Exhibit 10.46

***Text Omitted and Filed Separately

with the Securities and Exchange Commission.

Confidential Treatment Requested

Under 17 C.F.R. Sections 200.80(b)(4)

and 240.24b-2.

Confidential

Second Amended and Restated Marketing and Supply Agreement

by and among

Arena Pharmaceuticals GmbH,

Eisai Inc., and

Eisai Co., Ltd.

dated

November 7, 2013

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Confidential

 

TABLE OF CONTENTS

 

ARTICLE 1.    DEFINITIONS      2    ARTICLE 2.    EXCLUSIVE DISTRIBUTORSHIP     
24                2.1.    Appointment of Eisai as Exclusive Distributor in
Territory      24                2.2.    Supply of Product for Distributorship
     25                2.3.    Negative Covenants      25                2.4.   
Non-Compete Covenants      28                2.5.    OTC Covenant      29   
ARTICLE 3.    PRODUCT DEVELOPMENT AND REGULATORY ACTIVITIES      30   
            3.1.    Overview of Product Development      30                3.2.
   Further Development of the Initial Product      31                3.3.   
Development of Additional Products in the Territory      39                3.4.
   Development Plans      44                3.5.    Conduct of Development and
Regulatory Activities      45                3.6.    Development Expenses     
48                3.7.    Non-Development Plan Development      50   
            3.8.    Use of Subcontractors      52                3.9.   
Materials Transfer      53                3.10.    Product Regulatory Activities
     53                3.11.    Regulatory Compliance      54   
            3.12.    Regulatory Cooperation of the Parties      54   
            3.13.    Communications Outside the Territory      56   
            3.14.    Regulatory Filings; Arena’s Right of Reference      56   
            3.15.    Pharmacovigilance      57                3.16.   
Subcontracting Medical Education Activities      58   

 

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ARTICLE 4.    MANAGEMENT OF RELATIONSHIP      58                4.1.    Joint
Steering Committee      58                4.2.    Joint Development Committee   
  61                4.3.    Scope of Governance      63    ARTICLE 5.   
COMMERCIALIZATION OF PRODUCTS      64                5.1.    Commercialization
Rights and Responsibility      64                5.2.    Eisai Commercialization
Responsibilities      64                5.3.    Commercialization Plans and
Communication      65                5.4.    Eisai Commercialization Commitments
     66                5.5.    Commercialization Standards of Conduct      66   
            5.6.    Specific Diligence Obligations in Additional Territory     
67                5.7.    Limited Licenses      70                5.8.   
Commercialization by Arena      70                5.9.    Recalls      71   
            5.10.    Co-Promotion Partners, Sub-distributors and Developing
Sub-distributors      71                5.11.    Returned Product      73   
ARTICLE 6.    MANUFACTURE AND SUPPLY      73                6.1.    Manufacture
and Supply Commitment      73                6.2.    Forecasting and Ordering   
  73                6.3.    Delivery and Purchase      75                6.4.   
[Reserved]      76                6.5.    Labeling and Packaging      76   
            6.6.    Second Source      76                6.7.    Quality
Agreement      76                6.8.    Quality Control      76   

 

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            6.9.    Certificates      77                6.10.    Quality Audits
     77                6.11.    Acceptance/Rejection      77   
            6.12.    Dispute Regarding Rejection      78                6.13.   
Product Warranty      78                6.14.    Facility Licenses; Storage     
78                6.15.    Inspection by Eisai      79                6.16.   
Regulatory Inspections      79                6.17.    Supply Problems      80
               6.18.    Product Shortage      81                6.19.    Safety
Stock; Inventory      81                6.20.    Commitment to Optimize Supply
Relationship      81    ARTICLE 7.    PAYMENTS      82                7.1.   
Prior Initial Payments      82                7.2.    Upfront 2nd Amendment
Payment      82                7.3.    Milestone Payments      82   
            7.4.    Product Purchase Price Payments for Commercial Supply of
Product      86                7.5.    Product Purchase Price Adjustment
Payments      90                7.6.    Non-Commercial Product Purchase Price   
  95                7.7.    Payment Method; Currency      95                7.8.
   Necessary Third Party IP      95                7.9.    Taxes      96   
            7.10.    Records      96                7.11.    Audits      97   
            7.12.    Payment Due Dates; Late Payments      98   

 

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            7.13.    Currency Conversion      98    ARTICLE 8.   
CONFIDENTIALITY; STANDSTILL      98                8.1.    Product Information
     98                8.2.    Confidential Information      99   
            8.3.    Exceptions      100                8.4.    Permitted
Disclosures      100                8.5.    Confidentiality of this Agreement
and its Terms      102                8.6.    Public Announcements      102   
            8.7.    Use of Name      103                8.8.    Publication of
the Product Information      103                8.9.    Stand-Still      103   
ARTICLE 9.    PATENT PROSECUTION AND ENFORCEMENT      105                9.1.   
Ownership of Intellectual Property      105                9.2.    Patent
Prosecution and Maintenance      106                9.3.    Infringement by
Third Parties      108                9.4.    Infringement of Third Party Rights
     109                9.5.    Invalidity or Unenforceability Defenses or
Actions      110                9.6.    Consent for Settlement      111   
            9.7.    Patent Term Extensions      111                9.8.   
Orange Book Listings      111                9.9.    Trademarks      112   
            9.10.    Internet Policing and Website Agreement      115   
            9.11.    Product Security      116    ARTICLE 10.   
REPRESENTATIONS, WARRANTIES AND COVENANTS      116                10.1.   
Mutual Representations, Warranties and Covenants      116   

 

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            10.2.    Representations, Warranties and Covenants of Arena      117
               10.3.    Representations, Warranties and Covenants of Eisai     
120                10.4.    Disclaimer      120    ARTICLE 11.   
INDEMNIFICATION; PRODUCT LIABILITY CLAIMS      121                11.1.   
Indemnification of Arena      121                11.2.    Indemnification of
Eisai      121                11.3.    Procedure      122                11.4.
   Product Liability Claims      123                11.5.    Insurance      127
   ARTICLE 12.    TERM AND TERMINATION      127                12.1.    Term   
  127                12.2.    Early Termination      127                12.3.   
Termination for Commercialization Concerns      129                12.4.   
Termination for Third Party Infringement      130                12.5.    Eisai
Termination for Non-Compete Reasons      131                12.6.    Other Arena
Termination Rights      131                12.7.    Adjudication of Material
Breach and Other Specific Disputes      131    ARTICLE 13.    EFFECT OF
TERMINATION      133                13.1.    Accrued Obligations      133   
            13.2.    Effects of Termination in Entirety      133   
            13.3.    Effects of Termination With Respect to a Country      136
               13.4.    Effects of Termination With Respect to a Product     
137                13.5.    Return of Confidential Information      137   
            13.6.    Rights in Bankruptcy      137                13.7.   
Purchase of Binding Order      138   

 

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            13.8.    Survival      138    ARTICLE 14.    DISPUTE RESOLUTION AND
GOVERNING LAW      138                14.1.    Dispute Resolution Process     
138                14.2.    Governing Law; Litigation; Exclusive Venue and
Service      138    ARTICLE 15.    GENERAL PROVISIONS      139   
            15.1.    [Reserved]      139                15.2.    Force Majeure
     139                15.3.    Waiver of Breach      140                15.4.
   Further Actions      140                15.5.    Performance by Affiliates or
Subcontractors      140                15.6.    Modification      141   
            15.7.    Severability      141                15.8.    Entire
Agreement      141                15.9.    Language      141   
            15.10.    Notices      141                15.11.    Assignment     
142                15.12.    No Partnership or Joint Venture      142   
            15.13.    Interpretation      143                15.14.   
References      143                15.15.    Counterparts; Electronic Signature
Pages      143                15.16.    Limitation of Liability      143   
            15.17.    Equitable Relief; Specific Performance      143   
            15.18.    No Benefit to Third Parties      144                15.19.
   Cumulative Rights      144                15.20.    Amendment and
Restatement; No Novation      144   

 

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ARTICLE 16.    COMPLIANCE WITH LAW      145                16.1.    Generally   
  145                16.2.    Securities Laws      145                16.3.   
Certain Payments      145   

List of Exhibits

Exhibit A - Other Additional Territory

Exhibit B - Compound Structure

Exhibit C - Europe

Exhibit D - Existing Arena Patents

 

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SECOND AMENDED AND RESTATED MARKETING AND SUPPLY AGREEMENT

This SECOND AMENDED AND RESTATED MARKETING AND SUPPLY AGREEMENT (this
“Agreement”) is entered into as of November 7, 2013 (the “2nd Amendment
Effective Date”) by and among ARENA PHARMACEUTICALS GMBH, a company organized
under the laws of Switzerland having a principal place of business at Untere
Brühlstrasse 4, 4800, Zofingen, Switzerland (“Arena”), EISAI INC., a company
organized under the laws of Delaware having a principal place of business at 100
Tice Blvd., Woodcliff Lake, New Jersey 07677 (“ESI”), and EISAI CO., LTD, a
company organized under the laws of Japan having a principal place of business
at 4-6-10 Koishikawa Bunkyo-ku, Tokyo, Japan, 112-88 (“ECL”). “Eisai” shall mean
(a) ESI, with respect to rights and obligations of Eisai under this Agreement
with respect to the United States and the Additional Territory and (b) ECL, with
respect to rights and obligations of Eisai under this Agreement with respect to
the New Territory. Each of Arena and Eisai may be referred to in this Agreement
individually as a “Party” and collectively as the “Parties”.

WHEREAS

A. Arena is developing and manufacturing for commercialization a product
containing lorcaserin hydrochloride hemihydrate for weight loss or weight
maintenance, among other potential indications. Arena owns or controls certain
patents, know-how and other intellectual property relating to such product;

B. Arena wishes to commercialize such product through a distributor that will
promote, market, sell and distribute such product (and potentially other
pharmaceutical products containing lorcaserin) within the United States and
other countries in North America and South America, Asia, Europe and elsewhere;

C. Eisai has the ability to promote, market, sell and distribute such products
within the United States, other North and South America countries, Asian
countries, European countries and numerous other countries in the world and
wishes to be Arena’s exclusive distributor within the United States and such
other countries (excluding only a specified list of countries), and Arena is
willing to grant to Eisai such exclusive distribution rights on the terms and
conditions set forth in this Agreement;

D. Arena agrees to manufacture (or have manufactured) and sell to Eisai such
products for such commercialization activities in the United States and such
other countries, on the terms and conditions set forth in this Agreement;

E. Arena and Eisai previously entered into a Marketing and Supply Agreement,
dated as of July 1, 2010 (the “Original Agreement”), under which Arena granted
Eisai exclusive distribution rights for such products solely in the United
States, and they subsequently amended and restated the Original Agreement by
entering into the Amended and Restated Marketing and Supply Agreement, dated as
of May 9, 2012 (the “Restated Agreement”), to add the terms and conditions under
which Eisai’s exclusive distribution rights and obligations were expanded to
include other countries in North and South America and to supersede and replace
the Original

 

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Agreement, and they subsequently entered into several written amendments to the
Restated Agreement (the “Prior Amendments”); and

F. The Parties desire to further amend and restate such Restated Agreement to
add the terms and conditions under which Eisai’s exclusive distribution rights
and obligations would be expanded expressly to include specified other countries
in the world and to effect certain other amendments to the Restated Agreement,
and to incorporate the provisions set forth in certain of the Prior Amendments
in one unified and comprehensive document, and to supersede the Restated
Agreement and such Prior Amendments;

NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Arena and Eisai,
intending to be legally bound, hereby agree as follows:

Article 1.

DEFINITIONS

As used in this Agreement, the following capitalized terms have the meanings set
out in this Article 1.

1.1. “[...***...] Transferred Funds” has the meaning set forth in Section
3.3(e).

1.2. “Additional Product” means a pharmaceutical product (in any specific dosage
form or mode of administration) that contains the Compound or a Related Compound
as an active pharmaceutical agent (but excluding the Initial Product) and is
developed under this Agreement by the Parties as provided in Section 3.3 for a
particular Indication(s) (which product may also include one or more other
active pharmaceutical agents). For clarity, but without limiting the foregoing,
the Initial Formulation as indicated for any Indication, other than the
Indications that, as of the 2nd Amendment Effective Date, are the subject of the
Initial Product NDA, shall constitute an Additional Product if the Initial
Formulation is developed by the Parties for such additional Indication(s) under
Section 3.3.

1.3. “Additional Product Fund” means initially US$250,000,000, as such amount
may be (i) increased by any allocations of amounts from the New Territory
Pre-Approval Development Fund pursuant to Section 3.2(e)(iii), and
(ii) decreased pursuant to Section 3.2(a)(iv).

1.4. “Additional Territory” means: (a) Canada, Mexico and Brazil but excluding
any such country as to which this Agreement has been terminated by a Party
pursuant to a provision of this Agreement (the “Priority Additional Territory”)
and (b) the countries identified on Exhibit A, but excluding any such country as
to which this Agreement has been terminated by a Party pursuant to a provision
of this Agreement (the “Other Additional Territory”).

1.5. “Adjusted Territory” means all the countries and territories of the
Territory excluding Japan, China and the countries in Europe.

 

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1.6. “Affiliate” of a Party means any other Person that, directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with such Party, as the case may be, but for only so long as such
control exists. As used in this definition, the term “control” (with correlative
meanings for the terms “controlled by” and “under common control with”) means
(a) direct or indirect beneficial ownership of more than 50% of the voting share
capital or other equity interest in such Person able to elect the directors or
management of such Person or (b) the power to direct the management and policies
of such Person by contract or otherwise.

1.7. “Agreement” has the meaning set forth in the opening paragraph hereto.

1.8. “Alternate Lead Counsel” means, with respect to a particular Joint Product
Liability Claim, the counsel appointed (if applicable) by the Non-Controlling
Party in such Joint Product Liability claim to lead the Joint Defense Matters
relating to such Non-Controlling Party’s Party Indemnitees in such Joint Product
Liability Claim.

1.9. “Amendment Effective Date” means May 10, 2012, the effective date of the
Restated Agreement.

1.10. “Applicable Laws” means the applicable provisions of any and all national,
supranational, regional, state and local laws, treaties, statutes, rules,
regulations, administrative codes, guidance, ordinances, judgments, decrees,
directives, injunctions, orders, permits (including Regulatory Approvals) of or
from any court, arbitrator, Regulatory Authority or other governmental agency or
authority having jurisdiction over or related to the subject activity or item as
they may be in effect from time to time.

1.11. “Arena” has the meaning set forth in the opening paragraph hereto.

1.12. “Arena ex-Territory Distributor” means a licensee, collaborator or
distributor engaged by Arena or any of its Affiliates to market, promote or sell
a Product or other Compound Product or Related Product in a country or countries
outside the Territory. For clarity, (x) any such licensee, collaborator or
distributor engaged by Arena shall constitute an Arena ex-Territory Distributor
only during the term of such engagement and (y) a Sub-distributor or
Co-Promotion Partner appointed by Eisai (as permitted under this Agreement)
shall not constitute an Arena ex-Territory Distributor.

1.13. “Arena Indemnitees” has the meaning set forth in Section 11.1.

1.14. “Arena Independent Know-How” means all Know-How that is Confidential
Information of Arena and that is discovered, identified, conceived, reduced to
practice or otherwise made by or on behalf of Arena or any of its Affiliates, or
by any Arena ex-Territory Distributor and Controlled by Arena or any of its
Affiliates, after the Effective Date in the course of any Non-Development Plan
Development or other work conducted outside of a Development Plan; provided,
that Arena has notified Eisai of such Know-How pursuant to Section 3.7(b) and
such Know-How has not become Arena Know-How pursuant to Section 3.7(b).

 

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1.15. “Arena Know-How” means all Know-How that (a) is Controlled by Arena or any
of its Affiliates, including any Know-How of an Arena ex-Territory Distributor
that is Controlled by Arena or any of its Affiliates, as of the Effective Date,
or at any time during the Term, (b) is necessary or useful for the development
or Commercialization by Eisai of the Initial Product or an Additional Product in
any country in the Territory in accordance with this Agreement, but excluding
all Arena Independent Know-How and Program Know-How and (c) is Confidential
Information of Arena.

1.16. “Arena Patent” means any Patent pending or issued in any country in the
Territory that is Controlled by Arena or any of its Affiliates as of the
Effective Date, or at any time during the Term, and that claims (a) the
Compound, or a product containing the Compound, as a composition of matter, or
(b) a method of use of the Compound or a product containing the Compound, but
excluding (x) all claims of any such Patent that do not involve or relate to a
Compound, a Compound Product or the development or Commercialization thereof and
(y) any Program Patents.

1.17. “Arena US” means Arena Pharmaceuticals, Inc., an Affiliate of Arena.

1.18. “At-Fault Party” has the meaning set forth in Section 11.4(j).

1.19. “Auditor” has the meaning set forth in Section 7.11(a).

1.20. “Batch” means the total amount of a particular Finished Product resulting
from one complete production run conducted by or on behalf of Arena using the
applicable Master Batch Records and Manufacturing SOPs.

1.21. “Batch Records” means, with respect to a particular production run
conducted by or on behalf of Arena for manufacturing one Batch of a particular
Finished Product, the completed batch records, in the form of the Master Batch
Records, for such production run containing all the relevant manufacturing
details and information for the run, including any deviations.

1.22. “BLOOM-DM Trial” means the Phase 3 clinical trial of the Initial Product
conducted by Arena and referred to as “Behavioral modification and Lorcaserin
for Overweight and Obesity Management in Diabetes Mellitus” and identified as
clinical protocol APD356-010, entitled “A 52-Week, Double-blind, Randomized,
Placebo-controlled, Parallel-group Study to Assess the Safety and Efficacy of
Lorcaserin Hydrochloride in Overweight and Obese Patients with Type 2 Diabetes
Mellitus Managed with Oral Hypoglycemic Agent(s).”

1.23. “Board of Directors” has the meaning set forth in the definition of
“Change of Control”.

1.24. “Calendar Quarter” means a period of three consecutive months during a
Calendar Year beginning on and including January 1st, April 1st, July 1st or
October 1st; provided, that the last Calendar Quarter shall end on the last day
of the Term.

 

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1.25. “Calendar Year” means a period of 12 consecutive months beginning on and
including January 1st; provided, that the first Calendar Year of the Term shall
commence on the Effective Date and end on December 31 of the year in which the
Effective Date occurs, and the last Calendar Year shall end on the last day of
the Term.

1.26. “Certificate of Analysis” means a written certificate of analysis, in
reasonable and customary form, which confirms that the quantity of the
applicable Finished Product, manufactured by or on behalf of Arena and delivered
by Arena to Eisai under Article 6, has been tested in accordance with the
applicable Product Acceptance Tests and meets the warranty set forth in
Section 6.13. The Certificate of Analysis will include the results of all
Product Acceptance Tests performed by or on behalf of Arena on the particular
Batch of such Finished Product.

1.27. “CFM” means a certificate of foreign manufacture (or equivalent
certificate).

1.28. “Chairman” means the chairman of the Joint Development Committee or the
chairman of the Joint Steering Committee, as applicable.

1.29. “Change of Control” means, with respect to either Party, the occurrence of
any of the following:

(a) any “person” or “group” (as such terms are defined below) is or becomes the
“beneficial owner” (as defined below), directly or indirectly, in a transaction
or series of related transactions, of shares of capital stock or other interests
(including partnership or LLC membership interests) of such Party (or any of its
Controlling Affiliates) then-outstanding and normally entitled (without regard
to the occurrence of any contingency) to vote in the election of the directors,
managers or similar supervisory positions (“Voting Stock”) (or its Controlling
Affiliate, as applicable) of such Party representing 50% or more of the total
voting power of all outstanding classes of Voting Stock of such Party (or its
Controlling Affiliate, as applicable); or

(b) such Party (or any of its Controlling Affiliates) enters into a merger,
consolidation or other form of business combination, share exchange,
reorganization, recapitalization or other similar extraordinary transaction with
another Person (whether or not such Party (or its Controlling Affiliate, as
applicable) is the surviving entity) and as a result of such merger,
consolidation or other form of business combination, share exchange,
reorganization, recapitalization or similar extraordinary transaction (i) the
members of the board of directors or similar governing body (as the case may be,
“Board of Directors”) of such Party (or its Controlling Affiliate, as
applicable) immediately prior to such transaction constitute less than a
majority of the members of the Board of Directors of such Party (or its
Controlling Affiliate, as applicable) or, if not such Party (or its Controlling
Affiliate, as applicable), such surviving Person immediately following such
transaction or (ii) the Persons that beneficially owned, directly or indirectly,
the shares of Voting Stock of such Party (or its Controlling Affiliate, as
applicable) immediately prior to such transaction cease to beneficially own,
directly or indirectly, shares of Voting Stock representing at least a majority
of the total voting power of all outstanding classes of Voting Stock of the
surviving Person immediately following such transaction; or

 

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(c) such Party (or any of its Controlling Affiliates) sells or transfers to any
Third Party, in one or more related transactions, properties or assets
representing all or substantially all of the consolidated total assets of such
Party and its Affiliates.

For the purpose of this definition: (x) “person” and “group” have the meanings
given such terms under Section 13(d)(3) and 14(d)(2) of the Exchange Act and the
term “group” includes any group acting for the purpose of acquiring, holding or
disposing of securities within the meaning of Rule 13d-5(b)(1) under the
Exchange Act; (y) “beneficial owner” shall be determined in accordance with Rule
13d-3 under the Exchange Act; and (z) the terms “beneficially owned” and
“beneficially own” shall have meanings correlative to that of “beneficial
ownership”.

1.30. “Combination Product” means a pharmaceutical product containing the
Compound or a Related Compound as an active agent together with one or more
other active pharmaceutical agents (which product may be either a single,
fixed-dose formulation or combined in a single package and sold as one product).

1.31. “Commercial Approval” has the meaning set forth in Section 7.3.

1.32. “Commercial Strategy” has the meaning set forth in Section 5.2(a).

1.33. “Commercial Year” means a period of 12 consecutive months beginning on
July 1, 2013, or on an anniversary thereof during the Term.

1.34. “Commercialization” means marketing, promoting, detailing, offering for
sale, selling, importing and distributing in the Territory the applicable
Product, and other similar activities related to the commercial sale of the
Product in the Territory, but excluding for clarity all activities relating to
research, development, or manufacturing of Product or Finished Product. When
used as a verb, “Commercializing” means to engage in Commercialization and
“Commercialize” and “Commercialized” have corresponding meanings.

1.35. “Commercially Reasonable Efforts” means, with respect to a particular
Party’s specific obligations under this Agreement with respect to a Product and
a country in the Territory at the relevant point in time, that level of efforts
and application of resources that is consistent with the usual practice followed
by that Party in conducting similar activities, in the exercise of its
reasonable scientific, business or regulatory judgment, but in no event less
than the level of efforts and resources consistent with the commercially
reasonable practices of the research-based pharmaceutical industry in the
applicable country in the Territory, relating to other prescription
pharmaceutical products owned or licensed by it or to which it has exclusive
rights that have market potential and are at a stage of development or product
life similar to the applicable Product, taking into account the anticipated or,
if applicable, actual Patent coverage and the nature and extent of such
Product’s market exclusivity (including Patent coverage and regulatory
exclusivity), the likelihood of Regulatory Approval of such Product, the safety
and efficacy of such Product, the cost to develop such Product, such Product’s
profile, the competitiveness of the marketplace with respect to such Product,
the proprietary position of such Product, the regulatory structure involved with
respect to such Product, the profitability of such Product (including pricing
and reimbursement status and the amounts of marketing and promotional
expenditures),

 

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and other relevant factors, including comparative technical, legal, scientific,
or medical factors. Commercially Reasonable Efforts shall be determined on a
country-by-country basis. References in this Agreement to “commercially
reasonable” and similar formulations shall be deemed to incorporate the standard
set forth in this definition of “Commercially Reasonable Efforts.”

1.36. “Competing Product” means, with respect to a country in the Territory, a
pharmaceutical product, other than a Product, that is approved for sale in such
country by the applicable Regulatory Authorities for a weight loss, weight
management, obesity or, subject to the time limitations in Section 2.4(a),
addiction disorder Indication.

1.37. “Competing Program”, with respect to each country in the Territory, has
the meaning set forth in Section 2.4(b).

1.38. “Compound” means the compound known as
(R)-8-chloro-1-methyl-2,3,4,5-tetrahydro-1H-3-benzazepine, the structure of
which is set forth in Exhibit B, in the hydrochloride hemihydrate form, or any
other specific pharmaceutically acceptable salt, hydrate, solvate or crystalline
polymorph of such compound.

1.39. “Compound Product” means a pharmaceutical product (in any specific dosage
form or mode of administration) that contains the Compound as an active
pharmaceutical agent (which product may also include one or more other active
pharmaceutical agents).

1.40. “Confidential Information” has the meaning set forth in Section 8.2.

1.41. “Control” (including any variations such as “Controlled” and
“Controlling”), in the context of Materials, Patents, Know-How or regulatory
filings (including specific Confidential Information), means that the applicable
Party or its Affiliate owns or has a license (but excluding license rights
granted to such Party by the other Party) to such Materials, Patents, Know-How
or regulatory filings and has the ability to grant to the other Party the
applicable license (or sublicense, as applicable) or right to use such
Materials, Patents, Know-How or regulatory filings under this Agreement without
violating the terms of an agreement with a Third Party.

1.42. “Controlling Affiliate” means, with respect to a Party, an Affiliate of
such Party that controls (within the meaning given under the definition of
“Affiliate”) such Party.

1.43. “Controlling Party” means, with respect to a particular Product Liability
Claim, the Party that has the right and obligation to assume and conduct the
defense of such Product Liability Claim as provided in and in accordance with
Section 11.4.

1.44. “Co-Promotion Partner” means any Person other than an Eisai Affiliate
engaged by Eisai to provide promotional or marketing activities (including
detailing to prescribers), in collaboration with and as prescribed by Eisai, to
assist in the promotion of sales of Product in a particular country (or
countries) in the Territory (either on a co-promotion or co-marketing basis),
but excluding Sub-distributors in the applicable country. “Promotional or
marketing” as used herein does not include the right to sell or distribute, or
to invoice or book

 

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Product sales. For clarity, any such Person engaged by Eisai to provide
promotional activities shall constitute a Co-Promotion Partner only during the
term of such engagement.

1.45. “CPP” means a certificate of a pharmaceutical product (as such term is
generally understood in the pharmaceutical industry) with respect to the Initial
Product issued by the applicable Regulatory Authority.

1.46. “Developing Sub-Distributor” means, with respect to a particular country
in the Territory, a Sub-Distributor in such country to which Eisai has granted,
with Arena’s prior consent as provided in Section 5.10(c), the rights to conduct
clinical trials and other development of a particular Product in such country.

1.47. “Development Data” means, with respect to clinical trials and other
development work conducted on a Product, all data, results, information and
other Know-How generated from or related to such clinical trials and development
work, including preclinical, non-clinical and clinical data, reports and
information, protocols, statistical analysis plans, methods, and Batch Records
for all Products used in such work.

1.48. “Development Expenses” means (a) a Party’s (or its Affiliate’s) FTE costs
at the applicable FTE Rates, and all costs and expenses paid to Third Parties
(or payable to Third Parties and accrued in accordance with GAAP) by a Party or
any of its Affiliates, in each case, in conducting the clinical trials and other
development work assigned to such Party in accordance with the applicable
Development Plan and (b) Finished Product COGS with respect to clinical supply
of the applicable Finished Product used in such clinical trials and other
development work in accordance with the applicable Development Plan. For
clarity, costs of FTEs of a Party and its Affiliates, of Third Party experts,
and of other Third Parties relating to or associated with (w) communicating
(including meetings) with Regulatory Authorities, (x) filing fees for Regulatory
Filings, (y) data analysis and preparation of Regulatory Filings, and (z) other
activities to execute Regulatory Strategy are not included in Development
Expenses.

1.49. “Development Plan” means, with respect to a specific Product, the plan for
conducting the clinical trials and other development work (including any
preclinical and non-clinical studies) to generate data for use in obtaining,
maintaining, enhancing or expanding Regulatory Approval of such Product, as such
plan is approved, and amended (if applicable), by the JDC (or pursuant to
Section 4.1(f)). For clarity, a Development Plan may cover a single clinical
trial (e.g., a phase 2), a single preclinical or non-clinical study, or one or
more clinical, preclinical or non-clinical studies, and need not include all
studies required to obtain, maintain, enhance or expand Regulatory Approval of a
Product.

1.50. “Development Trademarks” has the meaning set forth in Section 9.9(f).

1.51. “Disclosing Party” has the meaning set forth in Section 8.2.

1.52. “Dispute” has the meaning set forth in Section 12.7(a).

1.53. “ECI” has the meaning set forth in the definition of “FTE Rate”.

 

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1.54. “Effective Date” means July 1, 2010, the effective date of the Original
Agreement.

1.55. “Eisai” has the meaning set forth in the opening paragraph hereto.

1.56. “Eisai Indemnitees” has the meaning set forth in Section 11.2.

1.57. “Eisai Know-How” means any and all Know-How that is Confidential
Information Controlled by Eisai or its Affiliate and that, in either case, is
discovered, identified, conceived, reduced to practice or otherwise made, as
necessary to establish authorship, inventorship or ownership under applicable
United States law as such law exists as of the Effective Date irrespective of
where such discovering, identifying, conception, reduction to practice or other
making occurs, solely by one or more employees of or consultants to Eisai or any
of its Affiliates or Sub-distributors or Co-Promotion Partners (to the extent
such Sub-distributors or Co-Promotion Partners are required to assign or license
such Know-How to Eisai) in the course of or as a result of or related to the
Commercialization activities under this Agreement to the extent such Know-How
does not relate predominantly to the Commercialization of a Product and is
predominantly applicable to the marketing, promoting, detailing, offering for
sale, selling, distributing, or conducting other similar activities related to
the commercial sale of pharmaceutical products generally.

1.58. “Escalation Notice” has the meaning set forth in Section 4.1(f).

1.59. “Estimated Price” has the meaning set forth in Section 7.4(c).

1.60. “Europe” means the countries identified on Exhibit C.

1.61. “Ex-Territory Development” has the meaning set forth in Section 3.2(h)(i).

1.62. “Excess Order” has the meaning set forth in Section 6.2(b).

1.63. “Exchange Act” means the Securities Exchange Act of 1934, as it may be
amended from time to time.

1.64. “Excluded Claim” has the meaning set forth in Section 12.7(j).

1.65. “Excluded List” means any of the Department of Health and Human Service’s
List of Excluded Individuals/Entities or the General Services Administration’s
Lists of Parties Excluded from Federal Procurement and Non-Procurement Programs.

1.66. “Existing Arena Patents” has the meaning set forth in Section 10.2(a).

1.67. “Facility” has the meaning set forth in Section 6.14.

1.68. “Facility Licenses” has the meaning set forth in Section 6.14.

1.69. “FCPA” has the meaning set forth in Section 5.5(a).

 

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1.70. “FDA” means the United States Food and Drug Administration or its
successor.

1.71. “FDA CVOT Study” means the clinical trial for the Initial Product
entitled, “Cardiovascular And Metabolic Effects of Lorcaserin In Overweight And
Obese Patients”.

1.72. “FDA Pediatric Studies” means the pediatric clinical trial for the Initial
Product required by the FDA, in the FDA approval letter for NDA 022529 dated
June 27, 2012, to be conducted after FDA approval of the Initial Product NDA as
a condition to granting such approval, and related development activities.

1.73. “FFDCA” means the United States Federal Food, Drug, and Cosmetic Act, 21
U.S.C. 301, et. seq., as it may be amended from time to time, and the rules,
regulations, guidances, guidelines, and requirements promulgated or issued
thereunder.

1.74. “Field Infringement” has the meaning set forth in Section 9.3(b).

1.75. “Finished Product” means, with respect to a particular Product and country
in the Territory, (a) if such Product is to be sold to end-users in such
country, such Product in final form ready for sale to the end user in such
country, (b) if such Product is to be used for clinical trials or other
development work in such country, such Product in final form ready for such
clinical trials or other development work, (c) if such Product is to be used as
a sample in such country, such Product in final form ready for distribution as a
sample in such country or (d) if such Product is to be used as part of a
compassionate use, named patient use or indigent patient program in such
country, such Product in final form ready for such compassionate use, named
patient use or indigent patient program in such country, in each case ((a) -
(d)), in appropriate final packaging and labeling.

1.76. “Finished Product COGS” means, with respect to a Finished Product, the
fully-burdened aggregate reasonable direct and indirect costs and expenses
incurred and recorded by Arena in manufacturing such Finished Product consisting
solely of: (a) direct labor costs (salaries, wages, employee benefits, overtime
costs and shift premiums); (b) direct materials (including raw materials and
intermediates and packaging) costs; (c) operating costs of facilities and
equipment (including start up and cleaning costs of production); (d) quality,
release and in-process control costs; (e) charges for reasonable spoilage, scrap
or rework costs; (f) amounts (without markup) that are paid to a Third Party,
Eisai, or an Affiliate of Eisai in connection with the manufacture of such
Finished Product or any component thereof; and (g) the reasonable allocation of
Facility overhead, both fixed and variable, to such manufacturing operation
(including the allocable costs of administrators and managers overseeing
manufacturing and production), in each case ((a) through (g)), to the extent
specifically identifiable to the manufacture of such Finished Product as
determined in accordance with GAAP.

1.77. “First Approval Date” has the meaning set forth in Section 5.6(b).

1.78. “First Commercial Sale” means, with respect to a particular Product in a
country in the Territory, on a Product-by-Product and country-by-country basis,
the first bona fide, arm’s length sale of the Product by Eisai or any of its
Affiliates or Sub-distributors to a

 

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Third Party in the particular country in the Territory. Sales of a Product for
registration samples, compassionate use sales, named patient use, inter-company
transfers to Affiliates of Eisai and the like shall not constitute a First
Commercial Sale.

1.79. “Fiscal Semester” means a period of six consecutive months during a Fiscal
Year beginning on and including April 1st or October 1st; provided, that the
first Fiscal Semester of the Term commenced on the Effective Date and ended on
September 30, 2010, and the last Fiscal Semester shall end on the last day of
the Term.

1.80. “Fiscal Year” means a period of 12 consecutive months beginning on and
including April 1st; provided, that the first Fiscal Year of the Term commenced
on the Effective Date and ended on March 31, 2011, and the last Fiscal Year
shall end on the last day of the Term.

1.81. “Forecast” has the meaning set forth in Section 6.2(a).

1.82. “Force Majeure” has the meaning set forth in Section 15.2.

1.83. “FTE” means the equivalent of the work of one employee full time for one
Calendar Year (consisting of a total of 1880 hours per Calendar Year) of work
under Development Plans. Any employee who devotes fewer than 1880 hours per
Calendar Year on work under Development Plans shall be treated as an FTE on a
pro-rata basis calculated by dividing the actual number of hours worked by such
employee under Development Plans during such Calendar Year by 1880. FTE efforts
shall not include the work of general corporate or administrative personnel.

1.84. “FTE Rate” means the FTE personnel cost incurred by a Party in connection
with the development of Products under Development Plans, which, as of the
Effective Date, shall be at an annual rate of (a) US$[...***...] per FTE for
director or equivalent level or above, (b) US$[...***...] per FTE for scientist
or equivalent level or above, and (c) US$[...***...] per FTE below scientist or
equivalent level. Commencing January 1, 2011, each above FTE Rate shall adjust
annually, effective January 1 of the applicable Calendar Year, to reflect any
year-to-year percentage increase or decrease (as the case may be) in the U.S.
Bureau of Labor Statistics Employee Cost Index (“ECI”) (based on the change in
the ECI from the most recent index available as of the Effective Date to the
most recent index available as of the date of the calculation of such adjusted
FTE Rate).

1.85. “G-5 Country” means each of the United Kingdom, Germany, France, Italy or
Spain.

1.86. “GAAP” means generally accepted accounting principles in the Territory, or
internationally, as appropriate, consistently applied, and means international
financial reporting standards (“IFRS”) at such time as IFRS becomes the
generally accepted accounting standard and Applicable Laws require that a Party
use IFRS.

1.87. “Generic Version” means, with respect to a particular Product, a product
sold (i) by a Third Party (who is not authorized by Eisai or any of its
Affiliates and who neither Arena

 

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nor any of its Affiliates has authorized at Eisai’s request) or (ii) by Arena,
any of its Affiliates or any Third Party authorized by Arena or any of its
Affiliates (provided, that the foregoing shall in no way be deemed or construed
to limit Arena’s obligations under Section 2.3(a)) that, in each case ((i) or
(ii)), (a) contains as an active pharmaceutical agent the same Compound or
Related Compound that such Product contains as an active pharmaceutical agent,
and (b) (1) if sold in the United States, has been approved for sales
introduction into commerce in the United States by reference to the Regulatory
Approval for such Product in the United States pursuant to Section 505(b)(2) or
505(j) of the FFDCA (or the successor thereof) or (2) if sold in a country in
the Additional Territory or the New Territory, has been approved for sale in
such country pursuant to an equivalent regulatory law or regulation, but
excluding for clarity any Products sold by Eisai or any of its Affiliates or
Sub-distributors during the Term.

1.88. “Good Clinical Practices” or “GCP” means the then-current standards,
practices and procedures promulgated or endorsed by the FDA for designing,
conducting, recording, analyzing and reporting clinical trials that involve the
participation of human subjects, including as set forth in 21 C.F.R. parts 50,
54, 56 and 312 and in the ICH guidelines entitled “Guidance for Industry E6 Good
Clinical Practice: Consolidated Guidance,” and comparable regulatory standards,
practices and procedures in other countries in the Territory outside of the
United States and in jurisdictions outside the Territory, as they may be updated
from time to time.

1.89. “Good Laboratory Practices” or “GLP” means the then-current good
laboratory practice standards promulgated or endorsed by the FDA for nonclinical
laboratory studies that support or are intended to support applications to
conduct research on human subjects or to obtain regulatory approval, including
as set forth in 21 C.F.R. Part 58, and comparable regulatory standards in other
countries in the Territory outside of the United States and in jurisdictions
outside the Territory, as they may be updated from time to time.

1.90. “Good Manufacturing Practices” or “GMP” means the then-current good
manufacturing practices required by the FDA, as set forth in the FFDCA for the
manufacture and testing of pharmaceutical materials, including as set forth in
21 U.S.C. section 351 and 21 C.F.R. Parts 210 and 211, and comparable laws or
regulations applicable to the manufacture and testing of pharmaceutical
materials in other countries in the Territory outside of the United States and
in jurisdictions outside the Territory, as they may be updated from time to
time. Good Manufacturing Practices shall include applicable quality guidelines
promulgated under the ICH.

1.91. “ICC” has the meaning set forth in Section 12.7(a).

1.92. “ICC Rules” has the meaning set forth in Section 12.7(a).

1.93. “ICH” means the International Conference on Harmonization (of Technical
Requirements for Registration of Pharmaceuticals for Human Use).

1.94. “IND” means an Investigational New Drug Application (including any
amendments thereto) filed with the FDA pursuant to 21 C.F.R. §312 before
commencement of

 

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clinical trials of a pharmaceutical product and its equivalent in other
countries or regulatory jurisdictions outside the United States.

1.95. “Indemnitee” has the meaning set forth in Section 11.3(a).

1.96. “Indemnitor” has the meaning set forth in Section 11.3(a).

1.97. “Indication” means the diagnosis, treatment, prevention or amelioration of
any disease or condition for which an NDA or similar regulatory filing may be
filed and approved.

1.98. “Initial Formulation” means the pharmaceutical product in solid, oral
tablet form containing 10mg of the Compound as its sole active pharmaceutical
agent as described in the Initial Product NDA as of the 2nd Amendment Effective
Date.

1.99. “Initial Product” means the Initial Formulation as indicated for the
Indication(s) that, as of the 2nd Amendment Effective Date, is (are) the subject
of the Initial Product NDA.

1.100. “Initial Product NDA” means NDA22529.

1.101. “JDC Subcommittee” has the meaning set forth in Section 4.2(c).

1.102. “Joint Defense Costs” means costs and expenses paid to Lead Counsel and
other Third Parties, including Third Party experts and investigators, in
connection with Joint Defense Matters. For clarity, Joint Defense Costs shall
not include costs and expenses paid to Shadow Counsel, costs and expenses paid
in connection with Sole Defense Matters, Product Liability Losses, or Punitive
Damages.

1.103. “Joint Defense Matters” means, with respect to a particular Joint Product
Liability Claim, all matters with respect to the investigation of, preparation
for the defense of, and conduct of the defense or settlement negotiations of,
such Joint Product Liability Claim, but excluding Sole Defense Matters with
respect to such Joint Product Liability Claim. Joint Defense Matters include
case-specific plaintiff discovery, discovery involving Third Party experts and
other witnesses (both for the plaintiff and Party Indemnitees), engagement and
preparation of Third Party experts for the Party Indemnitees, briefing on
matters affecting the Party Indemnitees of both Parties, trial preparation and
trial by Lead Counsel, appellate matters, general strategic decision-making, and
settlement negotiations and contracting.

1.104. “Joint Development Committee” or “JDC” has the meaning set forth in
Section 4.2(a).

1.105. “Joint Manufacturing Defect Claim” has the meaning set forth in Section
11.4(d)(i).

1.106. “Joint Product Liability Claim” means a Product Liability Claim against
one or more Arena Indemnitees and one or more Eisai Indemnitees.

 

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1.107. “Joint Steering Committee” or “JSC” has the meaning set forth in Section
4.1(a).

1.108. “JPSC” has the meaning set forth in Section 3.15.

1.109. “JSC Subcommittee” has the meaning set forth in Section 4.1(c).

1.110. “Know-How” means all tangible and intangible scientific, technical,
trade, financial or business information and materials, including compounds,
compositions of matter, formulations, techniques, processes, methods, trade
secrets, formulae, procedures, tests, data, results, analyses, documentation,
reports, information (including pharmacological, toxicological, non-clinical
(including chemistry, manufacturing and control)), and clinical test design,
methods, protocols, data, results, analyses, and conclusions, quality assurance
and quality control information, regulatory documentation, information and
submissions pertaining to, or made in association with, filings with any
Regulatory Authority, product life cycle management strategies, knowledge,
know-how, skill, and experience, and all other discoveries, developments,
inventions (whether or not confidential, proprietary, patented or patentable),
and tangible embodiments of any of the foregoing.

1.111. “Knowledge” means, with respect to a particular statement to which such
term is attributed, that none of the applicable Party’s or any of its
Affiliates’ respective employees with the title of vice president or higher or
in-house general counsel are aware of any facts or information that make such
statement untrue after performing a reasonably diligent investigation with
respect to such statement.

1.112. “Launch Quantity” has the meaning set forth in Section 7.3.

1.113. “Lead Counsel” means (a) with respect to a particular Joint Product
Liability Claim, the counsel appointed by the Controlling Party in such Joint
Product Liability claim to lead the Joint Defense Matters in such Joint Product
Liability Claim, and (b) with respect to a particular Sole Product Liability
Claim, the counsel appointed by the Controlling Party in such Sole Product
Liability claim to lead the defense of such Sole Product Liability Claim.

1.114. “Losses” has the meaning set forth in Section 11.1.

1.115. “Major New Territory Country” means a G-5 Country, Japan or China.

1.116. “Manufacturing SOPs” means, with respect to a particular Finished Product
being supplied by Arena to Eisai under Article 6, the specific methods,
techniques, processes and standard operating procedures (including Quality
Control Procedures) that are used by or on behalf of Arena in manufacturing such
Finished Product.

1.117. “Manufacturing Working Group” has the meaning set forth in Section 6.20.

1.118. “Marketing Activities” has the meaning set forth in Section 5.2(b).

 

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1.119. “Master Batch Records” means the master batch records for Arena’s (or its
designee’s) manufacturing of a specific Finished Product, as established in
accordance with the Quality Agreement, including the applicable Manufacturing
SOPs, the in-process testing and QA/QC testing for such Finished Product, which
records are to be used in the manufacture by or on behalf of Arena of such
Finished Product for supply to Eisai under Article 6.

1.120. “Materials” has the meaning set forth in Section 3.9.

1.121. “Minimum Order Quantity” has the meaning set forth in Section 6.2(a).

1.122. “NDA” means a New Drug Application (including an Abbreviated New Drug
Application) as described in 21 C.F.R. § 314.50, et seq., and all amendments and
supplements thereto, that is filed with the FDA, and its equivalent in other
countries or regulatory jurisdictions outside the United States, in each case
including all documents, data, and other information concerning the applicable
product filed therewith.

1.123. “Negative Covenant Period” means, with respect to a particular country in
the Territory (on a country-by-country basis), the period that begins on the
Effective Date and ends on the last day of the first Calendar Quarter commencing
after the Patent Expiry Date for such country in which the aggregate units of
all Generic Versions of all Products sold in such country during such Calendar
Quarter exceed [...***...]% of the aggregate units of all Products and all
Generic Versions of all Products sold in such country during such Calendar
Quarter.

1.124. “Net Sales” means, with respect to a Product during any period, the gross
invoiced sales price in US Dollars (as converted into US Dollars for sales made
in other currency) for all quantities of such Product sold by Eisai or any of
its Affiliates or Sub-distributors to a Third Party (other than a
Sub-distributor) during such period, less the following deductions to the extent
actually incurred, allowed, or paid with respect to such sale by the selling
party, using GAAP applied on a consistent basis:

(a) sales taxes or other taxes included in the gross invoiced sales price;

(b) credits or allowances given or made for rejection, recall or return of
previously sold Product, in amounts not exceeding usual and customary
reductions, or billing errors with respect to such Product;

(c) Retroactive Price Discounts;

(d) costs of outbound freight, insurance, and other transportation charges
directly related to the distribution of such Product to the purchaser, to the
extent separately set forth in the applicable invoice;

(e) quantity, cash and other trade discounts, or inventory management fees,
including those generated as a result of distributor service agreements, in
amounts not exceeding usual and customary discounts and fees; and

 

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(f) rebates, credits, and chargeback payments (or the equivalent thereof)
granted to managed health care organizations, wholesalers, or to federal, state,
local and other governments, including their agencies, purchasers, or
reimbursers, or to trade customers, in amounts not exceeding usual and customary
amounts and calculated in accordance with GAAP.

In no event shall any particular amount of deduction, identified above, be
deducted more than once in calculating Net Sales (i.e., no “double counting” of
reductions). Each of the above deductions shall be substantially consistent with
Eisai’s, its Affiliate’s or its applicable Sub-distributor’s internal accounting
policies as consistently applied by Eisai, its Affiliates or its applicable
Sub-distributor in the applicable country in the Territory across its products
at the time of sale. In no event shall the deductions with respect to
Retroactive Price Discounts for any Calendar Quarter exceed 3% of the amount
arrived at after deducting the items described in clauses (a), (b), (d), (e) and
(f) above from the gross invoiced sales price in US Dollars (as converted into
US Dollars for sales made in other currency) for all quantities of such Product
sold by Eisai or any of its Affiliates or Sub-distributors to a Third Party in
the Territory during such Calendar Quarter; provided, that any deductions for
Retroactive Price Discounts not taken in any Calendar Quarter pursuant to this
sentence shall be carried forward and applied in future Calendar Quarters. Eisai
shall not, and shall cause its Affiliates and Sub-distributors not to, use any
Product as a loss leader or otherwise unfairly or inappropriately discount the
gross invoiced sales price of a Product in a manner that is intended to benefit,
or provide an incentive to enhance sales of, any other pharmaceutical product
sold by Eisai or any of its Affiliates. Sales of a Product between Eisai and any
of its Affiliates and Sub-distributors for resale shall be excluded from the
computation of Net Sales, but the subsequent resale of such Product to a Third
Party (other than a Sub-distributor) shall be included within the computation of
Net Sales. Notwithstanding anything to the contrary herein, the transfer,
disposal or use of Product, without consideration, for marketing, regulatory,
development or charitable purposes, such as samples, clinical trials,
preclinical trials, compassionate use, named patient use, or indigent patient
programs, shall not be deemed a sale hereunder.

1.125. “New Territory” means the countries in Europe, Japan, China, and all
other countries and territories of the world, excluding the United States, the
countries in the Additional Territory, South Korea, Taiwan, Australia, New
Zealand, Israel, and the Gaza Strip and West Bank territories, and further
excluding any country as to which this Agreement has been terminated by a Party
pursuant to a provision of this Agreement.

1.126. “New Territory Pre-Approval Development Fund” means initially
US$100,000,000, as such amount may be reduced by any allocations of amounts of
such fund to the Additional Product Fund pursuant to Section 3.2(e)(iii).

1.127. “Non-Compete Period”, with respect to each country in the Territory, has
the meaning set forth in Section 2.4(a).

1.128. “Non-Conforming Finished Product” has the meaning set forth in
Section 6.11.

 

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1.129. “Non-Controlling Party” means, with respect to a particular Product
Liability Claim, the Party that is not the Controlling Party in such Product
Liability Claim.

1.130. “Non-Development Plan Development” has the meaning set forth in Section
3.7.

1.131. “Non-Fault Party” has the meaning set forth in Section 11.4(j).

1.132. “Non-G5 Country” means any country in Europe that is not a G-5 Country.

1.133. “Non-Required Additional Product Development” has the meaning set forth
in Section 3.3(i)(i).

1.134. “Non-Required Additional Territory Development” has the meaning set forth
in Section 3.2(d)(i).

1.135. “Non-Required Eisai Development” means investigator initiated-sponsored
research studies on a Product that has received Regulatory Approval in a country
in the Territory.

1.136. “Non-Required New Territory Development” has the meaning set forth in
Section 3.2(g)(i).

1.137. “Non-Required U.S. Development” has the meaning set forth in Section
3.2(b)(i).

1.138. “Notice Date” has the meaning set forth in Section 12.7(b).

1.139. “Once-Daily Product” means a once-daily oral tablet formulation that
contains the Compound as its sole active pharmaceutical agent.

1.140. “Order Acceptance” has the meaning set forth in Section 6.2(b).

1.141. “Order Commitment” has the meaning set forth in Section 6.2(a).

1.142. “Original Agreement” has the meaning set forth in the recitals to this
Agreement.

1.143. “OTC Product” has the meaning set forth in Section 2.5.

1.144. “Other Additional Territory” has the meaning set forth in the definition
of “Additional Territory”.

1.145. “Package Insert” means (a) any display of written, printed or graphic
matter affixed upon the immediate container, outside container, wrapper or other
packaging of such Product or (b) any written, printed or graphic material on or
within the package from which such Product is to be dispensed.

1.146. “Panel” has the meaning set forth in Section 12.7(b).

 

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1.147. “Paragraph IV Notice” has the meaning set forth in Section 9.3(c).

1.148. “Party” and “Parties” has the meaning set forth in the opening paragraph
of this Agreement.

1.149. “Party Indemnitee” means (a) with respect to Eisai, an Eisai Indemnitee,
and (b) with respect to Arena, an Arena Indemnitee.

1.150. “Patent(s)” means (a) all patents, certificates of invention,
applications for certificates of invention, priority patent filings and patent
applications, including provisional patent applications, (b) any renewal,
division, continuation (in whole or in part), or request for continued
examination of any of such patents, certificates of invention and patent
applications, and any all patents or certificates of invention issuing thereon,
and any and all extensions, divisions, renewals, substitutions, confirmations,
registrations, revalidations, revisions, and additions of or to any of the
foregoing, and (c) any patents or patent applications that are the subject of
administrative proceedings before a jurisdiction’s patent office, including
reissues, reexaminations, oppositions, third party observations, post-grant
reviews and inter partes review proceedings.

1.151. “Patent Expiry Date” means, with respect to a particular country in the
Territory (on a country-by-country basis), the later of (a) the date on which
the last issued Arena Patent in such country expires and (b) 12 years after the
First Commercial Sale of the first Product in such country.

1.152. “Patent Term Extension” means any term extensions, supplementary
protection certificates, regulatory exclusivity and equivalents thereof offering
patent protection beyond the initial term with respect to any issued Patents.

1.153. “Payee Party” has the meaning set forth in Section 7.9.

1.154. “Paying Party” has the meaning set forth in Section 7.9.

1.155. “Payment” has the meaning set forth in Section 7.9.

1.156. “Payment Report” has the meaning set forth in Section 3.6(b).

1.157. “Person” means any individual, corporation, partnership, limited
liability company, trust, governmental entity, or other legal entity of any
nature whatsoever.

1.158. “Post-Approval Required Additional Territory Development” has the meaning
set forth in Section 3.2(c).

1.159. “Post-Approval Required New Territory Development” means, for a country
in the New Territory, any clinical trials or other development work conducted on
the Initial Product after the 2nd Amendment Effective Date that are required by
the Regulatory Authorities in such country to be conducted after granting
Regulatory Approval of the Initial Product in such country to obtain or maintain
such Regulatory Approval; provided, that “Post-Approval Required New

 

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Territory Development” shall not include any trials or other development work
that are required to obtain or maintain Regulatory Approval for the Initial
Product in the United States or any country in the Additional Territory.

1.160. “Post-Approval Required U.S. Development” means: (a) the FDA CVOT Study;
(b) the FDA Pediatric Studies; and (c) any additional clinical trials or other
development work on the Initial Product that the FDA requires be conducted after
the 2nd Amendment Effective Date to maintain the Initial Product NDA.

1.161. “Pre-Approval Required Additional Territory Development” has the meaning
set forth in Section 3.2(c).

1.162. “Pre-Approval Required New Territory Development” means, as to a country
in the New Territory, any clinical trials or other development work conducted
after the 2nd Amendment Effective Date that are required by the Regulatory
Authorities in such country to be conducted on the Initial Product as a
condition of and prior to granting Regulatory Approval for the Initial Product
in such country; provided, that “Pre-Approval Required New Territory
Development” shall not include any trials or other development work that are
required to obtain or maintain Regulatory Approval for the Initial Product in
the United States or any country in the Additional Territory.

1.163. “Primary Additional Development Area” means any of the following
Indications or Additional Product development areas: (a) a Once-Daily (QD)
Product; (b) smoking cessation; (c) lorcaserin fixed dosed Combination Product
(FDC); (d) diabetes; and (e) MACE+ (superiority versus placebo for major adverse
cardiac events).

1.164. “Priority Additional Territory” has the meaning set forth in the
definition of “Additional Territory”.

1.165. “Product” means each of (a) the Initial Product and (b) each Additional
Product.

1.166. “Product Acceptance Tests” means, with respect to a particular Finished
Product being supplied by Arena to Eisai under Article 6, the specific tests
(including release tests) to be used to determine whether such Finished Product
manufactured by or on behalf of Arena conforms to the warranty set forth in
Section 6.13, which tests the Parties shall establish (and amend from time to
time if required) in accordance with the terms of the Quality Agreement.

1.167. “Product Information” has the meaning set forth in Section 8.1.

1.168. “Product Liability Claim” means any Third Party Claim brought against any
Arena Indemnitee or Eisai Indemnitee arising from, based on or occurring as a
result of personal injury, death or property damage (to the extent resulting
from personal injury or death) caused by or resulting from (or allegedly caused
by or resulting from) the use of a Product sold, distributed, dispensed or
otherwise administered during the Term in the Territory (other than a generic

 

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version of such Product sold by Eisai or any of its Affiliates, Sub-distributors
or Co-Promotion Partners, which generic version is not supplied by or on behalf
of Arena).

1.169. “Product Liability Losses” means, with respect to a Product Liability
Claim, (a) amounts paid to the Third Party(ies) bringing such Product Liability
Claim to satisfy a judgment in such Product Liability Claim, but excluding
Punitive Damages, or (b) amounts paid to the Third Party(ies) bringing such
Product Liability Claim in settlement of such Product Liability Claim.

1.170. “Product Purchase Price” has the meaning set forth in Section 7.4(a) with
respect to the applicable Product sold for end use in a particular country in
the Territory.

1.171. “Product Purchase Price Adjustment Payment” has the meaning set forth in
Section 7.5.

1.172. “Product Trademark” has the meaning set forth in Section 9.9(a).

1.173. “Program Know-How” means any and all Know-How discovered, identified,
conceived, reduced to practice or otherwise made, as necessary to establish
authorship, inventorship or ownership under applicable United States law as such
law exists as of the Effective Date irrespective of where such discovering,
identifying, conception, reduction to practice or other making occurs, in the
course of or as a result of or related to the development activities under this
Agreement, including pursuant to a Development Plan, or any Commercialization
activities to the extent such Know-How relates predominantly to the
Commercialization of a Product and is not predominately applicable to the
marketing, promoting, detailing, offering for sale, selling, distributing, or
conducting other similar activities related to the commercial sale of
pharmaceutical products generally (a) solely by one or more employees of or
consultants to Arena or any of its Affiliates, (b) solely by one or more
employees of or consultants to Eisai or any of its Affiliates or
Sub-distributors or Co-Promotion Partners (to the extent such Sub-distributors
or Co-Promotion Partners are required to assign or license such Know-How to
Eisai), or (c) jointly by one or more employees of or consultants to Arena or
any of its Affiliates, on the one hand, and one or more employees of or
consultants to Eisai or any of its Affiliates or Sub-distributors or
Co-Promotion Partners (to the extent such Sub-distributors or Co-Promotion
Partners are required to assign or license such Know-How to Eisai), on the other
hand; but excluding all Know-How discovered, identified, conceived, reduced to
practice or otherwise made by or on behalf of Arena or any of its Affiliates
pursuant to (x) any manufacturing activity relating to Compound or Product, or
(y) any activities outside of a Development Plan.

1.174. “Program Patent” means any Patent that claims or covers any invention
within the Program Know-How.

1.175. “Proposed Response” has the meaning set forth in Section 6.16(b).

1.176. “Punitive Damages” means punitive damages awarded against a Party
Indemnitee under a judgment in a Product Liability Claim.

 

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1.177. “Purchase Order” means a written order submitted by Eisai to Arena, in a
form reasonably acceptable to Arena, for Arena to manufacture (or have
manufactured) and deliver, and Eisai to purchase, a specific quantity of a
particular Finished Product, as provided in Section 6.2(b).

1.178. “PV Agreement” means the pharmacovigilance agreement, dated as of
March 21, 2013, entered into by the Parties as provided in Section 3.15 of the
Restated Agreement, as amended from time to time (including pursuant to
Section 3.15 of this Agreement).

1.179. “Quality Agreement” means the quality agreement between the Parties,
dated as of June 19, 2012, containing or referring to the agreed policies,
procedures, and standards, which shall be customary and reasonable, by which the
Parties will coordinate and implement the operational and quality assurance
activities needed to efficiently achieve regulatory compliance objectives with
respect to manufacturing and supply by Arena of the Finished Products, as the
same may be amended from time to time.

1.180. “Quality Control Procedures” has the meaning set forth in Section 6.8.

1.181. “Quarterly Report” has the meaning set forth in Section 3.6(b).

1.182. “Receiving Party” has the meaning set forth in Section 8.2.

1.183. “Recipient” has the meaning set forth in Section 8.2.

1.184. “Reconciliation Payment” has the meaning set forth in Section 7.4(c).

1.185. “Regulatory Approval” means, with respect to a Product to be sold for use
in a particular country in the Territory: (a) as to the United States, approval
by the FDA of the NDA covering such Product in the United States and, if
applicable, all necessary approvals or authorizations by the U.S. Drug
Enforcement Administration (or its successor) necessary to sell such Product in
the United States; and (b) as to a country in the Additional Territory or the
New Territory, all approvals, registrations, authorizations and licenses by the
Regulatory Authorities in such country necessary to sell such Product in such
country.

1.186. “Regulatory Authority” means, as to a particular country, any national,
regional, state or local regulatory agency, department, bureau, commission,
council or other governmental entity whose review, approval or authorization is
necessary for the manufacture, packaging, use, storage, import, export,
distribution, promotion, marketing, offer for sale or sale of a Product in such
country. In the event that governmental approval is required for pricing or
reimbursement for a Product in a country in the Territory to be reimbursed by
national health insurance (or its local equivalent), “Regulatory Authority”
shall also include any national, regional, state or local regulatory agency,
department, bureau, commission, council or other governmental entity whose
approval or authorization of pricing or reimbursement is required.

1.187. “Regulatory Filings” means all applications, approvals, licenses,
notifications, registrations, submissions and authorizations made to or received
from a Regulatory Authority in

 

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the Territory necessary for the development, manufacture or commercialization of
a pharmaceutical product, including any INDs, NDAs and Regulatory Approvals.

1.188. “Regulatory Standards” has the meaning set forth in Section 6.8.

1.189. “Regulatory Strategy” means, with respect to a Product in a country in
the Territory, the strategy for conducting the interactions with Regulatory
Authorities needed to develop such Product for such country and to obtain and
maintain Regulatory Approval of such Product in such country, including making
Regulatory Filings (including INDs, NDAs, and amendments thereto) and developing
and implementing risk evaluation and mitigation strategies.

1.190. “Related Compound” means (a) any known prodrug, known metabolite (having
similar physiological activity as the Compound), or racemate or other optically
active form of the Compound (other than the Compound itself), (b) any free acid
form or free base form of the Compound (other than the Compound itself), (c) any
compound that is claimed by claim 1 of U.S. Patent No. 6,953,787 and acts
primarily as a 5HT2C agonist and has physiological activity similar to the
Compound, or (d) any compound that is claimed by International Patent
Publication No. WO 2005/003096 (as such claims are published as of the Effective
Date).

1.191. “Related Product” means any pharmaceutical product that contains a
Related Compound as a pharmaceutically active agent.

1.192. “Remainder Period” means, as to a particular country in the Territory,
the period during the Term after the Negative Covenant Period for such country
ends.

1.193. “Required Additional Territory Development” has the meaning set forth in
Section 3.2(c).

1.194. “Required New Territory Development” means collectively the Pre-Approval
Required Additional Territory Development and Post-Approval Required New
Territory Development.

1.195. “Responsible Party” means (a) with respect to conducting the clinical
trials or other development work under a Development Plan, the Party designated
in such Development Plan as responsible for conducting such clinical trials or
other development work, and (b) with respect to regulatory activities for a
Product in a particular country in the Territory (and during a particular stage
of development, if applicable), the Party designated to execute the Regulatory
Strategy in such country for such Product (during such stage, if applicable) in
accordance with the terms of this Agreement.

1.196. “Retroactive Price Discount” means, with respect to a Product, a discount
off of the invoiced price for such Product provided for in a contract entered
into by Eisai or any of its Affiliates or Sub-distributors during any period
stipulating a discounted contract price for such Product that is effective for
Product purchased prior to the execution of such contract.

1.197. “ROT” means the countries and territories in the New Territory excluding
Japan, China and the countries in Europe.

 

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1.198. “Safety Stock” means, with respect to a Product and for each month during
the Term commencing three months after the First Commercial Sale of such Product
in the United States, a quantity of the applicable Finished Product equal to the
aggregate quantity of such Finished Product forecasted to be ordered for the
entire Territory for the three months following such month in the Forecast most
recently submitted by Eisai prior to such month, which Finished Product to
qualify as Safety Stock during such month (a) must have been released pursuant
to the Quality Agreement and (b) must meet the requirements of the warranty set
forth in Section 6.13 at all times during such month.

1.199. “SEC” has the meaning set forth in Section 8.6(a).

1.200. “Second Source” has the meaning set forth in Section 6.6.

1.201. “Senior Executives” has the meaning set forth in Section 4.1(f).

1.202. “Shadow Counsel” means, with respect to a particular Product Liability
Claim, the counsel (if any) appointed by the Non-Controlling Party in such
Product Liability Claim to participate in and monitor (but not control) such
Product Liability Claim.

1.203. “Sole Defense Matters” means, with respect to a Party Indemnitee in a
Joint Product Liability Claim, all matters with respect to: (a) investigation
of, discovery of, preparation of, and examination at trial of, personnel who are
employees, subcontractors, consultants, agents or representatives of such Party
Indemnitee or its Affiliates, and (b) investigation of and discovery of
documents and other materials owned or controlled by such Party Indemnitee or
its Affiliates.

1.204. “Sole Product Liability Claim” means a Product Liability Claim against
one or more Party Indemnitees of only one Party and not against any Party
Indemnitees of the other Party.

1.205. “Specifications” means, with respect to a particular Finished Product to
be sold in a particular country in the Territory, the specifications,
characteristics, qualities and labeling and packaging requirements established
in writing for such Finished Product, in accordance with the Quality Agreement
and in conformance with the Regulatory Approval for the applicable Product in
such country and Applicable Laws in such country, with which such Finished
Product must conform (including release criteria and associated analytical
methods) when delivered by Arena to Eisai under Article 6, and as the same may
be amended from time to time under the terms of the Quality Agreement.

1.206. “Stand-Still Period” has the meaning set forth in Section 8.9(a).

1.207. “Subject IP” has the meaning set forth in Section 9.1(d).

1.208. “Sub-distributor” means any Person other than Eisai and its Affiliates
that Eisai appoints to market, promote, sell and distribute Product in a country
(or countries) in the Territory, pursuant to the terms of Section 5.10
(including in conformance with the applicable consent requirements). For
clarity, any such Person appointed by Eisai to market, promote, sell

 

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and distribute Product shall constitute a Sub-distributor only during the term
of such appointment.

1.209. “Swiss CPP” means a CPP for the Initial Product marketed in Switzerland.

1.210. “Term” has the meaning set forth in Section 12.1.

1.211. “Terminated Country” has the meaning set forth in Section 13.3.

1.212. “Terminated Product” has the meaning set forth in Section 12.2(b)(ii).

1.213. “Territory” means: (a) the United States, unless and until this Agreement
has been terminated with respect to the United States by a Party pursuant to an
applicable provision of this Agreement, (b) the Additional Territory, and
(c) the New Territory.

1.214. “Testing Laboratory” has the meaning set forth in Section 6.12.

1.215. “Third Party” means any Person other than Arena, Eisai, and their
respective Affiliates.

1.216. “Third Party Claim” has the meaning set forth in Section 11.1.

1.217. “Trademark” means any word, name, symbol, color, designation or device or
any combination thereof, including any trademark, trade dress, brand mark,
service mark, trade name, brand name, logo or business symbol, whether or not
registered.

1.218. “United States” means the United States of America and its territories
and possessions, including Puerto Rico and the District of Columbia.

1.219. “Voting Stock” has the meaning set forth in the definition of “Change of
Control”.

1.220. “Wind-down Period” means any period after the date of termination of this
Agreement in its entirety or with respect to a particular country during which
the Parties are required to wind-down or transition development activities
pursuant to Section 13.2(a) and, if applicable, Eisai is required to wind-down
Commercialization activities pursuant to Section 13.2(e), in each case with
respect to the applicable countries where the termination has occurred.

Article 2.

EXCLUSIVE DISTRIBUTORSHIP

2.1. Appointment of Eisai as Exclusive Distributor in Territory. Subject to the
terms and conditions of this Agreement, Arena hereby appoints Eisai (a) during
the Negative Covenant Period for each country in the Territory, as the exclusive
distributor of the Initial Product and any and all Additional Products in such
country and grants to Eisai during such Negative Covenant Period the exclusive
rights to Commercialize the Initial Product and any and

 

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all Additional Products in such country, and (b) during the Remainder Period for
each country in the Territory, as the exclusive distributor, under the Product
Trademarks, of the Initial Product and any and all Additional Products in such
country and grants to Eisai during the Remainder Period in such country the
exclusive rights under the Product Trademarks in the applicable country to
Commercialize the Initial Product and any and all Additional Products in such
country. Eisai shall have the exclusive right in the Territory to invoice and
book (x) during the Negative Covenant Period for each country in the Territory,
all Product sales in such country and (y) during the Remainder Period for such
country, all sales of Product sold under the Product Trademarks in such country.
As between the Parties, Arena and its Affiliates shall retain the exclusive
right to commercialize Products outside the Territory. For clarity, Eisai
(a) shall have the right at all times during the Term to Commercialize any
Product in any country in the Territory under a Product Trademark, including as
a branded generic product sold under a Product Trademark, and (b) may exercise
any or all of its rights under this Section 2.1 through any Affiliate of Eisai
or any Sub-distributor.

2.2. Supply of Product for Distributorship. Arena shall supply (or have
supplied) to Eisai, and Eisai shall purchase exclusively from Arena, its
requirements of the Initial Product (and, if applicable, each Additional
Product) for sale by Eisai or its Affiliates or Sub-distributors in the
Territory pursuant to Section 2.1, subject to and under the provisions of
Article 6. Eisai shall purchase all such amounts of Product supplied by Arena
under the payment provisions of Article 7.

2.3. Negative Covenants.

(a) Arena hereby covenants and agrees, with respect to each country in the
Territory, that during the Negative Covenant Period for such country it shall
not, and shall cause its Affiliates not to (i) (A) file an NDA, a BLA or any
equivalent thereof for, market, promote, detail, offer for sale, sell,
distribute or conduct any other similar activities related to the commercial
sale of, any Compound Product or Related Product in such country or
(B) knowingly sell any Product or other Compound Product or Related Product to
any Person (other than Eisai or its Affiliate or Sub-distributor) outside such
country that Arena or any of its Affiliates knows intends to resell such Product
or other Compound Product or Related Product inside such country, (ii) license,
authorize, appoint or assist any Third Party to (A) file in such country an NDA,
a BLA or any equivalent thereof for, market, promote, detail, offer for sale,
sell, distribute or conduct any other similar activities related to the
commercial sale of, any Compound Product or Related Product in such country or
(B) knowingly sell any Product or other Compound Product or Related Product to
any Person (other than Eisai or its Affiliate or Sub-distributor) outside such
country that such Third Party knows intends to resell such Product or other
Compound Product or Related Product inside such country. During the Negative
Covenant Period for each country in the Territory, Arena shall, and shall cause
its Affiliates and each Arena ex-Territory Distributor to, use Commercially
Reasonable Efforts to prevent Third Parties from reselling the Products or other
Compound Products or Related Products in such country, including by obtaining
from each Arena ex-Territory Distributor an undertaking at least as restrictive
as the foregoing clause (i)(B) is with respect to Arena and using Commercially
Reasonable Efforts to enforce each such undertaking. If Arena receives any order
for a Product from a prospective purchaser located in the Territory for use or
delivery in a country in the Territory, Arena shall promptly notify Eisai in

 

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writing. Arena shall not accept any such orders. Subject to Section 2.3(d), the
foregoing shall not restrict Arena or its Affiliates or Arena ex-Territory
Distributors from conducting any research or development, including clinical
development, of Compound Products or Related Products.

(b) Arena hereby covenants and agrees, with respect to each country in the
Territory, that (i) during the Remainder Period for such country it shall not,
and shall cause its Affiliates not to (A) market, promote, detail, offer for
sale, sell, or distribute in such country any Product under a product-specific
Trademark (other than “lorcaserin”) or (B) knowingly sell any Product to any
Person (other than Eisai or its Affiliate or Sub-distributor) outside such
country that Arena or any of its Affiliates knows intends to resell such Product
inside such country under a product-specific Trademark (other than
“lorcaserin”); (ii) license or otherwise authorize any Third Party to
(A) market, promote, detail, offer for sale, sell, or distribute any Product in
such country under a product-specific Trademark (other than “lorcaserin”), or
(B) knowingly sell any Product to any Person (other than Eisai or its Affiliate
or Sub-distributor) outside such country that such Third Party knows intends to
resell such Product inside such country under a product-specific Trademark
(other than “lorcaserin”); except that nothing in the foregoing shall prevent
Arena or its Affiliates or contracting parties from using its own company name,
logo and trade dress in marketing, promoting, detailing, offering for sale,
selling, or distributing in such country any Product as a generic product, so
long as such activities do not also involve a product-specific Trademark.

(c) Notwithstanding anything in this Agreement to the contrary, Eisai
acknowledges and agrees that certain advertising, promotion or marketing of the
Products or other Compound Products or Related Products, including the
advertising, promotion and marketing of the Products or other Compound Products
or Related Products through the use of the internet and pan-regional print
advertisements and at conferences and seminars held outside the Territory, may
reach Persons in the Territory, and Arena shall not be in breach of this
Agreement so long as (i) the objective of such advertising, promotion or
marketing is to reach Persons outside the Territory or otherwise to promote
sales of the Products or other Compound Products or Related Products (as
applicable) outside the Territory, and (ii) the receipt by Persons located
inside the Territory of such advertising, promotion or marketing of the Products
or other Compound Products or Related Products is merely incidental to the
objectives of such advertising, promotion or marketing. In the event that Arena
(or any of its Affiliates or Arena ex-Territory Distributors) desires to attend
and give presentations (including seminars, “poster-board” presentations, and
industry booths) regarding the Products or other Compound Products or Related
Products at conferences or seminars and the like in the Territory, Arena shall
notify the JDC of such desire and the JDC (or any applicable JDC Subcommittee)
shall review and discuss such proposed presentation; provided, that (A) Arena
shall not, and shall cause its Affiliates and Arena ex-Territory Distributors
not to, attend and give any such presentations in the Territory without the
prior written consent of Eisai, which consent shall not be unreasonably
conditioned, withheld or delayed and (B) any such presentation shall comply with
Applicable Laws and be consistent with the applicable rules and regulations of
the applicable conference or seminar. Further, Eisai acknowledges that certain
Products sold to distributors outside the Territory and intended for resale to
end users outside the Territory may end up being resold (through, for example,
an internet sales channel) to end users in the Territory, and that Arena shall
not be in breach of this Agreement based on such resales so long as Arena (or
any of its

 

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Affiliates) does not authorize such resales into the Territory and complies with
its obligations set forth in Section 2.3(a).

(d) Arena hereby covenants and agrees that it shall not, and it shall cause its
Affiliates and the Arena ex-Territory Distributors not to, conduct any clinical
trials or other material development work with respect to a Compound Product or
a Related Product for use outside the Territory without first complying with the
provisions of Section 3.2(h), Section 3.3 and Section 3.7, as applicable.

(e) Notwithstanding anything in Section 2.3(a) or Section 2.3(b) to the
contrary, Eisai acknowledges and agrees that the provisions of Section 2.3(a)
and Section 2.3(b) shall not apply to a Terminated Product in any country with
respect to which such Terminated Product has been terminated.

(f) Eisai hereby covenants and agrees that it shall not, and it shall cause its
Affiliates, Sub-distributors and Co-Promotion Partners not to, purchase any
Compound or Related Compound from any Third Party, or market, promote, detail,
offer for sale, sell, distribute or conduct other similar activities related to
the commercial sale of any Compound Product or Related Product during the Term
that was not purchased from Arena.

(g) Eisai hereby covenants and agrees that it shall not, and shall cause its
Affiliates, Sub-distributors and Co-Promotion Partners not to, either directly
or indirectly, market, promote, detail, offer for sale, sell or distribute, or
conduct any other similar activities related to the commercial sale of, any
Product or Related Product in countries outside the Territory. As to such
countries outside the Territory, Eisai shall not, and shall cause its
Affiliates, Sub-distributors and Co-Promotion Partners not to: (i) engage in any
advertising or promotional activities relating to any such Product or Related
Product directed primarily to customers or other buyers or users of such Product
or Related Product located in such countries; or (ii) solicit orders from any
prospective purchaser located in such countries. Eisai hereby covenants and
agrees that it shall not, and shall cause its Affiliates, Sub-distributors and
Co-Promotion Partners not to, knowingly sell any Product or Related Product to
any Person inside the Territory that Eisai or any of its Affiliates,
Sub-distributors or Co-Promotion Partner, as applicable, knows intends to resell
such Product or Related Product outside the Territory. If Eisai receives any
order for any such Product or Related Product from a prospective purchaser
located in a country outside the Territory for use or delivery in a country
outside the Territory, Eisai shall promptly notify Arena in writing. Eisai shall
not accept any such orders. Notwithstanding anything in this Agreement to the
contrary, Arena acknowledges and agrees that certain advertising, promotion or
marketing of the Products, including the advertising, promotion and marketing of
the Products through the use of the internet and pan-regional print
advertisements and at conferences and seminars held in the Territory, may reach
Persons outside the Territory, and Eisai shall not be in breach of this
Agreement so long as (1) the objective of such advertising, promotion or
marketing is to reach Persons within the Territory or otherwise to promote sales
of the Products within the Territory, and (2) the receipt by Persons located
outside the Territory of such advertising, promotion or marketing of the Product
is merely incidental to the objectives of such advertising, promotion or
marketing. Eisai shall not, and shall cause its Affiliates, Sub-distributors,
Co-Promotion Partners and other subcontractors not to, conduct any medical
affairs activities,

 

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including attending and giving presentations at conferences and seminars and the
like (including “poster-board” presentations and industry booths), with respect
to any Product or Related Product outside the Territory without the prior
written consent of Arena, which consent shall not be unreasonably conditioned,
withheld or delayed.

2.4. Non-Compete Covenants.

(a) Each Party shall not, and shall cause its Affiliates and (as to Eisai)
Sub-distributors and Co-Promotion Partners not to, file an NDA, a BLA or any
equivalent thereof for, market, promote, detail, offer for sale, sell or
distribute, or conduct other similar activities related to the commercial sale
of, a Competing Product in a particular country in the Territory during the
period commencing on the Effective Date and ending 12 years after the First
Commercial Sale of the first Product in such country (the “Non-Compete Period”
for such country); provided, that a product that receives Regulatory Approval in
a country in the Territory for an addiction disorder Indication shall no longer
be deemed a Competing Product in such country (provided, that such product does
not otherwise meet the definition of “Competing Product”) upon the later of
(i) five years after the Effective Date and (ii) if the Parties agree during
such five-year period to develop an Additional Product for an addiction disorder
Indication for such country, the date when the Parties are no longer developing
(i.e., have not conducted any activity under a Development Plan for six months)
or Commercializing any Additional Product for an addiction disorder Indication
in or for such country under this Agreement.

(b) Notwithstanding Section 2.4(a), Arena shall not be in breach of
Section 2.4(a) by virtue of any Person filing an NDA, a BLA or any equivalent
thereof for, marketing, promoting, detailing, offering for sale, selling or
distributing, or conducting other similar activities related to the commercial
sale of, any Competing Product in a country in the Territory (a “Competing
Program” in such country), which Person becomes an Affiliate of Arena through a
Change of Control of Arena during the Non-Compete Period for such country;
provided, that Arena notifies Eisai in writing promptly after the closing of
such Change of Control of Arena. In the event of any such Change of Control of
Arena during the applicable Non-Compete Period where such Affiliate has a
Competing Program in the applicable country in the Territory, if such Affiliate
does not cease such Competing Program entirely (whether by a divestiture of such
Competing Program in a transaction where Arena and its Affiliates retain no
interest in the divested Competing Program, or otherwise) within six months
after such Change of Control, then after the end of such six-month period
(during which Arena or such Affiliate, as the case may be, shall be permitted to
file an NDA, a BLA or any equivalent thereof for, market, promote, detail, offer
for sale, sell and distribute, and conduct other similar activities related to
the commercial sale of, the applicable Competing Product in such country), then
with respect to Development Plans for the Product that competes with the
Competing Product, pursuant to Section 4.1(f), Eisai shall have final
decision-making authority with respect to all decisions regarding each such
Development Plan being conducted for such country, but only for so long as such
Competing Program continues, including whether or not to enter into or continue
such Development Plan, except that Eisai may not (i) obligate Arena to
(A) perform any clinical trials or development work other than Post-Approval
Required U.S. Development or (B) perform or fund any clinical trials or other
development work for which a Development Plan does not exist

 

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as of the date of such Change of Control or (ii) amend any existing Development
Plan in a manner that imposes additional economic obligations on Arena.

(c) Notwithstanding Section 2.4(a), if Eisai would violate the provisions of
Section 2.4(a) by virtue of (i) any Person having a Competing Program in a
particular country in the Territory becoming an Affiliate of Eisai during the
applicable Non-Compete Period through a Change of Control of Eisai, then Eisai
shall, at its election: (A) terminate this Agreement either in its entirety or
only with respect to such country(ies) upon 90 days’ notice to Arena (which
notice, if given, must be given within 60 days after such Change of Control) or
(B) cease entirely, or cause its applicable Affiliate to cease entirely, such
Competing Program (whether by a divestiture of such Competing Program in a
transaction where Eisai and its Affiliates retain no interest in the divested
Competing Program, or otherwise) within six months after such Change of Control;
provided, that in any case Eisai or such Affiliate, as the case may be, shall be
permitted to file an NDA, a BLA or any equivalent thereof for, market, promote,
detail, offer for sale, sell or distribute, and conduct other similar activities
related to the commercial sale of, the applicable Competing Product in such
country during such six-month period; and provided, further, that Eisai’s
obligations under Article 5 with respect to such country(ies) shall remain in
effect during such six-month period, or (ii) (A) any Person having a Competing
Program in a particular country in the Territory becoming an Affiliate of Eisai
during the applicable Non-Compete Period through an acquisition of such Person
by Eisai or any of its Affiliates or a merger or consolidation with such Person
(including merger by a subsidiary of such Person) by Eisai or any of its
Affiliates, which transaction does not result in a Change of Control of Eisai or
(B) the acquisition by Eisai or any of its Affiliates of all or substantially
all of the assets of a Person having a Competing Program in a particular country
in the Territory, then in each case ((A) and (B)) Eisai shall cease entirely, or
cause its applicable Affiliate to cease entirely, such Competing Program
(whether by a divestiture of such Competing Program in a transaction where Eisai
and its Affiliates retain no interest in the divested Competing Program, or
otherwise) within six months after such transaction; provided, that in any case
Eisai or such Affiliate, as the case may be, shall be permitted to file an NDA,
a BLA or any equivalent thereof for, market, promote, detail, offer for sale,
sell or distribute, and conduct other similar activities related to the
commercial sale of, the applicable Competing Product in such country during such
six-month period; and provided, further, that Eisai’s obligations under Article
5 shall remain in effect during such six-month period, and in each case ((i) and
(ii)) Eisai shall not be in breach of Section 2.4(a) if it complies with the
terms of this Section 2.4(c).

(d) For clarity, the negative covenants in subsections (a) – (c) above shall be
deemed effective: (i) with respect to the Additional Territory, on and after the
Amendment Effective Date, and (ii) the New Territory, on and after the 2nd
Amendment Effective Date. Further, the term “Territory” as used in this
Section 2.4 (and throughout the Agreement) shall be deemed to have the meaning,
at the applicable time, as defined in Article 1 at such time, taking into
account any deletions of one or more countries from such definition due to
termination of the Agreement with respect to any such country.

2.5. OTC Covenant. In the event that after the Negative Covenant Period
applicable to a particular country in the Territory Arena desires to market,
promote, offer for sale, sell, import or distribute in such country any Product
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without a prescription or other authorization from a physician, nurse
practitioner, pharmacist, physician assistant or other healthcare provider (such
Product, an “OTC Product”) either itself or through an Affiliate or Third Party,
then Arena shall notify Eisai of such desire, and if Eisai desires to obtain the
rights to market, promote, offer for sale, sell, import or distribute such OTC
Product in such country in the Territory, then Eisai shall notify Arena thereof
within 30 days after receipt of such notice from Arena and the Parties shall in
good faith seek to reach agreement, within 180 days after Eisai so notifies
Arena, on the terms under which Eisai would have the rights to market, promote,
offer for sale, sell, import or distribute such OTC Product in such country in
the Territory; provided, that it is understood that neither Party shall have any
obligation to enter into any such agreement except on terms that are acceptable
to such Party, or to continue such negotiations beyond the end of such period.
If the Parties do not enter into such an agreement within such 180-day period,
then, notwithstanding anything to the contrary in this Agreement, Arena shall
have the right to market, promote, offer for sale, sell, import or distribute
such OTC Product in such country in the Territory either itself or through an
Affiliate or Third Party without obligation to Eisai; provided, that such OTC
Product is not sold under a Product Trademark.

Article 3.

PRODUCT DEVELOPMENT AND REGULATORY ACTIVITIES

3.1. Overview of Product Development.

(a) Initial Product in the United States. Arena US has filed the Initial Product
NDA with the FDA, and Arena has conducted (or caused Arena US to conduct), the
regulatory activities with respect to the FDA for the Initial Product through
achievement of initial Regulatory Approval in the United States for the Initial
Product (resulting in the approved Initial Product NDA). The Parties shall
conduct the FDA CVOT Study and the FDA Pediatric Studies as provided in
Section 3.2(a). If, in addition to the FDA CVOT Study and the FDA Pediatric
Studies, the FDA requires clinical trials or other development work on the
Initial Product to maintain such Regulatory Approval (such as a required Phase 4
clinical trial or outcome study), or if the Parties agree to conduct other
additional clinical trials or other development work on the Initial Product with
respect to such Regulatory Approval (for clarity, not including clinical trials
or development work on Additional Products), such clinical trials or other
development work shall be conducted as provided in Section 3.2(a) and (b),
respectively.

(b) Initial Product in the Additional Territory. Eisai shall have the right and,
unless otherwise agreed by the Parties in writing, responsibility for
(1) conducting, or causing its Affiliate or Sub-distributor (in the applicable
country) to conduct, all regulatory activities, and (2) conducting, or causing
its Affiliate or Developing Sub-distributor (in the applicable country) to
conduct all clinical activities, in each case ((1) and (2)) with respect to each
Regulatory Authority in the Additional Territory for the Initial Product in
accordance with this Agreement. If (i) any such Regulatory Authority in a
country in the Additional Territory requires additional clinical trials or other
development work on the Initial Product to obtain or maintain a Regulatory
Approval in such country (such as a required clinical trial or outcome study),
or (ii) if the Parties agree to conduct other additional clinical trials or
other development

 

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work on the Initial Product after such Regulatory Approval in such country (for
clarity, not including clinical trials or other development work on Additional
Products), such clinical trials or other development work shall be conducted as
provided in Section 3.2(c) and (d), respectively, except as otherwise provided
in Section 3.2(i).

(c) Initial Product in the New Territory. Sections 3.2(e), (f) and (g) establish
the terms for the Parties’ development of the Initial Product in countries
throughout the New Territory.

(d) Additional Products in the Territory. Section 3.3 establishes the terms for
the Parties’ development of Additional Products throughout the Territory. The
Parties have agreed, in Section 3.3(a), to bear equally (up to the limit of the
Additional Product Fund) the Development Expenses of conducting the clinical
trials and other development work with respect to Additional Product(s) in the
Territory, through obtaining Regulatory Approval. Such development work may
include development work on the Primary Additional Development Areas, and
potentially on other development areas (including additional Indications or
other Additional Products). The Parties agree that the Additional Product Fund
will be used solely in connection with Development Plans for Additional Products
that are either mutually approved by the Parties or approved by Arena using its
final decision-making authority as provided in this Agreement.

3.2. Further Development of the Initial Product.

(a) Required Further Development of Initial Product in the United States.

(i) The JDC is using reasonable efforts to agree on the Development Plans
(consistent with Section 3.4) and Regulatory Strategy for conducting the FDA
CVOT Study and the FDA Pediatric Studies, and the Parties acknowledge that such
development work shall be conducted according to the terms of this
Section 3.2(a) and Section 3.5. If the JDC (and thereafter the JSC and the
Senior Executives pursuant to Section 4.1(f)) are unable to agree on such
Development Plans or Regulatory Strategy (or any amendments thereto) by
[...***...], then thereafter Eisai shall have final decision-making authority,
subject to and in accordance with Section 4.1(f), with respect to such
Development Plans and Regulatory Strategy (and any amendments thereto) for
conducting the FDA CVOT Study and the FDA Pediatric Studies.

(ii) If the FDA requires Post-Approval Required U.S. Development in addition to
the FDA CVOT Study and the FDA Pediatric Studies, Eisai (or one of its
Affiliates) shall notify Arena of such additional Post-Approval Required U.S.
Development, and the Parties shall, through the JDC, promptly meet to discuss in
good faith and seek to agree on the Development Plan (consistent with
Section 3.4) and Regulatory Strategy for such additional Post-Approval Required
U.S. Development; provided, that, unless the Parties otherwise agree in writing:
(i) the Parties shall conduct, or cause their Affiliates to conduct, such
Post-Approval Required U.S. Development in accordance with the applicable
Development Plan pursuant to Section 3.5 and; (ii) if the JDC (and thereafter
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Section 4.1(f)) are unable to agree on such Development Plan or Regulatory
Strategy (or any amendments thereto) , neither Party shall have final
decision-making authority with respect to such Development Plan or Regulatory
Strategy (or any amendments thereto) until [...***...], after which time Eisai
shall have final decision-making authority subject to and in accordance with
Section 4.1(f) with respect to such Development Plan and Regulatory Strategy for
conducting such Post-Approval Required U.S. Development (and any amendments
thereto).

(iii) Eisai shall bear 90% and Arena shall bear 10% of the Development Expenses
with respect to all Post-Approval Required U.S. Development, except that (A) the
Parties shall share equally the Development Expenses with respect to pediatric
or adolescent studies required by the FDA under Section 505A of the FFDCA (21
U.S.C. § 355a), and (B) with respect to a Development Plan for the FDA CVOT
Study that includes development activities for one or both of the Product areas
in subsections (d) and (e) of Section 1.163 (definition of Primary Additional
Development Area), the Parties shall share equally the Development Expenses for
such development activities (i.e.¸that relate specifically to diabetes or MACE+
and not also to other aspects of the FDA CVOT Study); provided, that Arena’s
share of such Development Expenses shall not in any event exceed US$40,000,000
and Eisai shall bear 100% of the Development Expenses for such development
activities in excess of an aggregate of US$80,000,000 in such expenses.

(iv) The Additional Product Fund shall be reduced by an amount equal to the
aggregate amount of Development Expenses in the Development Plan for the FDA
CVOT Study budgeted for development activities specific to the Product areas in
subsections (d) (diabetes) and (e) (MACE+) of Section 1.163 (definition of
Primary Additional Development Area), up to a maximum reduction of
US$80,000,000; provided, that if, upon completion of the FDA CVOT Study, the
aggregate amount of Development Costs actually incurred in performing
development activities specific to the Product areas in subsections
(d) (diabetes) and (e) (MACE+) of Section 1.163 is less than US$80,000,000, then
an amount equal to the difference between (A) US$80,000,000 and (B) the
aggregate amount of such Development Costs actually incurred shall be added back
to the Additional Product Fund.

(b) Non-Required Development of Initial Product in the United States.

(i) If either Party desires to conduct additional clinical trials or other
development work on the Initial Product to enhance or expand the Initial Product
NDA (or any other Regulatory Approval for the Initial Product in the United
States) beyond the scope of the Initial Product NDA (but not for a new
Indication), or for the purpose of enhancing scientific knowledge and
understanding of the clinical utility of the Initial Product, or for any other
appropriate purposes that are not Post-Approval Required U.S. Development
(“Non-Required U.S. Development”), the Party desiring to conduct such
Non-Required U.S. Development shall promptly notify the other Party, and the
Parties shall, through the JDC, promptly meet to discuss in good faith and seek
to agree on the terms under which the Parties would conduct such Non-Required
U.S. Development, including (A) the Parties’ responsibilities for conducting
such Non-Required U.S. Development, (B) the sharing of Development Expenses with
respect to such Non-Required U.S. Development, (C) the Development Plan for such
Non-Required U.S. Development consistent with Section 3.4, and (D) the
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Required U.S. Development. For clarity, development of the Initial Formulation
for Indications other than the Indications that, as of the 2nd Amendment
Effective Date, are the subject of the Initial Product NDA shall not be
considered Non-Required U.S. Development and shall instead be considered
development of an Additional Product under Section 3.3.

(ii) If the Parties fail to agree on the matters in subclause (i) above,
including the JDC (and thereafter the JSC and the Senior Executives pursuant to
Section 4.1(f)) not agreeing on a Development Plan and Regulatory Strategy
covering any Non-Required U.S. Development within a reasonable time period (not
to exceed 90 days after notice from the applicable Party), then (x) Arena shall
have the right, but not the obligation, to conduct such Non-Required U.S.
Development, and (y) Eisai shall have the right to, but not the obligation, to
conduct such Non-Required U.S. Development solely to the extent it is
Non-Required Eisai Development, in each case at such Party’s own expense and in
its sole discretion, and subject in each case to compliance with the terms of
Section 3.7.

(c) Required Development of Initial Product in the Additional Territory. If
(i) the Regulatory Authorities in a particular country in the Additional
Territory require that additional clinical trials or other development work be
conducted on the Initial Product as a condition of and prior to granting
Regulatory Approval for the Initial Product in such country (such required
clinical trials or other development work, “Pre-Approval Required Additional
Territory Development” in the applicable country), or (ii) the Regulatory
Authorities in a particular country in the Additional Territory require
additional clinical trials or other development work on the Initial Product
after granting Regulatory Approval of the Initial Product in such country to
obtain or maintain such Regulatory Approval in such country in the Additional
Territory (such required post-approval clinical trials or other development
work, “Post-Approval Required Additional Territory Development”, and,
collectively with the Pre-Approval Required Additional Territory Development,
the “Required Additional Territory Development”), Eisai shall notify Arena of
such Required Additional Territory Development, and the Parties shall, through
the JDC, promptly meet to discuss in good faith and seek to agree on the
Development Plan (consistent with Section 3.4) and the Regulatory Strategy for
such Required Additional Territory Development; provided, that if the JDC (and
thereafter the JSC and the Senior Executives pursuant to Section 4.1(f)) are
unable to agree on such Development Plan or Regulatory Strategy (or any
amendments thereto) within a reasonable time period (not to exceed 90 days after
notice from the applicable Party), neither Party shall have final
decision-making authority with respect to such Development Plan or Regulatory
Strategy (or any amendments thereto) until [...***...], after which time Eisai
shall have final decision-making authority subject to and in accordance with
Section 4.1(f) with respect to such Development Plan and Regulatory Strategy for
such Required Additional Territory Development (and any amendments thereto). The
Development Expenses with respect to any such Required Additional Territory
Development shall be allocated between the Parties as follows: Eisai shall bear
90% and Arena shall bear 10% of the Development Expenses with respect to any
Required Additional Territory Development (including any required Phase 4
clinical trial or outcomes studies) conducted by either Party. Unless otherwise
agreed by the Parties in writing, Eisai shall have the responsibility to
conduct, or to cause its Affiliate or Developing Sub-distributor in the
applicable country to conduct, such Required Additional Territory Development in
accordance

 

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with the Development Plans for such development work pursuant to Section 3.5,
except as otherwise provided in Section 3.2(i) below.

(d) Non-Required Development of Initial Product in the Additional Territory.

(i) If either Party desires to conduct additional clinical trials or other
development work on the Initial Product to enhance or expand the Regulatory
Approval for the Initial Product in a country in the Additional Territory beyond
the scope of the initial Regulatory Approval for the Initial Product in such
country (but not for a new Indication), or for the purpose of enhancing
scientific knowledge and understanding of the clinical utility of the Initial
Product in such country, or for any other appropriate purposes that are not
Required Additional Territory Development (“Non-Required Additional Territory
Development”), the Party desiring to conduct such Non-Required Additional
Territory Development shall promptly notify the other Party, and the Parties,
through the JDC, shall promptly meet to discuss in good faith and seek to agree
on the terms under which the Parties would conduct such Non-Required Additional
Territory Development, including (A) the Parties’ responsibilities for
conducting such Non-Required Additional Territory Development, (B) the sharing
of Development Expenses with respect to such Non-Required Additional Territory
Development, (C) a Development Plan for such Non-Required Additional Territory
Development in such country in the Additional Territory consistent with
Section 3.4, and (D) the Regulatory Strategy for such Non-Required Additional
Territory Development. For clarity, development of the Initial Formulation for
Indications other than the Indications that, as of the 2nd Amendment Effective
Date, are the subject of the Initial Product NDA shall not be considered
Non-Required Additional Territory Development and shall instead be considered
development of an Additional Product under Section 3.3.

(ii) If the Parties fail to agree on the matters in subclause (i) above,
including the JDC (and thereafter the JSC and the Senior Executives pursuant to
Section 4.1(f)) not agreeing on a Development Plan and Regulatory Strategy
covering any Non-Required Additional Territory Development within a reasonable
time period (not to exceed 90 days after notice from the applicable Party), then
(x) Arena shall have the right, but not the obligation, to conduct such
Non-Required Additional Territory Development, and (y) Eisai shall have the
right to, but not the obligation, to conduct such Non-Required Additional
Territory Development solely to the extent it is Non-Required Eisai Development,
in each case at such Party’s own expense and in its sole discretion, and subject
in each case to compliance with the terms of Section 3.7.

(e) Required Pre-Approval Development of Initial Product in the New Territory.

(i) Pre-Approval Development Plan. Promptly after the 2nd Amendment Effective
Date, the Parties shall, through the JDC, meet and discuss in good faith
development activities and Regulatory Strategy for the Initial Product for the
New Territory countries, and shall work toward preparing and shall seek to agree
on a mutually agreeable Development Plan (which plan shall be consistent with
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(including the timing and relative priorities) for the Initial Product for
conducting Pre-Approval Required New Territory Development for the countries in
the New Territory where it is commercially reasonable to do so. It is agreed
that starting [...***...], Eisai shall have final decision-making authority with
respect to the Development Plan and Regulatory Strategy for such Pre-Approval
Required New Territory Development (and any amendments thereto) if the JDC (and
thereafter the JSC and the Senior Executives pursuant to Section 4.1(f)) do not
agree on such Development Plan or Regulatory Strategy (or any amendments
thereto) within a reasonable time period (not to exceed 90 days after notice
from the applicable Party). In any event, prior to [...***...], Eisai shall
notify Arena whether or not it intends to conduct development (including seeking
Regulatory Approval) of the Initial Product with respect to each country in the
New Territory. Eisai may determine not to conduct any such development work and
not to seek Regulatory Approval with respect to any specific country in the New
Territory only if Eisai has determined, in good faith based on reasonable
assumptions relating to Pre-Approval Required New Territory Development and
Post-Approval Required New Territory Development with respect to such country in
the New Territory, that it is not commercially reasonable to conduct development
of Initial Product with respect to such country in the New Territory. If Eisai
gives notice that it intends to conduct development of the Initial Product in
the New Territory, but the JDC (and thereafter the JSC and the Senior Executives
pursuant to Section 4.1(f)) have not already approved a Development Plan and
Regulatory Strategy for such development prior to [...***...], then by no later
than [...***...], Eisai, through its final decision-making authority, shall
determine and present to Arena the Development Plan for Pre-Approval Required
New Territory Development, including a budget that is reasonably allocated among
development activities that are generally applicable to multiple countries in
the New Territory and development activities that are specific to individual
countries in the New Territory, based on reasonable assumptions relating to
future development under such Development Plan, and the Regulatory Strategy
related to such development. Notwithstanding the foregoing, if any country in
New Territory requires “in country” manufacturing or packaging of the Initial
Product in order to obtain or maintain Regulatory Approval, then the Parties
shall discuss the situation, through the JSC, and seek to determine if it is
commercially reasonable, taking into account all factors relevant to each Party,
for either Party to establish such “in country” manufacturing or packaging, and
on what terms. In such discussions, Arena shall consider in good faith any
reasonable proposal by Eisai regarding establishing such an “in country”
manufacturing or packaging facility, but Arena, acting reasonably and in good
faith, shall not have an obligation to accept such proposal. If the Parties
cannot agree (and Arena shall not unreasonably withhold, condition or delay such
agreement), then neither Party shall Commercialize the Additional Product in
such country.

(ii) Pre-Approval Development Expenses. Each Party will bear 50% of the
Development Expenses incurred with respect to conducting the Pre-Approval
Required New Territory Development under the applicable Development Plan (as
established under subclause (i) above), up to a combined total for both Parties
of US$100 million. If in conducting Pre-Approval Required New Territory
Development, the Parties have expended Development Expenses up to the combined
total amount of US$100 million, then any additional Development Expenses
incurred in conducting such Pre-Approval Required New Territory Development
shall be paid for 100% by Eisai (and for clarity, Arena shall not be obligated
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pay more than its cap of US$50 million in Development Expenses for any
Pre-Approval Required New Territory Development).

(iii) Allocation of Excess Development Fund Amounts. If either (a) as of
[...***...] Eisai has determined in accordance with subclause (i) above that it
is not commercially reasonable to pursue the development of Initial Product
anywhere in the New Territory or (b) as of [...***...] Eisai has not otherwise
presented Arena its Development Plan for development contemplated by subclause
(i) above (or the JDC (or thereafter the JSC and the Senior Executives pursuant
to Section 4.1(f)) have not otherwise agreed on a Development Plan for
Pre-Approval Required New Territory Development), then the entire amount of the
New Territory Pre-Approval Development Fund (US$100,000,000) shall be allocated
and transferred to, and thereby increase the total amount of, the Additional
Product Fund (and the New Territory Pre-Approval Development Fund shall be
reduced to zero (US$0)). If as of [...***...], the JDC (or the JSC and the
Senior Executives pursuant to Section 4.1(f)) has agreed, or Eisai has
established through exercise of its final decision-making authority (as
contemplated in subclause (i) above), a Development Plan for Pre-Approval
Required New Territory Development, and such Development Plan has an aggregate
budget for Development Expenses that is less than the entire initial amount of
the New Territory Pre-Approval Development Fund (US$100,000,000), then on
[...***...], the amount by which such aggregate budget amount in the Development
Plan is less than US$100,000,000 shall then be allocated and transferred to, and
thereby increase the total amount of, the Additional Product Fund, and such
transfer shall decrease the total amount of the New Territory Pre-Approval
Development Fund by the same amount. Further, no later than [...***...], if the
Parties are conducting Pre-Approval Required New Territory Development, Eisai
shall review in good faith the budget in the Development Plan for such
development work to determine if such budget should be reduced because the full
amount of the budget will not be used under the contemplated activities. If, and
only if, Eisai determines that the budget in the Development Plan for
Pre-Approval Required New Territory Development should be so reduced, then Eisai
shall amend such Development Plan to reduce such budget and on [...***...] the
difference between the then-current total amount of the New Territory
Pre-Approval Development Fund, less the aggregate amount of such budget, as
reduced, shall be allocated and transferred to, and thereby increase the total
amount of, the Additional Product Fund, and such transfer shall decrease the
total amount of the New Territory Pre-Approval Development Fund by the same
amount. In addition, Eisai agrees that if aggregate Development Expenses under
the Development Plan for Pre-Approval Required New Territory Development
incurred by the Parties by [...***...] is less than the then-current total
amount of the New Territory Pre-Approval Development Fund, then the difference
between such then-current total amount of the New Territory Pre-Approval
Development Fund, less the aggregate amount of such Development Expenses
incurred as of [...***...], shall be transferred to, and thereby increase the
amount of, the Additional Product Fund as of [...***...]. For clarity, no
transfer of amounts from the New Territory Pre-Approval Development Fund to the
Additional Product Fund shall limit Arena’s or Eisai’s respective obligation to
bear Development Costs for Pre-Approval Required New Territory Development
conducted under the applicable Development Plan, up to a total of US$50 million
of funding by each Party, in accordance with clause (ii) above.

 

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(f) Required Post-Approval Development of Initial Product in the New Territory.

(i) Post-Approval Development Plan. If, with respect to any New Territory
country where Regulatory Approval of Initial Product has been obtained, the
Regulatory Authority for such country requires that any Post-Approval Required
New Territory Development be conducted, Eisai shall notify Arena of such
Required Additional Territory Development, and the Parties shall, through the
JDC, promptly meet to discuss in good faith and seek to agree on the Development
Plan (consistent with Section 3.4) and the Regulatory Strategy for such
Post-Approval Required New Territory Development. It is agreed that Eisai shall
have final decision-making authority with respect to the Development Plan and
the Regulatory Strategy for such Post-Approval Required New Territory
Development (and any amendments thereto), if the JDC (and thereafter the JSC and
the Senior Executives pursuant to Section 4.1(f)) are unable to agree on such
Development Plan or Regulatory Strategy (or any amendments thereto).

(ii) Post-Approval Development Expenses. The Development Expenses incurred with
respect to conducting any Post-Approval Required New Territory Development under
the Development Plan established therefor shall be borne by the Parties equally,
with each Party bearing 50% of such Development Expenses incurred under the
Development Plan, up to a total amount of US$25,000,000 in expenses borne by
each Party (US$50,000,000 total). After such total amount has been borne by the
Parties, any additional Development Expenses that may be incurred to conduct the
Post-Approval Required New Territory Development shall be shared by the Parties
with Eisai paying 90% and Arena paying 10% of any such additional Development
Expenses to fund the conduct of Post-Approval Required New Territory
Development. For clarity, to the extent any such Development Expenses are for
Post-Approval Required U.S. Development, Arena’s payment responsibility will
remain at 10% of such Development Expenses, regardless of where development
occurs or is conducted geographically or the intent of the Parties to use the
data for seeking Regulatory Approval (or other purposes) in the New Territory
(except with respect to Development Expenses with respect to pediatric or
adolescent studies required by the FDA under Section 505A of the FFDCA (21
U.S.C. § 355a) as provided in Section 3.2(a)(iii)(A), and Development Expenses
incurred in conducting the FDA CVOT Study as provided in Section 3.2(a)(iii)(B),
up to the maximum of $80,000,000 as provided in such Section, which shall be
shared equally by the Parties).

(g) Non-Required Development of Initial Product in the New Territory.

(i) If either Party desires to conduct additional clinical trials or other
development work on the Initial Product to enhance or expand the Regulatory
Approval for the Initial Product in a country in the New Territory beyond the
scope of the initial Regulatory Approval for the Initial Product in such country
(but not for a new Indication), or for the purpose of enhancing scientific
knowledge and understanding of the clinical utility of the Initial Product in
such country, or for any other appropriate purposes in the New Territory, which
development activities are not Required New Territory Development (the
“Non-Required New Territory Development”), the Party desiring to conduct such
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Development shall promptly notify the other Party, and the Parties, through the
JDC, shall promptly meet to discuss in good faith and seek to agree on the terms
under which the Parties would conduct such Non-Required New Territory
Development, including (A) the Parties’ responsibilities for conducting such
Non-Required New Territory Development, (B) the sharing of Development Expenses
with respect to such Non-Required New Territory Development, (C) the Development
Plan for such Non-Required New Territory Development consistent with
Section 3.4, and (D) the Regulatory Strategy for such Non-Required New Territory
Development. For clarity, development of the Initial Formulation in the New
Territory for Indications other than the Indications that, as of the 2nd
Amendment Effective Date, are the subject of the Initial Product NDA shall not
be considered Non-Required New Territory Development and shall instead be
considered development of an Additional Product under Section 3.3.

(ii) If the Parties fail to agree on the matters in subclause (i) above,
including the JDC (and thereafter the JSC and the Senior Executives pursuant to
Section 4.1(f)) not agreeing on a Development Plan and Regulatory Strategy
covering any Non-Required New Territory Development within a reasonable time
period (not to exceed 90 days after notice from the applicable Party), then
(x) Arena shall have the right, but not the obligation, to conduct such
Non-Required New Territory Development, and (y) Eisai shall have the right to,
but not the obligation, to conduct such Non-Required New Territory Development
solely to the extent it is Non-Required Eisai Development, in each case at such
Party’s own expense and in its sole discretion, and subject in each case to
compliance with the terms of Section 3.7.

(h) For Use Outside the Territory.

(i) If Arena (or any of its Affiliates, Arena ex-Territory Distributors or other
Third Party on behalf of Arena) intends to conduct any clinical trials or other
development work on the Initial Product for use in obtaining, maintaining, or
expanding the registration, labeling or regulatory approval for the Initial
Product in any country or jurisdiction outside the Territory, or for the purpose
of enhancing scientific knowledge and understanding of the clinical utility of
the Initial Product, or for any other appropriate purposes (“Ex-Territory
Development”), Arena shall provide written notice, including a reasonable
summary of such proposed clinical trials or other development work, of such
Ex-Territory Development to Eisai.

(ii) If requested by Eisai, the Parties, through the JDC, shall promptly meet to
discuss in good faith and seek to agree on the terms under which Eisai would
participate in such Ex-Territory Development, including (A) the Parties’
responsibilities for conducting such Ex-Territory Development, (B) the sharing
of Development Expenses with respect to such Ex-Territory Development, and (C) a
Development Plan for such Ex-Territory Development consistent with Section 3.4.

(i) Exceptions for Required Development in Additional Territory. If, as to a
particular country in the Additional Territory, Eisai reasonably determines that
the costs of conducting the Required Additional Territory Development for such
country under the established Development Plan(s) for such development are not
commercially justified by the reasonably expected commercial market opportunity
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Eisai may give written notice of such determination to Arena, which notice will
include all the economic and related factors that are the basis for such
determination. The Parties then will meet promptly and discuss in good faith
such situation and seek reasonably to reach agreement on how to proceed. If the
Parties do not reach an agreement on how to proceed with Initial Product
development in such country, within 60 days of such notice, then Eisai has the
right to terminate this Agreement as to such country, on written notice to Arena
provided within 60 days after the end of such 60-day period. If Eisai provides
notice that the costs of any Required Additional Territory Development for a
country under the established Development Plan(s) for such development are not
commercially justified, Eisai’s obligations to conduct Required Additional
Territory Development in the country that is subject to such notice shall be
tolled for a period of 120 days from the date of such notice, and such
obligations shall be in force after such period (unless Eisai terminates the
Agreement as to such country pursuant to the above).

3.3. Development of Additional Products in the Territory.

(a) In General. Arena and Eisai will jointly collaborate on and bear the cost of
the development of Additional Products (e.g., new Indications, new formulations,
Combination Products, etc.) throughout the Territory in accordance with this
Section 3.3. The Parties agree to share equally (50%/50%) all Development
Expenses incurred in conducting all development work under the applicable
Development Plans for development of Additional Products through Regulatory
Approval, up to the then-current total amount of the Additional Product Fund.
Notwithstanding anything to the contrary in this Agreement, (i) subject to
Arena’s obligations under Section 3.3(g), Arena is not obligated to initiate
development of an Additional Product or approve a Development Plan for an
Additional Product under this Agreement, and (ii) in no event shall either Party
be obligated to bear aggregate Development Expenses with respect to all
Additional Products under all Development Plans for development of Additional
Products through Regulatory Approval in excess of 50% of the then-current total
amount of the Additional Product Fund, or to pay any development costs for any
development outside of the Development Plan approved under this Section 3.3. The
Development Plans for Additional Products may include development in one or more
of the Primary Additional Development Areas, and, for clarity, may also include
other areas and Additional Products, as provided below.

(b)Development of Additional Products in Primary Additional Development Areas of
Diabetes and MACE+. The Parties agree that clinical development in the Product
areas in subsections (d) and (e) of Section 1.163 (diabetes and MACE+) are
currently contemplated by the Parties to be conducted as part of the FDA CVOT
Study. The Parties also agree that if, in addition to any development activities
under the Development Plan for the FDA CVOT Study, either Party wishes to
develop an Additional Product in either or both of the Product areas of
subsections (d) and (e) of Section 1.163, then the Parties, through the JDC,
shall promptly meet to discuss in good faith and seek to agree on the
Development Plan(s) and Regulatory Strategy covering such development. If the
JDC (and thereafter the JSC and the Senior Executives pursuant to
Section 4.1(f)) are unable to agree on such Development Plan and Regulatory
Strategy for such additional development activities, by [...***...], then
(A) each Party may proceed independently with development of an Additional
Product in either or both of the Product areas of subsections (d) and (e) of
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its own funding (but, for clarity, any resulting product shall be an Additional
Product for all purposes of this Agreement), and (B) Eisai shall have final
decision-making authority subject to and in accordance with Section 4.1(f) with
respect to the Regulatory Strategy for any such development, including
development conducted by Arena (and any amendments thereto). Any such
independent development work by a Party shall be considered Non-Development Plan
Development. All results of any such independent development work by a Party
shall be disclosed to the other Party and shall be subject to all terms of this
Agreement, including under Sections 3.5 and 3.7. Neither Party can proceed on
development activities for Additional Products for the Product areas of (d) and
(e) of Section 1.163 prior to [...***...], unless the Parties otherwise agree as
to such activities.

(c) Development of Additional Products in Primary Additional Development Areas
of QD, Smoking Cessation and FDC. Promptly after the 2nd Amendment Effective
Date, the Parties shall, through the JDC, meet and discuss in good faith
development activities and regulatory approval strategy for Additional Products
for the Product areas of subsections (a), (b) and (c) of Section 1.163
(Once-Daily, smoking cessation and FDC), and shall work toward preparing and
shall seek to agree on mutually agreeable Development Plans (which plans shall
be consistent with Section 3.4) and a Regulatory Strategy (including the timing
and relative priorities) to develop Additional Products for the Product areas of
subsections (a), (b) and (c) of Section 1.163, utilizing the jointly funded
Additional Product Fund pursuant to such Development Plans. If the JDC (and
thereafter the JSC and the Senior Executives pursuant to Section 4.1(f)) are
unable to agree on such Development Plans and Regulatory Strategy (or any
amendments thereto) for the Product areas of subsections (a) (Once-Daily) and
(c) (FDC) of Section 1.163, neither Party shall have final decision-making
authority with respect to such Development Plans or Regulatory Strategy until
[...***...], after which time (A) Arena shall have final decision-making
authority subject to and in accordance with Section 4.1(f) with respect to
(1) each such Development Plan throughout the Territory (and any amendments
thereto) and (2) Regulatory Strategy (and any amendments thereto) in the United
States through the end of Phase III clinical trials under each such Development
Plan, and (B) Eisai shall have final decision-making authority subject to and in
accordance with Section 4.1(f) with respect to Regulatory Strategy (and any
amendments thereto) in each country in the Territory other than the United
States and in the United States after the end of such Phase III clinical trials.
Neither Party can proceed on development activities for Additional Products for
the Product areas of subsections (a) and (c) of Section 1.163 prior to
[...***...], unless the Parties otherwise agree as to such activities. With
respect to development activities for Additional Products for the Product areas
of subsection (b) (smoking cessation) of Section 1.163, commencing on the 2nd
Amendment Effective Date (A) Arena shall have the final decision-making
authority subject to and in accordance with Section 4.1(f) with respect to
(1) the Development Plans throughout the Territory (and any amendments thereto)
for such Product area, and (2) Regulatory Strategy (and any amendments thereto)
in the United States through the end of Phase III clinical trials under each
such Development Plan, and (B) Eisai shall have final decision-making authority
subject to and in accordance with Section 4.1(f) with respect to Regulatory
Strategy (and any amendments thereto) in each country in the Territory other
than the United States and in the United States after the end of Phase III
clinical trials.

 

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(d) Development of Additional Products Outside Primary Additional Development
Areas. If a Party (or its Affiliates, Developing Sub-distributors in the
applicable country (in the case of Eisai) or Arena ex-Territory Distributors (in
the case of Arena)) wishes to develop an Additional Product for an Indication or
Product area outside of the Primary Additional Development Areas, then the
Parties, through the JDC, shall meet and discuss in good faith and seek to agree
on a mutually agreeable Development Plan and Regulatory Strategy for such
Additional Product, over a period of up to four months after presentation of a
substantially mature proposed Development Plan for a particular Indication or
Product area (which four-month period, for clarity, may begin prior to
[...***...]). No work under any such Development Plan shall commence prior to
[...***...] (except as the Parties may otherwise agree). If, as to such a
proposed Additional Product, at the end of the four month discussion period, the
JDC (and thereafter the JSC and the Senior Executives pursuant to
Section 4.1(f)) are unable to agree on the Development Plan and Regulatory
Strategy for such Additional Product, (i) Arena shall have final decision-making
authority subject to and in accordance with Section 4.1(f) with respect to
(A) such Development Plan (and any amendments thereto) throughout the Territory
and (B) Regulatory Strategy (and any amendments thereto) in the United States
through the end of Phase III clinical trials under such Development Plan, and
(ii) Eisai shall have final decision-making authority subject to and in
accordance with Section 4.1(f) with respect to Regulatory Strategy (and any
amendments thereto) in each country in the Territory other than the United
States and in the United States after the end of such Phase III clinical trials.

(e) Use of Additional Product Fund to Fund Additional Development. It is further
agreed that any amounts of the Additional Product Fund (other than the
[...***...] Transferred Funds) that are not then allocated, pursuant to the
budgets in Development Plans established in accordance with this Section 3.3, to
development of Additional Products (including for the Primary Additional
Development Areas), or any previously allocated amounts of the Additional
Product Fund (other than the [...***...] Transferred Funds) that become
available from existing Additional Product development programs for use for new
Additional Product development programs in accordance with Section 3.5(b)(ii),
may be allocated (out of the Additional Product Fund) to pay for Development
Expenses for Additional Products under Development Plans established in
accordance with this Section 3.3 prior to or on [...***...]. For clarity, Eisai
and Arena each will be obligated to bear (pursuant to Section 3.6) its 50% share
of the Development Expenses (subject to the limitations set forth in clause
(a) above) incurred within the budgets under any Development Plan established
under this Section 3.3 on or before [...***...], even if the Development
Expenses are incurred after such date. Further, to the extent that any New
Territory Pre-Approval Development Funds are transferred into the Additional
Product Fund after [...***...] (the “[...***...] Transferred Funds”) as
described in Section 3.2(e)(iii) above, such [...***...] Transferred Funds shall
be allocable towards development of Additional Products under Development Plans
established under this Section 3.3 through [...***...]. If Arena wishes to
approve a Development Plan using its final decision-making authority for a
proposed Additional Product and either (i) there are no remaining amounts in the
Additional Product Fund (that is, because all the amounts in the Additional
Product Fund have either (x) been spent by the Parties in supporting their
respective shares of the Development Expenses incurred under Development Plans
for Additional Products, or (y) been allocated (at such time) under the budget
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ongoing Development Plans for Additional Products), or (ii) it is after
[...***...] and no [...***...] Transferred Funds remain unallocated, or (iii) it
is after [...***...], then Arena (including its Affiliates or Arena ex-Territory
Distributors) shall have the right, but not the obligation, independently and at
its own expense, to conduct such development work under a Development Plan
(which shall be consistent with Section 3.4) established (and as may be amended)
by Arena using its final decision-making authority subject to and in accordance
with Section 4.1(f), and any product resulting from such development work shall
be an Additional Product for all purposes of this Agreement. The Parties agree
that, in the event that Arena is independently conducting such development work
under such a Development Plan, (x) Arena shall be permitted to open new INDs for
such development work, (y) Arena shall have final decision-making authority
subject to and in accordance with Section 4.1(f) with respect to the Regulatory
Strategy (and any amendments thereto) for such development work throughout the
Territory through the end of Phase III clinical trials, and (z) Eisai shall have
final decision-making authority subject to and in accordance with Section 4.1(f)
with respect to Regulatory Strategy (and any amendments thereto) throughout the
Territory after the end of such Phase III clinical trials.

(f) Conduct of Development Plans for Additional Products. For any Development
Plan for an Additional Product established (or amended) by Arena through the use
of its final decision-making authority, Arena shall use Commercially Reasonable
Efforts to conduct the clinical trials and other development work set forth in
such Development Plan; provided, that Arena may amend such Development Plan
(including to terminate all development under such plan) to the extent
consistent with its obligation to use Commercially Reasonable Efforts. If Eisai
believes that Arena is breaching such obligation to use Commercially Reasonable
Efforts to perform such a Development Plan, then on written request by a Party
such issue will be resolved by arbitration under Section 12.7. If such
arbitration determines that Arena is not using Commercially Reasonable Efforts
to conduct such Development Plan, then Eisai, in addition to any other remedies
to which it may be entitled, will be entitled to specific performance of such
obligation (but subject to the cap on Arena’s spending obligation as provided in
Section 3.3(a)). In no event will Eisai have a right to perform any such
development on Additional Product on its own, except as otherwise agreed by the
Parties in writing, or as provided in Section 3.3(b). Notwithstanding the
foregoing, if any country in the Territory that would require “in country”
manufacturing of the Additional Product in order to obtain or maintain
Regulatory Approval in a particular country, the Parties shall discuss the
situation, through the JSC, and seek to determine if it is commercially
reasonable, taking into account all factors relevant to each Party, for either
Party to establish such “in country” manufacturing in such country, and on the
terms for such establishment. If the Parties cannot agree (and Arena shall not
unreasonably withhold, condition or delay such agreement), then neither Party
shall Commercialize the Additional Product in such country.

(g) Post-Approval Required Development. If, as to an Additional Product that has
achieved Regulatory Approval, the applicable Regulatory Authority requires
additional clinical trials or other development work on the Additional Product
in the applicable country of approval to obtain or maintain such Regulatory
Approval in such country (“Required Post-Approval Additional Product
Development”), then such Required Post-Approval Additional Product Development
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established as provided in the following: the Parties, through the JDC, shall
meet and discuss in good faith and seek to agree on a mutually agreeable
Development Plan and Regulatory Strategy for such Required Post-Approval
Additional Product Development on the Additional Product, over a period of up to
four months. If, as to such additional development work on the Additional
Product, at the end of the four month discussion period, the JDC (and thereafter
the JSC and the Senior Executives pursuant to Section 4.1(f)) are unable to
agree on the Development Plan and Regulatory Strategy for such work, then
(i) Arena shall have final decision-making authority subject to and in
accordance with Section 4.1(f) with respect to such Development Plan (and any
amendments thereto) throughout the Territory, and (ii) Eisai shall have final
decision-making authority subject to and in accordance with Section 4.1(f) with
respect to Regulatory Strategy (and any amendments thereto) in each country in
the Territory. The Parties shall share the Development Expenses incurred for
Required Post-Approval Additional Product Development as follows: Each Party
shall bear 50% of such Development Expenses up to a total amount of
US$50,000,000 each (US$100,000,000 total); after the Parties have each borne
Development Expenses of US$50,000,000 (whether for one Additional Product or in
the aggregate for two or more Additional Products), any additional Development
Expenses that may be incurred to conduct Required Post-Approval Additional
Product Development shall be shared by the Parties with Eisai paying 90% and
Arena paying 10%. For example, if the Development Expenses for Required
Post-Approval Additional Product Development for the first and second Additional
Products are $75,000,000 and $50,000,000, respectively, Eisai shall pay
$72,500,000 and Arena shall pay $52,500,000.

(h) Product Purchase Price for Additional Products. For clarity, all Additional
Product(s) will be supplied by Arena having the Product Purchase Price, for a
given country, as set forth in Section 7.4; provided, that for any Additional
Product that is a Combination Product or that involves a formulation other than
the Initial Formulation, then prior to the Parties initiating development on
such Product or as soon as practicable thereafter, the Parties shall discuss in
good faith and agree on an appropriate, commercially reasonable increase or
decrease to the minimum Product Purchase Price, under Section 7.4(e), to reflect
any additional or reduced costs of manufacture applicable to such other
ingredients or formulation.

(i) Non-Required Development of Additional Products in the Territory.

(i) If either Party desires to conduct additional clinical trials or other
development work on an Additional Product to enhance or expand the Regulatory
Approval for such Additional Product in any country in the Territory beyond the
scope of the initial Regulatory Approval for such Additional Product in such
country (but not for a new Indication), or for the purpose of enhancing
scientific knowledge and understanding of the clinical utility of such
Additional Product in such country, or for any other appropriate purposes in
such country, which development activities are not required by a Regulatory
Authority to obtain or maintain Regulatory Approval in such country (the
“Non-Required Additional Product Development”), the Party desiring to conduct
such Non-Required Additional Product Development shall promptly notify the other
Party, and the Parties, through the JDC, shall promptly meet to discuss in good
faith and seek to agree on the terms under which the Parties would conduct such
Non-Required Additional Product Development, including (A) the Parties’
responsibilities for conducting such Non-Required Additional Product
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Development Expenses with respect to such Non-Required Additional Product
Development, (C) the Development Plan for such Non-Required Additional Product
Development consistent with Section 3.4, and (D) the Regulatory Strategy for
such Non-Required Additional Product Development.

(ii) If the Parties fail to agree on the matters in subclause (i) above,
including the JDC (and thereafter the JSC and the Senior Executives pursuant to
Section 4.1(f)) not agreeing on a Development Plan and Regulatory Strategy
covering any Non-Required Additional Product Development within a reasonable
time period (not to exceed 90 days after notice from the applicable Party), then
(x) Arena shall have the right, but not the obligation, to conduct such
Non-Required Additional Product Development, and (y) Eisai shall have the right
to, but not the obligation, to conduct such Non-Required Additional Product
Development solely to the extent it is Non-Required Eisai Development, in each
case at such Party’s own expense and in its sole discretion, and subject in each
case to compliance with the terms of Section 3.7.

3.4. Development Plans.

(a) Any clinical studies or other development work to be conducted by the
Parties under this Agreement on the Initial Product or an Additional Product
shall be conducted pursuant to an agreed, or established by a Party under its
final decision-making authority as provided in Section 3.2 or 3.3, as
applicable, Development Plan that is consistent with the terms of this
Section 3.4. Each such Development Plan shall: (i) describe in appropriate
detail the clinical trials or other development work to be conducted (including
the protocol, the statistical analysis plan and related documents for any
clinical trials); (ii) allocate to each Party the specific clinical trials or
other development work to be conducted by such Party; provided, that if a Party
establishes a Development Plan on its own under its final decision-making
authority, it may not allocate any clinical trials or other development work to
be conducted or supervised by the other Party without such other Party’s
consent; (iii) identify whether clinical trials and other development work will
be conducted by the Responsible Party’s FTEs or by a contract research
organization or other Third Party (and, if applicable, which Party shall have
the responsibility for managing and supervising such contract research
organization or other Third Party), subject to Section 3.6(a); (iv) establish a
timeline and budget for such clinical trials or other development work; and
(v) address any other material matter relating to such clinical trials or other
development work.

(b) The Parties shall in all cases seek in good faith to establish Development
Plans that provide for maximum efficiency in the worldwide development of the
applicable Products, with the goal of obtaining quickly and efficiently the
clinical data (for each Product) that is useful, both in the Territory and in
countries and jurisdictions outside the Territory, in seeking registrations and
regulatory approvals of such Product; provided, that Eisai shall have no
obligation with respect to the costs and expenses for clinical trials and
development work for a Product to the extent related solely to countries and
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(c) The JDC also shall review and consider the existing Development Plans, in
light of the clinical trials and other development work conducted, and discuss
and seek to agree on any needed or appropriate changes or modifications to the
Development Plans on an ongoing basis, and in no event less frequently than once
each Calendar Quarter. All material changes to the Development Plans shall be
subject to approval by the JDC or, if the JDC cannot agree, in accordance with
Section 4.1(f).

3.5. Conduct of Development and Regulatory Activities.

(a) Compliance with Development Plan and Applicable Laws. Each Party shall
conduct the clinical trials and other development work for which it is the
Responsible Party under each Development Plan in compliance with all Applicable
Laws and in accordance with GLP and GCP and other Applicable Laws of the country
in which such activities are conducted. The Responsible Party with respect to a
clinical trial conducted under a Development Plan shall (or, if the Responsible
Party is not the sponsor of such clinical trial, the Responsible Party shall
cause the sponsor of such clinical trial to) register such clinical trial on and
report the results of such clinical trial to the appropriate registry or
database (e.g., clinicaltrials.gov) in accordance with Applicable Laws. With
respect to the conduct of Regulatory Strategy for which a Party has the final
decision-making authority as provided in this Article 3, such Party shall use
good faith, Commercially Reasonable Efforts to ensure that such conduct and
execution of the Regulatory Strategy complies with and supports the goals of the
related Development Plan, and any dispute as to whether the Party is complying
with the foregoing obligations shall be subject to resolution by arbitration
under Section 12.7.

(b) Diligence.

(i) Each Party shall use Commercially Reasonable Efforts to conduct and complete
the clinical trials and other development work for which it is the Responsible
Party under each Development Plan in order to achieve the goals of such
Development Plan in accordance with the timelines specified therein. Without
limiting the foregoing, each Party shall proceed diligently and in a timely
manner with respect to the clinical trials and other development work for which
it is the Responsible Party under each Development Plan by using its good faith
efforts to allocate sufficient time, effort, equipment and facilities to such
clinical trials and other development work and to use personnel with sufficient
skills and experience as are required to accomplish such clinical trials and
other development work in accordance with such Development Plan and the terms
and conditions of this Agreement.

(ii) A Party may cease conducting a clinical trial or other development work for
which it is the Responsible Party under a Development Plan if such cessation
would not constitute a breach of such Party’s diligence obligations under the
first sentence of Section 3.5(b)(i). Once a Development Plan for an Additional
Product initially has been established in accordance with Section 3.3, if a
Party ceases conducting a clinical trial or other development work under such
Development Plan or amends such Development Plan through its final
decision-making authority to reduce the budget included in such Development Plan
(and provided that such cessation or reduction would not constitute a breach of
such Party’s diligence obligations under the first sentence of
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the Additional Product Fund allocated to such Development Plan that will not be
utilized as a result of such cessation or reduction shall be available under the
Additional Product Fund to be allocated to the development of a different
Additional Product under a Development Plan established as provided in
Section 3.3.

(iii) Eisai shall use Commercially Reasonable Efforts to obtain Regulatory
Approval of (A) the Initial Product in each country in the New Territory except
for those countries for which Eisai has determined that it is not commercially
reasonable to conduct development of the Initial Product with respect to such
country in the New Territory in accordance with Section 3.2(e)(i), and (B) each
Additional Product in each country in the Territory; provided, that in no event
shall Eisai be required to bear Development Costs with respect to Additional
Products in excess of the amounts set forth in Section 3.3(a) or Section 3.3(g).

(c) Information Regarding Development Activities. Each Party shall maintain, or
cause to be maintained, records of the clinical trials and other development
work for which it is the Responsible Party, in sufficient detail and in good
scientific manner appropriate for patent and regulatory purposes, which shall
fully and properly reflect all work done and results achieved by or on behalf of
such Party in the performance of such clinical trials and other development work
under the Development Plans. Each Party shall retain such records for at least
five years after the Term, or for such longer period as may be required by
Applicable Laws. Each Party, through the JDC, shall keep the other Party
appropriately informed of the status and results of the clinical trials and
other development work with respect to each Product for which it is the
Responsible Party under any Development Plan. Upon reasonable request by a
Party, without limiting the foregoing, the other Party shall provide the
requesting Party, according to a reasonable time frame, with summaries of data
and results and other Program Know-How resulting from such clinical trials or
other development work and, if requested by the requesting Party, shall provide
access to all supporting data and results and other Program Know-How generated
or obtained in the course of such other Party’s performance of the clinical
trials or other development work for which such other Party is the Responsible
Party under any Development Plan. Upon reasonable prior written notice, each
Party shall have the right to inspect and copy any such records and notebooks
reflecting the work done and results achieved under a Development Plan by or on
behalf of the other Party or its Affiliates in the performance of such other
Party’s clinical trials and other development work with respect to Compounds,
Related Compounds or Products. For clarity, Eisai shall provide to Arena, and
Arena shall have access to and be able to use (and transfer to its Affiliates
and Arena ex-Territory Partners) all data and results of all Eisai development
activities, for use in developing, registering and obtaining regulatory
approvals of and commercializing Products outside the Territory.

(d) Limited License. Subject to the terms and conditions of this Agreement,
Arena hereby grants to Eisai and its Affiliates a non-exclusive, royalty-free,
limited license (with the right to grant sublicenses to Sub-distributors) in the
Territory under the applicable Arena Know-How and Program Know-How solely as
necessary to conduct the clinical trials and other development work under the
Development Plans for which Eisai is the Responsible Party to develop each
Product for use in the Territory pursuant to this Agreement, and to perform the
regulatory activities for the Products in the Territory for which Eisai is the
Responsible Party.

 

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(e) Conduct of New Territory Development. It is agreed that, prior to
[...***...], neither Party can proceed on regulatory interactions or development
activities with respect to the Initial Product in any countries in the New
Territory unless otherwise agreed by the Parties, except that Arena will have
the right to conduct regulatory interactions with Regulatory Authorities in
Switzerland until November 30, 2013.

(f) Additional Development Considerations.

(i) Arena has the right, during a “review period” for each filing of up to three
months beginning when a final or substantially mature draft filing is provided
to Arena by Eisai, to review and comment on each final or substantially mature
draft IND or NDA filing prior to submission by Eisai in a country in the
Territory where Eisai has the right to make such filing. After such review
period (or earlier if agreed by Arena), Eisai may move forward with the intended
filing after good faith consideration of any reasonable Arena comments.

(ii) Eisai has the right, during a “review period” for each filling of up to
three months beginning when a final or substantially mature draft filing is
provided to Eisai by Arena, to review and comment on each final or substantially
mature draft IND filing prior to submission by Arena in a country in the
Territory where Arena has the right to make such filing. After such review
period (or earlier if agreed by Eisai), Arena may move forward with the intended
filing after good faith consideration of any reasonable Eisai comments.

(iii) Eisai, unless otherwise agreed by the Parties, will use Commercially
Reasonable Efforts to obtain any CPP issuable by FDA, EMA or Swissmedic (or
other Regulatory Authority) necessary to obtain regulatory approval of the
Initial Product in a country in the Additional Territory or New Territory.

(iv) The Parties agree to coordinate a joint meeting, and to use Commercially
Reasonable Efforts to seek to hold such meeting, with the Committee for
Medicinal Products for Human Use in Europe within [...***...] of the 2nd
Amendment Effective Date. Eisai agrees to use Commercially Reasonable Efforts to
seek to hold a meeting with the Ministry of Health, Labour and Welfare of Japan
within [...***...] after such meeting with the Committee for Medicinal Products
for Human Use in Europe.

(v) The Parties shall discuss in good faith at the JDC, after consideration of
the Development Plans for Additional Products, which Party (or its Affiliate or
Sub-distributor) should be the Responsible Party to hold an IND and to execute
the Regulatory Strategy in a particular country in the Territory relating to the
applicable Development Plan for the Initial Product or any Additional Product.
Unless otherwise agreed by the JDC (or the JSC or the Senior Executives in
accordance with Section 4.1(f)), (A) the Party (or its Affiliate or
Sub-distributor) that has final decision-making authority with respect to the
Regulatory Strategy for an Additional Product for a country in the Territory
through the end of Phase III clinical trials shall hold the INDs for such
Additional Product in such country and shall execute the Regulatory Strategy
through the end of Phase III clinical trials, and (B) the Party (or its
Affiliate or Sub-distributor) that has final decision-making authority with
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Strategy for an Additional Product for a country in the Territory after the end
of Phase III clinical trials shall execute the Regulatory Strategy after the end
of Phase III clinical trials.

(vi) Unless otherwise agreed by the Parties, Eisai (or its Affiliate or
Sub-distributor in the applicable country) shall be the Responsible Party to
execute the Regulatory Strategy for the Initial Product in all countries in the
Territory. The Parties shall cooperate and work towards an orderly transfer of
any relevant Regulatory Filings held by Arena or its Affiliate in the Territory
for the Initial Product (including INDs) to Eisai or its Affiliate (or
Sub-distributor) in a country in the Territory, in order to effect any such
transfers prior to the earlier of (i) 30 days after the approval of the
Development Plan for development of Initial Product and of the Regulatory
Strategy for the Initial Product relating to such country in the Territory, or
(ii) [...***...].

(vii) Eisai will be the Responsible Party for and shall have the final decision
on all NDA and other filings for Regulatory Approval (including whether an NDA
shall be filed) for all Products (including Additional Products) in all
countries in the Territory, subject to Arena’s review and comment rights under
Section 3.5(f)(i). Eisai (or its Affiliate or Sub-distributor) shall hold all
NDAs and all Regulatory Approvals for all Products (including Additional
Products) in all countries in the Territory.

(viii) Eisai shall be responsible for obtaining pricing and reimbursement
approvals, as applicable, for all Products in all countries in the Territory at
its expense.

(ix) Any development rights or obligations of Eisai hereunder with respect to a
country in the Territory may be exercised or performed by the Developing
Sub-distributor for such country; provided, that Arena provides prior written
consent to that Developing Sub-distributor exercising such right or performing
such obligation as provided in Section 5.10(c).

(x) Any regulatory rights or obligations of Eisai hereunder with respect to a
country in the Territory may be exercised or performed by the Sub-distributor
for such country.

3.6. Development Expenses.

(a) Sharing of Expenses. With respect to all clinical trials and other
development work conducted by the Parties under a Development Plan, each Party
shall be responsible for its agreed (including as provided above in this Article
3) share of all Development Expenses incurred by the Parties under such
Development Plan. Notwithstanding a Party’s final decision-making authority with
respect to any Development Plan, if one Party does not approve the use, in
conducting development work under such Development Plan, of FTEs of the other
Party (such approval not to be unreasonably conditioned, withheld or delayed),
then use by such other Party of its FTEs shall be at such other Party’s own
expense, with the costs of such FTEs not included in Development Expenses.

 

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(b) Payment. Within 15 days after the end of each Calendar Quarter, each Party
shall provide a written report (each, a “Quarterly Report”) to the other Party
setting forth in reasonable detail the Development Expenses (together with the
evidence supporting such Development Expenses) incurred by such Party during
such Calendar Quarter in conducting the clinical trials and other development
work for which it is the Responsible Party under each Development Plan, and such
report shall specify the Development Plan under which such expenses were
incurred (and, if applicable, the development fund (i.e., the Additional Product
Fund or New Territory Pre-Approval Development Fund) to which they related).
Within 10 days after each Party has provided the other Party its Quarterly
Report for a Calendar Quarter, the Parties shall confer and agree on a written
report based upon the Quarterly Reports for such Calendar Quarter (each, a
“Payment Report”) setting forth the amount payable by Eisai to Arena or the
amount payable by Arena to Eisai, so that each of the Parties has borne its
agreed (including as provided above in this Article 3) share of all the
Development Expenses incurred by the Parties in such Calendar Quarter. The
applicable Party shall pay the amount shown to be due to the other Party as set
forth in the Payment Report within 20 days after the Parties agree on such
Payment Report.

(c) Funding Commitments; Cost Discussion. Each Party agrees to pay its share, as
allocated under the applicable provision of this Article 3, of the Development
Expenses actually incurred under a Development Plan approved or established
hereunder, but subject to the caps on such funding as provided in this Article
3. If, in conducting the development work allocated to a Party under a
particular Development Plan, a Party incurs (or expects to incur) Development
Expenses for such work that are at least 20% higher than the budgeted costs and
expenses set forth in the Development Plan, then such Party shall give notice to
the JDC of such cost overrun, and the reasons therefor. The JDC shall promptly
discuss the situation, and seek to reach agreement on any actions to be taken to
reduce or otherwise manage such cost overrun. Absent a decision by the JDC
otherwise, such Party shall continue to conduct its development work
obligations, using good faith efforts to minimize any further cost overruns in
such work, but subject to any applicable overall cap on Development Expenses for
such category of Development Plan.

(d) Records. Each Party shall keep, and cause its Affiliates to keep, complete,
true and accurate books of accounts and records of Development Expenses incurred
by such Party for the purpose of confirming the proper allocation of Development
Expenses pursuant to Section 3.6(a). Such books and records shall be kept for
such period of time required by Applicable Laws, but no less than at least five
years following the end of the Calendar Quarter to which they pertain. Such
records shall be subject to audit in accordance with Section 3.6(e).

(e) Audit. Each Party shall have the right to cause an independent, certified
public accounting firm of international recognition reasonably acceptable to the
other Party to audit the other Party’s records relating to Development Expenses
to confirm the amount of the Development Expenses reflected in the Quarterly
Reports and the related Payment Reports. Such audit right may be exercised
during normal business hours upon reasonable prior written notice to the audited
Party; provided, that such audit right may be exercised no more than once in any
12 month period, no more than once with regard to any given Calendar Quarter and
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than five years after the end of the Calendar Quarter to be audited, and shall
be conducted so as to not unreasonably interfere with the audited Party’s
business. The audited Party shall not be obligated to provide the public
accounting firm any records until the public accounting firm executes a
confidentiality agreement in a form reasonably acceptable to the audited Party.
The public accounting firm shall disclose to the auditing Party only whether any
reports made or amounts paid under this Agreement are correct and details
concerning any discrepancies. The public accounting firm shall send a copy of
the report to the audited Party at the same time it is sent to the auditing
Party. If such audit concludes that additional payments were owed or that excess
payments were made during the audited period, then Arena or Eisai, as
applicable, shall pay the other Party an appropriate adjustment payment to
achieve the applicable allocation of the Development Expenses set forth in the
Development Plans within 30 days after the date on which such audit is completed
and the public accounting firm notifies each Party of the conclusions thereof.
The auditing Party shall bear the full cost of such audit unless such audit
discloses an over-reporting by the audited Party of more than 5% of the amount
of Development Expenses for a given Calendar Quarter for the clinical trials and
other development work for which the audited Party is the Responsible Party, in
which case, the audited Party shall bear the reasonable and documented cost of
such audit.

(f) For clarity, (i) no Development Expenses incurred by either Party prior to
the 2nd Amendment Effective Date shall be credited towards either of the
Parties’ respective obligations to bear Development Expenses for development of
Initial Product in the New Territory or Development Expenses for development of
Additional Products, and (ii) neither Party shall be obligated to deposit, set
aside, segregate or otherwise reserve any funds to satisfy its obligation to pay
its share of any Development Expenses hereunder (including its share of the
Additional Product Fund or New Territory Pre-Approval Development Fund) prior to
the time that payment thereof is required pursuant to Section 3.6(b).

3.7. Non-Development Plan Development. With respect to any clinical trials or
other development work with respect to a Compound Product or Related Product
that is conducted by or on behalf of a Party or any of its Affiliates (or any
Arena ex-Territory Distributor (in the case of Arena) or Developing
Sub-distributor in the applicable country (in the case of Eisai)) anywhere in
the world outside the scope of a Development Plan to the extent permitted
hereunder (which clinical trials or other development work, with respect to
Eisai, its Affiliates and Developing Sub-Distributors, is limited to
Non-Required Eisai Development and development Eisai may conduct independently
pursuant to Section 3.3(b)) (“Non-Development Plan Development”):

(a) Prior to the commencement of any Non-Development Plan Development (and, in
the case of an Arena ex-Territory Distributor, to the extent Arena has the right
to do so under any applicable agreement with such Arena ex-Territory
Distributor), the developing Party shall provide the JDC a high-level
development plan with respect to such Non-Development Plan Development, and the
JDC shall promptly hold an ad-hoc meeting to review and discuss such plan. The
developing Party shall in good faith seek to address any reasonable issues that
the other Party’s members on the JDC may raise with respect to possible issues
that such Non-Development Plan Development could reasonably be expected to cause
to the other Party’s development or Commercialization of the Products in the
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the case of Arena). Following such JDC meeting, the developing Party or any of
its Affiliates (or any Arena ex-Territory Distributor (in the case of Arena) or
Developing Sub-distributor in the applicable country (in the case of Eisai))
shall have and retain the right to conduct (or have conducted, on its behalf)
the applicable Non-Development Plan Development in or outside the Territory as
permitted in accordance with the terms hereof. For clarity, (i) any Third Party
performing Non-Development Plan Development shall be considered a subcontractor,
subject to requirements for subcontractors set forth in this Agreement, and
(ii) all Know-How and Patents resulting from Eisai Non-Development Plan
Development shall be deemed to have been discovered, identified, conceived,
reduced to practice, or otherwise made as a result of development activities
under this Agreement, and therefore shall be Program Know-How and Program
Patents.

(b) Arena shall notify Eisai of any Know-How Controlled by Arena or any of its
Affiliates, including any Know-How made by an Arena ex-Territory Distributor and
Controlled by Arena or any of its Affiliates, resulting from any Non-Development
Plan Development and if, at any time during the Term, Eisai desires to use any
such Know-How in the Territory, Eisai shall notify Arena, and the Parties shall
meet and discuss in good faith and seek to agree on reasonable payments to Arena
for the use of such Know-How by Eisai. If the Parties reach such agreement, such
Know-How shall constitute Arena Know-How. If Eisai does not so notify Arena, or
if the Parties do not reach agreement, then such Know-How shall constitute Arena
Independent Know-How and, subject to clause (c) below, Eisai shall not have the
right to use any Arena Independent Know-How.

(c) Notwithstanding clause (b) above, Arena hereby grants Eisai and its
Affiliates and Sub-distributors in the applicable country a royalty-free
(i) right to use any Arena Independent Know-How with respect to the Initial
Product and right to reference any regulatory filings Controlled by Arena or any
of its Affiliates that are made by Arena, its Affiliates, or any Arena
ex-Territory Distributors with respect to the Initial Product outside the
Territory and to use any and all data contained therein, in each case, solely to
maintain the Initial Product NDA, to obtain and maintain Regulatory Approvals
for the Initial Product in the Additional Territory and the New Territory, or as
otherwise required by Regulatory Authorities in the Territory; provided, that,
except as provided otherwise pursuant to Section 3.7(b) or with the consent of
Arena, Eisai shall not have the right to use any Arena Independent Know-How or
reference any such regulatory filings to obtain any Regulatory Approval for the
Initial Product for any Indication(s) that are not, as of the Amendment
Effective Date, the subject of the Initial Product NDA and (ii) right to use any
Arena Independent Know-How with respect to any Additional Product and right to
reference any regulatory filings Controlled by Arena or any of its Affiliates
that are made by Arena, its Affiliates, or any Arena ex-Territory Distributors
with respect to the Additional Product outside the Territory, in each case,
solely to obtain and maintain any Regulatory Approval in the Territory for such
Additional Product that resulted from clinical trials or other development work
conducted under a Development Plan or as otherwise required by Regulatory
Authorities in the Territory; provided, that, except as provided otherwise
pursuant to Section 3.7(b) or with the consent of Arena, Eisai shall not have
the right to use any Arena Independent Know-How or reference any such regulatory
filings to obtain or maintain any Regulatory Approval for any Additional Product
for any Indications that are not the subject of any NDA or any amendment or
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development work conducted under a Development Plan. Arena shall, or shall cause
its applicable Affiliate or Arena ex-Territory Distributor to, on written
request by Eisai, provide to Eisai and to any specified Regulatory Authority in
the Additional Territory or New Territory a letter, in the form reasonably
required by Eisai, acknowledging that Eisai or its Affiliate or Sub-distributor
in the applicable country, as applicable, has the right of reference to any such
regulatory filing for use in obtaining and maintaining Regulatory Approval in
the applicable country in the Additional Territory or New Territory.

(d) The developing Party shall, within 30 days after the end of each Calendar
Quarter (and, in the case of an Arena ex-Territory Distributor, to the extent
Arena has the right to do so under any applicable agreement with such Arena
ex-Territory Distributor), provide the other Party with a written report that
summarizes the status and results of any Non-Development Plan Development by
such developing Party of its Affiliates (or any Arena ex-Territory Distributor
(in the case of Arena) or Sub-distributor (in the case of Eisai)) that occurred
during such Calendar Quarter. Without limiting the foregoing, upon request by
the other Party, the developing Party shall promptly provide the other Party
with summaries of data and results generated or obtained in the course of the
performance of any Non-Development Plan Development.

(e) The other Party, at the developing Party’s expense, shall reasonably
cooperate with the developing Party in facilitating communications between with
the developing Party and Regulatory Authorities in the Territory with respect to
any Non-Development Plan Development.

(f) With respect to any agreement entered into by Arena or any of its Affiliates
with an Arena ex-Territory Distributor, Arena shall, and shall cause any such
Affiliate to, use Commercially Reasonable Efforts to include in any such
agreement terms and conditions that permit Arena to make the disclosures to
Eisai contemplated by Section 3.7(a), Section 3.7(d) and Section 3.14(b).

(g) With respect to any clinical trial conducted in the course of any
Non-Development Plan Development, the developing Party shall (or if the
developing Party is not the sponsor of such clinical trial, the developing Party
shall cause the sponsor of such clinical trial to) register such clinical trial
on and report the results of such clinical trial to the appropriate registry or
database (e.g., clinicaltrials.gov) in accordance with Applicable Laws.

3.8. Use of Subcontractors. Each Party may subcontract some of the clinical
trials and other development work for which it is the Responsible Party under a
Development Plan to one or more subcontractors, to the extent permitted under
the Development Plan or otherwise in accordance with this Agreement; provided,
that: (a) none of the other Party’s rights hereunder are diminished or otherwise
adversely affected as a result of such subcontracting, (b) the subcontractor
undertakes in writing obligations of confidentiality and non-use that are no
less stringent than those undertaken by the Parties pursuant to Article 8,
(c) subject to Section 9.1(d), the applicable agreement with such subcontractor
assigns all Know-How developed by such subcontractor under the applicable
agreement to the applicable Party or its designee, and requires that all
employees of such subcontractor be under written obligation to assign without
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additional compensation all such Know-How to the applicable Party or its
designee, (d) the subcontractor does not have the right to further subcontract
such clinical trials or other development work unless agreed by the JDC, (e) the
subcontracting Party shall remain responsible and liable for the performance by
any subcontractor of its obligations under this Agreement, and (f) such
permitted subcontracting shall not relieve the Responsible Party of any
liability or obligation under this Agreement, except to the extent
satisfactorily performed by such subcontractor. In the event a Party performs
any of the clinical trials or other development work for which it is the
Responsible Party under a Development Plan through a subcontractor, then such
Party shall at all times be fully responsible for the performance and payment of
such subcontractor.

3.9. Materials Transfer. In order to facilitate the clinical trials and other
development work contemplated by this Agreement, either Party may provide to the
other Party certain biological materials or chemical compounds (other than
Compound or Product) Controlled by the supplying Party (collectively,
“Materials”) for use by the other Party in furtherance of such clinical trials
or other development work. Except as otherwise provided for under this
Agreement, all such Materials delivered to the other Party will remain the sole
property of the supplying Party. The receiving Party shall: (a) only use such
Materials in furtherance of the clinical trials and other development work for
which it is the Responsible Party under a Development Plan, (b) not use or
deliver any Materials to or for the benefit of any Third Party, except for
subcontractors pursuant to Section 3.8, without the prior written consent of the
supplying Party, and (c) use the Materials in compliance with all Applicable
Laws. The Parties shall use the Materials supplied under this Agreement with
prudence and appropriate caution in any experimental work because not all of
their characteristics may be known. Except as otherwise expressly set forth in
this Agreement, THE MATERIALS ARE PROVIDED “AS IS” AND WITHOUT ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, INCLUDING ANY IMPLIED WARRANTY
OF MERCHANTABILITY OR OF FITNESS FOR ANY PARTICULAR PURPOSE OR ANY WARRANTY THAT
THE USE OF THE MATERIALS WILL NOT INFRINGE OR VIOLATE ANY PATENT OR OTHER
PROPRIETARY RIGHTS OF ANY THIRD PARTY.

3.10. Product Regulatory Activities.

(a) The Responsible Party for executing the Regulatory Strategy for a Product in
a country in the Territory (and during a particular stage of development, if
applicable) shall conduct all regulatory activities for such Product in such
country in accordance with such Regulatory Strategy. In addition to its
obligations under Sections 3.5(f)(i), 3.5(f)(ii), 3.14(a), and 3.14(b), such
Responsible Party shall (i) ensure that the other Party is fully involved in the
planning of the execution of the Regulatory Strategy, (ii) in good faith seek to
reach agreement with the other Party on all material communications with
Regulatory Authorities and material decisions with respect to Regulatory
Strategy in such country, (iii) in good faith seek to reach agreement with the
other Party on decisions regarding the labeling of the Product in such country,
(iv) timely inform the other Party of any scheduled meetings with Regulatory
Authorities in such country with respect to such Product as soon as practicably
possible, and (v) use all reasonable efforts to ensure that the other Party is
afforded the opportunity to participate in such meetings. The other Party shall
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timely basis with respect to all such activities, including responding promptly
to all of the Responsible Party’s reasonable requests for information and
comments necessary for such regulatory activities.

(b) Eisai (or its Affiliate or Sub-distributor in the applicable country) shall
hold in the name of Eisai (or such Affiliate or Sub-distributor) all
applications for Regulatory Approval and all Regulatory Approvals in the
Territory, and shall provide Arena copies of all such applications and
approvals. Notwithstanding anything to the contrary in this Agreement, Eisai and
its Affiliates and Sub-Distributors shall not take (or omit to take) any such
regulatory action or make any Regulatory Filing in the Territory that shall or
would reasonably be expected to have a material negative impact on the Product,
or regulatory activities as to Product, outside the Territory. Arena hereby
grants Eisai and its Affiliates and Sub-distributors a royalty-free right,
subject to the terms of this Agreement, to reference the Initial Product NDA and
all other applications for Regulatory Approval and Regulatory Approvals and to
use any and all data contained therein, in each case, solely to obtain and
maintain Regulatory Approvals for the Products in the Territory, or as otherwise
required by Regulatory Authorities in the Territory with respect to the Initial
Product. Subject to other provisions of the Agreement (e.g., Eisai will not make
any regulatory filing in the New Territory prior to [...***...], without Arena’s
consent, etc.), Eisai will have the right to seek Regulatory Approval for the
Initial Product in all countries in the New Territory (including in Europe and
Switzerland), and will be responsible for all filing and registration fees and
its FTE costs associated with seeking, obtaining and maintaining such Regulatory
Approvals after the 2nd Amendment Effective Date. Eisai shall have right to
reference the U.S. NDA, EU MAA, Swiss MAA and use all data therein to seek
registrations in the Territory.

(c) Information Transfer. In addition to the information required to be provided
to the other Party in other provisions of this Agreement, each Party shall
timely provide the other Party with (i) copies of all written correspondence
with the Regulatory Authorities in the Territory regarding the Products for use
in the Territory, and (ii) a written summary of all oral communications with the
Regulatory Authorities in the Territory regarding the Products.

(d) REMS Costs. The costs of any risk evaluation and mitigation strategies with
respect to a Product in a country shall be deemed Development Costs for
Post-Approval Required U.S. Development, Post-Approval Required Additional
Territory Development, Post-Approval Required New Territory Development or
Required Post-Approval Additional Product Development, as applicable, which
shall be shared by the Parties in accordance with Section 3.2(a)(iii), 3.2(c),
3.2(f)(ii) or 3.3(g), as applicable.

3.11. Regulatory Compliance. Each Party shall conduct all of those regulatory
activities in the Territory for which it is the Responsible Party in compliance
with all Applicable Laws.

3.12. Regulatory Cooperation of the Parties.

(a) In addition to its obligations under Sections 6.14 and 6.16, Arena shall
reasonably cooperate with any reasonable requests for assistance from Eisai with
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Eisai’s conducting regulatory activities for which Eisai is the Responsible
Party, and (ii) maintaining any Regulatory Approval of a Product that is held by
Eisai, including by:

(i) making its employees, consultants and other staff reasonably available upon
reasonable notice during normal business hours to attend meetings with
Regulatory Authorities concerning the applicable Products;

(ii) performing (except as otherwise agreed by the Parties) all stability
testing of each packaging configuration of each Product for which Eisai applies
for Regulatory Approval in each applicable country in the Territory as is
reasonably necessary to prepare, file, obtain and maintain such Regulatory
Approval; and

(iii) disclosing and making available to Eisai, in a reasonable form as Eisai
may reasonably request, all manufacturing and quality control data, chemistry,
manufacturing and controls data and other information possessed by Arena or its
Affiliates or subcontractors and related to the applicable Product and the
manufacturing process therefor as is reasonably necessary or desirable to
prepare, file, obtain and maintain any such Regulatory Approval.

Arena shall provide all such assistance under this Section 3.12(a) at Arena’s
expense, except that Eisai shall reimburse Arena for 50% of all actual
fully-burdened (as determined by Arena in accordance with its customary
accounting procedures consistently applied ) costs incurred by Arena in
performing the stability testing required by Section 3.12(a)(ii). All such costs
shall be subject to the recordkeeping and audit provisions under Sections 3.6(d)
and (e), mutatis mutandis.

(b) Further, Arena will cooperate with Eisai, at Eisai’s expense, in Eisai’s
conducting shipping studies that are necessary for Commercialization of Product
in the New Territory.

(c) Eisai, at its expense, shall cooperate with any reasonable requests for
assistance from Arena conducting regulatory activities in the Territory for
which Arena is the Responsible Party, including by making its employees,
consultants and other staff reasonably available upon reasonable notice during
normal business hours to attend meetings with Regulatory Authorities concerning
the applicable Products.

(d) Eisai shall cooperate with any reasonable requests for assistance from Arena
with respect to obtaining any registration or other regulatory approval of a
Product or other Compound Product or Related Product outside the Territory,
including by making its employees, consultants and other staff available upon
reasonable notice during normal business hours to attend meetings with
Regulatory Authorities concerning the applicable Product, Compound Product or
Related Product; provided, that any such assistance with respect to obtaining
any registration or other regulatory approval of a Product or other Compound
Product or Related Product outside the Territory shall be at Arena’s expense and
no employee, consultant or other staff of Eisai shall be required to travel
outside of the Territory in connection therewith.

 

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3.13. Communications Outside the Territory. Except as may be required by
Applicable Laws, Eisai shall not communicate regarding development or regulatory
matters relating to the Initial Product or any Additional Product with any
Regulatory Authority outside the Territory unless explicitly provided for in a
Development Plan, the PV Agreement, or as requested or permitted in writing to
do so by Arena or unless so ordered by a Regulatory Authority in the Territory,
in which case Eisai shall promptly notify Arena of such order or shall seek
permission from the applicable Regulatory Authority for Arena (or one of its
Affiliates) to participate in such communication.

3.14. Regulatory Filings; Arena’s Right of Reference.

(a) Following initial Regulatory Approval of a Product in a country in the
Territory, Eisai (or its Affiliate or Sub-distributor) shall provide Arena a
draft of each proposed material Regulatory Filing reasonably in advance of the
expected filing date thereof (but at least 30 days in advance, unless
impracticable) and consult with Arena regarding any comments Arena may have with
respect thereto and shall use good faith efforts to address any reasonable
comments made. Eisai shall notify Arena of any material changes made to such
draft prior to filing and shall use good faith efforts to address any reasonable
comments made to such material changes. Promptly after the filing thereof, Eisai
(or its Affiliate or Sub-distributor) shall provide to Arena a copy of such
material Regulatory Filing, and any data included or referenced therein, with
respect to any Product for use in the Territory. Arena shall have the right to
disclose to its Affiliates and Arena ex-Territory Distributors any such draft
and filed Regulatory Filings provided by Eisai; provided, that wherever
reasonable and practicable in the circumstances any Arena ex-Territory
Distributor that receives such draft or filed Regulatory Filing shall be subject
to reasonable and customary obligations of confidentiality with respect to such
draft or filed Regulatory Filing.

(b) With respect to any material regulatory filing in any country or
jurisdiction outside the Territory covering a Product or other Compound Product
or a Related Product, and to the extent Arena has the right to do so under any
applicable agreement with an Arena ex-Territory Distributor, at least 15 days
prior (to the extent practicable) to making any such material regulatory filing
Arena shall provide Eisai a copy of the proposed regulatory filing and consult
with Eisai regarding any comments Eisai may have with respect thereto and shall
use good faith efforts to address any reasonable comments made. Promptly after
filing, to the extent Arena has the right to do so under any applicable
agreement with an Arena ex-Territory Distributor, Arena shall provide to Eisai
copies of all material regulatory filings with respect to any Product or other
Compound Product or a Related Product made in any country or jurisdiction
outside the Territory.

(c) During the Term, Arena and its Affiliates and Arena ex-Territory
Distributors shall have the royalty-free right to reference and use all
Regulatory Filings (including data included or referenced therein) that are made
by Eisai or any of its Affiliates or Sub-distributors with respect to a Product
in connection with obtaining, maintaining or expanding any registration or
regulatory approval that Arena or any of its Affiliates or Arena ex-Territory
Distributors may seek to obtain with respect to such Product or any other
Compound Product or Related Product in any country or jurisdiction outside the
Territory. Eisai shall, on

 

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written request by Arena, provide, or shall cause its applicable Affiliate or
Sub-Distributor to provide, to Arena and to any specified Regulatory Authority a
letter, in the form reasonably required by Arena, acknowledging that Arena or
its Affiliate or Arena ex-Territory Distributor, as applicable, has the right of
reference to any such Regulatory Filing for all purposes consistent with the
development, regulatory approval and commercialization of the applicable Product
or any other Compound Product or Related Product in the applicable country or
jurisdiction outside the Territory. Eisai shall not, and shall cause its
Affiliates and Sub-distributors not to, transfer any Regulatory Filings relating
to any Product to any Third Party without the prior written consent of Arena,
and in any such permitted transfer Eisai shall require the transferee to
acknowledge in writing to Arena, Arena’s (and its Affiliates’ and Arena
ex-Territory Distributors’) rights of reference to and right to use all such
Regulatory Filings as provided above.

3.15. Pharmacovigilance. Arena or its Arena ex-Territory Distributors shall be
responsible, at its own expense, for all required safety reporting with respect
to each Product in each country outside of the Territory. Promptly after the 2nd
Amendment Effective Date, (a) Arena shall cooperate towards the orderly transfer
to Eisai, or the establishment by Eisai, of the global safety database for the
Product, and thereafter, Eisai shall be responsible at its expense for
maintaining the global safety database and (b) the Parties shall amend and
restate the PV Agreement to address the exchange of safety information with
respect to the Product in the Territory (including with respect to Arena’s
current and future ex-Territory Distributors). As between the Parties, the Party
holding the relevant IND will be responsible for all safety reporting for
clinical development (unless otherwise agreed to by the Parties) in the
Territory and will assume all such expenses associated with safety reporting in
the Territory. Eisai (or its designated Affiliate or Sub-distributor) will be
responsible for all safety reporting relating to Commercialization of the
Product in the Territory and will assume all such expenses associated with
safety reporting in the Territory. Eisai shall be responsible for ensuring
compliance by its Affiliates or Sub-distributors with respect to
pharmacovilgilance responsibilities under the PV Agreement and Applicable Law in
the applicable countries in the Territory. Arena shall be responsible for
ensuring compliance by Arena ex-Territory Distributors with respect to
pharmacovigilance responsibilities under the PV Agreement and Applicable Law in
the ex-Territory countries, including safety reporting requirements. Each Party
shall cooperate and shall cause its Affiliates (and, in the case of Arena, shall
cause the Arena ex-Territory Distributors, and in the case of Eisai, shall cause
the Sub-distributors) to cooperate in implementing a pharmacovigilance mutual
alert process with respect to the Products. Arena and Eisai shall each have the
right to subcontract any such activities to a Third Party. Further, the PV
Agreement shall provide: (a) a Joint Product Safety Committee (the “JPSC”) will
be established by the Parties as a JDC Subcommittee with representatives from
Eisai and Arena (including pharmacovigilance, regulatory, medical affairs and
legal representatives); (b) the JPSC shall seek to act by consensus whenever
possible, with Eisai representatives having final decision-making authority;
(c) Arena shall have the right to have its or its Affiliate’s personnel interact
on a regular basis with Eisai’s operational safety team for the Products;
(d) Arena shall have the right to maintain an informational database with a copy
of all global safety reports; (e) Eisai will generate aggregate reports and for
those reports to be submitted to ex-Territory countries provide Arena a
reasonable amount of time to review and comment on such reports (and the Parties
shall seek to reach conclusions by consensus, with Eisai having final decision-

 

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making authority); (f) Eisai will, at its expense, create and implement a core
risk management plan and provide such plan to Arena for review and comment prior
to release or implementation (and Eisai shall consider Arena’s comments in good
faith); and (g) Eisai will be responsible for global literature review.

3.16. Subcontracting Medical Education Activities.

(a) If Eisai desires to use one or more Third Parties to conduct medical
education activities for a Product in the United States, Eisai shall notify
Arena, and upon such notice the Parties shall discuss in good faith the
qualifications of such Third Party and whether and under what conditions Eisai
may use such Third Party(ies) to conduct medical education activities for a
Product in the United States. Any such Third Party permitted hereunder to
conduct medical education activities for a Product in the United States shall be
deemed a “subcontractor” of Eisai for which Eisai shall be responsible as
provided in Section 15.5(b).

(b) If Eisai desires to use one or more Third Parties to conduct medical
education activities for a Product in a country in the Additional Territory or
the New Territory, Eisai shall notify Arena, and upon such notice the Parties
shall discuss in good faith the qualifications of such Third Party for acting in
such capacity. If Arena reasonably believes that the use of any such Third Party
would have a material adverse effect on the Products in any country in the
Territory or outside the Territory, then Arena may, by providing an Escalation
Notice to Eisai within 10 days after Eisai notifies Arena of its desire to use
such Third Party, have such matter referred for resolution to the Senior
Executives. The Senior Executives shall use good faith efforts to resolve any
such matter referred to them as soon as practicable. If the Senior Executives
are unable to resolve any matter set forth in an Escalation Notice within 15
days after Eisai receives such Escalation Notice, then Eisai shall have the
right to use such Third Party. Any such Third Party used by Eisai hereunder to
conduct medical education activities for a Product in a country in the
Additional Territory or the New Territory shall be deemed a “subcontractor” of
Eisai for which Eisai shall be responsible as provided in Section 15.5(b).

Article 4.

MANAGEMENT OF RELATIONSHIP

4.1. Joint Steering Committee.

(a) Establishment. Promptly after the 2nd Amendment Effective Date, the Parties
shall establish a joint steering committee (the “Joint Steering Committee” or
“JSC”).

(b) Duties. The JSC shall:

(i) generally oversee the relationship and activities of the Parties under this
Agreement;

(ii) serve as a forum for discussion and exchange of information regarding
Commercialization of the Products in the Territory;

 

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(iii) serve as a forum for discussion and exchange of information regarding
manufacture and supply of the Products by Arena for Eisai for distribution in
the Territory;

(iv) coordinate the Parties’ respective activities with respect to manufacturing
and commercialization matters pertaining to the Products and any other Compound
Products or Related Products in the Territory and outside the Territory;

(v) seek to resolve disputes that may arise in the JDC; and

(vi) perform such other duties as are specifically assigned by the Parties to
the Joint Steering Committee pursuant to this Agreement or in a writing executed
by each Party.

(c) Subcommittees. The JSC may delegate specific matters or types of matters
within its jurisdiction to subcommittees (each, a “JSC Subcommittee”), the
composition of which shall be determined by the JSC; provided, that unless the
Parties otherwise agree, each JSC Subcommittee shall include at least two
representatives from each Party. Each JSC Subcommittee shall operate pursuant to
procedures to be defined by the JSC in establishing such JSC Subcommittee. Any
decisions by any such JSC Subcommittee shall be subject to Section 4.1(f), which
shall apply mutatis mutandis to such JSC Subcommittee. From and after the 2nd
Amendment Effective Date, the Manufacturing Working Group shall be a JSC
Subcommittee.

(d) Membership; Procedure. The JSC shall be composed of six members, three of
whom shall be appointed by Arena and three of whom shall be appointed by Eisai.
Each Party may appoint employees of its Affiliates to serve as JSC members;
provided, that at least one representative of such Party on the JSC shall be an
employee of such Party (and not any of its Affiliates) and that each
representative must be an employee of the applicable Party or one of its
Affiliates. For the first year after the 2nd Amendment Effective Date, one of
Eisai’s three JSC members shall serve as Chairman and thereafter the Chairman
shall rotate annually between a representative of Arena and a representative of
Eisai. The Chairman shall have no independent voting power, but shall act to
lead the meetings of the JSC, to prepare the agenda for each meeting (based on
the comments and suggestions of each Party, with each such agenda to contain all
agenda items requested by a Party to be included) and to prepare the minutes of
each meeting for review and approval by the JSC at the next meeting. The draft
minutes shall be sent to all members of the JSC for comment promptly after each
such meeting (but in no event more than 15 days after each such meeting). All
actions noted in the minutes shall be reviewed and approved at the next meeting
of the JSC; provided, that if the Parties cannot agree as to the content of the
minutes by the time the JSC next meets, such minutes shall be finalized to
reflect any areas of disagreement. Any member of the JSC may designate a
substitute (who is an employee of the Party or any of its Affiliates) to attend
and perform the functions of that member at any meeting of the JSC. Each Party
may, with the consent of the other Party, such consent not to be unreasonably
conditioned, withheld or delayed, invite non-member, non-voting representatives
of such Party (who must be employees of such Party or any of its Affiliates
unless otherwise agreed in writing by the other Party, such agreement not to be
unreasonably conditioned, withheld or delayed) to attend meetings of the JSC.

 

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(e) Meetings. The JSC shall hold meetings as often as the members may determine,
but in any event JSC meetings shall occur not less than four times per Calendar
Year. The Chairman shall provide the other JSC members at least 10 days prior
written notice of each JSC meeting. Notwithstanding the foregoing, notice of any
JSC meeting may be waived in writing at any time, either before, during or after
such JSC meeting, and attendance of any member at such JSC meeting shall
constitute a valid waiver of notice of any such JSC meeting, unless such member
attends the JSC meeting for the express purpose of objecting to the failure to
provide valid notice. Such JSC meetings may be held in person, or by any means
of telecommunications or video conference, as the members deem necessary or
appropriate; provided, that at least one JSC meeting per year shall be held in
person and the location of such in-person JSC meeting shall alternate between a
location chosen by Arena and a location chosen by Eisai. A quorum for JSC
meetings shall be four members with at least two members from each Party. Each
Party shall bear its own costs to attend and participate in the JSC meetings,
including expenses incurred by the members nominated by it in connection with
their activities as members of the JSC.

(f) Decision-making of Joint Steering Committee.

(i) Vote Required. The JSC may make decisions with respect to any subject matter
that is within the purview of the JSC’s duties under Section 4.1(b). All
decisions of the JSC shall be made by unanimous vote or written consent, with
Arena and Eisai each having, respectively, one vote in all decisions. The JSC
shall use reasonable efforts to resolve any disputes or disagreements concerning
the matters within its duties.

(ii) Disputes. If, with respect to a matter that is within the JSC’s duties
(including resolution of disputes at the JDC) and involves (i) approval of an
initial Development Plan or any material change to any Development Plan,
(ii) the Regulatory Strategy for a Product for a country in the Territory or any
material change thereto, (iii) other strategic issues regarding development or
Regulatory Approval of a Product for the Territory, (iv) approval of any steps
to address a material cost overrun in a Development Plan, the JSC cannot reach
consensus within 15 days after it has met and attempted to reach such consensus,
then either Party may, by written notice to the other Party (an “Escalation
Notice”), have such matter referred for resolution to, on behalf of Arena, the
Chairman of the Managing Directors of Arena and to, on behalf of Eisai, the
President of Eisai (collectively, the “Senior Executives”). The Senior
Executives shall use good faith efforts to resolve any matter referred to them
as soon as practicable. If the Senior Executives are unable to resolve any
matter set forth in an Escalation Notice within 30 days after the applicable
Party receives such Escalation Notice, then no action will be taken with respect
to such matter; provided, that:

(1) subject to clauses (iii) and (iv) below, final decision-making authority
with respect to a Development Plan or any material change thereto shall be
allocated to either Eisai or Arena as set forth in Section 3.2 or 3.3, as
applicable; and

(2) subject to clauses (iii) and (iv) below, final decision-making authority
with respect to the Regulatory Strategy for a Product for a country in the

 

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Territory or any material change thereto shall be allocated to either Eisai or
Arena as set forth in Section 3.2 or 3.3, as applicable.

(iii) Exception for Change of Control of Arena. Notwithstanding clauses (ii)(1)
and (ii)(2) above, in the event of any Change of Control of Arena during the
Non-Compete Period that results in Arena or any of its Affiliates filing an NDA,
a BLA or any equivalent thereof for, marketing, promoting, detailing, offering
for sale, selling or distributing, or conducting other similar activities
related to the commercial sale of, any Competing Product in the Territory, then
Eisai shall have final decision-making authority as set forth in Section 2.4(b).

(iv) Exercise of Final Decision-Making Authority. A Party, in exercising its
final decision-making authority on Development Plans or Regulatory Strategy (or
amendments thereto), (A) shall not, without the other Party’s written consent,
take a course of action (or omit to perform an action) that would constitute a
violation of the requirements of this Agreement and (B) shall use good faith
efforts to take into account any reasonable comments made by the other Party
with respect to such Development Plans or Regulatory Strategy (or amendments
thereto).

4.2. Joint Development Committee.

(a) Establishment. The Parties acknowledge that Arena and Eisai have established
a joint development committee (the “Joint Development Committee” or “JDC”).

(b) Duties. The JDC shall:

(i) review, coordinate, and discuss the overall development and regulatory
strategies for obtaining Regulatory Approval for each Product in the Territory;

(ii) prepare, review and approve each Development Plan and any material changes
to each Development Plan, including budgets contained therein;

(iii) prepare, review and approve the Regulatory Strategy for each Product for
each country in the Territory and any material change thereto;

(iv) review and discuss the results and progress of the Parties under each
Development Plan;

(v) determine whether Arena or Eisai will be the Responsible Party for
conducting specific clinical trials and other development work under each
Development Plan, including the clinical and preclinical studies and other
activities necessary for obtaining Regulatory Approval for a Product in the
Territory, which determination will be reflected in the applicable Development
Plan;

(vi) subject to and within the parameters of the Development Plans, oversee and
manage the implementation of the Development Plans;

 

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(vii) review any information provided by a Party with respect to a cost overrun
relating to a Development Plan and approve any appropriate steps to address such
cost overrun;

(viii) review and discuss the development plans provided by a developing Party
with respect to any Non-Development Plan Development;

(ix) review and discuss any concerns that the other Party has with respect to
any on-going Non-Development Plan Development;

(x) coordinate the Parties’ respective activities with respect to development
and regulatory matters pertaining to the Products and any other Compound
Products or Related Products in the Territory and outside the Territory;

(xi) review and discuss any proposed presentations by Arena or any of its
Affiliates or any Arena ex-Territory Distributors at conferences and seminars
and the like in the Territory regarding the Compound Products or Related
Products; and

(xii) perform such other duties as are specifically assigned by the Parties to
the Joint Development Committee pursuant to this Agreement or by the JSC.

The JDC shall be responsible for setting overall strategic direction for the
development of the Products in the Territory and approving the Development
Plans, Regulatory Strategies and material changes thereto, but day-to-day,
tactical or operational matters with respect to the development of the Products
and the execution of Regulatory Strategies will be decided, in accordance with
the terms and conditions of this Agreement and the applicable Development Plans
and Regulatory Strategies, by the applicable Responsible Party.

(c) Subcommittees. The JDC may delegate specific matters or types of matters
within its jurisdiction to subcommittees (each, a “JDC Subcommittee”), the
composition of which shall be determined by the JDC; provided, that unless the
Parties otherwise agree, each JDC Subcommittee shall include at least two
representatives from each Party. Each JDC Subcommittee shall operate pursuant to
procedures to be defined by the JDC in establishing such JDC Subcommittee. Any
decisions by any such JDC Subcommittee shall be subject to Section 4.2(f), which
shall apply mutatis mutandis to such JDC Subcommittee; provided, that in any
dispute in the JPSC shall be resolved by Eisai without escalation to the JDC.
The JPSC established pursuant to the PV Agreement shall be a JDC Subcommittee.

(d) Membership; Procedure. The JDC shall be composed of six members, three of
whom shall be appointed by Arena and three of whom shall be appointed by Eisai.
Each Party may appoint employees of its Affiliates to serve as JDC members;
provided, that at least one representative of such Party on the JDC shall be an
employee of such Party (and not any of its Affiliates) and that each
representative must be an employee of the applicable Party or one of its
Affiliates. For the first year after the Effective Date, one of Arena’s three
JDC members shall serve as Chairman and thereafter the Chairman shall rotate
annually between a representative of Arena and a representative of Eisai. The
Chairman shall have no independent voting power, but

 

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shall act to lead the meetings of the JDC, to prepare the agenda for each
meeting (based on the comments and suggestions of each Party, with each such
agenda to contain all agenda items requested by a Party to be included) and to
prepare the minutes of each meeting for review and approval by the JDC at the
next meeting. The draft minutes shall be sent to all members of the JDC for
comment promptly after each such meeting (but in no event more than 15 days
after each such meeting). All actions noted in the minutes shall be reviewed and
approved at the next meeting of the JDC; provided, that if the Parties cannot
agree as to the content of the minutes by the time the JDC next meets, such
minutes shall be finalized to reflect any areas of disagreement. Any member of
the JDC may designate a substitute (who is an employee of the Party or any of
its Affiliates) to attend and perform the functions of that member at any
meeting of the JDC. Each Party may, with the consent of the other Party, such
consent not to be unreasonably conditioned, withheld or delayed, invite
non-member, non-voting representatives of such Party (who must be employees of
such Party or any of its Affiliates unless otherwise agreed in writing by the
other Party, such agreement not to be unreasonably conditioned, withheld or
delayed) to attend meetings of the JDC.

(e) Meetings. The JDC shall hold meetings as often as the members may determine,
but in any event JDC meetings shall occur not less than once per Calendar
Quarter. The Chairman shall provide the other JDC members at least 10 days prior
written notice of each JDC meeting. Notwithstanding the foregoing, notice of any
JDC meeting may be waived in writing at any time, either before, during or after
such JDC meeting, and attendance of any member at such JDC meeting shall
constitute a valid waiver of notice of any such JDC meeting, unless such member
attends the JDC meeting for the express purpose of objecting to the failure to
provide valid notice. Such JDC meetings may be held in person, or by any means
of telecommunications or video conference, as the members deem necessary or
appropriate; provided, that at least one JDC meeting per year shall be held in
person and the location of such in-person JDC meeting shall alternate between a
location chosen by Arena and a location chosen by Eisai. A quorum for JDC
meetings shall be four members with at least two members from each Party. Each
Party shall bear its own costs to attend and participate in the JDC meetings,
including expenses incurred by the members nominated by it in connection with
their activities as members of the JDC.

(f) Decision-making of Joint Development Committee. The JDC may make decisions
with respect to any subject matter that is within the purview of the JDC’s
duties under Section 4.2(b). All decisions of the JDC shall be made by unanimous
vote or written consent, with Arena and Eisai each having, respectively, one
vote in all decisions. The JDC shall use reasonable efforts to resolve any
disputes or disagreements concerning the matters within its duties. In the event
that the JDC cannot reach consensus on any subject matter that is within the
purview of the JDC’s duties under Section 4.2(b) within 15 days after it has met
and attempted to reach such consensus (or such longer period as may be specified
herein), such matter shall be submitted to the JSC for resolution.

4.3. Scope of Governance. Notwithstanding the creation of the JSC, the JDC, any
JSC Subcommittee, or any JDC Subcommittee, each Party shall retain the rights,
powers and discretion granted to it under this Agreement, and none of the JSC,
the JDC, any JSC Subcommittee, or any JDC Subcommittee shall be delegated or
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discretion unless such delegation or vesting is expressly provided in this
Agreement, or the Parties expressly so agree in writing. None of the JSC, the
JDC, any JSC Subcommittee, or any JDC Subcommittee shall have any power to amend
or modify this Agreement, and no decision of the JSC, the JDC, any JSC
Subcommittee, or any JDC Subcommittee shall be enforceable to the extent it is
in contravention of any terms and conditions of this Agreement. It is understood
and agreed that issues to be decided by the JSC and the JDC are limited to those
specific issues within its express duties, issues to be decided by any JSC
Subcommittee or are limited to those specific issues delegated to such JSC
Subcommittee by the JSC, and issues to be decided by any JDC Subcommittee or are
limited to those specific issues delegated to such JDC Subcommittee by the JDC.

Article 5.

COMMERCIALIZATION OF PRODUCTS

5.1. Commercialization Rights and Responsibility. Eisai shall be solely
responsible, and has the exclusive rights, for Commercializing all of the
Products in the Territory in accordance with the terms and conditions of this
Agreement. In connection with such Commercialization, Eisai shall purchase all
of its and its Affiliates’ and Sub-distributors’ requirements of Products from
Arena pursuant to Article 6. As between the Parties, Arena has and shall retain
the exclusive rights to commercialize, itself or through its Affiliates or Arena
ex-Territory Distributors, all Compound Products in all countries and
jurisdictions outside the Territory. Subject to Section 5.10, Eisai may
subcontract its obligations with respect to Commercializing the Products in the
Territory.

5.2. Eisai Commercialization Responsibilities. With respect to each Product
Commercialized in each country in the Territory, Eisai shall have the exclusive
right and sole responsibility for, in its sole discretion but subject to Eisai’s
compliance with its other obligations and covenants in this Agreement, in each
case solely with respect to each country in the Territory:

(a) establishing the Commercialization and marketing strategy and tactics to
promote sales of such Product (the “Commercial Strategy”);

(b) conducting all detailing, promotion, advertising and other marketing
activities to support sales of such Product, including developing marketing
materials and advertising campaigns with respect to such Product (the “Marketing
Activities”);

(c) developing and maintaining websites with respect to such Product specific to
the Commercialization of the Product in each country in the Territory (with
Eisai acknowledging that Arena, its Affiliates or Arena ex-Territory
Distributors retain the rights to develop and maintain websites with respect to
Products relating to commercialization of Products outside the Territory);

(d) establishing all terms of sale of such Product (including the price at which
such Product will be sold, whether such Product will be subject to any trade or
quantity

 

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discounts, whether any discount will be provided for payments on accounts
receivable, whether such Product will be subject to rebates, returns and
allowances or Retroactive Price Discounts, the channels of distribution of such
Product, and whether credit is to be granted or refused in connection with the
sale of such Product);

(e) conducting appropriate forecasting and ordering of such Product from Arena
to meet all orders for purchase, and maintaining adequate storage facilities,
inventory, and inventory handling and processing capabilities for such Product;

(f) managed care contracting with respect to such Product;

(g) receiving, accepting and filling orders for such Product;

(h) distribution of such Product to customers (including wholesalers);

(i) controlling invoicing, processing orders and collecting accounts receivable
for sales of such Product; and

(j) recording sales of such Product in its books of account for sales.

5.3. Commercialization Plans and Communication. Within a reasonable time (no
shorter than six months) prior to the anticipated date of the First Commercial
Sale of any Product in the United States, any country in the Priority Additional
Territory and any of the Major New Territory Countries, Eisai shall prepare and
deliver to Arena a plan setting forth the Eisai commercialization plan for the
Commercialization of such Product in such country, which plan shall be in
reasonable scope and detail and shall reflect the information typically included
in the industry for similar internal commercialization plans for such country,
such as market research to develop the product positioning, key messages and
testing of key promotional materials such as visual aids and other brochures
targeted to physicians and other healthcare professionals and patients, and key
opinion leader communications and meetings. Within a reasonable time (no shorter
than six months) prior to the anticipated date of the First Commercial Sale of
any Product in any country other than as provided in the previous sentence,
Eisai shall prepare and deliver to Arena a reasonable summary of the Eisai
commercialization plan for the Commercialization of such Product in such
country, which plan shall provide a reasonable summary of the information
typically included in the industry for similar internal commercialization plans
for such country. Eisai shall provide such plans and summaries to Arena on a
semi-annual basis and shall promptly provide any interim material updates
thereto. Eisai shall provide Arena a copy of any monthly reports regarding
Eisai’s Commercialization of the Products in the Territory that Eisai creates in
its normal course of business, which may include (a) market trends, (b) total
market Rx (strength and specialty), (c) physician behavior (market and brand),
(d) brand Rx overview, (e) detail summary by sales forces (market and brand),
(f) sales by customer/class and (g) share of voice. For clarity, the foregoing
obligation to provide monthly reports shall not be deemed or construed to
obligate Eisai to create any reports that it does not create in its normal
course of business. At Arena’s request, not more than once per month,
appropriate executives of Eisai responsible for Commercialization of Products
will meet (either in person or via telephone) with Arena representatives to
discuss the Eisai commercialization plans and Commercial Strategy, to discuss

 

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Arena’s comments and to answer fully all reasonable Arena questions with respect
to such plan and strategy, and Eisai shall use good faith reasonable efforts to
address and accommodate Arena’s reasonable comments. In addition, Eisai shall
permit at least three representatives of Arena to attend each semi-annual review
meeting with respect to each Product.

5.4. Eisai Commercialization Commitments. Eisai is responsible for
Commercializing the Products in the Territory. Eisai shall use Commercially
Reasonable Efforts to Commercialize in each country in the Territory the Initial
Product and each Additional Product for which Regulatory Approval in such
country is obtained. Without limiting the foregoing, Eisai shall (a) establish
and maintain a commercially reasonable sales force, marketing capabilities,
Product storage and distribution facilities, order processing and fulfillment
capabilities and resources, and other similar capabilities able to provide
commercially reasonable Product Commercialization activities in each country in
the Territory where Regulatory Approval has been obtained, (b) provide its sales
representatives that promote the Products commercially reasonable incentive
compensation with respect to the Products, and (c) use Commercially Reasonable
Efforts to conduct all activities necessary to maintain such Regulatory
Approvals. If reasonably requested by Eisai, the Parties shall discuss the
possibility, and the terms, of Eisai Commercializing non-branded generic
versions of the Products in the Territory, which Commercialization (if at all)
would be subject to Arena’s consent and on such terms as acceptable to Arena.

5.5. Commercialization Standards of Conduct.

(a) Eisai shall, and shall cause its Affiliates, Sub-distributors and
Co-Promotion Partners to, in all respects comply with all Applicable Laws in
Commercializing the Products in the Territory, including to the extent
applicable, the Foreign Corrupt Practices Act of 1977, as amended (“FCPA”); the
FFDCA; the Public Health Service Act, as amended; the Prescription Drug
Marketing Act of 1987, as amended; Federal Health Care Program Anti-Kickback Law
(42 U.S.C. §§ 1320a-7b), as amended; the Health Insurance Portability and
Accountability Act of 1996, as amended; the FDA Guidance for Industry-Supported
Scientific and Educational Activities; and all federal, state and local “fraud
and abuse,” consumer protection and false claims statutes and regulations,
including the Medicare and State Health Programs Anti-Fraud and Abuse Amendments
of the Social Security Act and the “Safe Harbor Regulations” found at 42 C.F.R.
§1001.952 et seq.; the Office of the Inspector General’s Compliance Guidance
Program, the Pharmaceutical Research and Manufacturers of America Code on
Interactions with Healthcare Professionals, as hereafter amended from time to
time; the standards set forth by the Accreditation Council for Continuing
Medical Education relating to educating the medical community in the Territory;
and all foreign equivalents in the Additional Territory of any of the foregoing.
Each Party represents and warrants to the other Party that, as of the 2nd
Amendment Effective Date, such first Party and its Affiliates have adequate
procedures in place to support their compliance with the FCPA. Each Party and
its Affiliates (and, as to Eisai, its Sub-distributors and Co-Promotion
Partners) shall maintain such procedures throughout the Term and shall promptly
notify the other Party in writing with respect to any material non-compliance
regarding the development or Commercialization of the Products.

 

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(b) Eisai shall not, and shall cause its Affiliates, Sub-distributors and
Co-Promotion Partners not to, promote or market any Product in any country in
the Territory for any use or Indication not approved by the applicable
Regulatory Authority in such country.

(c) Eisai shall, and shall cause its Affiliates, Sub-distributors and
Co-Promotion Partners to, ensure that all sales representatives promoting
Products (i) have skills, training and experience generally consistent with
industry standards in the applicable country in the Territory applicable to the
promotion, marketing and sale of a prescription pharmaceutical product in such
country and (ii) have satisfactorily completed all Products-specific training
and ethics and compliance training required by Eisai.

(d) Eisai shall not, and shall cause its Affiliates, Sub-distributors and
Co-Promotion Partners, and its and their respective sales representatives not
to, (i) make any statement, representation or warranty, oral or written,
concerning any Product in any country in the Territory, or use any labeling,
literature or promotional or marketing material for any Product in any country
in the Territory that (A) is contrary to or inconsistent with Regulatory
Approval for such Product in such country in a manner that violates any
Applicable Laws in such country or (B) violates any Applicable Laws in such
country or (ii) make any arrangements with, make payments to or provide gifts or
other incentives to any healthcare professionals in violation of Applicable Laws
in such country relating thereto. Eisai shall, and shall cause its Affiliates,
Sub-distributors and Co-Promotion Partners to, ensure that its and their sales
representatives are familiar with the procedures, obligations, rights, and
responsibilities imposed by the terms of this Agreement as applicable to the
performance of promotional activities hereunder.

5.6. Specific Diligence Obligations in Additional Territory.

(a) Eisai shall use Commercially Reasonable Efforts to obtain Regulatory
Approval of the Initial Product in each country in the Additional Territory.

(b) Arena shall have the right to terminate this Agreement as to one or more
specific countries in the Additional Territory, by providing written notice to
Eisai (such notice within 90 days, or such other time as agreed by the Parties,
after the end of the applicable time frame below, as such time frame may be
extended), as follows: (i) with respect to each of Brazil and Canada, if Eisai
does not achieve First Commercial Sale of a Product in such country within 5
years (as such diligence time frame may be extended pursuant to the following
provisions or another applicable provision of this Agreement) after the date
that is the first to occur of Regulatory Approval of the Initial Product in the
United States or in a country in the European Union (such date, the “First
Approval Date”); (ii) with respect to Mexico, if Eisai does not achieve First
Commercial Sale of a Product in such country by the later of (x) 5 years after
the First Approval Date and (y) 36 months following issuance of a Swiss CPP by
Swissmedic (in either case, as such diligence time frame may be extended
pursuant to the following provisions or another applicable provision of this
Agreement) and (iii) with respect to each country in the Other Additional
Territory, if Eisai does not file in such country a good faith NDA seeking
Regulatory Approval of the Initial Product in such country within 3 years (as
such diligence time frame may be extended pursuant to the following provisions
or another applicable provision of this Agreement) after First Approval Date.
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country in the Additional Territory, shall be extended by the applicable of the
following: (1) if Arena has materially failed to perform its obligations (but
excluding any such failure to the extent the failure is caused by a failure by
Eisai or its Affiliate to supply API or an intermediate to Arena as may be
required under this Agreement or another agreement between the Parties) under
Section 3.12, Section 6.14, Section 6.16 or under any Development Plan with
respect to the Initial Product and such failure has materially delayed Eisai’s
ability to progress its development or regulatory activities as to such country,
then the amount of such delay, to the extent caused by such material failure of
Arena, shall be added to such diligence time frame for such country; and (2) if
Arena has failed to deliver (on a timely basis) amounts of clinical material of
Initial Product necessary for conducting clinical trials required for Regulatory
Approval in the country, and such failure has delayed the conduct of such
trials, then the extent of such delay shall be added to such diligence time
frame for such country.

If Arena terminates this Agreement with respect to a particular country in the
Additional Territory as provided above in this Section 5.6(b), then such country
shall be deemed excluded from the Additional Territory, and Eisai shall not have
any further rights in such country. The above diligence termination rights as to
specific countries in the Additional Territory are in addition to Eisai’s other
diligence obligations in the Agreement.

(c) If at any time Eisai reasonably believes that Eisai will not be able to
obtain Regulatory Approval of the Initial Product in one or more countries in
the Additional Territory through the exercise of Commercially Reasonable
Efforts, then Eisai may terminate this Agreement with respect to such
country(ies) immediately on written notice to Arena.

(d) In addition, if in any Year (as defined below) Eisai does not achieve the
aggregate minimum Net Sales in the Additional Territory specified below for such
Year (as such minimum may be reduced pursuant to Section 5.6(e)), Eisai shall
pay Arena (for such Year) an amount equal to (i) the applicable percentage rate
set forth in Section 7.4(a)(ii) to determine Product Purchase Price for the
Additional Territory for that Year, multiplied by (ii) the difference between
the required minimum Net Sales in the Additional Territory for that Year set
forth below (as reduced pursuant to Section 5.6(e)), less the actual aggregate
Net Sales in the Additional Territory accrued for that Year:

Minimum Additional Territory Net Sales:

Year 1: US$[...***...] in Net Sales in the Additional Territory

Year 2: US$[...***...] in Net Sales in the Additional Territory

Year 3: US$[...***...] in Net Sales in the Additional Territory

Year 4: US$[...***...] in Net Sales in the Additional Territory

Year 5 through Year 10: US$[...***...] in Net Sales in the Additional Territory

“Year 1” refers to the first 12 full months following the First Commercial Sale
of the Initial Product in the Priority Additional Territory, “Year 2” is the
next 12 full month period, and so on.

 

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(e) The minimum Net Sales in the Additional Territory set forth in
Section 5.6(d) shall be reduced as follows:

(i) If this Agreement terminates with respect to a country in the Priority
Additional Territory for any reason other than termination by Arena pursuant to
Section 12.2(b), then from and after the date of such termination the minimum
Net Sales in the Additional Territory for each Year set forth in Section 5.6(d)
shall be reduced by [...***...]% of the amount specified in Section 5.6(d) for
such Year for each country in the Priority Additional Territory so terminated.
For clarity, the reductions under this Section 5.6(e)(i) apply separately with
respect to each country in the Priority Additional Territory (e.g., if this
Agreement is terminated with respect to both Brazil and Canada on the first day
of Year 2, then minimum Net Sales in the Additional Territory for Year 2 and
each subsequent Year shall be reduced by a total of [...***...]% of the amount
specified in Section 5.6(d) for such Year).

(ii) If during any Year there are sales by a Third Party of a Generic Version of
a Product in a country in the Priority Additional Territory, and the aggregate
units of all Generic Versions of such Product sold in such country in the
Priority Additional Territory in such Year exceed [...***...]% of the aggregate
units of such Product and all Generic Versions of such Product sold in such
country in such Year, then minimum Net Sales in the Additional Territory for
such Year set forth in Section 5.6(d) shall be reduced as follows: (x) by
[...***...]% of the amount specified in Section 5.6(d) for such Year, if such
aggregate units of all Generic Versions exceeds [...***...]% of the aggregate
units of such Product and all Generic Versions of such Product sold in such
country in such Year; or (y) by [...***...]% of the amount specified in
Section 5.6(d) for such Year, if such aggregate units of all Generic Versions
sold in such country exceeds [...***...]% of the aggregate units of such Product
and all Generic Versions of such Product sold in such country in such Year. For
clarity, the reductions under this Section 5.6(e)(ii) apply separately with
respect to each country in the Priority Additional Territory (e.g., if in Year 2
the aggregate units of all Generic Versions of the Initial Product sold in each
of Brazil and Canada in Year 2 exceed [...***...]% of the aggregate units of the
Initial Product and all Generic Versions of the Initial Product sold in each
such country in Year 2, then minimum Net Sales in the Additional Territory for
Year 2 shall be reduced by a total of US$[...***...] (i.e., [...***...]% of
US$[...***...] with respect to Brazil and [...***...]% of US$[...***...] with
respect to Canada)).

(iii) If Swissmedic has not issued a Swiss CPP for Eisai’s use in seeking
Regulatory Approval in Mexico by the date that is 24 months prior to the first
day of any Year, then the minimum Net Sales in the Additional Territory for such
Year shall be reduced by [...***...]% of the amount specified in Section 5.6(d)
for such Year; provided, that in any event such reduction terminates upon
Regulatory Approval in Mexico.

(iv) [Reserved].

(v) If, in any Year, Arena has failed (but excluding any such failure to the
extent the failure is caused by a failure by Eisai or its Affiliate to supply
API or an intermediate to Arena as may be required under this Agreement or
another agreement between the Parties) to provide to Eisai an amount of the
Initial Product ordered by Eisai in accordance with this Agreement by the date
10 days after the confirmed delivery date therefor and as a

 

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result of such delivery failure Eisai stocks out of Initial Product and is
unable to satisfy third party orders for the Initial Product in the Additional
Territory during such Year due to such stock out, then the minimum Net Sales in
the Additional Territory for such Year shall be reduced by an amount equal to
the Net Sales that would have been attained if such third party orders had been
satisfied.

For clarity, the reductions in subclauses (i) – (iv) above are mutually
exclusive; that is, only one such reduction in such subclauses (even if more
than one such subclause might apply to a country), as to a particular country in
the Priority Additional Countries, can be applied with respect to any specific
Year.

5.7. Limited Licenses.

(a) Subject to the terms and conditions of this Agreement, Arena hereby grants
to Eisai and its Affiliates an exclusive, royalty-free, limited license (with
the right to grant sublicenses to Sub-distributors and Co-Promotion Partners, in
the applicable country or countries) under the Arena Know-How and Program
Know-How and the Product Trademarks solely to Commercialize each Product in the
Territory and to perform medical education activities with respect to each
Product in the Territory.

(b) Subject to the terms and conditions of this Agreement, Arena hereby grants
to Eisai and its Affiliates a non-exclusive, royalty-free, fully-paid,
irrevocable, perpetual, worldwide license, with the right to grant multiple
tiers of sublicenses, under the Program Know-How and Program Patents for all
purposes, but excluding the research, development, manufacture, use,
importation, offer for sale, sale of, or any other use related to, Compound
Products or Related Compounds or Related Products.

5.8. Commercialization by Arena. Eisai acknowledges that Arena intends to
develop and commercialize, itself or with Affiliates or Arena ex-Territory
Distributors, the Products and possibly other Compound Products and Related
Products outside the Territory. Eisai shall notify Arena of any Eisai Know-How
discovered, identified, conceived, reduced to practice or otherwise made during
the Term and if, at any time during the Term, Arena desires to use (on behalf of
itself or any of its Affiliates or any Arena ex-Territory Distributors) any such
Eisai Know-How outside the Territory, Arena shall notify Eisai, and the Parties
shall meet and discuss in good faith and seek to agree on reasonable payments to
Eisai for the use of such Eisai Know-How outside the Territory by Arena, its
Affiliates and the Arena ex-Territory Distributors; provided, that in no event
shall any such payments exceed the actual costs and expenses incurred by Eisai
with respect to the discovery, identification, conception, reduction to practice
or other making of the applicable Eisai Know-How. Except as otherwise expressly
agreed by the Parties in writing, THE EISAI KNOW-HOW WILL BE PROVIDED “AS IS”
AND WITHOUT ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, INCLUDING ANY
IMPLIED WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR ANY PARTICULAR PURPOSE OR
ANY WARRANTY THAT THE USE OF THE EISAI KNOW-HOW WILL NOT INFRINGE OR VIOLATE ANY
PATENT OR OTHER PROPRIETARY RIGHTS OF ANY THIRD PARTY. Eisai hereby covenants
and agrees that it and its Affiliates shall not assert against Arena or any of
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subcontractors) any infringement of any Patent owned or controlled by Eisai or
any of its Affiliates that claims or covers any Product (or the manufacture or
use thereof) based on the manufacture for, and sale of Product to, Eisai
hereunder or on the importation, use, promotion, offer for sale, or sale by or
on behalf of Eisai or any of its Affiliates of such Product in the Territory.

5.9. Recalls. In the event that any Regulatory Authority issues or requests a
recall or takes similar action in connection with a Product in the Territory, or
in the event either Party determines that an event, incident or circumstance has
occurred that may result in the need for a recall or market withdrawal, the
Party notified of or desiring such recall or similar action shall, within 24
hours, advise the other Party thereof by telephone (and confirmed by email or
facsimile), email or facsimile. Eisai shall, to the extent practicable, endeavor
to discuss and agree with Arena upon whether to recall or withdraw such Product
in the Territory; provided, that if such discussion is not practicable or if the
Parties fail to so agree within an appropriate time period (recognizing the
exigencies of the situation), then Eisai shall decide whether to recall or
withdraw such Product in the Territory. Eisai shall be responsible for
conducting any such recall or withdrawal, shall use Commercially Reasonable
Efforts to minimize the expenses of any such recall or withdrawal and shall keep
Arena fully informed of all actions taken in conducting such recall or
withdrawal. Any recall or withdrawal expenses shall be shared equally by the
Parties; provided, that to the extent any such recall or withdrawal resulted
from a Party’s material breach of its obligations hereunder or the negligence or
willful misconduct of such Party or any of its Affiliates, Sub-distributors (as
applicable) or Arena ex-Territory Distributors (as applicable) or other
subcontractors, such Party shall bear the expense of such recall or withdrawal
to the extent of its or its Affiliates’, Sub-distributors’ (as applicable) or
Arena ex-Territory Distributors’ (as applicable) or other subcontractors’
responsibility.

5.10. Co-Promotion Partners, Sub-distributors and Developing Sub-distributors.

(a) Co-Promotion Partners and Sub-distributors in the U.S. If Eisai desires to
appoint a Third Party as a Co-Promotion Partner to co-promote or co-market the
Products with Eisai in the United States, Eisai shall notify Arena, and upon
such notice the Parties shall discuss in good faith the qualifications of such
proposed Co-Promotion Partner and whether and under what conditions Arena would
grant to Eisai the right to use such Third Party(ies) to co-promote or co-market
Products in the United States. Any such Third Party permitted by Arena hereunder
to co-promote or co-market Product with Eisai in the United States, shall be
deemed an approved Co-Promotion Partner (in the applicable country) and shall be
a “subcontractor” of Eisai for which Eisai shall be responsible as provided in
Section 15.5(b). Eisai shall not appoint a Sub-distributor in the United States
without Arena’s prior written consent.

(b) Co-Promotion Partners and Sub-distributors in the Additional Territory and
New Territory.

(i) If Eisai desires to appoint a Third Party as a Co-Promotion Partner to
co-promote or co-market the Products with Eisai in a Major New Territory
Country, or to appoint one or more a Third Parties as Sub-distributors to
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distribute, on Eisai’s behalf, in a Major New Territory Country, Eisai shall
notify Arena, and upon such notice the Parties shall discuss in good faith the
qualifications of such proposed Sub-distributor and whether and under what
conditions Arena would grant to Eisai the right to appoint such Third Party(ies)
to act as a Sub-distributor in such country. Eisai shall not appoint a
Co-Promotion Partner or Sub-distributor in a Major New Territory Country without
Arena’s prior written consent, such consent not to be unreasonably withheld,
conditioned or delayed. Any such Third Party Co-Promotion Partner or
Sub-distributor, as applicable, appointed by Eisai hereunder, shall be deemed a
“subcontractor” of Eisai for which Eisai shall be responsible as provided in
Section 15.5(b). In addition, any Third Party appointed by Eisai hereunder to
sell and distribute Product in a country in a Major New Territory Country shall
be deemed a Sub-distributor, subject to Section 15.5(b) and all other applicable
terms of this Agreement.

(ii) If Eisai desires to appoint a Third Party as a Co-Promotion Partner to
co-promote or co-market the Products with Eisai in a country in the Additional
Territory or New Territory other than a Major New Territory Country, or to
appoint one or more a Third Parties as Sub-distributors to market, promote, sell
and distribute, on Eisai’s behalf, the Products in the Additional Territory or
in any county in the New Territory other than a Major New Territory Country,
Eisai shall notify Arena, and upon such notice the Parties shall discuss in good
faith the qualifications of such Third Party for acting in such capacity. If
Arena reasonably believes that the appointment of any such Third Party would
have a material adverse effect on the Commercialization of the Products in such
country, or in any other country or jurisdiction, then Arena may, by providing
an Escalation Notice to Eisai within 20 days after Eisai notifies Arena of its
desire to appoint such Third Party, have such matter referred for resolution to
the Senior Executives. The Senior Executives shall use good faith efforts to
resolve any such matter referred to them as soon as practicable. If the Senior
Executives are unable to resolve any matter set forth in an Escalation Notice
within 15 days after Eisai receives such Escalation Notice, then Eisai shall
have the right to appoint such Third Party as a Co-Promotion Partner or
Sub-distributor, as applicable, in such country, on written notice to Arena. Any
such Third Party Co-Promotion Partner or Sub-distributor, as applicable,
appointed by Eisai hereunder, shall be deemed a “subcontractor” of Eisai for
which Eisai shall be responsible as provided in Section 15.5(b). In addition,
any Third Party appointed by Eisai hereunder to sell and distribute Product in a
country in the Additional Territory or in any country in the New Territory other
than a Major New Territory Country shall be deemed a Sub-distributor, subject to
Section 15.5(b) and all other applicable terms of this Agreement.

(iii) Eisai shall use Commercially Reasonable Efforts to cause each Co-Promotion
Partner or Sub-distributor to assign (or license, if assignment cannot be
achieved) to Eisai any and all Know-How discovered, identified, conceived,
reduced to practice or otherwise made by such Sub-distributor in the course of
or as a result of or related to any Commercialization activities under this
Agreement.

(c) Developing Sub-distributors in the Territory. If Eisai desires to grant a
Sub-distributor (in a particular country) the right to conduct development work
on a Product in such country (under the applicable Development Plan), Eisai
shall notify Arena, and upon such notice the Parties shall discuss in good faith
the qualifications of such Third Party for acting in such capacity and whether
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such Third Party(ies) in such capacity. If Arena agrees to permit the grant to
such Sub-distributor of such rights to conduct such development, then such
Sub-distributor shall be deemed a Developing Sub-distributor with respect to
such country, and the applicable Product(s). For clarity, no Third Party shall
be granted by Eisai the right to conduct Product development on its behalf,
other than approved Developing Sub-distributors (or permitted subcontractors
pursuant to Section 15.5(b)). Any such Third Party permitted by Arena hereunder
as a Developing Sub-distributor shall be a “subcontractor” of Eisai for which
Eisai shall be responsible as provided in Section 15.5(b).

(d) No Further Subcontracting. No Third Party appointed as a Co-Promotion
Partner or Sub-distributor by Eisai may further subcontract activities without
Arena’s consent.

5.11. Returned Product. Eisai shall have the sole responsibility and right to
accept any returned Product in the Territory. Arena shall not solicit the return
of any Product in the Territory, but if for any reason Arena should receive any
returned Product, Arena shall promptly notify Eisai. Any Product returned to
Arena shall be shipped by Arena to Eisai’s designated facility, and all
reasonable documented shipping costs incurred by Arena shall be reimbursed by
Eisai. Arena shall advise the customer that made such return that the Product
has been returned to Eisai. Arena shall fully complete and deliver to Eisai the
returned goods form provided by Eisai with respect to any returned Product.

Article 6.

MANUFACTURE AND SUPPLY

6.1. Manufacture and Supply Commitment. In accordance with the terms and
conditions of this Agreement, Arena shall use Commercially Reasonable Efforts to
supply, or cause to be supplied, to Eisai the amounts of the Initial Product and
each Additional Product, in each case supplied as Finished Product, ordered by
Eisai in accordance with the forecasting and ordering provisions of Section 6.2.
Eisai shall purchase all of its (and its Affiliates’ and Sub-distributors’)
requirements for Finished Products for Commercialization in the Territory from
Arena under the terms of this Article 6. If requested by Arena, the Parties
shall discuss in good faith Arena’s manufacturing capacity in light of forecasts
provided by Eisai under Section 6.2(a). Subject to Section 6.6, if either Party
anticipates that demand for any Finished Product would exceed Arena’s actual
manufacturing capacity, such Party shall promptly notify the other Party, and
the Parties shall meet and discuss in good faith a plan for addressing such
demand, which may include capital expenditures on a reasonable time frame or
increasing Second Source manufacturing capacity.

6.2. Forecasting and Ordering.

(a) Forecasts. With respect to each Product for which an NDA or other
application for Regulatory Approval in any country in the Territory has been
filed, commencing on the date at least six months prior to the expected date of
first Regulatory Approval of such application in such country for the Product,
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shall provide Arena a good faith 18-month rolling forecast of anticipated orders
of such Product for the entire Territory, in Finished Product form, to be placed
during each month of such period (broken down (A) on a country-by-country and
packaging configuration-by-packaging configuration basis and (B) by quantities
to be sold commercially or distributed as samples or as part of a compassionate
use, named patient use or indigent patient program) (each, a “Forecast” for such
Product). Each Forecast will specify, on a month-to-month basis during the
18-month period covered by the particular Forecast, the amounts of Finished
Product to be ordered in each month and the requested delivery dates for each
such order of Finished Product anticipated to be placed. Each order specified in
a Forecast for Initial Product for distribution in the United States shall be
for a multiple of an aggregate of [...***...] tablets (or such other number as
reasonably agreed by the Parties in writing). Prior to the due date for the
first Forecast for each Product in each country in the Territory, the Parties
will agree upon the maximum number of tablets that may be ordered in the initial
order of such Product in that country, and the minimum number of tablets
required in each order for each packaging configuration of the Product in such
country. The requested delivery dates for each order covered by a Forecast shall
not be sooner than three months, or later than four months, after the order date
specified in the Forecast; provided, that, if the Parties agree, Finished
Product may be delivered sooner than three months after the order date. The
first quarter (consecutive three-month period) of each such Forecast shall be a
binding commitment (the “Order Commitment” for the applicable Finished Product
for such quarter) on Eisai to place Purchase Orders, in each month of such
quarter, to order the applicable Finished Product in amounts at least equal to
the amounts forecast to be ordered (and with delivery dates within the limits
provided above), which commitment cannot be modified (absent Arena’s written
consent); provided, that, notwithstanding the foregoing, in no event shall Eisai
be obligated to submit Purchase Orders for or purchase any quantities of
Finished Product for a country if Regulatory Approval is not obtained in such
country for the applicable Product. Each such Forecast shall otherwise be
non-binding, except as provided below, but shall reflect Eisai’s good faith
expectation (at the time of submitting the Forecast) of the orders of Finished
Product and projected delivery dates during the 18-month period. In each
Forecast, the total quantity of Finished Product forecasted to be ordered by
Eisai during the first quarter in such Forecast may not vary (either up or down)
by more than: (X) 25% from the amounts of such Finished Product forecasted to be
ordered for the quarter in the earlier Forecast in which such quarter was the
second quarter of the Forecast; or (Y) 50% from the amounts of such Finished
Product forecasted to be ordered for the quarter in the earlier Forecast in
which such quarter was the third quarter of the Forecast. In addition to the
Forecasts described above in this Section 6.2(a), for each Product, Eisai shall
provide Arena, within three months after the Effective Date for the Initial
Product and not later than six months before the anticipated First Commercial
Sale for each Additional Product, and semi-annually thereafter, with a
good-faith three-year forecast of anticipated orders of such Product, which
forecast shall be nonbinding and used by Arena for capacity planning purposes.
Notwithstanding the foregoing forecasting process, the Parties acknowledge and
agree that forecasting and ordering for the launch of the Initial Product in a
country in the Territory, and for the launch of any Additional Product in a
country in the Territory, require the Parties to coordinate the launch
requirements in advance of obtaining Regulatory Approval for such Product in the
applicable country, and thus the Parties hereby agree to discuss reasonably and
in good faith and to agree, at least two months prior to expected date of
Regulatory Approval of the Initial Product in each country, or the application
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Regulatory Approval of any Additional Product (as applicable), on the binding
forecast covering the orders to be placed by Eisai for amounts to be delivered
in the first three months after such Regulatory Approval (such forecast, the
“Launch Forecast” with respect to the applicable Product in the applicable
country); provided, that, notwithstanding any Launch Forecast for a Product in a
country, in no event shall Eisai be obligated to submit Purchase Orders for or
purchase any quantities of such Product if Regulatory Approval is not obtained
in such country for the applicable Product.

(b) Orders. To order Finished Product for supply by Arena under this Article 6,
Eisai shall submit to Arena a Purchase Order (which is deemed binding on Eisai)
complying with the other applicable terms of this Article 6 and specifying the
amount of Finished Product ordered (broken down (A) on a country-by-country and
packaging configuration-by-packaging configuration basis and (B) by quantities
to be sold commercially (separate quantities for each different packaging
configuration ordered) or distributed as samples or as part of a compassionate
use, named patient use or indigent patient program) and the requested delivery
date (which shall be within the delivery time limitations specified in
subsection (a) above, unless otherwise agreed by Arena). Not later than 10 days
after receipt of a Purchase Order, Arena shall confirm in writing its receipt of
the Purchase Order (“Order Acceptance”) and the proposed delivery date, which
will be within five days (before or after) the requested date, to Eisai in
writing. Eisai shall notify Arena within five days after receipt of the Order
Acceptance if such proposed delivery date is unworkable for Eisai, and in such
event the Parties shall promptly discuss and seek to agree on an alternative
delivery date. If Eisai does not respond within such five-day period, the
proposed date will be the confirmed delivery date. For any Purchase Order that
contains an Excess Order, Arena shall notify Eisai in the Order Acceptance
whether Arena will be able to fulfill such Excess Order (or part thereof) and
the expected delivery date for fulfillment. For any such Purchase Order
submitted by Eisai, Arena shall be obligated to use Commercially Reasonable
Efforts to supply to Eisai the amount of Finished Product covered by such
Purchase Order by the confirmed delivery date; except that to the extent that
such ordered amount, when combined with the total amounts of such Finished
Product previously ordered by Eisai during the same quarter, exceeds 125% of the
Order Commitment for such Finished Product in such quarter (such excess amount,
the “Excess Order”), Arena shall not be obligated to fill any Purchase Orders to
the extent of the Excess Orders therein. Eisai may order in a Purchase Order
amounts of Finished Product that are Excess Orders with respect to a particular
quarter (i.e., that order amounts in excess of 125% the Order Commitment for
such quarter), and Arena shall use reasonable efforts to fill such Excess
Orders. If there is any material conflict between a Purchase Order or an Order
Acceptance and the terms and conditions of this Agreement, this Agreement
prevails and such conflicting terms are rejected and of no effect, unless the
Parties mutually agree otherwise in writing.

6.3. Delivery and Purchase. For each Purchase Order submitted by Eisai in
accordance with Section 6.2(b) (except to the extent of Excess Orders that Arena
does not fulfill), Arena shall use Commercially Reasonable Efforts to deliver to
Eisai the specified amount(s) of Finished Product conforming with the warranty
set forth in Section 6.13. Eisai shall engage a common carrier, at Eisai’s
expense, to ship Finished Product to Eisai. Upon Eisai’s request, Arena shall
assist Eisai in identifying a suitable common carrier. Title and risk of loss
with respect to Finished Product shall pass to Eisai, and delivery of such
Finished Product

 

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to Eisai for purposes of this Agreement shall be made, when Arena tenders such
Finished Product to Eisai’s designated common carrier at Fiege Logistik
(Schweiz) AG, Industriestrasse 11, CH-4665 Oftringen, Switzerland (or such other
location in Switzerland designated by Arena in writing at least 15 days prior to
the confirmed delivery date). Arena, at its own expense, shall be responsible
for clearing Finished Product for export and obtaining any export licenses with
respect thereto. Eisai, at its own expense, shall be responsible for clearing
Finished Product for import and obtaining any import licenses with respect
thereto. Arena shall use Commercially Reasonable Efforts to make each such
delivery to Eisai by the confirmed delivery date. Upon delivery of Finished
Product (but subject to Section 6.11), Eisai shall have the obligation to pay
Arena the Product Purchase Price pursuant to Section 7.4 for such delivered
Finished Product.

6.4. [Reserved]

6.5. Labeling and Packaging. Arena and Eisai shall discuss and reasonably agree
on all technical requirements for packaging configurations, packaging and
labeling used with Finished Product in each country in the Territory. Arena
shall label and package (in appropriate primary, secondary and tertiary
packaging), including production of Package Inserts, Finished Product to be
supplied in accordance with such agreement of the Parties, the applicable
Manufacturing SOPs, and Applicable Laws of each applicable country in the
Territory, for delivery in final form to Eisai under this Agreement. Eisai shall
be responsible for providing to Arena (or its designees, including printed
packaging material vendors utilized by Arena) all artwork for all such labeling,
Package Inserts and packaging on a timely basis, for each applicable packaging
configuration for each country in the Territory, as necessary for Arena to
perform such labeling and packaging, and in formats as reasonably agreed by the
Parties and reasonably acceptable to Arena. It is agreed that Arena’s
obligations to manufacture and supply Finished Product shall be delayed to the
extent Eisai does not timely agree on all packaging and labeling used with
Finished Product (which must be compatible with Arena’s equipment) and deliver
such necessary artwork. Arena shall have the right to subcontract the
manufacture of all printed packaging materials, including labels, and Arena
shall be responsible for all such subcontractors as provided in Section 15.5(b).

6.6. Second Source. Arena shall (a) engage and qualify a contract manufacturer
to act as a “back-up” contract manufacturer, to manufacture and supply to Arena
amounts of Finished Product (a “Second Source”), by the date 27 months after the
First Commercial Sale of the first Product in the United States, including by
entering into a supply agreement and quality agreement with such Second Source
that is approved by Eisai, such approval not to be unreasonably conditioned,
withheld or delayed, and (b) to keep such Second Source (or a
subsequently-qualified Second Source) qualified to manufacture and supply to
Arena the Finished Product during the Term.

6.7. Quality Agreement. Each Party shall duly and punctually perform all of its
obligations under and pursuant to the Quality Agreement. Arena shall release all
Finished Products in accordance with the terms of the Quality Agreement.

6.8. Quality Control. Arena shall maintain and follow a quality control and
quality assurance testing program consistent with the Specifications, the
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all other requirements of Applicable Laws and reasonably consistent with
industry standards (the “Quality Control Procedures”), which shall include
performing the applicable Product Acceptance Tests on each Batch of Finished
Product prior to delivery to Eisai. Arena shall ensure that all Finished Product
supplied to Eisai hereunder by Arena shall be manufactured in accordance with
the applicable Manufacturing SOPs, the Quality Agreement, GMP and all other
Applicable Laws, and all other applicable requirements of Regulatory
Authorities, (collectively, “Regulatory Standards”) and shall conform to the
applicable warranty set forth in Section 6.13.

6.9. Certificates. Arena shall provide to Eisai, accompanying each delivery of
Finished Product by Arena: (a) the Batch number and Purchase Order number (if
included on the applicable Purchase Order) of the delivered Finished Product,
(b) a completed and accurate Certificate of Analysis as to such Batch, and
(c) copies of all other documentation required for Finished Product release as
provided in the Quality Agreement.

6.10. Quality Audits. Arena shall maintain all quality control documentation and
Product Acceptance Test results for each Batch of Finished Product for a period
and in a manner consistent with Regulatory Standards and the Quality Agreement.
Eisai may periodically (but no more frequently than once per Calendar Year)
review such documentation and results, and, as provided for in the Quality
Agreement, audit and verify the adherence of Arena to the Quality Control
Procedures and Regulatory Standards. Such review and audit shall be on
reasonable prior notice and conducted during business hours and in a manner that
does not unreasonably disrupt Arena’s business or operations.

6.11. Acceptance/Rejection. Eisai (or its authorized representative) shall
perform a reasonable and customary visual inspection of all batches of Finished
Product delivered by Arena and shall report to Arena any Finished Product that
is reasonably discernable upon such visual inspection not to conform to the
warranty set forth in Section 6.13 (“Non-Conforming Finished Product”) within 20
days of receipt by Eisai. Eisai shall report to Arena Non-Conforming Finished
Product with hidden defects within 30 days of Eisai’s discovery of the same. A
defect is hidden if it could not reasonably have been discovered by a reasonable
and customary visual inspection upon receipt of the Finished Product. If any
Finished Product is found to be Non-Conforming Finished Product and is reported
by Eisai to Arena in the above time frame, then Arena shall, at Eisai’s request
and option (to be exercised by Eisai promptly), either: (a) replace such
Non-Conforming Finished Product at no additional charge to Eisai; (b) refund to
Eisai the Product Purchase Price paid (if already paid) to Arena for such
Non-Conforming Finished Product or cancel the applicable Purchase Order if not
paid; or (c) credit Eisai’s account in an amount equal to the Product Purchase
Price paid for such Non-Conforming Finished Product, and in any case ((a),
(b) or (c)) Arena shall reimburse all shipping, insurance and customs charges
for the Non-Conforming Finished Product from the point of delivery in
Switzerland to the destination in the Territory of the original shipment,
subject to receipt of invoice. Arena shall reimburse Eisai for the reasonable
costs incurred by Eisai in properly disposing of or shipping to Arena (as
instructed by Arena) such Non-Conforming Finished Product, subject to receipt of
invoice. Any notice given under this Section 6.11 shall specify the reason why
such Finished Product was found to be Non-Conforming Finished Product. If Eisai
does not report any defect or non-conformity of any Finished Product that could
reasonably have been discovered by a reasonable and customary visual inspection
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receipt by Eisai or any hidden defect within 30 days after discovery thereof,
then Eisai shall be deemed to have accepted such Finished Product.

6.12. Dispute Regarding Rejection. If the Parties disagree as to whether a
particular delivery of Finished Product contains Non-Conforming Finished
Product, and cannot resolve such disagreement within 30 days, the Parties shall
appoint an independent testing laboratory or other appropriate expert mutually
acceptable to the Parties (the “Testing Laboratory”) to (a) review data that are
in question or (b) to oversee the evaluation and testing of a sample of such
Finished Product at the Testing Laboratory. The Testing Laboratory will conduct
testing in accordance with the methods established for testing as set forth in
the applicable Specifications. The Party whose position in the dispute was not
supported by the Testing Laboratory’s findings shall bear the costs of the
Testing Laboratory. Arena shall address all amounts of Non-Conforming Finished
Product as determined by the Testing Laboratory as provided in Section 6.11.

6.13. Product Warranty. Arena warrants that, at the time of delivery to Eisai,
all Finished Product delivered to Eisai under this Article 6: (a) will have been
manufactured, tested, and packaged in accordance with the applicable
Manufacturing SOPs, the Quality Agreement, GMP and all other Applicable Laws;
(b) will meet the applicable Specifications; (c) will have a minimum remaining
shelf life of at least 70% of the approved shelf life for such Product set forth
in the applicable NDA (or other Regulatory Approval) therefor as of the date of
delivery, (d) will not be adulterated or misbranded under the FFDCA or any
similar law in the country in the Territory in which such Finished Product will
be sold or distributed; and (e) may be introduced into interstate commerce
pursuant to the FFDCA or any similar law in the country in the Territory in
which such Finished Product will be sold or distributed. Each of the foregoing
warranties is subject to the limitation that Arena shall have no liability or
responsibility under the foregoing for any defects, damage or harm to the
Finished Product resulting from improper storage, transportation, mishandling or
any other cause occurring after delivery by Arena to Eisai.

6.14. Facility Licenses; Storage. Arena shall obtain and maintain for the
facility(ies) at which it manufactures Finished Product for supply to Eisai (the
“Facility”), at its sole cost, all permits, licenses and approvals (including
facilities licenses) needed for Arena to be able to manufacture and supply
Finished Product in compliance with the warranty set forth in Section 6.13 (the
“Facility Licenses”), in a timely manner such that Arena is able to meet its
manufacturing and supply obligations under this Agreement. Arena shall keep
Eisai regularly informed about the status of all such Facility Licenses and
shall provide Eisai copies thereof upon request. Arena shall ensure that the
Facility complies with GMP and all other Applicable Laws (including
environmental laws) with regard to its manufacturing and supply of Finished
Product. Arena shall use Commercially Reasonable Efforts to resolve as soon as
possible any issues that arise in its seeking or maintaining Facility Licenses,
including completely addressing and rectifying any deviations or other issues
raised in any Warning Letter from the FDA or any similar warning or objection by
any other Regulatory Authority. Arena shall have the right to subcontract with
Third Parties for storage services and storage facilities for Finished Products
manufactured for supply to Eisai hereunder including Safety Stock, and Arena
shall be responsible for all such subcontractors as provided in Section 15.5(b).

 

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6.15. Inspection by Eisai. Arena agrees that Eisai and its respective agents
(but no more than a total of three persons per inspection) shall have the right,
pursuant to a reasonable confidentiality agreement with Arena, no more than once
per Calendar Year (unless any such inspection reveals a material compliance
issue, in which event Eisai and its respective agents shall have the right to
conduct such additional inspections during such Calendar Year as necessary to
verify that such issue has been remedied), upon reasonable prior notice to Arena
and during business hours, and in a manner that does not unreasonably disrupt
Arena’s manufacturing operations, to inspect the portion of the Facility where
Finished Product is manufactured or stored as well as the manufacturing of the
Finished Products, including inspection of (a) the raw materials used in the
manufacture of the Finished Products, (b) the holding facilities for such raw
materials, (c) the equipment used in the manufacture of the Finished Products,
and (d) all material records reasonably relating to such manufacturing at the
Facility, to the extent they relate to the Finished Products (which records may
be copied by Eisai or its agent, at Eisai’s expense). Following such inspection,
Eisai shall discuss its observations and conclusions with Arena and if Eisai
believes that any corrective actions are necessary for Arena to comply with the
terms and conditions of this Article 6, then within 15 days after such
discussion, Eisai shall prepare a schedule that sets forth the corrective
actions that Eisai reasonably believes in good faith are required, and Arena
will consider such actions in good faith and use Commercially Reasonable Efforts
to implement such corrective actions that Arena reasonably and in good faith
determines to be required.

6.16. Regulatory Inspections.

(a) Inspection by Regulatory Authorities. Upon the request of the FDA or any
other Regulatory Authority, Arena shall (i) provide the FDA or such other
Regulatory Authority reasonable access to observe and inspect (including
pre-approval inspections) the Facility and the procedures used for the
manufacture, release and stability testing, or warehousing of Finished Product
and to audit the Facility for compliance with GMP or other applicable Regulatory
Standards and (ii) cause any Third Party that manufactures any active
pharmaceutical agent contained in Finished Product to provide the FDA or such
other Regulatory Authority reasonable access to observe and inspect (including
pre-approval inspections) the facility at which such Third Party manufactures
such active pharmaceutical agent and the procedures used for the manufacture,
release and stability testing, or warehousing of such active pharmaceutical
agent and to audit such facility for compliance with GMP and all other
applicable Regulatory Standards. Arena specifically agrees to cooperate with any
inspection by the FDA or other Regulatory Authority, whether prior to or after
Regulatory Approval of the applicable Finished Product, and to provide Eisai a
copy of any inspection or audit report resulting from any such inspection
(subject to reasonable confidentiality restrictions imposed by any Third Party
that manufactures active pharmaceutical agent).

(b) Notification of Inspections. Arena agrees to notify Eisai within five
calendar days of Arena’s receipt of any written or oral inquiries, notifications
or inspection activity by any Regulatory Authority in regard to Finished Product
to be supplied to Eisai hereunder and immediately by telephone after learning of
any unannounced visit or inspection, and shall permit one Eisai employee or
agent approved by Arena, such approval not to be unreasonably conditioned,
withheld or delayed and subject to such agent’s executing a

 

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reasonable confidentiality agreement with Arena or, if applicable, any Third
Party that manufactures any active pharmaceutical agent contained in Finished
Product, to be present at and participate in such visit or inspection, excluding
any unannounced visit or inspection. Arena shall furnish to Eisai (i) within
five calendar days after Arena’s receipt, any report or correspondence issued by
any Regulatory Authority in connection with such inquiry, notification or
inspection, including any FDA Form 483 (List of Inspectional Observations) or
applicable portions of any FDA Warning Letters that pertain to any Product
manufactured for Eisai hereunder (or any equivalent warning notice in another
country or jurisdiction), and (ii) not later than two calendar days prior to the
time Arena provides the same to any Regulatory Authority, copies of proposed
draft responses or explanations relating to items set forth above (each, a
“Proposed Response”), in each case redacted of trade secrets or other
confidential information of Arena or its contract manufacturer that are
unrelated to the obligations under this Agreement and the manufacture of any
Finished Product hereunder. Arena shall discuss with Eisai and consider in good
faith any comments provided by Eisai on the Proposed Response. After the filing
of the Proposed Response (so modified by comments provided by Eisai, as may be
agreed) with the FDA or other Regulatory Authority, Arena shall notify Eisai of
any further contacts with the FDA or such Regulatory Authority relating to the
subject matter of the response.

(c) Remedial Actions. Arena shall notify Eisai immediately in writing in the
event any action is taken or threatened by a Regulatory Authority relating to
the manufacture or storage of Finished Product by Arena, or relating to the
Facility, that would reasonably be expected to impair materially the ability of
Arena to manufacture and supply Finished Product (including any impairment to
Arena’s ability to manufacture Finished Product conforming to the warranty set
forth in Section 6.13) in accordance with this Agreement. In any event, Arena
shall address and resolve as soon as reasonably practicable any issues, concerns
or warnings from any Regulatory Authority that would reasonably be expected to
affect Arena’s ability to manufacture and supply to Eisai Finished Product in
accordance with this Agreement. To the extent Arena must implement a plan of
remediation or for other modifications or changes to its Facility or its
manufacturing processes in order to address and resolve any such issues,
concerns or warnings from any Regulatory Authority, Arena shall prepare such
plan as soon as possible, shall provide a draft of the plan to Eisai for review
and comment, and shall use good faith efforts to implement all reasonable
comments of Eisai as soon as possible, and shall implement and complete all
aspects of the agreed plan as soon as possible.

6.17. Supply Problems.

(a) If Arena does not deliver any material amount of Finished Product ordered by
Eisai under a Purchase Order complying with the terms of Section 6.2 (other than
amounts that are Excess Orders) by the date 10 days after the confirmed delivery
date, Arena shall thereafter use good faith diligent efforts to deliver such
amount as soon as possible. Further, if, due to Arena not supplying to Eisai
amounts of Finished Product by the applicable confirmed delivery date(s) under a
Purchase Order complying with the terms of Section 6.2 (other than amounts that
are Excess Orders), there is a back-order of more than twenty days under pending
Purchase Orders of more than 25% of the amount of Finished Product ordered by
Eisai pursuant to such Purchase Orders (without regard to whether a Force
Majeure event has caused such supply delays), then the Parties shall meet as
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to find resolution, and in any event Arena shall continue to use good faith
diligent efforts to deliver to Eisai such back-ordered amounts of Finished
Product as soon as possible, including by obtaining such amounts from a Second
Source. Eisai will continue to order all its requirements for supply by Arena,
in accordance with the supply commitments of this Agreement.

(b) For purposes of Section 6.17(a), delivery of any quantity of Non-Conforming
Finished Product shall be deemed a failure to supply such quantity of Finished
Product by the confirmed delivery date if Eisai has timely given Arena notice of
such failure under the terms of Section 6.11.

6.18. Product Shortage. If, during any month of the Term, Arena has insufficient
quantities of the Finished Products to fill all Purchase Orders (excluding any
Excess Orders) submitted by Eisai that require delivery during such month, Arena
shall allocate and deliver to Eisai an amount of Finished Product equal to
(a) the aggregate amount of Product available for delivery by Arena and its
Affiliates in such month to all Persons worldwide, including Eisai, Affiliates
of Arena and Third Parties, multiplied by (b) a fraction, the numerator of which
is the aggregate amount of Finished Products delivered by Arena to Eisai during
the six-consecutive month period prior to the month in which such shortage
occurs, and the denominator of which is the aggregate amount of Products
delivered by Arena to all Persons worldwide, including Eisai, Affiliates of
Arena and Third Parties, during the six- consecutive month period prior to the
month in which such shortage occurs. Compliance by Arena with this Section 6.18
shall not relieve Arena of any other obligation or liability under this
Agreement.

6.19. Safety Stock; Inventory. In order to seek to ensure that Arena complies
with its Finished Product delivery obligations under this Article 6, each month
during the Term commencing three months after the First Commercial Sale of the
first Product in the United States, Arena shall, at its sole cost and expense,
maintain the amount of Safety Stock for such month in inventory at the Facility
(or at a storage facility of Arena’s subcontractor). At all times commencing one
month after the later of (a) the date that Arena first establishes the Safety
Stock or (b) the first date on which the approved shelf life for a Product set
forth in the United States NDA therefor is greater than or equal to 24 months,
Eisai shall maintain an inventory of at least one month of each Product, based
on Eisai’s most recent Forecast; provided, that Arena acknowledges and agrees
that Eisai’s obligation to maintain such inventory of such Product shall be
suspended to the extent Arena is unable to supply adequate Product to Eisai
under this Article 6.

6.20. Commitment to Optimize Supply Relationship. The Parties acknowledge and
agree that one of the goals of this Agreement is to provide for the efficient
ordering, manufacture and supply by Arena of the Finished Products ordered by
Eisai on a timely basis and meeting all requirements of this Agreement, so that
each Party benefits from such manufacturing and Eisai’s subsequent
Commercialization. In support of achieving such goals, the Parties have
established a manufacturing working group, comprised of appropriate individuals
with necessary expertise and authority, to meet (by telephone or as otherwise
agreed by the Parties) on a regular basis to coordinate forecasting, ordering
and delivery planning and execution and to discuss manufacturing and supply
matters (the “Manufacturing Working Group”). The Manufacturing Working Group
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procedures to facilitate regular and efficient communications and to keep
appropriate records of the interactions and decisions. If any aspect of the
forecasting, ordering, delivery or other supply-related provisions set forth
above in this Article 6 is determined, based on experience in operating under
such provisions, to impact negatively a Party in its efforts to achieve the
goals set forth above, then at such Party’s request the Manufacturing Working
Group shall meet and discuss reasonably and in good faith, and seek to agree on,
appropriate modifications to such aspect of the provisions, and shall present
any such agreed modifications to the Parties, who shall seek to agree on a
written amendment to this Agreement modifying such provisions in a manner that
better provides for the more efficient ordering, manufacture and supply of
Finished Product to Eisai by Arena. For example, a longer shelf life for
Finished Product delivered to Eisai may be requested by Eisai and accommodated
by Arena, and greater flexibility with respect to delivery dates for Finished
Product may be requested by Arena and accommodated by Eisai, in each case, as
the Parties may agree in a written amendment in furtherance of the goals set
forth above. In addition, if either Party desires to manufacture a Finished
Product in an alternative presentation or packaging configuration (e.g.,
different number of tablets per bottle) for sale in the Territory, at such
Party’s request, the Manufacturing Working Group shall discuss in good faith the
implementation of such alternative presentation or configuration. The
Manufacturing Working Group shall work in good faith to use Commercially
Reasonable Efforts to maximize the shelf life of all Initial Product delivered
to Eisai from the date of FDA approval of the Initial Product NDA to the end of
the third month after the First Commercial Sale of the Initial Product in the
United States. Notwithstanding the foregoing, the Manufacturing Working Group
shall not have any power to amend or modify this Agreement, and no decision of
the Manufacturing Working Group shall be enforceable to the extent it is in
contravention of any terms and conditions of this Agreement.

Article 7.

PAYMENTS

7.1. Prior Initial Payments. The Parties acknowledge that, in partial
consideration for entering into the Original Agreement, Eisai paid to Arena a
payment in the amount of US$50,000,000, and that, in partial consideration for
entering into the Restated Agreement, Eisai paid to Arena a payment in the
amount of US$5,000,000. Such payments are not refundable or creditable against
any other payments owed or payable by Eisai to Arena under the Original
Agreement, the Restated Agreement or this Agreement.

7.2. Upfront 2nd Amendment Payment. In partial consideration for entering into
this Agreement, Eisai shall pay to Arena a payment in the amount of
US$60,000,000 within five business days after the 2nd Amendment Effective Date.
Such payment is not refundable or creditable against any other payments owed or
payable by Eisai to Arena under this Agreement.

7.3. Milestone Payments. In further consideration for entering into this
Agreement, Eisai shall pay to Arena each milestone payment set out below within
30 days following the first achievement of the corresponding milestone event.
The payments set forth in this Section 7.3 shall not be refundable or creditable
against any other payments owed or payable by Eisai to Arena under this
Agreement.

 

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Milestone Event

   Milestone Payment (a) Upon first Regulatory Approval of a Product in the
United States or an EU country    US$5,000,000 *** (b) Upon Commercial Approval
of the Initial Product    US$60,000,000 *** (c) Upon the occurrence of the date
that is 15 days after the end of the month in which Net Sales for a Commercial
Year first exceed US$250,000,000    US$30,000,000 (d) Upon Regulatory Approval
in the United States of a Once-Daily Product    US$10,000,000 (e) Upon approval
by the FDA of prescribing information for the Initial Product in the United
States that (i) includes efficacy and safety data (or summary statements of
efficacy and safety data) from the BLOOM-DM Trial, (ii) does not materially
restrict or limit use of the Initial Product, or recommend caution with respect
to the use of the Initial Product, in patients with Type 2 diabetes, and
(iii) permits sales representatives to promote such efficacy and safety data
from the BLOOM-DM Trial to healthcare professionals in the United States under
Applicable Laws    US$20,000,000 *** (f) Upon receipt of determination by FDA of
exclusivity for the Initial Product under FFDCA Section 505A(b) or (c)   
US$[...***...] (g) Upon Regulatory Approval in the United States of the first
Additional Product for an Indication that is not a weight loss or weight
management Indication    US$[...***...] (h) Upon first filing of an NDA for
Product in Mexico:    US$500,000*** (i) Upon first filing of an NDA for Product
in Canada:    US$500,000*** (j) Upon first filing of an NDA for Product in
Brazil:    US$500,000 (k) Upon the earlier of Regulatory Approval or First
Commercial Sale of Product in Mexico:    US$1,000,000 (l) Upon the earlier of
Regulatory Approval or First Commercial Sale of Product in Canada:   
US$1,000,000 (m) Upon the earlier of Regulatory Approval or First Commercial
Sale of Product in Brazil:    US$1,000,000 (n) Upon the earlier of Regulatory
Approval or First Commercial Sale of    Aggregate of

 

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Product in [...***...]: *    US$[...***...] (o) Upon the earlier of Regulatory
Approval or First Commercial Sale of Product in [...***...]:    US$[...***...]
(p) Upon the earlier of Regulatory Approval or First Commercial Sale of Product
in [...***...]:    US$[...***...] (q) Upon the earlier of Regulatory Approval or
First Commercial Sale of Product in [...***...] **    US$[...***...] (r) Upon
issuance of the Swiss CPP by Swissmedic    US$3,000,000 (s) Upon the earlier of
first Regulatory Approval or First Commercial Sale of second Product to be
approved in [...***...]: †    Aggregate of US$[...***...] (t) Upon the earlier
of first Regulatory Approval or First Commercial Sale of the second Product to
be approved in [...***...]    US$[...***...] (u) Upon the earlier of first
Regulatory Approval or First Commercial Sale of the second Product to be
approved in [...***...]    US$[...***...] (v) Upon the earlier of first
Regulatory Approval or First Commercial Sale of the third Product to be approved
in [...***...]: †    Aggregate of US$[...***...] (w) Upon the earlier of first
Regulatory Approval or First Commercial Sale of the third Product to be approved
in [...***...]    US$[...***...] (x) Upon the earlier of first Regulatory
Approval or First Commercial Sale of the third Product to be approved in
[...***...]    US$[...***...] (y) Upon first Regulatory Approval in the United
States of an Additional Product that is a Combination Product    US$[...***...]

 

*

With respect to the milestone in subsection (n) above, if such milestone event
is first achieved in [...***...], then the entire milestone payment of
US$[...***...] shall be paid to Arena, and no further milestone payment shall be
made under such milestone (n). However, if the milestone in subsection (n) above
is first achieved in [...***...], then: (x) Eisai shall pay Arena a milestone
payment in the amount of US$[...***...], within 30 days of such first
achievement of the milestone, and (y) Eisai also shall pay to Arena (within 30
days of achieving the milestone) an additional milestone payment of
US$[...***...] for each [...***...] in which the milestone in subsection (n) is
achieved prior to achieving the milestone in subsection (n) above in [...***...]
(up to a maximum aggregate of US$[...***...] in milestone payments, pursuant to
this subclause (y) and the foregoing subclause (x), for the milestone under
subsection (n) above), and (z) upon achieving the milestone in subsection
(n) above in [...***...], Eisai shall pay Arena (within 30 days of

 

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  achieving the milestone) a final “true-up” milestone payment (under such
subsection (n)) in the amount of the difference between US$[...***...] and the
aggregate amount of milestone payments made to Arena pursuant the foregoing
clauses (x) and (y) prior to such amount being due (which amount may be zero).
For clarity, the total amount of milestone payments payable for achieving the
milestone event(s) under subsection (n) above shall not exceed US$[...***...].

** For clarity, the milestone payment for the milestone in subsection (q) above
is payable for [...***...], i.e., such payment will be made only for the
[...***...] to achieve the milestone event, and the total milestone payment for
such subsection will not exceed US$[...***...].

*** For clarity, these milestones have been earned and paid by Eisai prior to
the 2nd Amendment Effective Date.

† With respect to the milestones in subsection (s) or subsection (v) above, if
the milestone event is first achieved in [...***...] through the [...***...],
then the entire applicable milestone payment of US$[...***...] shall be paid to
Arena, and no further milestone payment shall be made under the applicable
milestone subsection. However, if the milestone in subsection (s) or (v) above
is first achieved in [...***...] other than through the [...***...], then:
(x) Eisai shall pay Arena a milestone payment in the amount of US$[...***...],
within 30 days of such first achievement of the milestone, and (y) Eisai also
shall pay to Arena (within 30 days of achieving the milestone) an additional
milestone payment of US$[...***...] for each [...***...] in which an approval is
achieved (up to a maximum aggregate of US$[...***...] in milestone payments,
pursuant to this subclause (y) and the foregoing subclause (x)), and (z) upon
achieving the milestone in such subsection (s) or (v) (as applicable) above in
[...***...] through the [...***...], Eisai shall pay Arena (within 30 days of
achieving the milestone) a final “true-up” milestone payment (under such
subsection (s) or (v), as applicable) in the amount of the difference between
US$[...***...] and the aggregate amount of milestone payments made to Arena
pursuant the foregoing clauses (x) and (y) with respect to such milestone, prior
to such amount being due (which amount may be zero). For clarity, (1) the total
amount of milestone payments payable for achieving the milestone event(s) under
either subsection (s) or (v) above shall not exceed US$[...***...], and for
achieving the milestone events under both subsection (s) and (v) above shall not
exceed US$[...***...], and (2) no milestone shall be payable under either
subsection (s) or (v) above upon achievement of the applicable milestone with
respect to [...***...] (except in connection with [...***...]).

As used herein, “Commercial Approval” means the date, after the earlier of
(A) Regulatory Approval for the Initial Product in the United States has been
obtained and (B) the First Commercial Sale in the United States of the Initial
Product, that Arena has delivered to Eisai the Launch Quantity of the Initial
Product. “Launch Quantity” means the amount of the Initial Product ordered by
Eisai under all Purchase Orders submitted no later than five days after such
Regulatory Approval in the United States of the Initial Product is obtained,
which Purchase

 

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Orders shall be submitted in accordance with the agreed Launch Forecast under
Section 6.2 and shall not exceed the quantity of the Initial Product specified
in the Launch Forecast.

No payment under Section 7.3 will be made more than once (except as otherwise
provided for the milestone events in subsection (n) above).

For the avoidance of doubt, in no event shall Eisai pay more than US$292,500,000
under this Section 7.3 (of which US$86,000,000 has been paid by Eisai prior to
the 2nd Amendment Effective Date).

7.4. Product Purchase Price Payments for Commercial Supply of Product.

(a) Product Purchase Price Calculations.

(i) For U.S. Sales. In consideration of the commercial supply of each Product
under this Agreement to Eisai by Arena for sale in the United States, subject to
Sections 7.4(d) and 7.6, Eisai shall pay to Arena a purchase price for Eisai’s
purchase of each unit of Finished Product (the “Product Purchase Price”) equal
to the greater of (i) the minimum price set forth in Section 7.4(e) below, and
(ii) a percentage of the Net Sales of such Product, where such percentage rate
is determined as set forth in the following schedule based on the aggregate
annual (Fiscal Year) Net Sales of all Products throughout the Adjusted Territory
(as such percentage rate is subject to adjustment under subclause (b) below):

 

Aggregate Annual Fiscal Year Net Sales of Products in Adjusted Territory

   Percentage Rate for
Product for Sale in the
United States  

For the portion of aggregate annual Fiscal Year Net Sales of Products that are
less than or equal to US$[...***...]

     31.50 % 

For the portion of aggregate annual Fiscal Year Net Sales of Products that are
greater than US$[...***...] but less than or equal to US$750,000,000

     [...***...] % 

For the portion of aggregate annual Fiscal Year Net Sales of Products that are
greater than US$750,000,000

     36.50 % 

(ii) For Sales in the Additional Territory and ROT Countries. In consideration
of the commercial supply of each Product under this Agreement to Eisai by Arena
for sale in the Additional Territory or the ROT countries and territories,
subject to Sections 7.4(d) and 7.6, Eisai shall pay to Arena a Product Purchase
Price for Eisai’s purchase of each unit of Finished Product equal to the greater
of (i) the minimum price set forth in Section 7.4(e) below, and (ii) a
percentage of the Net Sales of such Product, where such percentage is determined
as set forth in the following schedule based on the aggregate annual (Fiscal
Year) Net Sales of all Products throughout the Adjusted Territory (as such
percentage rate is subject to adjustment under subclause (b) below):

 

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Aggregate Annual Fiscal Year Net Sales of Products in Adjusted Territory

   Percentage Rate for
Product for Sale in the
Additional Territory or
ROT countries  

For the portion of aggregate annual Fiscal Year Net Sales of Products that are
less than or equal to US$[...***...]

     30.75 % 

For the portion of aggregate annual Fiscal Year Net Sales of Products that are
greater than US$[...***...] but less than or equal to US$750,000,000

     [...***...] % 

For the portion of aggregate annual Fiscal Year Net Sales of Products that are
greater than US$750,000,000

     35.75 % 

(iii) For Sales in Japan, China and Europe. In consideration of the commercial
supply of each Product under this Agreement to Eisai by Arena for sale in Japan,
China and the countries of Europe, subject to Sections 7.4(d) and 7.6, Eisai
shall pay to Arena a Product Purchase Price for Eisai’s purchase of each unit of
Finished Product equal to the greater of (i) the minimum price set forth in
Section 7.4(e) below, and (ii) a percentage of the Net Sales of such Product,
where such percentage is determined as set forth in the following schedule based
on the aggregate annual (Fiscal Year) Net Sales of all Products throughout
Japan, China and the countries of Europe (as such percentage rate is subject to
adjustment under subclause (b) below):

 

Aggregate Annual Fiscal Year Net Sales of Products in Japan, China and the
countries of Europe

   Percentage Rate for
Product for Sale in
Japan, China and the
countries of Europe  

For the portion of aggregate annual Fiscal Year Net Sales of Products that are
less than or equal to US$500,000,000

     27.50 % 

For the portion of aggregate annual Fiscal Year Net Sales of Products that are
greater than US$500,000,000

     35.00 % 

(iv) Payments; Adjustments. The Product Purchase Price for a particular Finished
Product purchased by Eisai hereunder shall be paid as provided in subclause
(c) below. In addition, the Product Purchase Prices paid by Eisai are subject to
adjustment by the payment of the Product Purchase Price Adjustment Payments
provided in Section 7.5.

(b) Percentage Rate Adjustment for Generic Sales. If, during any Calendar
Quarter there have been sales of a Generic Version of a Product in a country in
the Territory, the

 

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percentage rate under Section 7.4(a) used to determine the Product Purchase
Price for Eisai’s purchase of such Product for sale in such country shall be
adjusted downward as of either (i) with respect to the first Calendar Quarter in
which the aggregate units of all Generic Versions of such Product sold in such
country in such Calendar Quarter exceed [...***...]% of the aggregate units of
such Product and all Generic Versions of such Product sold in such country in
such Calendar Quarter, if Eisai notifies Arena thereof no later than 15 days
after the end of such Calendar Quarter, the later of the first day of such
Calendar Quarter or the first day of the month in which a Third Party first
sells a Generic Version of such Product in such country in the Territory or
(ii) the first day of the Calendar Quarter immediately following the Calendar
Quarter in which the aggregate units of all Generic Versions of a Product sold
in such country in the Territory in such first Calendar Quarter exceed
[...***...]% of the aggregate units of such Product and all Generic Versions of
such Product sold in such country in such first Calendar Quarter if Eisai
notifies Arena thereof more than 15 days after the end of such first Calendar
Quarter, as follows: (A) to [...***...]% of the percentage rate otherwise
applicable under the applicable schedule in Section 7.4(a) (e.g., for Product
purchased for sale in the United States (under subclause (a)(i) above) from
31.5%, [...***...]% and 36.5% to [...***...]%,[...***...]%, and [...***...]%,
respectively) in the event that aggregate units of all Generic Versions of such
Product sold in such country in the applicable Calendar Quarter exceed
[...***...]% of the aggregate units of such Product and all Generic Versions of
such Product sold in such country in the applicable Calendar Quarter; or (B) to
[...***...]% of the percentage rate otherwise applicable under the schedule in
Section 7.4(a) (e.g., for Product purchased for sale in the United States (under
subclause (a)(i) above) from 31.5%, [...***...]% and 36.5% to
[...***...]%,[...***...]%, and [...***...]%, respectively) in the event that the
aggregate units of all Generic Versions of such Product sold in such country in
the applicable Calendar Quarter exceed [...***...]% of the aggregate units of
such Product and all Generic Versions of such Product sold in such country in
the applicable Calendar Quarter; provided, that the percentage rates under the
applicable schedule in Section 7.4(a) shall not be adjusted as provided above
unless and until the aggregate units of all Generic Versions of such Product in
such country in the Territory in a Calendar Quarter exceed [...***...]% of the
aggregate units of such Product and all Generic Versions of such Product sold in
such country in such Calendar Quarter; and provided, further, that if after
launch of a Generic Version of the applicable Product that results in a
reduction of the percentage rates under the applicable schedule in
Section 7.4(a) with respect to purchase of Product for sale in such country, a
Resumption Date (as defined below) occurs with respect to such country, the
above reduction in the percentage rate shall thereafter no longer apply with
respect to such purchase of Products by Eisai for sale in such country, unless
and until the aggregate units of all Generic Versions of such Product sold in
such country in the Territory in a Calendar Quarter again exceed [...***...]% of
the aggregate units of such Product and the Generic Versions of such Product
sold in such country in the applicable Calendar Quarter, in which case the above
provisions again apply. As used herein, a “unit” of a product means the
equivalent of a prescription for 30 day supply of such product, and units of
generic sales shall be determined by IMS data (or an equivalent, reliable source
of prescribing information as agreed by the Parties in writing). As used herein,
“Resumption Date” with respect to a Product being sold in a particular country
in the Territory means the date (if any) after launch in such country of a
Generic Version of such Product that results in a reduction of the percentage
rates under the applicable schedule in Section 7.4(a) that is the earlier of
(x) if a court or courts of competent jurisdiction issues one or more
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country of all Generic Versions of such Product, or if all Generic Versions of
such Product in such country are withdrawn pursuant to settlement agreement(s)
or for another reason, the date that is the earlier of (i) the end of the last
month of the first period of three consecutive months after issuance of such
injunction(s) or effectiveness of such settlement agreement(s) or other
withdrawal during which the monthly average Net Sales of such Product in such
country exceed [...***...]% of the monthly average of Net Sales of such Product
in such country over the [...***...] months prior to the commercial launch of
the first Generic Version of such Product in such country and (ii) [...***...]
months after issuance of such injunction(s) or effectiveness of such settlement
agreement(s) or other withdrawal with respect to all Generic Versions of such
Product in such country, or (y) if all Generic Versions of such Product sold in
such country in a subsequent Calendar Quarter are less than [...***...]% of the
aggregate units of such Product and the Generic Versions of such Product sold in
such country in such subsequent Calendar Quarter, the end of the last month of
the first period of three consecutive months after such subsequent Calendar
Quarter during which the monthly average Net Sales of such Product in such
country exceed [...***...]% of the monthly average of Net Sales of such Product
in such country over the [...***...] months prior to the commercial launch of
the Generic Version of such Product in such country that resulted in the
reduction of the percentage rates under the applicable schedule in
Section 7.4(a).

(c) Payment of Product Purchase Prices; Reports. At a reasonable time prior to
the initial Eisai purchase of a particular Product, but in no event later than
30 days before the anticipated First Commercial Sale of such Product, and at the
beginning of each Fiscal Semester thereafter, the Parties shall discuss in good
faith and agree on a reasonable estimate of the actual Product Purchase Prices
for such Product purchase (based on the Product Purchase Price calculations
under subsection (a) above), which estimate shall be based on a reasonable
approximation of the aggregate Net Sales of such Product to be recognized by
Eisai and its Affiliates in the United States and by Eisai and its Affiliates
and Sub-distributors in the Additional Territory and New Territory during the
Fiscal Year in which such Fiscal Semester occurs (each such agreed estimate, the
“Estimated Price” for such Product, for the applicable Fiscal Semester). For all
amounts of a Product purchased by Eisai in a Fiscal Semester, promptly after
Arena delivers such Product to Eisai, Arena shall invoice Eisai an amount equal
to the total units of such Product delivered by Arena to Eisai, times the
Estimated Price for such Product applicable to such Fiscal Semester, and Eisai
shall pay such invoiced amount no later than 30 days after receipt of the
invoice. Within 10 days after the end of each month (other than the end of a
Calendar Quarter) after the First Commercial Sale of the first Product, Eisai
shall prepare and send to Arena a report stating: (i) the total amount of Net
Sales of each Product during such month, and; (ii) the detailed total deductions
(in each allowed category) from gross amounts invoiced to arrive at Net Sales;
and (iii) the sales in units of each Product in the Territory and gross amounts
invoiced for such sales, on a Product-by-Product basis during such month. Within
15 days after the end of each Calendar Quarter (other than the end of a Fiscal
Year) after the First Commercial Sale of the first Product, Eisai shall prepare
and send to Arena a report stating: (x) the total amount of Net Sales of each
Product during such Calendar Quarter; (y) the detailed and total deductions (in
each allowed category) from gross amounts invoiced to arrive at such Net Sales;
and (z) the sales in units of each Product in the Territory and gross amounts
invoiced for such sales, on a Product-by-Product basis during such Calendar
Quarter. Within 15 days after the end of each Fiscal Year, Eisai shall prepare
and send to Arena a report stating: (A) the total amount of Net Sales of each
Product during such Fiscal Year, and the

 

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detailed and total deductions (in each allowed category) from gross amounts
invoiced to arrive at Net Sales; (B) the sales in units of each Product in the
Territory and gross amounts invoiced for such sales, on a Product-by-Product
basis during such Fiscal Year; (C) the calculation of the actual aggregate
Product Purchase Price payments due to Arena on such sales; (D) the total amount
of Estimated Prices actually paid by Eisai to Arena upon invoice (as provided
above) for the delivery of such Products to Eisai; and (E) the amount of the
reconciliation payment (the “Reconciliation Payment”) for such Fiscal Year owed
by Eisai to Arena, or Arena to Eisai (as applicable), based on the calculations
in subclauses (C) and (D) above, such that after such Reconciliation Payment (by
the appropriate Party to the other) Eisai has paid to Arena the total actual
Product Purchase Price amount (as calculated under Section 7.4(a), but subject
to Sections 7.4(d), 7.4(e) and 7.6) owed for the purchase of such Products sold
in such Fiscal Year. Within 15 days of Arena’s receipt of such report from
Eisai, the applicable Party shall pay to the other the Reconciliation Payment
shown to be owed in such report. Eisai shall be responsible for payment of any
sales or value-added tax applicable to the sale of Finished Product by Arena to
Eisai (either at the Estimated Price or Reconciliation Payment). The Parties
agree that each of the monthly, quarterly and annual reports to be provided by
Eisai to Arena above shall be broken down to report all gross sales and Net
Sales on a Product-by-Product and country-by-country basis for all countries in
the Territory.

(d) Purchase Price for Products Returned or Not Sold. The Parties hereby agree
that, for any particular Finished Product delivered to Eisai other than
Non-Conforming Finished Product that either (i) is not subsequently resold by
Eisai (e.g., because it reaches the end of its shelf life prior to sale, or it
is destroyed or damaged), or (ii) whose sales price is not included in Net Sales
(e.g., due to credits or allowances for rejections or returns by the purchasing
party, which are deducted from gross sales to calculate Net Sales), the Product
Purchase Price that Eisai shall pay Arena for such Finished Product shall be the
Finished Product COGS for such Finished Product, and the Reconciliation Payment
for the period when such Finished Product is determined to meet the foregoing
shall be adjusted to reflect such Product Purchase Price.

(e) Minimum Product Purchase Price. Notwithstanding anything to the contrary in
this Agreement, in no event will the Product Purchase Price for any Finished
Product sold by Eisai or its Affiliate or Sub-distributor and included in Net
Sales, after applying all deductions under Sections 7.4(b) and 7.8, be less than
US$[...***...] per tablet, which amount shall be adjusted annually after the
Effective Date to reflect any year-to-year percentage increase or decrease (as
the case may be) in the U.S. Bureau of Labor Statistics’ All Items Consumer
Price Index for All Urban Consumers (CPI-U) for the U.S. City Average, 1982-84 =
100.

7.5. Product Purchase Price Adjustment Payments.

(a) The Product Purchase Prices owed by Eisai for its purchase of Products from
Arena that are then sold by Eisai and its Affiliates and Sub-distributors in a
particular Commercial Year in the Territory are subject to adjustment by the
payment by Eisai of one time purchase price adjustment payments, as provided
below (each, a “Product Purchase Price Adjustment Payment”) for achievement of
Net Sales throughout the Territory within any Commercial Year above the
threshold Net Sales amounts set forth below:

 

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Aggregate Products Net Sales for a Commercial Year Throughout the Territory

   Product Purchase Price Adjustment
Payment

(a) at least US$250,000,000

      US$25,000,000

(b) at least US$[...***...]

   US$[...***...]

(c) at least US$[...***...]

   US$[...***...]

(d) at least US$[...***...]

   US$[...***...]

(e) at least US$[...***...]

   US$[...***...]

(f) at least US$[...***...]

   US$[...***...]

(g) at least US$2,500,000,000

   US$[...***...]

If, for any particular Commercial Year, Eisai (including its Affiliates and
Sub-distributors) has sold in the Territory (for the first time) an amount of
the Products in excess of one of the above threshold Net Sales amounts, then
Eisai shall pay to Arena, as an adjustment to the Product Purchase Price paid by
Eisai for its purchase of such Products, a Product Purchase Price Adjustment
Payment in the amount listed above for such threshold, such payment to be made
within 45 days of the end of the month during such Commercial Year when such
threshold amount is first reached; provided, that if more than one such Net
Sales threshold in this subsection (a) is first achieved in the same Commercial
Year, then (x) the total amount of Product Purchase Price Adjustment Payments
paid by Eisai for such achievements shall equal (and not exceed) the Product
Purchase Price Adjustment Payment owed for the larger Net Sales threshold (that
is, for the second (and any subsequent) threshold amount that is reached, Eisai
shall pay to Arena, within 45 days of the end of the month during such
Commercial Year when such subsequent threshold(s) amount is first reached, the
difference between the Product Purchase Price Adjustment Payment owed for the
larger Net Sales threshold and the total of the Product Purchase Price
Adjustment Payment(s) paid by Eisai for the Net Sales threshold(s) met
previously in such Commercial Year), and (y) the Product Purchase Price
Adjustment Payment(s) (based on the above schedule) that was (or were) not paid
due to the limitation in the foregoing clause (x) shall be paid in the first
subsequent Commercial Year when the respective Net Sales threshold is again met
and no other Product Purchase Price Adjustment Payment is due. For example, if
annual Net Sales for Commercial Years 1 and 2 throughout the Territory are
US$[...***...] and US$[...***...], respectively, then a US$25 million payment
shall be paid when the first threshold is met in Commercial Year 1, and a
subsequent payment of US$[...***...] shall be paid after the second threshold is
met in Commercial Year 1 (for a total of US$[...***...]). In Commercial Year 2,
a US$25 million payment shall be paid when the first threshold is met in
Commercial Year 2. As an additional example, if annual Net Sales for Commercial
Years 1, 2 and 3 throughout the Territory are US$[...***...], US$[...***...],
and US$[...***...], respectively, then a US$[...***...] payment shall be paid
for Commercial Year 1 (in increments of US$25 million and US$[...***...]), a
US$[...***...]

 

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payment shall be paid for Commercial Year 2 (in increments of US$25 million and
US$[...***...]), and a US$25 million payment shall be paid for Commercial Year
3. Eisai covenants to record and track its aggregate Product Net Sales
throughout the Territory for Commercial Years on a monthly basis to determine
accurately when any of the above aggregate Net Sales thresholds has been met,
and to report any such threshold achievement to Arena within 30 days after such
threshold has been achieved. Any such Product Purchase Price Adjustment payment
will be allocated to Product sales made during the Commercial Year throughout
the Territory up to the date that the Net Sales threshold triggering such
payment is achieved.

No Product Purchase Price Adjustment Payment under Section 7.5(a) will be made
more than once regardless of the number of times any particular Net Sales
threshold that causes such payment is subsequently achieved again.

For the avoidance of doubt, in no event shall Eisai pay more than
US$1,160,000,000 under this Section 7.5(a).

(b) In addition to any Product Purchase Price Adjustment payable under
subsection (a) above, the Product Purchase Prices owed by Eisai for its purchase
of Products from Arena that are then sold by Eisai and its Affiliates and
Sub-distributors in a particular Commercial Year in the Additional Territory are
subject to adjustment by the payment by Eisai of a Product Purchase Price
Adjustment Payment for achievement of Net Sales solely in the Additional
Territory within any Commercial Year above the threshold Net Sales amounts set
forth below:

 

Products Net Sales for a Commercial Year Solely in the Additional Territory

   Product Purchase Price
Adjustment Payment  

(a) at least US$100,000,000

   US$ [...***... ] 

(b) at least US$[...***...]

   US$ [...***... ] 

(c) at least US$[...***...]

   US$ [...***... ] 

(d) at least US$1,000,000,000

   US$ [...***... ] 

If, for any particular Commercial Year, Eisai (including its Affiliates and
Sub-distributors) has sold solely in the Additional Territory (for the first
time) an amount of the Products in excess of one of the above threshold Net
Sales amounts, then Eisai shall pay to Arena, as an adjustment to the Product
Purchase Price paid by Eisai for its purchase of such Products, a Product
Purchase Price Adjustment Payment in the amount listed above for such threshold,
such payment to be made within 45 days of the end of the month during such
Commercial Year when such threshold amount is first reached; provided, that if
more than one such Net Sales threshold in this subsection (b) is first achieved
in the same Commercial Year, then (x) the total amount of Product Purchase Price
Adjustment Payments paid by Eisai for such achievements shall equal (and not
exceed) the Product Purchase Price Adjustment Payment owed for the larger Net
Sales

 

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threshold (that is, for the second (and any subsequent) threshold amount that is
reached, Eisai shall pay to Arena, within 45 days of the end of the month during
such Commercial Year when such subsequent threshold(s) amount is first reached,
the difference between the Product Purchase Price Adjustment Payment owed for
the larger Net Sales threshold and the total of the Product Purchase Price
Adjustment Payment(s) paid by Eisai for the Net Sales threshold(s) met
previously in such Commercial Year), and (y) the Product Purchase Price
Adjustment Payment(s) (based on the above schedule) that was (or were) not paid
due to the limitation in the foregoing clause (x) shall be paid in the first
subsequent Commercial Year when the respective Net Sales threshold is again met
and no other Product Purchase Price Adjustment Payment is due. For example, if
annual Net Sales for Commercial Years 1 and 2 solely in the Additional Territory
are US$[...***...] and US$[...***...], respectively, then a US$[...***...]
payment shall be paid when the first threshold is met in Commercial Year 1, and
a subsequent payment of US$[...***...] shall be paid after the second threshold
is met in Commercial Year 1 (for a total of US$[...***...]). In Commercial Year
2, a US$[...***...] payment shall be paid when the first threshold is met in
Commercial Year 2. As an additional example, if annual Net Sales for Commercial
Years 1, 2 and 3 solely in the Additional Territory are US$[...***...],
US$[...***...], and US$[...***...], respectively, then a US$[...***...] payment
shall be paid for Commercial Year 1 (in increments of US$[...***...] and
US$[...***...]), a US$[...***...] payment shall be paid for Commercial Year 2
(in increments of US$[...***...], US$[...***...] and US$[...***...]), and a
US$[...***...] payment shall be paid for Commercial Year 3 (in increments of
US$[...***...], and US$[...***...]). Eisai covenants to record and track its
aggregate Product Net Sales for Commercial Years solely in the Additional
Territory on a monthly basis to determine accurately when any of the above
aggregate Net Sales thresholds has been met, and to report any such threshold
achievement to Arena within 30 days after such threshold has been achieved. Any
such Product Purchase Price Adjustment payment will be allocated to Product
sales made during the Commercial Year solely in the Additional Territory up to
the date that the Net Sales threshold triggering such payment is achieved.

No Product Purchase Price Adjustment Payment under Section 7.5(b) will be made
more than once regardless of the number of times any particular Net Sales
threshold that causes such payment is subsequently achieved again.

For the avoidance of doubt, in no event shall Eisai pay more than US$185,000,000
under this Section 7.5(b).

(c) In addition to any Product Purchase Price Adjustment payable under
subsection (a) above, the Product Purchase Prices owed by Eisai for its purchase
of Products from Arena that are then sold by Eisai and its Affiliates and
Sub-distributors in a particular Commercial Year in the New Territory are
subject to adjustment by the payment by Eisai of a Product Purchase Price
Adjustment Payment for achievement of Net Sales solely in the New Territory
within any Commercial Year above the threshold Net Sales amounts set forth
below:

 

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Products Net Sales for a Commercial Year Solely in the New Territory

   Product Purchase Price Adjustment
Payment  

(a) at least US$100,000,000

   US$ [...***... ] 

(b) at least US$[...***...]

   US$ [...***... ]] 

(c) at least US$[...***...]

   US$ [...***... ] 

(d) at least US$1,000,000,000

   US$ [...***... ] 

If, for any particular Commercial Year, Eisai (including its Affiliates and
Sub-distributors) has sold solely in the New Territory (for the first time) an
amount of the Products in excess of one of the above threshold Net Sales
amounts, then Eisai shall pay to Arena, as an adjustment to the Product Purchase
Price paid by Eisai for its purchase of such Products, a Product Purchase Price
Adjustment Payment in the amount listed above for such threshold, such payment
to be made within 45 days of the end of the month during such Commercial Year
when such threshold amount is first reached; provided, that if more than one
such Net Sales threshold in this subsection (c) is first achieved in the same
Commercial Year, then (x) the total amount of Product Purchase Price Adjustment
Payments paid by Eisai for such achievements shall equal (and not exceed) the
Product Purchase Price Adjustment Payment owed for the larger Net Sales
threshold (that is, for the second (and any subsequent) threshold amount that is
reached, Eisai shall pay to Arena, within 45 days of the end of the month during
such Commercial Year when such subsequent threshold(s) amount is first reached,
the difference between the Product Purchase Price Adjustment Payment owed for
the larger Net Sales threshold and the total of the Product Purchase Price
Adjustment Payment(s) paid by Eisai for the Net Sales threshold(s) met
previously in such Commercial Year), and (y) the Product Purchase Price
Adjustment Payment(s) (based on the above schedule) that was (or were) not paid
due to the limitation in the foregoing clause (x) shall be paid in the first
subsequent Commercial Year when the respective Net Sales threshold is again met
and no other Product Purchase Price Adjustment Payment is due. For example, if
annual Net Sales for Commercial Years 1 and 2 solely in the New Territory are
US$[...***...] and US$[...***...], respectively, then a US$[...***...] payment
shall be paid when the first threshold is met in Commercial Year 1, and a
subsequent payment of US$[...***...] shall be paid after the second threshold is
met in Commercial Year 1 (for a total of US$[...***...]). In Commercial Year 2,
a US$[...***...] payment shall be paid when the first threshold is met in
Commercial Year 2. As an additional example, if annual Net Sales for Commercial
Years 1, 2 and 3 solely in the New Territory are US$[...***...], US$[...***...],
and US$[...***...], respectively, then a US$[...***...] payment shall be paid
for Commercial Year 1 (in increments of US$[...***...] and US$[...***...]), a
US$[...***...] payment shall be paid for Commercial Year 2 (in increments of
US$[...***...], US$[...***...] and US$[...***...]), and a US$[...***...] payment
shall be paid for Commercial Year 3 (in increments of US$[...***...], and
US$[...***...]). Eisai covenants to record and track its aggregate Product Net
Sales for Commercial Years solely in the New Territory on a monthly basis to
determine accurately when any of the above aggregate Net Sales thresholds has
been met, and to report any such threshold achievement to Arena within 30 days
after such

 

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threshold has been achieved. Any such Product Purchase Price Adjustment payment
will be allocated to Product sales made during the Commercial Year solely in the
New Territory up to the date that the Net Sales threshold triggering such
payment is achieved.

No Product Purchase Price Adjustment Payment under Section 7.5(c) will be made
more than once regardless of the number of times any particular Net Sales
threshold that causes such payment is subsequently achieved again.

For the avoidance of doubt, in no event shall Eisai pay more than US$185,000,000
under this Section 7.5(c).

7.6. Non-Commercial Product Purchase Price. With respect to any Finished
Products delivered by Arena to Eisai that are used as samples (including in
exchange for a voucher) or as part of a compassionate use, named patient use or
indigent patient program (collectively, all such Finished Product,
“Non-Commercial Product”) in the Territory and thus are disposed of by Eisai (or
its Affiliate) without charge, Eisai shall pay Arena an amount equal to the
Finished Product COGS with respect thereto. However, Arena shall invoice Eisai
for all such Non-Commercial Product delivered to Eisai at the Product Purchase
Price. Within 15 days after the end of each Calendar Quarter, Eisai shall
prepare and send to Arena a report stating: (i) the total number of tablets
distributed as Non-Commercial Product, (ii) the calculation of the actual
amounts paid by Eisai to Arena (based on Estimated Price) for such
Non-Commercial Product, (iii) the calculation of the actual price of such
Non-Commercial Product based on Finished Product COGs, and (iv) the difference
between (ii) and (iii) above representing the amount of the reconciliation
payment owed by Arena to Eisai, such that after such reconciliation payment
Eisai has paid to Arena the Finished Product COGs amount with respect to such
Non-Commercial Product. Within 15 days of Arena’s receipt of such report from
Eisai, Arena shall pay to Eisai the reconciliation payment shown to be owed in
such report.

7.7. Payment Method; Currency. All payments to the Payee Party under this
Agreement shall be made by bank wire transfer in immediately available funds to
an account in the name of the Payee Party designated in writing by the Payee
Party. Payments hereunder shall be considered to be made as of the day on which
they are received by the Payee Party’s designated bank. Unless otherwise
expressly stated in this Agreement, all amounts specified to be payable under
this Agreement are in United States Dollars and shall be paid in United States
Dollars.

7.8. Necessary Third Party IP. If either Party becomes aware of a Patent in the
Territory owned by a Third Party that it believes will, or may, be infringed by
the manufacture, importation, development or Commercialization of any Product in
the Territory as contemplated by this Agreement, such Party shall notify the
other Party of such Patent. The Parties then shall discuss the matter and seek
in good faith to agree on whether the Parties should take a license under such
Patent, and if so, on what terms; provided, that if the Parties are unable to
agree after a reasonable period, not to exceed 30 days, of good faith
discussions, then Eisai shall have the right to obtain such a license on such
terms as it determines in its sole discretion. The Parties shall share the
actual out-of-pocket amounts paid to the Third Party for any such license under
such a Patent with respect to any Product, with Eisai bearing [...***...]% of
such amounts and Arena

 

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bearing [...***...]%; provided, that (a) in no event shall Arena be required to
pay any amount of its share of such payments in any Calendar Quarter that
exceeds [...***...]% of the Product Purchase Price Payments earned by Arena for
Finished Product supplied to Eisai during such Calendar Quarter, and any amount
of Arena’s share of such expenses not paid in any Calendar Quarter due to the
foregoing limitation shall be carried forward and paid in future Calendar
Quarters, (b) payments for past activities shall be subject to Section 9.4 to
the extent applicable and (c) to the extent such license is required based on a
Patent related to the manufacturing of such Finished Product, then, to the
extent that Arena agrees to the terms of such license, Arena shall bear
[...***...]% of the actual out-of-pocket amounts paid to any Third Party for
such license.

7.9. Taxes. The milestones, Product Purchase Price, Product Purchase Price
Adjustment Payments and other amounts payable by one Party (the “Paying Party”)
to the other Party (the “Payee Party”) pursuant to this Agreement (each, a
“Payment”) shall not be reduced on account of any taxes except to the extent of
amounts required to be withheld by the Paying Party by Applicable Laws, if any.
The Payee Party alone shall be responsible for paying any and all taxes (other
than withholding taxes required by Applicable Laws to be withheld from Payments
and remitted by the Paying Party) levied on account of, or measured in whole or
in part by reference to, any Payments it receives. Without limiting the above,
the Paying Party shall not withhold from the Payments any taxes except to the
extent that it is required to do so by Applicable Laws. Notwithstanding the
foregoing, if the Payee Party is entitled under any applicable tax treaty to a
reduction of rate of, or the elimination of, applicable withholding tax, it may
deliver to the Paying Party or the appropriate governmental authority (with the
assistance of the Paying Party to the extent that this is reasonably required
and is expressly requested in writing) the prescribed forms necessary to reduce
the applicable rate of withholding or to relieve the Paying Party of its
obligation to withhold tax, and the Paying Party shall apply the reduced rate of
withholding, or dispense with withholding, as the case may be; provided, that
the Paying Party has received evidence, in a form reasonably satisfactory to the
Paying Party, of the Payee Party’s delivery of all applicable forms (and, if
necessary, its receipt of appropriate governmental authorization) at least 15
days prior to the time that the applicable Payment is due. If, in accordance
with the foregoing, the Paying Party withholds any amount, it shall pay to the
Payee Party the balance when due, make timely payment to the proper taxing
authority of the withheld amount and send to the Payee Party proof of such
payment within 10 days following such payment. In the event any taxes are
withheld on any Payment, the Paying Party agrees to pay the Payee Party an
amount equal to [...***...]% of the amount withheld (less any additional
required withholding).

7.10. Records.

(a) Eisai shall keep, and cause its Affiliates and Sub-distributors to keep,
complete, true and accurate books of accounts and records for the purpose of
determining the amounts payable to Arena pursuant to Section 7.3, Section 7.4,
Section 7.5 and Section 7.6. Such books and records shall be kept for such
period of time required by Applicable Laws, but no less than at least five years
following the end of the Calendar Quarter to which they pertain. Such records
shall be subject to inspection in accordance with Section 7.11.

 

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(b) Arena shall keep, and cause its Affiliates to keep, complete, true and
accurate books of accounts and records for the purpose of determining the
Finished Product COGS pursuant to this Agreement. Such books and records shall
be kept for such period of time required by Applicable Laws, but no less than at
least five years following the end of the Calendar Quarter to which they
pertain. Such records shall be subject to inspection in accordance with
Section 7.11.

7.11. Audits.

(a) Upon not less than 60 days’ prior written notice, Eisai shall permit an
independent, certified public accountant of international recognition (for the
purposes of this Section 7.11, the “Auditor”) selected by Arena and reasonably
acceptable to Eisai, which acceptance shall not be unreasonably conditioned,
withheld or delayed, to audit or inspect those books and records of Eisai and
its Affiliates and Sub-distributors that relate to Net Sales and Reconciliation
Payments for the sole purpose of verifying the Product Purchase Price payments,
Product Purchase Price Adjustment Payments and Reconciliation Payments.

(b) Upon not less than 60 days’ prior written notice, Arena shall permit an
Auditor selected by Eisai and reasonably acceptable to Arena, which acceptance
shall not be unreasonably conditioned, withheld or delayed, to audit or inspect
those books or records of Arena and its Affiliates that relate to the Finished
Product COGS for the sole purpose of verifying the amounts invoiced by Arena
pursuant to Section 7.4(d) or 7.6.

(c) The audited party shall not be obligated to provide the Auditor any records
until the Auditor executes a confidentiality agreement in a form reasonably
acceptable to the audited party. The Auditor shall disclose to the auditing
Party only whether any reports made or amounts invoiced under this Agreement are
correct and details concerning any discrepancies. The Auditor shall send a copy
of the report to the other Party at the same time it is sent to the auditing
Party. Such audits or inspections may be made no more than once each Calendar
Year (unless an audit or inspection reveals a material inaccuracy in reports
made or amounts invoiced under this Agreement, in which case it may be repeated
within such Calendar Year), during normal business hours. If such report shows
that the amounts paid by a Party for the period audited are less than the
amounts actually payable by such Party to the other Party during the period
audited, then (absent manifest error or fraud in such audit report) the
underpaying Party shall pay to the other Party the amount of such underpayment
plus interest under Section 7.12, from the date such amounts were originally
owed until payment is made, within 30 days of receipt of such audit. If such
report shows that the amounts paid by a Party for the period audited exceed the
amounts actually owed by such Party to the other Party for the period audited,
then (absent manifest error or fraud in such audit report) the overpaying Party
shall deliver to the other Party an invoice for such excess amount, and the
other Party shall pay such invoiced excess amount within 30 days of receipt of
such invoice. Such records for any particular Calendar Quarter shall be subject
to no more than one audit or inspection and no audit or inspection with respect
to any Calendar Quarter may be initiated later than five years after the end of
such Calendar Quarter. Audits and inspections conducted under this Section 7.11
shall be at the expense of the auditing Party, unless a variation or error
producing (i) with respect to an audit or inspection pursuant to subsection (a),
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equal to 5% of the amount paid for a period covered by the audit or inspection
is established, in which case all reasonable and verifiable costs relating to
the audit or inspection for such period and any unpaid amounts that are
discovered shall be paid by Eisai and (ii) with respect to an audit or
inspection pursuant to subsection (b), an overpayment in amounts payable
exceeding an amount equal to 5% of the amount paid for a period covered by the
audit or inspection is established, in which case all reasonable and verifiable
costs relating to the audit or inspection for such period and any unpaid amounts
that are discovered shall be paid by Arena. The auditing Party shall endeavor in
such audit not to unreasonably disrupt the normal business activities of the
audited party.

7.12. Payment Due Dates; Late Payments. If any Payment is due on a day when
banks in New York, New York are generally closed, then such Payment shall not be
considered late if made on the next day on which such banks are generally open.
In the event that any Payment due under this Agreement is not made when due,
such Payment shall accrue interest from the date due at a rate per annum equal
to 4% above the U.S. Prime Rate (as set forth in The Wall Street Journal,
Eastern Edition) for the date on which payment was originally due until the date
such Payment plus accrued interest hereunder is actually made, calculated daily
on the basis of a 365-day year, or similar reputable data source; provided, that
in no event shall such rate exceed the maximum legal annual interest rate. The
payment of such interest shall not limit the Party entitled to receive such
payment from exercising any other rights it may have as a consequence of the
lateness of any Payment.

7.13. Currency Conversion. For the purpose of calculating any sums due under, or
otherwise reimbursable pursuant to, this Agreement (including the calculation of
Net Sales expressed in currencies other than United States Dollars), such
conversion shall be made by using the arithmetic mean of the exchange rates for
the purchase of United States Dollars as published in The Wall Street Journal,
Eastern Edition, on the last Business Day of each month in the Calendar
Quarter(s) to which such payments relate.

Article 8.

CONFIDENTIALITY; STANDSTILL

8.1. Product Information. Arena recognizes that by reason of, inter alia,
Eisai’s status as an exclusive distributor of the Products in the Territory
under this Agreement, Eisai has an interest in Arena’s retention in confidence
of certain highly proprietary, confidential information of Arena. Accordingly,
until the expiration of Eisai’s exclusive distributorship with respect to the
Products, Arena shall, and shall cause its Affiliates and its and their
respective officers, directors, employees, and agents to, keep completely
confidential, and not publish or otherwise disclose, and not use directly or
indirectly for any purpose other than to fulfill Arena’s obligations, or
exercise Arena’s rights, under this Agreement, any Know-How Controlled by Arena
or any of its Affiliates, but excluding all Program Know-How, that relates
directly and solely to Compound or Product where the public disclosure of such
information would materially negatively impact the Commercialization of Product
in the Territory (the “Product Information”); except to the extent (a) the
Product Information is or becomes in the public domain through no fault of
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directors, employees, or agents, (b) such disclosure or use is expressly
permitted under Section 8.4, or (c) such disclosure or use is otherwise
expressly permitted by the terms and conditions of this Agreement. For clarity
and subject to the foregoing, Product Information shall be deemed Confidential
Information of Arena. In the event this Agreement is terminated in its entirety
pursuant to Article 12, this Section 8.1 shall have no continuing force or
effect, but the Product Information, to the extent disclosed by Arena to Eisai
hereunder, shall continue to be Confidential Information of Arena, subject to
the terms of Sections 8.2, 8.3, and 8.4, for purposes of the surviving
provisions of this Agreement.

8.2. Confidential Information. Except to the extent expressly authorized by this
Agreement or otherwise agreed in writing by the Parties, the Parties agree that
the receiving Party (the “Receiving Party”) shall keep confidential and not
publish or otherwise disclose or use for any purpose other than as provided for
in this Agreement any Know-How, information or materials, patentable or
otherwise, in any form (written, oral, photographic, electronic, magnetic, or
otherwise) that is disclosed to it by the other Party (the “Disclosing Party”)
pursuant to this Agreement, including all information concerning the Initial
Product or any Additional Product or any Compound and any other technical or
business information of whatever nature concerning the Disclosing Party or its
technology or business (collectively, “Confidential Information” of the
Disclosing Party), except that the Receiving Party may disclose Confidential
Information of the Disclosing Party to its Affiliates and its and its
Affiliates’ respective officers, directors, employees, agents, subcontractors
(including, in the case of Eisai, Sub-distributors and Co-Promotion Partners,
and in the case of Arena, the Arena ex-Territory Distributors) and consultants
with a need to know such Confidential Information to assist the Receiving Party
with the activities contemplated or required of it by this Agreement (and who
shall be advised of the Receiving Party’s obligations hereunder and who are
bound by confidentiality obligations with respect to such Confidential
Information no less onerous than those set forth in this Agreement) (each, a
“Recipient”). For the purposes of this Article 8, the term “Disclosing Party”
shall include each Party and its Affiliates and its and their respective
officers, directors, employees, agents, subcontractors and consultants who are
directed to disclose such Party’s or its Affiliate’s Confidential Information,
and the term “Receiving Party” shall include each Party and its Affiliates. For
clarity, all Program Know-How is deemed to be the Confidential Information of
Arena and shall be deemed to have been disclosed by Arena to Eisai for purposes
of Section 8.3. Notwithstanding the foregoing, the Parties acknowledge the
practical difficulty of policing the use of information in the unaided memory of
the Receiving Party or its Recipients, and as such each Party agrees that the
Receiving Party shall not be liable for the use by any of its Recipients of
specific Confidential Information of the Disclosing Party that is retained in
the unaided memory of such Recipient; provided, that (a) such Recipient is not
aware that such Confidential Information is the confidential information of
Disclosing Party at the time of such use; (b) the foregoing is not intended to
grant, and shall not be deemed to grant, the Receiving Party, its Affiliates, or
its Recipients (i) a right to disclose the Disclosing Party’s Confidential
Information or (ii) a license under any Patents or other intellectual property
right of the Disclosing Party; and (c) such Recipient has not intentionally
memorized such Confidential Information for use outside this Agreement.

 

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8.3. Exceptions. Notwithstanding Section 8.2, Confidential Information shall not
include any Know-How, information or materials that, in each case as
demonstrated by competent evidence:

(a) was already known to the Receiving Party or any of its Recipients, other
than under an obligation of confidentiality, at the time of disclosure;

(b) was generally available to the public or was otherwise part of the public
domain at the time of its disclosure to the Receiving Party;

(c) became generally available to the public or otherwise part of the public
domain after its disclosure by the Disclosing Party and other than through any
act or omission of the Receiving Party or any of its Recipients in breach of
this Agreement;

(d) was subsequently lawfully disclosed to the Receiving Party or any of its
Recipients by a Person other than the Disclosing Party, and who, to the
knowledge of the Receiving Party or such Recipient, did not directly or
indirectly receive such information from the Disclosing Party or any of its
Affiliates under an obligation of confidence; or

(e) was developed by the Receiving Party or any of its Recipients without use of
or reference to any information or materials disclosed by the Disclosing Party.

Information specific to the use of certain compounds, methods, conditions or
features shall not be deemed to be within the foregoing exceptions merely
because such information is embraced by general disclosures in the public domain
or in the possession of the Receiving Party or its Recipients. In addition, a
combination of information will not be deemed to fall within the foregoing
exceptions, even if all of the components fall within an exception, unless the
combination itself and its significance are in the public domain or in the
possession of the Receiving Party prior to the disclosures hereunder.
Notwithstanding anything to the contrary herein, neither the act of using
information in a clinical trial nor the filing of information with a
governmental authority shall, for the purpose of this Article 8, in and of
itself be deemed to place such information in the public domain.

8.4. Permitted Disclosures. Notwithstanding the provisions of Section 8.1 or
Section 8.2, the Receiving Party may disclose Confidential Information of the
Disclosing Party, and Arena may disclose and use Product Information, as
expressly permitted by this Agreement or if and to the extent such disclosure is
reasonably necessary or useful in the following instances:

(a) the performance by the Receiving Party of its obligations or exercise of its
rights as contemplated by this Agreement; provided, that wherever reasonable and
practicable in the circumstances the recipient of any such Confidential
Information shall be subject to obligations of confidentiality and non-use with
respect to such Confidential Information substantially similar to the
obligations of confidentiality and non-use of the Receiving Party pursuant to
this Article 8;

(b) filing or prosecuting Patents as permitted by this Agreement;

 

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(c) seeking, obtaining or maintaining any Regulatory Approval as permitted by
this Agreement; provided, that the Receiving Party shall take reasonable
measures to assure confidential treatment of such Confidential Information, to
the extent such treatment is available;

(d) prosecuting or defending litigation with respect to a Party or its
Affiliates, and (i) with respect to Arena, the Arena ex-Territory Distributors,
and (ii) with respect to Eisai, Sub-distributors and Co-Promotion Partners, as
permitted by this Agreement;

(e) complying with Applicable Laws;

(f) disclosure to Third Parties in connection with due diligence or similar
investigations by or on behalf of a Third Party in connection with a potential
marketing, distribution or supply agreement with, or license to, or
collaboration with such Third Party (including as to Arena a potential Arena
ex-Territory Distributor and as to Eisai a potential Sub-distributor) or a
potential merger or acquisition by such Third Party, or in connection with
performance of any such license, collaboration or merger agreement, and
disclosure to potential Third Party investors in confidential financing
documents, provided, in each case, that any such Third Party agrees to be bound
by obligations of confidentiality and non-use substantially similar to the
obligations of confidentiality and non-use of the Receiving Party pursuant to
this Article 8;

(g) with respect to Arena, disclosure of any Eisai Know-How as necessary or
reasonable in connection with the use of such Eisai Know-How outside the
Territory by Arena, its Affiliates and the Arena ex-Territory Distributors as
agreed to by the Parties pursuant to Section 5.8; provided, that wherever
reasonable and practicable in the circumstances the recipient of any such
Confidential Information shall be subject to obligations of confidentiality and
non-use with respect to such Confidential Information substantially similar to
the obligations of confidentiality and non-use of the Receiving Party pursuant
to this Article 8;

(h) with respect to Eisai, disclosure of any Program Know-How in connection with
the exercise of its rights under Section 5.7(b); and

(i) with respect to Arena, disclosure of any Product Information to Arena
ex-Territory Distributors to the extent reasonably necessary or useful for the
development of Compound Products and Related Products for outside the Territory
or the commercialization of Compound Products and Related Products outside the
Territory; provided, that wherever reasonable and practicable in the
circumstances the recipient of any such Confidential Information shall be
subject to reasonable and customary obligations of confidentiality with respect
to such Confidential Information.

Notwithstanding the foregoing, in the event the Receiving Party or a Recipient
is required to make a disclosure of the Disclosing Party’s Confidential
Information pursuant to Section 8.4(d) or Section 8.4(e) to comply with a
subpoena or other legal order, it shall, except where impracticable, give
reasonable advance notice to the Disclosing Party of such disclosure and give
the Disclosing Party a reasonable opportunity to quash such subpoena or order
and to obtain a protective order requiring that the Confidential Information and
documents that are the subject of such subpoena or order be held in confidence
by such court or agency or, if disclosed, be used

 

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only for the purposes for which such subpoena or order was issued; and provided,
further, that if such subpoena or order is not quashed or a protective order is
not obtained, the Confidential Information disclosed in response to such
subpoena or order shall be limited to the Disclosing Party’s Confidential
Information that is legally required to be disclosed in response to such
subpoena or order and shall still be subject to the restrictions on use set
forth in this Article 8.

8.5. Confidentiality of this Agreement and its Terms. Except as otherwise
provided in this Article 8, each Party agrees not to disclose to any Third Party
the existence of this Agreement or the terms and conditions of this Agreement
without the prior written consent of the other Party, except that each Party may
disclose the terms and conditions of this Agreement that are not otherwise made
public as contemplated by Section 8.6 as permitted under Section 8.4.

8.6. Public Announcements.

(a) As soon as practicable following the 2nd Amendment Effective Date, each
Party shall issue a mutually agreed to press release announcing the entry into
this Agreement. Except as required by Applicable Laws (including disclosure
requirements of the U.S. Securities and Exchange Commission (“SEC”) (including
disclosure requirements of a Party’s Affiliate), the NASDAQ stock exchange or
any other stock exchange on which securities issued by a Party or any of its
Affiliates are traded), neither Party shall make any other public announcement
concerning this Agreement or the subject matter hereof without the prior written
consent of the other Party, which shall not be unreasonably conditioned,
withheld or delayed; provided, that it shall not be unreasonable for a Party to
withhold consent with respect to any public announcement containing any of such
Party’s Confidential Information. In the event of a public announcement required
under Applicable Laws, to the extent practicable under the circumstances, the
Party making such announcement shall provide the other Party with a copy of the
proposed text of such announcement sufficiently in advance of the scheduled
release to afford such other Party a reasonable opportunity to review and
comment upon the proposed text.

(b) The Parties shall coordinate in advance with each other in connection with
the filing of this Agreement (including, if applicable, redaction of certain
provisions of this Agreement) with the SEC or any other governmental agency, the
NASDAQ stock exchange or any other stock exchange on which securities issued by
a Party or any of its Affiliates are traded, and each Party shall use reasonable
efforts to seek confidential treatment for the terms reasonably requested by the
other Party to be redacted; provided, that each Party shall ultimately retain
control over what information to disclose to the SEC or any other governmental
agency, the NASDAQ stock exchange or any other stock exchange, as the case may
be, and nothing in this Agreement shall prevent a Party from taking all actions
it reasonably considers necessary to comply with Applicable Laws with respect to
any such filings or disclosures; and provided, further, that the Parties shall
use their reasonable efforts to file redacted versions with any governing bodies
that are consistent with redacted versions previously filed with any other
governing bodies. Except as provided in the preceding sentence, neither Party
nor any of their respective Affiliates shall be obligated to consult with or
obtain approval from the other Party with respect to any filings to the SEC, the
NASDAQ stock exchange or any other stock exchange or governmental agency.

 

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8.7. Use of Name. Neither Party shall use the name, insignia, symbol, Trademark,
trade name or logotype of the other Party (or any abbreviation or adaptation
thereof) in any publication, press release or marketing and promotional material
or other form of publicity without the prior written approval of such other
Party in each instance, which approval shall not be unreasonably conditioned,
withheld or delayed, or except as expressly permitted in this Agreement. The
restrictions imposed by this Section 8.7 shall not prohibit either Party from
making any disclosure (a) identifying the other Party as a counterparty to this
Agreement to its investors, (b) that is required by Applicable Laws or the
requirements of a national securities exchange or another similar regulatory
body (provided, that any such disclosure shall be governed by this Article 8),
(c) that is necessary for the performance by Eisai or Arena of its obligations
or exercise of its rights as contemplated by this Agreement or (d) with respect
to which written consent has previously been obtained. Further, the restrictions
imposed on each Party under this Section 8.7 are not intended, and shall not be
construed, to prohibit a Party from identifying the other Party in its internal
business communications; provided, that any Confidential Information in such
communications remains subject to this Article 8.

8.8. Publication of the Product Information. At least 30 days prior to publicly
presenting or submitting for written or oral publication a manuscript, abstract
or the like that includes information relating to any Compound or any Compound
Product that has not been previously published, each Party shall provide to the
other Party a draft copy thereof for its review (unless such Party is required
by Applicable Laws to publish such information sooner, in which case such Party
shall provide such draft copy to the other Party as much in advance of such
publication as possible). In addition, if the publishing Party materially
changes the version of the manuscript, abstract or the like provided to the
other Party for review, the publishing Party shall provide the other Party with
such updated version and the other Party shall have 15 days to review and
comment on such updated version. The publishing Party shall consider in good
faith any comments provided by the other Party during such 30-day (or 15-day, if
applicable) period. In addition, the publishing Party shall, at the other
Party’s reasonable request, (a) remove therefrom any Confidential Information of
such other Party or (b) withhold material from submission for publication or
presentation for an additional 60 days after any information is first provided
to the other Party for review to allow for the filing of a patent application or
the taking of such measures to establish and preserve proprietary rights in such
information in the material being submitted for publication or presentation. The
contribution of each Party shall be noted in all publications or presentations
by acknowledgment or co-authorship, whichever is appropriate. Notwithstanding
the foregoing, this Section 8.8 shall not apply to any publications prepared or
submitted for publication no later than 30 days after the Effective Date.

8.9. Stand-Still.

(a) Certain Restrictions on Eisai. During the Term and, unless this Agreement is
terminated by Eisai pursuant to Section 12.2(a)(ii) or 12.2(a)(iii), for two
years thereafter (the “Stand-Still Period”), except with the written consent of
Arena or Arena US (which may be withheld by Arena or Arena US at the sole
discretion of its board of directors) or by way of stock dividends or other
distributions made to Arena’s or any of its Affiliates’ stockholders generally,
neither Eisai nor any of its Affiliates shall, in any manner, directly or
indirectly: (i) make, effect, initiate, cause or participate in (A) any
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ownership of any securities of Arena or any securities of any Affiliate of Arena
(in excess of 5% of the total outstanding securities of Arena or any such
Affiliate of Arena at the time of any such acquisition), (B) other than purchase
of the Products under this Agreement, any acquisition of any material assets of
Arena or any material assets of any Affiliate of Arena, (C) any tender offer,
exchange offer, merger, business combination, recapitalization, reorganization,
restructuring, liquidation, dissolution or extraordinary transaction involving
Arena or any Affiliate of Arena, or involving any securities of Arena or any
securities of any Affiliate of Arena, or (D) any “solicitation” of “proxies” (as
those terms are used in Regulation 14A of the Exchange Act) or consents with
respect to any securities of Arena or any Affiliate of Arena; (ii) form, join or
participate in a “group” (as defined in the Exchange Act and the rules
promulgated thereunder) with respect to the beneficial ownership of any
securities of Arena or any Affiliate of Arena in excess of the amounts permitted
under subclause (i)(A); (iii) act, alone or in concert with others, to seek to
control the management, board of directors or policies of Arena or any Affiliate
of Arena; (iv) take any action that could reasonably be expected to require
Arena or any Affiliate of Arena to make a public announcement regarding any of
the types of matters set forth in clause “(i)” of this sentence; (v) agree or
offer to take, or knowingly encourage or propose (publicly or otherwise) the
taking of, any action referred to in clause “(i)”, “(ii)”, “(iii)” or “(iv)” of
this sentence; (vi) induce or knowingly encourage any other person or entity to
take any action of the type referred to in clause “(i)”, “(ii)”, “(iii)”, “(iv)”
or “(v)” of this sentence; (vii) enter into any discussions, negotiations,
arrangement or agreement with any other Person relating to any of the foregoing;
or (viii) request or propose that Arena or any Affiliate of Arena amend, waive
or consider the amendment or waiver of any provision set forth in this
standstill provision.

(b) Exception to Standstill Provisions.

(i) The provisions of Section 8.9(a) shall cease to apply: (A) if Arena or any
Affiliate of Arena publicly announces or otherwise engages in a process designed
to solicit offers relating to transactions that, if consummated, would result in
(1) a Third Party acquiring beneficial ownership of 50% or more of the
outstanding securities of Arena or such Affiliate, as applicable, immediately
after such transaction, (2) a sale of all or substantially all of the
consolidated assets of Arena and all its Affiliates, or (3) a merger,
consolidation or any similar extraordinary transaction involving Arena or any
Affiliate of Arena pursuant to which all or substantially all of the
consolidated assets of Arena and all its Affiliates would, after the closing of
such transaction, be under the control of a Person that did not, prior to such
transaction, control Arena or any of its Affiliates, in each case ((1), (2) and
(3)) from the time of such announcement or the commencement of such process and
continuing until such time, if any, as the board of directors of Arena or the
applicable Affiliate publicly announces that such process has terminated; or
(B) if the board of directors of Arena or any Affiliate of Arena adopts a plan
of liquidation or dissolution.

(ii) Notwithstanding Section 8.9(a), (A) in the event a Third Party makes a bona
fide public offer or proposal that, if consummated, would result in such Third
Party, together with its affiliates and other members of any group of which such
Third Party is a member, beneficially owning 50% or more of the outstanding
shares of Arena or any Affiliate of Arena or all or substantially all of the
assets of Arena or any Affiliate of Arena, from the time such offer or proposal
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publicly rescinded or (B) from and after the 10th day following the filing of a
preliminary proxy statement by any Third Party with respect to the commencement
of a bona fide proxy or consent solicitation subject to Section 14 of the
Exchange Act to elect or remove more than one-half of the directors of Arena or
any Affiliate of Arena, then either case ((A) or (B)) during the applicable time
frame above Eisai or any of its Affiliates shall have the right to submit a
confidential, non-public proposal to the board of directors of Arena or any
Affiliate of Arena or any executive officer thereof with respect to any
transaction of the type referred to in Section 8.9(a)(i), and in connection with
such a proposal Eisai and its Affiliates may consult on a confidential basis
with third party advisors with respect to any such proposal

(iii) Nothing in Section 8.9(a) shall prohibit Eisai or any of its Affiliates
from acquiring beneficial ownership of securities of Arena or any Affiliate of
Arena by or through (A) a diversified mutual or pension fund managed by an
independent investment adviser or pension plan established for the benefit of
the employees of Eisai or any of its Affiliates, (B) any employee benefit plan
of Eisai or any of its Affiliates or (C) any stock portfolios not controlled by
Eisai or any of its Affiliates that invest in Arena or any Affiliate of Arena
among other companies; provided, that Eisai or any of its Affiliates does not,
directly or indirectly, request the trustee or administrator or investment
adviser of such fund, plan or portfolio to acquire beneficial ownership of such
securities. Further, nothing herein shall prevent Eisai or any of its Affiliates
from acquiring securities of another pharmaceutical or biotechnology company or
other Person that beneficially owns any securities of Arena or any Affiliate of
Arena; provided, that such Person beneficially does not own, at the time of the
consummation of such acquisition of securities by Eisai or any of its
Affiliates, more than 10% of any class of outstanding securities of Arena or any
Affiliate of Arena.

Article 9.

PATENT PROSECUTION AND ENFORCEMENT

9.1. Ownership of Intellectual Property.

(a) Arena Intellectual Property Rights. Arena and its Affiliates have, and shall
retain, all right, title and interest in and to the Arena Know-How and Arena
Patents and any other intellectual property rights owned by Arena or its
Affiliates as of the Effective Date or developed by Arena or its Affiliates
during the Term.

(b) Eisai Intellectual Property Rights. Eisai and its Affiliates have, and shall
retain, all right, title and interest in and to the Eisai Know-How and any other
intellectual property rights owned by Eisai or its Affiliates as of the
Effective Date or developed by Eisai or its Affiliates during the Term,
excluding any Program Know-How or Program Patents.

(c) Program Intellectual Property Rights. Arena shall have and own the entire
right, title and interest in and to all Program Know-How and Program Patents and
shall have and retain the right to use, disclose and exploit the Program
Know-How and Program Patents for any and all purposes, including the right to
disclose the Program Know-How to its Affiliates and Arena ex-Territory
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Territory Distributors the right to use the Program Know-How for developing and
commercializing Compound Products and Related Products outside the Territory,
subject only to the license rights therein granted by Arena to Eisai under
Sections 3.5(d), 5.7(a) and 5.7(b). Each Party shall promptly disclose to the
other Party in writing the discovery, identification, conception, reduction to
practice or other making of any Program Know-How or Program Patents. Eisai
shall, and hereby does, assign, and shall cause its Affiliates to so assign, to
Arena or an Affiliate of Arena designated by Arena in writing, without
additional compensation, all its right, title and interest in and to the Program
Know-How and Program Patents as well as any intellectual property rights with
respect thereto to fully effect the ownership by Arena provided for in this
Section 9.1(c). Eisai and its Affiliates shall execute all documents and take
all actions reasonably requested by Arena to fully effect the ownership by Arena
provided for in this Section 9.1(c).

(d) If applicable, each Party shall cause all subcontractors of such Party to
assign all of their right, title and interest in and to the Program Know-How and
Program Patents as well as any intellectual property rights with respect
thereto, to Arena or its designee. To the extent a Party desires to utilize a
subcontractor that will not agree to such an assignment, such Party may notify
the other Party and subject to such other Party’s prior written consent, the
first Party may instead obtain a non-exclusive license to Program Know-How and
Program Patents, as well as any intellectual property rights with respect
thereto (collectively, the “Subject IP”), which, in the case of Eisai, Eisai
hereby irrevocably and non-exclusively sublicenses to Arena or its designee,
royalty free. Any consent so provided pursuant to this provision is subject to:
(A) such non-exclusive license to the Subject IP, being irrevocable and
royalty-free, with the right to further sublicense through multiple tiers, and
(B) the license grant provision in the agreement between the Party and the
subcontractor explicitly surviving the expiration or termination of such
agreement.

9.2. Patent Prosecution and Maintenance.

(a) Arena Patents. Arena shall be responsible for the preparation, filing,
prosecution and maintenance of all Arena Patents, at Arena’s own expense and at
its discretion. Eisai shall reimburse Arena, based on invoices provided by
Arena, for 70% of the actual costs and expenses of prosecuting and maintaining
Arena Patents in the Additional Territory to the extent incurred after the
Amendment Effective Date (for clarity, Arena shall bear all such costs incurred
prior to the Amendment Effective Date). Eisai shall reimburse Arena, based on
invoices provided by Arena, for 70% of the actual costs and expenses of
prosecuting and maintaining Arena Patents in the New Territory to the extent
incurred after the 2nd Amendment Effective Date (for clarity, Arena shall bear
all such costs incurred prior to the 2nd Amendment Effective Date). Arena shall
keep Eisai informed of progress with regard to the preparation, filing,
prosecution and maintenance of Arena Patents in the Territory in a timely
manner, but not less frequently than once per Calendar Quarter. To that end,
Arena shall: (i) provide Eisai with a copy of the final draft of any proposed
application for the Arena Patents at least 30 days prior to filing the same in
the Territory, unless otherwise agreed by patent counsel for each Party, and
Arena shall consider in good faith any comments or revisions suggested by Eisai
or its counsel; (ii) promptly provide Eisai with a copy of each patent
application as filed, together with a notice of its filing date and serial
number; (iii) provide Eisai with a copy of any action, communication,

 

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letter, or other correspondence issued by the applicable patent office within at
least 10 days of receipt thereof, and Arena shall consult with Eisai regarding
responding to the same and shall consider in good faith any comments,
strategies, and the like proposed by Eisai or its counsel; (iv) provide Eisai
with a copy of any response, amendment, paper, or other correspondence filed
with the applicable patent office within 10 days of Arena’s receipt of the
as-filed document; and (v) promptly notify Eisai of the allowance, grant, or
issuance of such Arena Patents in the Territory. If Arena elects to abandon or
cease prosecution or maintenance of any Arena Patent in the Territory, Arena
shall provide reasonable prior written notice to Eisai of such intention to
abandon (which notice shall, to the extent possible, be given no later than 90
calendar days prior to the next deadline for any action that must be taken with
respect to any such Arena Patent in the U.S. patent office). In such case, at
Eisai’s sole discretion, upon written notice to Arena, Eisai may elect to
continue prosecution or maintenance of any such Arena Patent at its own expense,
and Arena shall take such actions, at Arena’s expense, as may be reasonably
necessary to enable Eisai to do so. If Eisai elects to continue prosecution or
maintenance of any such Arena Patent, then at Eisai’s request, Arena shall
execute such documents (or shall cause its Affiliates, as applicable, to execute
such documents) as are required to enable Eisai to prosecute and maintain, on
Arena’s behalf, such Arena Patent in the Territory.

(b) Program Patents. Arena shall be responsible for the preparation, filing,
prosecution and maintenance of all Program Patents throughout the world. Arena
shall keep Eisai informed of progress with regard to the preparation, filing,
prosecution and maintenance of Program Patents throughout the world in a timely
manner, but no less frequently than once per Calendar Quarter. To that end,
Arena shall: (i) provide Eisai with a copy of the final draft of any proposed
application for the Program Patents at least 30 days prior to filing the same in
any country in the world, unless otherwise agreed by patent counsel for each
Party, and Arena shall consider in good faith any comments or revisions
suggested by Eisai or its counsel; (ii) promptly provide Eisai with a copy of
each patent application as filed, together with a notice of its filing date and
serial number; (iii) provide Eisai with a copy of any action, communication,
letter, or other correspondence issued by the applicable patent office within at
least 10 days of receipt thereof, and Arena shall consult with Eisai regarding
responding to the same and shall consider in good faith any comments,
strategies, and the like proposed by Eisai or its counsel; (iv) provide Eisai
with a copy of any response, amendment, paper, or other correspondence filed
with the applicable patent office within 10 days of Arena’s receipt of the
as-filed document; and (v) promptly notify Eisai of the allowance, grant, or
issuance of such Program Patents in any country in the world. If Arena elects to
abandon or cease prosecution or maintenance of any Program Patent in any country
in the world, Arena shall provide reasonable prior written notice to Eisai of
such intention to abandon (which notice shall, to the extent possible, be given
no later than 90 calendar days prior to the next deadline for any action that
must be taken with respect to any such Program Patent in the relevant patent
office). In such case, at Eisai’s sole discretion, upon written notice to Arena,
Eisai may elect to continue prosecution or maintenance of any such Program
Patent, and Arena shall take such actions, at Arena’s expense, as may be
reasonably necessary to enable Eisai to do so. The reasonable and documented
costs and expenses of preparing, filing, prosecuting and maintaining the Program
Patents (A) in the Territory, shall be shared equally by the Parties and (B) in
any country outside the Territory, shall be borne 80% by Arena and 20% by Eisai.
Notwithstanding the above, either Party may decline to pay its share of the
costs and expenses for preparing, filing, prosecuting and maintaining any
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a particular country or particular countries, in which case, at the other
Party’s request, the declining Party shall assign, and shall cause its
Affiliates to assign, to the other Party all of its and their right, title, and
interest in and to any such Program Patent in the relevant country or countries
whereupon such Program Patent shall cease to be a Program Patent and shall
become either an Arena Patent or else a Patent owned solely by Eisai in such
country or countries, as the case may be; provided, that, if a Program Patent
becomes a Patent owned solely by Eisai in such country or countries, Eisai
hereby grants to Arena a non-exclusive, royalty-free, fully-paid, irrevocable,
perpetual, worldwide license, with the right to grant multiple tiers of
sublicenses, under such Patent to research, develop, manufacture, use, import,
offer for sale, sell, or conduct any other similar activities related to the
commercial sale of, Products or other Compound Compounds or Related Products
(subject to the rights granted to Eisai in the Territory hereunder).

9.3. Infringement by Third Parties.

(a) Notice. In the event that either Arena or Eisai becomes aware of any
infringement or threatened infringement by a Third Party of any Arena Patents or
Program Patents, it shall notify the other Party in writing to that effect. Any
such notice shall include any evidence that such notifying Party has in its
possession and is legally able to disclose that supports such allegation of
infringement or threatened infringement by such Third Party.

(b) Enforcement Procedures. Subject to the following provisions, the Parties
jointly shall engage counsel, which counsel shall be reasonably agreed in good
faith by the Parties, to bring and maintain any action or proceeding with
respect to infringement of any Arena Patent or Program Patent by a Third Party
in the Territory (a “Field Infringement”). The Parties shall cooperate and
consult fully with each other in strategizing, preparing, presenting and
conducting any such action or proceeding, and the Parties shall seek in good
faith to agree on all matters regarding such action or proceeding with Eisai
having the final decision (regardless of whether or not Eisai is a party to such
action or proceeding) in case such agreement cannot be reached within an
appropriate time period (recognizing that certain decisions with respect to
strategizing, preparing, presenting and conducting any such action or proceeding
may be time sensitive) (subject to the other provisions of this Section 9.3(b));
provided, that Eisai shall fully consider and seek to accommodate Arena’s global
intellectual property litigation positions in all such decisions that may impact
such global positions (and Eisai shall fully take into account Arena’s interests
with respect to the Compounds, the Related Compounds, the Products and other
Compound Products and Related Products outside the Territory, including its
intellectual property with respect thereto, and the impact outside the Territory
of all its final decisions in, and conduct of, such actions or proceedings, and
Eisai shall not unreasonably reject or unreasonably act contrary to Arena’s
advice and suggestions with respect thereto). Each Party shall cooperate fully
with the other Party with respect to such actions or proceedings, including
being joined as a party plaintiff or joining the other Party as a party
plaintiff in such action or proceeding and providing access to relevant
documents and other evidence and making its employees available at reasonable
business hours. The Parties shall share all out-of-pocket costs and expenses of
conducting any such action or proceeding, with Eisai paying [...***...]%, and
Arena paying [...***...]%, of such costs and expenses. Any monetary recovery
resulting from such actions or proceedings will be allocated as follows: each of
Eisai and Arena first will be reimbursed, out of such recovery,

 

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for its reasonable and verifiable costs and expenses with respect to such action
or proceeding (such reimbursement to be pro-rata based on the Parties’ relative
costs and expenses if the recovery is not sufficient to reimburse both Parties
fully) with any remainder being shared by the Parties with Eisai being paid
[...***...]% of such net recovery and Arena being paid [...***...]% of such net
recovery.

(c) Paragraph IV Notices. If either Party receives a notice under 21 U.S.C.
§355(b)(2)(A)(iv) or 355(j)(2)(A)(vii)(IV) concerning an Arena Patent or a
Program Patent, or any similar notice under the Applicable Laws of a country in
the Additional Territory, (each, a “Paragraph IV Notice”), then it shall provide
a copy of such notice to the other Party within five days after its receipt
thereof. Patent infringement litigation based on a Paragraph IV Notice
concerning an Arena Patent or Program Patent shall be brought as provided in
Section 9.3(b), with such Paragraph IV Notice being deemed a Field Infringement.

9.4. Infringement of Third Party Rights. Each Party shall promptly notify the
other in writing of any allegation by a Third Party that the activity of either
of the Parties pursuant to this Agreement infringes or may infringe the
intellectual property rights of such Third Party.

(a) With respect to any claim alleging that (i) the Commercialization of
Products in the Territory in accordance with the terms of this Agreement or
(ii) the conduct of development activities by either Party under a Development
Plan in accordance with the terms of this Agreement, excluding Pre-Approval
Required U.S. Development or Post-Approval Required U.S. Development, in either
case ((i) and (ii)) infringes the intellectual property rights of any Third
Party, the Parties shall discuss which Party shall defend the action, and absent
an agreement otherwise, Eisai shall have the initial right to control any
defense of any such claim by counsel of its own choice and reasonably acceptable
to Arena, and Arena shall have the right, at its own expense (which shall not be
costs or expenses of defense), to be represented in any such action by counsel
of its own choice. Eisai shall involve Arena fully in Eisai’s defense of any
such claim and shall keep Arena fully informed of such claim and the defense,
and shall reasonably consider and seek to accommodate any timely comments of
Arena with respect thereto, including good faith and reasonable consideration of
Arena’s global intellectual property litigation positions (with Eisai obligated
to take into account the reasonably likely impact outside the Territory of all
its positions in and conduct of such defense, and not to unreasonably reject or
unreasonably act contrary to, Arena’s advice and suggestions with respect to its
global intellectual property litigation positions), and if reasonably requested
by Arena, the Parties shall enter into a reasonable and standard joint defense
agreement with respect to any such infringement claim. If Eisai does not
undertake in good faith the defense of any such infringement claim by the
date 10 days before the time limit, if any, set forth in the Applicable Laws for
the filing of the initial response or defense to any such claim, or if Eisai
(having commenced such defense) subsequently does not continue to pursue and
conduct such defense diligently, Arena shall have the right (but not the
obligation) to bring and control such defense by counsel of its own choice. Each
Party shall bear its own internal costs and expenses of any such defense. All
out-of-pocket external costs and expenses of conducting such defense (including
outside counsel fees), and all amounts payable by either Party as a judgment
based on such claim or in settlement of such claim shall be shared as follows:
for claims with respect to Eisai’s Commercialization of the

 

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Products in the Territory or either Party’s conduct of clinical trials or other
development work under a Development Plan, excluding any Pre-Approval Required
U.S. Development and any Post-Approval Required U.S. Development, Eisai shall
bear [...***...]% and Arena shall bear [...***...]%; provided, that Arena shall
not be required to pay any amount of its share of such expenses that exceeds,
for any Calendar Quarter, 50% of the Product Purchase Price Payment earned by
Arena for Finished Product supplied to Eisai during such Calendar Quarter and
any amount of Arena’s share of such expenses not paid in any Calendar Quarter
due to the foregoing limitation shall be carried forward and paid in future
Calendar Quarters.

(b) With respect to any claim alleging that (i) the discovery, development prior
to the Effective Date, the making or having made, or importing or selling in the
Territory (to the extent that such importation or selling claim is based on the
manufacture by or on behalf of Arena), of any Compound or Product or
intermediate thereof, (ii) the conduct of the BLOOM-DM Trial, Pre-Approval
Required U.S. Development or Post-Approval Required U.S. Development, or
(iii) any activity by Arena or its Affiliates outside the Territory, infringes
or may infringe the intellectual property rights of any Third Party, in each
case ((i) - (iii)) Arena shall have the sole right, subject to Section 11.3, to
control any defense of any such claims at its own expense (including outside
counsel fees and all amounts payable by Arena as a judgment based on such claim
or in settlement of such claim) and by counsel of its own choice.

9.5. Invalidity or Unenforceability Defenses or Actions.

(a) Third Party Defense or Counterclaim. If a Third Party asserts, as a defense
or as a counterclaim in any action or proceeding with respect to a Field
Infringement under Section 9.3, that any Arena Patent or Program Patent is
invalid or unenforceable, then the Parties, through the counsel jointly engaged
by the Parties pursuant to Section 9.3, shall respond to such defense or defend
against such counterclaim (as applicable); provided, that the Parties shall
fully consider and seek to accommodate Arena’s global intellectual property
litigation positions in all such decisions that may impact such global positions
and Eisai shall fully take into account the impact outside the Territory of all
its responses to such defense and not unreasonably reject or unreasonably act
contrary to, Arena’s advice and suggestions with respect thereto, taking into
account Arena’s interests with respect to the Products and other Compound
Products and Related Products outside the Territory. The Parties shall share all
out-of-pocket costs and expenses of conducting any such action or proceeding,
with Eisai paying [...***...]%, and Arena paying [...***...]%, of such costs and
expenses.

(b) Third Party Declaratory Judgment or Similar Action. If a Third Party
asserts, in a declaratory judgment action or similar action or claim filed by
such Third Party in the Territory, that any Arena Patent or Program Patent is
invalid or unenforceable, then the Party first becoming aware of such action or
claim shall promptly give written notice to the other Party. With respect to the
Arena Patent and Program Patents, the Parties jointly shall engage counsel,
which counsel shall be reasonably agreed in good faith by the Parties, to defend
against such action or claim. The Parties shall cooperate and consult fully with
each other in strategizing, preparing, presenting and conducting any such
defense, and the Parties shall seek in good faith to agree on all matters
regarding such defense with Eisai having the final decision (regardless of
whether or not Eisai is a party to such defense) in case such agreement cannot
be

 

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reached within an appropriate time period (recognizing that certain decisions
with respect to strategizing, preparing, presenting and conducting any such
defense may be time sensitive) (subject to the other provisions of this
Section 9.5(b)); provided, that Eisai shall fully consider and seek to
accommodate Arena’s global intellectual property litigation positions in all
such decisions that may impact such global positions (and Eisai shall fully take
into account Arena’s interests with respect to the Compounds, the Related
Compounds, the Products and other Compound Products and Related Products outside
the Territory, including its intellectual property with respect thereto, and the
impact outside the Territory of all its final decisions in, and conduct of, such
defense, and Eisai shall not unreasonably reject or unreasonably act contrary to
Arena’s advice and suggestions with respect thereto). Each Party shall cooperate
fully with the other Party with respect to such defense, including being joined
as a party defendant or joining the other Party as a party defendant in such
defense and providing access to relevant documents and other evidence and making
its employees available at reasonable business hours. The Parties shall share
all out-of-pocket costs and expenses of such defense, with Eisai paying
[...***...]%, and Arena paying [...***...]%, of such costs and expenses.

9.6. Consent for Settlement. Neither Party shall enter into any settlement or
compromise of any action or proceeding under Section 9.3 or Section 9.5 without
the prior written consent of the other Party, which consent shall not be
unreasonably conditioned, withheld or delayed. The defending Party may enter
into a settlement or compromise of any action or proceeding under Section 9.4
without the consent of the other Party; provided, that such settlement or
compromise would not reasonably be expected to materially adversely affect such
other Party or its Affiliates.

9.7. Patent Term Extensions. The Parties shall discuss and recommend for which,
if any, of the Patents within the Arena Patents and the Program Patents the
Parties should seek Patent Term Extensions in the Territory. Arena shall have
the final decision-making authority with respect to applying for any such Patent
Term Extensions in the Territory for the Arena Patents and the Program Patents,
and shall act with reasonable promptness in light of the development stage of
each Product to apply for any such Patent Term Extensions, where it so elects;
provided, that (a) Arena shall consult with Eisai in good faith to determine
which such Arena Patent or Program Patent should be the subject of efforts to
obtain a Patent Term Extension and (b) with respect to seeking exclusivity for a
Product under FFDCA Section 505A(b) or (c) or any similar laws or regulations of
a country in the Additional Territory, the holder of the NDA with respect to
such Product in the applicable country shall be responsible for seeking and
using Commercially Reasonably Efforts to obtain such exclusivity and have final
decision-making with respect thereto. Eisai shall cooperate fully with Arena in
making such filings or actions, for example and without limitation, by making
available all required regulatory data and information and executing any
required authorizations to apply for such Patent Term Extension. All expenses
incurred in connection with activities of each Party with respect to the Arena
Patents and Program Patents for which Arena seeks Patent Term Extensions
pursuant to this Section 9.7 shall be entirely borne by the Party responsible
for seeking such Patent Term Extension.

9.8. Orange Book Listings. The NDA holder with respect to each Product in a
country in the Territory shall fully involve the other Party in the planning and
decisions

 

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regarding listing the applicable Arena Patents and the applicable Program
Patents with the applicable Regulatory Authorities in the Territory for such
Product and shall in good faith seek to reach agreement with such other Party
regarding such listing, including all so called “Orange Book” listings required
under the Hatch-Waxman Act in the United States and equivalent listings in other
countries in the Territory; provided, that the NDA holder with respect to each
such Product in a country in the Territory shall have final decision-making
authority regarding which Arena Patents and Program Patents to list and shall
maintain such listings in such country (and shall make such filings). With
respect to any Product for which Eisai is the NDA holder in a country in the
Territory, Arena shall use reasonable efforts to provide any needed cooperation,
including to (a) provide to Eisai a correct and complete list of Arena Patents
in such country covering such Product and any other information that is
Controlled by Arena or any of its Affiliates, and is, to the Knowledge of Arena,
otherwise necessary or reasonably useful to enable Eisai to make such decision
and filings with Regulatory Authorities in such country with respect to the
applicable Arena Patents, and (b) cooperate with Eisai’s reasonable requests in
connection therewith, including meeting any submission deadlines, in each case,
to extent required or permitted by Applicable Laws. Eisai shall pay the costs of
all “Orange Book” (and any equivalent) filings with respect to any Product in
the Territory.

9.9. Trademarks.

(a) Selection and Ownership of Product Trademarks. The Parties shall discuss and
select one or more Trademarks for the Commercialization of each Product in each
country that (i) includes a brand name or (ii) that covers a logo that is used
in conjunction with a brand name to form a brand signature or “logo lock up”
(e.g., the “genie” logo used with BELVIQ® in the United States as of the 2nd
Amendment Effective Date) (each, a “Product Trademark”); provided, that if the
Parties are unable to agree on such Product Trademarks, Arena shall have the
right to select the Product Trademarks for the Commercialization of such Product
in the United States, and Eisai shall have the right to select, subject to
Arena’s prior written consent, not to be unreasonably withheld, the Product
Trademarks for the Commercialization of such Product in each country in the
Additional Territory and New Territory (provided, that Eisai shall not select a
trademark that would reasonably be expected to dilute or be confused with an
Arena Trademark that is not a Product Trademark). Arena or its Affiliates shall
own all right, title, and interest in and to the Product Trademarks, all
corresponding Trademark applications and registrations thereof, and all common
law rights thereto. All goodwill of the business associated with or symbolized
by the Product Trademarks shall inure to the benefit of Arena. Eisai
acknowledges Arena’s exclusive ownership of the Product Trademarks and agrees
not to take any action inconsistent with such ownership.

(b) Maintenance and Prosecution of Product Trademarks.

(i) Arena shall control the registration, prosecution and maintenance of the
Product Trademarks with respect to each Product in the Territory; provided, that
Arena shall keep Eisai reasonably informed of Arena’s actions with respect
thereto and shall consider in good faith any comments made by Eisai with respect
thereto.

 

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(ii) Promptly following the 2nd Amendment Effective Date, Arena shall provide a
written report to Eisai of all Trademarks related to the Product for which
applications for registration have been submitted by or on behalf of Arena in
the Territory prior to the 2nd Amendment Effective Date. All such Trademarks
shall be Product Trademarks, except to the extent Eisai provides written notice
to Arena within thirty (30) days of receipt of Arena’s report indicating that
Eisai is declining any such Trademarks.

(iii) Each Party shall bear 50% of the out-of-pocket costs of registration,
prosecution and maintenance of Product Trademarks in the Territory to the extent
incurred on or after 2nd Amendment Effective Date. Any expenses incurred prior
to the 2nd Amendment Effective Date shall be shared as provided in the Restated
Agreement.

(iv) If Arena plans to abandon any Product Trademark in the Territory, Arena
shall notify Eisai in writing at least 30 days in advance of the due date of any
payment or other action that is required to maintain such Product Trademark, and
Eisai may elect, upon written notice within such 30-day period to Arena, to make
such payment or take such action, at Eisai’s expense, and Arena shall reasonably
cooperate with Eisai in connection with such maintenance activities. If Eisai
elects to make such payment or take such action, at Eisai’s request, Arena shall
assign to Eisai all of its right, title, and interest in and to any such Product
Trademark in the Territory whereupon Eisai shall own all right, title and
interest in and to such Product Trademark. For clarity, the obligation to notify
Eisai of Arena’s plan to abandon a Product Trademark, as set forth in this
Section, shall not apply to Trademarks that are declined by Eisai pursuant to
Section 9.9(b)(ii).

(c) Selection and Ownership of Non-Branded Trademarks. In the event Eisai seeks
to use a Trademark for (i) Commercialization of Product in the Territory or
(ii) medical or corporate (for clarity, other than used in Commercialization or
development) campaigns, programs or websites that, in either case, does not
include or incorporate a Product Trademark (a “Non-Branded Trademark”), Eisai
shall provide written notice to Arena. Eisai may use Non-Branded Trademarks for
such purposes. For clarity, Non-Branded Trademarks include tag lines, slogans
and headlines and logos that do not include or incorporate a Product Trademark.
Eisai or its Affiliates shall own all right, title, and interest in and to the
Non-Branded Trademarks, all corresponding Trademark applications and
registrations thereof, and all common law rights thereto. All goodwill of the
business associated with or symbolized by the Non-Branded Trademarks shall inure
to the benefit of Eisai. Arena acknowledges Eisai’s exclusive ownership of the
Non-Branded Trademarks and agrees not to take any action inconsistent with such
ownership. Eisai hereby grants to Arena and its Affiliates a non-exclusive,
royalty-free, fully-paid, irrevocable, perpetual license (with the right to
grant multiple tiers of sublicenses) to the Non-Branded Trademarks used in
Commercialization of Product in the Territory solely for the purpose of
commercializing Product outside the Territory. Except as otherwise expressly
agreed by the Parties in writing, THE NON-BRANDED TRADEMARKS WILL BE PROVIDED
“AS IS” AND WITHOUT ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED,
INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR ANY
PARTICULAR PURPOSE OR ANY WARRANTY THAT THE USE OF THE NON-BRANDED TRADEMARKS
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INFRINGE OR VIOLATE ANY TRADEMARK OR OTHER PROPRIETARY RIGHTS OF ANY THIRD
PARTY.

(d) Maintenance and Prosecution of Non-Branded Trademarks.

(i) Eisai shall control the registration, prosecution and maintenance of the
Non-Branded Trademarks with respect to each Product in the Territory at Eisai’s
sole expense; provided, that, if requested by Arena, Eisai shall keep Arena
reasonably informed of Eisai’s actions with respect thereto and shall consider
in good faith any comments made by Arena with respect thereto. Any expenses
incurred prior to the 2nd Amendment Effective Date with respect to Non-Branded
Trademarks shall be shared as provided in the Restated Agreement.

(ii) If Eisai plans to abandon any Non-Branded Trademark in the Territory, Eisai
shall notify Arena in writing at least 30 days in advance of the due date of any
payment or other action that is required to maintain such Non-Product Trademark,
and Arena may elect, upon written notice within such 30-day period to Eisai, to
make such payment or take such action, at Arena’s expense, and Eisai shall
reasonably cooperate with Arena in connection with such maintenance activities.
If Arena elects to make such payment or take such action, at Arena’s request,
Eisai shall assign to Arena all of Eisai’s right, title, and interest in and to
any such Non-Branded Trademark in the Territory whereupon Arena shall own all
right, title and interest in and to such Non-Branded Trademark

(e) Use of Trademarks. Eisai shall Commercialize each Product in the Territory
only under the applicable Product Trademarks and Non-Branded Trademarks with
respect thereto. Eisai shall provide Arena with samples of any advertising and
promotional materials that incorporate (i) the Product Trademarks, prior to
distributing such materials for use and (ii) the Non-Branded Trademarks used in
Commercialization of Product in the Territory, in a timely manner after first
use. Eisai shall comply with reasonable policies provided by Arena from time to
time to maintain the goodwill and value of the Product Trademarks. Neither Party
shall, or shall permit its Affiliates (or with respect to Arena, the Arena
ex-Territory Distributors) to, (i) use, seek to register, or otherwise claim
rights in the Territory in any Trademark that is confusingly similar to,
misleading or deceptive with respect to, or that materially dilutes any of the
Product Trademarks, or (ii) knowingly do, cause to be done, or knowingly omit to
do any act, the doing, causing or omitting of which endangers, undermines,
impairs, destroys or similarly affects, in any material respect, the validity or
strength of any of the Product Trademarks (including any registration or pending
registration application relating thereto) or the value of the goodwill
pertaining to any of the Product Trademarks .

(f) Development Trademarks. Eisai agrees to notify Arena in advance in writing
of all Trademarks that Eisai plans to use solely for development (as opposed to
Commercialization) of Product (“Development Trademarks”). Eisai shall control
the registration, prosecution and maintenance of the Development Trademarks with
respect to each Product in the Territory at Eisai’s sole expense, as well as any
enforcement or defense of Development Trademarks.

 

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(g) Enforcement of Trademarks.

(i) Enforcement of Product Trademarks. From time to time, the Parties may seek
to agree on whether it is necessary or desirable to enforce or defend the
Product Trademarks in the Territory, including (i) defending against any
alleged, threatened or actual claim by a Third Party that the use of the Product
Trademarks in the Territory infringes, dilutes or misappropriates any Trademark
of that Third Party or constitutes unfair trade practices, or any other claims
that may be brought by a Third Party against a Party in connection with the use
of or relating to the Product Trademarks in the Territory with respect to the
Products and (ii) taking such action (including opposition proceedings) as Arena
deems necessary against a Third Party based on any alleged, threatened or actual
infringement, dilution or misappropriation of, or unfair trade practices or any
other like offense relating to, the Product Trademarks in the Territory by a
Third Party. If the Parties agree that enforcing or defending the Product
Trademarks is necessary or desirable, Arena shall lead such enforcement or
defense and the Parties shall each bear 50% of the out-of-pocket costs. If the
Parties do not agree, then Arena shall have the first right, but not the
obligation, at its expense, to enforce and defend the Product Trademarks in the
Territory. If Arena elects not to enforce or defend the Product Trademarks in
any such instance, then Arena shall promptly so notify Eisai and Eisai shall
have the right, but not the obligation, at its expense, to do so. Each Party
shall provide to the other Party all reasonable assistance requested by such
first Party in connection with any such action, claim or suit under this
Section 9.9(g)(i), including allowing such first Party access to such other
Party’s documents and to such other Party’s personnel who may have possession of
relevant information.

(ii) Enforcement of Non-Branded Trademarks. From time to time, the Parties may
seek to agree on whether it is necessary or desirable to enforce or defend the
Non-Branded Trademarks in the Territory, including (i) defending against any
alleged, threatened or actual claim by a Third Party that the use of the
Non-Branded Trademarks in the Territory infringes, dilutes or misappropriates
any Trademark of that Third Party or constitutes unfair trade practices, or any
other claims that may be brought by a Third Party against a Party in connection
with the use of or relating to the Non-Branded Trademarks in the Territory with
respect to the Products and (ii) taking such action (including opposition
proceedings) as Eisai deems necessary against a Third Party based on any
alleged, threatened or actual infringement, dilution or misappropriation of, or
unfair trade practices or any other like offense relating to, the Non-Branded
Trademarks in the Territory by a Third Party. Eisai shall have the first right,
but not the obligation, at its expense to lead such enforcement or defense. If
Eisai elects not to enforce or defend the Non-Branded Trademarks, then Eisai
shall promptly so notify Arena and Arena shall have the right, but not the
obligation, at its expense, to do so. Each Party shall provide to the other
Party all reasonable assistance requested by such first Party in connection with
any such action, claim or suit under this Section 9.9(g)(ii), including allowing
such first Party access to such other Party’s documents and to such other
Party’s personnel who may have possession of relevant information.

9.10. Internet Policing and Website Agreement. Following the 2nd Amendment
Effective Date, the Parties will enter into an Internet Policing and Website
Agreement to address issues related to product security and domain name
registration and enforcement.

 

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9.11. Product Security. Following the 2nd Amendment Effective Date, the Parties
shall establish a Joint Product Security Committee as a JSC Subcommittee, which
committee shall have authority to (a) establish an annual budget relating to
Product security matters throughout the Territory, (b) oversee Product security
matters throughout the Territory and (c) perform such other activities as may be
delegated to it by the JSC or the Parties. All out-of-pocket costs and expenses
approved by the Joint Product Security Committee relating to Product security
matters shall be shared equally by the Parties (50%/50%).

Article 10.

REPRESENTATIONS, WARRANTIES AND COVENANTS

10.1. Mutual Representations, Warranties and Covenants. Each Party hereby
represents and warrants to the other Party, as of the 2nd Amendment Effective
Date, and covenants as follows:

(a) Duly Organized. Such Party (i) is a corporation or limited liability
company, with restricted liability, duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or organization
and (ii) is qualified to do business and is in good standing as a foreign
corporation or organization in each jurisdiction in which the conduct of its
business or the ownership of its properties requires such qualification and
failure to have such qualification would prevent such Party from performing its
obligations under this Agreement.

(b) Due Authorization; Binding Agreement. The execution, delivery and
performance of this Agreement by such Party have been duly authorized by all
necessary corporate or organizational action. This Agreement is a legal and
valid obligation binding on such Party and enforceable in accordance with its
terms subject to the effects of bankruptcy, insolvency or other laws of general
application affecting the enforcement of creditor rights and judicial principles
affecting the availability of specific performance and general principles of
equity, whether enforceability is considered in the proceeding at law or equity.
The execution, delivery and performance of this Agreement by such Party does
not: (i) violate any law, rule, regulation, order, writ, judgment, decree,
determination or award of any court, governmental body or administrative or
other agency having jurisdiction over such Party; or (ii) conflict with, or
constitute a default under, any agreement, instrument or understanding a court
or administrative order, oral or written, to which such Party is a party or by
which it is bound.

(c) Consents. Such Party has obtained, or is not required to obtain, or prior to
performance will obtain, the consent, approval, order or authorization of any
Third Party, or has completed, or is not required to complete, or prior to
performance will complete, any registration, qualification, designation,
declaration, or filing with, any Regulatory Authority or other governmental
authority, in connection with the execution and delivery of this Agreement and
the performance by such Party of its obligations under this Agreement.

(d) No Conflicting Grant of Rights. Such Party has the right to grant (or cause
its Affiliates to grant) the rights granted by such Party to the other Party
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Agreement and has not granted any rights to any Person that are in conflict with
the rights granted by such Party to the other Party under this Agreement.

(e) Debarment. Such Party is not debarred under the FFDCA or listed on either
Excluded List and it does not, and shall not during the Term, employ or use the
services of any Person who is debarred or listed on either Excluded List, in
connection with the development, manufacture or Commercialization of the Initial
Product or any Additional Product. In the event that either Party becomes aware
of the debarment or threatened debarment of, or listing or threatened listing on
either Excluded List of, any Person providing services to such Party, including
the Party itself and its Affiliates, contractors, licensees, or distributors,
that directly or indirectly relate to activities under this Agreement, the other
Party shall be immediately notified in writing.

10.2. Representations, Warranties and Covenants of Arena. Arena represents and
warrants to Eisai, as of the 2nd Amendment Effective Date, and hereby (where
applicable) covenants to Eisai:

(a) Patent Rights. The Arena Patents existing as of the 2nd Amendment Effective
Date are set forth on Exhibit D attached hereto (“Existing Arena Patents”) and
are all Patents Controlled by Arena or any of its Affiliates as of the Effective
Date that claim or cover the Compound or the Initial Product, or the use of the
Compound or Initial Product, in the Territory, and Arena or one of its
Affiliates is the sole and exclusive owner of the Existing Arena Patents. The
Existing Arena Patents are not subject to any liens, mortgages, encumbrances,
pledges or security interests, or, to the Knowledge of Arena, claims of
ownership, by any Third Party that would prevent the grant of the rights granted
to Eisai under this Agreement or would materially interfere with Arena’s
performance of its obligations under this Agreement or materially prevent Eisai
from exercising its rights under the Agreement. True, complete and correct
copies of the complete file wrapper relating to the prosecution and maintenance
of the Existing Arena Patents filed in the United States have been made
available to Eisai prior to the 2nd Amendment Effective Date. Except as
previously disclosed to Eisai prior to the 2nd Amendment Effective Date, the
Existing Arena Patents in the United States are being diligently prosecuted
before the United States patent office in accordance with Applicable Laws, and
to the Knowledge of Arena, the Existing Arena Patents in the countries of the
Additional Territory and New Territory are being diligently prosecuted before
the applicable patent offices in accordance with Applicable Laws. The Existing
Arena Patents in the United States have been filed and maintained in accordance
with Applicable Laws, and to the Knowledge of Arena, the Existing Arena Patents
in the countries of the Additional Territory and New Territory have been filed
and maintained in accordance with Applicable Laws. All applicable fees owed with
respect to the prosecution and maintenance of the Existing Arena Patents have
been paid on or before the due date for payment to the extent necessary to
prevent the abandonment of the Existing Arena Patents. With respect to any
pending applications included in the Existing Arena Patents in the United
States, Arena or one of its Affiliates has presented all prior art material to
the patentability of the claims of such applications of which it and the
inventors are aware to the relevant Patent Examiner at the United States patent
office, to the extent required and in accordance with Applicable Laws.

 

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(b) Patent Status. As of the 2nd Amendment Effective Date, (i) all issued Arena
Patents are in full force and effect and subsisting, and, to Arena’s Knowledge,
are not invalid or unenforceable; (ii) except as previously disclosed to Eisai
prior to the 2nd Amendment Effective Date, none of the Arena Patents is
currently involved in any interference, reissue, reexamination, or opposition
proceeding; and (iii) except as previously disclosed to Eisai prior to the 2nd
Amendment Effective Date, neither Arena nor any of its Affiliates has received
any written notice from any Person, or has Knowledge, of any such actual or
threatened proceeding.

(c) Non-Infringement of Third Party Rights. To the Knowledge of Arena, the
discovery, identification, conception, reduction to practice or other making of
any inventions claimed in the Arena Patents or any Arena Know-How existing as of
the 2nd Amendment Effective Date have not constituted or involved the
misappropriation of trade secrets of any Third Party. Except as previously
disclosed to Eisai prior to the 2nd Amendment Effective Date, neither Arena nor
any of its Affiliates has received any written notice from any Third Party, nor
does Arena have any Knowledge of any actual or threatened claim or assertion by
a Third Party, that the manufacture, use, sale or import of the Compound or the
Initial Product in the Territory infringes or misappropriates the intellectual
property rights of a Third Party.

(d) Non-Action or Claim. As of the 2nd Amendment Effective Date, there are no
pending or threatened in writing, or to Knowledge of Arena, threatened adverse
actions, suits, claims, or formal governmental investigations by or against
Arena or any of its Affiliates in or before any court, Regulatory Authority or
other governmental authority in the Territory with respect to the Compound or
the Initial Product, including in connection with the conduct of any clinical
trials or manufacturing activities with respect thereto. As of the 2nd Amendment
Effective Date, there are no material unsatisfied judgments or outstanding
orders, injunctions, decrees, stipulations or awards (whether rendered by a
court, an administrative agency or by an arbitrator) against Arena (or any of
its Affiliates) in the Territory with respect to the Compound or the Initial
Product.

(e) No Conflicting Agreement. Neither Arena nor any of its Affiliates has
entered into any contract, whether written or oral, that granted any Third Party
the right to develop, promote, market or sell in the Territory the Compound, the
Initial Product or any other Compound Product or otherwise assigned,
transferred, licensed, conveyed or otherwise encumbered in a manner that would
prevent Eisai from exercising its rights under this Agreement, its right, title
or interest in or to, the Arena Patents, the Arena Know-How or the Regulatory
Filings in the Territory with respect to the Initial Product (including by
granting any covenant not to sue with respect thereto) and during the Term it
will not enter into any such agreements or grant any such right, title or
interest to any Person that conflicts with the rights granted to Eisai under
this Agreement.

(f) Additional Legal Compliance.

(i) No governmental authority (including the FDA) has commenced or, to the
Knowledge of Arena, threatened to initiate any action to enjoin production of
the Initial Product at any facility, nor has Arena or any of its Affiliates or,
to the Knowledge of Arena, any of its contractors, received any written notice
thereof.

 

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(ii) Arena or one of its Affiliates has prepared, maintained and retained all
Regulatory Filings that are required to be maintained or retained as of the 2nd
Amendment Effective Date pursuant to and in accordance with GLP, GCP and other
Applicable Laws.

(iii) Neither Arena nor any of its Affiliates received any written notice or to
the Knowledge of Arena, any oral notice, that indicates that any of the INDs for
the Initial Product are not currently in good standing with the FDA.

(iv) Arena or one of its Affiliates has filed with the FDA all required notices,
supplemental applications and annual or other reports or documents, including
adverse experience reports, with respect to each IND that are material to the
continued development of the Initial Product.

(v) Neither Arena nor any of its Affiliates, nor any of its or their respective
officers, employees, or agents has made an untrue statement of material fact or
fraudulent statement to the FDA or any other Regulatory Authority with respect
to the development of the Initial Product, failed to disclose a material fact
required to be disclosed to the FDA with respect to the development of the
Initial Product, or committed an act, made a statement, or failed to make a
statement with respect to the development of the Initial Product that could
reasonably be expected to provide a basis for the FDA to invoke its policy
respecting “Fraud, Untrue Statements of Material Facts, Bribery, and Illegal
Gratuities”, set forth in 56 Fed. Reg. 46191 (September 10, 1991) and any
amendments thereto.

(g) Arena and its Affiliates have conducted, and to the Knowledge of Arena,
their respective contractors and consultants have conducted, all development
with respect to the Compound and the Initial Product that they have conducted
prior to the Effective Date, in accordance with GLP and GCP and other Applicable
Laws, except to the extent any noncompliance would not materially negatively
affect the likelihood of obtaining Regulatory Approval of the Initial Product or
the commercial viability of the Initial Product in any country in the Territory.

(h) Arena has heretofore disclosed or made available to Eisai (or Eisai
otherwise has access to) (i) all material scientific and technical information
known to any of its or its Affiliates’ respective employees with the title of
vice president or higher or in-house general counsel relating to (A) the safety
and efficacy of the Compound and the Initial Product, including the results of
any material nonclinical studies required for filing an IND or clinical trials
with respect to the foregoing, (B) the drug quality, including stability,
variability, impurities and delivery performance, of the Compound and the
Initial Product and (C) the status of the Initial Product under the Controlled
Substances Act, as it may be amended from time to time, and the rules,
regulations, guidances, guidelines, and requirements promulgated or issued
thereunder and (ii) all material Regulatory Filings submitted to, or filed with,
or listed by a Regulatory Authority and the status of all material discussions
with Regulatory Authorities, in each case, in respect of the Compound and the
Initial Product in the Territory.

 

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(i) To the Knowledge of Arena, (x) no serious adverse event information has come
to the attention of Arena or any of its Affiliates with respect to the Compound
or the Initial Product that is materially different with respect to the
incidence, severity or nature of such serious adverse events than the
information that was filed as safety updates to any Regulatory Filings for the
Compound or the Initial Product, and (y) all written data summaries that were
included in any such Regulatory Filings based on clinical trials conducted or
sponsored by Arena or any of its Affiliates accurately summarize in all material
respects the raw data underlying such summaries.

(j) To the Knowledge of Arena, the manufacturing of the Initial Product to be
provided by Arena to Eisai pursuant to Article 6, as such manufacturing is
conducted as of the 2nd Amendment Effective Date, do not and will not infringe
the Patents of a Third Party that, as of the 2nd Amendment Effective Date, are
granted in the Territory or in jurisdictions in which Arena is contemplating
conducting such manufacturing. Arena shall use reasonable efforts to avoid
modifying the manufacturing process for the Initial Product in a manner that
Arena knows will or is likely to infringe the Patent rights of a Third Party.

10.3. Representations, Warranties and Covenants of Eisai. Eisai represents and
warrants to Arena that, as of the 2nd Amendment Effective Date, and hereby
(where applicable) covenants to Arena:

(a) No Conflicting Agreement. Neither Eisai nor any of its Affiliates has
entered into any contract that would, and shall not enter into during the Term
any such agreement that would, conflict with its obligations, or prevent or
impair its performance, under this Agreement.

(b) Non-Action or Claim. As of the 2nd Amendment Effective Date, there are no
pending or threatened in writing, or to Knowledge of Eisai, threatened adverse
actions, suits, claims, or formal governmental investigations by or against
Eisai or any of its Affiliates in or before any court, Regulatory Authority or
other governmental authority in the Territory with respect to Eisai’s marketing,
promotion or sale of pharmaceutical products in the Territory that would
materially negatively affect Eisai’s ability to perform its obligations under
this Agreement.

(c) Investigations. Eisai shall notify Arena within 30 days after it becomes the
subject of an investigation by any governmental authority with respect to its
marketing practices or marketing conduct with respect to pharmaceutical products
in the Territory (including any Product).

(d) No Blocking Patents. To Eisai’s Knowledge, Eisai does not own or control any
Patents as of the Amendment Effective Date in the Territory that would be
infringed by Arena’s conduct of the development activities contemplated to be
conducted under this Agreement as of the Amendment Effective Date.

10.4. Disclaimer. EXCEPT FOR THE EXPRESS REPRESENTATIONS AND WARRANTIES SET
FORTH SECTIONS 5.5(a), 6.13, 10.1, 10.2, AND 10.3, NEITHER

 

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PARTY MAKES ANY REPRESENTATIONS OR EXTENDS ANY WARRANTIES OF ANY KIND, EITHER
EXPRESS OR IMPLIED, AND EACH PARTY EXPRESSLY DISCLAIMS ALL SUCH OTHER
REPRESENTATIONS AND WARRANTIES, INCLUDING THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND OF FITNESS FOR A PARTICULAR PURPOSE OR USE,
NON-INFRINGEMENT, VALIDITY AND ENFORCEABILITY OF PATENTS, OR THE PROSPECTS OR
LIKELIHOOD OF DEVELOPMENT OR COMMERCIAL SUCCESS OF THE PRODUCT.

Article 11.

INDEMNIFICATION; PRODUCT LIABILITY CLAIMS

11.1. Indemnification of Arena. Eisai shall defend, indemnify and hold harmless
each of Arena, its Affiliates, and its and their respective directors, officers,
stockholders and employees (collectively, the “Arena Indemnitees”) from and
against any and all losses, liabilities, damages, penalties, fines, costs and
expenses (including reasonable attorneys’ fees and other expenses of litigation)
(“Losses”) from any claims, actions, suits or proceedings brought by a Third
Party (each, a “Third Party Claim”) against any Arena Indemnitee to the extent
arising from, based upon or occurring as a result of: (a) the actual or alleged
(i) negligence or willful misconduct of or (ii) violation of Applicable Laws by,
in each case ((i) and (ii)), Eisai or any of its Affiliates or its or their
respective Sub-distributors, Co-Promotion Partners or other subcontractors in
performing any activity contemplated by this Agreement, but excluding Product
Liability Claims; (b) any actual or alleged breach by Eisai (or any of its
Affiliates or Sub-distributors or Co-Promotion Partners) of this Agreement, the
Quality Agreement or the PV Agreement, but excluding Product Liability Claims;
(c) the regulatory activities, development, manufacture, use, handling, storage,
sale or other exploitation of any Compound, Related Compound, Compound Product
or Related Product by Eisai, any of its Affiliates, or any of its or their
Co-Promotion Partners, licensees, distributors (including Sub-distributors),
collaborators or other subcontractors after the Term, except pursuant to
Section 13.2(b)(i) or 13.3(a)(i); (d) any investigation by a governmental entity
of Eisai’s or any of its Affiliates’ or Co-promotion Partner’s or
Sub-distributors’ marketing, promotion, detailing or similar activities with
respect to Products in the Territory; or (e) any alleged or actual infringement
arising from, based on or occurring as a result of the use by Eisai, its
Affiliates or Co-promotion Partners or Sub-Distributors of any Non-Branded
Trademark or any Development Trademark; except that the foregoing
indemnification obligations shall not apply to the extent any such Third Party
Claim is based on or result from matters within the scope of the indemnification
obligations of Arena set forth in Section 11.2, as to which Third Party Claim
each Party shall indemnify the other Party to the extent of its liability with
respect to the Losses applicable to such Third Party Claim.

11.2. Indemnification of Eisai. Arena shall defend, indemnify and hold harmless
each of Eisai, its Affiliates, and its and their respective directors, officers,
stockholders and employees (collectively, the “Eisai Indemnitees”) from and
against any and all Losses from any Third Party Claims against any Eisai
Indemnitee to the extent arising from, based on or occurring as a result of:
(a) any negligent act or omission, willful misconduct, failure to comply with
any Applicable Laws or breach of any agreement with a Third Party by Arena, its
Affiliates, or any Arena ex-Territory Distributor, licensee, distributor or
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Eisai, its Affiliates and their respective licensees, distributors and
subcontractors) with respect to any development of the Compound, any Related
Compound, Compound Products or Related Products prior to the Effective Date, but
excluding Product Liability Claims; (b) the actual or alleged negligence or
willful misconduct of Arena, any of its Affiliates or any Arena ex-Territory
Distributor, licensee, distributor or other subcontractor (excluding in all
cases Eisai, its Affiliates and their respective licensees, distributors and
subcontractors) with respect to the development, manufacture, use, handling,
storage, sale or other exploitation of the Compound, any Related Compound,
Compound Product or Related Product in any jurisdiction or country outside the
Territory, at any time during the Term (but excluding, for clarity, all
activities under this Agreement except to the extent otherwise subject to an
indemnification obligation of Arena under subsections (d)-(g) under this
Section), but excluding Product Liability Claims; (c) the regulatory activities,
development, manufacture, use, handling, storage, sale or other exploitation of
any Compound, Related Compound, Compound Product, Related Product or Terminated
Product by Arena, any of its Affiliates, any Arena ex-Territory Distributor or
any other subcontractor, licensee, distributor or collaborator of Arena or any
of its Affiliates (i) after the Term, (ii) in any Terminated Country after this
Agreement has been terminated with respect to such country, or (iii) with
respect to any Terminated Product, after the termination of this Agreement with
respect to such Terminated Product; (d) the actual or alleged (i) negligence or
willful misconduct of or (ii) violation of Applicable Laws by, in each case ((i)
and (ii)), Arena or any of its Affiliates or its or their respective Arena
ex-Territory Distributor or other subcontractors in performing any activity
contemplated by this Agreement, but excluding Product Liability Claims; (e) any
actual or alleged breach by Arena (or any of its Affiliates or Arena
ex-Territory Distributors) of this Agreement, the Quality Agreement or the PV
Agreement, but excluding Product Liability Claims; (f) any infringement or
alleged infringement of the intellectual property rights of a Third Party
arising from or based on the manufacturing by or on behalf of Arena of any
Product or other Compound Product or Related Product; or (g) any alleged or
actual infringement arising from, based on or occurring as a result of the use
by Eisai in accordance with the terms hereof of any Product Trademark selected
by Arena pursuant to Section 9.9(a) to which Eisai had reasonably objected;
except that the foregoing indemnification obligations shall not apply to the
extent any such Third Party Claim is based on or result from matters within the
scope of the indemnification obligations of Eisai set forth in Section 11.1, as
to which Third Party Claim each Party shall indemnify the other Party to the
extent of its liability with respect to the Losses applicable to such Third
Party Claim.

11.3. Procedure.

(a) A Party that intends to exercise its rights to defense, indemnity or hold
harmless under this Article 11 (the “Indemnitee”) shall promptly notify the
indemnifying Party (the “Indemnitor”) in writing of any Third Party Claim in
respect of which the Indemnitee intends to exercise such rights. The failure to
deliver written notice to the Indemnitor within a reasonable time after the
commencement of any action with respect to a Third Party Claim shall only
relieve the Indemnitor of its obligations under this Article 11 if and to the
extent the Indemnitor is actually prejudiced thereby. The Indemnitee shall
provide the Indemnitor with reasonable assistance, at the Indemnitor’s expense,
in connection with the defense of the Third Party Claim. The Indemnitor shall
have the right to assume and conduct the defense of the Third Party Claim with
counsel of its choice. The Indemnitee may participate in and monitor such

 

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defense with counsel of its choice, which shall be at its own expense. The
Indemnitor shall not settle any Third Party Claim without the prior written
consent of the Indemnitee, not to be unreasonably conditioned, withheld or
delayed, unless the settlement involves only the payment of money by the
Indemnitor and does not involve any admission of liability or wrongdoing on the
part of any Arena Indemnitees or Eisai Indemnitees, as applicable. So long as
the Indemnitor is defending the Third Party Claim, the Indemnitee shall not
settle any such Third Party Claim without the prior written consent of the
Indemnitor.

(b) The assumption of a defense by the Indemnitor shall not be deemed an
admission that the Indemnitor has an obligation to defend, indemnify or hold
harmless an Arena Indemnitee or Eisai Indemnitee, as applicable, from and
against any Loss from a Third Party Claim. If the Indemnitor assumes and
conducts the defense of a Third Party Claim as provided above, and if it is
ultimately determined pursuant to Section 12.7 that the Indemnitor was not
obligated to indemnify, defend, or hold harmless an Arena Indemnitee or Eisai
Indemnitee, as applicable, from and against any Loss from such Third Party
Claim, the Indemnitee shall reimburse the Indemnitor for any and all reasonable
and verifiable costs and expenses (including attorneys’ fees and costs of suit)
and all other Losses incurred by the Indemnitor in connection with such Third
Party Claim, and if such determination is the result of an arbitration
proceeding initiated by the Indemnitor pursuant to Section 12.7, then the
Indemnitee also shall reimburse the Indemnitor for all of the reasonable and
verifiable costs and expenses (including attorneys’ fees and costs of
arbitration) incurred by the Indemnitor in connection with such arbitration
proceeding.

(c) If the Indemnitor does not assume and conduct the defense of a Third Party
Claim as provided above, (i) the Indemnitee may defend against such Third Party
Claim; provided, that the Indemnitee shall not settle any Third Party Claim
without the prior written consent of the Indemnitor, not to be unreasonably
conditioned, withheld or delayed and (ii) if it is ultimately determined
pursuant to Section 12.7 that the Indemnitor was obligated to indemnify, defend,
or hold harmless an Arena Indemnitee or Eisai Indemnitee, as applicable, from
and against any Loss from such Third Party Claim, the Indemnitor shall reimburse
the Indemnitee for any and all reasonable and verifiable costs and expenses
(including attorneys’ fees and costs of suit) and all other Losses incurred by
the Indemnitee in connection with such Third Party Claim, and if such
determination is the result of an arbitration proceeding initiated by the
Indemnitee pursuant to Section 12.7, then the Indemnitor also shall reimburse
the Indemnitee for all of the reasonable and verifiable costs and expenses
(including attorneys’ fees and costs of arbitration) incurred by the Indemnitee
in connection with such arbitration proceeding.

11.4. Product Liability Claims.

(a) Product Liability Losses. Except as otherwise provided in Section 11.4(j),
each Party shall bear 50% of all Product Liability Losses from all Product
Liability Claims.

(b) Notice of Claim. Each Party shall give the other Party prompt written notice
of any Product Liability Claim.

 

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(c) Sole Product Liability Claims. Subject to Section 11.4(f), with respect to
any Sole Product Liability Claim, the Party against whose Party Indemnitees such
Sole Product Liability Claim is brought shall be the Controlling Party and shall
assume and conduct the defense of such Sole Product Liability Claim with Lead
Counsel of its choosing. The counsel fees and all other expenses of litigation
of the Controlling Party in conducting such defense shall be borne solely by the
Controlling Party. The Non-Controlling Party may participate in and monitor such
defense with Shadow Counsel appointed by the Non-Controlling Party, and the
attorneys’ fees and costs for such Shadow Counsel shall be borne solely by the
Non-Controlling Party.

(d) Joint Manufacturing Defect Claims.

(i) Subject to Section 11.4(f) and clause (ii) below, with respect to any Joint
Product Liability Claim based solely on an allegation of defective manufacturing
of a Product (a “Joint Manufacturing Defect Claim”), Arena shall be the
Controlling Party and shall assume and conduct the Joint Defense Matters with
respect to such Joint Manufacturing Defect Claim. Subject to clause (ii) below,
Arena shall appoint the Lead Counsel to represent all Party Indemnitees for such
Joint Defense Matters, subject to Eisai’s consent (which shall not be
unreasonably withheld, conditioned or delayed). Eisai agrees to waive any
conflict so that such Lead Counsel may represent Arena in individual matters
(other than cases adverse to Eisai or its Affiliates).

(ii) Eisai shall have the right at any time to appoint Alternate Lead Counsel to
defend Eisai on those Joint Defense Matters relating to Eisai Indemnitees in
such Joint Manufacturing Defect Claim. If Eisai appoints Alternate Lead Counsel,
each Party shall control the Joint Defense Matters (including strategic
decisions) affecting such Party.

(1) If Eisai appoints Alternate Lead Counsel, (A) Eisai shall solely bear all
fees and expenses of such Alternate Lead Counsel and all other costs and
expenses with respect to Joint Defense Matters relating to Eisai Indemnitees,
(B) from and after the date of the appointment of such Alternate Lead Counsel,
Arena shall solely bear all fees and expenses of Lead Counsel and all other
costs and expenses with respect to Joint Defense Matters relating to Arena
Indemnitees and (C) Eisai shall reimburse Arena in an amount equal to
[...***...]% of all Joint Defense Costs with respect to such Joint Manufacturing
Defect Claim incurred prior to the date of the appointment of such Alternate
Lead Counsel.

(2) Arena shall bear [...***...]% of all Joint Defense Costs and Eisai shall
bear [...***...]% of all Joint Defense Costs for the defense of such Joint
Manufacturing Defect Claim, subject to clause (d)(ii)(1) above.

(iii) Eisai shall have the right to appoint Shadow Counsel to participate in and
monitor all Joint Defense Matters. If Eisai appoints Shadow Counsel, Eisai shall
solely bear all fees and expenses of such Shadow Counsel.

 

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(iv) Each Party shall conduct and control Sole Defense Matters with respect to
such Party and appoint its own counsel to lead the defense of Sole Defense
Matters with respect to such Party. Each Party shall solely bear all fees and
expenses of such counsel and all other costs and expenses with respect to Sole
Defense Matters with respect to such Party.

(e) Other Joint Product Liability Claims.

(i) Subject to clause (ii) below, with respect to any Joint Product Liability
Claim other than a Joint Manufacturing Defect Claim, Eisai shall be the
Controlling Party and shall assume and conduct the Joint Defense Matters with
respect to such Joint Product Liability Claim. Subject to clause (ii) below,
Eisai shall appoint the Lead Counsel to represent all Party Indemnitees for such
Joint Defense Matters, subject to Arena’s consent (which shall not be
unreasonably withheld, conditioned or delayed). Arena agrees to waive any
conflict so that such Lead Counsel may represent Eisai in individual matters
(other than cases adverse to Arena or its Affiliates).

(ii) Arena shall have the right at any time to appoint Alternate Lead Counsel to
defend Arena on those Joint Defense Matters relating to Arena Indemnitees in
such Joint Product Liability Claim. If Arena appoints Alternate Lead Counsel,
each Party shall control the Joint Defense Matters (including strategic
decisions) affecting such Party.

(1) If Arena appoints Alternate Lead Counsel, (A) Arena shall solely bear all
fees and expenses of such Alternate Lead Counsel and all other costs and
expenses with respect to Joint Defense Matters relating to Arena Indemnitees,
(B) from and after the date of the appointment of such Alternate Lead Counsel,
Eisai shall solely bear all fees and expenses of Lead Counsel and all other
costs and expenses with respect to Joint Defense Matters relating to Eisai
Indemnitees and (C) Arena shall reimburse Eisai in an amount equal to
[...***...]% of all Joint Defense Costs with respect to such Joint Product
Liability Claim incurred prior to the date of the appointment of such Alternate
Lead Counsel.

(2) Eisai shall bear [...***...]% of all Joint Defense Costs and Arena shall
bear [...***...]% of all Joint Defense Costs for Other Joint Product Liability
Claims, subject to clause (e)(ii)(1) above.

(iii) Arena shall have the right to appoint Shadow Counsel to participate in and
monitor all Joint Defense Matters. If Arena appoints Shadow Counsel, Arena shall
solely bear all fees and expenses of such Shadow Counsel.

(iv) Each Party shall conduct and control Sole Defense Matters with respect to
such Party and appoint its own counsel to lead the defense of Sole Defense
Matters with respect to such Party. Each Party shall solely bear all fees and
expenses of such counsel and all other costs and expenses with respect to Sole
Defense Matters with respect to such Party.

 

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(f) Consolidation. In the event that one or more separate Product Liability
Claims (at least one of which is not a Joint Manufacturing Defect Claim) are
consolidated for discovery, such consolidated Product Liability Claims shall be
deemed a Joint Product Liability Claim that is not a Joint Manufacturing Defect
Claim and shall be governed by Section 11.4(e).

(g) General Procedures. With respect to each Product Liability Claim, regardless
of which Party is the Controlling Party, the Parties shall cooperate and consult
fully with each other in strategizing, preparing, presenting and conducting the
defense of each Product Liability Claim and to help drive efficiencies in
defense costs. The Parties shall seek in good faith to agree on all matters
regarding such Product Liability Claim. In case such agreement cannot be reached
within an appropriate time period (recognizing that certain decisions with
respect to strategizing, preparing, presenting and conducting the defense of
such Product Liability Claim may be time sensitive), (i) the Controlling Party
shall have the final decision with respect to (A) all matters, in the case of a
Sole Product Liability Claim, or (B) Joint Defense Matters, in the case of Joint
Product Liability Claims, and (ii) each Party shall have the final decision with
respect to Sole Defense Matters with respect to such Party. The Non-Controlling
Party shall provide the Controlling Party with reasonable assistance in
connection with the defense of all Product Liability Claims. Notwithstanding the
foregoing, the Controlling Party shall not settle any Product Liability Claim
without the prior written consent of the Non-Controlling Party, which consent
shall not be unreasonably withheld, conditioned or delayed.

(h) Expenses. Within 15 days after the end of each Calendar Quarter, each Party
shall provide a written report to the other Party setting forth in reasonable
detail the Joint Defense Costs and Product Liability Losses from each Product
Liability Claim incurred by such Party during such Calendar Quarter. Within 10
days after each Party has provided the other Party its report for a Calendar
Quarter, the applicable Party shall pay to the other Party the amount necessary
to achieve the Joint Defense Cost and Product Liability Loss sharing required by
this Section 11.4. On reasonable request by the other Party, the Party providing
a report shall also provide to the other Party all documentation reasonably
necessary to evidence the costs set forth in such report.

(i) Punitive Damages. If Punitive Damages are awarded against any Party
Indemnitee in any Product Liability Claim, the applicable Party shall bear 100%
of such Punitive Damages.

(j) Cost Shifting. If it is ultimately determined by clear and convincing
evidence pursuant to Section 12.7 that any Product Liability Claim solely and
directly was caused by or resulted from the actual willful misconduct of, or
actual violation of Applicable Laws by, only one Party (the “At-Fault Party”) or
any of its Affiliates or its or their subcontractors (including, in the case of
Eisai or its Affiliates, a Sub-distributor or Co-Promotion Partner, and in the
case of Arena or its Affiliates, an Arena ex-Territory Distributor) in
performing any activity contemplated by this Agreement, or any actual breach by
the At-Fault Party (or any of its Affiliates) of this Agreement, the Quality
Agreement or the PV Agreement, and the actions or omissions of the other Party
(the “Non-Fault Party”) or any of its Affiliates or its or their subcontractors
(including, in the case of Eisai or its Affiliates, a Sub-distributor or
Co-Promotion Partner, and in the case of Arena or its Affiliates, an Arena
ex-Territory Distributor)

 

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did not in any way contribute to the events and circumstances leading to such
Product Liability Claim, then the At-Fault Party shall bear 100% of all Product
Liability Losses from such Product Liability Claim and shall reimburse the
Non-Fault Party for any Product Liability Losses incurred by the Non-Fault Party
in connection with such Product Liability Claim (if not previously reimbursed),
and if such determination is the result of an arbitration proceeding initiated
by the Non-Fault Party pursuant to Section 12.7, then the At-Fault Party also
shall reimburse the Non-Fault Party for all of the reasonable and verifiable
costs and expenses (including attorneys’ fees and costs of arbitration) incurred
by the Non-Fault Party directly in connection with such arbitration proceeding
(and, for clarity, excluding Joint Defense Costs, costs and expenses paid in
connection with Sole Defense Matters, and costs and expenses of Shadow Counsel).

11.5. Insurance. Each Party, at its own expense, shall maintain product
liability and other appropriate insurance with an insurance carrier that has a
minimum rating of A.M. Best’s rating of A-7 in an amount consistent with
industry standards, for a company in a similar position to such Party, during
the Term, which shall include, (a) product liability insurance (including
clinical trial insurance) in the minimum amount of US$10 million per occurrence
and in the aggregate and (b) general liability insurance in the minimum amount
of US$1 million per occurrence, US$2 million in the aggregate, and US$10 million
umbrella coverage. Product liability insurance shall be maintained at the same
level for not less than five years after termination of this Agreement. Clinical
trial insurance shall only be required to be maintained at the same level for
five years after the last clinical trial for a Product conducted by the
applicable Party; provided, that Eisai shall not be required to maintain
clinical trial insurance unless or until Eisai is the Responsible Party under a
Development Plan with respect to one or more clinical trials. Each Party shall
provide the other Party with written notice at least 30 days prior to any
cancellation, nonrenewal or material change in the insurance described in
clauses (a) and (b) above and shall name the other Party as an additional
insured with respect to such insurance. Each Party shall provide a certificate
of insurance evidencing such coverage to the other Party upon request. It is
understood that such insurance shall not be construed to create a limit of
either Party’s liability with respect to its indemnification obligations under
this Article 11.

Article 12.

TERM AND TERMINATION

12.1. Term. This Agreement shall commence on the Effective Date and shall
continue in full force and effect until termination of this Agreement with
respect to all countries in the Territory (such period, the “Term”).

12.2. Early Termination.

(a) This Agreement may be terminated in its entirety as follows:

(i) by mutual written agreement of the Parties;

 

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(ii) by a Party upon written notice by such Party to the other Party if the
other Party is in material breach of this Agreement and has not cured such
breach within 90 days (20 days with respect to any payment breach) after notice
from the terminating Party requesting cure of the breach. Any such termination
shall become effective at the end of such 90-day (20-day with respect to any
payment breach) period unless the breaching Party has cured any such breach
prior to the end of such period;

(iii) by a Party upon the bankruptcy of, or the filing of an action to commence
insolvency proceedings against, the other Party, or the making or seeking to
make or arrange an assignment for the benefit of creditors of the other Party,
or the initiation of proceedings in voluntary or involuntary bankruptcy with
respect to the other Party, or the appointment of a receiver or trustee of the
other Party’s property, in each case that is not discharged within 90 days; or

(iv) by Eisai upon written notice to Arena if the FDA requires that Eisai cease
Commercializing the Initial Product in the United States.

(b) Notwithstanding Section 12.2(a)(ii),

(i) if the material breach and failure to cure contemplated by
Section 12.2(a)(ii) is with respect to Eisai’s diligence obligations under
Section 3.5(a), Sections 3.5(b)(i) and (iii), Section 5.4 or Section 5.6(a) with
respect to all Products in a country in the Territory but not all countries in
the Territory, Arena shall not have the right to terminate this Agreement in its
entirety, but shall have the right to terminate this Agreement solely with
respect to such country; or

(ii) if the material breach and failure to cure contemplated by
Section 12.2(a)(ii) is with respect to Eisai’s diligence obligations under
Section 3.5(a), Sections 3.5(b)(i) and (iii), Section 5.4 or Section 5.6(a) with
respect to one, but not all, Products in a country in the Territory (but not all
countries in the Territory), Arena shall not have the right to terminate this
Agreement in its entirety or with respect to such country, but shall have the
right to terminate this Agreement solely with respect to such Product in such
country (any such terminated Product, a “Terminated Product” with respect to the
applicable country).

(c) This Agreement may be terminated with respect to one or more countries in
the Territory as provided in Section 3.2(i) or Section 5.6.

(d) If the FDA requires that Eisai cease Commercializing the Initial Product in
the United States due to a matter relating to or caused by Eisai’s violation of
Applicable Law or breach of its obligation under this Agreement, then Arena can
terminate this Agreement with respect to the United States.

(e) If, during the period of sales of a Product in a country in the Territory by
Eisai, there have been sales of a Generic Version of such Product in such
country and the aggregate units of all Generic Versions of such Product sold in
such country in a particular Calendar Quarter exceed [...***...]% of the
aggregate units of such Product and all Generic Versions

 

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of such Product sold in such country in such Calendar Quarter, then Eisai may
terminate this Agreement with respect to such country on 180 days’ prior written
notice (such notice to be provided no later than 60 days after the end of such
Calendar Quarter).

(f) This Agreement may be terminated with respect to any country in the
Additional Territory or the New Territory by either Party upon written notice to
the other Party if the applicable Regulatory Authorities in such country require
that Eisai cease Commercializing the Initial Product in such country.

(g) This Agreement may be terminated with respect to each country in the
Territory by Eisai upon 90 days’ notice to Arena; provided, that in no event
shall such termination of a country in the Territory by Eisai under this
Section 12.2(g) be effective before the later of: (a) expiration of all issued
Arena Patents in such country, and (b) 12 years after the First Commercial Sale
of a Product in such country.

12.3. Termination for Commercialization Concerns.

(a) If at any time during the Term either Party has a good faith concern that
the safety profile of the Initial Product adversely affects its commercial
potential or does not warrant further Commercialization such Party shall notify
the other Party of such first Party’s concern and the Parties shall promptly
discuss such concern in good faith. If (i) after such good faith discussions
such first Party continues to believe in good faith that the safety profile of
the Initial Product adversely affects its commercial potential or does not
warrant further Commercialization or (ii) such discussions do not occur within
20 days after such notice, then such first Party may terminate this Agreement in
its entirety upon providing 20 days’ prior written notice to the other Party.

(b) At any time following termination of this Agreement by Arena pursuant to
Section 12.3(a), if Arena or any of its Affiliates desires to engage in any way
in, or desires to license, authorize, appoint, or otherwise enable any Third
Party to engage in any way in, (i) any development of any Product or other
Compound Product or Related Product in support of Regulatory Approval in the
Territory (as comprised as of the effective date of termination pursuant to
Section 12.3(a)), or (ii) any Commercialization of any Product or other Compound
Product or Related Product in the Territory (as comprised as of the effective
date of termination pursuant to Section 12.3(a)), then in each case ((i) and
(ii)), Arena shall notify Eisai prior to commencing any such activity and Eisai
may elect, by written notice to Arena no later than 60 days following the notice
by Arena to Eisai, to have this Agreement be reinstated. From and after the date
of such written notice by Eisai, this Agreement shall be in full force and
effect notwithstanding such prior termination, and the Parties shall thereafter
have the rights and obligations set forth herein (but, for the avoidance of
doubt, actions and inactions taken during the period following such termination
and prior to such reinstatement shall not be breaches hereunder). In the event
that Eisai elects not to reinstate this Agreement (or does not provide notice of
its election to reinstate within 60 days following the written notice by Arena
to Eisai), then this Agreement shall not be reinstated, and thereafter Arena
shall be entitled to exploit (itself or with its Affiliates and Third Party
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Compound Products and Related Products within the Territory independently of and
without obligations to Eisai.

12.4. Termination for Third Party Infringement.

(a) Eisai may terminate this Agreement in its entirety at any time during the
Term immediately upon written notice to Arena in the event that Eisai reasonably
and in good faith believes that the Commercialization of a Product in the United
States hereunder infringes or misappropriates any Patents, trade secrets or any
other intellectual property right of a Third Party in the United States, such
that Eisai or any of its Affiliates will not be able to Commercialize such
Product in the United States without infringing the Patents or other
intellectual property right of such Third Party, and Eisai is unable to obtain a
license from such Third Party on commercially reasonable terms.

(b) Eisai may terminate this Agreement with respect to any country in the
Territory at any time during the Term immediately upon written notice to Arena
in the event that Eisai reasonably and in good faith believes that the
Commercialization of a Product in such country hereunder infringes or
misappropriates any Patents, trade secrets or any other intellectual property
right of a Third Party in such country, such that Eisai or any of its Affiliates
will not be able to Commercialize such Product in such country without
infringing the Patents or other intellectual property right of such Third Party,
and Eisai is unable to obtain a license from such Third Party on commercially
reasonable terms.

(c) Arena may terminate this Agreement in its entirety at any time during the
Term immediately upon written notice to Eisai in the event that Arena reasonably
and in good faith believes that the manufacture for and sale to Eisai of a
Product under this Agreement infringes or misappropriates any Patents, trade
secrets or any other intellectual property right of a Third Party, such that
Arena will not be able to conduct (or have conducted on its behalf) such
manufacturing for and sale of such Product to Eisai without infringing (or its
contract manufacturers infringing) the Patents or other intellectual property
right of such Third Party, and neither Arena nor any of its Affiliates is able
to obtain a license from such Third Party on commercially reasonable terms.

(d) At any time following termination of this Agreement by Arena pursuant to
Section 12.4(c), if Arena or any of its Affiliates desires to engage in any way
in, or desires to license, authorize, appoint, or otherwise enable any Third
Party to engage in any way in, (i) any development of any Product or other
Compound Product or Related Product in support of Regulatory Approval in the
Territory (as comprised as of the effective date of termination pursuant to
Section 12.4(c)), or (ii) any Commercialization of any Product or other Compound
Product or Related Product in the Territory (as comprised as of the effective
date of termination pursuant to Section 12.4(c)), then in each case ((i) and
(ii)), Arena shall notify Eisai prior to commencing any such activity and Eisai
may elect, by written notice to Arena no later than 60 days following the notice
by Arena to Eisai, to have this Agreement be reinstated. From and after the date
of such written notice by Eisai, this Agreement shall be in full force and
effect notwithstanding such prior termination, and the Parties shall thereafter
have the rights and obligations set forth herein (but, for the avoidance of
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the period following such termination and prior to such reinstatement shall not
be breaches hereunder). In the event that Eisai elects not to reinstate this
Agreement (or does not provide notice of its election to reinstate within 60
days following the written notice by Arena to Eisai), then this Agreement shall
not be reinstated, and Arena thereafter shall be entitled to exploit (itself or
with its Affiliates and Third Party partners or licensees) the Products and
other Compound Products and Related Products within the Territory independently
of and without obligations to Eisai.

12.5. Eisai Termination for Non-Compete Reasons. Eisai may terminate this
Agreement in its entirety or with respect to one or more countries in the
Territory pursuant to Section 2.4(c).

12.6. Other Arena Termination Rights.

(a) Arena shall have the right to terminate this Agreement immediately upon
written notice to Eisai if Eisai or any of its Affiliates commences, or
knowingly and materially assists or encourages any Third Party to commence or
conduct, any interference, re-examination or opposition proceeding with respect
to, challenges the validity or enforceability of, or opposes any extension of or
the grant of a supplementary protection certificate with respect to, any
(i) Arena Patent; (ii) Program Patent; or (iii) any Patent pending or issued
outside the Territory that is owned or controlled by Arena or any of its
Affiliates as of the Effective Date or at any time during the Term and that
claims (x) the Compound, or a product containing the Compound, as a composition
of matter, or (y) a method of use of the Compound or a product containing the
Compound, but excluding all claims of any such Patent that do not involve or
relate to a Compound or a Product.

(b) Arena shall have the right to terminate this Agreement immediately upon
written notice to Eisai if Eisai is debarred under the FFDCA or listed on either
Excluded List.

(c) Arena shall have the right to terminate this Agreement on five days written
notice to Eisai if Eisai breaches its obligations under Section 8.9.

12.7. Adjudication of Material Breach and Other Specific Disputes.

(a) In the event of any dispute, controversy or claim (i) arising from or
related to a material breach of this Agreement (including (A) whether Arena has
breached its obligation to use Commercially Reasonable Efforts to perform a
Development Plan for an Additional Product or (B) whether the Responsible Party
has breached its obligation to use Commercially Reasonable Efforts to ensure
that its conduct and execution of a Regulatory Strategy complies with and
supports the goals of the related Development Plan) or termination pursuant to
Section 12.2(a)(ii) or 12.2(b), (ii) with respect to whether a Party is
obligated to indemnify, defend or hold harmless an Arena Indemnitee or Eisai
Indemnitee, as applicable, from and against a Third Party Claim under
Section 11.1 or Section 11.2, as applicable, or (iii) with respect to whether
any Product Liability Claim solely and directly was caused by or resulted from
the actions or omissions of an At-Fault Party, (in each case ((i)–(iii)), a
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the Parties shall attempt to resolve such Dispute in accordance with
Section 14.1. If such Dispute is not resolved in accordance with Section 14.1
and a Party wishes to pursue the matter, each such Dispute that is not an
Excluded Claim shall be resolved by binding arbitration in accordance with the
Rules of Arbitration of the International Chamber of Commerce (“ICC”) as then in
effect (the “ICC Rules”) as such rules may be modified by this Section 12.7 or
agreement of the Parties, and judgment on the arbitration award may be entered
in any court having jurisdiction thereof. The decision rendered in any such
arbitration will be final and not appealable, absent manifest error. If either
Party intends to commence binding arbitration of such Dispute, such Party shall
file a request for arbitration with the ICC and provide written notice to the
other Party informing the other Party of such intention and the issues to be
resolved, including the amount of damages that the non-breaching Party is
entitled to receive if it elects to terminate this Agreement or the amount of
damages that the non-breaching Party is entitled to receive if it does not elect
to terminate this Agreement. Within 30 days after the receipt of such notice,
the other Party may, by written notice to the Party initiating binding
arbitration, add any related issues to be resolved.

(b) The arbitration shall be conducted by a panel of three arbitrators
experienced in the pharmaceutical business, each of whom shall not be a current
or former employee or director, or a then-current stockholder, of either Party
or any of its Affiliates (the “Panel”). Within 30 days after receipt of the
original notice of binding arbitration (the “Notice Date”), each Party shall
nominate one arbitrator for the ICC’s confirmation (with the right to nominate a
replacement arbitrator until an arbitrator nominated by such Party is confirmed
by the ICC) and such two arbitrators shall jointly nominate the third arbitrator
for the ICC’s confirmation; provided, that if the two arbitrators nominated by
the Parties are unable or fail to agree upon the third arbitrator within such
period, the third arbitrator shall be appointed by the ICC. The place of
arbitration shall be New York, New York.

(c) Within 30 days after the appointment and selection of the Panel, the Parties
shall reach an agreement upon and thereafter shall follow the arbitration
procedures, including limits on discovery, ensuring that the arbitration will be
concluded and the award rendered as expeditiously as possible, but in any event
within eight months from appointment and selection of the Panel. In the event
the Parties fail to reach an agreement on procedures, procedures meeting such
time limits shall be determined by the Panel and adhered to by the Parties.

(d) All rulings of the Panel shall be in writing and shall be delivered to the
Parties within seven days of the conclusion of the arbitration.

(e) The Panel shall, in rendering its decision, apply the substantive law of the
laws of the State of New York, United States, without reference to its conflicts
of law principles with the exception of sections 5-1401 and 5-1402 of New York
General Obligations Law, and without giving effect to any rules or laws relating
to arbitration. In such decision, the Panel may award a Party specific
performance of the other Party’s obligations.

 

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(f) The Panel, in rendering its decision, shall not modify or amend the terms
and conditions of this Agreement or determine any issue in a manner that would
conflict with the express terms and conditions of this Agreement.

(g) Either Party may apply to the Panel for interim injunctive relief until the
arbitration award is rendered or the controversy is otherwise resolved. Either
Party also may, without waiving any remedy under this Agreement, seek from any
court having jurisdiction any injunctive or provisional relief necessary to
protect the rights or property of that Party pending the arbitration award.
Subject to Section 11.3 and 11.4, each Party shall bear its own costs and
expenses and attorneys’ fees, and the non-prevailing Party shall pay the full
costs of the Panel’s fees and any administrative fees of arbitration.

(h) All proceedings and decisions of the Panel shall be deemed Confidential
Information of each of the Parties, and shall be subject to Article 8. Except to
the extent necessary to confirm or enforce an award or as may be required by
Applicable Laws, neither a Party nor any member of the Panel may disclose the
existence, content, or results of an arbitration without the prior written
consent of both Parties.

(i) In no event shall an arbitration be initiated after the date when
commencement of a legal or equitable proceeding based on the Dispute would be
barred by the applicable New York statute of limitations.

(j) As used in this Section, the term “Excluded Claim” means a Dispute that
concerns (i) the validity, enforceability or infringement of a Patent; or
(ii) any antitrust, anti-monopoly or competition law or regulation, whether or
not statutory.

(k) Any relevant time period under this Agreement related to any Dispute,
including any cure period with respect thereto, shall be tolled during any
dispute resolution proceeding pursuant to this Section 12.7.

Article 13.

EFFECT OF TERMINATION

13.1. Accrued Obligations. The termination of this Agreement, in whole or part,
for any reason shall not release either Party from any liability or obligation
that, at the time of such termination, has already accrued to such Party or that
is attributable to a period prior to such termination, nor will any termination
of this Agreement preclude either Party from pursuing all rights and remedies it
may have under this Agreement, at law or in equity, with respect to breach of
this Agreement.

13.2. Effects of Termination in Entirety. If this Agreement is terminated in its
entirety by a Party pursuant to Section 12.2(a), 12.3, 12.4, 12.5, or 12.6 the
following shall apply (in addition to any other rights and obligations under
this Agreement with respect to such termination):

 

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(a) Winding-Down of Development Activities. In the event there are any on-going
clinical trials or other development work with respect to a Product in the
Territory:

(i) The Parties shall work together in good faith to adopt, and Arena shall have
the final decisional power with respect to, a plan to wind-down such clinical
trials or other development work in an orderly fashion or, at Arena’s election,
promptly transition such clinical trials or other development work activities to
Arena or its designee, including the transfer to Arena of any Development Data
then in Eisai’s or its Affiliate’s possession that has not previously been
transferred (or developed) by Arena, with due regard for patient safety and the
rights of any subjects that are participants in any clinical trials of a
Product, and take any actions it deems reasonably necessary or appropriate to
avoid any human health or safety problems and in compliance with all Applicable
Laws; and

(ii) All costs and expenses incurred from the effective date of the termination
notice in winding-down or transitioning the clinical trials or other development
work with respect to a Product shall be borne 100% by Arena, except to the
extent that the termination of the Agreement is by Arena under
Section 12.2(a)(ii), 12.2(a)(iii), or Section 12.6 or by Eisai under
Section 12.2(a)(iv) or Section 12.5, in which case Eisai shall pay for its share
(under the applicable terms of this Agreement with respect to the Parties’
sharing of Development Costs, which terms shall survive until completion of all
such payments by Eisai) of the Development Costs incurred during the period of
wind-down or transition under Section 13.2(a)(i).

(b) Inventory.

(i) Except in the case of termination by Arena under Section 12.2(a)(ii),
12.2(a)(iii), 12.3, 12.4 or 12.6, or by Eisai under 12.2(a)(iv), 12.3 or 12.4,
at Eisai’s election Eisai and its Affiliates and Sub-distributors shall have the
right, subject to Section 13.2(b)(ii), to sell off any inventory of Product in
its or their possession as of the termination date during a sell-off period of
180 days after the termination date; provided, that if Eisai terminates this
Agreement pursuant to Section 12.2(a)(ii) or Section 12.2(a)(iii), such sell-off
period shall be indefinite. Any sales of Product by Eisai and its Affiliates
under this Section 13.2(b)(i) shall be taken into account in calculating Net
Sales for purposes of calculating the Product Purchase Price under Section 7.4.

(ii) If Eisai terminates this Agreement pursuant to Section 12.2(a)(ii) or
12.2(a)(iii), Arena shall have the right, but not obligation, on written notice
to Eisai, to repurchase from Eisai and its Affiliates and Sub-distributors
quantities of Product remaining in inventory as of the termination date at the
applicable Estimated Price paid by Eisai for such Product.

(iii) If either Party terminates this Agreement pursuant to Section 12.3 or
Section 12.4, Arena shall repurchase from Eisai and its Affiliates and
Sub-distributors all quantities of Product remaining in inventory as of the
termination date at the applicable Estimated Price paid by Eisai for such
Product.

 

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(iv) If Eisai elects not to sell off its remaining inventory of Product in
accordance with clause (i) above, Arena shall have the right, on written notice
to Eisai, to repurchase from Eisai and its Affiliates and Sub-distributors
quantities of Product remaining in inventory as of the termination date at the
applicable Estimated Price paid by Eisai for such Product.

(c) Assignment of Regulatory Filings (including Regulatory Approvals). Upon
Arena’s request and to the extent permitted by Applicable Laws, Eisai shall
assign or cause to be assigned to Arena or its designees (or to the extent not
so assignable, Eisai shall take all reasonable actions to make available to
Arena or its designee the benefits of) all Regulatory Filings (including INDs,
NDAs and Regulatory Approvals) for the Products in the Territory, including any
such Regulatory Filings made or owned by Eisai or any of its Affiliates or
Sub-distributors, at no cost to Arena. Eisai shall provide a complete copy of
all Regulatory Filings assigned (or made available), as well as copies of all
correspondence with Regulatory Authorities not already provided to Arena,
pertaining to Products in the Territory.

(d) Clinical Supply. Unless Arena terminates this Agreement pursuant to
Section 12.2(a)(ii), 12.2(a)(iii) or 12.6, Arena shall reimburse Eisai for the
amount paid by Eisai to Arena pursuant to Section 3.6 with respect to any
remaining clinical supply of Products, to the extent such remaining clinical
supply is still usable by Arena over the six-month period after such
termination. Upon termination for any reason, if any such clinical supply of
Products is in Eisai’s or any of its Affiliates’ possession, at Arena’s request
and expense of transportation, Eisai shall return such clinical supply of
Products to Arena.

(e) Transition. Eisai shall, at Arena’s cost and written request, use
Commercially Reasonable Efforts to cooperate with Arena or its designee to
effect a smooth and orderly transition in the development and Commercialization
of the Products in the Territory during the Wind-down Period. To the extent
applicable, Arena shall use, identify and finalize an agreement or other
arrangement with a Third Party in relation to the Products or, to the extent
Arena is able to take over such activities under Applicable Laws, take over,
directly or through an Affiliate, all activities related to the Products, and in
particular development activities, on-going at the time of the effective date of
the termination and the transfer of the Regulatory Filings (including INDs, NDAs
and Regulatory Approval) into the name of Arena or Arena’s designee so that the
Wind-down Period will be as limited as possible (subject to Eisai’s rights under
clause (b) above).

(f) Customer Agreements. Upon the completion of the rights and obligations
defined in this Section 13.2, at the written request of Arena, Eisai shall
assign to Arena or its designee any Third Party distribution agreements that
solely relate to the Products, to the extent permitted under each such
distribution agreement. In the event such assignment is not requested by Arena
or is not permitted under any distribution agreement, then the rights of such
Third Party with respect to each Product shall terminate upon termination of
Eisai’s rights with respect thereto. Eisai shall use its good faith efforts to
include provisions requiring compliance with the foregoing provision in the
agreements with applicable Third Parties. Notwithstanding the foregoing, in the
event that Eisai terminates this Agreement pursuant to Section 12.2(a)(ii) or
Section 12.2(a)(iii), Eisai shall have no obligations under this Section

 

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13.2(f) unless and until the Parties agree upon commercially reasonable terms
with respect to Eisai’s assignment to Arena or its designee of the Third Party
distribution agreements that solely relate to the Products in the Territory.

(g) Non-Branded Trademarks and Development Trademarks. Upon Arena’s request,
Eisai shall assign or cause to be assigned to Arena or its designees (or to the
extent not so assignable, Eisai shall take all actions to make available to
Arena or its designee the benefits of) all Non-Branded Trademarks used in
Commercialization of Product in the Territory (but, for clarity, excluding those
used in medical or corporate programs, campaigns and websites as set forth in
Section 9.9(c)(ii)) and Development Trademarks specifically related to the
Products, including any of the foregoing made or owned by Eisai or any of its
Affiliates, Sub-distributors or Co-Promotion Partners, at no cost to Arena.
Eisai shall provide a list of all Non-Branded Trademarks used in
Commercialization of Product in the Territory and Development Trademarks within
30 days of Arena’s request.

13.3. Effects of Termination With Respect to a Country. If this Agreement is
terminated with respect to one or more, but not all, countries in the Territory
(each such terminated country, a “Terminated Country”) by a Party pursuant to
Section 2.4(c), 3.2(i), 5.6(b), 12.2(b)(i), 12.2(c), 12.2(d), 12.2(e), 12.2(f),
12.2(g), 12.4(b) or 12.5, or any other applicable provision of this Agreement,
the following shall apply (in addition to any other rights and obligations under
this Agreement with respect to such termination):

(a) Inventory.

(i) In the case of termination of a Terminated Country by Eisai under
Section 12.2(e), 12.2(g) or 12.5, at Eisai’s election Eisai and its Affiliates
and Sub-distributors shall have the right to sell off in such Terminated Country
any inventory of Product in such Terminated Country in its or their possession
as of the termination date during an indefinite sell-off period. Any sales of
Product by Eisai and its Affiliates and Sub-distributors under this
Section 13.3(a)(i) shall be taken into account in calculating Net Sales for
purposes of calculating the Product Purchase Price under Section 7.4.

(ii) If Eisai terminates this Agreement with respect to a Terminated Country
pursuant to Section 12.4(b), Arena shall repurchase from Eisai and its
Affiliates and Sub-distributors all quantities of Product remaining in inventory
in such Terminated Country as of the termination date at the applicable
Estimated Price paid by Eisai for such Product.

(iii) If Eisai elects not to sell off its remaining inventory of Product in
accordance with clause (i) above, Arena shall have the right, on written notice
to Eisai, to repurchase from Eisai and its Affiliates and Sub-distributors
quantities of Product remaining in inventory as of the termination date at the
applicable Estimated Price paid by Eisai for such Product.

(b) Certain Effects of Termination. The effects of termination set forth in
Sections 13.2(a), 13.2(c), 13.2(e), 13.2(f) and 13.2(g) above shall apply solely
with respect to the activities and matters specific to the Terminated
Country(ies).

 

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(c) Effect of Termination of U.S., Priority Additional Countries and Major New
Territory Countries. If this Agreement is terminated with respect to the United
States, all the Priority Additional Countries and all Major New Territory
Countries, then, effective as of the date on which this Agreement is terminated
with respect to the last of the United States, each of the Priority Additional
Countries and each of the Major New Territory Countries, Arena’s obligations
under Sections 3.7(a), 3.7(b), 3.7(d), and 3.14(b) automatically shall
terminate, and any other obligation (if any) under this Agreement of Arena to
disclose any information or draft Regulatory Filings regarding the development
or marketing of Product outside the Territory, or to discuss any Product
activities outside the Territory with Eisai, also terminate.

13.4. Effects of Termination With Respect to a Product. If this Agreement is
terminated with respect to a Terminated Product in one or more countries in the
Territory by Arena pursuant to Section 12.2(b)(ii), (a) the effects of
termination set forth in Section 13.2(a)—(f) above shall apply solely with
respect to the activities and matters specific to the Terminated Product(s) in
the applicable country(ies), and (b) Eisai shall have the sole and exclusive
right to use all Product Trademarks then being used by Eisai in the country(ies)
with respect to which such Terminated Product has been terminated for so long as
Eisai continues to Commercialize a Product in such country(ies).

13.5. Return of Confidential Information. Upon termination of this Agreement in
its entirety, each Party shall promptly return to the other Party, or delete or
destroy, all relevant records and materials in such Party’s possession or
control containing Confidential Information of the other Party; provided, that
such Party may keep one copy of such materials for archival purposes only
subject to a continuing confidentiality obligations. Upon termination of this
Agreement solely as to one or more Terminated Countries, each Party shall
promptly return to the other Party, or delete or destroy, all relevant records
and materials in such Party’s possession or control containing Confidential
Information of the other Party that are specific to and relate solely to such
Terminated Country(ies); provided, that such Party may keep one copy of such
materials for archival purposes only subject to a continuing confidentiality
obligations.

13.6. Rights in Bankruptcy. All licenses granted under or pursuant to
Section 5.7(b) by Arena and by Eisai under Section 9.2(b) are, and shall
otherwise be deemed to be, for purposes of Section 365(n) of the U.S. Bankruptcy
Code or analogous provisions of Applicable Laws outside the United States,
licenses of right to “intellectual property” as defined under Section 101 of the
U.S. Bankruptcy Code or analogous provisions of Applicable Laws outside the
United States. The Parties agree that Eisai or Arena, as the case may be, as
licensee of such rights under this Agreement, shall retain and may fully
exercise all of its rights and elections under the U.S. Bankruptcy Code or
analogous provisions of Applicable Laws outside the United States. The Parties
further agree that, in the event of the commencement of a bankruptcy proceeding
by or against a Party under the U.S. Bankruptcy Code or analogous provisions of
Applicable Laws outside the United States, the other Party shall be entitled to
a complete duplicate of (or complete access to, as appropriate) any such
intellectual property and all embodiments of such intellectual property, which,
if not already in such other Party’s possession, shall be promptly delivered to
it (a) upon any such commencement of a bankruptcy proceeding upon such other
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perform all of its obligations under this Agreement, or (b) if not delivered
under (a) above, following the rejection of this Agreement by or on behalf of
such first Party upon written request therefor by the other Party.

13.7. Purchase of Binding Order. Upon the termination of this Agreement, the
Parties will discuss and negotiate in good faith and agree on the equitable
division between the Parties of costs associated with any Product that is the
subject of any then-pending Order Commitment that has not been otherwise
fulfilled by Arena.

13.8. Survival. Upon termination of this Agreement, all rights and obligations
of the Parties under this Agreement shall terminate, except those described in
the following Articles and Sections: Sections 3.5(c), 3.6(d), 3.6(e) (solely
with respect to Development Expenses incurred prior to such termination or that
are otherwise non-cancellable), 3.9 (last sentence only), 5.7(b), 5.8 (warranty
only), 5.9 (solely to the extent related to Products sold by Eisai, its
Affiliates and Sub-distributors), 6.11 (with respect to Finished Product
delivered prior to termination), 6.12 (with respect to Finished Product
delivered prior to termination), 6.13 (with respect to Finished Product
delivered prior to termination), 7.5 (with respect to Product delivered prior to
termination), 7.7, 7.9, 7.10, 7.11, 7.12, 7.13, 8.1 (as required by the last
sentence), 8.2, 8.3, 8.4, 8.5, 8.6, 8.7, 8.8, 8.9 (to the extent provided
therein), 9.1(a)–(c), 9.1(d) (license only, solely for Program Know-How and
Program Patents licensed to Eisai prior to such termination), 9.2(b) (license in
last sentence only, solely for Program Patents assigned to Eisai prior to such
termination), 9.9(a) (last three sentences only), 9.9(c) (last five sentences
only), 10.4, 11.1, 11.2, 11.3, 11.4, 11.5 (to the extent provided therein),
12.7, 15.3, 15.6, 15.7, 15.8, 15.9, 15.10, 15.11, 15.12, 15.13, 15.14, 15.15,
15.16, 15.17(a), 15.18, 15.19 and 15.20, and Articles 13 and 14.

Article 14.

DISPUTE RESOLUTION AND GOVERNING LAW

14.1. Dispute Resolution Process. The Parties recognize that disputes as to
certain matters may from time to time arise during the Term that relate to
interpretation of a Party’s rights or obligations hereunder or any alleged
breach of this Agreement. If the Parties cannot resolve any such dispute within
30 days after written notice of a dispute from one Party to the other, either
Party may, by written notice to the other Party, have such dispute referred to
the Senior Executives. The Senior Executives shall negotiate in good faith to
resolve the dispute within 30 days. During such period of negotiations, any
applicable time periods under this Agreement shall be tolled. If the Senior
Executives are unable to resolve the dispute within such time period, except any
Dispute required to be arbitrated pursuant to Section 12.7, either Party may
pursue any remedy available to such Party at law or in equity, subject to the
terms and conditions of this Agreement and the other agreements expressly
contemplated hereunder. Notwithstanding anything in this Article 14 to the
contrary, Arena and Eisai shall each have the right to apply to any court of
competent jurisdiction for appropriate injunctive or provisional relief, as
necessary to protect its rights or property.

14.2. Governing Law; Litigation; Exclusive Venue and Service. This Agreement and
all questions regarding its existence, validity, interpretation, breach or
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governed by, and construed and enforced in accordance with, the laws of the
State of New York, United States, without reference to its conflicts of law
principles with the exception of sections 5-1401 and 5-1402 of New York General
Obligations Law. Subject to Section 12.7, the Parties hereby irrevocably and
unconditionally consent to the exclusive jurisdiction of the courts of the State
of New York and the United States District Court for the Southern District of
New York for any action, suit or proceeding (other than appeals therefrom)
arising out of or relating to this Agreement, and agree not to commence any
action, suit or proceeding (other than appeals therefrom) related thereto except
in such courts. The Parties irrevocably and unconditionally waive their right to
a jury trial. The Parties further hereby irrevocably and unconditionally waive
any objection to the laying of venue of any action, suit or proceeding (other
than appeals therefrom) arising out of or relating to this Agreement in the
courts of the State of New York or in the United States District Court for the
Southern District of New York, and hereby further irrevocably and
unconditionally waive and agree not to plead or claim in any such court that any
such action, suit or proceeding brought in any such court has been brought in an
inconvenient forum. Each Party further agrees that service of any process,
summons, notice or document by registered mail to its address set forth in
Section 15.10 shall be effective service of process for any action, suit or
proceeding brought against it under this Agreement in any such court.

Article 15.

GENERAL PROVISIONS

15.1. [Reserved]

15.2. Force Majeure. If the performance of any part of this Agreement by a Party
(other than making payment when due) is prevented, restricted, interfered with
or delayed by any reason or cause beyond the reasonable control of such Party
(including: fire, flood, volcano, embargo, power shortage or failure, acts of
war, insurrection, riot, terrorism, strike, lockout or other labor disturbance,
shortage of raw materials, epidemic, failure or default of public utilities or
common carriers, destruction of production facilities or materials by fire,
earthquake, or storm or like catastrophe, acts of God or any acts, omissions or
delays in acting of the other Party) or by compliance with any injunction, law,
order, proclamation, regulation, ordinance, demand or requirement of any
government or of any subdivision, authority or representative of any such
government (including changes in the requirements of a Regulatory Authority),
whether or not it is later held to be invalid, except to the extent any such
injunction, law, order, proclamation, regulation, ordinance, demand or
requirement operates to delay or prevent the non-performing Party’s performance
as a result of any breach by such Party or any of its Affiliates of any term or
condition of this Agreement, the PV Agreement or the Quality Agreement or any
breach of Applicable Laws (an event of “Force Majeure”), the Party so affected
shall, upon giving written notice to the other Party, be excused from such
performance to the extent of such Force Majeure event; provided, that the
affected Party shall use its substantial, good faith efforts to avoid or remove
such causes of non-performance and shall continue performance with the utmost
dispatch whenever such causes are removed or it is otherwise able (with
Commercially Reasonable Efforts) to perform its obligations.

 

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(a) Notification. If either Party becomes aware that such an event of Force
Majeure has occurred, is imminent or likely, it shall immediately notify the
other Party.

(b) Keeping the Other Informed. The Party subject to an event of Force Majeure
shall keep the other Party informed as to the progress of overcoming or avoiding
the effects of such an event of Force Majeure and of recommending performing the
affected obligation.

15.3. Waiver of Breach. Any condition or term of this Agreement may be waived at
any time by the Party that is entitled to the benefit thereof. No such waiver
shall be effective unless set forth in a written instrument duly executed by or
on behalf of the waiving Party. No delay or waiver by either Party of any
condition or term of this Agreement in any one or more instances shall be
construed as a further or continuing waiver of such condition or term or of
another condition or term of this Agreement.

15.4. Further Actions. Each Party agrees to execute, acknowledge and deliver
such further instruments, and to perform all such other acts, as may be
necessary or appropriate in order to carry out the purposes and intent of this
Agreement.

15.5. Performance by Affiliates or Subcontractors.

(a) To the extent that this Agreement imposes obligations on Affiliates of a
Party, such Party agrees to cause its Affiliates to perform such obligations.
Either Party may contract with one or more of its Affiliates to perform its
obligations hereunder; provided, that the Parties shall remain liable hereunder
for the prompt payment and performance of all of their respective obligations
hereunder.

(b) Each Party may subcontract some of its obligations under this Agreement to
the extent expressly permitted under this Agreement; provided, that with respect
to all subcontractors: (i) none of the other Party’s rights hereunder are
materially diminished or otherwise materially adversely affected as a result of
such subcontracting; (ii) the subcontractor undertakes in writing reasonable and
customary obligations of confidentiality and non-use; (iii) the subcontractor
does not have the right to further subcontract such obligation unless agreed by
the other Party; (iv) the subcontracting Party shall remain responsible and
liable for the performance by any subcontractor of its obligations under this
Agreement; and (v) such permitted subcontracting shall not relieve the
subcontracting Party of any liability or obligation under this Agreement, except
to the extent satisfactorily performed by such subcontractor. In the event a
Party performs any of its obligations under this Agreement through a
subcontractor, then such Party shall at all times be fully responsible for the
performance and payment of such subcontractor. The termination of the engagement
of, or termination of the appointment of, any subcontractor of a Party shall not
release such Party from any liability or obligation that, at the time of such
termination, has already accrued to such Party with respect to the
subcontractor, nor will any such termination of such an engagement or
termination of an appointment preclude the other Party from pursuing all rights
and remedies it may have under this Agreement, at law or in equity, with respect
to the subcontractor and its acts and omissions.

 

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15.6. Modification. No amendment or modification of any provision of this
Agreement shall be effective unless in a prior writing signed by authorized
officers of both Parties. No provision of this Agreement shall be varied,
contradicted or explained by any oral agreement, course of dealing or
performance, or any other matter not set forth in an agreement in writing and
signed by authorized officers of both Parties.

15.7. Severability. In the event any provision of this Agreement is held
invalid, illegal or unenforceable in any jurisdiction, to the fullest extent
permitted by Applicable Laws, (a) the Parties shall negotiate, in good faith and
enter into a valid, legal and enforceable substitute provision that most nearly
reflects the original intent of the Parties and (b) if the rights and
obligations of either Party will not be materially and adversely affected, all
other provisions of this Agreement shall remain in full force and effect in such
jurisdiction. Such invalidity, illegality or unenforceability shall not affect
the validity, legality or enforceability of such provision in any other
jurisdiction.

15.8. Entire Agreement. This Agreement (including the Exhibits attached hereto)
constitutes the entire agreement between the Parties relating to the subject
matter hereof and supersedes and cancels all previous express or implied
agreements and understandings, negotiations, writings and commitments, either
oral or written, in respect to the subject matter hereof, effective as of the
2nd Amendment Date, except that the Prior Amendment entered into by the Parties
on October 3, 2012 shall survive and remain in force, and shall be deemed to
amend the terms of this Agreement as per its terms. Each of the Parties
acknowledges and agrees that in entering into this Agreement, and the documents
referred to in it, it does not rely on, and shall have no remedy in respect of,
any statement, representation, warranty or understanding (whether negligently or
innocently made) of any Person (whether party to this Agreement or not) other
than as expressly set out in this Agreement. Nothing in this clause shall,
however, operate to limit or exclude any liability for fraud.

15.9. Language. The language of this Agreement is English. Any translation of
this Agreement in another language shall be deemed for convenience only and
shall never prevail over the original English version.

15.10. Notices. Any notice or communication required or permitted under this
Agreement shall be in writing in the English language, delivered personally,
sent by facsimile (and promptly confirmed by personal delivery, registered or
certified mail or overnight courier), or sent by internationally-recognized
overnight courier to the following addresses of the Parties (or such other
address for a Party as may be at any time thereafter specified by like notice):

 

  

To Arena:

 

Arena Pharmaceuticals GmbH

Untere Brühlstrasse 4

4800 Zofingen

Switzerland

Facsimile: 41 62 746 7505

Attention: General Manager

  

To Eisai:

 

Eisai Inc.

100 Tice Blvd.

Woodcliff Lake, New Jersey 07677

Facsimile: (201) 746-3204

Attention: General Counsel

 

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with a copy to:

 

Arena Pharmaceuticals, Inc.

6154 Nancy Ridge Drive

San Diego, CA 92121

USA

Facsimile: (858) 677-0065

Attention: General Counsel

  

with a copy to:

 

Eisai Inc.

100 Tice Blvd.

Woodcliff Lake, New Jersey 07677

Facsimile: (201) 746-2457

Attention: Vice President of

Commercial Development

Any such notice shall be deemed to have been given: (a) when delivered if
personally delivered, (b) on the third day after dispatch if sent by confirmed
facsimile, or (c) on the sixth day after dispatch if sent by
internationally-recognized overnight courier. Notices hereunder will not be
deemed sufficient if provided only between or among each Party’s representatives
on the Joint Development Committee. This Section 15.10 is not intended to govern
the day-to-day business communications necessary between the Parties in
performing their obligations under this Agreement.

15.11. Assignment. This Agreement shall not be assignable or otherwise
transferred, nor may any right or obligations hereunder be assigned or
transferred (except as otherwise expressly stated in this Agreement), by either
Party to any Third Party without the prior written consent of the other Party;
except that either Party may assign or otherwise transfer this Agreement without
the consent of the other Party to a successor in interest that acquires all or
substantially all of the business or assets of the assigning Party, whether by
merger, acquisition or otherwise; provided, that the successor in interest
assumes this Agreement in writing or by operation of law. In addition, either
Party shall have the right to assign, sublicense, subcontract or delegate, this
Agreement or any or all of its obligations or rights hereunder to an Affiliate
upon written notice to the other Party; provided, that the assigning,
sublicensing, subcontracting or delegating Party hereby guarantees and shall
remain fully and unconditionally obligated and responsible for the full and
complete performance of this Agreement by such Affiliate and in no event such
assignment, sublicensing, subcontracting or delegation be deemed to relieve such
Party’s liabilities or obligations to the other Party under this Agreement. The
other Party shall, at the request and expense of the assigning, sublicensing,
subcontracting or delegating Party, enter into such supplemental agreements with
the applicable Affiliates as may be necessary or advisable to permit such
Affiliates to avail itself of any rights or perform any obligations of the
assigning, sublicensing, subcontracting or delegating Party hereunder. Subject
to the foregoing, this Agreement shall inure to the benefit of each Party, its
successors and permitted assigns. Any assignment of this Agreement in
contravention of this Section 15.11 shall be null and void.

15.12. No Partnership or Joint Venture. Each Party is an independent contractor
under this Agreement. Nothing contained herein shall be deemed to create an
employment, agency, joint venture or partnership relationship between the
Parties or any of their agents or employees, or any other legal arrangement that
would impose liability upon one Party for the act or failure to act of the other
Party. The Parties shall operate their own businesses separately and
independently and they shall hold themselves out as, act as, and constitute
independent contractors in all respects and not as principal and agent, partners
or joint venturers. The Parties

 

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shall each be responsible for fulfilling their own obligations under this
Agreement, and they shall not have control or responsibility over the actions of
the other Party. The Parties shall make and receive only such payments as are
required under this Agreement, and shall not share in, or participate in, the
business operations of the other Party. Neither Party shall have any express or
implied power to enter into any contracts or commitments or to incur any
liabilities in the name of, or on behalf of, the other Party, or to bind the
other Party in any respect whatsoever.

15.13. Interpretation. The captions to the several Articles and Sections of this
Agreement are not a part of this Agreement but are included for convenience of
reference and shall not affect its meaning or interpretation. In this Agreement:
(a) the word “including” shall be deemed to be followed by the phrase “without
limitation” or like expression; (b) the singular shall include the plural and
vice versa; (c) masculine, feminine and neuter pronouns and expressions shall be
interchangeable; (d) except where the context requires otherwise, “or” has the
inclusive meaning represented by the phrase “and/or”; and (e) a reference to any
agreement includes any supplements and amendments to such agreement. Each
accounting term used herein that is not specifically defined herein has the
meaning given to it under GAAP consistently applied, but only to the extent
consistent with its usage and the other definitions in this Agreement. The
language of this Agreement shall be deemed to be the language mutually chosen by
the Parties and no rule of strict construction shall be applied against either
Party.

15.14. References. Unless otherwise specified, (a) references in this Agreement
to any Article, Section or Exhibit means references to such Article, Section or
Exhibit of this Agreement and (b) references in any section to any clause are
references to such clause of such section.

15.15. Counterparts; Electronic Signature Pages. This Agreement may be executed
in any number of counterparts each of which shall be deemed an original, and all
of which together shall constitute one and the same instrument. This Agreement
may be executed by facsimile or other electronic signatures and such signatures
shall be deemed to bind each Party as if they were original signatures.

15.16. Limitation of Liability. EXCEPT FOR LIABILITY FOR BREACH OF ARTICLE 8,
NEITHER PARTY SHALL BE ENTITLED TO RECOVER FROM THE OTHER PARTY ANY SPECIAL,
INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES IN CONNECTION WITH THIS AGREEMENT
OR ANY LICENSE GRANTED HEREUNDER; PROVIDED, THAT THIS SECTION 15.16 SHALL NOT BE
CONSTRUED TO LIMIT EITHER PARTY’S INDEMNIFICATION OBLIGATIONS UNDER ARTICLE 11.

15.17. Equitable Relief; Specific Performance.

(a) The Parties acknowledge and agree that the obligations and restrictions set
forth in Article 8 are reasonable and necessary to protect the legitimate
interests of the other Party and that such other Party would not have entered
into this Agreement in the absence of such obligations and restrictions, and
that any breach or threatened breach of any provision of Article 8 will result
in irreparable injury to such other Party for which there will be no adequate
remedy at law. In the event of a breach or threatened breach of any provision of
Article 8 the

 

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non-breaching Party shall be authorized and entitled to obtain from any court of
competent jurisdiction injunctive relief, whether preliminary or permanent, and
an equitable accounting of all earnings, profits and other benefits arising from
such breach, which rights shall be cumulative and in addition to any other
rights or remedies to which such non-breaching Party may be entitled in law or
equity. Each Party hereby waives any requirement that the other Party post a
bond or other security as a condition for obtaining any such relief. Nothing in
this Section 15.17 is intended, or should be construed, to limit either Party’s
right to equitable relief or any other remedy for a breach of any other
provision of this Agreement.

(b) Arena acknowledges and agrees that Arena’s obligations under Section 6.6 are
unique and that Eisai would not have entered into this Agreement in the absence
of such obligations, and that any breach or threatened breach of Section 6.6
will result in irreparable injury to Eisai for which damages will be not be an
adequate remedy. Accordingly, Eisai shall be entitled to specific performance of
Section 6.6. For clarity, the foregoing shall not be deemed to grant Eisai the
right to engage a Third Party manufacturer or to manufacture any Product itself
or through any of its Affiliates.

(c) Arena acknowledges and agrees that Arena’s obligations under Sections 3.3(f)
and 3.5(b)(i) are unique and that Eisai would not have entered into this
Agreement in the absence of such obligations, and that any breach or threatened
breach of Section 3.3(f) or 3.5(b)(i) will result in irreparable injury to Eisai
for which damages will be not be an adequate remedy. Accordingly, Eisai shall be
entitled to specific performance of Section 3.3(f) and 3.5(b)(i).

15.18. No Benefit to Third Parties. The representations, warranties, covenants
and agreements set forth in this Agreement are forth the sole benefit of the
Parties and their successors and permitted assigns, and they shall not be
construed as conferring any rights on any other Persons.

15.19. Cumulative Rights. Except as expressly provided herein, the Parties’
respective rights under the various provisions of this Agreement shall be
construed as cumulative, and no one of them is exclusive of the other or
exclusive of any rights allowed by Applicable Laws.

15.20. Amendment and Restatement; No Novation. This Agreement constitutes an
amendment and restatement of the Restated Agreement effective from and after the
2nd Amendment Effective Date. The execution and delivery of this Agreement shall
not constitute a novation of any rights or obligations owing under the Original
Agreement based on facts or events occurring or existing prior to the execution
and delivery of the Restated Agreement, or a novation of any rights or
obligations owing under the Restated Agreement based on facts or events
occurring or existing prior to the execution and delivery of this Agreement. As
of the 2nd Amendment Effective Date, the Restated Agreement is hereby amended,
supplemented, modified and restated in its entirety as described herein.

 

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Article 16.

COMPLIANCE WITH LAW

16.1. Generally. Each Party covenants that it shall, and shall cause its
Affiliates to, comply with Applicable Laws with respect to performing its
obligations or exercising its rights under this Agreement.

16.2. Securities Laws. Each of the Parties acknowledges that it is aware that
the securities laws of the Territory and other countries prohibit any Person who
has material non-public information about a publicly listed company from
purchasing or selling securities of such company or from communicating such
information to any person under circumstances in which it is reasonably
foreseeable that such person is likely to purchase or sell such securities.

16.3. Certain Payments. Each of the Parties acknowledges that it is aware that
the United States and other countries have stringent laws that prohibit persons
directly or indirectly to make unlawful payments to, and for the benefit of,
government officials and related parties to secure approvals or permission for
their activities.

[Signature Page Follows]

 

145

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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective
Date.

 

ARENA PHARMACEUTICALS GmbH       EISAI INC. By:  

/s/ Daniel A. Müller

      By:  

/s/ Lonnel Coats

Name: Daniel A. Müller, Ph.D.       Name: Lonnel Coats Title: General Manager   
   Title: President & CEO By:  

/s/ Joachim Fries

      Name: Joachim Fries         Title: Head Supply Chain Management        
EISAI CO., LTD.         By:  

/s/ Ivan Cheung

        Name: Ivan Cheung         Title:
Corporate Officer, VP, Corporate Strategy & Planning                

[Signature Page to 2nd Amended and Restated Marketing and Supply Agreement]

--------------------------------------------------------------------------------

EXHIBIT A

Other Additional Territory

 

Carribean

Anguilla

Antigua and Barbuda

Aruba

Bahamas

Barbados

Bermuda

British Virgin Islands

Cayman Islands

Cuba

Curaçao

Dominica

Dominican Republic

Grenada

Guadeloupe

Haiti

Jamaica

Martinique

Montserrat

Navassa Island

Netherlands Antilles

Saba

Saint Barthélemy

Sint Eustatius

Saint Martin

Saint Kitts and Nevis

Saint Lucia

Saint Vincent and the Grenadines

Trinidad and Tobago

Turks and Caicos

Central America

Belize

Costa Rica

El Salvador

Guatemala

Honduras

Nicaragua

Panama

South America

Argentina

Bolivia

Chile

Colombia

Ecuador

French Guiana

Guyana

Paraguay

Peru

Suriname

Uruguay

Venezuela

 

--------------------------------------------------------------------------------

EXHIBIT B

Compound Structure

 

LOGO [g652747g50g39.jpg]

(R)-8-Chloro-1-methyl-2,3,4,5-tetrahydro-1H-3-benzazepine

--------------------------------------------------------------------------------

EXHIBIT C

Europe

 

Albania

Andorra

Austria

Belarus

Belgium

Bosnia and Herzegovina

Bulgaria

Croatia

Cyprus

Czech Republic

Denmark

Estonia

Finland

France

Germany

Gibraltar

Greece

Hungary

Iceland

Ireland

Italy

Kosovo

Latvia

Liechtenstein

Lithuania

Luxembourg

Macedonia

Malta

Moldova

Monaco

Montenegro

Netherlands

Norway

Poland

Portugal

Romania

Russia

San Marino

Serbia

Slovakia

Slovenia

Spain

Sweden

Switzerland

Ukraine

United Kingdom

Vatican City

 

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EXHIBIT D

Existing Arena Patents

[With the exception of the below paragraph from the last page of this exhibit,
pages 1 through 10 of this exhibit have been redacted and omitted pursuant to a
confidential treatment request filed with the Securities and Exchange
Commission.]

It is further understood and agreed that, to the extent any of the above
applications, or any patents issuing or derived therefrom, have territorial
effect in any country or jurisdiction outside the Territory (such as WIPO
applications), such applications and patents are limited to their application
solely in the Territory, for purposes of establishing the scope of the Arena
Patents and Existing Arena Patents.

 

    ***Confidential Treatment Requested