sold			4,929,970			2,692,746			11,648,178			9,417,960
	Research and product development			1,550,867			1,267,697			4,400,916			3,484,806
	Selling, general and administrative			1,218,385			996,202			3,646,034			2,845,044
				7,699,222			4,956,645			19,695,128			15,747,810
Operating income				1,118,152			409,606			3,137,083			1,085,009
Other income:
	Investment income			2,686,047			220,360			7,573,770			502,906
	Other income (expense)			(828	)		(6,982	)		(2,074	)		(22,824	)
				2,685,219			213,378			7,571,696			480,082
Income before provision for income taxes				3,803,371			622,984			10,708,779			1,565,091
Provision for income taxes (benefit)				(38,439	)		—			196,482			—
Income before cumulative effect of a change in accounting principle				3,841,810			622,984			10,512,297			1,565,091
Cumulative effect of change in accounting principle				—			—			—			(799,337	)
Net income			$	3,841,810		$	622,984		$	10,512,297		$	765,754
Net income per share:
	Basic
		Income per share before cumulative effect of a change in accounting principle	$	.26		$	.06		$	.72		$	.15
		Loss per share from the cumulative effect of a change in accounting principle		.00			.00			.00			(.08	)
Net income per basic share			$	.26		$	.06		$	.72		$	.07
	Diluted
		Income per share before cumulative effect of a change in accounting principle	$	.24		$	.05		$	.68		$	.13
		Loss per share from the cumulative effect of a change in accounting principle		.00			.00			.00			(.06	)
Net income per diluted share			$	.24		$	.05		$	.68		$	.07
Weighted average number of shares:
	Basic			14,715,046			10,895,509			14,564,167			10,551,628
	Diluted			15,699,443			12,194,910			15,556,711			11,682,029

See accompanying notes.

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Statements of Cash Flows
CIMA LABS INC.

(Unaudited)

				For the Nine Months Ended
				September 30,
				2001			2000
Operating activities:
Net income				$	10,512,297		$	765,754
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
		Depreciation and amortization			1,857,910			1,253,517
		Income tax benefit on stock options exercised			4,100,000			—
		Deferred income taxes			(4,300,000	)		—
		Gain on sale of investment securities			(578,491	)		—
		Loss on impairment of assets			—			400,000
		Cumulative effect of a change in accounting principle			—			799,337
		Changes in operating assets and liabilities:
			Accounts receivable and other assets		(119,115	)		(3,389,001	)
			Interest receivable		(1,354,751	)		(3,836	)
			Inventories		(1,582,378	)		1,184,531
			Accounts payable		846,790			(1,519,120	)
			Accrued expenses and other		362,625			(407,122	)
			Deferred revenue		20,833			(574,337	)
Net cash provided by (used in) operating activities					9,765,720			(1,490,277	)
Investing activities:
	Purchases of property, plant and equipment				(12,224,989	)		(5,714,848	)
	Patents and trademarks				(221,376	)		(44,819	)
	Purchases of available-for-sale securities				(127,798,338	)		(10,292,220	)
	Sales of available-for-sale securities				55,581,249			5,919,222
Net cash used in investing activities					(84,663,454	)		(10,132,665	)
Financing activities:
	Stock option exercise proceeds				2,877,093			1,032,805
	Net proceeds from stock offerings				—			19,400,000
	Security deposits on leases				—			150,103
	Notes payable				—			(3,500,000	)
	Payments on capital lease obligations				—			(52,161	)
Net cash provided by financing activities					2,877,093			17,030,747
Increase (decrease) in cash and cash equivalents					(72,020,641	)		5,407,805
Cash and cash equivalents at beginning of period					91,587,716			2,480,698
Cash and cash equivalents at end of period				$	19,567,075		$	7,888,503

See accompanying notes.

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CIMA LABS INC.
Notes to Financial Statements
(Unaudited)

1. Basis of Presentation

CIMA LABS INC. (the “Company”), a Delaware corporation, develops and manufactures fast-dissolve and enhanced-absorption oral drug delivery systems. OraSolv and DuraSolv, the Company’s leading proprietary fast-dissolve technologies, are oral dosage forms incorporating taste-masked active drug ingredients into tablets, which dissolve quickly in the mouth without chewing or the need for water. The Company develops applications for technologies that are licensed to pharmaceutical company partners. The Company currently manufactures and packages five pharmaceutical brands incorporating its proprietary fast-dissolve technologies. Revenues are comprised of three components: net sales of products it manufactures; product development fees and licensing revenues for development activities conducted through collaborative agreements with pharmaceutical companies; and royalties on the sales of products sold by pharmaceutical companies under license from the Company.

The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. These financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring accruals, which are considered necessary for fair presentation have been included. Operating results for the three and nine month periods ended September 30, 2001 are not necessarily indicative of the results that may be expected for the year ended December 31, 2001. For further information, you should refer to the audited financial statements and accompanying notes contained in our Annual Report on Form 10-K for the year ended December 31, 2000.

2. Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires us to make estimates and assumptions that may affect the amounts we report in our financial statements and accompanying notes. Actual results could differ from those estimates.

3. Cash Equivalents and Investments

The Company’s investments in available-for-sale securities are carried at fair value, with unrealized gains and losses included in accumulated other comprehensive income as a separate component of stockholders’ equity. As of September 30, 2001, the amortized cost and estimated market value of available-for-sale securities, all of which have contractual maturities of three years or less, are as follows:

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				Gross		Gross		Estimated
		Amortized		Unrealized		Unrealized		Market
		Cost		Gains		Losses		Value
As of September 30, 2001:
	Asset backed securities	$	27,708,884	$	596,128	$	—	$	28,305,012
	Corporate bonds and notes		70,264,268		2,069,005		—		72,333,273
	Euro notes		18,337,905		466,020		—		18,803,925
	Floating rate notes		27,918,040		20,457		2,070		27,936,427
Totals – September 30, 2001		$	144,229,097	$	3,151,610	$	2,070	$	147,378,637
As of December 31, 2000:
	Commercial paper	$	4,449,373	$	—	$	813	$	4,448,560
	Asset backed securities		23,217,006		71,690		—		23,288,696
	Corporate bonds and notes		35,445,721		158,688		10,541		35,593,868
	Euro notes		5,338,075		—		77,860		5,260,215
	Floating rate notes		1,998,791		—		31		1,998,760
	U.S. government securities		984,551		—		175		984,376
Totals – December 31, 2000		$	71,433,517	$	230,378	$	89,420	$	71,574,475

4. Income Per Share

Income per share for the three and nine months ended September 30, 2001 and 2000 are summarized in the following table:

		Three Months Ended				Nine Months Ended
		September 30,		September 30,		September 30,		September 30,
		2001		2000		2001		2000
Numerator:
	Net income	$	3,841,810	$	622,984	$	10,512,297	$	765,754
Denominator:
	Denominator for basic earnings per share – weighted average shares outstanding		14,715,046		10,895,509		14,564,167		10,551,628
	Effect of dilutive stock options		984,397		1,299,401		992,544		1,130,401
Denominator for diluted earnings per share – weighted average shares outstanding			15,699,443		12,194,910		15,556,711		11,682,029
Basic earnings per share		$	.26	$	.06	$	.72	$	.07
Diluted earnings per share		$	.24	$	.05	$	.68	$	.07

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5. Comprehensive Income

Comprehensive income consists of net income and net unrealized gains on available-for-sale securities.

	Three Months Ended				Nine Months Ended
	September 30,		September 30,		September 30,		September 30,
	2001		2000		2001		2000
Net income	$	3,841,810	$	622,984	$	10,512,297	$	765,754
Unrealized gain on available-for-sale securities		1,341,554		—		3,008,582		—
Total comprehensive income	$	5,183,364	$	622,984	$	13,520,879	$	765,754

6. Inventories

Inventories are stated at the lower of cost (first in, first out) or fair market value.

	September 30, 2001		December 31, 2000
Raw materials	$	2,628,959	$	1,370,822
Work in process		19,482		10,654
Finished products		315,413		—
	$	2,963,854	$	1,381,476

7. Tax Expense

Provisions for income taxes for the three and nine month periods ended September 30, 2001, reflect provisions for non-U.S. withholding taxes on the Company’s royalty income paid from sources outside the U.S. and state franchise taxes. At December 31, 2000, the Company had a valuation reserve of $21.4 million and a net deferred tax asset of $21.4 million. As of September 30, 2001, the Company reduced its valuation reserve by $4.3 million to reflect its current estimate of realizable deferred tax assets related to net operating loss carryforwards.

8. Segment Information – Major Customers

The Company operates within a single segment: the development and manufacture of fast-dissolve and enhanced-absorption oral drug delivery systems. Revenues are comprised of three components: net sales of products utilizing the Company’s proprietary fast-dissolve technologies; product development fees and licensing revenues for development activities conducted by the Company through collaborative agreements with pharmaceutical companies; and royalties on the sales of products manufactured by the Company, which are sold by pharmaceutical companies under licenses from the Company. Less than 10 percent of the Company’s revenues are earned from activities conducted outside the United States.

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Revenues as a percentage of total revenues from major customers are as follows:

	For the Three Months Ended						For The Nine Months Ended
	September 30,			September 30,			September 30,			September 30,
	2001			2000			2001			2000
American Home Products		—	%		3	%		1	%		10	%
AstraZeneca		20			24			25			15
Bristol-Myers Squibb		2			4			1			3
Organon		20			40			25			26
Novartis		41			22			32			44
Schwarz Pharma		5			2			7			—
Other		12			5			9			2
Total		100	%		100	%		100	%		100	%

Trade accounts receivable at September 30, 2001, of approximately $7,785,000 were comprised primarily of the following customers: Organon (20%), Novartis (34%), AstraZeneca (22%), and Schwarz Pharma (6%).

9. Reclassifications

Certain prior period balances have been reclassified in order to conform with the presentation for the three and nine months ended September 30, 2001. These reclassifications have no impact on the net income or shareholders’ equity as previously reported.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

We make many statements in this Quarterly Report on Form 10-Q under the captions Management’s Discussion and Analysis of Financial Condition and Results of Operations, and Factors That Could Affect Future Results and elsewhere, which are forward-looking and are not based on historical facts. These statements relate to our future plans, objectives, expectations and intentions. We may identify these statements by the use of words such as believe, expect, will, anticipate, intend, plan and other similar expressions. These forward-looking statements involve a number of risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those we discuss in Factors That Could Affect Future Results and elsewhere in this report. These forward-looking statements speak only as of the date of this report, and we caution you not to rely on these statements without considering the risks and uncertainties associated with these statements and our business that are addressed in this report.

These forward-looking statements include statements relating to the potential capacity of our second production line; expected growth in product sales in the fourth quarter of 2001; the expected construction of a second manufacturing facility; future expense levels; the timing of availability of products; expected demand for products using our technologies and the adequacy of our production capacity; and future research and development activities relating to our current or new technologies. We are not under any duty to update any of the forward-looking statements after the date of this report to conform these statements to actual results, except as required by law.

Overview

We develop and manufacture pharmaceutical products based on our proprietary OraSolv and DuraSolv technologies. We have agreements with several pharmaceutical companies regarding a variety of potential products, with an emphasis on prescription products. We currently manufacture five commercial pharmaceutical brands using our fast-dissolve technologies. These products include Triaminic Softchews for Novartis, Tempra FirsTabs for Bristol-Meyers Squibb, Remeron SolTab for Organon, NuLev for Schwarz Pharma and Zomig-ZMT and Zomig Rapimelt for AstraZeneca. We operate within a single segment: the development and manufacture of fast dissolve and enhanced-absorption oral drug delivery systems. Our revenues are comprised of three components: net sales of products utilizing our proprietary fast-dissolve technologies; product development fees and licensing revenues for development activities we conduct through collaborative agreements with pharmaceutical companies; and royalties on the sales of products we manufacture, which are sold by pharmaceutical companies under licenses from us. In addition, we are currently developing other drug delivery technologies.

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Revenues from product sales and from royalties will fluctuate from quarter to quarter and from year to year depending on, among other factors, demand for our products by patients, new product introductions, the seasonal nature of some of our products and pharmaceutical company ordering patterns. Revenues from product development fees and licensing revenue will fluctuate from quarter to quarter and from year to year depending on, among other factors, the number of new collaborative agreements that we enter into; the number of product development milestones we achieve under collaborative agreements, including making submissions to, and obtaining approvals from, the FDA for products in development; and the level of our development activity conducted for pharmaceutical companies under collaborative agreements.

During the first nine months of 2001, we completed the installation of a second production line, which we expect to more than double our manufacturing capacity. However, our new production line will not be fully operational until validation for each of our products is completed, which we expect to occur during the fourth quarter of 2001.

Results of Operations

Three and Nine Month Periods Ended September 30, 2001 and 2000

Operating Revenues. Total operating revenues for the third quarter ended September 30, 2001, were $8.8 million, an increase of $3.5 million, or 64%, over the same period in 2000, and for the first nine months of 2001, total operating revenues were $22.8 million, an increase of $6.0 million, or 36%, over same period in 2000. Operating revenues from AstraZeneca, Organon and Novartis, our three largest pharmaceutical company partners, together represented 81% and 82% of our total operating revenues in the third quarter and first nine months of 2001, respectively, compared to 86% and 85% for the corresponding periods in 2000. The increases in total operating revenue were due to higher manufacturing volumes of products we sell to, and royalties paid by, our pharmaceutical company partners, partially offset by lower product development fees and licensing revenue.

Revenues from net sales of products we manufacture for the third quarter of 2001 were $5.4 million, an increase of $2.2 million, or 68%, over the same period in 2000, and for the first nine months of 2001, net sales of products we manufacture were $13.3 million, an increase of $4.0 million, or 43%, over the same period in 2000. The third quarter increase was due primarily to increased shipments of Triaminic, Zomig-ZMT, Zomig Rapimelt and NuLev that offset decreased Remeron SolTab shipments. The decline in Remeron SolTab shipments primarily resulted from the completion of high-volume, pre-launch shipments made during the third quarter of 2000 for the Remeron SolTab launch. The increase for first nine months of this year was due primarily to increased shipments of Remeron SolTab, NuLev and Zomig-ZMT, which were introduced in the U.S. during the first half of 2001, as well as international shipments of Zomig Rapimelt. For the first nine months of 2001, 50% of our product sales came from branded prescription products compared to 28% in the corresponding period in 2000. We expect the percentage of product sales derived from branded prescription products to remain at or near 50% during the rest of 2001.

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Revenues from product development fees and licensing were $2.0 million for both the third quarter of 2001 and 2000, and for the first nine months of 2001, revenues from product development fees and licensing were $5.9 million, a decrease of $500,000, or 8%, from the same period in 2000. The decrease for the nine months ended September 30, 2001, was primarily due to lower amortization of deferred revenue for up-front license fees, partially offset by increased revenue from product development fees. For the nine month period ended September 30, 2001, revenues from product development fees and licensing included deferred revenue amortization of $229,000 compared to $1.2 million for the same period in 2000. Revenues from product development fees and licensing in subsequent quarters will depend on our success in signing new license and development agreements with pharmaceutical companies. We expect fourth quarter product development fees and licensing revenues to be higher due to an increased backlog of partner-funded development activities.

Revenues from royalties were $1.5 million in the third quarter of 2001, an increase of $1.3 million, or 684%, over the same period in 2000, and for the first nine months of 2001, royalty revenue was $3.7 million, an increase of $2.5 million, or 215%, over the same period in 2000. The royalty revenue increases were primarily due to strong European sales by AstraZeneca of Zomig Rapimelt, as well as U.S. launch sales of Zomig-ZMT, Remeron SolTab and NuLev. In the fourth quarter of 2001, we expect royalty revenue to exceed the third quarter 2001 levels due to AstraZeneca’s U.S. launch of 5.0 milligram strength Zomig-ZMT tablets and from the expected market growth of Zomig Rapimelt in Europe and Remeron SolTab in the U.S.

Cost of Goods Sold. Cost of goods sold increased to $4.9 million, or 83%, in the third quarter of 2001 from $2.7 million in the third quarter of 2000, and cost of goods sold in the first nine months of 2001 increased to $11.6 million, or 24%, from $9.4 million over the same period in 2000. The third quarter increase was principally due to higher production volumes over the same period in 2000 and a shift in our product mix to products that cost more to produce. Cost of goods sold increased for the first nine months of 2001 due mainly to higher production volumes over the same period in 2000.

Gross profits on product sales were $446,000 or 8% of net product sales in the third quarter of 2001 compared to $502,000 or 16% in last year’s third quarter, and were $1.6 million or 12% of net product sales in the first nine months of 2001, compared to a negative gross profit and gross profit margin in the same period in 2000. The decrease in this year’s third quarter gross profits and gross profit margin from last year’s third quarter was due mainly to decreased Remeron SolTab shipments and a shift to lower margin over-the-counter products. Over-the-counter products accounted for 64% of total product sales for the third quarter of 2001, compared to 31% for the third quarter of 2000. The improvement in gross profits and gross profit margin for the first nine months of 2001 was principally due to significant increases in production volumes of higher margin branded prescription products.

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Research and Product Development Expenses. Research and product development expenses were $1.6 million in the third quarter of 2001, an increase of $283,000, or 22%, over the same period in 2000, and for the first nine months of 2001, these expenses were $4.4 million, an increase of $916,000, or 26%, over the same period in 2000. The increases were due primarily to increased development activity for Organon, AstraZeneca, and partner-funded feasibility projects for potential new products, as well as additional development activities related to our OraVescent technology. In the fourth quarter of 2001, we expect research and product development expenses to increase modestly due to increased internal development of proprietary products.

Selling, General and Administrative Expenses. Selling, general and administrative expenses were $1.2 million in the third quarter of 2001, an increase of $222,000, or 22%, over the same period in 2000, and for the first three quarters of 2001, these expenses were $3.6 million, an increase of $801,000, or 28%, over the same period in 2000. The increases were due primarily to costs associated with increased professional staffing and infrastructure improvements. In the fourth quarter of 2001, we expect selling, general and administrative expenses to increase moderately as we continue to make investments in infrastructure to support our anticipated growth.

Other Income (Expense). Other income was $2.7 million in the third quarter of 2001, an increase of $2.5 million over the same period in 2000, and for the first three quarters of 2001, other income was $7.6 million, an increase of $7.1 million, over the same period in 2000. Other income consists primarily of investment income comprised of interest earned on securities and gains realized on the sale of securities. The increases in other income were primarily due to higher levels of cash available for investment as a result of the completion of a private placement of equity in March 2000 and a public equity offering in November 2000. In the fourth quarter of 2001, we expect other income to be at or near third quarter levels.

Liquidity and Capital Resources

We have financed our operations to date primarily through private and public sales of equity securities, other income, and from operating revenues consisting of product sales, product development fees and licensing revenues, and royalties.

Working capital decreased from $109.7 million at December 31, 2000, to $83.5 million at September 30, 2001. The $26.2 million decrease in working capital was due primarily to the purchase of $31.8 million in available-for-sale securities that mature in more than one year and, as a result, are classified as other assets. In addition, we spent approximately $12.2 million making capital improvements to our manufacturing facility and purchasing our Brooklyn Park facility. The decrease in working capital was partially offset by increases in cash from operations and cash proceeds from the exercise of stock options. We invest excess cash in interest-bearing money market accounts and investment grade securities.

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We plan to spend approximately $15.0 to $20.0 million over the next twelve months to expand our Brooklyn Park research and development center and to complete other capital improvements. We are considering purchasing our Eden Prairie facility, which we currently lease. We also expect to fund the development of additional proprietary products using our OraSolv and DuraSolv technologies and may fund potential acquisitions of new technologies. In September of 2001, we announced a stock repurchase program that, depending on market conditions and other factors, may result in the use of up to an additional $20.0 million.

We believe that our cash and cash equivalents and marketable securities, together with expected revenues from operations, will be sufficient to meet our anticipated capital requirements for the foreseeable future. However, we may require additional funds to support our working capital requirements or for other purposes and may seek to raise such additional funds through public or private equity financings or from other sources. We cannot be certain that additional financing will be available on terms favorable to us, or at all, or that any additional financing will not be dilutive.

Factors That Could Affect Future Results

Certain statements made in this Quarterly Report on Form 10-Q are forward-looking statements based on our current expectations, assumptions, estimates and projections about our business and our industry. These forward-looking statements involve risks and uncertainties. Our business, financial condition and results of operations could differ materially from those anticipated in these forward-looking statements as a result of certain factors, as more fully described below and elsewhere in this Form 10-Q. You should consider carefully the risks and uncertainties described below, which are not the only ones facing our company. Additional risks and uncertainties also may impair our business operations.

The Loss Of One Of Our Major Customers Could Reduce Our Revenues Significantly.

Revenues from AstraZeneca, Organon and Novartis together represented approximately 82% of our total operating revenues for both the year ended December 31, 2000, and for the nine months ended September 30, 2001. The loss of any one of these customers could cause our revenues to decrease significantly, resulting in losses from our operations. If we cannot broaden our customer base, we will continue to depend on a few customers for the majority of our revenues. We may be unable to negotiate favorable business terms with customers that represent a significant portion of our revenues. If we cannot, our revenues and gross profits may not grow as expected and may be insufficient to allow us to achieve sustained profitability.

We Rely On Third Parties To Market, Distribute And Sell The Products Incorporating Our Drug Delivery Technologies And Those Third Parties May Not Perform.

Our pharmaceutical company partners market and sell the products we develop and manufacture. If one or more of our pharmaceutical company partners fails to pursue the marketing of our products as planned, our revenues and gross profits may not reach our expectations, or may decline. We often cannot control the timing and other aspects of the development of products incorporating our technologies because our pharmaceutical company partners may have priorities that differ from ours. Therefore, our commercialization of products under development may be

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delayed unexpectedly. Because we incorporate our drug delivery technologies into the oral dosage forms of products marketed and sold by our pharmaceutical company partners, we do not have a direct marketing channel to consumers for our drug delivery technologies. The marketing organizations of our pharmaceutical company partners may be unsuccessful, or they may assign a low level of priority to the marketing of our products that is different from our priorities. Further, they may discontinue marketing the products that incorporate our drug delivery technologies. If marketing efforts for our products are not successful, our revenues may fail to grow as expected or may decline.

If We Do Not Enter Into Additional Collaborative Agreements with Pharmaceutical Companies, We May Not Be Able To Achieve Sustained Profitability.

We depend upon collaborative agreements with pharmaceutical companies to develop, test and obtain regulatory approval for, and commercialize oral dosage forms of, active pharmaceutical ingredients using our drug delivery technologies. The number of products that we successfully develop under these collaborative agreements will affect our revenues. If we do not enter into additional agreements in the future, or if our current or future agreements do not result in successful marketing of our products, our revenues and gross profits may be insufficient to allow us to achieve sustained profitability. We currently have collaborative agreements with American Home Products, AstraZeneca, Bristol-Myers Squibb, Organon, Novartis and Schwarz Pharma.

We face additional risks related to our collaborative agreements, including the risks that:

• any existing or future collaborative agreements may not result in additional commercial products;

• additional commercial products that we may develop may not be successful;

• we may not be able to meet the milestones established in our current or future collaborative agreements; and

• we may not be able to successfully develop new drug delivery technologies that will be attractive in the future to potential pharmaceutical company partners.

If We Cannot Increase Our Production Capacity, We May Be Unable To Meet Expected Demand For Our Products And We May Lose Revenues.

We must increase our production capacity to meet expected demand for our products. We currently have one production line and a second line is being developed. The second production line has been installed and the required validation procedures have been completed for most, but not all, products. If we are unable to increase our production capacity as scheduled, we may be unable to meet expected demand for our products, we may lose revenues and we may not be able to maintain our relationships with our pharmaceutical company partners. Production lines in the pharmaceutical industry generally take 16 to 24 months to complete due to the long lead times required for precision production equipment to be manufactured and installed, as well as the required testing and validation process that must be completed once the equipment is installed. We may not be able to increase our production capacity quickly enough to meet the requirements of our pharmaceutical company partners with whom we are developing our drug delivery technologies.

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If We Do Not Properly Manage Our Growth, We May Be Unable To Sustain The Level Of Revenues We Have Attained Or Effectively Pursue Additional Business Opportunities.

Our operating revenues increased 79% and 36% for the year ended December 31, 2000, and for the nine month period ended September 30, 2001, respectively, placing significant strain on our management, administrative and operational resources. If we do not properly manage the growth we have recently experienced and expect in the future, our revenues may decline or we may be unable to pursue sources of additional revenues. To properly manage our growth, we must, among other things, implement additional (and improve existing) administrative, financial and operational systems, procedures and controls on a timely basis. We will also need to expand our finance, administrative and operations staff. We may not be able to complete the improvements to our systems, procedures and controls necessary to support our future operations in a timely manner. We may not be able to hire, train, integrate, retain, motivate and manage required personnel and may not be able to successfully identify, manage and pursue existing and potential market opportunities. Improving our systems and increasing our staff will increase our operating expenses. If we fail to generate additional revenue in excess of increased operating expenses in any fiscal period we may incur losses, or our losses may increase in that period.

If We Cannot Attract And Retain Key Personnel On Which We Depend, We May Not Be Able To Execute Our Business Plan As Anticipated.

During our operating history, we have assigned many key responsibilities within our company to a relatively small number of individuals. If we lose the services of John Siebert, our Chief Executive Officer, John Hontz, our Chief Operating Officer, or David Feste, our Chief Financial Officer, we may have difficulty executing our business plan in the manner we currently anticipate. The competition for qualified personnel is intense and the loss of services of key personnel could adversely affect our business. We have employment agreements that run to January 1, 2004 with Dr. Siebert and Mr. Feste and an employment agreement that runs to September 1, 2004 with Dr. Hontz. We do not maintain key person life insurance for any of our key personnel.

We May Experience Significant Delays In Expected Product Releases While Our Pharmaceutical Company Partners Seek Regulatory Approvals For The Products We Develop And, If They Are Not Successful In Obtaining The Approvals, We May Be Unable To Achieve Our Anticipated Revenues And Profits.

The federal government, principally the U.S. Food and Drug Administration, and state and local government agencies regulate all new pharmaceutical products, including our existing products and those under development. Our pharmaceutical company partners may experience significant delays in expected product releases while attempting to obtain regulatory approval for the products we develop. If they are not successful, our revenues and profitability may decline. We cannot control, and our pharmaceutical company partners cannot control, the timing of regulatory approval for the products we develop.

Applicants for FDA approval often must submit extensive clinical data and supporting information to the FDA. Varying interpretations of the data obtained from pre-clinical and clinical testing could delay, limit or prevent regulatory approval of a drug product. Changes in FDA approval policy during the development period, or changes in regulatory review for each

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submitted new drug application, also may cause delays or rejection of an approval. Even if the FDA approves a product, the approval may limit the uses or “indications” for which a product may be marketed, or may require further studies. The FDA also can withdraw product clearances and approvals for failure to comply with regulatory requirements or if unforeseen problems follow initial marketing.

Manufacturers of drugs also must comply with applicable good manufacturing practices requirements. If we cannot comply with applicable good manufacturing practices, we may be required to suspend the production and sale of our products, which would reduce our revenues and gross profits. We may not be able to comply with the applicable good manufacturing practices and other FDA regulatory requirements for manufacturing as we expand our manufacturing operations.

If our products are marketed in foreign jurisdictions, we, and the pharmaceutical company partners with whom we are developing our technologies, must obtain required regulatory approvals from foreign regulatory agencies and comply with extensive regulations regarding safety and quality. If approvals to market our products are delayed, if we fail to receive these approvals, or if we lose previously received approvals, our revenues would be reduced. We may be required to incur significant costs in obtaining or maintaining foreign regulatory approvals.

Our Commercial Products Are Subject To Continuing Regulations And We May Be Subject To Adverse Consequences If We Fail To Comply With Applicable Regulations.

Even if our products receive regulatory approval, either in the U.S. or internationally, we will continue to be subject to extensive regulatory requirements. These regulations are wide-ranging and govern, among other things:

• adverse drug experience reporting regulations;

• product promotion;

• product manufacturing, including good manufacturing practice requirements; and

• product changes or modifications.

If we fail to comply or maintain compliance with these laws and regulations, we may be fined or barred from selling our products. If the FDA determines that we are not complying with the law, it can:

• issue warning letters;

• impose fines;

• seize products or order recalls;

• issue injunctions to stop future sales of products;

• refuse to permit products to be imported into, or exported out of, the U.S.;

• totally or partially suspend our production;

• withdraw previously approved marketing applications; and

• initiate criminal prosecutions.

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We Have A Single Manufacturing Facility And We May Lose Revenues And Be Unable To Maintain Our Relationships With Our Pharmaceutical Company Partners If We Lose Its Production Capacity.

We manufacture all of the products that we produce on our existing production lines in our Eden Prairie facility. If our existing production lines or facility becomes incapable of manufacturing products for any reason, we may be unable to meet production requirements, we may lose revenues and we may not be able to maintain our relationships with our pharmaceutical company partners. Without our existing production lines, we would have no other means of manufacturing products incorporating our drug delivery technologies until we were able to restore the manufacturing capability at our facility or develop an alternative manufacturing facility. Although we carry business interruption insurance to cover lost revenues and profits in an amount we consider adequate, this insurance does not cover all possible situations. In addition, our business interruption insurance would not compensate us for the loss of opportunity and potential adverse impact on relations with our existing pharmaceutical company partners resulting from our inability to produce products for them. Although we currently plan to build a second manufacturing facility to reduce this risk, we may encounter unforeseen difficulties or delays in doing so.

We Rely On Single Sources For Some Of Our Raw Materials And We May Lose Revenues And Be Unable To Maintain Our Relationships With Our Pharmaceutical Company Partners If Those Materials Were Not Available.

We rely on single suppliers for some of our raw materials and packaging supplies. If these raw materials or packaging supplies were no longer available we may be unable to meet production requirements, we may lose revenues and we may not be able to maintain our relationships with our pharmaceutical company partners. Without adequate supplies of raw materials or packaging supplies, our manufacturing operations may be interrupted until another supplier could be identified, its products validated and trading terms with it negotiated. We may not be able to identify an alternative supplier in a timely manner, or at all. Furthermore, we may not be able to negotiate favorable terms with an alternative supplier. Any disruptions in our manufacturing operations from the loss of a supplier could potentially damage our relations with our pharmaceutical company partners.

If We Cannot Develop Additional Products, Our Ability To Increase Our Revenues Would Be Limited.

We intend to continue to enhance our current technologies and pursue additional proprietary drug delivery technologies. If we are unable to do so, we may be unable to achieve our objectives of revenue growth and sustained profitability. Even if enhanced or additional technologies appear promising during various stages of development, we may not be able to develop commercial applications for them because:

• the potential technologies may fail clinical studies;

• we may not find a pharmaceutical company to adopt the technologies;

• it may be difficult to apply the technologies on a commercial scale; or

• the technologies may be uneconomical to market.

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If We Cannot Keep Pace With The Rapid Technological Change And Meet The Intense Competition In Our Industry, We May Lose Business.

Our success depends, in part, on maintaining a competitive position in the development of products and technologies in a rapidly evolving field. If we cannot maintain competitive products and technologies, our current and potential pharmaceutical company partners may choose to adopt the drug delivery technologies of our competitors. Fast dissolve tablet technologies that compete with our OraSolv and DuraSolv technologies include the Zydis technology developed by R.P. Scherer Corporation, a wholly-owned subsidiary of Cardinal Health, Inc., the WOWTab technology developed by Yamanouchi Shaklee Pharmaceuticals, the Flashtab technology developed by Laboratories Prographarm and the FlashDose technology developed by Fuisz Technologies Ltd., a wholly-owned subsidiary of Biovail Corporation. We also compete generally with other drug delivery, biotechnology and pharmaceutical companies engaged in the development of alternative drug delivery technologies or new drug research and testing. Many of these competitors have substantially greater financial, technological, manufacturing, marketing, managerial and research and development resources and experience than we do and represent significant competition for us.

Our competitors may succeed in developing competing technologies or obtaining governmental approval for products before us. The products of our competitors may gain market acceptance more rapidly than our products. Developments by competitors may render our products, or potential products, noncompetitive or obsolete.

If We Cannot Adequately Protect Our Technology And Proprietary Information, We May Be Unable To Sustain A Competitive Advantage.

Our success depends, in part, on our ability to obtain and enforce patents for our products, processes and technologies and to preserve our trade secrets and other proprietary information. If we cannot do so, our competitors may exploit our innovations and deprive us of the ability to realize revenues and profits from our developments. We have been granted eight patents on our drug delivery and packaging systems in the U.S., which will expire beginning in 2010.

Any patent applications we may have made or may make relating to our potential products, processes and technologies may not result in patents being issued. Our current patents may not be valid or enforceable. They may not protect us against competitors that challenge our patents, obtain patents that may have an adverse effect on our ability to conduct business or are able to circumvent our patents. Further, we may not have the necessary financial resources to enforce our patents.

To protect our trade secrets and proprietary technologies and processes, we rely, in part, on confidentiality agreements with our employees, consultants and advisors. These agreements may not provide adequate protection for our trade secrets and other proprietary information in the event of any unauthorized use or disclosure, or if others lawfully develop the information.

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Third Parties May Claim That Our Technologies, Or The Products In Which They Are Used, Infringe On Their Rights And We May Incur Significant Costs Resolving These Claims.

Third parties may claim that the manufacture, use or the sale of our drug delivery technologies infringe on their patent rights. If such claims are asserted, we may have to seek licenses, defend infringement actions or challenge the validity of those patents in court. If we cannot obtain required licenses, are found liable for infringement or are not able to have these patents declared invalid, we may be liable for significant monetary damages, encounter significant delays in bringing products to market or be precluded from participating in the manufacture, use or sale of products or methods of drug delivery covered by the patents of others. We may not have identified, or be able to identify in the future, U.S. and foreign patents that pose a risk of potential infringement claims.

We enter into collaborative agreements with pharmaceutical companies to apply our drug delivery technologies to drugs developed by others. Ultimately, we receive license revenues and product development fees, as well as revenues from, and royalties on, the sale of products incorporating our technology. The drugs to which our drug delivery technologies are applied are generally the property of the pharmaceutical companies. Those drugs may be the subject of patents or patent applications and other forms of protection owned by the pharmaceutical companies or third parties. If those patents or other forms of protection expire, are challenged or become ineffective, sales of the drugs by the collaborating pharmaceutical company may be restricted or may cease.

Because We Have A Limited Operating History, Potential Investors In Our Stock May Have Difficulty Evaluating Our Prospects.

We recorded the first commercial sales of products using our fast dissolve technologies in early 1997. Accordingly, we have only a limited operating history, which may make it difficult for you and other potential investors to evaluate our prospects. The difficulty investors may have in evaluating our prospects may cause volatile fluctuations, including decreases, in the market price of our common stock as investors react to information about our prospects. Since 1997, we have generated revenues from product development fees and licensing arrangements, sales of products using our fast dissolve technologies and royalties. We are currently making the transition from research and product development operations with limited production to commercial operations with expanding production capabilities in addition to research and product development activities. Our business and prospects, therefore, must be evaluated in light of the risks and uncertainties of a company with a limited operating history and, in particular, one in the pharmaceutical industry.

If We Are Not Profitable In The Future, The Value Of Our Stock May Fall.

Although we were profitable for the year ended December 31, 2000 and the quarter ended September 30, 2001, we have accumulated aggregate net losses from inception of approximately $42.0 and $31.5 million, respectively. If we are unable to sustain profitable operations in future periods, the market price of our stock may fall. The costs for research and product development of our drug delivery technologies and general and administrative expenses have been the principal causes of our losses. Our ability to achieve sustained profitable operations depends on a number of factors, many of which are beyond our direct control. These factors include:

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• the demand for our products;

• our ability to manufacture our products efficiently and with the required quality;

• our ability to increase our manufacturing capacity;

• the level of product and price competition;

• our ability to develop additional commercial applications for our products;

• our ability to control our costs; and

• general economic conditions.

We May Require Additional Financing, Which May Not Be Available On Favorable Terms Or At All And Which May Result In Dilution Of The Equity Interest Of An Investor.

We may require additional financing to fund the development and possible acquisition of new drug delivery technologies and to increase our production capacity beyond what is currently anticipated. If we cannot obtain financing when needed, or obtain it on favorable terms, we may be required to curtail our plans to develop and possibly to acquire new drug delivery technologies or limit the expansion of our manufacturing capacity. We believe our cash and cash equivalents, and expected revenues from operations will be sufficient to meet our anticipated capital requirements for the foreseeable future. However, we may elect to pursue additional financing at any time to more aggressively pursue development of new drug delivery technologies and expand manufacturing capacity beyond that currently planned.

Other factors that will affect future capital requirements and may require us to seek additional financing include:

• the level of expenditures necessary to develop and, or, acquire new products or technologies;

• the progress of our research and product development programs;

• the need to construct a larger than currently anticipated manufacturing facility, or additional manufacturing facilities, to meet demand for our products;

• results of our collaborative efforts with current and potential pharmaceutical company partners; and

• the timing of, and amounts received from, future product sales, product development fees and licensing revenue and royalties.

Demand For Some Of Our Products Is Seasonal, And Our Sales And Profits May Suffer During Periods When Demand Is Light.

Certain non-prescription products that we manufacture for our pharmaceutical company partners treat seasonal ailments such as colds, coughs and allergies. Our pharmaceutical company partners may choose to not market those products in off-seasons and our sales and profits may decline in those periods as a result. For full-year 2000 and the first nine months of 2001, operating revenues from Novartis, which included revenues related to Triaminic, a seasonal cold, cough and allergy product, represented 36% and 32%, respectively, of our total operating revenues. We may not be successful in developing a mix of products to reduce these seasonal variations.

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If The Marketing Claims Asserted About Our Products Are Not Approved, Our Revenues May Be Limited.

Once a drug product incorporating our technologies is approved by the FDA, the Division of Drug Marketing, Advertising and Communication, the FDA’s marketing surveillance department within the Center for Drug Evaluation and Research, must approve marketing claims asserted about it by our pharmaceutical company partners. If our pharmaceutical company partners fail to obtain from the Division of Drug Marketing acceptable marketing claims for a product incorporating our drug technology, our revenues from that product may be limited. Marketing claims are the basis for a product’s labeling, advertising and promotion. The claims our pharmaceutical company partners are asserting about our drug delivery technology, or the drug product itself, may not be approved by the Division of Drug Marketing.

We May Face Product Liability Claims Related To Participation In Clinical Trials Or The Use Or Misuse Of Our Products.

The testing, manufacturing and marketing of products using our drug delivery technologies may expose us to potential product liability and other claims resulting from their use. If any such claims against us are successful, we may be required to make significant compensation payments. Any indemnification that we have obtained, or may obtain, from contract research organizations or pharmaceutical companies conducting human clinical trials on our behalf may not protect us from product liability claims or from the costs of related litigation. Similarly, any indemnification we have obtained, or may obtain, from pharmaceutical companies with whom we are developing our drug delivery technologies may not protect us from product liability claims from the consumers of those products or from the costs of related litigation. If we are subject to a product liability claim, our product liability insurance may not reimburse us, or be sufficient to reimburse us, for any expenses or losses we may suffer. A successful product liability claim against us, if not covered by, or if in excess of, our product liability insurance, may require us to make significant compensation payments, which would be reflected as expenses on our statement of operations and reduce our earnings.

Anti-Takeover Provisions Of Our Corporate Charter Documents, Delaware Law And Our Stockholders’ Rights Plan May Affect The Price Of Our Common Stock.

Our corporate charter documents, Delaware law and our stockholders’ rights plan include provisions that may discourage or prevent parties from attempting to acquire us. These provisions may have the effect of depriving our stockholders of the opportunity to sell their stock at a price in excess of prevailing market prices in an acquisition of us by another company. Our board of directors has the authority to issue up to 5,000,000 shares of preferred stock and to determine the rights, preferences and privileges of those shares without any further vote or action by our stockholders. The rights of holders of our common stock may be adversely affected by the rights of the holders of any preferred stock that may be issued in the future. Additional provisions of our certificate of incorporation and bylaws could have the effect of making it more difficult for a third party to acquire a majority of our outstanding voting common stock. These include provisions that limit the ability of stockholders to call special meetings or remove a director for cause.

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We are subject to the provisions of Section 203 of the Delaware General Corporation Law, which prohibits a publicly-held Delaware corporation from engaging in a “business combination” with an “interested stockholder” for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is approved in a prescribed manner. For purposes of Section 203, a “business combination” includes a merger, asset sale or other transaction resulting in a financial benefit to the interested stockholder, and an “interested stockholder” is a person who, either alone or together with affiliates and associates, owns (or within the past three years, did own) 15% or more of the corporation’s voting stock.

We also have a stockholders’ rights plan, commonly referred to as a poison pill, which makes it difficult, if not impossible, for a person to acquire control of us without the consent of our board of directors.

Our Stock Price Has Been Volatile And May Continue To Be Volatile.

The trading price of our common stock has been, and is likely to continue to be, highly volatile. The market value of your investment in our common stock may fall sharply at any time due to this volatility. In the year ended December 31, 2000, the closing sale price for our common stock ranged from $12.13 to $72.13. For the nine months ended September 30, 2001, the closing sale price of our common stock ranged from $43.05 to $85.75. The market prices for securities of drug delivery, biotechnology and pharmaceutical companies historically have been highly volatile. Factors that could adversely affect our stock price include:

• fluctuations in our operating results;

• announcements of technological collaborations, innovations or new products by us or our competitors;

• governmental regulations;

• developments in patent or other proprietary rights owned by us or others;

• public concern as to the safety of drugs developed by us or others;

• the results of pre-clinical testing and clinical studies or trials by us or our competitors;

• litigation;

• decisions by our pharmaceutical company partners relating to the products incorporating our technologies;

• actions by the FDA in connection with submissions related to the products incorporating our technologies; and

• general market conditions.

Our Operating Results May Fluctuate, Causing Our Stock Price To Fall.

Fluctuations in our operating results may lead to fluctuations, including declines, in our stock price. Our operating results may fluctuate from quarter to quarter and from year to year depending on:

• demand by consumers for the products we produce;

• new product introductions;

• the seasonal nature of the products we produce to treat seasonal ailments;

• pharmaceutical company ordering patterns;

• our production schedules;

• the number of new collaborative agreements that we enter into;

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• the number and timing of product development milestones that we achieve under collaborative agreements;

• the level of our development activity conducted for, and at the direction of, pharmaceutical companies under collaborative agreements; and

• the level of our spending on new drug delivery technology development and technology acquisition, and internal product development.

Item 3. Quantitative and Qualitative Disclosures about Market Risks

The Company is subject to interest rate and foreign currency risks. Our investments in fixed-rate debt securities, which are classified as available-for-sale at September 30, 2001, have remaining maturities ranging from 3 to 36 months and thus are exposed to the risk of fluctuating interest rates. Available-for-sale securities had a market value of $147 million at September 30, 2001, and represented 70% of our total assets. From time to time, we may enter into foreign currency denominated contractual commitments to purchase assets for our manufacturing expansion, but we will also enter into forward foreign exchange contracts to limit our exposure to fluctuating exchange rates. At September 30, 2001, we did not have any contractual commitments denominated in a foreign currency.

We performed a sensitivity analysis assuming a hypothetical 10% adverse movement in foreign exchange rates to the underlying currency exposures described above and in interest rates applicable to fixed rate investments maturing during the next twelve months that are subject to reinvestment risk. As of September 30, 2001, the analysis indicated that these hypothetical market movements could have a material effect on our financial position, results of operations or cash flow in the range of $300,000 to $400,000 on an annualized basis.

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PART II — OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits

Exhibit	Description of Document	Method of Filing
3.1	Fifth Restated Certificate of Incorporation of CIMA LABS INC., as amended.(1)	Incorporated by Reference
3.2	Third Restated Bylaws.(2)	Incorporated by Reference
4.1	Form of Certificate for Common Stock.(3)	Incorporated by Reference
4.2	Amended and Restated Rights Agreement dated June 26, 2001, between the Registrant and Wells Fargo Bank Minnesota, N.A. as Rights Agent.(4)	Incorporated by Reference
10.1	Supply Agreement, dated August 31, 2001, between CIMA and AstraZeneca UK Limited.*	Filed herewith
10.2	Supply Agreement, dated January 1, 2001, and executed September 2, 2001, between Novartis Consumer Health, Inc. and CIMA.*	Filed herewith
10.3	License Agreement No. 1, executed September 2, 2001, by and between Novartis Consumer Health, Inc. and CIMA, amending that certain License Agreement dated July 1, 1998, between Novartis and CIMA. *	Filed herewith

(1)	Incorporated by reference to Exhibit 4.2 to the Registrant’s Registration Statement on Form S-8, filed June 13, 2001, File No. 0-24424.
(2)	Incorporated by reference to Exhibit 3.2 to the Registrant’s Form 10-Q for the period ended June 30, 1999, File No. 0-24424.
(3)	Incorporated by reference to an exhibit to the Registrants Registration Statement on Form S-1, File No. 33-80194.
(4)	Incorporated by reference to Exhibit 1 to the Registrant’s Amendment No. 1 to Registration Statement on Form 8-A/A, filed July 18, 2001, File No. 0-24424.
*	Confidential information has been omitted from the exhibit and filed separately, accompanied by a confidential treatment request, with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

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(b) Reports on Form 8-K

No reports on Form 8-K were filed for the quarter ended September 30, 2001.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		CIMA LABS INC. Registrant
Date  November 12, 2001	By	/s/ David A. Feste David A. Feste Chief Financial Officer (principal financial and accounting officer, duly authorized to sign on behalf of the Registrant)

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\

Exhibit Index

Exhibit	Description of Document	Method of Filing
3.1	Fifth Restated Certificate of Incorporation of CIMA LABS INC., as amended.(1)	Incorporated by Reference
3.2	Third Restated Bylaws.(2)	Incorporated by Reference
4.1	Form of Certificate for Common Stock.(3)	Incorporated by Reference
4.2	Amended and Restated Rights Agreement dated June 26, 2001, between the Registrant and Wells Fargo Bank Minnesota, N.A. as Rights Agent.(4)	Incorporated by Reference
10.1	Supply Agreement, dated August 31, 2001, between CIMA and AstraZeneca UK Limited.*	Filed herewith
10.2	Supply Agreement, dated January 1, 2001, and executed September 2, 2001, between Novartis Consumer Health, Inc. and CIMA.*	Filed herewith
10.3	License Agreement No. 1, executed September 2, 2001, by and between Novartis Consumer Health, Inc. and CIMA, amending that certain License Agreement dated July 1, 1998, between Novartis and CIMA.*	Filed herewith

(1)	Incorporated by reference to Exhibit 4.2 to the Registrant’s Registration Statement on Form S-8, filed June 13, 2001, File No. 0-24424.
(2)	Incorporated by reference to Exhibit 3.2 to the Registrant’s Form 10-Q for the period ended June 30, 1999, File No. 0-24424.
(3)	Incorporated by reference to an exhibit to the Registrants Registration Statement on Form S-1, File No. 33-80194.
(4)	Incorporated by reference to Exhibit 1 to the Registrant’s Amendment No. 1 to Registration Statement on Form 8-A/A, filed July 18, 2001, File No. 0-24424.
*	Confidential information has been omitted from the exhibit and filed separately, accompanied by a confidential treatment request, with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

EX-10.1 3 c66053ex10-1.txt SUPPLY AGREEMENT, DATED 8/31/01 Exhibit 10.1 DATED 31 AUGUST 2001 CIMA LABS INC (1) AND ASTRAZENECA UK LIMITED (2) SUPPLY AGREEMENT IN RELATION TO [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] Exhibit 10.1 INDEX 1. INTERPRETATIONS AND DEFINITIONS 2. DURATION 3. SALE AND PURCHASE 4. FORECASTING AND ORDERING 5. DELIVERY AND TITLE 6. PRICE 7. PAYMENT 8. WARRANTIES & QUALITY OF THE PRODUCT 9. ASTRAZENECA'S IVRS 10. REGULATORY REQUIREMENTS 11. FORCE MAJEURE 12. HARDSHIP 13. TERMINATION 14. COMPETITION 15. MOST FAVOURED CUSTOMER 16. CONFIDENTIALITY 17. PROVISION OF TECHNOLOGY & IMPROVEMENTS 18. ANNOUNCEMENTS/PUBLICITY 19. NOTICES 20. AGENCY, PARTNERSHIP OR JOINT VENTURE EXCLUDED 21. NON-ASSIGNMENT 22. ENTIRE AGREEMENT 23. REMEDIES AND WAIVERS 24. SEVERABILITY/INVALIDITY 25. VARIATIONS AND/OR AMENDMENTS 26. LAW AND JURISDICTION 27. COUNTERPARTS SCHEDULE 1 : PRODUCT SPECIFICATION SCHEDULE 2 : PACKING SPECIFICATION SCHEDULE 3 : STOCK REPORTING FORMAT SCHEDULE 4 PRICE MATRIX SCHEDULE 5 SUPPLY PARAMETERS 2 Exhibit 10.1 SCHEDULE 6 SELF SUPPLY TERMS 3 Exhibit 10.1 THIS AGREEMENT is dated 31st August 2001 and is made BETWEEN: (1) CIMA LABS INC., a Delaware corporation, whose principal office is at 10000 Valley View Road, Eden Prairie, Minnesota, 55344,USA ("CIMA"); and (2) ASTRAZENECA UK LIMITED (No. 03674842) a company incorporated in England and Wales whose registered office is at 15 Stanhope Gate, London W1K 1LN ("AstraZeneca"). WHEREAS: (A) CIMA owns rights to certain oral drug delivery technology marketed under the trade mark DuraSolv(TM) and related know-how. (B) AstraZeneca has an exclusive licence to use and sell products containing the drug [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***]. (C) CIMA and AstraZeneca have entered into a Development and Licence Option Agreement (the "Option Agreement") pursuant to which CIMA has granted AstraZeneca an exclusive licence dated 28 May 1999 (the "Licence Agreement") to use the DuraSolv(TM) technology in formulations with API (together, the "Product"). 4 Exhibit 10.1 (D) In accordance with the general obligations of Clause 3.5 of the Option Agreement, CIMA wishes to manufacture, supply and AstraZeneca wishes to purchase Product and Placebo on the terms and conditions set out below (the "Agreement"). NOW IT IS HEREBY AGREED as follows: 1 INTERPRETATIONS AND DEFINITIONS 1.1 HEADINGS AND DEFINITIONS In this Agreement, including its Schedules, the headings are included for ease of reference only and shall not affect its interpretation and, unless the context expressly requires otherwise: 1.1.1 "Affiliate" means, with respect to each party, any corporation or other business entity that (a) directly or indirectly controls, is owned by or is under common ownership with a party to this Agreement to the extent of at least fifty percent (50%) of the equity (or such lesser percentage which is the maximum allowed to be owned by a foreign organisation in a particular jurisdiction) having the power to vote or direct the affairs or such entity, or (b) directly or indirectly Controls, is Controlled by or is under common Control with such party; 1.1.2 "Associated Company" means any company which is either the parent undertaking or a subsidiary undertaking of the party in question or a subsidiary undertaking of such party's parent undertaking and an 5 Exhibit 10.1 undertaking in which the party in question has a participating interest (as defined in section 260 Companies Act 1985) and which is not a subsidiary undertaking of the party in question. "Parent undertaking" and "subsidiary undertaking" shall have the meanings attributed thereto in section 258 Companies Act 1985; 1.1.3 "Business Day" means a day (other than a Saturday, Sunday or Bank Holiday) on which banks are open for the transaction of normal business in the City of London; 1.1.4 "Calendar Quarter" means each successive period of three calendar months commencing in each Calendar Year on 1st January, 1st April, 1st July and 1st October and referred to as Q1, Q2, Q3 and Q4 respectively; 1.1.5 "Calendar Year" means each successive period of twelve calendar months commencing on 1st January; 1.1.6 "Certificate of Analysis" means the certificate of analysis to accompany all Product delivered to AstraZeneca in the agreed format; 1.1.7 "Commercial Phase" means from [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] to the date of termination of this Agreement; 6 Exhibit 10.1 1.1.8 "manufacture of Product" means storage, checking and testing of both incoming materials and outgoing Product, processing and blister packing of tablets with overprinted lidding into pre-formed strips of multiples of 6 or 2 tablets per strip which are then bulk packed in an agreed container ready for shipment. It is agreed between the parties that this definition complies with the description 'bulk unlabelled and unpacked blisters' in Exhibit I of the Development and Licence Agreement as far as pricing is concerned .In such description it is acknowledged that unlabelled allows for provision of certain variable Product information and packing instructions and that if AstraZeneca wishes CIMA to provide Product in non standard packaging (cassettes) prior to bulk packing, additional costs shall be incurred; 1.1.9 "Manufacturing Quarter" means the calendar quarter in which product or placebo is manufactured but which is cleared for delivery within the 15 days following that calendar quarter; 1.1.10 "Placebo" means formulations made using CIMA's DuraSolv(TM) Technology but without the inclusion of API. Manufacture of Placebos shall mean the same as manufacture of Product but in addition Placebos are to be supplied packed in cartons prior to being packed into an agreed container ready for shipment. It is agreed between the parties that this definition complies with the description for 'Finished Packaged Product' in Exhibit 1 of the Development and Licence Agreement in relation to 7 Exhibit 10.1 pricing; 1.1.11 "Quality Assurance Agreements" mean the quality assurance agreement signed by the parties and dated 23rd April 1999 and the US quality assurance agreement signed by the parties dated April 11, 2000; 1.1.12 "Product" means any pharmaceutical dosage form which is formulated using the DuraSolv(TM) Technology and which contains [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] as its active ingredient, whether taste masked (in any flavour ) or untreated; 1.1.13 "Product Specification" means the specification for the Product as specified in Schedule 1 and as amended from time to time by agreement in writing between the parties; 1.1.14 "Pre-printed Foil" means forming and lidding foil purchased by CIMA for exclusive use in the manufacture of particular market variants of Product; 1.1.15 "Packing Specification" means the specification for Placebo and Product ready for delivery to AstraZeneca; 1.2 DEFINITIONS Unless expressly stated otherwise in clause 1.1 above, capitalised terms shall 8 Exhibit 10.1 bear the meaning ascribed to them in the Licence Agreement. 1.3 COMPANY References to a "company" shall be construed so as to include any company, corporation or other body corporate wherever and however incorporated or established. 1.4 CONTROL For the purposes of this Agreement a person is to be taken as having "Control" of a company if: 1.4.1 the directors of the company or of another company which has control of it (or any of them) are accustomed to act in accordance with his directions or instructions; or 1.4.2 either alone or with any one or more associates he is entitled to exercise, or directly influence the exercise of, one third or more of the voting power at any general meeting of the company or of another company which has control of it; or 1.4.3 he is otherwise able to secure by any voting or other powers conferred by the articles of association or other document regulating that or any other company that the affairs of the company are conducted in accordance with his wishes, 9 Exhibit 10.1 and where two or more persons together satisfy any of the above conditions, they are to be taken as having control of the company. 1.5 PERSONS The word "person" and words importing persons shall be construed so as to include individuals, firms, bodies corporate, joint ventures, governments, states or agencies of state (whether or not having separate legal personality). 1.6 SUCCESSORS AND ASSIGNEES A reference to any party to this Agreement shall include a reference to its legal successors and permitted assignees. 1.7 GENDER References to any of the masculine, feminine or neuter genders shall include the other genders and references to the singular number shall include the plural and vice versa if the context so requires. 1.8 REFERENCES Unless the context expressly requires otherwise, references to recitals, clauses, paragraphs, parties and Schedules are to the recitals, clauses and paragraphs of and the parties and Schedules to this Agreement. To the extent that there is conflict between or ambiguity relating to, on the one hand, any or all of the Schedules and, on the other, the remainder of this Agreement, the wording of the Schedules shall prevail. 10 Exhibit 10.1 1.9 SCHEDULES The Schedules and any attachments form part of this Agreement and shall have the same force and effect as if expressly set out in the body of this Agreement and any reference to this Agreement shall include the Schedules and any attachments. 1.10 LEGAL TERMS References to any English term for any action, remedy, method of judicial proceeding, legal document, legal status, court, official or any legal concept or thing shall in respect of any jurisdiction other than England be deemed to include what most nearly approximates in that jurisdiction to the English legal term. 1.11 DATES AND TIMES Reference to a date or time is a reference to that date or time in London, England, unless expressly stated otherwise. 1.12 WRITING References to writing shall include any mode of reproducing words in a legible and non-transitory form. 2 TERM AND TERMINATION 2.1 TERM This Agreement will be coterminous with the Licence Agreement and as such will be effective as of the date hereof and will expire on a country by country basis, 11 Exhibit 10.1 upon the later date of (a) ten (10) years after the date of first commercial sale of the Product in the relevant country, or (b) the expiration of the last Patent covering the Product filed in that country. The parties will meet in good faith jointly to consider ways to extend this Agreement to the extent permitted by applicable law or regulation at least [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] before this Agreement is due to terminate pursuant to this clause 2.1 and the parties may so extend the term in a writing signed by both parties. 2.2 TERMINATION 2.2.1 AstraZeneca may terminate this Agreement in its entirety or with respect to use of the rights licensed in any country or countries under the Licence Agreement, with or without cause, upon [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] written notice to CIMA. Such termination will not relieve AstraZeneca or any obligation to make payments to CIMA for royalties accrued prior to the effective date of such termination. AstraZeneca may sell, transfer or otherwise dispose of for payment any of the Product that is not sold prior to the effective date of such termination, so long as such sale, transfer or disposal occurs within three months of the effective date of termination of this Agreement. 12 Exhibit 10.1 2.2.2 Either party may terminate this Agreement prior to its expiration by giving written notice to the other party, if the other party materially fails or neglects to perform its obligations under this Agreement and the same is not cured or being cured to the non-breaching party's reasonable satisfaction within forty five (45) days after the non-breaching party gives written notice specifying the nature and extent of such material breach; provided, however, that CIMA may not assert a material payment default by AstraZeneca on invoiced amounts disputed in good faith by AstraZeneca if AstraZeneca provides a written description of the disputed amounts to CIMA. Cure of a material payment default by AstraZeneca will be made by remitting to CIMA the amount of the overdue payment with accrued interest thereon, calculated using a major US commercial bank rate selected by CIMA, during the forty-five day period. 2.2.3 This Agreement shall terminate at the same time as the termination (for whatever reason) of the Licence Agreement and any notice to terminate served under the terms of the Licence Agreement shall be deemed also to be a notice to terminate this Agreement. 2.2.4 Either party may terminate this Agreement immediately and without notice in the event that an application is made by the other party for the appointment of a receiver, trustee or custodian for any of the other party's assets; a petition under any section or chapter of the federal Bankruptcy Code or any similar law or regulation of the United States or Puerto Rico or the United Kingdom is filed by or against the other party is not 13 Exhibit 10.1 dismissed within sixty (60) days; the other party makes an assignment for the benefit of its creditors; the other party becomes insolvent or fails generally to pay its debts when they come due; or if Control of the other party passes to any persons who do not on the Effective Date Control that party provided, however, that such change in Control would result in an unreasonable competitive situation for the party claiming a right to terminate. 2.2.5 If AstraZeneca terminates this Agreement other than under Sections 2.2.1 or 2.2.2, or if CIMA terminates this Agreement under Section 2.2.2, then AstraZeneca will pay to CIMA the amounts set out in clause 9.2(d) of the Licence Agreement. 2.2.6 CIMA may terminate this Agreement upon [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] notice in the event that AstraZeneca or its Affiliates commercialise under any agreement with a third party a formulation of [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***]. This restriction on AstraZeneca and its Affiliates is subject to the right of AstraZeneca to self-supply the Product under Section 3.2 of this Agreement. 14 Exhibit 10.1 2.3 ADDITIONAL REMEDIES Termination of this Agreement for any reason will be without prejudice to, and will not affect the right of, either party to recover any and all damages to which it may be entitled, or to exercise any other remedies that it may otherwise have. 2.4 SURVIVAL Clauses 10, 12, 13, 17, 18, 19, 20, 21, 22, 23, 24 and 26 shall survive the termination of this Agreement howsoever the same occurs. 3 SALE AND PURCHASE 3.1 Except under the conditions of clause 3.2 of this Agreement, CIMA shall manufacture and supply all quantities of the Product and Placebo required by AstraZeneca and within the forecast limitations set forth in clause 5 of this Agreement and AstraZeneca shall purchase all quantities of the Product and Placebo during the Validation Phase and the Commercial Phase from CIMA upon the terms of this Agreement and in accordance with the provisions of the Quality Assurance Agreement (as amended from time to time). In the event that there is a conflict between the terms of this Agreement and the terms of Quality Assurance Agreements, the terms of this Agreement shall prevail. 3.2 As described more particularly in Schedule 6 of this Agreement, CIMA shall grant AstraZeneca a self supply option for Product. The payments to be made by AstraZeneca to CIMA under the terms of Schedule 6 shall be the only payments made in relation to the self supply option and shall cover all future strengths and 15 Exhibit 10.1 dosage forms of the Product. 3.3 Supply of quantities of Product substantially greater than [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] tablets per calendar year may require investment on the part of CIMA. Such quantities should be forecast in writing by AstraZeneca no later than [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] prior to the date on which AstraZeneca requires delivery of such quantity to commence. 4 OBLIGATIONS IN RELATION TO MANUFACTURING AND SUPPLY STANDARDS 4.1 CIMA undertakes to obtain and maintain all permits, registrations and licences necessary for its equipment, facilities and resources to be used to manufacture Placebo and Product that meets the agreed Specification in accordance with the terms of the Quality Assurance Agreement using purchased excipients and Pre-printed Foil. 4.2 CIMA shall hold agreed Safety Stock as described in Clause 7 and 8. 4.3 CIMA shall provide AstraZeneca with a Certificate of Analysis and agreed campaign documentation no later than [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] (except in relation to Product 16 Exhibit 10.1 under investigation by CIMA) after completion of blister packing to initiate collection of Product by AstraZeneca. In addition, fully signed manufacturing campaign validation reports shall be provided by CIMA before the expiry of the period stipulated in the relevant validation protocol. 4.4 CIMA may employ a third party to test Product in whole or in part, provided that such third party is approved by AstraZeneca and that such party agrees to be bound by the terms of the Quality Assurance Agreement. CIMA shall bear the full liability for such third party costs. 4.5 If revised manufacturing standards or revised Product specifications are required which result in an increased cost of production to CIMA, and which relate specifically to the Product: 4.5.1 as a result of requests by external regulatory bodies, the Parties shall discuss and agree on an implementation plan to achieve such revisions within thirty days of the revisions being known to both Parties. AstraZeneca shall either bear the cost of goods increases agreed or exercise its right to self-supply described in clause 3.2 above; 4.5.2 as a result of a request by AstraZeneca, the Parties shall discuss and agree an implementation plan to achieve such revisions for which AstraZeneca shall bear the cost in full on terms to be agreed; 17 Exhibit 10.1 4.5.3 it is understood by the Parties that this clause 4 does not apply to failures by CIMA to meet the existing standards and specifications. 4.6 AstraZeneca shall provide forecasts and orders in accordance with the terms of this Agreement and shall provide design and text for variable Product information to CIMA no later than [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] in advance of scheduled use by CIMA. 4.7 AstraZeneca shall provide API to CIMA for use solely in the manufacture of Product in accordance with Clause 7. 4.8 AstraZeneca shall collect Product from CIMA's manufacturing facility promptly after the provision by CIMA of agreed documentation as described in Clause 4.3 and AstraZeneca shall inspect the Product on arrival at AstraZeneca's user facilities in accordance with its obligations under the Quality Assurance Agreement. 4.9 Each party shall inform the other party without delay of receipt of notice of any impending or threatened litigation or governmental investigation or impending audit of any kind that is or could be related to the manufacture of Product. 18 Exhibit 10.1 5 FORECASTING AND ORDERING 5.1 During the Commercial Phase the following shall apply: 5.1.1 Prior to 30th October in each Calendar Year, AstraZeneca shall provide CIMA with a forecast ("THE ANNUAL FORECAST") of AstraZeneca's annual requirements for the Product and Placebo for each Calendar Quarter of the subsequent Calendar Year which will be expressed in terms of formulation batches, each formulation batch being not less than equal to [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] (a "BATCH"). 5.1.2 In each Calendar Year after 2002, AstraZeneca shall be obliged to purchase not less than [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] of the Annual Forecast for Product and CIMA shall be obliged to supply up to [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] of the Annual Forecast for Product prorated equally throughout the year. 5.1.3 For the avoidance of doubt, CIMA shall not be obliged at any time to supply more than [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES 19 Exhibit 10.1 AND EXCHANGE COMMISSION.***] of the Annual Forecast in 5.1.2 or more than [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] tablets (product plus placebo combined), whichever is the smaller, in any given Calendar Year unless the Parties agree otherwise. 5.1.4 In the event that AstraZeneca does forecast to require more than such maximum quantity, CIMA shall immediately notify AstraZeneca of its receipt of such a forecast and CIMA is obliged to inform AstraZeneca in writing within thirty (30) days of receipt of such forecast what quantity (if any) above the maximum forecast quantity CIMA is able to supply. 5.1.5 In order to assist CIMA's production planning, AstraZeneca shall, at the end of each Calendar Quarter provide to CIMA a non-binding update of AstraZeneca's requirements for Product and Placebo for the next fifteen calendar months, with the first six (6) month-by-month and the remainder by quarter. 5.1.6 AstraZeneca shall place binding orders for the Product and Placebo required in each Manufacturing Quarter with CIMA not less than thirty (30) days before the start of that Manufacturing Quarter. Quantities of individual market variants of Product required to be delivered in each calendar month of that Calendar Quarter shall be provided by AstraZeneca in the form of call-off/manufacturing orders to be placed no 20 Exhibit 10.1 later than one month prior to the start of the month of delivery. 6 DELIVERY AND TITLE 6.1 Unless otherwise agreed all quantities of the Product and Placebo supplied pursuant to this Agreement shall be delivered EXW, CIMA to load Product and Placebos on to collecting vehicle at CIMA's risk, from CIMA's facility at Eden Prairie, MN, USA (Incoterms 2000). 6.2 Risk in respect of all Product and Placebo supplied to AstraZeneca pursuant to this Agreement shall pass accordingly. Title to all Product and Placebo supplied to AstraZeneca shall at all times remain with AstraZeneca. 6.3 API shall be delivered by AstraZeneca at AstraZeneca's expense to CIMA's facility at 10000 Valley View Road, Eden Prairie, MN 55344 USA and AstraZeneca shall retain title to all deliveries of API at all times. Risk shall pass with ownership and both parties undertake to maintain adequate insurance cover. 7 API TO BE SUPPLIED TO CIMA 7.1 All deliveries of API shall meet agreed API and package specifications and be accompanied by a Certificate of Analysis and with at least [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] of its agreed shelf life 21 Exhibit 10.1 remaining. 7.2 CIMA shall store API in conditions approved by AstraZeneca and shall rotate stock held to eliminate shelf life losses. 7.3 CIMA shall test and handle API consistent with information provided by AstraZeneca and in compliance with local laws and regulations. 7.4 All API deliveries must meet CIMA approved packaging, documentation and labelling; including certificate of analysis; gross/tare/net weight and manufacturing lot number. The quantities and timing of deliveries shall be as follows: 7.4.1 During the Commercial Phase the Parties shall ensure that a safety stock of API is maintained (the "API Safety Stock") equivalent to [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] of the Annual Forecast of Product (provided by AstraZeneca on 30th October each Calendar Year) multiplied by the agreed conversion ratio of [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***]. CIMA shall provide AstraZeneca at the time of the monthly Stock Report described in Clause 9 with the date that AstraZeneca needs to deliver stock replenishment material in quantities not less than [***CONFIDENTIAL TREATMENT 22 Exhibit 10.1 REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***]. Such forecast delivery date shall not be less than 1 month after the month that the stock report is issued to AstraZeneca. 7.4.2 It is recognised by the parties that if AstraZeneca's actual requirements vary substantially within the allowed limits of Clause 5.1.2 and 5.1.4, that adjustments may be needed to the API Safety Stock level described in Clause 7.4.1 above. In such an event, CIMA shall notify AstraZeneca at the time of the monthly Stock Report that a new API Safety Stock level is required and recommend new deliveries of API that are required. 7.5 During the Commercial Phase CIMA shall consume API at the rate of [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] Batch .API consumed in excess of this rate shall be replaced by AstraZeneca but at the expense of CIMA based on an API price of USD [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***]. CIMA shall provide a breakdown in writing of any amounts due and shall make payment due in a Calendar Year within 30 days after the end of that Calendar Year as part of the reconciliation described in Clause 11. 8 PRE-PRINTED FOILS AT CIMA 23 Exhibit 10.1 8.1 Some markets for the Product require Pre-printed Lidding Foil ("Pre-printed Lidding Foil"). AstraZeneca shall supply to CIMA its design and text for the Pre-printed Lidding Foil for such markets at least three (3) months in advance of CIMA's manufacture of the Product for such markets. The cost for the Pre-printed Lidding Foil has not been included in the costing on Schedule 4. CIMA agrees to provide and AstraZeneca agrees to pay [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] per tablet for all Product manufactured using the Pre-printed Lidding Foil. This additional cost will be billed to AstraZeneca in addition to the costs on Schedule 4. 9 STOCK REPORTING 9.1 CIMA shall provide a stock report at the end of each calendar month in the format as attached in Schedule 3 relating to API stock holding and performance against agreed conversion ratios as described in Clause 7.6 (the "Stock Report"). 9.2 In addition CIMA at the time of the report (a) will recommend adjustments to API Safety Stock levels and request stock replenishment quantities of API from AstraZeneca as described in Clauses 7.4.2; and (b) will recommend adjustments to Pre-printed Foil Safety Stock levels 24 Exhibit 10.1 both for confirmation by AstraZeneca within [5] working days. 10 PRICE 10.1 All sums payable by AstraZeneca under this Agreement are exclusive of Value Added Tax which, if payable, shall be borne and paid by AstraZeneca upon the provision by CIMA of an appropriate VAT invoice. 10.2 The price to be paid by AstraZeneca for Product and Placebos during the Commercial Phase will conform to the pricing in Schedule 4. 10.3 Subject to the exceptional circumstances set out in Clause 4.5 of this Agreement, the prices in Schedule 4 shall remain fixed through [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***]. On [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] and thereafter, the prices in Schedule 4 shall be adjusted [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***]. 25 Exhibit 10.1 11 ORDER AND INVOICE PRICING AND RECONCILIATION 11.1 During the Commercial Phase, Product and Placebo shall be ordered and invoiced as follows: 11.1.1 In addition to the prices specified in Schedule 4 the following surcharges shall apply, [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] cassette surcharge Pre-printed Lidding Foil surcharge [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] cassette surcharge Pre-printed Lidding Foil surcharge [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] 26 Exhibit 10.1 11.1.2 Within thirty days of the end of the first calendar year CIMA shall debit or credit AstraZeneca with an amount equal to the difference between the amount so invoiced and the sum due with respect to the aggregate of: (a) Prices for Product as described in Schedule 4 that take account of cumulative batches and variants actually ordered; and (b) sums due in respect of performance against API conversion ratio according to clause 7.5. 11.1.3 For each Calendar Year thereafter Placebos and the cassette surcharge will continue to be used in orders and invoices as described in Clause 11.1.2 but Product will be ordered and invoiced at prices according to Schedule 4 and where the cumulative number of Batches of Product shall be taken as the sum of the Batches of Product in the previous year plus those Batches of Product forecast in AstraZeneca's Annual Forecast for the year in question and the number of variants forecast to be ordered shall be taken as 5-12. 11.1.4 Within thirty days of the end of the calendar year CIMA will debit or credit AstraZeneca with an amount as described in clause 11.1.2. 12 PAYMENT 27 Exhibit 10.1 AstraZeneca shall pay all invoices in full in US Dollars by wire transfer to CIMA's registered office at Eden Prairie, Minnesota no later than 30 days following receipt of invoice (by fax or otherwise) subject to CIMA complying with its obligations under clause 4.3 of this Agreement. 13 WARRANTIES, QUALITY OF THE PRODUCT AND LIABILITY 13.1 CIMA hereby warrants and undertakes to AstraZeneca that: 13.1.1 the performance by CIMA of its obligations to AstraZeneca hereunder will not breach any covenant or obligation of CIMA to any third party, or infringe any rights of any third party; CIMA is not aware of any matter or impediment which would prevent CIMA from performing or would restrict or hinder CIMA in the performance of its obligations hereunder; 13.1.2 Product to be supplied to AstraZeneca pursuant to this Agreement (and all associated packaging and documentation) shall be manufactured, analysed and supplied in accordance with the provisions of Clause 4 which are summarised in Schedule 5 as supply parameters (the "Supply Parameters"). 13.2 CIMA will inform AstraZeneca promptly in writing of any event which in the reasonable judgement of CIMA may adversely affect the suitability of the Product for AstraZeneca's use. 28 Exhibit 10.1 13.3 AstraZeneca shall notify CIMA of any non-compliance with the Supply Parameters within forty-five (45) days of AstraZeneca's receipt of Product. If and to the extent that AstraZeneca has failed to examine the Product in accordance with this clause 13.3 (or it has failed to so notify CIMA in accordance with this clause 13.3) the relevant consignment of the Product shall be deemed to have been accepted by AstraZeneca in satisfactory condition in respect of all damage, shortage or defects which would have been discovered upon such examination. 13.4 CIMA and AstraZeneca agree to make best endeavours to resolve all claims made in accordance with Clause 13.3. If a dispute arises between the parties in relation to such claims which cannot be resolved by the parties within ninety(90) days of a claim being notified by AstraZeneca pursuant to clause 13.3, either party shall be entitled to require that the matter in dispute be referred to an independent expert nominated by agreement of the parties or, failing agreement, appointed by [the President of the International Chamber of Commerce, Paris] at the instigation of either party. Such referral shall be solely for the purpose of establishing whether or not there is any shortage, damage or defect (as the case may be) in relation to the Supply Parameters. Save in the case of fraud or manifest error the decision of such independent expert shall be binding upon the parties. In the event that the independent expert decides there was no shortage, damage or defect, the costs of the independent expert shall be borne by AstraZeneca. In all other circumstances, the costs of the independent expert shall be borne by CIMA. 29 Exhibit 10.1 13.5 If AstraZeneca brings a claim against CIMA in respect of a defect in any Product supplied or in any associated packaging or documentation, CIMA's liability in respect of such claim shall at AstraZeneca's option be limited to either:- 13.5.1 replacing the defective item at CIMA's expense; or at AstraZeneca's sole discretion; 13.5.2 refunding to AstraZeneca the cost paid to CIMA by AstraZeneca for such defective item. 13.6 In the event of AstraZeneca bringing a claim against CIMA in respect of a non-disclosed change (as described in the Quality Assurance Agreement) CIMA shall be required to bear the cost of any resulting validation of the change and the cost of obtaining any necessary regulatory approvals or alternatively (at AstraZeneca's option) reverting to the original form of manufacture and bearing the cost of any recall of Product necessitated by such non-disclosed change. 13.7 In the event of direct loss or damage to AstraZeneca's employees, agents or contractors; to AstraZeneca's property or to the environment associated with production using the Product (and excluding circumstances which have been caused directly by API or the negligence of AstraZeneca or its employees, agents or contractors) CIMA shall bear the full cost of any such loss or damage PROVIDED THAT CIMA shall bear no liability for special, indirect or consequential loss. 30 Exhibit 10.1 13.8 In the event of direct loss or damage to CIMA's employees, agents or contractors; to CIMA's property or to the environment arising out of its due performance of its obligations under this Agreement (and excluding circumstances which have been caused directly by the negligence of CIMA or its employees, agents or contractors) AstraZeneca shall bear the full cost of any such loss or damage PROVIDED THAT AstraZeneca shall bear no liability for special, indirect or consequential loss. 13.9 CIMA UNDERTAKES NO OTHER WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, AND EXPRESSLY DISCLAIMS ANY WARRANTY OF MECHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AND ANY AND ALL LIABILITY FOR SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES. 14 VENDOR PERFORMANCE CIMA shall comply with the Vendor Rating Scheme an indicative version of which is set out in Schedule 5 and shall use its best endeavours to maintain Division 1 status throughout the term of this Agreement. 15 FORCE MAJEURE 15.1 Subject to clause 15.3, each party shall be released from its obligations under this Agreement to the extent that its performance hereunder is delayed, hindered or prevented by circumstances which are not within its reasonable control, 31 Exhibit 10.1 including, without limitation, acts or restraints of governments or public authorities; war, revolution, riot or civil commotion; strikes, lock-outs or other industrial action; blockage or embargo; failure of supplies of power, fuel, transport, equipment or other goods or services; and explosion, fire, flood or natural disaster (a "Force Majeure Event"). 15.2 The party affected by such circumstances shall, as soon as it becomes aware of them, give full written particulars of them to the other party, and shall use best endeavours to resume full performance of its obligations under this Agreement without delay, and pending such resumption shall use best endeavours to facilitate any efforts that the other party may make to procure an alternative method by which its obligations under this Agreement may be performed. Furthermore, if, as a result of a Force Majeure Event CIMA is unable to supply the quantity of Product ordered by AstraZeneca or the quantity which AstraZeneca would have ordered but for such circumstances then:- 15.2.1 AstraZeneca shall be obliged to purchase such Product as it has actually ordered but at the price which would have applied under schedule 4 had CIMA been able to supply and had AstraZeneca purchased the quantities actually required by AstraZeneca; and 15.2.2 if such circumstances continue or are forecast to continue for more than [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***], CIMA shall use all reasonable endeavours to offer to 32 Exhibit 10.1 AstraZeneca alternative capacity for Product (at prices and on terms to be agreed) which can be operable within a further [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] to the standards required by the Quality Assurance Agreement; and 15.2.3 CIMA shall allocate all available capacity of Product produced by CIMA proportionally as between CIMA, AstraZeneca and other customers of CIMA and CIMA shall be deemed to have supplied the Product ordered or forecast for the purposes of calculating the price of the Product. 15.3 Neither party shall be entitled to relief under this clause 15 for any delay or failure in performing any of its payment obligations under this Agreement. 15.4 If a Force Majeure Event other than the supply of API prevails for a continuous period in excess of [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***], the party entitled to notification of such circumstances in accordance with clause 15.2 may, without prejudice to any other rights or remedies which may be available to it, terminate this Agreement with immediate effect by giving written notice of termination to the other party. 15.5 If AstraZeneca is notified of a Force Majeure Event, the obligation upon AstraZeneca to purchase the Product from CIMA in accordance with this 33 Exhibit 10.1 Agreement shall be suspended for the duration of the force majeure event. 16 HARDSHIP 16.1 For so long as any circumstances prevail which prevent or impede AstraZeneca from using or selling the Product and which AstraZeneca cannot control by taking all measures which can reasonably be expected then AstraZeneca shall not be obliged to place any further orders for the Product notwithstanding any other provision of this Agreement but shall be obliged to purchase such quantities of Product as it has actually ordered. If such circumstances prevail for a period of [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] or more, AstraZeneca shall be entitled to terminate this Agreement forthwith on written notice to CIMA PROVIDED THAT, on or prior to such termination, AstraZeneca shall: (i) purchase all Product actually ordered prior to the date of termination at the price specified in Schedule 4 and (ii) pay CIMA for the purchase value of Pre-printed Foil Safety Stock it holds or has ordered solely for use in the manufacture of Product; and (iii) compensate CIMA for all reasonable costs and expenses incurred by CIMA (including the costs of excipients and packaging materials specific to AstraZeneca purchased or manufactured by CIMA solely for use in the 34 Exhibit 10.1 manufacture of Product) in order to comply with its obligations to supply Product pursuant to this Agreement such costs and expenses not to exceed the cost of manufacturing six (6) months' Safety Stock based on the latest forecast. 17 CONFIDENTIALITY 17.1 Subject to clause 18, any know-how or other information proprietary to either party to this Agreement which is disclosed by that party ("the Discloser") or on its behalf to the other party ("Recipient") in connection with this Agreement ("Confidential Information") shall remain the property of the Discloser and shall not, without the prior written consent of the Discloser, be disclosed to any third party or used by the Recipient except for the performance of the Recipient's obligations under this Agreement. 17.2 The obligations of non-use and confidentiality contained in this clause 17 shall not apply to any information which the Recipient can reasonably demonstrate; 17.2.1 was already in the possession of the Recipient and at the Recipient's free use and disposal or in the public domain (through no fault of the Recipient) prior to its disclosure by the Discloser hereunder; or 17.2.2 is purchased or otherwise legally acquired by the Recipient at any time from a third party having good title thereto and the right to disclose the same; or 35 Exhibit 10.1 17.2.3 comes into the public domain, otherwise than through the fault of the Recipient; or 17.2.4 is independently generated by the Recipient without any recourse or reference to the information disclosed by the Discloser. All documents supplied by either party to the other which contain Confidential Information within the scope of this clause 17 shall be promptly returned by the Recipient to the Discloser upon the expiry or termination of this Agreement. The obligations of each party under this clause shall survive the expiry or termination of this Agreement provided that the Recipient shall have the right to retain in its legal department a single copy for archival purposes to ensure compliance with the above obligations. 17.3 In addition to the Confidential Information identified in clause 17, each party shall treat as Confidential Information all information which it receives or obtains relating to: 17.3.1 the contents of or negotiations relating to this Agreement; and 17.3.2 the business and customers of the other party. 17.4 Each of the parties may disclose Confidential Information to its directors and employees and professional advisers who need to know the Confidential Information, provided that each party shall procure that prior to such disclosure 36 Exhibit 10.1 each of those directors, employees and professional advisers to whom Confidential Information is to be disclosed is made aware of the confidentiality obligations herein contained and undertakes to adhere to such terms of this Agreement as if he were a party to it. 17.5 Each party is entitled to disclose Confidential Information to Associated Companies, provided that each party shall procure that prior to such disclosure each of those Associated Companies to which Confidential Information is to be disclosed is made aware of the confidentiality obligations herein contained and undertakes to adhere to such terms of this Agreement as if it were a party to it. 17.6 Nothing in this clause 17 shall preclude disclosure of any Confidential Information required by any governmental or regulatory authority or court entitled by law to disclosure of the same including, for the avoidance of doubt, any information required for disclosure under the Securities Act of 1933 (as amended) or the Securities Exchange Act of 1934 (as amended) or in accordance with the regulations of any recognised stock exchange, or which is required by law, provided that the party concerned promptly notifies the other party when such requirement to disclose has arisen. 18 ANNOUNCEMENTS/PUBLICITY 18.1 Save as expressly permitted in clause 18.2 neither party shall make any announcement about the transaction contemplated by this Agreement without the 37 Exhibit 10.1 prior written consent of the other party. 18.2 If any announcement concerning the transaction contemplated by this Agreement or any ancillary matter is required of a party by law or any securities exchange or regulatory or governmental body to which either party is subject, the announcement shall be made only after informing the other party as to the terms of and timetable for publication of any such announcement (if such consultation is reasonably practicable). 19 NOTICES 19.1 All notices and other communications given or made in relation to this Agreement; 19.1.1 shall be in English and in writing; 19.1.2 shall be delivered by hand or courier or sent by facsimile; 19.1.3 shall be delivered or sent to the party concerned at the relevant address or facsimile number, shown in clause 19.2 subject to such amendments as may be notified from time to time in accordance with this clause by the relevant party to the other party by no less than three (3) Business Days' notice; and 38 Exhibit 10.1 19.1.4 shall be deemed to have been duly given or made if addressed in the aforesaid manner: 19.1.4.1 if delivered by hand or courier, upon delivery; and 19.1.4.2 if sent by facsimile, when a complete and legible copy of the communication, has been received at the appropriate address, provided that if any notice or other communication would otherwise become effective on a non-Business Day or after 5.00 p.m. on a Business Day, it shall instead be deemed to be given or made at 10.00 a.m. on the next Business Day. 19.2 The initial details for the purposes of clause 19.1 are: For AstraZeneca Alderley House, Alderley Park Macclesfield, Cheshire SK10 4TF, England Facsimile: 01625 514061 For the attention of: Supply Manager For CIMA 10000 Valley View Road Eden Prairie 39 Exhibit 10.1 MN 55344 U.S.A. Facsimile: 001 612 947 8770 For the attention of: President and Chief Executive Officer 20 AGENCY, PARTNERSHIP OR JOINT VENTURE EXCLUDED 20.1 Nothing in this Agreement shall be construed so as to constitute either party to be the agent of the other. 20.2 Nothing in this Agreement and no action taken by the parties pursuant to this Agreement shall constitute a partnership or joint venture of any kind between the parties. 21 NON-ASSIGNMENT 21.1 Save as hereinafter provided this Agreement shall not be assigned nor any of the obligations hereunder transferred (nor the performance of any obligation hereunder sub-contracted) by either party except with the prior written consent of the other, provided that no consent shall be required in the cases of an assignment or transfer to an Associated Company of that party provided that any such assignment shall be made on terms that, should any such assignee cease to be an Associated Company of the assignor then the Agreement and any obligations which have been transferred to the assignee shall be transferred 40 Exhibit 10.1 back to the assignor. 22 ENTIRE AGREEMENT 22.1 Each party acknowledges that in entering into this Agreement it places no reliance on any representation or warranty relating to the subject matter of this Agreement, save for the representations and warranties expressly set out herein. 22.2 Subject to any terms implied by law, this Agreement, the Licence Agreement and the Quality Assurance Agreements together represent the entire agreement between the parties in relation to the subject matter of this Agreement and supersede any previous agreement or arrangement, between the parties in relation to that subject matter whether written or oral or which might be inferred from the conduct of the parties. 23 REMEDIES AND WAIVERS 23.1 No delay or omission on the part of either party in exercising any right, power or remedy provided by law or under this Agreement shall:- 23.1.1 impair such right, power or remedy; or 23.1.2 operate as a waiver thereof. 41 Exhibit 10.1 23.2 The single or partial exercise of any right, power or remedy provided by law or under this Agreement shall not preclude any other or further exercise thereof or the exercise of any other right, power or remedy. 23.3 The rights, powers and remedies provided in this Agreement are cumulative and not exclusive of any rights, powers and remedies provided by law. 24 SEVERABILITY/INVALIDITY 24.1 Should any provision of this Agreement be held to be illegal, invalid or unenforceable in any respect by any judicial or other competent authority under the law of any jurisdiction: 24.1.1 such provision shall, so far as it is illegal, invalid or unenforceable in any jurisdiction, be given no effect by the parties and shall be deemed not to be included in this Agreement in that jurisdiction; 24.1.2 the other provisions of this Agreement shall be binding on the parties in that jurisdiction as if such provision were not included herein; 24.1.3 the legality, validity and enforceability of the provision in any other jurisdiction shall not be affected or impaired; and 24.1.4 the parties agree to negotiate in good faith to amend such provision to the extent possible for incorporation herein in such reasonable manner as 42 EXHIBIT 10.1 most closely achieves the intention of the parties and without rendering such provision invalid or unenforceable. 25 VARIATIONS AND/OR AMENDMENTS 25.1 This Agreement may only be varied or amended by agreement in writing signed by or on behalf of the parties. 26 LAW AND JURISDICTION 26.1 This Agreement shall be governed by, interpreted and enforced in accordance with the laws of the State of Delaware, without regard to its choice of law provisions. 26.2 The parties will use all reasonable efforts to resolve in an amicable fashion any dispute, claim or controversy that may arise relating to the terms or performance of this Agreement. If the parties are unable to resolve such dispute within thirty (30) days after initial notice, either party may, by notice to the other, have such dispute referred to a senior officer of each company. Such officers shall attempt to resolve the dispute by good faith negotiation within thirty (30) days after receipt of such notice. If the designated officers are not able to resolve such dispute within ninety (90) days after receipt of such notice, the parties will submit the dispute to arbitration by a single arbitrator in Minneapolis, Minnesota, in accordance with the Commercial Arbitration Rules of the American Arbitration Association then in effect. The arbitrator must be a retired judge of a state or federal court of the United States or a licensed lawyer with at least ten (10) years 43 EXHIBIT 10.1 of intellectual property law experience from a law firm with at least ten (10) attorneys and at least an AV rating by Martindale Hubbell. A list of ten (10) potential arbitrators shall be obtained from the AAA. Each party to the dispute will rank the potential arbitrators from one to ten with one being the most desirable. The arbitrator who receives the least points shall be the arbitrator for such dispute. If there is a tie, a random drawing will be held and the first arbitrator chosen will be the arbitrator for the dispute. Judgment upon the arbitration award will be final, binding and conclusive and may be entered in any court having jurisdiction. The parties hereto further agree that the arbitrator is not authorised to award any punitive damages in connection with any controversy or claim settled by arbitration hereunder. 27 COUNTERPARTS 27.1 This Agreement may be executed in more than one counterpart, each of which when executed and delivered shall be deemed to constitute an original. This Agreement shall become effective when one or more counterparts have been signed by both parties and such a counterpart (so signed) has been delivered to each of the parties. IN WITNESS whereof this Agreement has been entered into the day and year first above written. SIGNED for and on behalf of CIMA LABS INC /s/ John M. Siebert Name John M. Siebert 44 EXHIBIT 10.1 Title President & CEO Date August 23, 2001 SIGNED for and on behalf of ASTRAZENECA UK LIMITED /s/ C.R.W. Petty C R W Petty Authorised Signatory Date 31 August 2001 45 EXHIBIT 10.1 SCHEDULE 1 PRODUCT SPECIFICATION [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION; 4 pages omitted. ***] EXHIBIT 10.1 SCHEDULE 2 PACKING SPECIFICATION FOR UK AND US [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION; 2 pages omitted. ***] EXHIBIT 10.1 SCHEDULE 3 STOCK REPORTING FORMAT [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION; 3 pages omitted. ***] EXHIBIT 10.1 SCHEDULE 4 PRICE MATRIX [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] MG TABLETS CIMA TABLET PRICES [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION; 4 pages omitted. ***] EXHIBIT 10.1 SCHEDULE 6 SELF SUPPLY TERMS 1. CIMA will grant to AstraZeneca an option to manufacture or have manufactured up to one hundred percent (100%) of its requirements of the Product for distribution, marketing and sale by AstraZeneca, its Affiliates and sublicensees ("Self-Supply") commencing at any time after the [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] after commercial launch of the [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] formulation of Product, except as provided in Section 2 below. AstraZeneca may exercise such option by so notifying CIMA in writing at least three (3) months before AstraZeneca requires the Technology Transfer to begin that AstraZeneca intends to Self-Supply. If AstraZeneca exercises its option to Self-Supply, AstraZeneca shall pay an Option fee (the "Self-Supply Option Fee") equal to [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***]. For the avoidance of doubt, no further payments will be due from AstraZeneca to CIMA in respect of this option to Self-Supply any other (future or existing) dosage forms of the Product.. 2. If CIMA is unable to supply AstraZeneca with AstraZeneca's requirements of the Product, for any reason other than force majeure of a duration less than 60 days, (or AstraZeneca's inability to supply API as specified in Clause 7 of the Agreement) AstraZeneca may elect to manufacture the Product or have it manufactured by its Affiliates and sublicensees. In such situation, if AstraZeneca has already elected to Self-Supply at the time CIMA becomes unable to supply the balance of AstraZeneca's requirements, AstraZeneca will receive a refund of any portion of the EXHIBIT 10.1 Self-Supply Option Fee that AstraZeneca has paid to CIMA. However, AstraZeneca shall in such circumstances continue to be obligated to pay to CIMA the per tablet fee referred to in Section 3 below. If CIMA subsequently becomes able to again supply AstraZeneca with AstraZeneca's requirements of the Product and AstraZeneca elects to purchase any portion of its requirements of the Product from CIMA or elects to have CIMA reserve manufacturing capacity for manufacture of any portion of AstraZeneca's requirements of the Product, AstraZeneca shall repay to CIMA that portion of the Self-Supply Option fee refunded to AstraZeneca under this Section 2. 3. If AstraZeneca elects to Self-Supply or to manufacture under Section 2 of this Schedule, in addition to the technology transfer fee, AstraZeneca shall pay to CIMA either (i) [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] per tablet manufactured by AstraZeneca, if at the time AstraZeneca elects to self-supply CIMA is supplying finished packaged Product to AstraZeneca, or (ii) [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] per tablet manufactured by AstraZeneca, if at the time AstraZeneca elects to Self-Supply CIMA is supplying bulk, unpackaged blisters to AstraZeneca. 4. If AstraZeneca elects to Self-Supply or to manufacture, under Section 2 of this Schedule, AstraZeneca will have no right to make changes of any kind to the Product or the manufacturing process without CIMA's written consent, may not use of permit its Affiliates or sublicencees to use the technology for any purpose other 2 EXHIBIT 10.1 than to manufacture the Product, and may not permit its Affiliates or sublicensees to further transfer the technology. If AstraZeneca ceases to utilise the manufacturing technology to manufacture the Product, the manufacturing licence will automatically terminate and revert to CIMA. 5. If AstraZeneca elects to Self-Supply or to manufacture under Section 2 of this Schedule, CIMA will provide to AstraZeneca, its Affiliates and/or sublicensees, at AstraZeneca's sole expense, technical support and assistance to ensure the smooth and satisfactory establishment of the DuraSolv Technology at the new manufacturing site. 3 EX-10.2 4 c66053ex10-2.txt SUPPLY AGREEMENT, DATED 1/1/01 EXHIBIT 10.2 SUPPLY AGREEMENT This Supply Agreement, dated as of the 1st day of January 2001 (the "Effective Date"), is between Novartis Consumer Health, Inc., 560 Morris Avenue, Summit, New Jersey 07901 ("Novartis"), and CIMA LABS INC., 10000 Valley View Road, Eden Prairie, MN 55344 ("Supplier"). WHEREAS Supplier and Novartis are parties to a License Agreement dated July 1, 1998 (the "License Agreement") and a Supply Agreement dated July 1, 1998 and an Amendment No. 1 thereto dated as of November 19, 1999 (collectively, the "Prior Supply Agreement"); and WHEREAS Supplier and Novartis wish to enter into a new Supply Agreement to supersede the Prior Supply Agreement; IT IS THEREFORE AGREED by and between the parties hereto as follows: 1. GENERAL SCOPE OF AGREEMENT 1.1 This Agreement shall supersede the Prior Supply Agreement as of the Effective Date. The Prior Supply Agreement is hereby terminated without penalty to either party, and shall be of no further force or effect after the Effective Date. Notwithstanding the foregoing, the License Agreement remains in full force and effect. Nothing set forth herein shall be deemed to effect any modification to the terms of the License Agreement, except that (i) any references to the "Supply Agreement" contained in the License Agreement shall be deemed to be references to this Agreement; and (ii) any references in the License Agreement to specific provisions of the "Supply Agreement" shall be deemed to be references to the provisions set forth in this Agreement which are equivalent to the Sections of the Prior Supply Agreement referred to in the License Agreement (in particular, references in the License Agreement to provisions contained within Section 12 of the Prior Supply Agreement shall be deemed to be references to the equivalent provisions set forth within Section 7 of this Agreement). 1.2 Supplier shall manufacture, sell and cause to be delivered exclusively to Novartis the products set forth in Exhibit A hereto (the "Products") in accordance with and subject to the terms and conditions of this Agreement, in quantities sufficient to meet the total requirements, consistent with the forecasting and purchase order mechanism set forth in Article 3 of this Agreement, of Novartis for such Products for use in the Territory (as defined in the License Agreement). 1.3 Novartis shall purchase all of Novartis' requirements of the Products for use in the Territory exclusively from Supplier, in accordance with and subject to the terms and conditions of this Agreement. This requirements obligation is limited to Novartis' requirements of Products which meet the Specifications (as defined below). 1.4 Novartis shall be responsible for obtaining regulatory approval of any products sold by Novartis. Supplier shall cooperate with Novartis and shall use its commercially reasonable best efforts to assist Novartis in obtaining any and all regulatory approvals necessary to market Novartis' products which contain the Products. 1.5 All Products sold and delivered to Novartis hereunder shall (a) be manufactured, packaged and sold in strict accordance with (i) the Quality Assurance Agreement, attached hereto as Exhibit B (the "QA Agreement"), including the specifications set forth therein, and with such further specifications as shall be agreed to by Supplier and Novartis in writing (the "Specifications"); and (ii) all applicable laws, regulations, and requirements of any government or governmental agency; and (b) be subject to the warranties set forth in Article 9 of this Agreement. 1.6 In order for the parties to conduct long-term planning with respect to the manufacture and sales of the Products, senior representatives of Supplier and Novartis shall meet annually, on or about the anniversary of the Effective Date, and shall each present to the other the current status of its business and its long-term plans with respect to the Products. 2. PAYMENT 2.1 In consideration of the satisfactory manufacture and delivery to Novartis of the ordered quantities of Products, Novartis shall pay Supplier for all Products accepted by Novartis pursuant to Section 4.1 of this Agreement in accordance with the prices set forth in Exhibit C hereto, subject to adjustment in accordance with this Agreement. Novartis shall make such payments within thirty (30) days of the date of Supplier's invoice. Supplier shall issue its invoice to Novartis upon the delivery of Products to Novartis hereunder. 2.2 Novartis shall bear the cost of any taxes of any kind, nature or description whatsoever applicable to the sale of any Products by Supplier to Novartis (except for any taxes based upon the income of Supplier or its employees), unless Novartis is exempt from such taxes and provides to Supplier, at the time of the submission of any purchase order, tax exemption certificates or permits acceptable to the appropriate taxing authorities. 2.3 Shipping terms for the Products are EXW (Incoterms 2000), place of manufacture. Notwithstanding the foregoing, Supplier shall load all Product onto the trucks of Novartis' designated carrier, and title to and risk of loss of the Products shall pass to Novartis when the Product is so loaded. 2.4 On [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***], the price at which Novartis shall purchase the Products shall be increased or decreased to pass on to Novartis, [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] of any net increase or decrease in the cost of (i) the raw materials and packaging materials necessary to the manufacture of Products (collectively, the "Raw Materials"); and (ii) direct labor and fully-absorbed overhead rates (collectively, the "Overhead") actually incurred by Supplier in 2 producing the Products during the twelve (12) month period ending on the preceding December 31. Such increase or decrease shall be effective with respect to Product delivered to Novartis after the [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] effective date of the applicable price adjustment. 2.4.1 On or before [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***], Supplier shall provide Novartis with a non-binding estimate of the amount by which the price will increase or decrease pursuant to this Section 2.4 [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***]. Supplier shall determine the final amount of any such increase or decrease by no later than the following [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***], and Supplier shall notify Novartis of such amount in writing at that time. Product delivered to Novartis between [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] shall be invoiced to Novartis at the price applicable to Product delivered to Novartis during the immediately preceding calendar year. Then on or about [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***], Supplier shall transmit to Novartis a corrected invoice for Product delivered between [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***], taking into account the final amount of any such price increase or decrease, and setting forth the applicable additional charges or credits. 2.4.2 To determine the amount by which the cost of Raw Materials and Overhead have increased or decreased during a period, the Raw Material and Overhead costs at the beginning of the period shall be compared to the Raw Material and Overhead costs at the end of the period, without regard to intervening fluctuations. Notwithstanding the foregoing, in the event that (i) the parties shall agree upon Supplier undertaking the development work necessary to support the substitution of [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] coated in Supplier's own facilities (in Products containing [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***]) for coated [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] purchased from third parties, and (ii) such development work is successfully completed, then in calculating the amount by which the cost of Raw Materials has increased or decreased during a period, Supplier shall only pass on to Novartis [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] of any cost savings associated with the substitution of Supplier-coated [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***]. 3 2.4.3 In no event shall any increase or decrease in price pursuant to Section 2.4(ii) exceed, on a percentage basis, the percentage which the Producers' Price Index, published by the U.S. Department of Labor, Bureau of Labor Statistics, increased during the period since the last increase under Section 2.4(ii). 2.4.4 At Novartis' request, the parties shall informally discuss the factors which contributed to any price adjustment hereunder. 2.5 If, for any reason other than a Force Majeure Event (as defined in Section 6.7), Supplier fails to deliver Products ordered in accordance with the lead-times set forth in Section 3.2, in the quantities so ordered, within twenty (20) days of the date specified in the applicable purchase order, then Novartis shall be entitled, as liquidated damages, and not a penalty, to a discount of [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] off the price of the late-delivered Products. 2.6 Novartis shall have the right, not more than once in each calendar year, upon reasonable notice and during normal business hours, to review through an independent certified public accounting firm selected jointly by the parties, but retained by Novartis (the "CPA Firm"), such records of Supplier as may be necessary to verify the accuracy of the amounts invoiced to Novartis hereunder, including the accuracy of any price adjustments made hereunder. The prices charged for the Products shall be increased or decreased in accordance with the CPA Firm's conclusions, including through the crediting of Novartis' account for any overcharges, and through the payment by Novartis of any additional amounts for any undercharges, actually incurred in the period audited. 2.6.1 Novartis shall pay all fees of the CPA Firm performing such verification unless the CPA Firm concludes that there has been any cumulative overcharge of prices of more than [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] in the period audited, in which case Supplier shall bear all reasonable costs of the audit charged by the CPA Firm. 2.6.2 Novartis shall instruct the CPA Firm not to disclose to Novartis any information other than its conclusion as to the the accuracy of the amounts invoiced to Novartis hereunder, including the accuracy of any price adjustments made hereunder, and the amount of any variance between the amounts actually invoiced to Novartis and the amounts which the CPA Firm determines should have been invoiced. 2.6.3 In the event that Supplier should disagree with the conclusions of the CPA Firm, it shall have the right to provide the CPA Firm with any additional information it so chooses, and to request the CPA Firm to reconsider. The CPA Firm shall review any such submissions and resolve the issue in accordance with this Agreement and the facts. The costs charged by the CPA Firm for conducting such a reconsideration shall be paid by the party against whom the determination was made. 4 2.7 Novartis may at any time identify to Supplier suppliers from which Supplier might obtain any of the Raw Materials at a lower cost than Supplier is able to obtain such Raw Materials. In such an event, the parties shall evaluate the new suppliers' proposed pricing and determine whether such suppliers present an opportunity for significant cost savings, and whether Supplier would incur significant expenses in shifting to that supplier. Should the parties jointly determine that it would be appropriate for Supplier to shift to any such new suppliers, then Supplier shall utilize such suppliers, and the prices charged to Novartis for Product hereunder shall be reduced as follows: (i) during the first one (1) year from the date Supplier first utilizes supplies from any such new supplier (the "Initial Year"), Supplier shall reduce the prices charged to Novartis for Product by [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] of the amount of any realized savings; and (ii) after the Initial Year, Supplier shall reduce the prices charged to Novartis for Product by [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] of the amount of any realized savings. Supplier shall not unreasonably withhold its approval of any new suppliers identified by Novartis hereunder. In making any such switch, Supplier shall be allowed to exhaust its inventory of higher cost Raw Materials prior to commencing the use of the lower cost materials from the new supplier. Novartis shall reimburse Supplier for any costs Supplier shall reasonably incur in implementing any such change in suppliers. Supplier shall maintain accurate records in sufficient detail to clearly document any such cost savings which result from any new suppliers identified by Novartis pursuant to this Section. Upon request, Supplier shall provide all such records to Novartis. 2.8 Novartis and Supplier shall confer on a regular basis, but no less than annually, to consider whether new technologies or new manufacturing methods may exist which likely would reduce Supplier's cost of manufacturing the Products. Should any such technologies and/or methods be identified, then (unless utilizing such technologies and/or methods would restrict Supplier's ability to conduct drug delivery projects for third parties) the parties shall discuss the sharing of the costs of developing and implementing such technologies and/or methods, and of the proceeds from any resulting cost reductions in amounts to be agreed upon. 3. FORECASTS AND ORDERS 3.1 In order to assist Supplier in planning production, Novartis shall, on or before the tenth (10th) day of each month, provide Supplier with a twelve (12) month rolling forecast of the quantities of Products required by Novartis, by month, for the following twelve (12) months. It is understood that such forecasts are intended to be estimates only, and shall not be binding upon Novartis. Notwithstanding the foregoing, Novartis shall be bound to purchase from Supplier [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] of those quantities of Products set forth in each such forecast as being Novartis' requirements of Products for the first three (3) months of each twelve (12) month period. Supplier shall, no later than fifteen (15) business days after receipt of each such forecast, notify Novartis in writing of any prospective problems of which it is aware that might prevent it from meeting Novartis' 5 forecasted order quantities or estimated delivery dates. Unless Supplier so informs Novartis that it would have problems in meeting Novartis' forecasted requirements, Supplier shall be obligated to deliver during any calendar year, pursuant to purchase orders provided under Section 3.2 of this Agreement, up to [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] of Novartis' estimated purchases for that calendar year. Supplier shall further use its commercially reasonable best efforts to comply with orders for Products in excess of such [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] amount. 3.2 At least [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] prior to the date on which Novartis desires to have Product delivered, Novartis shall furnish to Supplier a binding purchase order for the quantity of Products which Novartis shall purchase and Supplier shall deliver. The quantities to be delivered under any such purchase order shall be in full batch-size quantities only, and for a minimum of four (4) batches. Notwithstanding the foregoing, Novartis shall use its commercially reasonable best efforts to consolidate its orders into at quantities of eight (8) batches. Supplier shall, within five (5) business days after its receipt of such purchase order, acknowledge such receipt and confirm that the order can be supplied. Each such purchase order shall designate the quantity of Products ordered and the date by which Supplier must deliver the Products to Novartis. 3.3 Supplier shall use its commercially reasonable best efforts to accommodate any Novartis requests for Product in excess of the quantities described in any previously-submitted purchase order, or for delivery of Product sooner than that allowed pursuant to this Article 3. Should Novartis' business conditions necessitate reduction or delay in purchase order requirements, then Supplier shall use its commercially reasonable best efforts to implement such requested changes. Without limiting the generality of the foregoing, Novartis shall have the right, up to [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] prior to the date of manufacture, to issue binding change orders, without charge, to increase or decrease the quantities of Product ordered in any previously-submitted purchase orders by amounts of up to [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] of the total quantity of Products ordered in such purchase order. Notwithstanding anything to the contrary herein, (i) Supplier shall not be obligated to accept any requests for modifications to purchase orders during the [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] period prior to the date of manufacture; and (ii) Supplier shall not take any action in response to any requests for modifications to purchase orders which would result in charges to Novartis in addition to the standard purchase price permitted hereunder without Novartis' prior written consent. 3.4 Supplier shall order each Raw Material in accordance with the lead-time therefor specified in Exhibit D hereto, in amounts sufficient to enable Supplier to manufacture [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED 6 SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] of those quantities of Product forecast to be required at the end of the particular lead-time period (as set forth in the most recent forecast issued pursuant to Section 3.1 available at the time which the order for the particular Raw Material must be issued). 3.4.1 By way of example, if Raw Material A had a ninety (90) day lead-time, and Raw Material B had a thirty (30) day lead-time, then in January, Supplier shall order enough Raw Material A to meet [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] of those quantities of Product forecast to be required in April, and enough Raw Material B to meet [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] of those quantities of Product forecast to be required in February, as set forth in the most recent forecast available in January. 3.4.2 Should any Raw Materials obtained in accordance with the requirements of this Section (or any additional quantities ordered as a result of standard container sizes or minimum order quantities imposed by Supplier's suppliers) become unusable due to changes in Product or purchase order requirements, then Novartis shall reimburse Supplier for the full cost of such unusable Raw Materials. Supplier shall use all reasonable commercial efforts to mitigate any such losses of Raw Materials. Supplier shall submit supporting documentation on all claims based on unusable Raw Materials, and requests for reimbursement thereof. 3.5 If for any reason Supplier experiences any shortage of any input used by Supplier in manufacturing the Products, including without limitation Raw Materials, labor and plant capacity (each, an "Input"), and is therefore unable to supply Novartis with the full quantity of Products ordered by it and accepted by Supplier by the date set forth in the purchase order, then Novartis shall be entitled to the same proportionate quantity of the Input as the quantity of the Input used by Supplier in manufacturing Products for Novartis in the twelve (12) months preceding the shortage bears to the total quantity of the Input used by Supplier in manufacturing products for all its customers, during such period. 4. INSPECTIONS AND ACCEPTANCE 4.1 Novartis shall accept any delivery of Products hereunder if, in Novartis' sole discretion, Novartis determines that the delivery complies fully with the relevant purchase order, the Specifications, and with the requirements of this Agreement. Novartis shall inspect all Products delivered hereunder, and shall provide Supplier with written notice of its acceptance or rejection of the delivery, as soon as reasonably practicable, but not later than thirty (30) days after its receipt of the Products and all required documentation. Any notice of rejection shall specify the reason(s) therefor. Except in the event of any investigation, corrective action or retesting of a delivery, should Novartis fail to provide Supplier with written notice of its acceptance or rejection of the delivery within thirty (30) days of receipt of the Products and all required documentation, then the delivery shall be deemed to have been accepted by Novartis on the thirtieth (30th) day after delivery. After notice of rejection is received by Supplier, Novartis shall cooperate with Supplier in determining whether rejection is necessary or justified. Supplier 7 shall notify Novartis as soon as reasonably possible, but not later than thirty (30) days after receipt of the notice from Novartis, whether it accepts Novartis' basis for rejection. If Supplier accepts Novartis' determination that the Products are nonconforming, then Novartis shall be entitled to the remedies set forth in Section 4.2. If Supplier does not accept Novartis' determination that the Products are nonconforming, Novartis and Supplier jointly shall select an independent third party expert to test the Products and determine whether they conform to the applicable specifications. The parties agree that such third party's determination shall be final. The party against whom the third party rules shall bear the reasonable costs of the third party testing. If the third party rules that the Product conforms to the specifications, Novartis shall purchase the Products at the agreed upon price. If the third party rules that the Product is nonconforming, then Novartis shall be entitled to the remedies set forth in Section 4.2. Notwithstanding anything to the contrary herein, a Product shall not be deemed nonconforming for purposes of this Agreement if such nonconformance was caused by the acts or omissions of Novartis after delivery of the Product in accordance with Section 2.3. 4.2 Once any such delivery, or any part thereof, is finally deemed to be rejected, then, at Novartis' option, (a) Supplier shall, at no additional charge, deliver replacement Products to Novartis as soon as reasonably practicable thereafter (but, in any event, within sixty (60) days after the initial notification by Novartis); or (b) the purchase order at issue shall be deemed terminated, and Novartis shall not be obligated to make any payments to Supplier with respect to such purchase order, or the rejected delivery (or, if payment has already been made for such Products, then Novartis shall be entitled to a credit in such an amount). 5. DOCUMENTATION AND INFORMATION 5.1 Supplier shall provide to Novartis all documentation and information reasonably requested by Novartis (a) to assist Novartis in determining whether any delivery complies fully with the Specifications and the requirements of this Agreement; (b) to assist Novartis in obtaining any and all regulatory approvals necessary to market Novartis' products which contain the Products; or (c) to enable Novartis to comply with any statutory or regulatory requirements, or with a request by any governmental or regulatory authority. 5.2 Every delivery of Products to Novartis shall be accompanied by a Certificate of Analysis. Supplier hereby warrants the accuracy of each such Certificate of Analysis to a reasonable degree of scientific certainty. 5.3 Upon request, Supplier shall submit to Novartis all manufacturing and testing documents relating to any Products ordered hereunder, including analyses with instrument conditions, within [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] of the completion of the manufacturing process with respect to any particular batch of Products. 6. PRODUCTION PROCEDURES 6.1 Supplier shall not rework or reprocess any non-conforming Products without the prior written approval of Novartis. Notwithstanding the foregoing, Supplier may correct minor 8 packaging defects observed prior to the completion of production of a batch of Products without the prior written approval of Novartis. Supplier shall describe any such corrections in the applicable batch records. 6.2 The Products shall be delivered to Novartis packaged in accordance with the Specifications. Notwithstanding the foregoing, Novartis shall have the right to require any special or varied packing that it believes is reasonably necessary to meet customs or regulatory requirements. Reasonable incremental costs which result directly from any packing changes required by Novartis will be borne by Novartis. 6.3 At least [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] prior to its first production run of Products, and prior to the production of qualification batches, Supplier shall provide to Novartis written notice thereof. Supplier and Novartis shall then agree upon a schedule for the review and approval by Novartis of Supplier's production procedures for the Products, including without limitation the manufacturing site, manufacturing equipment, manufacturing process, manufacturing conditions or testing procedures within its facilities for the manufacture of the Products (collectively, the "Production Procedures"). After such initial Novartis approval, if Supplier should wish to change any of the Production Procedures, Supplier shall provide written notice of such proposed changes to Novartis at least [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] prior to implementation. Supplier and Novartis shall then agree upon a schedule for the review and approval by Novartis of such changes, which must be approved in writing by Novartis prior to being implemented, which approval shall not unreasonably be withheld. 6.4 In the event that regulatory action or applicable law require changes in the Specifications or any production procedures, then, subject to Novartis' prior written agreement, Supplier shall use its commercially reasonable best efforts to implement such changes as soon as reasonably practicable. Should such regulatory action or applicable law only require changes to the Products and not to any other products manufactured by Supplier, then Novartis shall pay the reasonable costs actually incurred by Supplier in implementing such changes. In all other events, the parties shall enter into good faith negotiations to allocate the costs of any such changes between them. 6.5 Supplier represents and warrants, and shall take all actions reasonably necessary to ensure, that all facilities, equipment and practices used to perform its responsibilities under this Agreement by or on behalf of Supplier, or any of Supplier's environmental or safety and health consultants or waste management or disposal contractors (collectively, the "Supplier Contractors"), will be during the term of this Agreement, in full compliance with all health, safety and environmental laws, statutes, ordinances, regulations, rules, permits and pronouncements. 6.5.1 Supplier assumes responsibility for disposing of any and all waste generated during the performance of its responsibilities under this Agreement (including, without 9 limitation, during any manufacturing, storage and transportation activities) in accordance with all legal and professional standards. 6.5.2 Notwithstanding anything to the contrary herein, (i) should Supplier and/or any Supplier Contractor fail to comply with the obligations set forth in this Section 6.5, then Supplier shall be solely responsible for any claims, suits, or liabilities resulting therefrom (including, without limitation, those based on strict liability and joint and several liability), and Supplier shall indemnify, defend and save Novartis (including officers, directors, employees and agents of Novartis) harmless from and against any and all such claims, suits, and liabilities; and (ii) Supplier shall indemnify, defend and save Novartis (including officers, directors, employees and agents of Novartis) harmless from and against any and all claims, suits, and liabilities which arise directly or indirectly from the storage, release, transportation or disposal of chemicals, raw materials, product, waste or any other substance by Supplier and/or any Supplier Contractor. 6.6 Packaging and labeling content for Products shall be determined by Novartis in its sole discretion. A representative sample or proof of all packaging materials and labels will be submitted to Novartis for approval prior to initial use. If Novartis wishes to institute changes in artwork, both parties will develop a mutually acceptable implementation schedule and such changes will be at Novartis' expense. Supplier shall purchase labeling and packaging components in accordance with Novartis artwork. Supplier shall not alter, change or in any way modify Novartis supplied artwork for any reason, without prior written consent from Novartis. Commencing on the date this Agreement is signed by the last party to sign it, Novartis shall be entitled to change the artwork on each SKU of Product one (1) time in each calendar year without charge. Novartis shall pay Supplier [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] per SKU for each additional artwork change. Notwithstanding the foregoing, Novartis shall not be charged for any artwork changes which are instigated by Supplier. 6.7 Neither party shall be liable for any failure to deliver or receive, or delay in delivery or receipt of, any shipment when such failure or delay shall be caused (directly or indirectly) by fire; flood; accident; explosion; sabotage; civil commotions; riots; invasions; wars (present or future); acts, restraints, requisitions, regulations, or directions of any governmental authority; compliance by a party with any request of any governmental authority, or any officer, department, agency, or committee thereof; compliance by a party with any request for material represented to be for purposes of (directly or indirectly) producing articles for national defense or national defense facilities; shortage of labor, fuel, power or raw materials; inability to obtain supplies; failures of normal sources of supplies; inability to obtain or delays of transportation facilities; any act of God; or any cause (whether similar or dissimilar to the foregoing) beyond the reasonable control of a party (a "Force Majeure Event"). Except as provided in Sections 6.7.1 and 7.1, if a Force Majeure Event occurs, then the affected party's performance shall be excused and the time for performance shall be extended for the period of delay or inability to perform due to such occurrence. 6.7.1 If any Force Majeure Event shall delay any shipment hereunder or the receipt thereof for more than [***CONFIDENTIAL TREATMENT REQUESTED, PORTION 10 OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] beyond the scheduled delivery date, then (a) if such Force Majeure Event is suffered by Novartis and not also by Supplier, Supplier shall have the right, at its option, to cancel such shipment without incurring any liability to Novartis with respect thereto, and (b) if such Force Majeure Event is suffered by Supplier and not also by Novartis, Novartis shall have the right to cancel its order and to purchase from a third party the amount of Product ordered without incurring any liability to Supplier with respect thereto until such time as Supplier is able to perform its obligations hereunder. 6.8 From time to time Supplier may provide Novartis with safety and health information, including, without limitation, warnings, material safety data sheets, precautionary safety measures, and instructions on proper care, use and handling, storage, and disposal of the Product. Novartis agrees to observe all precautions and instructions provided by Supplier and to communicate all such environmental, safety and health information to its employees. Novartis shall follow safe handling, storage, transportation, use and disposal practices with respect to the Product. 7. MEETING PRODUCT SUPPLY DEMANDS; BACK-UP SUPPLIER; RIGHT TO MANUFACTURE 7.1 In the event that, for any reason, Supplier is unable to supply conforming Product sufficient to meet Novartis' purchase orders made consistent with Section 3.2 in any material respect (an "Inability To Supply"), Novartis shall have the immediate right, exercisable upon written notice within [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] after any such event, to manufacture and package Product with a supplier other than Supplier (a "Back-Up Supplier"). Notwithstanding the foregoing, if Supplier's Inability To Supply is the result of an Exceptional Event (as defined below), then Novartis may not exercise its right to manufacture and package Product with a Back-Up Supplier until [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] after the commencement of the applicable Exceptional Event. If Novartis exercises its right pursuant to this Section 7.1 to utilize a Back-Up Supplier then the parties shall work together diligently to establish a Back-Up Supplier in accordance herewith. In the event that any Inability To Supply shall continue for more than [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***], then Novartis may immediately terminate this Agreement without liability to Supplier by giving Supplier [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] prior written notice of termination, and this Agreement shall terminate on such [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] unless prior thereto performance under this Agreement resumes and Supplier so notifies Novartis in writing. 7.1.1 Novartis shall act as Back-Up Supplier, utilizing the Novartis Manufacturing Facility, unless Novartis determines, in its sole discretion, that an interruption of 11 Product supply could result if the Novartis Manufacturing Facility is used, in which event, Novartis shall have the right to have a third party supplier of Novartis' choice (and reasonably acceptable to Supplier) act as Back-Up Supplier. 7.1.2 Supplier shall cooperate fully with Novartis and the Back-Up Supplier, and shall use commercially reasonable best efforts to enable Back-Up Supplier to qualify and validate the Back-Up Supplier's facilities and to manufacture and package the Product. Supplier shall give Back-Up Supplier prompt and unrestricted access to, or, if requested, Supplier immediately shall provide to Back-Up Supplier, all Technical Information. Any disclosure or use of Technical Information will be subject to the confidentiality restrictions set forth in Article 8 of this Agreement. Back-Up Supplier shall have the right to observe the operation of any laboratory and manufacturing and/or packaging facility of Supplier (subject to Supplier's obligations of confidentiality to third parties) and to have a reasonable number of employees or other representatives of Supplier visit the Back-Up Suppliers' facilities, at Novartis' option and in accordance with a mutually agreed time table, to demonstrate and explain any of the Technical Information and the manufacturing and packaging processes. 7.1.3 In the event that Novartis has the Back-Up Supplier manufacture and/or package Product pursuant to this Section 7.1, then Novartis shall pay to Supplier an amount equal to the amounts that Novartis would have owed Supplier pursuant to Section 7.3.2. In such an event, Novartis shall not be obligated to make any payment to Supplier pursuant to Section 7.3.3. 7.1.4 For purposes of this Agreement, the term "Exceptional Event" shall mean a Force Majeure Event which, at the time of its commencement, the parties reasonably expect would be resolved within [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] from the date of its commencement. 7.2 If Supplier is unable to supply conforming Product in accordance with Novartis' firm orders made pursuant to and in accordance with the terms and conditions of this Agreement, and as a direct result of Supplier's nonperformance, (i) Novartis is unable to supply Product to the marketplace, (ii) an out-of-stock condition ensues at the Novartis warehouse and (iii) Novartis receives backorders for the Product, then Novartis shall have the remedy set forth in Section 4.2.5 of the License Agreement. Failure by Supplier to supply Product ordered pursuant to a change order issued to Supplier pursuant to Section 3.3 hereof which increased the order for the related month above Novartis' forecast shall not be considered nonperformance by Supplier for purposes of this Section 7.2. 7.3 In consideration for the payments made to Supplier under the License Agreement and this Agreement, Novartis shall have the option to manufacture and/or package the Product, and/or have a third party supplier of Novartis' choice (and reasonably acceptable to Supplier) ("Third Party Supplier") manufacture and/or package the Product and any future pharmaceutical product developed using the OraSolv Technology with respect to which Novartis licenses rights from Supplier. Novartis may exercise such right, by [***CONFIDENTIAL TREATMENT 12 REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] written notice to Supplier, at any time. 7.3.1 Supplier shall cooperate fully with Novartis and the Third Party Supplier, if any, and shall use commercially reasonable best efforts to enable Novartis and/or the Third Party Supplier to qualify and validate the Novartis Manufacturing Facility or the Third Party Supplier's facilities and to manufacture and package the Product. Supplier shall give Novartis and the Third Party Supplier prompt and unrestricted access to, or, if requested, immediately shall provide to Novartis and the Third Party Supplier, all Technical Information. Any disclosure or use of Technical Information will be subject to the confidentiality restrictions set forth in Article 8 of this Agreement. Novartis and/or the Third Party Supplier shall have the right to observe the operation of any laboratory and manufacturing and/or packaging facility of Supplier (subject to Supplier's obligations of confidentiality to third parties) and to have a reasonable number of employees or other representatives of Supplier visit the Novartis Manufacturing Facility or the Third Party Supplier's manufacturing and/or packaging facilities upon reasonable notice and during normal business hours, at Novartis' option and in accordance with a mutually agreed time table, to demonstrate and explain any of the Technical Information and the manufacturing or packaging processes. 7.3.2 Novartis shall reimburse Supplier for all reasonable, pre-approved and fully-documented costs and expenses, including the cost of reasonable personnel time, development, scale-up and validation costs, and other out-of-pocket expenses actually incurred by Supplier in connection with the technology transfer anticipated by this Section 7.3. 7.3.3 In the event Novartis elects to exercise this option, Novartis will pay to Supplier total transfer costs not to exceed [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] according to the following payment schedule: 1. Upon exercising this option [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] 2. Upon order of equipment [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] 3. Upon completion of installation of equipment [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] 4. Upon completion of validation of equipment [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] 13 Notwithstanding the foregoing, if the license granted to Novartis under the License Agreement has been converted to a fully paid-up, royalty-free, irrevocable, nonexclusive license under the CIMA Patents and Know-How pursuant to Section 8.5 of the License Agreement and, therefore, Novartis has rights to the Technical Information pursuant to that Section 8.5, Novartis shall not be required to make any payments to Supplier under this Section 7.3 upon exercising the option to manufacture and/or package the Product. 7.4 For purposes of this Agreement, the following terms shall have the meaning set forth below: 7.4.1 "Novartis Manufacturing Facility" shall mean a manufacturing and/or packaging facility of Novartis or a Novartis Affiliate. 7.4.2 "Technical Information" means all know how, trade secrets, inventions, data, technology and other information now owned or licensed by Supplier or hereafter acquired or licensed by Supplier during the term of this Agreement, including that related to the OraSolv Technology (as defined in the License Agreement) which are necessary or useful to the manufacture, packaging, use or sale of Products including, but not limited to, (i) medical, chemical and other scientific data, (ii) processes and analytic methodology used in the validation, stability testing and other testing or analysis of such Products and (iii) packaging and manufacturing data and processes. 8. TRADE SECRETS, CONFIDENTIALITY AND PUBLICITY 8.1 Article 7 of the License Agreements incorporated herein by reference. 9. QUALITY OF THE PRODUCT; COMPLIANCE WITH LAW 9.1 Supplier hereby represents and warrants that: 9.1.1 no Products constituting or being a part of any shipment hereunder shall at the time of any such shipment be (i) adulterated or misbranded within the meaning of the Federal Food, Drug and Cosmetic Act, as amended from time to time (the "Act"), or regulations promulgated thereunder, as such law or regulation is constituted and in effect at the time of any such shipment, or (ii) an article which may not, under the provisions of Sections 404, 505 or 512 of the Act, be introduced into interstate commerce; 9.1.2 all Products furnished to Novartis hereunder shall be in full compliance with the Specifications at the time of delivery, and shall remain in full compliance with the Specifications for the full period of the expected shelf-life of such Products, so long as the Products are stored in accordance with the Specifications (absent convincing proof to the contrary, proper storage shall be determined by comparing delivered Product with Product from the same production lot which Supplier has held as a retained sample; if only the delivered Product is non-compliant then the failure shall be deemed to be the result of improper storage); 14 9.1.3 Supplier shall perform its obligations hereunder in compliance with all applicable federal, state and local laws and regulations, including without limitation the Act, FDA's then current Good Manufacturing Practices ("cGMP"), and any and all health, safety and environmental laws and regulations applicable to Supplier's operations and performance hereunder; 9.1.4 all Products furnished to Novartis hereunder shall have been manufactured in accordance with the terms of the QA Agreement; 9.1.5 Supplier has complied with, and during the term of this Agreement will continue to comply with, the laws, rules and regulations which affect the ability of Supplier to manufacture and package the Products in commercial quantities for use and sale in the Territory; 9.1.6 Supplier's manufacturing, laboratory and packaging facilities shall remain in compliance with cGMP at all times during the term of this Agreement to the extent applicable to the manufacture and packaging of the Products; 9.1.7 Supplier has disclosed to Novartis all material information concerning Supplier's facilities and Supplier's ability to perform its obligations hereunder which is in Supplier's possession as of the date this Agreement is executed by Supplier, and will use reasonable best efforts to continue to disclose such information to Novartis in the future, promptly after receiving or becoming aware of it; and 9.1.8 the title conveyed on all Products furnished to Buyer hereunder shall be good, and its transfer rightful, and the Products shall be delivered free from any security interest or other lien or encumbrance. 9.2 EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED IN THIS AGREEMENT, SUPPLIER MAKES NO WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, CONCERNING THE PRODUCTS, OR THE MERCHANTABILITY OR FITNESS THEREOF FOR ANY PURPOSE. 9.3 In the event that Products are delivered to Novartis by Supplier which are not in compliance with the warranties made in Section 9.1 then, at Novartis' option (i) Supplier shall replace the non-compliant Products at no additional charge (which replacement Products shall be delivered to Novartis as soon as reasonably practicable, but in no event more than sixty (60) days after the initial notification by Novartis); or (ii) Supplier shall credit Novartis' account in the amount of the price of the non-compliant Products. 10. INDEMNIFICATION AND INSURANCE 10.1 Novartis agrees to defend, indemnify and hold harmless Supplier against any and all claims, damages, expenses, reasonable attorneys' fees, settlement amounts and judgments arising out of any personal injury, bodily injury or property damage to a third party alleged to have been caused by the Products, except to the extent that such injury or damage was the result of any breach of this Agreement by Supplier, including any warranty contained herein, or 15 the result of any latent defects in the Products caused by the negligence or willful misconduct of Supplier. Supplier shall promptly notify Novartis of any such claim or action, shall reasonably cooperate with Novartis in the defense of such claim or action, and shall permit Novartis to control the defense and settlement of such claim or action, all at Novartis' cost and expense. 10.2 Supplier shall defend, indemnify and hold Novartis harmless against any and all claims, damages, expenses, attorneys' fees, settlement amounts, royalty fees, and judgments arising out of (i) any claim of personal injury, bodily injury or property damage to a third party to the extent that such injury or damage is the result of (a) any breach of this Agreement by Supplier, including any warranty contained herein, or (b) any claim regarding latent defects in the Products caused by the negligence or willful misconduct of Supplier; or (ii) any claim regarding a work-related injury to any Supplier employee. Novartis shall promptly notify Supplier of any such claim or action, shall reasonably cooperate with Supplier in the defense of such claim or action, and shall permit Supplier to control the defense and settlement of such claim or action, all at Supplier's cost and expense. 10.3 Supplier shall obtain, at its own expense, a policy of insurance in amounts no less than those specified below: 10.3.1 naming Novartis as an additional insured on a policy of general liability insurance with combined limits of not less than $1,000,000 per occurrence and $1,000,000 per accident for bodily injury, including death, and property damage; 10.3.2 workers' compensation and disability insurance in the amounts required by the law of the state(s) in which its workers are located, and employer's liability insurance with limits of not less than $1,000,000 per occurrence; 10.3.3 naming Novartis as an additional insured on a policy of product liability insurance with limits not less than $1,000,000; 10.3.4 property insurance for the replacement value of the facilities and equipment used to produce the Products; and 10.3.5 naming Novartis as an additional insured on a policy of excess insurance with limits not less than $5,000,000. 10.4 Supplier shall provide to Novartis evidence of its insurance. Supplier shall provide Novartis thirty (30) days prior written notice of any cancellation or change in coverage. 10.5 Novartis warrants that it maintains a policy or program of insurance or self-insurance at levels sufficient to support the indemnification obligations assumed herein. Upon request, Novartis shall provide to Supplier evidence of its insurance. Novartis shall provide to Supplier thirty (30) days prior written notice of any cancellation or change in coverage. 10.6 THE EXPRESS OBLIGATIONS STATED IN THIS ARTICLE 10 AND IN ARTICLES 4 AND 9 ARE IN LIEU OF ALL OTHER LIABILITIES OR OBLIGATIONS OF 16 SUPPLIER FOR DAMAGES, INCLUDING BUT NOT LIMITED TO DIRECT OR CONSEQUENTIAL DAMAGES, ARISING OUT OF OR IN CONNECTION WITH THE DELIVERY, USE OR PERFORMANCE OF SUPPLIER'S PRODUCTS. 11. TERM AND TERMINATION 11.1 This Agreement shall commence on the Effective Date hereof and shall continue in effect for [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] (the "Initial Term") and, thereafter, subject to agreement on pricing pursuant to Section 11.1.3, shall automatically renew for an unlimited number of [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] periods (the "Renewal Terms"). 11.1.1 Novartis may terminate this Agreement at no cost, effective at the end of the Initial Term or at the conclusion of any Renewal Term, by giving Supplier at least [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] prior written notice of such termination. 11.1.2 Novartis may terminate this Agreement in accordance with the provisions of Section 7.1. 11.1.3 Subject to Section 11.1.1, commencing on or about [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] prior to the conclusion of the Initial Term or any Renewal Term, the parties shall meet to negotiate pricing for the Products for one (1) or more Renewal Terms. 11.1.3.1 If the parties reach such an agreement on price, then this Agreement shall be deemed to be renewed and Supplier shall continue to supply the Products to Novartis in accordance with the terms and conditions set forth herein. 11.1.3.2 In the event that the parties are unable to reach an agreement on price by the end of the Initial Term, then this Agreement shall be deemed to be automatically renewed for a period of [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] from the end of the Initial Term (the "Transition Term"), with no further right of automatic renewal. In such an event, (i) during the Transition Term, Supplier shall charge Novartis the Transition Price (as defined below) for Products; and (ii) should Novartis choose to transfer production of the Products to Novartis or to a Novartis facility or to a Third Party Supplier pursuant to Section 7.3, then Novartis shall pay to Supplier an amount equal to the amounts that Novartis would otherwise have owed Supplier pursuant to Section 7.3.2 and [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED 17 SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] of the amounts that Novartis would otherwise have owed Supplier pursuant to Section 7.3.3. 11.1.3.3 For purposes of this Agreement, the term "Transition Price" for any Product shall mean the price which Supplier charged Novartis for the Product in accordance with this Agreement during the final year of the Initial Term, adjusted so as to permit Supplier to earn a percent profit margin on the Product which is [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] than the average percent profit margin which Supplier actually earned on the manufacture of prescription drug products during the final year of the Initial Term. By way of example, if the average profit margin which Supplier actually earned on the manufacture of prescription drug products during the final year of the Initial Term was [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***], then the price which Supplier charged Novartis for the Products in accordance with this Agreement during the final year of the Initial Term would be adjusted so as to permit Supplier to earn a [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] profit margin on the Products. The Transition Price (including the profit margin data on which it is based) shall be subject to review by a CPA Firm in accordance with Section 2.6. 11.2 In the event that either party shall materially breach this Agreement, the other party shall give such party written notice specifying such breach with reasonable detail. Should the breaching party fail to cure such breach within [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] of its receipt of such notice, then the other party may terminate this Agreement. In addition, either party may terminate this Agreement with immediate effect upon giving written notice to the other party in the event of insolvency, assignment for the benefit of creditors, or bankruptcy proceedings by or against the other party. 11.3 In order to permit Novartis to make a smooth transition to a new supplier of Products, in the event that this Agreement should terminate for any reason other than a termination pursuant to Section 11.2 due to the material breach of Novartis, then Novartis shall be permitted, in its discretion, to continue to submit purchase orders to Supplier in accordance with Section 3.2, and Supplier shall continue to supply Products to Novartis in accordance with such purchase orders and this Agreement, for a period of [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] after the termination of this Agreement, and this Agreement shall remain in effect with respect to such purchase orders until the expiration or termination of the purchase orders. 11.4 Notwithstanding any termination of this Agreement, the provisions of Sections 6.5.2, 7.2, 7.3, 7.4, 8, 9, 10, 11.3 and 13 shall remain in effect. Notwithstanding the foregoing, in the event that this Agreement is terminated pursuant to Section 11.2 due to the material breach of Novartis, then Novartis may not exercise its rights under Section 7.3 until it has cured such breach, and, in any event, Novartis shall exercise any rights under Section 7.3 18 within [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] after the termination of this Agreement. 12. AUDIT AND INSPECTION RIGHTS 12.1 During the term of this Agreement and any extension thereof, Novartis shall have the right, at its sole cost and expense, to send Novartis representatives to audit, inspect and observe the manufacture, storage, disposal and transportation of the Products, and all other materials related thereto or used in connection therewith, with reasonable notice during normal business hours. Such Novartis representatives shall have no responsibility for supervision of Supplier employees performing the manufacture, storage, disposal or transportation operations themselves. The audit and inspection rights set forth in this Section 12.1 are for the purpose of determining Supplier's compliance with the terms of this Agreement. 12.2 Supplier shall make available to Novartis all records and reports relating to the manufacture, storage, disposal and transportation of the Products, and all other materials related thereto or used in connection therewith, including without limitation those documents relating to analytical data, for Novartis' review during normal business hours and upon reasonable prior notice, and Novartis shall have the right to copy these documents as required. Such records and reports shall be subject to the confidentiality provisions of Section 8 of this Agreement. Novartis shall have the right to conduct inventory reconciliation audits and other audits as reasonably required for its internal control, at Novartis' sole cost and expense. 12.3 If, as a result of any such inspection, Novartis concludes that Supplier is not in compliance with any of its obligations hereunder, it shall so notify Supplier in writing, specifying such areas of noncompliance in reasonable detail. Supplier shall provide to Novartis within [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] of Novartis' request a written action plan satisfactory to Novartis, with a time line for resolution of the problems identified within a reasonable, mutually agreed upon time frame. 12.4 Supplier shall inform Novartis within [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] of any notification to Supplier of any site visits to any of Supplier's facilities by the FDA, state or federal regulatory agencies or any other governmental or regulatory agency, directly relating to the manufacture of the Products, and shall provide to Novartis all other materials related thereto or used in connection therewith. Novartis shall have the option of participating in any site visit by any governmental or regulatory agency, if the site visit directly relates to the manufacturing, storage, disposal and transportation of the Products , subject to such reasonable restraints on such participation as Supplier may reasonably require. Should Novartis not participate in the site visit, Supplier shall report in writing the results of the visit to Novartis within [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] of the occurrence thereof. In the event that any such governmental or regulatory agency finds that the site is deficient or unsatisfactory in any respect, Supplier shall 19 cure all deficiencies within the earlier of [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] or such cure period as ordered by the government or regulatory agency. If all deficiencies are not cured within the required time frame, Novartis shall have the option to immediately terminate this Agreement, without liability. 12.5 In the event that any provision of Article 12 should conflict with any provision of the QA Agreement, then the applicable provision of the QA Agreement shall take precedence over the applicable provision of this Agreement. 13. MISCELLANEOUS 13.1 Each party acknowledges and agrees that any failure on the part of the other party to enforce at any time, or for any period of time, any of the provisions of this Agreement shall not be deemed or construed to be a waiver of such provisions or of the right of such other party thereafter to enforce each and every such provision. 13.2 If and to the extent that any provision of this Agreement is determined by any legislature, court or administrative agency to be, in whole or in part, invalid or unenforceable, such provision or part thereof shall be deemed to be surplusage and, to the extent not so determined to be invalid or unenforceable, each provision hereof shall remain in full force and effect unless the purposes of this Agreement cannot be achieved. In the event any provisions shall be held invalid, illegal or unenforceable the parties shall use commercially reasonable efforts to substitute a valid, legal and enforceable provision which insofar as practical implements the purposes hereof. 13.3 This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York as though made and to be fully performed in said State. 13.4 All notices required or permitted hereunder shall be given in writing and sent by facsimile transmission, or mailed postage prepaid by first-class certified or registered mail, or sent by a nationally recognized express courier service, or hand-delivered to the following addressees: Novartis: Novartis Consumer Health, Inc. 560 Morris Avenue Summit, NJ 07901 Attn: General Counsel Supplier: CIMA LABS INC. 10000 Valley View Road Eden Prairie, MN 55344 Attn: Vice President, Business Development or to such other address as may be specified in a notice given to the other party in accordance with this Section. Any notice, if sent properly addressed, postage prepaid, shall be deemed made 20 three (3) days after the date of mailing as indicated on the certified or registered mail receipt, or on the next business day if sent by express courier service or on the date of delivery or transmission (if delivered or sent during ordinary business hours, otherwise on the next business day) if hand-delivered or sent by facsimile transmission. 13.5 The captions of each section of this Agreement are inserted only as a matter of convenience and for reference and in no way shall be deemed to define, limit, enlarge, or describe the scope of this Agreement and the relationship of the parties hereto, and shall not in any way affect this Agreement or the construction of any provisions herein. 13.6 This Agreement, including all Exhibits annexed hereto (which are incorporated herein by reference), represents and incorporates the entire understanding between the parties hereto with respect to the subject matter of this Agreement, and each party acknowledges that there are no warranties, representations, covenants or understandings of any kind, nature or description whatsoever made by any party to any other, except such as are expressly set forth herein. This Agreement shall not be subject to change or modification except by the execution of a writing specified to be an explicit amendment to this Agreement duly executed by all parties hereto. Notwithstanding the foregoing, the terms and conditions set forth in this Agreement shall take precedence over any contrary or inconsistent terms and conditions appearing or referred to in any Exhibits annexed hereto, unless the Exhibit explicitly states otherwise. 13.7 The parties recognize that, during the term of this Agreement, a purchase order, acknowledgment form or similar routine document (collectively, "Forms") may be used to implement or administer provisions of this Agreement. Therefore, the parties agree that the terms of this Agreement shall prevail in the event of any conflict between this Agreement and the printed provisions of such Forms, or typed provisions of Forms that add to, vary, modify or are at conflict with the provisions of this Agreement. 13.8 Nothing in this Agreement shall create between the parties a partnership, joint venture or principal-agent relationship and, for the avoidance of doubt, each of Supplier and Novartis now confirms and accepts that it is an independent contractor trading for and on its own behalf. 13.9 Neither party hereto shall assign or otherwise transfer any of its rights or obligations under this Agreement, in whole or in part, without the prior written consent of the other party, except that either party may, without the necessity for such consent, assign this Agreement or any interest herein or any right hereunder, to any of its Affiliates or successors by merger or sale of all or substantially all of its business unit to which this Agreement relates. This Agreement shall be binding upon any permitted Assignee or successor of either party. Any assignment that is not in accordance with this Section 13.9 will be void. 13.10 Novartis shall have the right, not to be unreasonably exercised, to disapprove of any subcontractor or sub-subcontractor retained or to be retained to assist Supplier in the performance of its obligations hereunder. Any such approval or disapproval shall not relieve Supplier of its obligations under this Agreement. Supplier may not make use of the services of 21 any subcontractor or sub-subcontractor in the performance of the Services if Novartis has disapproved of that subcontractor or sub-subcontractor. 13.11 This Agreement may be executed in two or more counterparts, each of which shall constitute an original and all of which together shall constitute a single instrument. 13.12 This Agreement is understood and accepted by Supplier as a general Novartis Agreement that facilitates application to all Novartis Affiliates in the world. Due to Affiliate-specific requirements relating to product supply, it is further recognized and agreed that each Novartis Affiliate will finalize their specific supply details, including Annexes if the Affiliate so elects, separately with Supplier; provided, however, that Supplier agrees (1) to the extent volume discounts are then available to Novartis, as Novartis Affiliate incremental volume is added to total Product production, pricing for the Product to all Novartis Affiliates will be discounted to appropriately reflect the increase in total Novartis and Novartis Affiliate volume for Product meeting the criteria set forth in (2)(a) - (c) of this Section 13.12; and (2) each Novartis Affiliate shall be entitled to, but not bound by, financial terms no less favorable than the terms set forth in Article 2 hereof for manufacture and packaging by Supplier of a product of (a) the same formulation and dosage as the Product, (b) packaged in the same blister packaging and, (c) in the same pack count. Pricing for external packaging and labeling shall be negotiated in good faith by Supplier and the Novartis Affiliate; provided, that, such pricing is based on competitive costing. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. CIMA LABS INC. NOVARTIS CONSUMER HEALTH, INC. By: /s/ John M. Siebert By: /s/ Tim Strong ------------------- -------------- Name: John M. Siebert Name: Tim Strong Title: President & CEO Title: Sr VP Supply Chain Date: 2 September 2001 Date: 8/24/01 Ver. Fixed 01/1-4 22 EXHIBIT A List of current Novartis Triaminic Softchews SKU's as of January 1, 2001: [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] EXHIBIT B Novartis Consumer Health. Inc. 560 Morris Ave. Summit, New Jersey 07901 NOVARTIS Tele: (908) 598-7600 Fax: (908) 598-7187 QUALITY AGREEMENT INDEX & CONTACT LIST Date: May 16, 2000 To: CIMA cc: ###, Legal, QACS File, QACS Product Manual Document: CIMA Revision No.: 02 Quality Assurance Agreement for CIMA CIMA 01 Attachment Attachment Title Attachment Number Revision Number A.01 Testing requirements for Triaminic(R) Softchew(R) 01 Tablets B.01 Validation requirements for Triaminic(R) Softchew(R) 01 Tablets C.01 Contractor guideline for Triaminic(R) Softchew(R) 01 Tablets D.01 Quality Control line check and sampling procedure for 00 Triaminic(R) Softchew(R) Tablets, per CIMA SOP ### E.01 Approved Supplier list for Triaminic(R) Softchew(R) 01 Tablets CIMA Address: 10000 Valley View Road City, State Zip Eden Prairie, MN 55344 Key Contacts at Novartis Key Contacts at CIMA Name Telephone No. Name Telephone No. ###, Manager Quality ### ###, Director QC ### Assurance Contract Supply John Kosewick 612-947-8778 VP Regulatory Compliance Approved by NCHIs QACS: /s/ ### Date: 25 May 00 --------------------- --------------- ### - [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] Approved by CIMA: /s/ J. Kosewick Date: 25 May 00 ------------------------- --------------- CHANGE HISTORY Reason for Change: 3/30/2000--Document revised to add information specific to SKU ### TRIAMINIC(R) Softchews(R) Cough - 1/2" Strawberry - ### ### - [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] QUALITY ASSURANCE CONTRACT SUPPLY AGREEMENT CIMA - 001 TESTING REQUIREMENTS FOR TRIAMINIC(R) SOFTCHEW(R) TABLETS ================================================================================ TESTING REQUIREMENTS FOR RAW MATERIALS, COMPONENTS, AND PACKAGED PRODUCT

SKU Product Code No.: - -------------------------------------------------------------------------------- SKU ### Triaminic(R) Softchews(R) Cold & Allergy 1/2" Orange ### SKU ### Triaminic(R) Softchews(R) Cough & Cold 1/2" Cherry ### SKU ### Triaminic(R) Softchews(R) Throat Pain & Cough, 5/8" ### Grape SKU ### Triaminic(R) Softchews(R) Cough-Strawberry ###

================================================================================ Testing per Approved Blend Product Specification(s), and referenced on the Certificate of Analysis -- BLEND TESTING [ ] N/A [ ] Full Testing [X] Reduced Testing(explain below) Explanation: Per specifications; ### ================================================================================ Testing per Approved Product Specification(s), and referenced on the Certificate of Analysis -- PACKAGED PRODUCT TESTING / FINISHED PRODUCT TESTING [ ] N/A [ ] Full Testing [X] Reduced Testing(explain below) Explanation: Per specifications; ### ================================================================================ Testing per Approved Raw Material Specifications - RAW MATERIAL TESTING [ ] N/A [ ] Full Testing [X] Reduced Testing(explain below) Explanation: Per SOP ### & raw material specifications. ================================================================================ Testing per Approved Component Specifications -- COMPONENT TESTING / PACKAGING MATERIALS [ ] N/A [ ] Full Testing [X] Reduced Testing(explain below) Explanation: Per packaging specifications. ================================================================================ FOR REFERENCE ONLY - KEY STANDARD OPERATING PROCEDURE(s) SOP #: OOS / Retest SOP ### SOP #: Reduced Testing & Supplier Qualification Program ### SOP #: Vendor Audit Program ### SOP #: Quality Control Line Check and Sampling Procedure for Triaminic(R) Softchews(R), SOP # ### ================================================================================ ### - [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] QUALITY ASSURANCE CONTRACT SUPPLY AGREEMENT CIMA - 001 VALIDATION REQUIREMENTS FOR TRIAMINIC(R) SOFTCHEW(R) TABLETS ================================================================================

Product: Code: NCHI Package List No.: - -------------------------------------------------------------------------------- Triaminic(R) Softchews(R) Cold & ### ### Allergy 1/2" Orange Triaminic(R) Softchews(R) Cough ### ### & Cold 1/2" Cherry Triaminic(R) Softchews(R) Throat ### ### Pain & Cough, 5/8" Grape ================================================================================

Validation Area Required Validation Completed (Check box below if completed) - -------------------------------------------------------------------------------- Manufacturing Process [X] Yes [ ] No [ ] Cleaning [X] Yes [ ] No [ ] Validation Packaging Process [X] Yes [ ] No [ ] Cleaning [X] Yes [ ] No [ ] Validation Child Resistant [X] Yes [ ] No [X] SKU ### only. NCHI approval Testing letter dated Oct. 29, 1997 Blend Product [X] Yes [ ] No Copy of Data Obtained Lot Expiration Dating [ ] Yes [ ] No Numbers: Blend Product [X] Yes [ ] No [ ] Poly drums with plastic Storage Conditions liner over the lid, less than 25 grains/lbs of air. Test Method(s) [X] Yes [ ] No [ ] Transfer Required Cross Validation [X] Yes [ ] No [ ] between laboratories Test Method [X] Yes [ ] No [ ] Validation Required Stability Data [X] Yes [ ] No Copy of Data Obtained Lot (Supports Expiry) [ ] Yes [ ] No Numbers: ================================================================================

Manufacturing and control procedures, including Cleaning Procedures must be validated. CIMA will be responsible for process (manufacturing & packaging) validation. CIMA will be responsible for cleaning validation. CIMA will be responsible for analytical testing validation. CIMA will be responsible for IQ/OQ and equipment validation. The validation responsibility included performance of validation and maintenance of the associated documentation is CIMA responsibility. CIMA will provide NCHIs QACS with the validation protocols for review and approval prior to implementation. The final validation report(s) will be sent to NCHIs QACS for review and approval upon completion of validation activities. ### - [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] QUALITY ASSURANCE CONTRACT SUPPLY AGREEMENT CIMA - 001 VALIDATION REQUIREMENTS FOR TRIAMINIC(R) SOFTCHEW(R) TABLETS ================================================================================

Product: Code: NCHI Package List No.: - -------------------------------------------------------------------------------- Triaminic(R) Softchews(R) ### ### Cough 1/2" Strawberry

================================================================================

Validation Area Required Validation Completed (Check box below if completed) - -------------------------------------------------------------------------------- Manufacturing Process [X] Yes [ ] No [ ] Cleaning [X] Yes [ ] No [ ] Validation Packaging Process [X] Yes [ ] No [ ] Cleaning [X] Yes [ ] No [ ] Validation Child Resistant [ ] Yes [X] No [ ] Testing Blend Product [X] Yes [ ] No Copy of Data Obtained Lot Expiration Dating [ ] Yes [ ] No Numbers: Blend Product [X] Yes [ ] No [ ] Poly drums with plastic liner Storage Conditions over the lid, less than 25 grains/lbs of air. Test Method(s) [X] Yes [ ] No [ ] Transfer Required Cross Validation [X] Yes [ ] No [ ] between laboratories Test Method [X] Yes [ ] No [ ] Validation Required Stability Data [X] Yes [ ] No Copy of Data Obtained Lot (Supports Expiry) [ ] Yes [ ] No Numbers: ================================================================================

Manufacturing and control procedures, including Cleaning Procedures must be validated. CIMA will be responsible for process (manufacturing & packaging) validation. CIMA will be responsible for cleaning validation. CIMA will be responsible for analytical testing validation. CIMA will be responsible for IQ/OQ and equipment validation. The validation responsibility included performance of validation and maintenance of the associated documentation is CIMA responsibility. CIMA will provide NCHIs QACS with the validation protocols for review and approval prior to implementation. The final validation report(s) will be sent to NCHIs QACS for review and approval upon completion of validation activities. ### - [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] QUALITY ASSURANCE CONTRACT SUPPLY AGREEMENT CIMA - 001 Title: Contractor Guideline for CIMA, Triaminic(R) Softchew(R) Tablets Revision Number: 00 Supersedes: None 1. PURPOSE: This guideline will describe the sampling requirements (line & legal retains), expiry term coding, lot coding, and batch record content for Triaminic(R) Softchew(R) Tablets at CIMA. 2. SCOPE: This procedure applies to the following product Manufactured and/or Packaged at CIMA.

Manufacturing Product Code Number - -------------------------------------------------------------------------------- Triaminic(R) Softchews(R) Cough- 1/2" Strawberry ### Triaminic(R) Softchews(R) Cold & Allergy 1/2" Orange ### Triaminic(R) Softchews(R) Cough & Cold 1/2" Cherry ### Triaminic(R) Softchews(R) Throat Pain & Cough, 5/8" Grape ###

3. RESPONSIBILITIES: 3.1. CIMA is responsible for complying with this procedure. 3.2. If CIMA can not comply with this procedure they must inform Novartis Consumer Health, Inc. (NCHI) Quality Assurance Contract Supply (QACS) in writing with the rationale and proposed changes for the document. 3.3. QACS is responsible for the issuance, revision, and control of this procedure. 3.4. Only QACS has the authority to change this procedure. 4. PROCEDURE: RETAINS 4.1. From each batch/lot of product produced a minimum of three cases per lot will be pulled evenly from the beginning, middle, and end of every batch/lot of product. Ensure the product is labeled to identify when and from where the samples were taken. 4.1.1. All retains and batch records will be forwarded to QACS at the following address: Novartis Consumer Health, Inc. Quality Assurance Contract Supply 560 Morris Ave Summit, NJ 07901-1312 ### - [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] 4.2. EXPIRY TERM CODING 4.2.1. The expiration dating on the cartons must appear as follows: - EXP 01/01 - Two digit month - Two digit year 4.2.2. The expiration dating on the blister cards and shippers must appear as follows: - EXP 01/2001 - Two digit month - Four digit year QUALITY ASSURANCE CONTRACT SUPPLY AGREEMENT CIMA - 001 Contractor Guideline for CIMA, Triaminic(R) Softchew(R) Tablets Revision Number: 00 Supersedes: None Lot coding will adhere to a coding procedure using seven digits defined as follows: - First & second digit represents a particular product SKU: - T1 - Triaminic(R) Softchew(R) Cold & Allergy, 1/2" Orange. - T2 - Triaminic(R) Softchew(R) Cold & Cough, 1/2" Cherry. - T3 - Triaminic(R) Softchew(R) Throat Pain & Cough, 5/8" Grape. - T5 - Triaminic(R) Softchew(R) Cough, 1/2", Strawberry - Third digit represents the year, 1998 => 8. - Fourth digit represents the month, Jan => A, Feb => B... (do not use "I"). - Fifth & sixth digits represent a sequential number for the month. - Seventh digit will only be used if the bulk lot is split during packaging, each portion must be assigned its own unique lot number using an alpha suffix (i.e., A, B, C, etc.). 4.3. BATCH RECORD CONTENT - CIMA will maintain full manufacturing and packaging batch records. The following batch record documents will be forwarded to NCHIs ACS as outlined below: Required in Batch Record

YES NO Record(s) X NCHI Purchase Order X Batch Manufacturing Record (weighting & blending, compression, blister packaging, & final packaging) X Master Packaging Specification X "CIMA Raw Material Test Form for all Actives" X Vendor CofA for Active Raw Material(s) X Finished Product CofA X Product Reconciliation X Component Reconciliation X QC On-line Inspection Reports Manufacturing & Packaging X Certificate(s) for Critical Components X Copies of all Labeling X QC Record(s) and test results for the Release of Blend X QC Record(s) and test results for the Release of Raw Materials X QC Record(s) and test results for the Release of Components X QC Record(s) and test results for the Release of Finished Product X Line Clearance & Set-up Documentation for the Manufacturing and Packaging Process X Documentation and/or Investigation for any Process Deviation(s) X Documentation indicating that samples have been forwarded to the outside or internal laboratory for Testing X Cleaning and sanitization records. X Packaging Waivers signed by the appropriate NCHI Departments (Regulatory, Package Development, & Contract Operations). X Manufacturing Deviations signed by NCHIs QACS.

QUALITY ASSURANCE CONTRACT SUPPLY AGREEMENT CIMA - 001 Title: Contractor Guideline for CIMA, Triaminic(R) Softchew(R) Tablets Revision Number: 00 Supersedes: None HISTORY PAGE

REVISION NO. DATE CHANGE - ------------ ---- ------ 02 3/30/2000 Added Information specific to Triaminic- Softchew-Cough - Strawberry flavor SKU

QUALITY ASSURANCE CONTRACT SUPPLY AGREEMENT CIMA - 001 AQL'S & DEFECT CATEGORIES FOR PACKAGING AND FINISHED PRODUCT TRIAMINIC(R) SOFTCHEW(R) TABLETS Refer to CIMAs SOP ###. ### - [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] QUALITY ASSURANCE CONTRACT SUPPLY AGREEMENT CIMA - 001 APPROVED SUPPLIER LIST FOR TRIAMINIC(R) SOFTCHEW TABLETS(R) List all actives, excipients, and components used to manufacture/package material for NCHL [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] EXHIBIT C - TRIAMINIC PRICING [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] Exhibit D Lead Times [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] EX-10.3 5 c66053ex10-3.txt LICENSE AGREEMENT #1, EXECUTED 9/2/01 EXHIBIT 10.3 LICENSE AGREEMENT AMENDMENT NO. 1 This License Agreement Amendment No. 1 (the "Amendment") is made and entered into as of this _____ day of April 2001, by and between Novartis Consumer Health, Inc., 560 Morris Avenue, Summit, New Jersey 07901 ("Novartis"), and CIMA LABS INC., 10000 Valley View Road, Eden Prairie, MN 55344 ("CIMA"). WITNESSETH: WHEREAS CIMA and Novartis are parties to a License Agreement, dated July 1, 1998 (the "License Agreement"), by which Novartis licensed from CIMA certain rights with respect to CIMA Patents and Know-How and the Products, as defined and set forth more fully therein; and WHEREAS the parties wish to amend the License Agreement; NOW, THEREFORE, in consideration of the mutual covenants, agreements and obligations set forth herein, CIMA and Novartis hereby agree as follows: 1. Section 4.2 of the License Agreement is hereby modified by deleting it in its entirety and replacing it with the following: 4.2 As further consideration for the license granted to NCH under this License Agreement as stipulated in Article 2 above, NCH shall pay to CIMA a running non-refundable royalty of (i) [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] of Net Sales [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] of all Products in the Field and in the Territory, (ii) [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] of Net Sales [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] of all Products in the Field and in the Territory, and (iii) [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] of Net EXHIBIT 10.3 Sales [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] of all Products in the Field and in the Territory, in each case in accordance with the provisions of Article 5. The running royalty shall be fully creditable against minimum annual royalties, as set forth below in Section 4.4. 2. Article 7 of the License Agreement is hereby modified by deleting it in its entirety and replacing it with the following: 7. CONFIDENTIALITY 7.1 During the period that this Agreement is in effect and thereafter, CIMA and NCH shall not disclose to anyone in any manner whatsoever or use for any purpose other than its performance of this Agreement (except as authorized in writing by the disclosing party) any information it receives from the other party (the "Information"), including, without limitation, intellectual property, inventions, works of authorship, trade secrets or know-how or other information relating in any way to the Products, processes, and services of the other party. 7.2 Each party shall limit disclosure of Information received hereunder to only those of its Agents (as defined below) who are directly concerned with the performance of any activities with respect to which the Information was disclosed and who have a need to know the particular Information in order to perform such activities. 7.2.1 Each party agrees to advise those of its employees who receive any other party's Information that such Information (a) is proprietary and confidential to such party and (b) shall not be disclosed to anyone except as authorized by this Agreement or otherwise authorized by such party in writing. Each party further agrees to take at least such precautions as it normally takes with its own confidential and proprietary information to prevent unauthorized disclosure of the other party's Information. 7.2.2 To the extent either party discloses Information of the other party to an Agent, or permits an Agent to have access to such Information, such party shall indemnify the other party for any claims, damages, losses, liabilities, costs or expenses, including reasonable attorneys' fees, incurred by EXHIBIT 10.3 the other party as a result of the indemnifying party's Agent further disclosing or misusing such Information. 7.2.3 For purposes of this Agreement, (i) the term "Agent" shall mean a party's employees, the employees of the party's Affiliate (as defined below), and the party's consultants, subcontractors or manufacturing contractors, and their employees; and (ii) a corporation or other business entity is an "Affiliate" of a party hereto it such corporation or entity is controlled by, controlling or under common control with such party. 7.3 Each party acknowledges that any unauthorized disclosure of any portion of the other party's Information shall cause irreparable injury to the other party and that no adequate or complete remedy shall be available at law to such other party to compensate for such injury. Accordingly, each party hereby also acknowledges that the other party shall be entitled to injunctive relief in the event of such unauthorized disclosure by a party or any of its employees in addition to whatever remedies it might have at law. 7.4 Upon termination of this Agreement, each party shall return to the other all copies of the other's Information, and shall make no further use of such Information, except for one copy which may be retained in the receiving party's confidential files. 7.5 The obligations of this Section 8 shall not apply to Information 7.5.1 that is or has been in the possession of the recipient prior to receipt of the same from the disclosing party as evidenced by written records; 7.5.2 which the recipient lawfully obtains from any third party not under an obligation to the disclosing party to hold the same in confidence; 7.5.3 that is published or becomes part of the public domain without breach of any undertakings discussed hereinabove; 7.5.4 that is independently developed by personnel of the receiving party; or EXHIBIT 10.3 7.5.5 that is required to be disclosed pursuant to judicial process, court order or administrative request, or that is otherwise required for any regulatory filing, provided that the receiving party shall notify the other party sufficiently prior to disclosing such Information as to permit such other party to seek a protective order. 7.6 CIMA and NCH agree not to issue any press release or other public statement disclosing the existence of or relating to this Agreement without prior written consent of the other party; provided, however, that neither CIMA nor NCH shall be prevented from complying with any duty of disclosure it may have pursuant to law, including, but not limited to, the Securities Act of 1933, as amended, or the Securities and Exchange Act of 1934, as amended, subject to notifying the other party in writing and, to the extent practicable, giving such other party reasonable time to comment on the same prior to disclosure. Notwithstanding the foregoing, NCH and CIMA each shall have the right to disclose information regarding this Agreement to potential investors and its financial advisors (including allowing such investors and financial advisors to review this Agreement itself); provided, that, the disclosing party has obtained a commercially reasonable confidentiality agreement from each such investor and financial advisor. 3. All provisions of the License Agreement not explicitly modified herein shall remain in full force and effect. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed as of the Effective Date by their duly authorized officers. NOVARTIS CONSUMER HEALTH, INC. CIMA LABS INC. By: /s/ Tim Strong By: /s/ John M. Siebert ----------------- ---------------------- Name: Tim Strong Name: John M. 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EX-10.1

                                                                    Exhibit 10.1


                              DATED 31 AUGUST 2001



                                CIMA LABS INC (1)


                                       AND


                           ASTRAZENECA UK LIMITED (2)



                                SUPPLY AGREEMENT

IN RELATION TO [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***]

                                                                    Exhibit 10.1

                                     INDEX

1.       INTERPRETATIONS AND DEFINITIONS
2.       DURATION
3.       SALE AND PURCHASE
4.       FORECASTING AND ORDERING
5.       DELIVERY AND TITLE
6.       PRICE
7.       PAYMENT
8.       WARRANTIES & QUALITY OF THE PRODUCT
9.       ASTRAZENECA'S IVRS
10.      REGULATORY REQUIREMENTS
11.      FORCE MAJEURE
12.      HARDSHIP
13.      TERMINATION
14.      COMPETITION
15.      MOST FAVOURED CUSTOMER
16.      CONFIDENTIALITY
17.      PROVISION OF TECHNOLOGY & IMPROVEMENTS
18.      ANNOUNCEMENTS/PUBLICITY
19.      NOTICES
20.      AGENCY, PARTNERSHIP OR JOINT VENTURE EXCLUDED
21.      NON-ASSIGNMENT
22.      ENTIRE AGREEMENT
23.      REMEDIES AND WAIVERS
24.      SEVERABILITY/INVALIDITY
25.      VARIATIONS AND/OR AMENDMENTS
26.      LAW AND JURISDICTION
27.      COUNTERPARTS
SCHEDULE 1 : PRODUCT SPECIFICATION
SCHEDULE 2 : PACKING SPECIFICATION
SCHEDULE 3 : STOCK REPORTING FORMAT
SCHEDULE 4 PRICE MATRIX
SCHEDULE 5 SUPPLY PARAMETERS

                                       2

                                                                    Exhibit 10.1

SCHEDULE 6 SELF SUPPLY TERMS

                                       3

                                                                    Exhibit 10.1

THIS AGREEMENT is dated 31st August 2001 and is made BETWEEN:

(1)      CIMA LABS INC., a Delaware corporation, whose principal office is at
         10000 Valley View Road, Eden Prairie, Minnesota, 55344,USA ("CIMA");
         and

(2)      ASTRAZENECA UK LIMITED (No. 03674842) a company incorporated in England
         and Wales whose registered office is at 15 Stanhope Gate, London W1K
         1LN ("AstraZeneca").

WHEREAS:

(A)      CIMA owns rights to certain oral drug delivery technology marketed
         under the trade mark DuraSolv(TM) and related know-how.

(B)      AstraZeneca has an exclusive licence to use and sell products
         containing the drug [***CONFIDENTIAL TREATMENT REQUESTED, PORTION
         OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
         COMMISSION.***].

(C)      CIMA and AstraZeneca have entered into a Development and Licence Option
         Agreement (the "Option Agreement") pursuant to which CIMA has granted
         AstraZeneca an exclusive licence dated 28 May 1999 (the "Licence
         Agreement") to use the DuraSolv(TM) technology in formulations with API
         (together, the "Product").

                                       4

                                                                    Exhibit 10.1

(D)      In accordance with the general obligations of Clause 3.5 of the Option
         Agreement, CIMA wishes to manufacture, supply and AstraZeneca wishes to
         purchase Product and Placebo on the terms and conditions set out below
         (the "Agreement").

NOW IT IS HEREBY AGREED as follows:

1        INTERPRETATIONS AND DEFINITIONS

         1.1      HEADINGS AND DEFINITIONS

         In this Agreement, including its Schedules, the headings are included
         for ease of reference only and shall not affect its interpretation and,
         unless the context expressly requires otherwise:

                  1.1.1    "Affiliate" means, with respect to each party, any
                           corporation or other business entity that (a)
                           directly or indirectly controls, is owned by or is
                           under common ownership with a party to this Agreement
                           to the extent of at least fifty percent (50%) of the
                           equity (or such lesser percentage which is the
                           maximum allowed to be owned by a foreign organisation
                           in a particular jurisdiction) having the power to
                           vote or direct the affairs or such entity, or (b)
                           directly or indirectly Controls, is Controlled by or
                           is under common Control with such party;

                  1.1.2    "Associated Company" means any company which is
                           either the parent undertaking or a subsidiary
                           undertaking of the party in question or a subsidiary
                           undertaking of such party's parent undertaking and an

                                       5

                                                                    Exhibit 10.1

                           undertaking in which the party in question has a
                           participating interest (as defined in section 260
                           Companies Act 1985) and which is not a subsidiary
                           undertaking of the party in question. "Parent
                           undertaking" and "subsidiary undertaking" shall have
                           the meanings attributed thereto in section 258
                           Companies Act 1985;

                  1.1.3    "Business Day" means a day (other than a Saturday,
                           Sunday or Bank Holiday) on which banks are open for
                           the transaction of normal business in the City of
                           London;

                  1.1.4    "Calendar Quarter" means each successive period of
                           three calendar months commencing in each Calendar
                           Year on 1st January, 1st April, 1st July and 1st
                           October and referred to as Q1, Q2, Q3 and Q4
                           respectively;

                  1.1.5    "Calendar Year" means each successive period of
                           twelve calendar months commencing on 1st January;

                  1.1.6    "Certificate of Analysis" means the certificate of
                           analysis to accompany all Product delivered to
                           AstraZeneca in the agreed format;

                  1.1.7    "Commercial Phase" means from [***CONFIDENTIAL
                           TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY
                           WITH THE SECURITIES AND EXCHANGE COMMISSION.***] to
                           the date of termination of this Agreement;

                                       6

                                                                    Exhibit 10.1

                  1.1.8    "manufacture of Product" means storage, checking and
                           testing of both incoming materials and outgoing
                           Product, processing and blister packing of tablets
                           with overprinted lidding into pre-formed strips of
                           multiples of 6 or 2 tablets per strip which are then
                           bulk packed in an agreed container ready for
                           shipment. It is agreed between the parties that this
                           definition complies with the description 'bulk
                           unlabelled and unpacked blisters' in Exhibit I of the
                           Development and Licence Agreement as far as pricing
                           is concerned .In such description it is acknowledged
                           that unlabelled allows for provision of certain
                           variable Product information and packing instructions
                           and that if AstraZeneca wishes CIMA to provide
                           Product in non standard packaging (cassettes) prior
                           to bulk packing, additional costs shall be incurred;

                  1.1.9    "Manufacturing Quarter" means the calendar quarter in
                           which product or placebo is manufactured but which is
                           cleared for delivery within the 15 days following
                           that calendar quarter;

                  1.1.10   "Placebo" means formulations made using CIMA's
                           DuraSolv(TM) Technology but without the inclusion of
                           API. Manufacture of Placebos shall mean the same as
                           manufacture of Product but in addition Placebos are
                           to be supplied packed in cartons prior to being
                           packed into an agreed container ready for shipment.
                           It is agreed between the parties that this definition
                           complies with the description for 'Finished Packaged
                           Product' in Exhibit 1 of the Development and Licence
                           Agreement in relation to

                                       7

                                                                    Exhibit 10.1

                           pricing;

                  1.1.11   "Quality Assurance Agreements" mean the quality
                           assurance agreement signed by the parties and dated
                           23rd April 1999 and the US quality assurance
                           agreement signed by the parties dated April 11, 2000;

                  1.1.12   "Product" means any pharmaceutical dosage form which
                           is formulated using the DuraSolv(TM) Technology and
                           which contains [***CONFIDENTIAL TREATMENT REQUESTED,
                           PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES
                           AND EXCHANGE COMMISSION.***] as its active
                           ingredient, whether taste masked (in any flavour ) or
                           untreated;

                  1.1.13   "Product Specification" means the specification for
                           the Product as specified in Schedule 1 and as amended
                           from time to time by agreement in writing between the
                           parties;

                  1.1.14   "Pre-printed Foil" means forming and lidding foil
                           purchased by CIMA for exclusive use in the
                           manufacture of particular market variants of Product;

                  1.1.15   "Packing Specification" means the specification for
                           Placebo and Product ready for delivery to
                           AstraZeneca;

         1.2      DEFINITIONS

                  Unless expressly stated otherwise in clause 1.1 above,
                  capitalised terms shall

                                       8

                                                                    Exhibit 10.1

                  bear the meaning ascribed to them in the Licence Agreement.

         1.3      COMPANY

                  References to a "company" shall be construed so as to include
                  any company, corporation or other body corporate wherever and
                  however incorporated or established.

         1.4      CONTROL

                  For the purposes of this Agreement a person is to be taken as
                  having "Control" of a company if:

                  1.4.1    the directors of the company or of another company
                           which has control of it (or any of them) are
                           accustomed to act in accordance with his directions
                           or instructions; or

                  1.4.2    either alone or with any one or more associates he is
                           entitled to exercise, or directly influence the
                           exercise of, one third or more of the voting power at
                           any general meeting of the company or of another
                           company which has control of it; or

                  1.4.3    he is otherwise able to secure by any voting or other
                           powers conferred by the articles of association or
                           other document regulating that or any other company
                           that the affairs of the company are conducted in
                           accordance with his wishes,

                                       9

                                                                    Exhibit 10.1

and where two or more persons together satisfy any of the above conditions, they
are to be taken as having control of the company.

         1.5      PERSONS

                  The word "person" and words importing persons shall be
                  construed so as to include individuals, firms, bodies
                  corporate, joint ventures, governments, states or agencies of
                  state (whether or not having separate legal personality).

         1.6      SUCCESSORS AND ASSIGNEES

                  A reference to any party to this Agreement shall include a
                  reference to its legal successors and permitted assignees.

         1.7      GENDER

                  References to any of the masculine, feminine or neuter genders
                  shall include the other genders and references to the singular
                  number shall include the plural and vice versa if the context
                  so requires.

         1.8      REFERENCES

                  Unless the context expressly requires otherwise, references to
                  recitals, clauses, paragraphs, parties and Schedules are to
                  the recitals, clauses and paragraphs of and the parties and
                  Schedules to this Agreement. To the extent that there is
                  conflict between or ambiguity relating to, on the one hand,
                  any or all of the Schedules and, on the other, the remainder
                  of this Agreement, the wording of the Schedules shall prevail.

                                       10

                                                                    Exhibit 10.1

         1.9      SCHEDULES

                  The Schedules and any attachments form part of this Agreement
                  and shall have the same force and effect as if expressly set
                  out in the body of this Agreement and any reference to this
                  Agreement shall include the Schedules and any attachments.

         1.10     LEGAL TERMS

                  References to any English term for any action, remedy, method
                  of judicial proceeding, legal document, legal status, court,
                  official or any legal concept or thing shall in respect of any
                  jurisdiction other than England be deemed to include what most
                  nearly approximates in that jurisdiction to the English legal
                  term.

         1.11     DATES AND TIMES

                  Reference to a date or time is a reference to that date or
                  time in London, England, unless expressly stated otherwise.

         1.12     WRITING

                  References to writing shall include any mode of reproducing
                  words in a legible and non-transitory form.

2        TERM AND TERMINATION

         2.1      TERM

                  This Agreement will be coterminous with the Licence Agreement
                  and as such will be effective as of the date hereof and will
                  expire on a country by country basis,

                                       11

                                                                    Exhibit 10.1

                  upon the later date of (a) ten (10) years after the date of
                  first commercial sale of the Product in the relevant country,
                  or (b) the expiration of the last Patent covering the Product
                  filed in that country. The parties will meet in good faith
                  jointly to consider ways to extend this Agreement to the
                  extent permitted by applicable law or regulation at least
                  [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
                  SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***]
                  before this Agreement is due to terminate pursuant to this
                  clause 2.1 and the parties may so extend the term in a writing
                  signed by both parties.

         2.2      TERMINATION

                  2.2.1    AstraZeneca may terminate this Agreement in its
                           entirety or with respect to use of the rights
                           licensed in any country or countries under the
                           Licence Agreement, with or without cause, upon
                           [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED
                           FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
                           COMMISSION.***] written notice to CIMA. Such
                           termination will not relieve AstraZeneca or any
                           obligation to make payments to CIMA for royalties
                           accrued prior to the effective date of such
                           termination. AstraZeneca may sell, transfer or
                           otherwise dispose of for payment any of the Product
                           that is not sold prior to the effective date of such
                           termination, so long as such sale, transfer or
                           disposal occurs within three months of the effective
                           date of termination of this Agreement.

                                       12

                                                                    Exhibit 10.1

                  2.2.2    Either party may terminate this Agreement prior to
                           its expiration by giving written notice to the other
                           party, if the other party materially fails or
                           neglects to perform its obligations under this
                           Agreement and the same is not cured or being cured to
                           the non-breaching party's reasonable satisfaction
                           within forty five (45) days after the non-breaching
                           party gives written notice specifying the nature and
                           extent of such material breach; provided, however,
                           that CIMA may not assert a material payment default
                           by AstraZeneca on invoiced amounts disputed in good
                           faith by AstraZeneca if AstraZeneca provides a
                           written description of the disputed amounts to CIMA.
                           Cure of a material payment default by AstraZeneca
                           will be made by remitting to CIMA the amount of the
                           overdue payment with accrued interest thereon,
                           calculated using a major US commercial bank rate
                           selected by CIMA, during the forty-five day period.

                  2.2.3    This Agreement shall terminate at the same time as
                           the termination (for whatever reason) of the Licence
                           Agreement and any notice to terminate served under
                           the terms of the Licence Agreement shall be deemed
                           also to be a notice to terminate this Agreement.

                  2.2.4    Either party may terminate this Agreement immediately
                           and without notice in the event that an application
                           is made by the other party for the appointment of a
                           receiver, trustee or custodian for any of the other
                           party's assets; a petition under any section or
                           chapter of the federal Bankruptcy Code or any similar
                           law or regulation of the United States or Puerto Rico
                           or the United Kingdom is filed by or against the
                           other party is not

                                       13

                                                                    Exhibit 10.1

                           dismissed within sixty (60) days; the other party
                           makes an assignment for the benefit of its creditors;
                           the other party becomes insolvent or fails generally
                           to pay its debts when they come due; or if Control of
                           the other party passes to any persons who do not on
                           the Effective Date Control that party provided,
                           however, that such change in Control would result in
                           an unreasonable competitive situation for the party
                           claiming a right to terminate.

                  2.2.5    If AstraZeneca terminates this Agreement other than
                           under Sections 2.2.1 or 2.2.2, or if CIMA terminates
                           this Agreement under Section 2.2.2, then AstraZeneca
                           will pay to CIMA the amounts set out in clause 9.2(d)
                           of the Licence Agreement.

                  2.2.6    CIMA may terminate this Agreement upon
                           [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED
                           FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
                           COMMISSION.***] notice in the event that AstraZeneca
                           or its Affiliates commercialise under any agreement
                           with a third party a formulation of [***CONFIDENTIAL
                           TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY
                           WITH THE SECURITIES AND EXCHANGE COMMISSION.***].
                           This restriction on AstraZeneca and its Affiliates is
                           subject to the right of AstraZeneca to self-supply
                           the Product under Section 3.2 of this Agreement.


                                       14

                                                                    Exhibit 10.1

         2.3      ADDITIONAL REMEDIES

                  Termination of this Agreement for any reason will be without
                  prejudice to, and will not affect the right of, either party
                  to recover any and all damages to which it may be entitled, or
                  to exercise any other remedies that it may otherwise have.

         2.4      SURVIVAL

                  Clauses 10, 12, 13, 17, 18, 19, 20, 21, 22, 23, 24 and 26
                  shall survive the termination of this Agreement howsoever the
                  same occurs.

3        SALE AND PURCHASE

         3.1      Except under the conditions of clause 3.2 of this Agreement,
                  CIMA shall manufacture and supply all quantities of the
                  Product and Placebo required by AstraZeneca and within the
                  forecast limitations set forth in clause 5 of this Agreement
                  and AstraZeneca shall purchase all quantities of the Product
                  and Placebo during the Validation Phase and the Commercial
                  Phase from CIMA upon the terms of this Agreement and in
                  accordance with the provisions of the Quality Assurance
                  Agreement (as amended from time to time). In the event that
                  there is a conflict between the terms of this Agreement and
                  the terms of Quality Assurance Agreements, the terms of this
                  Agreement shall prevail.

         3.2      As described more particularly in Schedule 6 of this
                  Agreement, CIMA shall grant AstraZeneca a self supply option
                  for Product. The payments to be made by AstraZeneca to CIMA
                  under the terms of Schedule 6 shall be the only payments made
                  in relation to the self supply option and shall cover all
                  future strengths and

                                       15

                                                                    Exhibit 10.1

                  dosage forms of the Product.

         3.3      Supply of quantities of Product substantially greater than
                  [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
                  SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***]
                  tablets per calendar year may require investment on the part
                  of CIMA. Such quantities should be forecast in writing by
                  AstraZeneca no later than [***CONFIDENTIAL TREATMENT
                  REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE
                  SECURITIES AND EXCHANGE COMMISSION.***] prior to the date on
                  which AstraZeneca requires delivery of such quantity to
                  commence.

4        OBLIGATIONS IN RELATION TO MANUFACTURING AND SUPPLY STANDARDS

         4.1      CIMA undertakes to obtain and maintain all permits,
                  registrations and licences necessary for its equipment,
                  facilities and resources to be used to manufacture Placebo and
                  Product that meets the agreed Specification in accordance with
                  the terms of the Quality Assurance Agreement using purchased
                  excipients and Pre-printed Foil.

         4.2      CIMA shall hold agreed Safety Stock as described in Clause 7
                  and 8.

         4.3      CIMA shall provide AstraZeneca with a Certificate of Analysis
                  and agreed campaign documentation no later than
                  [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
                  SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***]
                  (except in relation to Product

                                       16

                                                                    Exhibit 10.1

                  under investigation by CIMA) after completion of blister
                  packing to initiate collection of Product by AstraZeneca. In
                  addition, fully signed manufacturing campaign validation
                  reports shall be provided by CIMA before the expiry of the
                  period stipulated in the relevant validation protocol.

         4.4      CIMA may employ a third party to test Product in whole or in
                  part, provided that such third party is approved by
                  AstraZeneca and that such party agrees to be bound by the
                  terms of the Quality Assurance Agreement. CIMA shall bear the
                  full liability for such third party costs.

         4.5      If revised manufacturing standards or revised Product
                  specifications are required which result in an increased cost
                  of production to CIMA, and which relate specifically to the
                  Product:

                  4.5.1    as a result of requests by external regulatory
                           bodies, the Parties shall discuss and agree on an
                           implementation plan to achieve such revisions within
                           thirty days of the revisions being known to both
                           Parties. AstraZeneca shall either bear the cost of
                           goods increases agreed or exercise its right to
                           self-supply described in clause 3.2 above;

                  4.5.2    as a result of a request by AstraZeneca, the Parties
                           shall discuss and agree an implementation plan to
                           achieve such revisions for which AstraZeneca shall
                           bear the cost in full on terms to be agreed;

                                       17

                                                                    Exhibit 10.1

                  4.5.3    it is understood by the Parties that this clause 4
                           does not apply to failures by CIMA to meet the
                           existing standards and specifications.

         4.6      AstraZeneca shall provide forecasts and orders in accordance
                  with the terms of this Agreement and shall provide design and
                  text for variable Product information to CIMA no later than
                  [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
                  SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] in
                  advance of scheduled use by CIMA.

         4.7      AstraZeneca shall provide API to CIMA for use solely in the
                  manufacture of Product in accordance with Clause 7.

         4.8      AstraZeneca shall collect Product from CIMA's manufacturing
                  facility promptly after the provision by CIMA of agreed
                  documentation as described in Clause 4.3 and AstraZeneca shall
                  inspect the Product on arrival at AstraZeneca's user
                  facilities in accordance with its obligations under the
                  Quality Assurance Agreement.

         4.9      Each party shall inform the other party without delay of
                  receipt of notice of any impending or threatened litigation or
                  governmental investigation or impending audit of any kind that
                  is or could be related to the manufacture of Product.

                                       18

                                                                    Exhibit 10.1

5        FORECASTING AND ORDERING

         5.1      During the Commercial Phase the following shall apply:

                  5.1.1    Prior to 30th October in each Calendar Year,
                           AstraZeneca shall provide CIMA with a forecast ("THE
                           ANNUAL FORECAST") of AstraZeneca's annual
                           requirements for the Product and Placebo for each
                           Calendar Quarter of the subsequent Calendar Year
                           which will be expressed in terms of formulation
                           batches, each formulation batch being not less than
                           equal to [***CONFIDENTIAL TREATMENT REQUESTED,
                           PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES
                           AND EXCHANGE COMMISSION.***] (a "BATCH").

                  5.1.2    In each Calendar Year after 2002, AstraZeneca shall
                           be obliged to purchase not less than [***CONFIDENTIAL
                           TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY
                           WITH THE SECURITIES AND EXCHANGE COMMISSION.***] of
                           the Annual Forecast for Product and CIMA shall be
                           obliged to supply up to [***CONFIDENTIAL TREATMENT
                           REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE
                           SECURITIES AND EXCHANGE COMMISSION.***] of the Annual
                           Forecast for Product prorated equally throughout the
                           year.

                  5.1.3    For the avoidance of doubt, CIMA shall not be obliged
                           at any time to supply more than [***CONFIDENTIAL
                           TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY
                           WITH THE SECURITIES

                                       19

                                                                    Exhibit 10.1

                           AND EXCHANGE COMMISSION.***] of the Annual Forecast
                           in 5.1.2 or more than [***CONFIDENTIAL TREATMENT
                           REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE
                           SECURITIES AND EXCHANGE COMMISSION.***] tablets
                           (product plus placebo combined), whichever is the
                           smaller, in any given Calendar Year unless the
                           Parties agree otherwise.

                  5.1.4    In the event that AstraZeneca does forecast to
                           require more than such maximum quantity, CIMA shall
                           immediately notify AstraZeneca of its receipt of such
                           a forecast and CIMA is obliged to inform AstraZeneca
                           in writing within thirty (30) days of receipt of such
                           forecast what quantity (if any) above the maximum
                           forecast quantity CIMA is able to supply.

                  5.1.5    In order to assist CIMA's production planning,
                           AstraZeneca shall, at the end of each Calendar
                           Quarter provide to CIMA a non-binding update of
                           AstraZeneca's requirements for Product and Placebo
                           for the next fifteen calendar months, with the first
                           six (6) month-by-month and the remainder by quarter.

                  5.1.6    AstraZeneca shall place binding orders for the
                           Product and Placebo required in each Manufacturing
                           Quarter with CIMA not less than thirty (30) days
                           before the start of that Manufacturing Quarter.
                           Quantities of individual market variants of Product
                           required to be delivered in each calendar month of
                           that Calendar Quarter shall be provided by
                           AstraZeneca in the form of call-off/manufacturing
                           orders to be placed no

                                       20

                                                                    Exhibit 10.1

                           later than one month prior to the start of the month
                           of delivery.

6        DELIVERY AND TITLE

         6.1      Unless otherwise agreed all quantities of the Product and
                  Placebo supplied pursuant to this Agreement shall be delivered
                  EXW, CIMA to load Product and Placebos on to collecting
                  vehicle at CIMA's risk, from CIMA's facility at Eden Prairie,
                  MN, USA (Incoterms 2000).

         6.2      Risk in respect of all Product and Placebo supplied to
                  AstraZeneca pursuant to this Agreement shall pass accordingly.
                  Title to all Product and Placebo supplied to AstraZeneca shall
                  at all times remain with AstraZeneca.

         6.3      API shall be delivered by AstraZeneca at AstraZeneca's expense
                  to CIMA's facility at 10000 Valley View Road, Eden Prairie, MN
                  55344 USA and AstraZeneca shall retain title to all deliveries
                  of API at all times. Risk shall pass with ownership and both
                  parties undertake to maintain adequate insurance cover.

7        API TO BE SUPPLIED TO CIMA

         7.1      All deliveries of API shall meet agreed API and package
                  specifications and be accompanied by a Certificate of Analysis
                  and with at least [***CONFIDENTIAL TREATMENT REQUESTED,
                  PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND
                  EXCHANGE COMMISSION.***] of its agreed shelf life

                                       21

                                                                    Exhibit 10.1

                  remaining.

         7.2      CIMA shall store API in conditions approved by AstraZeneca and
                  shall rotate stock held to eliminate shelf life losses.

         7.3      CIMA shall test and handle API consistent with information
                  provided by AstraZeneca and in compliance with local laws and
                  regulations.

         7.4      All API deliveries must meet CIMA approved packaging,
                  documentation and labelling; including certificate of
                  analysis; gross/tare/net weight and manufacturing lot number.
                  The quantities and timing of deliveries shall be as follows:

                  7.4.1    During the Commercial Phase the Parties shall ensure
                           that a safety stock of API is maintained (the "API
                           Safety Stock") equivalent to [***CONFIDENTIAL
                           TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY
                           WITH THE SECURITIES AND EXCHANGE COMMISSION.***] of
                           the Annual Forecast of Product (provided by
                           AstraZeneca on 30th October each Calendar Year)
                           multiplied by the agreed conversion ratio of
                           [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED
                           FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
                           COMMISSION.***]. CIMA shall provide AstraZeneca at
                           the time of the monthly Stock Report described in
                           Clause 9 with the date that AstraZeneca needs to
                           deliver stock replenishment material in quantities
                           not less than [***CONFIDENTIAL TREATMENT

                                       22

                                                                    Exhibit 10.1

                           REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE
                           SECURITIES AND EXCHANGE COMMISSION.***]. Such
                           forecast delivery date shall not be less than 1 month
                           after the month that the stock report is issued to
                           AstraZeneca.

                  7.4.2    It is recognised by the parties that if AstraZeneca's
                           actual requirements vary substantially within the
                           allowed limits of Clause 5.1.2 and 5.1.4, that
                           adjustments may be needed to the API Safety Stock
                           level described in Clause 7.4.1 above. In such an
                           event, CIMA shall notify AstraZeneca at the time of
                           the monthly Stock Report that a new API Safety Stock
                           level is required and recommend new deliveries of API
                           that are required.

         7.5      During the Commercial Phase CIMA shall consume API at the rate
                  of [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
                  SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***]
                  Batch .API consumed in excess of this rate shall be replaced
                  by AstraZeneca but at the expense of CIMA based on an API
                  price of USD [***CONFIDENTIAL TREATMENT REQUESTED, PORTION
                  OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
                  COMMISSION.***]. CIMA shall provide a breakdown in writing of
                  any amounts due and shall make payment due in a Calendar Year
                  within 30 days after the end of that Calendar Year as part of
                  the reconciliation described in Clause 11.

8        PRE-PRINTED FOILS AT CIMA

                                       23

                                                                    Exhibit 10.1

         8.1      Some markets for the Product require Pre-printed Lidding Foil
                  ("Pre-printed Lidding Foil"). AstraZeneca shall supply to CIMA
                  its design and text for the Pre-printed Lidding Foil for such
                  markets at least three (3) months in advance of CIMA's
                  manufacture of the Product for such markets. The cost for the
                  Pre-printed Lidding Foil has not been included in the costing
                  on Schedule 4. CIMA agrees to provide and AstraZeneca agrees
                  to pay [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED
                  FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
                  COMMISSION.***] per tablet for all Product manufactured using
                  the Pre-printed Lidding Foil. This additional cost will be
                  billed to AstraZeneca in addition to the costs on Schedule 4.

9        STOCK REPORTING

         9.1      CIMA shall provide a stock report at the end of each calendar
                  month in the format as attached in Schedule 3 relating to API
                  stock holding and performance against agreed conversion ratios
                  as described in Clause 7.6 (the "Stock Report").

         9.2      In addition CIMA at the time of the report

                  (a) will recommend adjustments to API Safety Stock levels and
                  request stock replenishment quantities of API from AstraZeneca
                  as described in Clauses 7.4.2; and

                  (b) will recommend adjustments to Pre-printed Foil Safety
                  Stock levels

                                       24

                                                                    Exhibit 10.1

                  both for confirmation by AstraZeneca within [5] working days.

10       PRICE

         10.1     All sums payable by AstraZeneca under this Agreement are
                  exclusive of Value Added Tax which, if payable, shall be borne
                  and paid by AstraZeneca upon the provision by CIMA of an
                  appropriate VAT invoice.

         10.2     The price to be paid by AstraZeneca for Product and Placebos
                  during the Commercial Phase will conform to the pricing in
                  Schedule 4.

         10.3     Subject to the exceptional circumstances set out in Clause 4.5
                  of this Agreement, the prices in Schedule 4 shall remain fixed
                  through [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED
                  FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
                  COMMISSION.***]. On [***CONFIDENTIAL TREATMENT REQUESTED,
                  PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND
                  EXCHANGE COMMISSION.***] and thereafter, the prices in
                  Schedule 4 shall be adjusted [***CONFIDENTIAL TREATMENT
                  REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE
                  SECURITIES AND EXCHANGE COMMISSION.***].

                                       25

                                                                    Exhibit 10.1

11       ORDER AND INVOICE PRICING AND RECONCILIATION

         11.1     During the Commercial Phase, Product and Placebo shall be
                  ordered and invoiced as follows:

                  11.1.1   In addition to the prices specified in Schedule 4 the
                           following surcharges shall apply,

                           [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED
                           FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
                           COMMISSION.***]

                           cassette surcharge Pre-printed Lidding Foil surcharge

                           [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED
                           FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
                           COMMISSION.***]

                           [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED
                           FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
                           COMMISSION.***]

                           cassette surcharge Pre-printed Lidding Foil surcharge

                           [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED
                           FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
                           COMMISSION.***]

                                       26

                                                                    Exhibit 10.1

                  11.1.2   Within thirty days of the end of the first calendar
                           year CIMA shall debit or credit AstraZeneca with an
                           amount equal to the difference between the amount so
                           invoiced and the sum due with respect to the
                           aggregate of:

                           (a) Prices for Product as described in Schedule 4
                           that take account of cumulative batches and variants
                           actually ordered; and

                           (b) sums due in respect of performance against API
                           conversion ratio according to clause 7.5.

                  11.1.3   For each Calendar Year thereafter Placebos and the
                           cassette surcharge will continue to be used in orders
                           and invoices as described in Clause 11.1.2 but
                           Product will be ordered and invoiced at prices
                           according to Schedule 4 and where the cumulative
                           number of Batches of Product shall be taken as the
                           sum of the Batches of Product in the previous year
                           plus those Batches of Product forecast in
                           AstraZeneca's Annual Forecast for the year in
                           question and the number of variants forecast to be
                           ordered shall be taken as 5-12.

                  11.1.4   Within thirty days of the end of the calendar year
                           CIMA will debit or credit AstraZeneca with an amount
                           as described in clause 11.1.2.

12       PAYMENT

                                       27

                                                                    Exhibit 10.1

         AstraZeneca shall pay all invoices in full in US Dollars by wire
         transfer to CIMA's registered office at Eden Prairie, Minnesota no
         later than 30 days following receipt of invoice (by fax or otherwise)
         subject to CIMA complying with its obligations under clause 4.3 of this
         Agreement.

13       WARRANTIES, QUALITY OF THE PRODUCT AND LIABILITY

         13.1     CIMA hereby warrants and undertakes to AstraZeneca that:

                  13.1.1   the performance by CIMA of its obligations to
                           AstraZeneca hereunder will not breach any covenant or
                           obligation of CIMA to any third party, or infringe
                           any rights of any third party; CIMA is not aware of
                           any matter or impediment which would prevent CIMA
                           from performing or would restrict or hinder CIMA in
                           the performance of its obligations hereunder;

                  13.1.2   Product to be supplied to AstraZeneca pursuant to
                           this Agreement (and all associated packaging and
                           documentation) shall be manufactured, analysed and
                           supplied in accordance with the provisions of Clause
                           4 which are summarised in Schedule 5 as supply
                           parameters (the "Supply Parameters").

         13.2     CIMA will inform AstraZeneca promptly in writing of any event
                  which in the reasonable judgement of CIMA may adversely affect
                  the suitability of the Product for AstraZeneca's use.

                                       28

                                                                    Exhibit 10.1

         13.3     AstraZeneca shall notify CIMA of any non-compliance with the
                  Supply Parameters within forty-five (45) days of AstraZeneca's
                  receipt of Product. If and to the extent that AstraZeneca has
                  failed to examine the Product in accordance with this clause
                  13.3 (or it has failed to so notify CIMA in accordance with
                  this clause 13.3) the relevant consignment of the Product
                  shall be deemed to have been accepted by AstraZeneca in
                  satisfactory condition in respect of all damage, shortage or
                  defects which would have been discovered upon such
                  examination.

         13.4     CIMA and AstraZeneca agree to make best endeavours to resolve
                  all claims made in accordance with Clause 13.3. If a dispute
                  arises between the parties in relation to such claims which
                  cannot be resolved by the parties within ninety(90) days of a
                  claim being notified by AstraZeneca pursuant to clause 13.3,
                  either party shall be entitled to require that the matter in
                  dispute be referred to an independent expert nominated by
                  agreement of the parties or, failing agreement, appointed by
                  [the President of the International Chamber of Commerce,
                  Paris] at the instigation of either party. Such referral shall
                  be solely for the purpose of establishing whether or not there
                  is any shortage, damage or defect (as the case may be) in
                  relation to the Supply Parameters. Save in the case of fraud
                  or manifest error the decision of such independent expert
                  shall be binding upon the parties. In the event that the
                  independent expert decides there was no shortage, damage or
                  defect, the costs of the independent expert shall be borne by
                  AstraZeneca. In all other circumstances, the costs of the
                  independent expert shall be borne by CIMA.

                                       29

                                                                    Exhibit 10.1

         13.5     If AstraZeneca brings a claim against CIMA in respect of a
                  defect in any Product supplied or in any associated packaging
                  or documentation, CIMA's liability in respect of such claim
                  shall at AstraZeneca's option be limited to either:-

                  13.5.1   replacing the defective item at CIMA's expense; or at
                           AstraZeneca's sole discretion;

                  13.5.2   refunding to AstraZeneca the cost paid to CIMA by
                           AstraZeneca for such defective item.

         13.6     In the event of AstraZeneca bringing a claim against CIMA in
                  respect of a non-disclosed change (as described in the Quality
                  Assurance Agreement) CIMA shall be required to bear the cost
                  of any resulting validation of the change and the cost of
                  obtaining any necessary regulatory approvals or alternatively
                  (at AstraZeneca's option) reverting to the original form of
                  manufacture and bearing the cost of any recall of Product
                  necessitated by such non-disclosed change.

         13.7     In the event of direct loss or damage to AstraZeneca's
                  employees, agents or contractors; to AstraZeneca's property or
                  to the environment associated with production using the
                  Product (and excluding circumstances which have been caused
                  directly by API or the negligence of AstraZeneca or its
                  employees, agents or contractors) CIMA shall bear the full
                  cost of any such loss or damage PROVIDED THAT CIMA shall bear
                  no liability for special, indirect or consequential loss.

                                       30

                                                                    Exhibit 10.1

         13.8     In the event of direct loss or damage to CIMA's employees,
                  agents or contractors; to CIMA's property or to the
                  environment arising out of its due performance of its
                  obligations under this Agreement (and excluding circumstances
                  which have been caused directly by the negligence of CIMA or
                  its employees, agents or contractors) AstraZeneca shall bear
                  the full cost of any such loss or damage PROVIDED THAT
                  AstraZeneca shall bear no liability for special, indirect or
                  consequential loss.

         13.9     CIMA UNDERTAKES NO OTHER WARRANTIES OF ANY KIND, EXPRESS OR
                  IMPLIED, AND EXPRESSLY DISCLAIMS ANY WARRANTY OF
                  MECHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AND ANY AND
                  ALL LIABILITY FOR SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES.

14       VENDOR PERFORMANCE

         CIMA shall comply with the Vendor Rating Scheme an indicative version
         of which is set out in Schedule 5 and shall use its best endeavours to
         maintain Division 1 status throughout the term of this Agreement.

15       FORCE MAJEURE

         15.1     Subject to clause 15.3, each party shall be released from its
                  obligations under this Agreement to the extent that its
                  performance hereunder is delayed, hindered or prevented by
                  circumstances which are not within its reasonable control,

                                       31

                                                                    Exhibit 10.1

                  including, without limitation, acts or restraints of
                  governments or public authorities; war, revolution, riot or
                  civil commotion; strikes, lock-outs or other industrial
                  action; blockage or embargo; failure of supplies of power,
                  fuel, transport, equipment or other goods or services; and
                  explosion, fire, flood or natural disaster (a "Force Majeure
                  Event").

         15.2     The party affected by such circumstances shall, as soon as it
                  becomes aware of them, give full written particulars of them
                  to the other party, and shall use best endeavours to resume
                  full performance of its obligations under this Agreement
                  without delay, and pending such resumption shall use best
                  endeavours to facilitate any efforts that the other party may
                  make to procure an alternative method by which its obligations
                  under this Agreement may be performed. Furthermore, if, as a
                  result of a Force Majeure Event CIMA is unable to supply the
                  quantity of Product ordered by AstraZeneca or the quantity
                  which AstraZeneca would have ordered but for such
                  circumstances then:-

                  15.2.1   AstraZeneca shall be obliged to purchase such Product
                           as it has actually ordered but at the price which
                           would have applied under schedule 4 had CIMA been
                           able to supply and had AstraZeneca purchased the
                           quantities actually required by AstraZeneca; and

                  15.2.2   if such circumstances continue or are forecast to
                           continue for more than [***CONFIDENTIAL TREATMENT
                           REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE
                           SECURITIES AND EXCHANGE COMMISSION.***], CIMA shall
                           use all reasonable endeavours to offer to

                                       32

                                                                    Exhibit 10.1

                           AstraZeneca alternative capacity for Product (at
                           prices and on terms to be agreed) which can be
                           operable within a further [***CONFIDENTIAL TREATMENT
                           REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE
                           SECURITIES AND EXCHANGE COMMISSION.***] to the
                           standards required by the Quality Assurance
                           Agreement; and

                  15.2.3   CIMA shall allocate all available capacity of Product
                           produced by CIMA proportionally as between CIMA,
                           AstraZeneca and other customers of CIMA and CIMA
                           shall be deemed to have supplied the Product ordered
                           or forecast for the purposes of calculating the price
                           of the Product.

         15.3     Neither party shall be entitled to relief under this clause 15
                  for any delay or failure in performing any of its payment
                  obligations under this Agreement.

         15.4     If a Force Majeure Event other than the supply of API prevails
                  for a continuous period in excess of [***CONFIDENTIAL
                  TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE
                  SECURITIES AND EXCHANGE COMMISSION.***], the party entitled to
                  notification of such circumstances in accordance with clause
                  15.2 may, without prejudice to any other rights or remedies
                  which may be available to it, terminate this Agreement with
                  immediate effect by giving written notice of termination to
                  the other party.

         15.5     If AstraZeneca is notified of a Force Majeure Event, the
                  obligation upon AstraZeneca to purchase the Product from CIMA
                  in accordance with this

                                       33

                                                                    Exhibit 10.1

                  Agreement shall be suspended for the duration of the force
                  majeure event.

16       HARDSHIP

         16.1     For so long as any circumstances prevail which prevent or
                  impede AstraZeneca from using or selling the Product and which
                  AstraZeneca cannot control by taking all measures which can
                  reasonably be expected then AstraZeneca shall not be obliged
                  to place any further orders for the Product notwithstanding
                  any other provision of this Agreement but shall be obliged to
                  purchase such quantities of Product as it has actually
                  ordered. If such circumstances prevail for a period of
                  [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
                  SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] or
                  more, AstraZeneca shall be entitled to terminate this
                  Agreement forthwith on written notice to CIMA PROVIDED THAT,
                  on or prior to such termination, AstraZeneca shall:

                  (i) purchase all Product actually ordered prior to the date of
                  termination at the price specified in Schedule 4 and

                  (ii) pay CIMA for the purchase value of Pre-printed Foil
                  Safety Stock it holds or has ordered solely for use in the
                  manufacture of Product; and

                  (iii) compensate CIMA for all reasonable costs and expenses
                  incurred by CIMA (including the costs of excipients and
                  packaging materials specific to AstraZeneca purchased or
                  manufactured by CIMA solely for use in the

                                       34

                                                                    Exhibit 10.1

                  manufacture of Product) in order to comply with its
                  obligations to supply Product pursuant to this Agreement such
                  costs and expenses not to exceed the cost of manufacturing six
                  (6) months' Safety Stock based on the latest forecast.

17       CONFIDENTIALITY

         17.1     Subject to clause 18, any know-how or other information
                  proprietary to either party to this Agreement which is
                  disclosed by that party ("the Discloser") or on its behalf to
                  the other party ("Recipient") in connection with this
                  Agreement ("Confidential Information") shall remain the
                  property of the Discloser and shall not, without the prior
                  written consent of the Discloser, be disclosed to any third
                  party or used by the Recipient except for the performance of
                  the Recipient's obligations under this Agreement.

         17.2     The obligations of non-use and confidentiality contained in
                  this clause 17 shall not apply to any information which the
                  Recipient can reasonably demonstrate;

                  17.2.1   was already in the possession of the Recipient and at
                           the Recipient's free use and disposal or in the
                           public domain (through no fault of the Recipient)
                           prior to its disclosure by the Discloser hereunder;
                           or

                  17.2.2   is purchased or otherwise legally acquired by the
                           Recipient at any time from a third party having good
                           title thereto and the right to disclose the same; or

                                       35

                                                                    Exhibit 10.1

                  17.2.3   comes into the public domain, otherwise than through
                           the fault of the Recipient; or

                  17.2.4   is independently generated by the Recipient without
                           any recourse or reference to the information
                           disclosed by the Discloser.

                  All documents supplied by either party to the other which
                  contain Confidential Information within the scope of this
                  clause 17 shall be promptly returned by the Recipient to the
                  Discloser upon the expiry or termination of this Agreement.
                  The obligations of each party under this clause shall survive
                  the expiry or termination of this Agreement provided that the
                  Recipient shall have the right to retain in its legal
                  department a single copy for archival purposes to ensure
                  compliance with the above obligations.

         17.3     In addition to the Confidential Information identified in
                  clause 17, each party shall treat as Confidential Information
                  all information which it receives or obtains relating to:

                  17.3.1   the contents of or negotiations relating to this
                           Agreement; and

                  17.3.2   the business and customers of the other party.

         17.4     Each of the parties may disclose Confidential Information to
                  its directors and employees and professional advisers who need
                  to know the Confidential Information, provided that each party
                  shall procure that prior to such disclosure

                                       36

                                                                    Exhibit 10.1

                  each of those directors, employees and professional advisers
                  to whom Confidential Information is to be disclosed is made
                  aware of the confidentiality obligations herein contained and
                  undertakes to adhere to such terms of this Agreement as if he
                  were a party to it.

         17.5     Each party is entitled to disclose Confidential Information to
                  Associated Companies, provided that each party shall procure
                  that prior to such disclosure each of those Associated
                  Companies to which Confidential Information is to be disclosed
                  is made aware of the confidentiality obligations herein
                  contained and undertakes to adhere to such terms of this
                  Agreement as if it were a party to it.

         17.6     Nothing in this clause 17 shall preclude disclosure of any
                  Confidential Information required by any governmental or
                  regulatory authority or court entitled by law to disclosure of
                  the same including, for the avoidance of doubt, any
                  information required for disclosure under the Securities Act
                  of 1933 (as amended) or the Securities Exchange Act of 1934
                  (as amended) or in accordance with the regulations of any
                  recognised stock exchange, or which is required by law,
                  provided that the party concerned promptly notifies the other
                  party when such requirement to disclose has arisen.

18       ANNOUNCEMENTS/PUBLICITY

         18.1     Save as expressly permitted in clause 18.2 neither party shall
                  make any announcement about the transaction contemplated by
                  this Agreement without the

                                       37

                                                                    Exhibit 10.1

                  prior written consent of the other party.

         18.2     If any announcement concerning the transaction contemplated by
                  this Agreement or any ancillary matter is required of a party
                  by law or any securities exchange or regulatory or
                  governmental body to which either party is subject, the
                  announcement shall be made only after informing the other
                  party as to the terms of and timetable for publication of any
                  such announcement (if such consultation is reasonably
                  practicable).

19       NOTICES

         19.1     All notices and other communications given or made in relation
                  to this Agreement;

                  19.1.1   shall be in English and in writing;

                  19.1.2   shall be delivered by hand or courier or sent by
                           facsimile;

                  19.1.3   shall be delivered or sent to the party concerned at
                           the relevant address or facsimile number, shown in
                           clause 19.2 subject to such amendments as may be
                           notified from time to time in accordance with this
                           clause by the relevant party to the other party by no
                           less than three (3) Business Days' notice; and

                                       38

                                                                    Exhibit 10.1

                  19.1.4   shall be deemed to have been duly given or made if
                           addressed in the aforesaid manner:

                           19.1.4.1 if delivered by hand or courier, upon
                                    delivery; and

                           19.1.4.2 if sent by facsimile, when a complete and
                                    legible copy of the communication, has been
                                    received at the appropriate address,

                           provided that if any notice or other communication
                           would otherwise become effective on a non-Business
                           Day or after 5.00 p.m. on a Business Day, it shall
                           instead be deemed to be given or made at 10.00 a.m.
                           on the next Business Day.

         19.2     The initial details for the purposes of clause 19.1 are: For
                  AstraZeneca

                  Alderley House, Alderley Park

                  Macclesfield, Cheshire

                  SK10 4TF, England

                  Facsimile: 01625 514061

                  For the attention of: Supply Manager


                  For CIMA

                  10000 Valley View Road

                  Eden Prairie

                                       39

                                                                    Exhibit 10.1

                  MN 55344

                  U.S.A.

                  Facsimile: 001 612 947 8770

                  For the attention of: President and Chief Executive Officer


20       AGENCY, PARTNERSHIP OR JOINT VENTURE EXCLUDED

         20.1     Nothing in this Agreement shall be construed so as to
                  constitute either party to be the agent of the other.

         20.2     Nothing in this Agreement and no action taken by the parties
                  pursuant to this Agreement shall constitute a partnership or
                  joint venture of any kind between the parties.

21       NON-ASSIGNMENT

         21.1     Save as hereinafter provided this Agreement shall not be
                  assigned nor any of the obligations hereunder transferred (nor
                  the performance of any obligation hereunder sub-contracted) by
                  either party except with the prior written consent of the
                  other, provided that no consent shall be required in the cases
                  of an assignment or transfer to an Associated Company of that
                  party provided that any such assignment shall be made on terms
                  that, should any such assignee cease to be an Associated
                  Company of the assignor then the Agreement and any obligations
                  which have been transferred to the assignee shall be
                  transferred

                                       40

                                                                    Exhibit 10.1

                  back to the assignor.

22       ENTIRE AGREEMENT

         22.1     Each party acknowledges that in entering into this Agreement
                  it places no reliance on any representation or warranty
                  relating to the subject matter of this Agreement, save for the
                  representations and warranties expressly set out herein.

         22.2     Subject to any terms implied by law, this Agreement, the
                  Licence Agreement and the Quality Assurance Agreements
                  together represent the entire agreement between the parties in
                  relation to the subject matter of this Agreement and supersede
                  any previous agreement or arrangement, between the parties in
                  relation to that subject matter whether written or oral or
                  which might be inferred from the conduct of the parties.

23       REMEDIES AND WAIVERS

         23.1     No delay or omission on the part of either party in exercising
                  any right, power or remedy provided by law or under this
                  Agreement shall:-

                  23.1.1   impair such right, power or remedy; or

                  23.1.2   operate as a waiver thereof.

                                       41

                                                                    Exhibit 10.1

         23.2     The single or partial exercise of any right, power or remedy
                  provided by law or under this Agreement shall not preclude any
                  other or further exercise thereof or the exercise of any other
                  right, power or remedy.

         23.3     The rights, powers and remedies provided in this Agreement are
                  cumulative and not exclusive of any rights, powers and
                  remedies provided by law.

24       SEVERABILITY/INVALIDITY

         24.1     Should any provision of this Agreement be held to be illegal,
                  invalid or unenforceable in any respect by any judicial or
                  other competent authority under the law of any jurisdiction:

                  24.1.1   such provision shall, so far as it is illegal,
                           invalid or unenforceable in any jurisdiction, be
                           given no effect by the parties and shall be deemed
                           not to be included in this Agreement in that
                           jurisdiction;

                  24.1.2   the other provisions of this Agreement shall be
                           binding on the parties in that jurisdiction as if
                           such provision were not included herein;

                  24.1.3   the legality, validity and enforceability of the
                           provision in any other jurisdiction shall not be
                           affected or impaired; and

                  24.1.4   the parties agree to negotiate in good faith to amend
                           such provision to the extent possible for
                           incorporation herein in such reasonable manner as

                                       42

                                                                    EXHIBIT 10.1


                           most closely achieves the intention of the parties
                           and without rendering such provision invalid or
                           unenforceable.

25       VARIATIONS AND/OR AMENDMENTS

         25.1     This Agreement may only be varied or amended by agreement in
                  writing signed by or on behalf of the parties.

26       LAW AND JURISDICTION

         26.1     This Agreement shall be governed by, interpreted and enforced
                  in accordance with the laws of the State of Delaware, without
                  regard to its choice of law provisions.

         26.2     The parties will use all reasonable efforts to resolve in an
                  amicable fashion any dispute, claim or controversy that may
                  arise relating to the terms or performance of this Agreement.
                  If the parties are unable to resolve such dispute within
                  thirty (30) days after initial notice, either party may, by
                  notice to the other, have such dispute referred to a senior
                  officer of each company. Such officers shall attempt to
                  resolve the dispute by good faith negotiation within thirty
                  (30) days after receipt of such notice. If the designated
                  officers are not able to resolve such dispute within ninety
                  (90) days after receipt of such notice, the parties will
                  submit the dispute to arbitration by a single arbitrator in
                  Minneapolis, Minnesota, in accordance with the Commercial
                  Arbitration Rules of the American Arbitration Association then
                  in effect. The arbitrator must be a retired judge of a state
                  or federal court of the United States or a licensed lawyer
                  with at least ten (10) years

                                       43

                                                                    EXHIBIT 10.1

                  of intellectual property law experience from a law firm with
                  at least ten (10) attorneys and at least an AV rating by
                  Martindale Hubbell. A list of ten (10) potential arbitrators
                  shall be obtained from the AAA. Each party to the dispute will
                  rank the potential arbitrators from one to ten with one being
                  the most desirable. The arbitrator who receives the least
                  points shall be the arbitrator for such dispute. If there is a
                  tie, a random drawing will be held and the first arbitrator
                  chosen will be the arbitrator for the dispute. Judgment upon
                  the arbitration award will be final, binding and conclusive
                  and may be entered in any court having jurisdiction. The
                  parties hereto further agree that the arbitrator is not
                  authorised to award any punitive damages in connection with
                  any controversy or claim settled by arbitration hereunder.

27       COUNTERPARTS

         27.1     This Agreement may be executed in more than one counterpart,
                  each of which when executed and delivered shall be deemed to
                  constitute an original. This Agreement shall become effective
                  when one or more counterparts have been signed by both parties
                  and such a counterpart (so signed) has been delivered to each
                  of the parties.

IN WITNESS whereof this Agreement has been entered into the day and year first
above written.

SIGNED for and on behalf of
CIMA LABS INC

/s/ John M. Siebert

Name John M. Siebert

                                       44

                                                                    EXHIBIT 10.1

Title President & CEO

Date August 23, 2001


SIGNED for and on behalf of
ASTRAZENECA UK LIMITED

/s/ C.R.W. Petty
C R W Petty
Authorised Signatory

Date 31 August 2001

                                       45

                                                                    EXHIBIT 10.1

                                   SCHEDULE 1

                              PRODUCT SPECIFICATION


     [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY
       WITH THE SECURITIES AND EXCHANGE COMMISSION; 4 pages omitted. ***]

                                                                    EXHIBIT 10.1


                                   SCHEDULE 2

                       PACKING SPECIFICATION FOR UK AND US

     [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY
       WITH THE SECURITIES AND EXCHANGE COMMISSION; 2 pages omitted. ***]

                                                                    EXHIBIT 10.1

                                   SCHEDULE 3

                             STOCK REPORTING FORMAT


     [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY
       WITH THE SECURITIES AND EXCHANGE COMMISSION; 3 pages omitted. ***]

                                                                    EXHIBIT 10.1

                                   SCHEDULE 4

PRICE MATRIX [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] MG TABLETS


CIMA TABLET PRICES

[***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION; 4 pages omitted. ***]

                                                                    EXHIBIT 10.1

                                   SCHEDULE 6

                                SELF SUPPLY TERMS

1.       CIMA will grant to AstraZeneca an option to manufacture or have
         manufactured up to one hundred percent (100%) of its requirements of
         the Product for distribution, marketing and sale by AstraZeneca, its
         Affiliates and sublicensees ("Self-Supply") commencing at any time
         after the [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
         SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] after
         commercial launch of the [***CONFIDENTIAL TREATMENT REQUESTED, PORTION
         OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
         COMMISSION.***] formulation of Product, except as provided in Section 2
         below. AstraZeneca may exercise such option by so notifying CIMA in
         writing at least three (3) months before AstraZeneca requires the
         Technology Transfer to begin that AstraZeneca intends to Self-Supply.
         If AstraZeneca exercises its option to Self-Supply, AstraZeneca shall
         pay an Option fee (the "Self-Supply Option Fee") equal to
         [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY
         WITH THE SECURITIES AND EXCHANGE COMMISSION.***]. For the avoidance of
         doubt, no further payments will be due from AstraZeneca to CIMA in
         respect of this option to Self-Supply any other (future or existing)
         dosage forms of the Product..

2.       If CIMA is unable to supply AstraZeneca with AstraZeneca's requirements
         of the Product, for any reason other than force majeure of a duration
         less than 60 days, (or AstraZeneca's inability to supply API as
         specified in Clause 7 of the Agreement) AstraZeneca may elect to
         manufacture the Product or have it manufactured by its Affiliates and
         sublicensees. In such situation, if AstraZeneca has already elected to
         Self-Supply at the time CIMA becomes unable to supply the balance of
         AstraZeneca's requirements, AstraZeneca will receive a refund of any
         portion of the

                                                                    EXHIBIT 10.1

         Self-Supply Option Fee that AstraZeneca has paid to CIMA. However,
         AstraZeneca shall in such circumstances continue to be obligated to pay
         to CIMA the per tablet fee referred to in Section 3 below.

         If CIMA subsequently becomes able to again supply AstraZeneca with
         AstraZeneca's requirements of the Product and AstraZeneca elects to
         purchase any portion of its requirements of the Product from CIMA or
         elects to have CIMA reserve manufacturing capacity for manufacture of
         any portion of AstraZeneca's requirements of the Product, AstraZeneca
         shall repay to CIMA that portion of the Self-Supply Option fee refunded
         to AstraZeneca under this Section 2.

3.       If AstraZeneca elects to Self-Supply or to manufacture under Section 2
         of this Schedule, in addition to the technology transfer fee,
         AstraZeneca shall pay to CIMA either (i) [***CONFIDENTIAL TREATMENT
         REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND
         EXCHANGE COMMISSION.***] per tablet manufactured by AstraZeneca, if at
         the time AstraZeneca elects to self-supply CIMA is supplying finished
         packaged Product to AstraZeneca, or (ii) [***CONFIDENTIAL TREATMENT
         REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND
         EXCHANGE COMMISSION.***] per tablet manufactured by AstraZeneca, if at
         the time AstraZeneca elects to Self-Supply CIMA is supplying bulk,
         unpackaged blisters to AstraZeneca.

4.       If AstraZeneca elects to Self-Supply or to manufacture, under Section 2
         of this Schedule, AstraZeneca will have no right to make changes of any
         kind to the Product or the manufacturing process without CIMA's written
         consent, may not use of permit its Affiliates or sublicencees to use
         the technology for any purpose other

                                       2

                                                                    EXHIBIT 10.1

         than to manufacture the Product, and may not permit its Affiliates or
         sublicensees to further transfer the technology. If AstraZeneca ceases
         to utilise the manufacturing technology to manufacture the Product, the
         manufacturing licence will automatically terminate and revert to CIMA.

5.       If AstraZeneca elects to Self-Supply or to manufacture under Section 2
         of this Schedule, CIMA will provide to AstraZeneca, its Affiliates
         and/or sublicensees, at AstraZeneca's sole expense, technical support
         and assistance to ensure the smooth and satisfactory establishment of
         the DuraSolv Technology at the new manufacturing site.




                                       3

EX-10.2

                                                                    EXHIBIT 10.2


                               SUPPLY AGREEMENT


      This Supply Agreement, dated as of the 1st day of January 2001 (the
"Effective Date"), is between Novartis Consumer Health, Inc., 560 Morris Avenue,
Summit, New Jersey 07901 ("Novartis"), and CIMA LABS INC., 10000 Valley View
Road, Eden Prairie, MN 55344 ("Supplier").

      WHEREAS Supplier and Novartis are parties to a License Agreement dated
July 1, 1998 (the "License Agreement") and a Supply Agreement dated July 1, 1998
and an Amendment No. 1 thereto dated as of November 19, 1999 (collectively, the
"Prior Supply Agreement"); and

      WHEREAS Supplier and Novartis wish to enter into a new Supply Agreement to
supersede the Prior Supply Agreement;

      IT IS THEREFORE AGREED by and between the parties hereto as follows:

1.    GENERAL SCOPE OF AGREEMENT

      1.1   This Agreement shall supersede the Prior Supply Agreement as of the
Effective Date. The Prior Supply Agreement is hereby terminated without penalty
to either party, and shall be of no further force or effect after the Effective
Date. Notwithstanding the foregoing, the License Agreement remains in full force
and effect. Nothing set forth herein shall be deemed to effect any modification
to the terms of the License Agreement, except that (i) any references to the
"Supply Agreement" contained in the License Agreement shall be deemed to be
references to this Agreement; and (ii) any references in the License Agreement
to specific provisions of the "Supply Agreement" shall be deemed to be
references to the provisions set forth in this Agreement which are equivalent to
the Sections of the Prior Supply Agreement referred to in the License Agreement
(in particular, references in the License Agreement to provisions contained
within Section 12 of the Prior Supply Agreement shall be deemed to be references
to the equivalent provisions set forth within Section 7 of this Agreement).

      1.2   Supplier shall manufacture, sell and cause to be delivered
exclusively to Novartis the products set forth in Exhibit A hereto (the
"Products") in accordance with and subject to the terms and conditions of this
Agreement, in quantities sufficient to meet the total requirements, consistent
with the forecasting and purchase order mechanism set forth in Article 3 of this
Agreement, of Novartis for such Products for use in the Territory (as defined in
the License Agreement).

      1.3   Novartis shall purchase all of Novartis' requirements of the
Products for use in the Territory exclusively from Supplier, in accordance with
and subject to the terms and conditions of this Agreement. This requirements
obligation is limited to Novartis' requirements of Products which meet the
Specifications (as defined below).

      1.4   Novartis shall be responsible for obtaining regulatory approval of
any products sold by Novartis. Supplier shall cooperate with Novartis and shall
use its commercially reasonable best efforts to assist Novartis in obtaining any
and all regulatory approvals necessary to market Novartis' products which
contain the Products.

      1.5   All Products sold and delivered to Novartis hereunder shall (a) be
manufactured, packaged and sold in strict accordance with (i) the Quality
Assurance Agreement, attached hereto as Exhibit B (the "QA Agreement"),
including the specifications set forth therein, and with such further
specifications as shall be agreed to by Supplier and Novartis in writing (the
"Specifications"); and (ii) all applicable laws, regulations, and requirements
of any government or governmental agency; and (b) be subject to the warranties
set forth in Article 9 of this Agreement.

      1.6   In order for the parties to conduct long-term planning with respect
to the manufacture and sales of the Products, senior representatives of Supplier
and Novartis shall meet annually, on or about the anniversary of the Effective
Date, and shall each present to the other the current status of its business and
its long-term plans with respect to the Products.

2.    PAYMENT

      2.1   In consideration of the satisfactory manufacture and delivery to
Novartis of the ordered quantities of Products, Novartis shall pay Supplier for
all Products accepted by Novartis pursuant to Section 4.1 of this Agreement in
accordance with the prices set forth in Exhibit C hereto, subject to adjustment
in accordance with this Agreement. Novartis shall make such payments within
thirty (30) days of the date of Supplier's invoice. Supplier shall issue its
invoice to Novartis upon the delivery of Products to Novartis hereunder.

      2.2   Novartis shall bear the cost of any taxes of any kind, nature or
description whatsoever applicable to the sale of any Products by Supplier to
Novartis (except for any taxes based upon the income of Supplier or its
employees), unless Novartis is exempt from such taxes and provides to Supplier,
at the time of the submission of any purchase order, tax exemption certificates
or permits acceptable to the appropriate taxing authorities.

      2.3   Shipping terms for the Products are EXW (Incoterms 2000), place of
manufacture. Notwithstanding the foregoing, Supplier shall load all Product onto
the trucks of Novartis' designated carrier, and title to and risk of loss of the
Products shall pass to Novartis when the Product is so loaded.

      2.4   On [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***], the price at which
Novartis shall purchase the Products shall be increased or decreased to pass on
to Novartis, [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] of any net increase
or decrease in the cost of (i) the raw materials and packaging materials
necessary to the manufacture of Products (collectively, the "Raw Materials");
and (ii) direct labor and fully-absorbed overhead rates (collectively, the
"Overhead") actually incurred by Supplier in


                                       2

producing the Products during the twelve (12) month period ending on the
preceding December 31. Such increase or decrease shall be effective with respect
to Product delivered to Novartis after the [***CONFIDENTIAL TREATMENT REQUESTED,
PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***]
effective date of the applicable price adjustment.

            2.4.1 On or before [***CONFIDENTIAL TREATMENT REQUESTED, PORTION
OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***],
Supplier shall provide Novartis with a non-binding estimate of the amount by
which the price will increase or decrease pursuant to this Section 2.4
[***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION***]. Supplier shall determine the final
amount of any such increase or decrease by no later than the following
[***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION***], and Supplier shall notify Novartis of
such amount in writing at that time. Product delivered to Novartis between
[***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION***] shall be invoiced to Novartis at the
price applicable to Product delivered to Novartis during the immediately
preceding calendar year. Then on or about [***CONFIDENTIAL TREATMENT REQUESTED,
PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION***], Supplier shall transmit to Novartis a corrected invoice for
Product delivered between [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***], taking into
account the final amount of any such price increase or decrease, and setting
forth the applicable additional charges or credits.

            2.4.2 To determine the amount by which the cost of Raw Materials and
Overhead have increased or decreased during a period, the Raw Material and
Overhead costs at the beginning of the period shall be compared to the Raw
Material and Overhead costs at the end of the period, without regard to
intervening fluctuations. Notwithstanding the foregoing, in the event that (i)
the parties shall agree upon Supplier undertaking the development work necessary
to support the substitution of [***CONFIDENTIAL TREATMENT REQUESTED, PORTION
OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] coated
in Supplier's own facilities (in Products containing [***CONFIDENTIAL TREATMENT
REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION***]) for coated [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] purchased from
third parties, and (ii) such development work is successfully completed, then in
calculating the amount by which the cost of Raw Materials has increased or
decreased during a period, Supplier shall only pass on to Novartis
[***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION***] of any cost savings associated with the
substitution of Supplier-coated [***CONFIDENTIAL TREATMENT REQUESTED, PORTION
OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***].



                                       3

            2.4.3 In no event shall any increase or decrease in price pursuant
to Section 2.4(ii) exceed, on a percentage basis, the percentage which the
Producers' Price Index, published by the U.S. Department of Labor, Bureau of
Labor Statistics, increased during the period since the last increase under
Section 2.4(ii).

            2.4.4 At Novartis' request, the parties shall informally discuss the
factors which contributed to any price adjustment hereunder.

      2.5   If, for any reason other than a Force Majeure Event (as defined in
Section 6.7), Supplier fails to deliver Products ordered in accordance with the
lead-times set forth in Section 3.2, in the quantities so ordered, within twenty
(20) days of the date specified in the applicable purchase order, then Novartis
shall be entitled, as liquidated damages, and not a penalty, to a discount of
[***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION***] off the price of the late-delivered
Products.

      2.6 Novartis shall have the right, not more than once in each calendar
year, upon reasonable notice and during normal business hours, to review through
an independent certified public accounting firm selected jointly by the parties,
but retained by Novartis (the "CPA Firm"), such records of Supplier as may be
necessary to verify the accuracy of the amounts invoiced to Novartis hereunder,
including the accuracy of any price adjustments made hereunder. The prices
charged for the Products shall be increased or decreased in accordance with the
CPA Firm's conclusions, including through the crediting of Novartis' account for
any overcharges, and through the payment by Novartis of any additional amounts
for any undercharges, actually incurred in the period audited.

            2.6.1 Novartis shall pay all fees of the CPA Firm performing such
verification unless the CPA Firm concludes that there has been any cumulative
overcharge of prices of more than [***CONFIDENTIAL TREATMENT REQUESTED, PORTION
OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] in the
period audited, in which case Supplier shall bear all reasonable costs of the
audit charged by the CPA Firm.

            2.6.2 Novartis shall instruct the CPA Firm not to disclose to
Novartis any information other than its conclusion as to the the accuracy of the
amounts invoiced to Novartis hereunder, including the accuracy of any price
adjustments made hereunder, and the amount of any variance between the amounts
actually invoiced to Novartis and the amounts which the CPA Firm determines
should have been invoiced.

            2.6.3 In the event that Supplier should disagree with the
conclusions of the CPA Firm, it shall have the right to provide the CPA Firm
with any additional information it so chooses, and to request the CPA Firm to
reconsider. The CPA Firm shall review any such submissions and resolve the issue
in accordance with this Agreement and the facts. The costs charged by the CPA
Firm for conducting such a reconsideration shall be paid by the party against
whom the determination was made.



                                       4

      2.7   Novartis may at any time identify to Supplier suppliers from which
Supplier might obtain any of the Raw Materials at a lower cost than Supplier is
able to obtain such Raw Materials. In such an event, the parties shall evaluate
the new suppliers' proposed pricing and determine whether such suppliers present
an opportunity for significant cost savings, and whether Supplier would incur
significant expenses in shifting to that supplier. Should the parties jointly
determine that it would be appropriate for Supplier to shift to any such new
suppliers, then Supplier shall utilize such suppliers, and the prices charged to
Novartis for Product hereunder shall be reduced as follows: (i) during the first
one (1) year from the date Supplier first utilizes supplies from any such new
supplier (the "Initial Year"), Supplier shall reduce the prices charged to
Novartis for Product by [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] of the amount
of any realized savings; and (ii) after the Initial Year, Supplier shall reduce
the prices charged to Novartis for Product by [***CONFIDENTIAL TREATMENT
REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION***] of the amount of any realized savings. Supplier shall not
unreasonably withhold its approval of any new suppliers identified by Novartis
hereunder. In making any such switch, Supplier shall be allowed to exhaust its
inventory of higher cost Raw Materials prior to commencing the use of the lower
cost materials from the new supplier. Novartis shall reimburse Supplier for any
costs Supplier shall reasonably incur in implementing any such change in
suppliers. Supplier shall maintain accurate records in sufficient detail to
clearly document any such cost savings which result from any new suppliers
identified by Novartis pursuant to this Section. Upon request, Supplier shall
provide all such records to Novartis.

      2.8   Novartis and Supplier shall confer on a regular basis, but no less
than annually, to consider whether new technologies or new manufacturing methods
may exist which likely would reduce Supplier's cost of manufacturing the
Products. Should any such technologies and/or methods be identified, then
(unless utilizing such technologies and/or methods would restrict Supplier's
ability to conduct drug delivery projects for third parties) the parties shall
discuss the sharing of the costs of developing and implementing such
technologies and/or methods, and of the proceeds from any resulting cost
reductions in amounts to be agreed upon.

3.    FORECASTS AND ORDERS

      3.1   In order to assist Supplier in planning production, Novartis shall,
on or before the tenth (10th) day of each month, provide Supplier with a twelve
(12) month rolling forecast of the quantities of Products required by Novartis,
by month, for the following twelve (12) months. It is understood that such
forecasts are intended to be estimates only, and shall not be binding upon
Novartis. Notwithstanding the foregoing, Novartis shall be bound to purchase
from Supplier [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] of those quantities
of Products set forth in each such forecast as being Novartis' requirements of
Products for the first three (3) months of each twelve (12) month period.
Supplier shall, no later than fifteen (15) business days after receipt of each
such forecast, notify Novartis in writing of any prospective problems of which
it is aware that might prevent it from meeting Novartis'


                                       5

forecasted order quantities or estimated delivery dates. Unless Supplier so
informs Novartis that it would have problems in meeting Novartis' forecasted
requirements, Supplier shall be obligated to deliver during any calendar year,
pursuant to purchase orders provided under Section 3.2 of this Agreement, up to
[***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION***] of Novartis' estimated purchases for that
calendar year. Supplier shall further use its commercially reasonable best
efforts to comply with orders for Products in excess of such [***CONFIDENTIAL
TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION***] amount.

      3.2   At least [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] prior to the date on
which Novartis desires to have Product delivered, Novartis shall furnish to
Supplier a binding purchase order for the quantity of Products which Novartis
shall purchase and Supplier shall deliver. The quantities to be delivered under
any such purchase order shall be in full batch-size quantities only, and for a
minimum of four (4) batches. Notwithstanding the foregoing, Novartis shall use
its commercially reasonable best efforts to consolidate its orders into at
quantities of eight (8) batches. Supplier shall, within five (5) business days
after its receipt of such purchase order, acknowledge such receipt and confirm
that the order can be supplied. Each such purchase order shall designate the
quantity of Products ordered and the date by which Supplier must deliver the
Products to Novartis.

      3.3   Supplier shall use its commercially reasonable best efforts to
accommodate any Novartis requests for Product in excess of the quantities
described in any previously-submitted purchase order, or for delivery of Product
sooner than that allowed pursuant to this Article 3. Should Novartis' business
conditions necessitate reduction or delay in purchase order requirements, then
Supplier shall use its commercially reasonable best efforts to implement such
requested changes. Without limiting the generality of the foregoing, Novartis
shall have the right, up to [***CONFIDENTIAL TREATMENT REQUESTED, PORTION
OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] prior
to the date of manufacture, to issue binding change orders, without charge, to
increase or decrease the quantities of Product ordered in any
previously-submitted purchase orders by amounts of up to [***CONFIDENTIAL
TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION***] of the total quantity of Products ordered in such
purchase order. Notwithstanding anything to the contrary herein, (i) Supplier
shall not be obligated to accept any requests for modifications to purchase
orders during the [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] period prior to the
date of manufacture; and (ii) Supplier shall not take any action in response to
any requests for modifications to purchase orders which would result in charges
to Novartis in addition to the standard purchase price permitted hereunder
without Novartis' prior written consent.

      3.4   Supplier shall order each Raw Material in accordance with the
lead-time therefor specified in Exhibit D hereto, in amounts sufficient to
enable Supplier to manufacture [***CONFIDENTIAL TREATMENT REQUESTED, PORTION
OMITTED FILED


                                       6

SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] of those quantities
of Product forecast to be required at the end of the particular lead-time period
(as set forth in the most recent forecast issued pursuant to Section 3.1
available at the time which the order for the particular Raw Material must be
issued).

            3.4.1 By way of example, if Raw Material A had a ninety (90) day
lead-time, and Raw Material B had a thirty (30) day lead-time, then in January,
Supplier shall order enough Raw Material A to meet [***CONFIDENTIAL TREATMENT
REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION***] of those quantities of Product forecast to be required in April,
and enough Raw Material B to meet [***CONFIDENTIAL TREATMENT REQUESTED, PORTION
OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] of
those quantities of Product forecast to be required in February, as set forth in
the most recent forecast available in January.

            3.4.2 Should any Raw Materials obtained in accordance with the
requirements of this Section (or any additional quantities ordered as a result
of standard container sizes or minimum order quantities imposed by Supplier's
suppliers) become unusable due to changes in Product or purchase order
requirements, then Novartis shall reimburse Supplier for the full cost of such
unusable Raw Materials. Supplier shall use all reasonable commercial efforts to
mitigate any such losses of Raw Materials. Supplier shall submit supporting
documentation on all claims based on unusable Raw Materials, and requests for
reimbursement thereof.

      3.5   If for any reason Supplier experiences any shortage of any input
used by Supplier in manufacturing the Products, including without limitation Raw
Materials, labor and plant capacity (each, an "Input"), and is therefore unable
to supply Novartis with the full quantity of Products ordered by it and accepted
by Supplier by the date set forth in the purchase order, then Novartis shall be
entitled to the same proportionate quantity of the Input as the quantity of the
Input used by Supplier in manufacturing Products for Novartis in the twelve (12)
months preceding the shortage bears to the total quantity of the Input used by
Supplier in manufacturing products for all its customers, during such period.

4.    INSPECTIONS AND ACCEPTANCE

      4.1   Novartis shall accept any delivery of Products hereunder if, in
Novartis' sole discretion, Novartis determines that the delivery complies fully
with the relevant purchase order, the Specifications, and with the requirements
of this Agreement. Novartis shall inspect all Products delivered hereunder, and
shall provide Supplier with written notice of its acceptance or rejection of the
delivery, as soon as reasonably practicable, but not later than thirty (30) days
after its receipt of the Products and all required documentation. Any notice of
rejection shall specify the reason(s) therefor. Except in the event of any
investigation, corrective action or retesting of a delivery, should Novartis
fail to provide Supplier with written notice of its acceptance or rejection of
the delivery within thirty (30) days of receipt of the Products and all required
documentation, then the delivery shall be deemed to have been accepted by
Novartis on the thirtieth (30th) day after delivery. After notice of rejection
is received by Supplier, Novartis shall cooperate with Supplier in determining
whether rejection is necessary or justified. Supplier


                                       7

shall notify Novartis as soon as reasonably possible, but not later than thirty
(30) days after receipt of the notice from Novartis, whether it accepts
Novartis' basis for rejection. If Supplier accepts Novartis' determination that
the Products are nonconforming, then Novartis shall be entitled to the remedies
set forth in Section 4.2. If Supplier does not accept Novartis' determination
that the Products are nonconforming, Novartis and Supplier jointly shall select
an independent third party expert to test the Products and determine whether
they conform to the applicable specifications. The parties agree that such third
party's determination shall be final. The party against whom the third party
rules shall bear the reasonable costs of the third party testing. If the third
party rules that the Product conforms to the specifications, Novartis shall
purchase the Products at the agreed upon price. If the third party rules that
the Product is nonconforming, then Novartis shall be entitled to the remedies
set forth in Section 4.2. Notwithstanding anything to the contrary herein, a
Product shall not be deemed nonconforming for purposes of this Agreement if such
nonconformance was caused by the acts or omissions of Novartis after delivery of
the Product in accordance with Section 2.3.

      4.2   Once any such delivery, or any part thereof, is finally deemed to be
rejected, then, at Novartis' option, (a) Supplier shall, at no additional
charge, deliver replacement Products to Novartis as soon as reasonably
practicable thereafter (but, in any event, within sixty (60) days after the
initial notification by Novartis); or (b) the purchase order at issue shall be
deemed terminated, and Novartis shall not be obligated to make any payments to
Supplier with respect to such purchase order, or the rejected delivery (or, if
payment has already been made for such Products, then Novartis shall be entitled
to a credit in such an amount).

5.    DOCUMENTATION AND INFORMATION

      5.1   Supplier shall provide to Novartis all documentation and information
reasonably requested by Novartis (a) to assist Novartis in determining whether
any delivery complies fully with the Specifications and the requirements of this
Agreement; (b) to assist Novartis in obtaining any and all regulatory approvals
necessary to market Novartis' products which contain the Products; or (c) to
enable Novartis to comply with any statutory or regulatory requirements, or with
a request by any governmental or regulatory authority.

      5.2   Every delivery of Products to Novartis shall be accompanied by a
Certificate of Analysis. Supplier hereby warrants the accuracy of each such
Certificate of Analysis to a reasonable degree of scientific certainty.

      5.3   Upon request, Supplier shall submit to Novartis all manufacturing
and testing documents relating to any Products ordered hereunder, including
analyses with instrument conditions, within [***CONFIDENTIAL TREATMENT
REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION***] of the completion of the manufacturing process with respect to
any particular batch of Products.

6.    PRODUCTION PROCEDURES

      6.1   Supplier shall not rework or reprocess any non-conforming Products
without the prior written approval of Novartis. Notwithstanding the foregoing,
Supplier may correct minor


                                       8

packaging defects observed prior to the completion of production of a batch of
Products without the prior written approval of Novartis. Supplier shall describe
any such corrections in the applicable batch records.

      6.2   The Products shall be delivered to Novartis packaged in accordance
with the Specifications. Notwithstanding the foregoing, Novartis shall have the
right to require any special or varied packing that it believes is reasonably
necessary to meet customs or regulatory requirements. Reasonable incremental
costs which result directly from any packing changes required by Novartis will
be borne by Novartis.

      6.3   At least [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] prior to its first
production run of Products, and prior to the production of qualification
batches, Supplier shall provide to Novartis written notice thereof. Supplier and
Novartis shall then agree upon a schedule for the review and approval by
Novartis of Supplier's production procedures for the Products, including without
limitation the manufacturing site, manufacturing equipment, manufacturing
process, manufacturing conditions or testing procedures within its facilities
for the manufacture of the Products (collectively, the "Production Procedures").
After such initial Novartis approval, if Supplier should wish to change any of
the Production Procedures, Supplier shall provide written notice of such
proposed changes to Novartis at least [***CONFIDENTIAL TREATMENT REQUESTED,
PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***]
prior to implementation. Supplier and Novartis shall then agree upon a schedule
for the review and approval by Novartis of such changes, which must be approved
in writing by Novartis prior to being implemented, which approval shall not
unreasonably be withheld.

      6.4   In the event that regulatory action or applicable law require
changes in the Specifications or any production procedures, then, subject to
Novartis' prior written agreement, Supplier shall use its commercially
reasonable best efforts to implement such changes as soon as reasonably
practicable. Should such regulatory action or applicable law only require
changes to the Products and not to any other products manufactured by Supplier,
then Novartis shall pay the reasonable costs actually incurred by Supplier in
implementing such changes. In all other events, the parties shall enter into
good faith negotiations to allocate the costs of any such changes between them.

      6.5   Supplier represents and warrants, and shall take all actions
reasonably necessary to ensure, that all facilities, equipment and practices
used to perform its responsibilities under this Agreement by or on behalf of
Supplier, or any of Supplier's environmental or safety and health consultants or
waste management or disposal contractors (collectively, the "Supplier
Contractors"), will be during the term of this Agreement, in full compliance
with all health, safety and environmental laws, statutes, ordinances,
regulations, rules, permits and pronouncements.

            6.5.1 Supplier assumes responsibility for disposing of any and all
waste generated during the performance of its responsibilities under this
Agreement (including, without


                                       9

limitation, during any manufacturing, storage and transportation activities) in
accordance with all legal and professional standards.

            6.5.2 Notwithstanding anything to the contrary herein, (i) should
Supplier and/or any Supplier Contractor fail to comply with the obligations set
forth in this Section 6.5, then Supplier shall be solely responsible for any
claims, suits, or liabilities resulting therefrom (including, without
limitation, those based on strict liability and joint and several liability),
and Supplier shall indemnify, defend and save Novartis (including officers,
directors, employees and agents of Novartis) harmless from and against any and
all such claims, suits, and liabilities; and (ii) Supplier shall indemnify,
defend and save Novartis (including officers, directors, employees and agents of
Novartis) harmless from and against any and all claims, suits, and liabilities
which arise directly or indirectly from the storage, release, transportation or
disposal of chemicals, raw materials, product, waste or any other substance by
Supplier and/or any Supplier Contractor.

      6.6   Packaging and labeling content for Products shall be determined by
Novartis in its sole discretion. A representative sample or proof of all
packaging materials and labels will be submitted to Novartis for approval prior
to initial use. If Novartis wishes to institute changes in artwork, both parties
will develop a mutually acceptable implementation schedule and such changes will
be at Novartis' expense. Supplier shall purchase labeling and packaging
components in accordance with Novartis artwork. Supplier shall not alter, change
or in any way modify Novartis supplied artwork for any reason, without prior
written consent from Novartis. Commencing on the date this Agreement is signed
by the last party to sign it, Novartis shall be entitled to change the artwork
on each SKU of Product one (1) time in each calendar year without charge.
Novartis shall pay Supplier [***CONFIDENTIAL TREATMENT REQUESTED, PORTION
OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] per SKU
for each additional artwork change. Notwithstanding the foregoing, Novartis
shall not be charged for any artwork changes which are instigated by Supplier.

      6.7   Neither party shall be liable for any failure to deliver or receive,
or delay in delivery or receipt of, any shipment when such failure or delay
shall be caused (directly or indirectly) by fire; flood; accident; explosion;
sabotage; civil commotions; riots; invasions; wars (present or future); acts,
restraints, requisitions, regulations, or directions of any governmental
authority; compliance by a party with any request of any governmental authority,
or any officer, department, agency, or committee thereof; compliance by a party
with any request for material represented to be for purposes of (directly or
indirectly) producing articles for national defense or national defense
facilities; shortage of labor, fuel, power or raw materials; inability to obtain
supplies; failures of normal sources of supplies; inability to obtain or delays
of transportation facilities; any act of God; or any cause (whether similar or
dissimilar to the foregoing) beyond the reasonable control of a party (a "Force
Majeure Event"). Except as provided in Sections 6.7.1 and 7.1, if a Force
Majeure Event occurs, then the affected party's performance shall be excused and
the time for performance shall be extended for the period of delay or inability
to perform due to such occurrence.

            6.7.1 If any Force Majeure Event shall delay any shipment hereunder
or the receipt thereof for more than [***CONFIDENTIAL TREATMENT REQUESTED,
PORTION


                                       10

OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] beyond
the scheduled delivery date, then (a) if such Force Majeure Event is suffered by
Novartis and not also by Supplier, Supplier shall have the right, at its option,
to cancel such shipment without incurring any liability to Novartis with respect
thereto, and (b) if such Force Majeure Event is suffered by Supplier and not
also by Novartis, Novartis shall have the right to cancel its order and to
purchase from a third party the amount of Product ordered without incurring any
liability to Supplier with respect thereto until such time as Supplier is able
to perform its obligations hereunder.

      6.8   From time to time Supplier may provide Novartis with safety and
health information, including, without limitation, warnings, material safety
data sheets, precautionary safety measures, and instructions on proper care, use
and handling, storage, and disposal of the Product. Novartis agrees to observe
all precautions and instructions provided by Supplier and to communicate all
such environmental, safety and health information to its employees. Novartis
shall follow safe handling, storage, transportation, use and disposal practices
with respect to the Product.

7.    MEETING PRODUCT SUPPLY DEMANDS; BACK-UP SUPPLIER; RIGHT TO MANUFACTURE

      7.1   In the event that, for any reason, Supplier is unable to supply
conforming Product sufficient to meet Novartis' purchase orders made consistent
with Section 3.2 in any material respect (an "Inability To Supply"), Novartis
shall have the immediate right, exercisable upon written notice within
[***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION***] after any such event, to manufacture and
package Product with a supplier other than Supplier (a "Back-Up Supplier").
Notwithstanding the foregoing, if Supplier's Inability To Supply is the result
of an Exceptional Event (as defined below), then Novartis may not exercise its
right to manufacture and package Product with a Back-Up Supplier until
[***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION***] after the commencement of the applicable
Exceptional Event. If Novartis exercises its right pursuant to this Section 7.1
to utilize a Back-Up Supplier then the parties shall work together diligently to
establish a Back-Up Supplier in accordance herewith. In the event that any
Inability To Supply shall continue for more than [***CONFIDENTIAL TREATMENT
REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION***], then Novartis may immediately terminate this Agreement without
liability to Supplier by giving Supplier [***CONFIDENTIAL TREATMENT REQUESTED,
PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***]
prior written notice of termination, and this Agreement shall terminate on such
[***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION***] unless prior thereto performance under
this Agreement resumes and Supplier so notifies Novartis in writing.

            7.1.1 Novartis shall act as Back-Up Supplier, utilizing the Novartis
Manufacturing Facility, unless Novartis determines, in its sole discretion, that
an interruption of


                                       11

Product supply could result if the Novartis Manufacturing Facility is used, in
which event, Novartis shall have the right to have a third party supplier of
Novartis' choice (and reasonably acceptable to Supplier) act as Back-Up
Supplier.

            7.1.2 Supplier shall cooperate fully with Novartis and the Back-Up
Supplier, and shall use commercially reasonable best efforts to enable Back-Up
Supplier to qualify and validate the Back-Up Supplier's facilities and to
manufacture and package the Product. Supplier shall give Back-Up Supplier prompt
and unrestricted access to, or, if requested, Supplier immediately shall provide
to Back-Up Supplier, all Technical Information. Any disclosure or use of
Technical Information will be subject to the confidentiality restrictions set
forth in Article 8 of this Agreement. Back-Up Supplier shall have the right to
observe the operation of any laboratory and manufacturing and/or packaging
facility of Supplier (subject to Supplier's obligations of confidentiality to
third parties) and to have a reasonable number of employees or other
representatives of Supplier visit the Back-Up Suppliers' facilities, at
Novartis' option and in accordance with a mutually agreed time table, to
demonstrate and explain any of the Technical Information and the manufacturing
and packaging processes.

            7.1.3 In the event that Novartis has the Back-Up Supplier
manufacture and/or package Product pursuant to this Section 7.1, then Novartis
shall pay to Supplier an amount equal to the amounts that Novartis would have
owed Supplier pursuant to Section 7.3.2. In such an event, Novartis shall not be
obligated to make any payment to Supplier pursuant to Section 7.3.3.

            7.1.4 For purposes of this Agreement, the term "Exceptional Event"
shall mean a Force Majeure Event which, at the time of its commencement, the
parties reasonably expect would be resolved within [***CONFIDENTIAL TREATMENT
REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION***] from the date of its commencement.

      7.2   If Supplier is unable to supply conforming Product in accordance
with Novartis' firm orders made pursuant to and in accordance with the terms and
conditions of this Agreement, and as a direct result of Supplier's
nonperformance, (i) Novartis is unable to supply Product to the marketplace,
(ii) an out-of-stock condition ensues at the Novartis warehouse and (iii)
Novartis receives backorders for the Product, then Novartis shall have the
remedy set forth in Section 4.2.5 of the License Agreement. Failure by Supplier
to supply Product ordered pursuant to a change order issued to Supplier pursuant
to Section 3.3 hereof which increased the order for the related month above
Novartis' forecast shall not be considered nonperformance by Supplier for
purposes of this Section 7.2.

      7.3   In consideration for the payments made to Supplier under the License
Agreement and this Agreement, Novartis shall have the option to manufacture
and/or package the Product, and/or have a third party supplier of Novartis'
choice (and reasonably acceptable to Supplier) ("Third Party Supplier")
manufacture and/or package the Product and any future pharmaceutical product
developed using the OraSolv Technology with respect to which Novartis licenses
rights from Supplier. Novartis may exercise such right, by [***CONFIDENTIAL
TREATMENT


                                       12

REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION***] written notice to Supplier, at any time.

            7.3.1 Supplier shall cooperate fully with Novartis and the Third
Party Supplier, if any, and shall use commercially reasonable best efforts to
enable Novartis and/or the Third Party Supplier to qualify and validate the
Novartis Manufacturing Facility or the Third Party Supplier's facilities and to
manufacture and package the Product. Supplier shall give Novartis and the Third
Party Supplier prompt and unrestricted access to, or, if requested, immediately
shall provide to Novartis and the Third Party Supplier, all Technical
Information. Any disclosure or use of Technical Information will be subject to
the confidentiality restrictions set forth in Article 8 of this Agreement.
Novartis and/or the Third Party Supplier shall have the right to observe the
operation of any laboratory and manufacturing and/or packaging facility of
Supplier (subject to Supplier's obligations of confidentiality to third parties)
and to have a reasonable number of employees or other representatives of
Supplier visit the Novartis Manufacturing Facility or the Third Party Supplier's
manufacturing and/or packaging facilities upon reasonable notice and during
normal business hours, at Novartis' option and in accordance with a mutually
agreed time table, to demonstrate and explain any of the Technical Information
and the manufacturing or packaging processes.

            7.3.2 Novartis shall reimburse Supplier for all reasonable,
pre-approved and fully-documented costs and expenses, including the cost of
reasonable personnel time, development, scale-up and validation costs, and other
out-of-pocket expenses actually incurred by Supplier in connection with the
technology transfer anticipated by this Section 7.3.

            7.3.3 In the event Novartis elects to exercise this option, Novartis
will pay to Supplier total transfer costs not to exceed [***CONFIDENTIAL
TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION***] according to the following payment schedule:

      1. Upon exercising this option [***CONFIDENTIAL TREATMENT REQUESTED,
PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***]

      2. Upon order of equipment [***CONFIDENTIAL TREATMENT REQUESTED, PORTION
OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***]

      3. Upon completion of installation of equipment [***CONFIDENTIAL TREATMENT
REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION***]

      4. Upon completion of validation of equipment [***CONFIDENTIAL TREATMENT
REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION***]



                                       13

Notwithstanding the foregoing, if the license granted to Novartis under the
License Agreement has been converted to a fully paid-up, royalty-free,
irrevocable, nonexclusive license under the CIMA Patents and Know-How pursuant
to Section 8.5 of the License Agreement and, therefore, Novartis has rights to
the Technical Information pursuant to that Section 8.5, Novartis shall not be
required to make any payments to Supplier under this Section 7.3 upon exercising
the option to manufacture and/or package the Product.

      7.4   For purposes of this Agreement, the following terms shall have the
meaning set forth below:

            7.4.1 "Novartis Manufacturing Facility" shall mean a manufacturing
and/or packaging facility of Novartis or a Novartis Affiliate.

            7.4.2 "Technical Information" means all know how, trade secrets,
inventions, data, technology and other information now owned or licensed by
Supplier or hereafter acquired or licensed by Supplier during the term of this
Agreement, including that related to the OraSolv Technology (as defined in the
License Agreement) which are necessary or useful to the manufacture, packaging,
use or sale of Products including, but not limited to, (i) medical, chemical and
other scientific data, (ii) processes and analytic methodology used in the
validation, stability testing and other testing or analysis of such Products and
(iii) packaging and manufacturing data and processes.

8.    TRADE SECRETS, CONFIDENTIALITY AND PUBLICITY

      8.1   Article 7 of the License Agreements incorporated herein by
reference.

9.    QUALITY OF THE PRODUCT; COMPLIANCE WITH LAW

      9.1   Supplier hereby represents and warrants that:

            9.1.1 no Products constituting or being a part of any shipment
hereunder shall at the time of any such shipment be (i) adulterated or
misbranded within the meaning of the Federal Food, Drug and Cosmetic Act, as
amended from time to time (the "Act"), or regulations promulgated thereunder, as
such law or regulation is constituted and in effect at the time of any such
shipment, or (ii) an article which may not, under the provisions of Sections
404, 505 or 512 of the Act, be introduced into interstate commerce;

            9.1.2 all Products furnished to Novartis hereunder shall be in full
compliance with the Specifications at the time of delivery, and shall remain in
full compliance with the Specifications for the full period of the expected
shelf-life of such Products, so long as the Products are stored in accordance
with the Specifications (absent convincing proof to the contrary, proper storage
shall be determined by comparing delivered Product with Product from the same
production lot which Supplier has held as a retained sample; if only the
delivered Product is non-compliant then the failure shall be deemed to be the
result of improper storage);



                                       14

            9.1.3 Supplier shall perform its obligations hereunder in compliance
with all applicable federal, state and local laws and regulations, including
without limitation the Act, FDA's then current Good Manufacturing Practices
("cGMP"), and any and all health, safety and environmental laws and regulations
applicable to Supplier's operations and performance hereunder;

            9.1.4 all Products furnished to Novartis hereunder shall have been
manufactured in accordance with the terms of the QA Agreement;

            9.1.5 Supplier has complied with, and during the term of this
Agreement will continue to comply with, the laws, rules and regulations which
affect the ability of Supplier to manufacture and package the Products in
commercial quantities for use and sale in the Territory;

            9.1.6 Supplier's manufacturing, laboratory and packaging facilities
shall remain in compliance with cGMP at all times during the term of this
Agreement to the extent applicable to the manufacture and packaging of the
Products;

            9.1.7 Supplier has disclosed to Novartis all material information
concerning Supplier's facilities and Supplier's ability to perform its
obligations hereunder which is in Supplier's possession as of the date this
Agreement is executed by Supplier, and will use reasonable best efforts to
continue to disclose such information to Novartis in the future, promptly after
receiving or becoming aware of it; and

            9.1.8 the title conveyed on all Products furnished to Buyer
hereunder shall be good, and its transfer rightful, and the Products shall be
delivered free from any security interest or other lien or encumbrance.

      9.2   EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED IN THIS AGREEMENT,
SUPPLIER MAKES NO WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, CONCERNING THE
PRODUCTS, OR THE MERCHANTABILITY OR FITNESS THEREOF FOR ANY PURPOSE.

      9.3   In the event that Products are delivered to Novartis by Supplier
which are not in compliance with the warranties made in Section 9.1 then, at
Novartis' option (i) Supplier shall replace the non-compliant Products at no
additional charge (which replacement Products shall be delivered to Novartis as
soon as reasonably practicable, but in no event more than sixty (60) days after
the initial notification by Novartis); or (ii) Supplier shall credit Novartis'
account in the amount of the price of the non-compliant Products.

10.   INDEMNIFICATION AND INSURANCE

      10.1  Novartis agrees to defend, indemnify and hold harmless Supplier
against any and all claims, damages, expenses, reasonable attorneys' fees,
settlement amounts and judgments arising out of any personal injury, bodily
injury or property damage to a third party alleged to have been caused by the
Products, except to the extent that such injury or damage was the result of any
breach of this Agreement by Supplier, including any warranty contained herein,
or


                                       15

the result of any latent defects in the Products caused by the negligence or
willful misconduct of Supplier. Supplier shall promptly notify Novartis of any
such claim or action, shall reasonably cooperate with Novartis in the defense of
such claim or action, and shall permit Novartis to control the defense and
settlement of such claim or action, all at Novartis' cost and expense.

      10.2  Supplier shall defend, indemnify and hold Novartis harmless against
any and all claims, damages, expenses, attorneys' fees, settlement amounts,
royalty fees, and judgments arising out of (i) any claim of personal injury,
bodily injury or property damage to a third party to the extent that such injury
or damage is the result of (a) any breach of this Agreement by Supplier,
including any warranty contained herein, or (b) any claim regarding latent
defects in the Products caused by the negligence or willful misconduct of
Supplier; or (ii) any claim regarding a work-related injury to any Supplier
employee. Novartis shall promptly notify Supplier of any such claim or action,
shall reasonably cooperate with Supplier in the defense of such claim or action,
and shall permit Supplier to control the defense and settlement of such claim or
action, all at Supplier's cost and expense.

      10.3  Supplier shall obtain, at its own expense, a policy of insurance in
amounts no less than those specified below:

            10.3.1 naming Novartis as an additional insured on a policy of
general liability insurance with combined limits of not less than $1,000,000 per
occurrence and $1,000,000 per accident for bodily injury, including death, and
property damage;

            10.3.2 workers' compensation and disability insurance in the amounts
required by the law of the state(s) in which its workers are located, and
employer's liability insurance with limits of not less than $1,000,000 per
occurrence;

            10.3.3 naming Novartis as an additional insured on a policy of
product liability insurance with limits not less than $1,000,000;

            10.3.4 property insurance for the replacement value of the
facilities and equipment used to produce the Products; and

            10.3.5 naming Novartis as an additional insured on a policy of
excess insurance with limits not less than $5,000,000.

      10.4  Supplier shall provide to Novartis evidence of its insurance.
Supplier shall provide Novartis thirty (30) days prior written notice of any
cancellation or change in coverage.

      10.5  Novartis warrants that it maintains a policy or program of insurance
or self-insurance at levels sufficient to support the indemnification
obligations assumed herein. Upon request, Novartis shall provide to Supplier
evidence of its insurance. Novartis shall provide to Supplier thirty (30) days
prior written notice of any cancellation or change in coverage.

      10.6  THE EXPRESS OBLIGATIONS STATED IN THIS ARTICLE 10 AND IN ARTICLES 4
AND 9 ARE IN LIEU OF ALL OTHER LIABILITIES OR OBLIGATIONS OF


                                       16

SUPPLIER FOR DAMAGES, INCLUDING BUT NOT LIMITED TO DIRECT OR CONSEQUENTIAL
DAMAGES, ARISING OUT OF OR IN CONNECTION WITH THE DELIVERY, USE OR PERFORMANCE
OF SUPPLIER'S PRODUCTS.

11.   TERM AND TERMINATION

      11.1  This Agreement shall commence on the Effective Date hereof and shall
continue in effect for [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] (the "Initial
Term") and, thereafter, subject to agreement on pricing pursuant to Section
11.1.3, shall automatically renew for an unlimited number of [***CONFIDENTIAL
TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION***] periods (the "Renewal Terms").

            11.1.1 Novartis may terminate this Agreement at no cost, effective
at the end of the Initial Term or at the conclusion of any Renewal Term, by
giving Supplier at least [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] prior written
notice of such termination.

            11.1.2 Novartis may terminate this Agreement in accordance with the
provisions of Section 7.1.

            11.1.3 Subject to Section 11.1.1, commencing on or about
[***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION***] prior to the conclusion of the Initial
Term or any Renewal Term, the parties shall meet to negotiate pricing for the
Products for one (1) or more Renewal Terms.

                  11.1.3.1 If the parties reach such an agreement on price, then
this Agreement shall be deemed to be renewed and Supplier shall continue to
supply the Products to Novartis in accordance with the terms and conditions set
forth herein.

                  11.1.3.2 In the event that the parties are unable to reach an
agreement on price by the end of the Initial Term, then this Agreement shall be
deemed to be automatically renewed for a period of [***CONFIDENTIAL TREATMENT
REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION***] from the end of the Initial Term (the "Transition Term"), with no
further right of automatic renewal. In such an event, (i) during the Transition
Term, Supplier shall charge Novartis the Transition Price (as defined below) for
Products; and (ii) should Novartis choose to transfer production of the Products
to Novartis or to a Novartis facility or to a Third Party Supplier pursuant to
Section 7.3, then Novartis shall pay to Supplier an amount equal to the amounts
that Novartis would otherwise have owed Supplier pursuant to Section 7.3.2 and
[***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED


                                       17

SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] of the amounts that
Novartis would otherwise have owed Supplier pursuant to Section 7.3.3.

                  11.1.3.3 For purposes of this Agreement, the term "Transition
Price" for any Product shall mean the price which Supplier charged Novartis for
the Product in accordance with this Agreement during the final year of the
Initial Term, adjusted so as to permit Supplier to earn a percent profit margin
on the Product which is [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] than the
average percent profit margin which Supplier actually earned on the manufacture
of prescription drug products during the final year of the Initial Term. By way
of example, if the average profit margin which Supplier actually earned on the
manufacture of prescription drug products during the final year of the Initial
Term was [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION***], then the price which Supplier
charged Novartis for the Products in accordance with this Agreement during the
final year of the Initial Term would be adjusted so as to permit Supplier to
earn a [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION***] profit margin on the Products.
The Transition Price (including the profit margin data on which it is based)
shall be subject to review by a CPA Firm in accordance with Section 2.6.

      11.2  In the event that either party shall materially breach this
Agreement, the other party shall give such party written notice specifying such
breach with reasonable detail. Should the breaching party fail to cure such
breach within [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***] of its receipt of
such notice, then the other party may terminate this Agreement. In addition,
either party may terminate this Agreement with immediate effect upon giving
written notice to the other party in the event of insolvency, assignment for the
benefit of creditors, or bankruptcy proceedings by or against the other party.

      11.3  In order to permit Novartis to make a smooth transition to a new
supplier of Products, in the event that this Agreement should terminate for any
reason other than a termination pursuant to Section 11.2 due to the material
breach of Novartis, then Novartis shall be permitted, in its discretion, to
continue to submit purchase orders to Supplier in accordance with Section 3.2,
and Supplier shall continue to supply Products to Novartis in accordance with
such purchase orders and this Agreement, for a period of [***CONFIDENTIAL
TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION***] after the termination of this Agreement, and this
Agreement shall remain in effect with respect to such purchase orders until the
expiration or termination of the purchase orders.

      11.4  Notwithstanding any termination of this Agreement, the provisions of
Sections 6.5.2, 7.2, 7.3, 7.4, 8, 9, 10, 11.3 and 13 shall remain in effect.
Notwithstanding the foregoing, in the event that this Agreement is terminated
pursuant to Section 11.2 due to the material breach of Novartis, then Novartis
may not exercise its rights under Section 7.3 until it has cured such breach,
and, in any event, Novartis shall exercise any rights under Section 7.3


                                       18

within [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION***] after the termination of this
Agreement.

12.   AUDIT AND INSPECTION RIGHTS

      12.1  During the term of this Agreement and any extension thereof,
Novartis shall have the right, at its sole cost and expense, to send Novartis
representatives to audit, inspect and observe the manufacture, storage, disposal
and transportation of the Products, and all other materials related thereto or
used in connection therewith, with reasonable notice during normal business
hours. Such Novartis representatives shall have no responsibility for
supervision of Supplier employees performing the manufacture, storage, disposal
or transportation operations themselves. The audit and inspection rights set
forth in this Section 12.1 are for the purpose of determining Supplier's
compliance with the terms of this Agreement.

      12.2  Supplier shall make available to Novartis all records and reports
relating to the manufacture, storage, disposal and transportation of the
Products, and all other materials related thereto or used in connection
therewith, including without limitation those documents relating to analytical
data, for Novartis' review during normal business hours and upon reasonable
prior notice, and Novartis shall have the right to copy these documents as
required. Such records and reports shall be subject to the confidentiality
provisions of Section 8 of this Agreement. Novartis shall have the right to
conduct inventory reconciliation audits and other audits as reasonably required
for its internal control, at Novartis' sole cost and expense.

      12.3  If, as a result of any such inspection, Novartis concludes that
Supplier is not in compliance with any of its obligations hereunder, it shall so
notify Supplier in writing, specifying such areas of noncompliance in reasonable
detail. Supplier shall provide to Novartis within [***CONFIDENTIAL TREATMENT
REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION***] of Novartis' request a written action plan satisfactory to
Novartis, with a time line for resolution of the problems identified within a
reasonable, mutually agreed upon time frame.

      12.4  Supplier shall inform Novartis within [***CONFIDENTIAL TREATMENT
REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION***] of any notification to Supplier of any site visits to any of
Supplier's facilities by the FDA, state or federal regulatory agencies or any
other governmental or regulatory agency, directly relating to the manufacture of
the Products, and shall provide to Novartis all other materials related thereto
or used in connection therewith. Novartis shall have the option of participating
in any site visit by any governmental or regulatory agency, if the site visit
directly relates to the manufacturing, storage, disposal and transportation of
the Products , subject to such reasonable restraints on such participation as
Supplier may reasonably require. Should Novartis not participate in the site
visit, Supplier shall report in writing the results of the visit to Novartis
within [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION***] of the occurrence thereof. In
the event that any such governmental or regulatory agency finds that the site is
deficient or unsatisfactory in any respect, Supplier shall


                                       19

cure all deficiencies within the earlier of [***CONFIDENTIAL TREATMENT
REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION***] or such cure period as ordered by the government or regulatory
agency. If all deficiencies are not cured within the required time frame,
Novartis shall have the option to immediately terminate this Agreement, without
liability.

      12.5  In the event that any provision of Article 12 should conflict with
any provision of the QA Agreement, then the applicable provision of the QA
Agreement shall take precedence over the applicable provision of this Agreement.

13.   MISCELLANEOUS

      13.1  Each party acknowledges and agrees that any failure on the part of
the other party to enforce at any time, or for any period of time, any of the
provisions of this Agreement shall not be deemed or construed to be a waiver of
such provisions or of the right of such other party thereafter to enforce each
and every such provision.

      13.2  If and to the extent that any provision of this Agreement is
determined by any legislature, court or administrative agency to be, in whole or
in part, invalid or unenforceable, such provision or part thereof shall be
deemed to be surplusage and, to the extent not so determined to be invalid or
unenforceable, each provision hereof shall remain in full force and effect
unless the purposes of this Agreement cannot be achieved. In the event any
provisions shall be held invalid, illegal or unenforceable the parties shall use
commercially reasonable efforts to substitute a valid, legal and enforceable
provision which insofar as practical implements the purposes hereof.

      13.3  This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York as though made and to be fully performed
in said State.

      13.4  All notices required or permitted hereunder shall be given in
writing and sent by facsimile transmission, or mailed postage prepaid by
first-class certified or registered mail, or sent by a nationally recognized
express courier service, or hand-delivered to the following addressees:

      Novartis:         Novartis Consumer Health, Inc.
                        560 Morris Avenue
                        Summit, NJ 07901
                        Attn: General Counsel

      Supplier:         CIMA LABS INC.
                        10000 Valley View Road
                        Eden Prairie, MN 55344
                        Attn:  Vice President, Business Development

or to such other address as may be specified in a notice given to the other
party in accordance with this Section. Any notice, if sent properly addressed,
postage prepaid, shall be deemed made


                                       20

three (3) days after the date of mailing as indicated on the certified or
registered mail receipt, or on the next business day if sent by express courier
service or on the date of delivery or transmission (if delivered or sent during
ordinary business hours, otherwise on the next business day) if hand-delivered
or sent by facsimile transmission.

      13.5  The captions of each section of this Agreement are inserted only as
a matter of convenience and for reference and in no way shall be deemed to
define, limit, enlarge, or describe the scope of this Agreement and the
relationship of the parties hereto, and shall not in any way affect this
Agreement or the construction of any provisions herein.

      13.6  This Agreement, including all Exhibits annexed hereto (which are
incorporated herein by reference), represents and incorporates the entire
understanding between the parties hereto with respect to the subject matter of
this Agreement, and each party acknowledges that there are no warranties,
representations, covenants or understandings of any kind, nature or description
whatsoever made by any party to any other, except such as are expressly set
forth herein. This Agreement shall not be subject to change or modification
except by the execution of a writing specified to be an explicit amendment to
this Agreement duly executed by all parties hereto. Notwithstanding the
foregoing, the terms and conditions set forth in this Agreement shall take
precedence over any contrary or inconsistent terms and conditions appearing or
referred to in any Exhibits annexed hereto, unless the Exhibit explicitly states
otherwise.

      13.7  The parties recognize that, during the term of this Agreement, a
purchase order, acknowledgment form or similar routine document (collectively,
"Forms") may be used to implement or administer provisions of this Agreement.
Therefore, the parties agree that the terms of this Agreement shall prevail in
the event of any conflict between this Agreement and the printed provisions of
such Forms, or typed provisions of Forms that add to, vary, modify or are at
conflict with the provisions of this Agreement.

      13.8  Nothing in this Agreement shall create between the parties a
partnership, joint venture or principal-agent relationship and, for the
avoidance of doubt, each of Supplier and Novartis now confirms and accepts that
it is an independent contractor trading for and on its own behalf.

      13.9  Neither party hereto shall assign or otherwise transfer any of its
rights or obligations under this Agreement, in whole or in part, without the
prior written consent of the other party, except that either party may, without
the necessity for such consent, assign this Agreement or any interest herein or
any right hereunder, to any of its Affiliates or successors by merger or sale of
all or substantially all of its business unit to which this Agreement relates.
This Agreement shall be binding upon any permitted Assignee or successor of
either party. Any assignment that is not in accordance with this Section 13.9
will be void.

      13.10 Novartis shall have the right, not to be unreasonably exercised, to
disapprove of any subcontractor or sub-subcontractor retained or to be retained
to assist Supplier in the performance of its obligations hereunder. Any such
approval or disapproval shall not relieve Supplier of its obligations under this
Agreement. Supplier may not make use of the services of


                                       21

any subcontractor or sub-subcontractor in the performance of the Services if
Novartis has disapproved of that subcontractor or sub-subcontractor.

      13.11 This Agreement may be executed in two or more counterparts, each of
which shall constitute an original and all of which together shall constitute a
single instrument.

      13.12 This Agreement is understood and accepted by Supplier as a general
Novartis Agreement that facilitates application to all Novartis Affiliates in
the world. Due to Affiliate-specific requirements relating to product supply, it
is further recognized and agreed that each Novartis Affiliate will finalize
their specific supply details, including Annexes if the Affiliate so elects,
separately with Supplier; provided, however, that Supplier agrees (1) to the
extent volume discounts are then available to Novartis, as Novartis Affiliate
incremental volume is added to total Product production, pricing for the Product
to all Novartis Affiliates will be discounted to appropriately reflect the
increase in total Novartis and Novartis Affiliate volume for Product meeting the
criteria set forth in (2)(a) - (c) of this Section 13.12; and (2) each Novartis
Affiliate shall be entitled to, but not bound by, financial terms no less
favorable than the terms set forth in Article 2 hereof for manufacture and
packaging by Supplier of a product of (a) the same formulation and dosage as the
Product, (b) packaged in the same blister packaging and, (c) in the same pack
count. Pricing for external packaging and labeling shall be negotiated in good
faith by Supplier and the Novartis Affiliate; provided, that, such pricing is
based on competitive costing.

      IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.

CIMA LABS INC.                           NOVARTIS CONSUMER HEALTH, INC.




By: /s/ John M. Siebert                  By: /s/ Tim Strong
    -------------------                      --------------

Name: John M. Siebert                    Name: Tim Strong

Title: President & CEO                   Title: Sr VP Supply Chain

Date: 2 September 2001                   Date: 8/24/01

Ver. Fixed 01/1-4




                                       22

                                    EXHIBIT A

    List of current Novartis Triaminic Softchews SKU's as of January 1, 2001:

           [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
           SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***]

                                    EXHIBIT B

                                                Novartis Consumer Health. Inc.
                                                560 Morris Ave.
                                                Summit, New Jersey 07901

NOVARTIS                                        Tele: (908) 598-7600
                                                Fax:  (908) 598-7187

      QUALITY AGREEMENT INDEX & CONTACT LIST

Date: May 16, 2000
To:   CIMA
cc:   ###, Legal, QACS File, QACS Product Manual

Document:  CIMA                                                Revision No.:
                                                               02

Quality Assurance Agreement for CIMA
CIMA                                                           01

Attachment    Attachment Title                                        Attachment
Number                                                                Revision
                                                                      Number

      A.01    Testing requirements for Triaminic(R) Softchew(R)       01
              Tablets

      B.01    Validation requirements for Triaminic(R) Softchew(R)    01
              Tablets

      C.01    Contractor guideline for Triaminic(R) Softchew(R)       01
              Tablets

      D.01    Quality Control line check and sampling procedure for   00
              Triaminic(R) Softchew(R) Tablets, per CIMA SOP ###

      E.01    Approved Supplier list for Triaminic(R) Softchew(R)     01
              Tablets
CIMA                                         Address: 10000 Valley View Road
                                             City, State  Zip
                                             Eden Prairie, MN 55344

Key Contacts at Novartis                     Key Contacts at CIMA

Name                     Telephone No.       Name                 Telephone No.
###, Manager Quality     ###                 ###, Director QC     ###
Assurance Contract Supply
                                             John Kosewick        612-947-8778
                                             VP Regulatory Compliance

Approved by NCHIs QACS: /s/ ###               Date:  25 May 00
                       ---------------------       ---------------
      ### - [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
      SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***]

Approved by CIMA:  /s/ J. Kosewick            Date: 25 May 00
                  -------------------------        ---------------




CHANGE HISTORY

Reason for Change: 3/30/2000--Document revised to add information specific to
SKU ### TRIAMINIC(R) Softchews(R) Cough - 1/2" Strawberry - ###








### - [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION***]

            QUALITY ASSURANCE CONTRACT SUPPLY AGREEMENT CIMA - 001
          TESTING REQUIREMENTS FOR TRIAMINIC(R) SOFTCHEW(R) TABLETS

================================================================================
            TESTING REQUIREMENTS FOR RAW MATERIALS, COMPONENTS, AND
                                PACKAGED PRODUCT



SKU         Product                                                  Code No.:
- --------------------------------------------------------------------------------
                                                               
SKU ###     Triaminic(R) Softchews(R) Cold & Allergy 1/2" Orange     ###

SKU ###     Triaminic(R) Softchews(R) Cough & Cold 1/2" Cherry       ###

SKU ###     Triaminic(R) Softchews(R) Throat Pain & Cough, 5/8"      ###
            Grape

SKU ###     Triaminic(R) Softchews(R) Cough-Strawberry               ###


================================================================================
Testing per Approved Blend Product Specification(s), and referenced on the
Certificate of Analysis -- BLEND TESTING

[ ] N/A        [ ] Full Testing         [X] Reduced Testing(explain below)

Explanation:  Per specifications; ###
================================================================================
Testing per Approved Product Specification(s), and referenced on the Certificate
of Analysis -- PACKAGED PRODUCT TESTING / FINISHED PRODUCT TESTING

[ ] N/A        [ ] Full Testing         [X] Reduced Testing(explain below)

Explanation:  Per specifications; ###
================================================================================
Testing per Approved Raw Material Specifications - RAW MATERIAL TESTING

[ ] N/A        [ ] Full Testing         [X] Reduced Testing(explain below)

Explanation: Per SOP ### & raw material specifications.
================================================================================
Testing per Approved Component Specifications -- COMPONENT TESTING / PACKAGING
MATERIALS

[ ] N/A        [ ] Full Testing         [X] Reduced Testing(explain below)

Explanation: Per packaging specifications.
================================================================================
FOR REFERENCE ONLY - KEY STANDARD OPERATING PROCEDURE(s)
SOP #: OOS / Retest SOP ###
SOP #: Reduced Testing & Supplier Qualification Program ###
SOP #: Vendor Audit Program ###
SOP #: Quality Control Line Check and Sampling Procedure for Triaminic(R)
       Softchews(R), SOP # ###
================================================================================

### - [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION***]

             QUALITY ASSURANCE CONTRACT SUPPLY AGREEMENT CIMA - 001
          VALIDATION REQUIREMENTS FOR TRIAMINIC(R) SOFTCHEW(R) TABLETS

================================================================================


Product:                             Code:              NCHI Package List No.:
- --------------------------------------------------------------------------------
                                                  
Triaminic(R) Softchews(R) Cold &     ###                ###
Allergy 1/2" Orange
Triaminic(R) Softchews(R) Cough      ###                ###
& Cold 1/2" Cherry
Triaminic(R) Softchews(R) Throat     ###                ###
Pain & Cough, 5/8" Grape
================================================================================




Validation Area           Required           Validation Completed
                                             (Check box below if completed)
- --------------------------------------------------------------------------------
                                       
Manufacturing Process     [X] Yes  [ ] No    [ ]

Cleaning                  [X] Yes  [ ] No    [ ]
  Validation

Packaging Process         [X] Yes  [ ] No    [ ]

Cleaning                  [X] Yes  [ ] No    [ ]
  Validation

Child Resistant           [X] Yes  [ ] No    [X] SKU ### only. NCHI approval
       Testing                               letter dated Oct. 29, 1997

Blend Product             [X] Yes  [ ] No    Copy of Data Obtained   Lot
Expiration Dating                            [ ] Yes  [ ] No         Numbers:

Blend Product             [X] Yes  [ ] No    [ ] Poly drums with plastic
Storage Conditions                           liner over the lid, less than 25
                                             grains/lbs of air.

Test Method(s)            [X] Yes  [ ] No    [ ]
Transfer Required

Cross Validation          [X] Yes  [ ] No    [ ]
between laboratories

Test Method               [X] Yes  [ ] No    [ ]
Validation Required

Stability Data            [X] Yes  [ ] No    Copy of Data Obtained   Lot
  (Supports Expiry)                          [ ] Yes  [ ] No         Numbers:
================================================================================


Manufacturing and control procedures, including Cleaning Procedures must be
validated. CIMA will be responsible for process (manufacturing & packaging)
validation. CIMA will be responsible for cleaning validation. CIMA will be
responsible for analytical testing validation. CIMA will be responsible for
IQ/OQ and equipment validation. The validation responsibility included
performance of validation and maintenance of the associated documentation is
CIMA responsibility. CIMA will provide NCHIs QACS with the validation protocols
for review and approval prior to implementation. The final validation report(s)
will be sent to NCHIs QACS for review and approval upon completion of validation
activities.

### - [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION***]

            QUALITY ASSURANCE CONTRACT SUPPLY AGREEMENT CIMA - 001
         VALIDATION REQUIREMENTS FOR TRIAMINIC(R) SOFTCHEW(R) TABLETS

================================================================================


Product:                             Code:              NCHI Package List No.:
- --------------------------------------------------------------------------------
                                                  
Triaminic(R) Softchews(R)            ###                ###
Cough 1/2" Strawberry

================================================================================


Validation Area           Required           Validation Completed
                                             (Check box below if completed)
- --------------------------------------------------------------------------------
                                       

Manufacturing Process     [X] Yes  [ ] No    [ ]

Cleaning                  [X] Yes  [ ] No    [ ]
  Validation

Packaging Process         [X] Yes  [ ] No    [ ]

Cleaning                  [X] Yes  [ ] No    [ ]
  Validation

Child Resistant           [ ] Yes  [X] No    [ ]
  Testing

Blend Product             [X] Yes  [ ] No    Copy of Data Obtained   Lot
Expiration Dating                            [ ] Yes  [ ] No         Numbers:

Blend Product             [X] Yes  [ ] No    [ ] Poly drums with plastic liner
Storage Conditions                           over the lid, less than 25
                                             grains/lbs of air.

Test Method(s)            [X] Yes  [ ] No    [ ]
Transfer Required

Cross Validation          [X] Yes  [ ] No    [ ]
between laboratories

Test Method               [X] Yes  [ ] No    [ ]
Validation Required

Stability Data            [X] Yes  [ ] No    Copy of Data Obtained   Lot
  (Supports Expiry)                          [ ] Yes  [ ] No         Numbers:
================================================================================



Manufacturing and control procedures, including Cleaning Procedures must be
validated. CIMA will be responsible for process (manufacturing & packaging)
validation. CIMA will be responsible for cleaning validation. CIMA will be
responsible for analytical testing validation. CIMA will be responsible for
IQ/OQ and equipment validation. The validation responsibility included
performance of validation and maintenance of the associated documentation is
CIMA responsibility. CIMA will provide NCHIs QACS with the validation protocols
for review and approval prior to implementation. The final validation report(s)
will be sent to NCHIs QACS for review and approval upon completion of validation
activities.

       ### - [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
           SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***]

             QUALITY ASSURANCE CONTRACT SUPPLY AGREEMENT CIMA - 001

Title: Contractor Guideline for CIMA, Triaminic(R) Softchew(R) Tablets

Revision Number: 00                     Supersedes:  None

1.    PURPOSE:  This guideline will describe the sampling requirements (line
      & legal retains), expiry term coding, lot coding, and batch record
      content for Triaminic(R) Softchew(R) Tablets at CIMA.

2.    SCOPE: This procedure applies to the following product Manufactured and/or
      Packaged at CIMA.



                                                               Manufacturing
                      Product                                   Code Number
- --------------------------------------------------------------------------------
                                                            
Triaminic(R) Softchews(R) Cough- 1/2" Strawberry                   ###
Triaminic(R) Softchews(R) Cold & Allergy 1/2" Orange               ###
Triaminic(R) Softchews(R) Cough & Cold 1/2" Cherry                 ###
Triaminic(R) Softchews(R) Throat Pain & Cough, 5/8" Grape          ###



3.    RESPONSIBILITIES:
      3.1.  CIMA is responsible for complying with this procedure.
      3.2.  If CIMA can not comply with this procedure they must inform Novartis
            Consumer Health, Inc. (NCHI) Quality Assurance Contract Supply
            (QACS) in writing with the rationale and proposed changes for the
            document.
      3.3.  QACS is responsible for the issuance, revision, and control of this
            procedure.
      3.4.  Only QACS has the authority to change this procedure.

4.    PROCEDURE:

      RETAINS

      4.1.  From each batch/lot of product produced a minimum of three cases per
            lot will be pulled evenly from the beginning, middle, and end of
            every batch/lot of product. Ensure the product is labeled to
            identify when and from where the samples were taken.

            4.1.1. All retains and batch records will be forwarded to QACS at
                   the following address:

              Novartis Consumer Health, Inc.
              Quality Assurance Contract Supply
              560 Morris Ave
              Summit, NJ 07901-1312

### - [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION***]

      4.2.  EXPIRY TERM CODING

            4.2.1. The expiration dating on the cartons must appear as follows:
                -     EXP 01/01
                      -     Two digit month
                      -     Two digit year

            4.2.2. The expiration dating on the blister cards and shippers must
                  appear as follows:
                -     EXP 01/2001
                      -     Two digit month
                      -     Four digit year

            QUALITY ASSURANCE CONTRACT SUPPLY AGREEMENT CIMA - 001

 Contractor Guideline for CIMA, Triaminic(R) Softchew(R) Tablets
Revision Number: 00                Supersedes:  None

Lot coding will adhere to a coding procedure using seven digits defined as
follows:

            -     First & second digit represents a particular product SKU:
                  -     T1 - Triaminic(R) Softchew(R) Cold & Allergy, 1/2"
                        Orange.
                  -     T2 - Triaminic(R) Softchew(R) Cold & Cough, 1/2"
                        Cherry.
                  -     T3 - Triaminic(R) Softchew(R) Throat Pain & Cough, 5/8"
                        Grape.
                  -     T5 - Triaminic(R) Softchew(R) Cough, 1/2", Strawberry
            -     Third digit represents the year, 1998 => 8.
            -     Fourth digit represents the month, Jan => A, Feb => B... (do
                  not use "I").
            -     Fifth & sixth digits represent a sequential number for the
                  month.
            -     Seventh digit will only be used if the bulk lot is split
                  during packaging, each portion must be assigned its own unique
                  lot number using an alpha suffix (i.e., A, B, C, etc.).

      4.3.  BATCH RECORD CONTENT - CIMA will maintain full manufacturing and
            packaging batch records. The following batch record documents will
            be forwarded to NCHIs ACS as outlined below:

Required in Batch
Record



YES   NO    Record(s)
      
 X          NCHI Purchase Order
 X          Batch Manufacturing Record (weighting & blending, compression,
            blister packaging, & final packaging)
       X    Master Packaging Specification
 X          "CIMA Raw Material Test Form for all Actives"
 X          Vendor CofA for Active Raw Material(s)
 X          Finished Product CofA
 X          Product Reconciliation
 X          Component Reconciliation
 X          QC On-line Inspection Reports Manufacturing & Packaging
       X    Certificate(s) for Critical Components
 X          Copies of all Labeling
       X    QC Record(s) and test results for the Release of Blend
       X    QC Record(s) and test results for the Release of Raw Materials
       X    QC Record(s) and test results for the Release of Components
       X    QC Record(s) and test results for the Release of Finished Product
       X    Line Clearance & Set-up Documentation for the Manufacturing and
            Packaging Process
 X          Documentation and/or Investigation for any Process Deviation(s)
       X    Documentation indicating that samples have been forwarded to the
            outside or internal laboratory for Testing
       X    Cleaning and sanitization records.
 X          Packaging Waivers signed by the appropriate NCHI Departments
            (Regulatory, Package Development, & Contract Operations).
 X          Manufacturing Deviations signed by NCHIs QACS.


             QUALITY ASSURANCE CONTRACT SUPPLY AGREEMENT CIMA - 001

Title: Contractor Guideline for CIMA, Triaminic(R) Softchew(R) Tablets

Revision Number: 00                Supersedes:  None

                                  HISTORY PAGE



REVISION NO.            DATE            CHANGE
- ------------            ----            ------
                                  
02                    3/30/2000         Added Information specific to Triaminic-
                                        Softchew-Cough - Strawberry flavor SKU




             QUALITY ASSURANCE CONTRACT SUPPLY AGREEMENT CIMA - 001

          AQL'S & DEFECT CATEGORIES FOR PACKAGING AND FINISHED PRODUCT
                        TRIAMINIC(R) SOFTCHEW(R) TABLETS

Refer to CIMAs SOP ###.







### - [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION***]

             QUALITY ASSURANCE CONTRACT SUPPLY AGREEMENT CIMA - 001

           APPROVED SUPPLIER LIST FOR TRIAMINIC(R) SOFTCHEW TABLETS(R)

List all actives, excipients, and components used to manufacture/package
material for NCHL






           [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
           SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***]

                          EXHIBIT C - TRIAMINIC PRICING

           [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
           SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***]

                              Exhibit D Lead Times

           [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
           SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION***]

EX-10.3

                                                                    EXHIBIT 10.3


                                LICENSE AGREEMENT
                                 AMENDMENT NO. 1

      This License Agreement Amendment No. 1 (the "Amendment") is made and
entered into as of this _____ day of April 2001, by and between Novartis
Consumer Health, Inc., 560 Morris Avenue, Summit, New Jersey 07901
("Novartis"), and CIMA LABS INC., 10000 Valley View Road, Eden Prairie, MN
55344 ("CIMA").

                                   WITNESSETH:

      WHEREAS CIMA and Novartis are parties to a License Agreement, dated July
1, 1998 (the "License Agreement"), by which Novartis licensed from CIMA certain
rights with respect to CIMA Patents and Know-How and the Products, as defined
and set forth more fully therein; and

      WHEREAS the parties wish to amend the License Agreement;

      NOW, THEREFORE, in consideration of the mutual covenants, agreements and
obligations set forth herein, CIMA and Novartis hereby agree as follows:

      1.    Section 4.2 of the License Agreement is hereby modified by deleting
it in its entirety and replacing it with the following:

            4.2   As further consideration for the license granted to NCH under
            this License Agreement as stipulated in Article 2 above, NCH shall
            pay to CIMA a running non-refundable royalty of (i) [***CONFIDENTIAL
            TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE
            SECURITIES AND EXCHANGE COMMISSION.***] of Net Sales
            [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
            SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] of all
            Products in the Field and in the Territory, (ii) [***CONFIDENTIAL
            TREATMENT REQUESTED, PORTION OMITTED FILED SEPARATELY WITH THE
            SECURITIES AND EXCHANGE COMMISSION.***] of Net Sales
            [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
            SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] of all
            Products in the Field and in the Territory, and (iii)
            [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
            SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] of Net


                                                                    EXHIBIT 10.3


            Sales [***CONFIDENTIAL TREATMENT REQUESTED, PORTION OMITTED FILED
            SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.***] of all
            Products in the Field and in the Territory, in each case in
            accordance with the provisions of Article 5. The running royalty
            shall be fully creditable against minimum annual royalties, as set
            forth below in Section 4.4.

      2.    Article 7 of the License Agreement is hereby modified by deleting
it in its entirety and replacing it with the following:

            7.    CONFIDENTIALITY

                  7.1   During the period that this Agreement is in effect and
            thereafter, CIMA and NCH shall not disclose to anyone in any manner
            whatsoever or use for any purpose other than its performance of this
            Agreement (except as authorized in writing by the disclosing party)
            any information it receives from the other party (the
            "Information"), including, without limitation, intellectual
            property, inventions, works of authorship, trade secrets or know-how
            or other information relating in any way to the Products, processes,
            and services of the other party.

                  7.2   Each party shall limit disclosure of Information
            received hereunder to only those of its Agents (as defined below)
            who are directly concerned with the performance of any activities
            with respect to which the Information was disclosed and who have a
            need to know the particular Information in order to perform such
            activities.

                        7.2.1 Each party agrees to advise those of its employees
            who receive any other party's Information that such Information (a)
            is proprietary and confidential to such party and (b) shall not be
            disclosed to anyone except as authorized by this Agreement or
            otherwise authorized by such party in writing. Each party further
            agrees to take at least such precautions as it normally takes with
            its own confidential and proprietary information to prevent
            unauthorized disclosure of the other party's Information.

                        7.2.2 To the extent either party discloses Information
            of the other party to an Agent, or permits an Agent to have access
            to such Information, such party shall indemnify the other party for
            any claims, damages, losses, liabilities, costs or expenses,
            including reasonable attorneys' fees, incurred by

                                                                    EXHIBIT 10.3



            the other party as a result of the indemnifying party's Agent
            further disclosing or misusing such Information.

                        7.2.3 For purposes of this Agreement, (i) the term
            "Agent" shall mean a party's employees, the employees of the party's
            Affiliate (as defined below), and the party's consultants,
            subcontractors or manufacturing contractors, and their employees;
            and (ii) a corporation or other business entity is an "Affiliate" of
            a party hereto it such corporation or entity is controlled by,
            controlling or under common control with such party.

                  7.3   Each party acknowledges that any unauthorized disclosure
            of any portion of the other party's Information shall cause
            irreparable injury to the other party and that no adequate or
            complete remedy shall be available at law to such other party to
            compensate for such injury. Accordingly, each party hereby also
            acknowledges that the other party shall be entitled to injunctive
            relief in the event of such unauthorized disclosure by a party or
            any of its employees in addition to whatever remedies it might have
            at law.

                  7.4   Upon termination of this Agreement, each party shall
            return to the other all copies of the other's Information, and shall
            make no further use of such Information, except for one copy which
            may be retained in the receiving party's confidential files.

                  7.5   The obligations of this Section 8 shall not apply to
            Information

                        7.5.1 that is or has been in the possession of the
            recipient prior to receipt of the same from the disclosing party as
            evidenced by written records;

                        7.5.2 which the recipient lawfully obtains from any
            third party not under an obligation to the disclosing party to hold
            the same in confidence;

                        7.5.3 that is published or becomes part of the public
            domain without breach of any undertakings discussed hereinabove;

                        7.5.4 that is independently developed by personnel of
            the receiving party; or

                                                                    EXHIBIT 10.3



                        7.5.5 that is required to be disclosed pursuant to
            judicial process, court order or administrative request, or that is
            otherwise required for any regulatory filing, provided that the
            receiving party shall notify the other party sufficiently prior to
            disclosing such Information as to permit such other party to seek a
            protective order.

                  7.6   CIMA and NCH agree not to issue any press release or
            other public statement disclosing the existence of or relating to
            this Agreement without prior written consent of the other party;
            provided, however, that neither CIMA nor NCH shall be prevented from
            complying with any duty of disclosure it may have pursuant to law,
            including, but not limited to, the Securities Act of 1933, as
            amended, or the Securities and Exchange Act of 1934, as amended,
            subject to notifying the other party in writing and, to the extent
            practicable, giving such other party reasonable time to comment on
            the same prior to disclosure. Notwithstanding the foregoing, NCH and
            CIMA each shall have the right to disclose information regarding
            this Agreement to potential investors and its financial advisors
            (including allowing such investors and financial advisors to review
            this Agreement itself); provided, that, the disclosing party has
            obtained a commercially reasonable confidentiality agreement from
            each such investor and financial advisor.

      3.    All provisions of the License Agreement not explicitly modified
herein shall remain in full force and effect.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed
as of the Effective Date by their duly authorized officers.

NOVARTIS CONSUMER HEALTH, INC.            CIMA LABS INC.


By:  /s/ Tim Strong                       By: /s/ John M. Siebert
   -----------------                         ----------------------
Name: Tim Strong                          Name: John M. Siebert
Title: SVP Supply Chain                   Title: President & CEO
Date: 8/24/01                             Date: 2 September 2001