EXHIBIT 10.1
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
Development, License and Marketing Agreement
By and Among
Jagotec AG,
SkyePharma PLC
(in connection with parent guaranty only),
Kos Life Sciences, Inc.
and
Kos Pharmaceuticals, Inc.
(in connection with parent guaranty only)
Dated As Of
May 5, 2006

 

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Table of Contents

                                              Page     1.     Definitions.     1
            1.1    
“Affiliate”
    1             1.2    
“Agreement”
    2             1.3    
“ANDA”
    2             1.4    
“Annual Commercialization Plan”
    2             1.5    
“Annual Development Plan”
    2             1.6    
“Applicable Laws”
    2             1.7    
“Bankruptcy Code”
    2             1.8    
“Blocking Patent”
    2             1.9    
“Breaching Party”
    2             1.10    
“Calendar Quarter”
    2             1.11    
“Canada”
    2             1.12    
“Canada Term Sheet”
    2             1.13    
“Calendar Year”
    2             1.14    
“cGMP”
    2             1.15    
“Commercialization Program”
    2             1.16    
“Commercially Reasonable Efforts”
    3             1.17    
“Confidential Information”
    3             1.18    
“Confidentiality Agreement”
    3             1.19    
“Controlled”
    3             1.20    
“COPD”
    3             1.21    
“Core Clinical Program”
    3             1.22    
“Data”
    3             1.23    
“Development Costs”
    3             1.24    
“Development Program”
    3             1.25    
“Disclosing Party”
    3             1.26    
“Effective Date”
    3             1.27    
“Executive Officers”
    3             1.28    
“Existing Product”
    4             1.29    
“Expert”
    4             1.30    
“FDA”
    4             1.31    
“FD&C Act”
    4             1.32    
“Field”
    4             1.33    
“First Commercial Sale”
    4             1.34    
“GAAP”
    4             1.35    
“GCP”
    4             1.36    
“Generic Product”
    4             1.37    
“GLP”
    4             1.38    
“Governmental Authority”
    4             1.39    
“Improved Product”
    5             1.40    
“Indemnitee”
    5             1.41    
“Indications”
    5  

 

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                                              Page             1.42    
“INDs”
    5             1.43    
“Infringement”
    5             1.44    
“Invention”
    5             1.45    
“Jagotec”
    5             1.46    
“Jagotec Marks”
    5             1.47    
“Jagotec Technology”
    5             1.48    
“Kos”
    5             1.49    
“Kos Marks”
    5             1.50    
“Kos Technology”
    5             1.51    
“Know-how”
    5             1.52    
“Knowledge”
    6             1.53    
“Licensees”
    6             1.54    
“Marketing Costs”
    6             1.55    
“NDA”
    6             1.56    
“Net Sales”
    6             1.57    
“Non-breaching Party”
    7             1.58    
“Orange Book”
    7             1.59    
“Party”
    7             1.60    
“Patents”
    7             1.61    
“PDEs”
    7             1.62    
“PDMA”
    7             1.63    
“Person”
    7             1.64    
“PhRMA Code”
    7             1.65    
“Post-Registration Studies”
    7             1.66    
“Product”
    7             1.67    
“Product Trademarks”
    7             1.68    
“PSUR”
    7             1.69    
“Receiving Party”
    7             1.70    
“Registration”
    8             1.71    
“Registration Application”
    8             1.72    
“Regulatory Authority”
    8             1.73    
“Serious Adverse Drug Experience”
    8             1.74    
“SkyePharma”
    8             1.75    
“Specifications”
    8             1.76    
“Steering Committee”
    8             1.77    
“Success Event 1”
    8             1.78    
“Success Event 2”
    8             1.79    
“Supply Agreement”
    8             1.80    
“Term Sheet Date”
    8             1.81    
“Territory”
    8             1.82    
“Third Party”
    8             1.83    
“Third Party Licenses”
    8             1.84    
“Treaty”
    8  

 

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                                              Page             1.85    
“United States” or “U.S.”
    8             1.86    
“Withholding Taxes”
    8                               2.     Grant of Rights.     9            
2.1    
Licenses
    10             2.2    
Trademarks
    10             2.3    
Right of First Negotiation for Canada.
    10                               3.     Steering Committee.     11          
  3.1    
Steering Committee
    11             3.2    
Development Committee
    12             3.3    
Commercialization Committee
    13             3.4    
Meetings
    14             3.5    
Decision-making of Steering Committee
    14             3.6    
Decision-making of Development, Commercialization and Other Committees
    16             3.7    
Minutes
    17             3.8    
Expenses
    17                               4.     Product Development; Registration;
Supply of Product.     17             4.1    
Development Program
    17             4.2    
Development Funding
    18             4.3    
Jagotec Responsibilities under the Development Program
    19             4.4    
Kos Responsibilities under the Development Program
    20             4.5    
Conduct of Development Program Activities
    20             4.6    
Improved Products
    21             4.7    
Manufacture and Supply Agreement
    22                               5.     Commercialization Program.     22  
          5.1    
Commercialization Program.
    22             5.2    
Responsibilities of Kos under the Commercialization Program
    23             5.3    
Modifications to Kos’ Commercialization Obligations
    25             5.4    
Responsibilities of Jagotec under the Commercialization Program
    25             5.5    
Subcontractors/Co-promotion Partners
    25                               6.     Milestones; Success Fees and
Royalties.     26             6.1    
Milestones
    26             6.2    
Success Fees
    26             6.3    
Royalty Payments to Jagotec
    27             6.4    
Royalty Reductions
    28             6.5    
Material Breach
    29             6.6    
Bartering and Bundling Prohibited
    29                               7.     Payments and Reports.     29  

 

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                                              Page             7.1    
Payments
    29             7.2    
Mode of Payment; Interest
    30             7.3    
Records Retention
    30             7.4    
Audits
    30             7.5    
Taxes
    31                               8.     Ownership; Patents and Trademarks.  
  32             8.1    
Ownership; Validity; Enforceability
    32             8.2    
Inventions
    32             8.3    
Patent and Trademark Enforcement
    33             8.4    
Infringement Action by Third Parties
    34                               9.     Regulatory Matters.     35          
  9.1    
Adverse Event Reporting
    35             9.2    
Recall
    37             9.3    
Access, Use and Reference Rights to Data and Filings
    38                               10.     Representations, Warranties and
Covenants.     38             10.1    
Representations, Warranties and Covenants of Both Parties
    38             10.2    
Representations and Warranties of Jagotec
    39             10.3    
Representations, Warranties and Covenants of Kos
    41             10.4    
Disclaimer
    42             10.5    
Limitation on Damages
    42                               11.     Confidentiality.     42            
11.1    
Confidential Information
    42             11.2    
Exclusions
    42             11.3    
Exceptions
    43             11.4    
Limitations on Use
    43             11.5    
Remedies
    43             11.6    
Duration
    43                               12.     Indemnification; Insurance.     43
            12.1    
By Jagotec
    43             12.2    
By Kos
    44             12.3    
Notice
    44             12.4    
Complete Indemnification
    44             12.5    
Insurance
    44                               13.     Term; Termination.     45          
  13.1    
Term
    45             13.2    
Right to Extend Term
    45  

 

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                                              Page             13.3    
Termination for Cause
    45             13.4    
Termination Upon Withdrawal of the Product
    45             13.5    
Termination for Safety Concerns
    46             13.6    
Termination upon Insolvency
    46             13.7    
Other Termination Rights
    46             13.8    
Effect of Expiration or Termination
    47             13.9    
Partial Termination for Jagotec Breach
    48             13.10    
Assignment of Supply Agreements with Third Parties
    48             13.11    
Accrued Rights; Surviving Obligations
    48             13.12    
Section 365(n) of the Bankruptcy Code
    48                               14.     Force Majeure.     49              
                15.     Miscellaneous.     49             15.1    
Relationship of Parties
    49             15.2    
Assignment
    49             15.3    
Subcontracting
    49             15.4    
Books and Records
    50             15.5    
Further Actions
    50             15.6    
Notice
    50             15.7    
Use of Name
    52             15.8    
Public Announcements
    52             15.9    
Waiver
    52             15.10    
Compliance with Law
    53             15.11    
Severability
    53             15.12    
Amendment
    53             15.13    
Governing Law
    53             15.14    
Jurisdiction; Service of Process
    53             15.15    
Dispute Resolution
    53             15.16    
Entire Agreement
    53             15.17    
Parties in Interest
    54             15.18    
Descriptive Headings
    54             15.19    
Construction of Agreement
    54             15.20    
Counterparts
    54             15.21    
Guaranties
    54  

 

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Development, License and Marketing Agreement
     This Development, License and Marketing Agreement, made as of May 5, 2006
(the “Effective Date”), is by and between Kos Life Sciences, Inc., a company
organized and existing under the laws of Delaware, having a place of business
located at 2200 N. Commerce Parkway, Weston, FL 33326 (“Kos”), and solely with
respect to Section 15.21.1 Kos Pharmaceuticals, Inc., a corporation organized
and existing under the laws of Florida, having offices located at 1 Cedar Brook
Drive, Cranbury, NJ 08512 (“Kos Pharmaceuticals”), Jagotec AG, a corporation
organized and existing under the laws of Switzerland, having offices located at
Eptingerstrasse 51, CH—4132 Muttenz, Switzerland (“Jagotec”) and solely with
respect to Section 15.21.2, SkyePharma PLC, a company registered in England and
Wales, having offices located at 105 Piccadilly, London W1J 7NJ, United Kingdom
(“SkyePharma”).
Preliminary Statements
     A. Jagotec, together with its Affiliates (as defined below), own and have
rights and interests in, or have acquired the rights to, the Existing Product
(as defined below) based on the Jagotec Technology (as defined below) and Third
Party Licenses (as defined below).
     B. Kos, together with its Affiliates, possess skills, knowledge and
expertise in the development, marketing and sales of pharmaceutical products
for, among other things, the treatment of respiratory diseases in the Territory
(as defined below).
     C. Jagotec desires to complete the development of the Existing Product for
the Indications up to Registration (as defined below) in the United States, and
Kos desires to commercialize the Product pursuant to the terms and conditions of
this Agreement.
     NOW, THEREFORE, in consideration of the foregoing preliminary statements,
the mutual agreements and covenants set out herein, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
Parties (as defined below) hereby agree as follows:
1. Definitions.
     As used in this Agreement, the following terms shall have the meanings set
out in this Section 1. Unless the context clearly and unambiguously requires
otherwise, references to the singular include the plural and vice versa, and
references to Sections are references to the Sections of this Agreement.
     1.1 “Affiliate” shall mean, with respect to a Party, any other Person
controlling, controlled by, or under common control with, such Party, for only
so long as such control exists. For these purposes, “control” shall refer to:
(i) the possession, directly or indirectly, of the power to direct the
management or policies of a Person, whether through the ownership of voting
securities, by contract or otherwise, or (ii) the ownership, directly or
indirectly, of more than fifty percent (50%) of the voting securities or other
ownership interest of a Person, provided, that if local law restricts foreign
ownership, control will be established by direct or indirect ownership of the
maximum ownership percentage that may, under such local law, be owned by foreign
interests. Notwithstanding the foregoing, except with respect to Jagotec’s
indemnification obligations pursuant to Section 12.1, for the purposes of this
Agreement, none of the following

1

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persons shall be considered to be an “Affiliate” of Kos or any of Kos’
Affiliates: (i) Michael Jaharis or the spouse or any sibling or lineal
descendent of Michael Jaharis or their estates, (ii) any trust for the benefit
of Michael Jaharis or the spouse or any sibling or lineal descendent of Michael
Jaharis, or (iii) any corporation, limited liability company, partnership,
limited partnership, or other entity that is beneficially owned or controlled by
any of the persons in clauses (i) or (ii) above, other than Kos Pharmaceuticals
and its direct and indirect subsidiaries.
     1.2 “Agreement” shall mean this Development, License and Marketing
Agreement, together with the preliminary statements and all schedules hereto, as
the same may be amended in writing from time to time.
     1.3 “ANDA” shall mean an Abbreviated New Drug Application.
     1.4 “Annual Commercialization Plan” shall have the meaning assigned to such
term in Section 5.1.3.
     1.5 “Annual Development Plan” shall have the meaning assigned to such term
in Section 4.1.2.
     1.6 “Applicable Laws” shall mean all applicable federal, national, state
and local laws, ordinances, rules and regulations applicable to this Agreement
or the activities contemplated hereunder, including, without limitation, the
FD&C Act, cGMP, GCP, GLP and the PDMA.
     1.7 “Bankruptcy Code” shall have the meaning assigned to such term in
Section 13.12.
     1.8 “Blocking Patent” means any patent issued to a Third Party that would
be infringed by the use, sale, offer for sale or importation of the Product in
the Field in the Territory.
     1.9 “Breaching Party” shall have the meaning assigned to such term in
Section 13.3.
     1.10 “Calendar Quarter” shall mean a period of three (3) consecutive months
ending on the last day of March, June, September, or December, respectively.
     1.11 “Canada” shall include the country of Canada and its possessions and
territories.
     1.12 “Canada Term Sheet” shall have the meaning assigned to such term in
Section 2.3.3
     1.13 “Calendar Year” shall mean a period of four (4) consecutive Calendar
Quarters ending on the last day of December.
     1.14 “cGMP” shall mean current Good Manufacturing Practice and General
Biological Products Standards as promulgated under and in accordance with the
FD&C Act, Title 21 of the U.S. Code of Federal Regulations, Parts 210, 211, and
600-680, as each may be amended from time to time, or any successors thereto.
     1.15 “Commercialization Program” shall have the meaning assigned to such
term in Section 5.1.1.

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     1.16 “Commercially Reasonable Efforts” shall mean, with respect to a Party,
those commercially reasonable efforts by that Party similar to the efforts that
Party, in good faith, would make in similar circumstances for its own operations
at that time, it being understood that a Party’s Commercially Reasonable Efforts
will not in any event require that Party to take any action that would be
reasonably likely to result in a breach of any other provision of this
Agreement, or any other agreement between the Parties, or any other agreement
between a Party, Affiliate of such Party and/or Third Parties existing as of the
Effective Date, or that the Party in good faith believes may violate any
Applicable Law or any order, permit, direction or license of any court or
Governmental Authority having appropriate jurisdiction over the Party and
subject matter.
     1.17 “Confidential Information” shall have the meaning assigned to such
term in Section 11.1.
     1.18 “Confidentiality Agreement” shall mean that certain Mutual
Confidential Disclosure Agreement dated April 4, 2003 entered into by and
between Kos Pharmaceuticals and SkyePharma.
     1.19 “Controlled” means, with respect to any Know-How, patent, other
intellectual property right, data, or regulatory filing only, the possession of
the right, whether directly or indirectly, whether by ownership, license or
otherwise, to assign, or grant a license, sublicense or other right to or under,
such Know-How, patent, other intellectual property right, data or regulatory
filing as provided for herein without violating the terms of any agreement or
other arrangements with any Third Party. The term “Control” used in this context
shall also have a correlative meaning.
     1.20 “COPD” shall mean chronic obstructive pulmonary disease.
     1.21 “Core Clinical Program” shall mean those clinical studies described in
Schedule 1.21 with respect to the Existing Product.
     1.22 “Data” shall have the meaning assigned to such term in Section 8.1.3.
     1.23 “Development Costs” shall have the meaning assigned to such term in
Section 4.2.2(a).
     1.24 “Development Program” shall have the meaning assigned to such term in
Section 4.1.1.
     1.25 “Disclosing Party” shall have the meaning assigned to such term in
Section 11.1.
     1.26 “Effective Date” shall have the meaning assigned to such term in the
introductory paragraph of this Agreement.
     1.27 “Executive Officers” shall have the meaning assigned to such term in
Section 3.5.1.

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     1.28 “Existing Product” shall mean Jagotec’s proprietary formulation having
fluticasone **** and formoterol ****, the propellant heptafluoropropane (HFA
227), **** metered dose inhaler, and which is delivered two (2) times per day,
at two (2) dosage strengths: (i) fluticasone 50 mcg/formoterol 5 mcg per
actuation; and (ii) fluticasone 125 mcg/formoterol 5 mcg per actuation; ****.
     1.29 “Expert” shall have the meaning assigned to such term in
Section 3.5.4(a).
     1.30 “FDA” shall mean the United States Food and Drug Administration, or
any successor thereto.
     1.31 “FD&C Act” shall mean the Food Drug and Cosmetic Act as that federal
statute was enacted in 1938 as Public Law 75-717, as such may have been amended,
and which is contained in Title 21 of the U.S. Code, Section 301 et seq., as
amended, and the regulations promulgated thereunder from time to time.
     1.32 “Field” shall mean the treatment of respiratory diseases, including
without limitation, the treatment of all types of asthma and COPD.
     1.33 “First Commercial Sale” shall mean the first sale of the Product in
the Territory to a Person that is not an Affiliate of Kos for which payment is
due for use or consumption by the general public of such Product after all
required Registrations have been granted by the applicable Regulatory Authority.
Sales for clinical studies, compassionate use, named patient programs, sales
under a treatment IND, test marketing, any nonregistrational studies, or any
similar instance where Product is supplied with or without charge will not
constitute a First Commercial Sale.
     1.34 “GAAP” shall mean: (i) with respect to Kos, generally accepted
accounting principles in the United States; and (ii) with respect to Jagotec,
international financial reporting standards; in each case, consistently applied
by the Party at issue.
     1.35 “GCP” shall mean the FDA regulations and applicable ICH guidelines for
the design, conduct, performance, monitoring, auditing, recording, analysis, and
reporting of clinical trials, as applicable to the development of the Product
from time to time, including 21 C.F.R. Part 11, 50, 54, 56, 312, and 314 as
amended from time to time.
     1.36 “Generic Product” shall mean with respect to any Product, a
pharmaceutical product (i) designated by the FDA in the Orange Book as an AB
rated product to such Product; (ii) that is substitutable for such Product; and
(iii) that is approved through an ANDA filing.
     1.37 “GLP” shall mean the FDA regulations and applicable ICH guidelines for
conducting nonclinical laboratory studies that support or are intended to
support applications for research or marketing permits for products regulated by
the FDA, as applicable to the development of Product from time to time,
including 21 C.F.R. Part 58 as amended from time to time.
     1.38 “Governmental Authority” shall mean any federal, state or local
governmental authority, agency or other body.

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     1.39 “Improved Product” shall mean any Existing Product that is modified or
enhanced by: (i) an Invention of either Party (including Inventions made on
behalf of or with a Third Party); or (ii) any intellectual property Controlled
by Jagotec after the Effective Date; or (iii) any intellectual property
Controlled by Kos after the Effective Date; in each case pertaining to the
formulation, dosage strength, or inhaler mechanism, provided that such Improved
Product shall continue to have fluticasone proprionate and formoterol as its
active ingredients and be delivered through a metered dose inhaler, a dry powder
inhaler or other inhaler.
     1.40 “Indemnitee” shall have the meaning assigned to such term in
Section 12.3.
     1.41 “Indications” shall mean the treatment of adult and adolescent asthma.
     1.42 “INDs” shall mean Investigational New Drug Applications filed with the
FDA in the United States.
     1.43 “Infringement” shall have the meaning assigned to such term in
Section 8.3.1.
     1.44 “Invention” shall mean any new or useful process, machine,
manufacture, or composition of matter directly relating to or comprising the
Product, whether patentable or unpatentable, or any improvement, enhancement,
modification or derivative work thereof, that is conceived or first reduced to
practice or first demonstrated to have utility during the term of this Agreement
in connection with the Parties’ activities under this Agreement.
     1.45 “Jagotec” shall have the meaning assigned to such term in the
introductory paragraph of this Agreement.
     1.46 “Jagotec Marks” shall mean those trademarks owned or licensed (with
right to sublicense) by Jagotec that pertain to the Product and which are set
forth on Schedule 1.46.
     1.47 “Jagotec Technology” shall mean all Know-how and Patents (including
without limitation the Patents set forth on Schedule 1.60) which are Controlled
(other than the Third Party Licenses) by Jagotec or its Affiliates prior to the
Effective Date and all Inventions Controlled by Jagotec or its Affiliates during
the term of this Agreement, if any.
     1.48 “Kos” shall have the meaning assigned to such term in the introductory
paragraph.
     1.49 “Kos Marks” shall mean any trademarks or trade names used or
registered by Kos or its Affiliates at any time prior to or during the term of
the Agreement to identify itself or the Product (for the sake of clarity,
excluding those belonging to Jagotec that are set forth on Schedule 1.46).
     1.50 “Kos Technology” shall mean all Know-how and Patents (for the sake of
clarity, excluding the Patents belonging to Jagotec that are set forth on
Schedule 1.60) which are Controlled by Kos or its Affiliates, prior to the
Effective Date, and all Inventions Controlled by Kos or its Affiliates during
the term of this Agreement, if any.
     1.51 “Know-how” shall mean any and all unpatented formulae, confidential
and/or proprietary industrial and Confidential Information and techniques,
processes, trade secrets,

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technologies and know-how that directly relates to the Product, whether or not
patentable, including, without limitation, compositions of matter, formulae,
test results, testing procedures, synthesis, preparation, recovery and
purification processes and techniques, control methods and assays, chemical
data, toxicological and pharmacological data and techniques, clinical data,
medical uses, product forms and product formulations and Specifications,
together with all documents and files embodying the foregoing.
     1.52 “Knowledge” shall mean, with respect to Jagotec, the actual knowledge
of the employees of Jagotec, listed on Schedule 1.52 as of the Effective Date.
     1.53 “Licensees” shall have the meaning assigned to such term in
Section 4.3.7.
     1.54 “Marketing Costs” shall mean the direct costs and expenses for
marketing, promotion, advertising (****), promotional materials, professional
education, medical support to marketing activities, Phase IV clinical trials
(solely to the extent any such trials are: (i) conducted in support of approved
indications in the Field, (ii) not intended to result in a labeling change, and
(iii) not required by any Regulatory Authority), public relations, and other
similar activities directly related to the Product. Such costs will not include
**** but will include **** incurred by Kos (including the foregoing costs
incurred by subcontractors, co-promotion partners, or consultants of Kos
retained pursuant to Section 5.5 and reimbursed by Kos) which relate directly to
the Marketing Costs of the Product and shall be in addition to any ****.
     1.55 “NDA” means a New Drug Application filed with the FDA in the United
States.
     1.56 “Net Sales” shall mean, with respect to the Product, the gross amount
recorded for sales of such Product in arm’s length sales by Kos or its
Affiliates to Third Parties, commencing with the First Commercial Sale of the
Product, less the following deductions from such gross amounts which are
actually incurred, allowed, accrued or specifically allocated to the Product:
(i) credits, price adjustments or allowances for damaged products, returns or
rejections of Product; (ii) normal and customary trade, cash and quantity
discounts, allowances and credits (other than price discounts granted at the
time of invoicing which have been already included in the gross amount invoiced)
including fees incurred or accrued relative to recorded sales by Kos or its
Affiliate to Third Parties pursuant to inventory management agreements;
(iii) chargeback payments and rebates (or the equivalent thereof) and
administrative service fees granted to group purchasing organizations, managed
health care organizations or to federal, state/provincial, local and other
governments, including their agencies, or to trade customers; (iv) any invoiced
freight, postage, shipping, insurance and other transportation charges; and
(v) sales, value-added (to the extent not refundable in accordance with
Applicable Laws), and excise taxes, tariffs and duties, and other taxes directly
related to the sale (but not including taxes assessed against the income derived
from such sale); provided that the foregoing deductions remain consistent with
GAAP and are calculated using the standard accounting practices Kos customarily
applies to other products sold by it.
     Net Sales shall also include the average selling price for the Product
multiplied by the number of units transferred to Third Parties for non-cash
consideration or where no invoice is generated.

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     For the avoidance of doubt, Net Sales shall not include sales of Product
among Kos and its Affiliates.
     1.57 “Non-breaching Party” shall have the meaning assigned to such term in
Section 13.3.
     1.58 “Orange Book” shall mean the FDA publication entitled Approved Drug
Products with Therapeutic Equivalence Evaluations.
     1.59 “Party” shall mean, as applicable, Jagotec or Kos and, when used in
the plural, shall mean Jagotec and Kos.
     1.60 “Patents” shall mean the U.S. patents and U.S. patent applications
directly relating to and covering the Product in the Territory, together with
any U.S. patents that may issue therefor in the Territory, including any and all
extensions, renewals, continuations, continuations-in-part, divisions,
patents-of-additions, reissues, or reexaminations of any of the foregoing, and
any U.S. patents based on applications that claim priority from any of the
foregoing. The Patents owned by Jagotec and in existence as of the Effective
Date are listed on Schedule 1.60.
     1.61 “PDEs” shall have the meaning assigned to such term in Section 5.1.3.
     1.62 “PDMA” shall mean the Prescription Drug Marketing Act of 1987, Title
21 of the U.S. Code of Federal Regulations, Parts 203 and 205, as amended, and
any final regulations or guidances promulgated thereunder from time to time.
     1.63 “Person” shall mean any individual, corporation, partnership, limited
liability company, trust, governmental entity, or other legal entity of any
nature whatsoever.
     1.64 “PhRMA Code” shall mean the Pharmaceutical Research and Manufacturers
of America Code on Interactions with Healthcare Professionals.
     1.65 “Post-Registration Studies” shall mean such studies as may be required
to be conducted by any Regulatory Authority to maintain the Registration and any
other studies as may be desired by Kos in respect of the Product.
     1.66 “Product” shall mean any Existing Product and, to the extent that the
Parties agree to develop and commercialize any Improved Product pursuant to
Section 4.6, any such Improved Product.
     1.67 “Product Trademarks” shall mean any trademarks, trade dress (including
packaging design), logos, slogans, and designs, whether or not registered in the
Territory developed by the Commercialization Committee and used to identify or
promote the Product in the Territory, but excluding any Kos Marks or Jagotec
Marks.
     1.68 “PSUR” shall have the meaning assigned to such term in Section 9.1.3.
     1.69 “Receiving Party” shall have the meaning assigned to such term in
Section 11.1.

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     1.70 “Registration” shall mean the approval of the Registration Application
for the Product in the Field in the Territory by the Regulatory Authority.
     1.71 “Registration Application” shall mean any filing(s) made with the
Regulatory Authority in the Territory for regulatory approval of the marketing,
manufacture and sale of the Product in the Field in the Territory.
     1.72 “Regulatory Authority” shall mean the FDA and any other regulatory
authority that has responsibility for granting regulatory approval for the
marketing, manufacture and sale of the Product in the Field in the Territory.
     1.73 “Serious Adverse Drug Experience” shall have the meaning assigned to
such term in Section 9.1.1.
     1.74 “SkyePharma” shall have the meaning assigned to such term in the
introductory paragraph.
     1.75 “Specifications” shall mean the technical specifications for the
Product as required in the Registration, or any other regulatory requirements
applicable in the Territory as the same may be amended from time to time as
required by Applicable Laws or as may be mutually agreed upon in writing by the
Parties from time to time.
     1.76 “Steering Committee” shall have the meaning assigned to such term in
Section 3.1.
     1.77 “Success Event 1” shall have the meaning assigned to such term in
Section 6.2.
     1.78 “Success Event 2” shall have the meaning assigned to such term in
Section 6.2.
     1.79 “Supply Agreement” shall have the meaning assigned to such term in
Section 4.7.
     1.80 “Term Sheet Date” shall have the meaning assigned to such term in
Section 2.3.2
     1.81 “Territory” shall mean the United States.
     1.82 “Third Party” shall mean any Person who or which is neither a Party
nor an Affiliate of a Party.
     1.83 “Third Party Licenses” shall mean the licenses granted to Jagotec by
any Third Party which directly relate to the Existing Product, redacted copies
of which are attached as Schedule 1.83A (the "**** License”) and 1.83B.
     1.84 “Treaty” shall have the meaning assigned to such term in
Section 7.5.2.
     1.85 “United States” or “U.S.” shall mean The United States of America,
including its possessions and territories.
     1.86 “Withholding Taxes” shall have the meaning assigned to such term in
Section 7.5.1.

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2. Grant of Rights.
     2.1 Licenses.
          2.1.1 Subject to the terms and conditions of this Agreement, Jagotec
hereby grants to Kos and its Affiliates (except as otherwise provided in
Section 2.1.2): (i) an exclusive (even as to Jagotec) license throughout the
Territory under the Jagotec Technology and limited to the Field, and a
non-exclusive sublicense throughout the Territory under the Third Party Licenses
and limited to the Field, to: (A) conduct the Commercialization Program with
respect to the Product in the Territory; (B) use, offer for sale, sell, have
sold and distribute the Product in the Territory; and (C) import the Product
into the Territory for the aforementioned purposes; and (ii) a non-exclusive
worldwide right solely for the purposes of conducting research and development
activities necessary or desirable to obtain Registration for the Product in the
Field in the Territory (other than for the Core Clinical Program) or to conduct
Post-Registration Studies in accordance with the Annual Development Plans;
provided, however that any conduct to be undertaken by Kos pursuant to this
clause (ii) in the European Union (as constituted from time to time) and
Switzerland shall require the prior written consent of Jagotec or its Licensee
in such territory, such consent not to be unreasonably withheld or delayed.
          2.1.2 The non-exclusive sublicense granted in Section 2.1.1 under the
**** License is granted solely to Kos Pharmaceuticals. As the “Sublicensee” (as
such term is defined in the **** License) under the **** License, Kos
acknowledges and agrees to be bound to Sections 2.4 (Covenant Not to Sue of
SkyePharma), and 12.3(vi)(a) and 12.3(vi)(c) (Assignment and Successors) of the
**** License as if such provisions were included in this Agreement and apply to
Kos as the Sublicensee (as such term is defined in the **** License).
          2.1.3 Subject to the terms and conditions of this Agreement, Kos
hereby grants to Jagotec a non-exclusive, royalty-free, sublicensable license
under the Kos Technology (i) to conduct the Development Program with respect to
the Product, and (ii) for the manufacture, use and sale of the Product outside
the Territory or in the Territory, but outside the Field.
          2.1.4 Subject to Applicable Laws and compliance with FDA regulations,
all labeling and packaging for all Product shall be determined by the
Development Committee.
          2.1.5 Except as expressly set out in this Agreement, no license is
granted by Jagotec under its rights in any Jagotec Technology, Third Party
Licenses or any other Patents or Know-how whatsoever for any activities by Kos
that are outside the scope of the license grants in Section 2.1.1, or outside
the scope of Kos’ rights and responsibilities under the Development Program and
Kos’ rights and responsibilities under the Commercialization Program.
          2.1.6 Except as expressly set out in this Agreement, no license is
granted by Kos or its Affiliates, under its rights in any Kos Technology or any
other Patents or Know-how whatsoever for any activities by Jagotec that are
outside the scope of the license grants in Section 2.1.2.

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     2.2 Trademarks.
          2.2.1 Subject to the terms and conditions of this Agreement, Jagotec
grants to Kos, and its Affiliates, an exclusive, royalty-free license to use the
Jagotec Marks in the Territory for the term of this Agreement in connection with
the marketing, promotion and sale of the Product in the Field as contemplated in
this Agreement.
          2.2.2 Jagotec reserves all rights, title and interest in the Jagotec
Marks. Kos acknowledges Jagotec’s right, title and interest in and to the
Jagotec Marks and acknowledges that nothing herein will be construed to accord
Kos any rights in such Jagotec Marks except as expressly provided herein. The
ownership and all goodwill from the use of the Jagotec Marks shall vest in and
inure to the benefit of Jagotec. Jagotec reserves all rights not expressly
granted herein.
          2.2.3 Kos reserves all rights, title and interest in the Kos Marks.
Jagotec acknowledges Kos’ exclusive right, title and interest in and to the Kos
Marks and acknowledges that nothing herein will be construed to accord Jagotec
any rights in such Kos Marks, except as expressly provided herein.
          2.2.4 The Parties shall jointly own all rights, title and interest in
and to any Product Trademarks developed by or on behalf of the Commercialization
Committee directly relating to the manufacturing, marketing and sale of the
Product in the Territory during the term of the Agreement, excluding the Jagotec
Marks and Kos Marks.
     2.3 Right of First Negotiation for Canada.
          2.3.1 Until Jagotec’s or its Affiliate’s filing of a Registration
Application in the United States with respect to the Product, Kos shall have a
right of first negotiation to obtain an exclusive (even as to Jagotec) license
throughout Canada under the Jagotec Technology for the purpose of
commercializing the Product in the Field in Canada, provided that Kos, either
through its Affiliates or pursuant to a Third Party arrangement, has a Canadian
sales and marketing presence capable of commercializing the Product, in
accordance with the following:
               (a) Prior to granting any license or other right to any Third
Party to commercialize the Product in the Field in Canada, Jagotec shall provide
Kos with written notice (the “Jagotec ROFN Notice”) that Jagotec or its
Affiliate intends to permit a Third Party to do so; OR
               (b) If Kos wishes to exercise its rights of first negotiation and
pursue such discussions with Jagotec, Kos will so notify Jagotec thereof in
writing (the “Kos ROFN Notice”).
          2.3.2 If such negotiation right is commenced pursuant to Jagotec’s
receipt of a Kos ROFN Notice, then Kos shall provide a term sheet to Jagotec at
the time of such Kos ROFN Notice. If such negotiation right is commenced
pursuant to Kos’ receipt of a Jagotec ROFN Notice, then Kos shall provide a term
sheet to Jagotec **** following the date of the Jagotec ROFN Notice (in each
case, the date of delivery of the term sheet is the “Term Sheet Date”). The term
sheet shall describe the key terms under which Kos proposes to obtain a

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license to the Jagotec Technology from Jagotec to commercialize the Product in
the Field in Canada and will include no less detail than the final term sheet
prepared by the Parties prior to the exchange of the first draft of this
Agreement.
          2.3.3 For a period of **** following the Term Sheet Date, the Parties
will use diligent efforts to conduct good faith exclusive negotiations of an
agreed upon term sheet (the “Canada Term Sheet”) with respect to such license.
If (i) during such thirty (30) day period, Jagotec and Kos do not reach
agreement on the Canada Term Sheet under which Kos would acquire such license,
or (ii) the Parties do not execute a definitive agreement based on the Canada
Term Sheet within **** after the Parties have agreed to the terms of such Canada
Term Sheet; then in either case, Jagotec will be free to enter into negotiations
with any Third Party regarding such license; provided, that Jagotec may not
enter into any agreement with any Third Party other than Kos if **** of the
terms of such agreement is lower than the **** last proposed by Kos (where the
net present value of both sets of terms is calculated ****).
3. Steering Committee.
     3.1 Steering Committee. The Parties shall establish a joint steering
committee (“Steering Committee”) consisting of an equal number of
representatives from each of Kos and Jagotec, the exact number of which shall be
as the Parties may agree, from time to time. Initially, the Steering Committee
shall consist of six (6) individuals; three (3) of whom shall be nominated by
Jagotec; and three (3) of whom shall be nominated by Kos. The initial members of
the Steering Committee are set out on Schedule 3.1. Any member of the Steering
Committee may designate a substitute to attend and perform the functions of that
member at any meeting of the Steering Committee. Each Party may with the consent
of the other Party, such consent not to be unreasonably withheld or delayed,
invite non-member, non-voting representatives of such Party to attend meetings
of the Steering Committee. A chairperson and secretary of the Steering Committee
shall serve co-terminus one (1) year terms, commencing on the Effective Date or
an anniversary thereof, as the case may be. The right to name the chairperson
and the secretary of the Steering Committee shall alternate annually between the
Parties, and each chairperson shall be named no later than ten (10) days after
the commencement of his or her term. The initial chairperson shall be selected
by Jagotec, the initial secretary shall be selected by Kos and each is
designated on Schedule 3.1. The Steering Committee shall perform the following
responsibilities:
          3.1.1 coordinate the overall strategy for the Development Program and
the Commercialization Program;
          3.1.2 review and coordinate the manufacturing, supply and packaging of
the Product (or authorize a committee to do so);
          3.1.3 determine the date of the anticipated First Commercial Sale of
the Product in the Territory for the purposes of establishing a date for the
Parties’ respective obligations under Sections 3.3 and 5.1.3;
          3.1.4 undertake a bi-annual review and comparison of the status of
each Annual Development Plan and Annual Commercialization Plan, including,
without limitation,

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the applicable timelines, and provide direction to the conduct of the
Development Program and Commercialization Program, as necessary;
          3.1.5 authorize the formation of additional committees, including but
not limited to, a technical operations committee;
          3.1.6 coordinate and delegate the activities of other committees;
          3.1.7 review and approve each Annual Development Plan and any
amendments or modifications thereto as submitted by the Development Committee;
          3.1.8 review and comment upon each Annual Commercialization Plan and
any amendments or modifications thereto as submitted by the Commercialization
Committee; provided that Kos shall have ultimate decision making authority with
respect to each such Annual Commercialization Plan but shall give reasonable
consideration to the comments made by the Steering Committee to modify or amend
such Annual Commercialization Plans;
          3.1.9 determine if any Improved Product should be selected as a
Product pursuant to Section 4.7, and the terms and conditions thereof;
          3.1.10 review and approve “go/no-go” decisions and other matters
referred to the Steering Committee by the Development Committee,
Commercialization Committee, or any other committee and make recommendations, as
appropriate;
          3.1.11 review the product lifecycle plans for the Product in the Field
for the Territory, including indication and label expansions, new dosage forms,
and new formulations or delivery systems;
          3.1.12 in accordance with the procedures established in this
Agreement, resolve disputes, disagreements and deadlocks unresolved by the
Development Committee or Commercialization Committee; and
          3.1.13 perform such other responsibilities as may be assigned to the
Steering Committee pursuant to this Agreement or as may be mutually agreed upon
by the Parties from time to time.
     3.2 Development Committee. Within fourteen (14) days after the Effective
Date, the Parties shall establish a joint development project team to carry out
the day to day activities of the Development Program, (the “Development
Committee”) consisting of an equal number of representatives from each of Kos
and Jagotec, the exact number of which shall be as the Parties agree, from time
to time. Initially, the Development Committee shall consist of six
(6) individuals; three (3) of whom shall be nominated by Jagotec; and three
(3) of whom shall be nominated by Kos. Such members of the Development Committee
shall consist of a key representative from each of Jagotec and Kos, together
with such additional business and development personnel from each of Jagotec and
Kos, who are appropriately skilled and knowledgeable in relation to the
development of the Product in the Field and who are deemed necessary to
accomplish or have accomplished the work according to the Annual Development
Plan. Until receipt of approval of the Registration for the Existing Product for
the Indications in

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the Territory, Jagotec shall designate the chairperson and Kos shall designate
the secretary of the Development Committee. Following receipt of approval of the
Registration for the Existing Product for the Indications in the Territory, Kos
shall designate the chairperson and Jagotec shall designate the secretary of the
Development Committee. Each shall serve co-terminus one (1) year terms,
commencing on the Effective Date or an anniversary thereof, as the case may be.
Such person shall be named no later than ten (10) days after the commencement of
his or her term. The initial chairperson and the initial secretary are set out
in Schedule 3.2. The Development Committee shall perform the following
responsibilities:
          3.2.1 prepare each Annual Development Plan and present to the Steering
Committee for approval;
          3.2.2 advise the Steering Committee as to which pre-clinical studies,
clinical trials, and toxicology studies are necessary or desirable to meet the
requirements of the FDA for the Registration of the Products in the Territory
and evaluate progress of each such study;
          3.2.3 advise the Steering Committee as to all activities related to
manufacturing in connection with the Development Program;
          3.2.4 review and approve any proposed labeling and packaging for the
Product in the Territory;
          3.2.5 review and recommend to the Steering Committee “go/no-go”
decisions in connection with the Development Program;
          3.2.6 in connection with clinical trials, review protocol, trial
budget (to the extent to be included in Development Costs) and trial design and
present to the Steering Committee for approval; and
          3.2.7 perform such other responsibilities as may be assigned to the
Development Committee by the Steering Committee pursuant to this Agreement or as
may be mutually agreed upon by the Parties from time to time.
     3.3 Commercialization Committee. No later than **** prior to the
anticipated First Commercial Sale of the first Product, the Parties shall
establish a joint commercialization project team (the “Commercialization
Committee”) consisting of an equal number of representatives from each of Kos
and Jagotec, the exact number of which shall be as the Parties agree, from time
to time. Initially, the Commercialization Committee shall consist of six
(6) individuals; three (3) of whom shall be nominated by Jagotec; and three
(3) of whom shall be nominated by Kos. Such members of the Commercialization
Committee shall consist of a key representative from each of Jagotec and Kos,
together with such additional business and marketing personnel from each of
Jagotec and Kos, who are appropriately skilled and knowledgeable in relation to
the marketing and sale of the Product in the Field and who are deemed necessary
to accomplish or have accomplished the work according to the Annual
Commercialization Plan. Kos shall designate the chairperson and Jagotec shall
designate the secretary of the Commercialization Committee. Each shall serve
co-terminus one (1) year terms, commencing on the date which is **** prior to
the anticipated First Commercial Sale or an anniversary thereof, as the case may

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be. Such person shall be named no later than ten (10) days after the
commencement of his or her term. The Commercialization Committee shall perform
the following responsibilities:
          3.3.1 review and provide comment on each Annual Commercialization Plan
prepared by Kos prior to review by the Steering Committee;
          3.3.2 bi-annually review the activities and progress of the
performance of the Annual Commercialization Plan for each Calendar Year based on
reasonably detailed summary written reports provided by Kos to the
Commercialization Committee;
          3.3.3 review each Annual Commercialization Plan and determine what
elements of such Annual Commercialization Plan can be shared with Licensees of
Jagotec for the purposes set forth in Section 5.4 for the Product outside the
Territory and in the Field;
          3.3.4 review Kos’ multi-year forecasts and projected financial results
of each Annual Commercialization Plan;
          3.3.5 review and recommend to the Steering Committee “go/no-go”
decisions in connection with the Commercialization Program;
          3.3.6 review and approve subcontractors, co-promotion partners,
consultants and/or contract sales forces that Kos desires to engage pursuant to
Section 5.5 and the terms of such arrangements as they relate directly to the
Product;
          3.3.7 monitor compliance with respect to the Annual Commercialization
Plan and expenditure of Marketing Costs in accordance with the terms of this
Agreement; and
          3.3.8 perform such other responsibilities as may be assigned to the
Commercialization Committee by the Steering Committee pursuant to this Agreement
or as may be mutually agreed upon by the Parties from time to time.
     3.4 Meetings. All Steering Committee, Development Committee,
Commercialization Committee and other committee meetings shall be as often as
the members may determine, but in any event not less than twice per Calendar
Year. Such meetings may be held in person, or any means of telecommunications or
video conference, as the members deem necessary or appropriate, provided that at
least one committee meeting per year shall be held in person and the location of
such in person meeting shall alternate between Kos’ and Jagotec’s offices. A
quorum for Steering Committee meetings shall be four (4) members, with at least
two (2) from each Party. With respect to the Development Committee and
Commercialization Committee, a quorum shall mean the presence of at least 2/3 of
the members with at least two (2) members from each Party.
     3.5 Decision-making of Steering Committee.
          3.5.1 The Steering Committee may make decisions with respect to any
subject matter that is subject to the Steering Committee’s decision-making
authority. Except as expressly provided in this Agreement, all decisions of the
Steering Committee shall be made by unanimous vote or written consent, with
Jagotec and Kos each having, collectively, one vote in

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all decisions. The Steering Committee shall use Commercially Reasonable Efforts
to resolve the matters within its roles and functions or otherwise referred to
it.
          3.5.2 If, with respect to a matter that is subject to a Steering
Committee’s decision-making authority, the Steering Committee cannot reach
consensus within fifteen (15) days after it has met and attempted to reach such
consensus or the Parties cannot reach consensus on whether the Steering
Committee has decision-making authority regarding a matter within fifteen
(15) days after such matter was first raised by either Party, the dispute in
question shall be referred to the Chief Executive Officer of SkyePharma, on
behalf of Jagotec, or such other person holding a similar position designated by
Jagotec from time to time, and the Chief Executive Officer of Kos
Pharmaceuticals, on behalf of Kos, or such other person holding a similar
position designated by Kos from time to time (such officers collectively, the
“Executive Officers”), for resolution. The Executive Officers shall use
reasonable efforts to resolve the matter referred to them.
          3.5.3 If the Executive Officers cannot resolve the matter in
accordance with Section 3.5.3 within thirty (30) days, then except as otherwise
specifically provided in Section 3.5.4): (i) prior to the receipt of approval of
the Registration for the Product for the Indications in the Territory, matters
in dispute concerning the Development Program shall be finally determined by the
Chief Executive Officer of SkyePharma; provided that (A) no determination may be
made pursuant to this subsection that imposes additional obligations with
respect to development activities on Kos, other than those specifically set
forth in Section 4.4; and (B) decisions regarding the label included in the
Registration Application and amendments thereto for the Existing Product shall
be resolved by the Chief Executive Officer of Kos, unless Jagotec’s Chief
Executive Officer reasonably believes in good faith that such resolution would
delay the filing of such Registration Application or approval thereof, in which
case Jagotec’s Chief Executive Officer shall resolve such dispute in a manner as
consistent as possible with Kos’ Chief Executive Officer’s resolution but
avoiding such delay; (ii) following the receipt of approval of the Registration
for the Product for the Indications in the Territory, matters in dispute
concerning the Development Program shall be finally determined by the Chief
Executive Officer of Kos; provided that no determination may be made pursuant to
this clause (ii) that imposes additional obligations with respect to development
activities on Jagotec, other than those specifically set forth in Section 4.3;
(iii) matters in dispute concerning the Commercialization Program at any time
shall be finally determined by the Chief Executive Office of Kos, and (iv) all
other matters shall be settled pursuant to Section 15.15.
          3.5.4 In the event that the Steering Committee cannot reach a
consensus with respect to determinations to be made as provided in Section 5.3
or Section 13.7.3(b) pursuant to Section 3.5.1 or Section 3.5.2 within the time
periods provided in such Sections, then either Party shall have the right to
refer the dispute in question to an Expert for expedited arbitration under the
then current expedited procedures applicable to the then current commercial
arbitration rules of the American Arbitration Association, as set forth below;
provided that in the event that the triggering event for such a determination by
the Steering Committee is made pursuant to clause (B) of Section 5.3, then
neither Party shall have the right to refer the dispute to any Expert until the
triggering event in clause (A) of Section 5.3 occurs:

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               (a) Upon written request by either Party to the other Party, the
Parties shall promptly negotiate in good faith to appoint a mutually acceptable
independent person, with scientific, technical and regulatory experience with
respect to the development of pharmaceutical products in the Field necessary to
resolve such dispute (an “Expert”). If the Parties are not able to agree within
five (5) days after the receipt by a Party of the written request in the
immediately preceding sentence, the American Arbitration Association shall be
responsible for selecting an Expert within ten (10) days of receipt of written
request by a Party to the American Arbitration Association. The fees and costs
of the Expert and the American Arbitration Association, if applicable, shall be
shared equally by the Parties.
               (b) Within five (5) days after the designation of the Expert by
the Parties or the American Arbitration Association, as the case may be, the
Parties shall each simultaneously submit to the Expert and one another a written
statement of their respective positions on such disagreement. Each Party shall
have fifteen (15) days from receipt of the other Party’s submission to submit to
the Expert and the other Party a written response thereto, which shall include
any scientific and technical information in support thereof. The Expert shall
have the right to meet with the Parties, either alone or together, as necessary
to make a determination.
               (c) No later than thirty (30) days after the designation of the
Expert, the Expert shall make a determination that the Expert deems to be fair
and reasonable in light of the totality of the circumstances. The Expert shall
provide the Parties with a written statement setting forth the basis of the
determination in connection therewith. The decision of the Expert shall be final
and conclusive.
          3.5.5 For all purposes under this Agreement, any decision made
pursuant to this Section 3.5 shall be deemed to be the decision of the Steering
Committee.
          3.5.6 Neither Party will exercise its right to finally resolve a
dispute in accordance with this Section 3.5 in a manner that excuses such Party
from any of its obligations specifically enumerated under this Agreement.
          3.5.7 Notwithstanding this Section 3.5, any dispute regarding the
interpretation of this Agreement or any alleged breach of this Agreement will be
resolved in accordance with the terms of Section 15.15.
     3.6 Decision-making of Development, Commercialization and Other Committees.
          3.6.1 The Development Committee may make decisions with respect to any
matter that relates to the Development Program and shall use Commercially
Reasonable Efforts to resolve all such matters. All decisions of the Development
Committee shall be made by unanimous vote or written consent, with Jagotec and
Kos each having, collectively, one vote in all decisions. The chairperson shall
attempt to mediate and resolve all matters in dispute brought before the
Development Committee; however, any matters that cannot be resolved by the
Development Committee shall be referred to the Steering Committee and resolved
as provided for in Section 3.5.
          3.6.2 The Commercialization Committee may make decisions with respect
to any matter that relates to the Commercialization Program and shall use
Commercially

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Reasonable Efforts to resolve all such matters. All decisions of the
Commercialization Committee shall be made by unanimous vote or written consent,
with Jagotec and Kos each having, collectively, one vote in all decisions. The
chairperson shall attempt to mediate and resolve all matters in dispute brought
before the Commercialization Committee; however, any matters that cannot be
resolved by the Commercialization Committee shall be referred to the Steering
Committee and resolved as provided for in Section 3.5.
          3.6.3 All other committees may make decisions with respect to any
matter that relates to the primary purpose of such committee and shall use
Commercially Reasonable Efforts to resolve all such matters. All decisions of
any committee commissioned by the Steering Committee shall be made by unanimous
vote or written consent, with Jagotec and Kos each having, collectively, one
vote in all decisions. The chairperson shall attempt to mediate and resolve all
matters in dispute brought before such committee; however, any matters that
cannot be resolved by the committee shall be referred to the Steering Committee
and resolved as provided for in Section 3.5
     3.7 Minutes. Minutes for each of the committee meetings shall be drafted by
the secretary of the meeting and sent to the chairperson of the applicable
committee for comment promptly after each such meeting (but in no event more
than twenty (20) days). All actions noted in the minutes are to be reviewed and
approved at subsequent meetings of the Steering Committee, Development
Committee, Commercialization Committee or other committee, as applicable;
provided, that if the Parties cannot agree as to the content of the minutes,
such minutes will be finalized to reflect such disagreement.
     3.8 Expenses. Each Party shall bear all its own costs, including expenses
incurred by the members nominated by it in connection with their activities as
members of the Steering Committee, Development Committee, Commercialization
Committee or other committee, as applicable.
4. Product Development; Registration; Supply of Product.
     4.1 Development Program.
          4.1.1 The “Development Program” for the Product in the Territory, as
amended from time to time, shall be comprised of all research, development, and
regulatory activities related to the Product in the Field and all filings,
reports and related regulatory interactions prior to Registration of the Product
for an indication in the Field. Jagotec and Kos shall each have certain
responsibilities with respect to the conduct and execution of the Development
Program, each of which are specifically described in Section 4.3 and
Section 4.4, respectively. The respective funding obligations of Jagotec and Kos
under the Development Program are set forth in Section 4.2.
          4.1.2 The Parties shall, through the Development Committee, prepare
and deliver to the Steering Committee a proposed Annual Development Plan with
respect to the Product in the Field in the Territory for each Calendar Year no
later than December 1st of the immediately proceeding Calendar Year during the
Development Program. For purposes hereof, an “Annual Development Plan” shall
mean the plan of research, development, and regulatory

17

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activities to be undertaken during the upcoming Calendar Year as part of the
Product’s Development Program as proposed by the Parties and approved by the
Steering Committee. The Annual Development Plan will set forth the objectives,
planned tasks, resource allocations and timelines for the conduct of the
development activities with respect to the Product in the Field in the
Territory, and in the event that Development Costs will be incurred in any such
Calendar Year, a budget of such Development Costs.
     4.2 Development Funding. Responsibility for bearing the costs of the
Development Program is as follows:
          4.2.1 **** shall bear the cost of the Core Clinical Program.
          4.2.2 To the extent that the Regulatory Authority requires any
clinical or other trials in addition to the Core Clinical Program to be
conducted in order to obtain Registration of the Existing Product for the
Indications, the costs of such additional trials (the “Development Costs”):
(i) shall be **** the Parties up to **** and (ii) subject to termination of this
Agreement by Kos pursuant to Section 13.7.4, all amounts in excess of **** shall
be borne ****.
               (a) Development Costs shall include: (i) all costs paid to Third
Parties in connection with the conduct of studies on the toxicological,
pharmacokinetical, metabolical or clinical aspects of the Product, the protocol
design, data management, statistical analysis, document preparation, preparing,
submitting, reviewing or developing data or information for submissions to the
Regulatory Authority, and other actual reasonable expenses associated with the
additional trials required by the Regulatory Authority; plus (ii) all costs paid
to Third Parties for production of clinical supplies and CMC pharmaceutical
development, or the Parties may agree that Jagotec should provide for production
of clinical supplies and/or CMC pharmaceutical development at a cost agreed upon
by the Parties at the time, in which case such costs shall be included in
Development Costs.
               (b) No later than the **** of each month, Jagotec shall submit to
Kos, in writing, the Development Costs incurred for the immediately preceding
month. Such notification of Development Costs shall provide details regarding
all costs described in each of clauses (i) and (ii) of Section 4.2.2(a). Kos
shall pay either **** or ****, as applicable pursuant to this Section 4.2.2, of
the Development Costs for the immediately preceding month no later than the ****
of the following month.
               (c) All Development Costs paid by Kos to Jagotec pursuant to
Section 4.2.2(b) shall be reimbursed to Kos by crediting at any one time (until
such time as Kos has recovered the amounts paid pursuant to Section 4.2.2) of up
to **** of, at Kos’ election: (i) any milestone payments due pursuant to
Section 6.1.2 upon obtaining the first Registration of the Product as provided
therein, (ii) any success fees due pursuant to Section 6.2; and/or (iii) any
royalty payments due; and Kos may carry forward any unreimbursed amount to be
credited against future payments until the full amount of such Development Costs
paid by Kos has been fully recaptured by Kos. Notwithstanding the foregoing, the
aggregate costs recaptured pursuant to this Section 4.2.2(c) and
Section 6.4.1(a), shall in no event exceed **** of any payment due to Jagotec.

18

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          4.2.3 At **** election, any Post-Registration Studies (to those
specified pursuant to Section 4.4.1 with respect to pediatric asthma
indications), and any trials conducted for the purpose of obtaining approval for
COPD or any other indications in the Field, will be ****.
     4.3 Jagotec Responsibilities under the Development Program. As part of the
Development Program for the Product, in accordance with each Annual Development
Plan, Jagotec shall:
          4.3.1 **** (except as otherwise provided in Section 4.2.2), conduct
the Core Clinical Program and such other research and development activities
necessary to obtain Registration for the Existing Product for the Indications in
the Territory, including: (i) the clinical trials specified in the Development
Program to be conducted by Jagotec or otherwise required by a Regulatory
Authority in order to obtain Registration of the Existing Product for the
Indications; (ii) all CMC pharmaceutical development of the Existing Product for
the Indications; (iii) manufacture and supply of Existing Product for Jagotec’s
requirements for any of the foregoing in the Development Program; and (iv) all
Registration stability and all analytical work required to obtain the
Registration of the Existing Product for the Indications by the Regulatory
Authority, including extractables and leachables testing;
          4.3.2 if requested by Kos, provide support to Kos, ****, with respect
to Kos’ research and development activities necessary to obtain Registration for
the Products for any indications, other than the Indication in the Territory,
including: (i) the clinical trials specified in the Development Program to be
conducted by Jagotec for Kos’ requirements for any of the foregoing; (ii) all
CMC pharmaceutical development for such other indications; and (iii) all
Registration stability and all analytical work required to obtain the
Registration of the Existing Product for any indications, other than the
Indications, by the Regulatory Authority, including extractables and leachables
testing;
          4.3.3 manufacture and supply of Existing Product for Kos’ requirements
for any of the foregoing in the Development Program **** pursuant to the terms
and conditions of the Supply Agreement;
          4.3.4 ****, submit Registration Applications for the Existing Product
and obtain Registrations for the Existing Product for the Indications in the
Territory as soon as reasonably possible;
          4.3.5 ****, prepare the product label included in the Registration for
the Existing Product for the Indications, subject to review and approval of any
proposed labels by the Development Committee;
          4.3.6 ****, take the lead in, and be responsible for, all
communications with the Regulatory Authority arising during review of the
Registration Applications for the Existing Product for the Indications submitted
by Jagotec. For purposes of clarification, prior to transfer of any Registration
to Kos pursuant to Section 8.1.2, all communication with a Regulatory Authority
with regard to the Existing Product shall be made through Jagotec, provided that
Jagotec will: (i) consult in advance with Kos with respect to any substantive or
material filings or

19

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correspondence with any Regulatory Authority to be made by Jagotec in accordance
with this Agreement and the Development Program; and (ii) promptly provide Kos
copies of any correspondence received from any Regulatory Authority;
          4.3.7 facilitate discussions between Jagotec’s other licensees outside
of the Territory with respect to the Product (collectively, “Licensees”) and
Kos, for Kos and the Licensees to share pre-clinical and clinical data, INDs,
clinical trial protocols and plans, registration applications (including the
Registration Applications), registrations (including Registrations) and other
regulatory filings, studies, information and materials relating to the
development and commercialization of the Product in the Field; and
          4.3.8 use Commercially Reasonable Efforts to perform such other
responsibilities with respect to the Development Program as may be mutually
agreed upon in writing by the Parties from time to time.
     4.4 Kos Responsibilities under the Development Program. As part of the
Development Program for the Product, in accordance with each Annual Development
Plan, Kos shall, at ****:
          4.4.1 conduct: (i) all clinical trials specified in the Development
Program to be conducted by Kos, specifically including, without limitation,
clinical trials for pediatric asthma or other indications, other than the
Indications; and (ii) all Post-Registration Studies;
          4.4.2 at any time, but no later than promptly following Registration
of the Existing Product for the Indications in the Territory, give due
consideration to pursuing an indication for COPD in the Territory;
          4.4.3 to the extent provided for in the Development Program, use
Commercially Reasonable Efforts to submit Registration Applications and obtain
Registrations for any indications in the Field other than the Indications;
          4.4.4 take the lead in, and be responsible for, all communications
with the Regulatory Authority arising during review of the Registration
Applications submitted by Kos; provided that Kos will: (i) consult in advance
with Jagotec with respect to any substantive or material filings or
correspondence with any Regulatory Authority to be made by Kos in accordance
with this Agreement and the Development Program; and (ii) promptly provide
Jagotec copies of any correspondence received from any Regulatory Authority; and
          4.4.5 use Commercially Reasonable Efforts to perform such other
responsibilities with respect to the Development Program as may be mutually
agreed upon in writing by the Parties from time to time.
     4.5 Conduct of Development Program Activities. Each Party, acting in
accordance with this Section 4 and the relevant Annual Development Plan, shall:
          4.5.1 reasonably cooperate with the other Party, as requested by the
other Party with primary responsibility over the applicable task set forth in
the Annual Development Plan to implement all such plans and such other
activities that, from time to time, the

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Development Committee decides are necessary or useful for the commercial success
of the Development Program;
          4.5.2 conduct the Development Program in good scientific manner, and
in compliance in all material respects with all requirements of Applicable Laws,
and all other requirements of any applicable cGMP, GLP and GCP;
          4.5.3 maintain records, in sufficient detail and in good scientific
manner, which shall be complete and accurate in all material respects and shall
fully and properly reflect all work done and results achieved in connection with
the Development Program in the form required under all Applicable Laws, and
shall retain such records for no less than the period of time required by
Applicable Laws;
          4.5.4 allow representatives of the other Party, upon reasonable prior
written notice and during normal business hours, at its own expense, to visit
such Party’s facilities where the Development Program is being conducted, and
consult, during such visits and by telephone, with such Party’s personnel
performing work on the Development Program, so long as such visits and
consultations are not unreasonably disruptive and are limited to a review of
only that portion of the facility where the Development Program is being
conducted. The other Party shall maintain any information received (whether by
observation or otherwise) during such visit in confidence in accordance with
Section 11 and shall not use such information except to the extent otherwise
permitted by this Agreement; and
          4.5.5 during the period that the Development Program is being
conducted, inform the Development Committee of the performance of the Annual
Development Plan through periodic progress reports submitted to the Development
Committee. In addition, at any time upon either Party’s request, the Parties
will exchange copies of any final reports of any clinical studies performed by
the Parties, and any other information or data reasonably requested by a Party
relating to the Development Program.
     4.6 Improved Products.
          4.6.1 In the event that either Party develops an Improved Product
during the term of this Agreement, such Party shall promptly notify the other
Party of such Improved Product.
          4.6.2 The Steering Committee shall review the data and information
available on such Improved Product and determine whether the Parties should
pursue the further development and commercialization of such Improved Product,
taking into consideration the value of such Improved Product over the Existing
Product, the cost of, and timeline for, development of such Improved Product,
the intellectual property position of the Improved Product, whether rights to
any Third Party patents will be required and, if so, the allocation of
responsibility between the Parties to bear such expense, whether the Parties can
reach agreement on the allocation of development funding and responsibility with
respect to such Improved Product, and such other factors as the Steering
Committee reasonably believes is relevant to its determination.

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          4.6.3 In the event that the Steering Committee determines to pursue
the further development and commercialization of such Improved Product, and
subject to any amendment to this Agreement necessary to reflect the agreement of
the Parties relating to allocations of obligations and responsibilities, such
Improved Product shall become a Product for purposes of this Agreement.
          4.6.4 In the event that the Steering Committee ****, each Party ****
this Agreement.
     4.7 Manufacture and Supply Agreement. Following the Effective Date and
within ninety (90) days thereof, Jagotec and Kos (or an Affiliate of Kos) shall
negotiate in good faith and shall enter into a Manufacture and Supply Agreement
(the “Supply Agreement”) which shall reflect, among other things, the terms
outlined in Schedule 4.7 for the supply of Existing Products by (or on behalf
of) Jagotec for use in the Development Program and for commercialization of the
Existing Product.
5. Commercialization Program.
     5.1 Commercialization Program.
          5.1.1 The “Commercialization Program” for the Product shall be
comprised of: (i) all manufacturing forecasts, marketing, advertising,
promotional, launch (including pre-launch market development and market
research) sales activities and sales representative detailing plan for the
Product in the Field in the Territory including, without limitation, planned
budgets and expenditures; (ii) all filings, reports and related regulatory
interactions required by any Regulatory Authority to maintain Registration in
the Territory after the Registration of such Product in the Field in the
Territory; and (iii) all Post-Registration Studies.
          5.1.2 Other than manufacture of the Product, Kos, either itself and/or
by and through its Affiliates, shall be responsible for all activities
comprising the Commercialization Program for the Product.
          5.1.3 Beginning **** prior to the anticipated First Commercial Sale of
the Product in the Field in the Territory (as determined by the Steering
Committee) and thereafter, not later than ****, Kos shall prepare and deliver to
the Commercialization Committee, for its review and comment, a proposed plan for
the marketing, sales, development, and regulatory (if applicable) activities
expected to be undertaken during the upcoming Calendar Year as part of the
Commercialization Program in the Territory and a timeline and budget for
undertaking the same (such plan, an “Annual Commercialization Plan”). In
addition, Kos shall deliver any material modifications made to any Annual
Commercialization Plan to the Commercialization Committee for review and comment
promptly following such modifications. Without limiting the foregoing, each
Annual Commercialization Plan for the Product shall contain annual forecasts of
sales, production requirements, annual marketing plans, product positioning,
campaign strategies, pricing strategies, sampling strategies, targets and
projections for the approximate number of sales representatives to be deployed,
a budget of the anticipated Marketing Costs (including, without limitation,
expenditures for market research, physician education, and advertising), the
number of Primary Details Equivalents (“PDEs”) of the Product

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to be provided during such Calendar Year and the allocations of such PDEs during
each month of each Calendar Year, a reasonably descriptive overview of the
marketing and advertising campaigns proposed to be conducted, Net Sales targets,
managed care contract strategies, and, if applicable, Post-Registration Studies
(including scope and strategic direction).
     5.2 Responsibilities of Kos under the Commercialization Program. Kos,
either itself and/or by or through its Affiliates, (either directly or through
the use of subcontractors, co-promotion partners, consultants or contract sales
force pursuant to Section 5.5), shall be responsible for, and shall have the
exclusive right to engage in, all marketing, advertising, promotional, launch
and sales activities in connection with the marketing of the Product in the
Field in the Territory. As part of the Commercialization Program, at Kos’
expense, Kos shall:
          5.2.1 use its Commercially Reasonable Efforts to launch the Product in
the Territory as soon as possible **** after the issuance of the Registration:
provided, however, failure to launch and to make the First Commercial Sale of
the Product in the Territory within **** of the issuance of the Registration
shall be deemed a material breach of this Agreement subject to termination by
Jagotec pursuant to Section 13.3; provided further that: (i) Jagotec has
confirmed to Kos within **** following receipt of the Registration that Jagotec
is able to ship to Kos its initial order(s) for supply of finished and packaged
Product that is released for commercial sale by the requested delivery date(s)
contained in the orders, based on the forecast Kos submits **** prior to the
anticipated First Commercial Sale containing Kos’ initial **** of firm order(s),
if such order(s) for such Product have been made pursuant to the terms of the
Supply Agreement; and (ii) Jagotec provides Kos with a Certificate of Officer of
Jagotec, attached hereto as Schedule 5.2.1, stating that Jagotec reasonably
believes that it can meet Kos’ requirements for the **** following such First
Commercial Sale based on Kos’ most recent forecasts provided pursuant to the
Supply Agreement;
          5.2.2 perform pre-commercialization analysis, planning, market
preparation and related marketing activities in the Territory;
          5.2.3 carry out the distribution, marketing and sales of the Product
in the Territory;
          5.2.4 promote the Product with at least **** PDEs during ****
following the First Commercial Sale consistent with the allocation set forth in
the Annual Commercialization Plan for the relevant period following the First
Commercial Sale; provided, however, that if the first Registration for the
Product has not been obtained on or before ****, then Kos’ obligation in this
Section 5.2.4 shall no longer apply;
          5.2.5 incur at least **** per annum of Marketing Costs in each of the
**** following the First Commercial Sale of the Product, provided that: (i) with
respect to the **** following the First Commercial Sale, up to **** of such
amount may be incurred in the twelve (12) months prior to such First Commercial
Sale; and (ii) to the extent that Kos undertakes any Phase IV clinical trials
(solely to the extent any such trials are: (A) conducted in support of approved
indications in the Field, (B) not intended to result in a labeling change, and
(C) not required by any Regulatory Authority) during such ****, Kos shall be
permitted to credit the costs of such Phase IV clinical trials, up to a maximum
amount of **** per annum, as Marketing

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Cost; provided, however, that in any event Kos shall spend at least **** in the
**** following the First Commercial Sale (and specifically excluding the
Marketing Costs incurred during the **** prior to Product the First Commercial
Sale) on Marketing Costs other than such Phase IV clinical trials; and further
provided that if the first Registration for the Product has not been obtained on
or before ****, then Kos’ obligation in this Section 5.2.5 shall no longer
apply;
          5.2.6 conduct the Commercialization Program in compliance in all
material respects with Applicable Laws;
          5.2.7 use Commercially Reasonable Efforts to manage reimbursement for
the Product in the appropriate reimbursement channels (health maintenance
organizations, pharmacy benefit management companies and institutional
customers) and shall be responsible for all costs associated with such efforts;
Jagotec shall be updated in reasonable detail of all Kos’ efforts in this
regard;
          5.2.8 provide suitable storage and handling in accordance with the
labeling for the Product and the Specifications and other appropriate facilities
and services as needed for the storage and continuous sale and distribution of
the Product throughout the Territory;
          5.2.9 prepare the Annual Commercialization Plans for commercialization
of the Product, including an annual budget therefor and ensure the Marketing
Costs incurred during each Calendar Year during the term of this Agreement are
not less than those set out in the Annual Commercialization Plan for such year,
and provide quarterly updates;
          5.2.10 provide all medical information services for the Product, which
may include, telephone hotlines, informational fax programs, mail response
programs or such other services as Kos reasonably deems appropriate;
          5.2.11 administer and pay any chargebacks, rebates, administrative
service fees and other discounts and fees with respect to the Product which from
time to time Kos may agree to give or may be required under Applicable Laws to
give to payors or purchasers of the Product;
          5.2.12 maintain all required Registrations in the Territory at its
expense, including without limitation, Post-Registration Studies and filing NDA
annual reports as required;
          5.2.13 conduct all reporting, including adverse event reporting, to
the Regulatory Authority as required by Applicable Laws;
          5.2.14 provide a **** report on inventory level of Product held by its
customers and use Commercially Reasonable Efforts to ensure that **** after
Product launch, such inventory does not **** of Net Sales of Product based on
the previous ****. If the inventory **** of Net Sales, the Parties will meet to
determine what actions to take and, in addition, will consider Kos ceasing to
supply to such customers;
          5.2.15 maintain records, which shall be complete and accurate in all
material respects and shall fully and properly reflect all revenues in
connection with the Product. Jagotec shall have the right, during normal
business hours, upon reasonable prior written notice, to

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inspect all such records at its own expense, so long as doing so is not
unreasonably disruptive; provided, however, Jagotec shall be permitted ****
during any ****. Jagotec shall maintain such records and information contained
therein in confidence in accordance with Section 11 and shall not use such
records or information except to the extent otherwise permitted by this
Agreement; and
          5.2.16 undertake, and have primary responsibility for all
communication with the Regulatory Authorities in the Territory in connection
with Kos’ marketing and sales activities in the Territory, including the
submission to the FDA for approval of all marketing materials used in the
Territory (for purposes of clarification, following transfer of a Registration
to Kos pursuant to Section 8.1.2, or with respect to all Registrations submitted
by Kos, all communication with a Regulatory Authority regarding such Product
shall be made through Kos); provided, however, the Jagotec shall cooperate with
Kos in order for Kos to meet its obligations pursuant to this subsection.
     5.3 Modifications to Kos’ Commercialization Obligations. In the event that:
(A) there is an “Inability to Supply” as defined in the Supply Agreement (and
currently provided in the term sheet for the Supply Agreement set forth in
Schedule 4.7); or (B) Jagotec fails for any reason to supply Kos with, in the
aggregate, at least **** of the quantities of Product ordered by Kos in any ****
month period; then: (i) the Steering Committee shall determine whether such
Inability to Supply has or is reasonably likely to have a material negative
affect on the market potential of the Product and, if so, whether Kos’
obligations under Sections 5.2.4 and 5.2.5 should be modified (and to what
levels) to take such affect into consideration (but such levels will not be
modified in any way to increase the level of Kos’ obligations under such
Sections); and (ii) during the period of such determination process (including,
if necessary resolution by an Expert pursuant to Section 3.5.4), Kos’
obligations under Sections 5.2.4 and 5.2.5 shall be tolled until a final
determination is made (so that Kos’ obligations cease during such tolled period
and the relevant period is extended to add the number of days to the end of such
period equal to the number of days for which such obligations are tolled). If
the Steering Committee determines (whether by consensus or through the use of an
Expert as provided in Section 3.5.4) that such obligations should be modified or
terminated, then Kos’ obligations shall resume at such modified levels, if any.
     5.4 Responsibilities of Jagotec under the Commercialization Program.
Jagotec shall be responsible for facilitating discussions between Jagotec’s
Licensees and Kos for Kos and such Licensees to share certain information
relating to their respective commercialization plans (consistent with the
determination of the Commercialization Committee as provided in Section 3.3.3)
for the Product in the Field so that a consistent global commercialization plan
for the Product in the Field can be developed as between Kos and such Licensees.
For clarity, Jagotec and its Licensees shall have the ultimate decision making
authority with respect to each commercialization plan of such Licensees outside
the Territory for the Product.
     5.5 Subcontractors/Co-promotion Partners. Kos shall be permitted, **** with
the consent of the Commercialization Committee pursuant to Section 3.3.6, to
engage subcontractors, co-promotion partners, consultants and/or contract sales
forces to perform, or assist Kos in the performance of, its commercialization
obligations hereunder (including the

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satisfaction of its PDE requirements pursuant to Section 5.2.4), provided that
Kos remains primarily responsible for satisfying such contractual obligations
hereunder.
6. Milestones; Success Fees and Royalties.
     6.1 Milestones.
          6.1.1 A non-refundable, non-creditable payment of $25,000,000 will be
due from Kos to Jagotec upon the execution of this Agreement and such amount
shall be paid to Jagotec within **** business days from the Effective Date.
          6.1.2 Upon the first occurrence of the milestone events set forth
below, a non-refundable, non-creditable (except as provided in Section 4.2.2)
development milestone payment will be due from Kos to Jagotec, following the
occurrence of such milestone event and such amount shall be paid to Jagotec
within **** of such event:

                          Milestone Payment Milestone Event   (U.S. Dollars)
****      
 
        •  
If accepted on or before ****
  ****        
 
        •  
If accepted on or after **** but prior to ****
  ****        
 
        •  
If accepted on **** or later
  ****        
 
    ****      
 
           
 
        •  
If approved on or before ****
  ****        
 
        •  
If approved on or after **** but prior to ****
  ****        
 
        •  
If approved in ****
  ****        
 
        •  
If approved in **** or later (provided that, if on or after ****, Kos has not
exercised its termination rights set forth in Section 13.7.3)
  ****

     6.2 Success Fees. On the first occurrence of each of the following success
events, the corresponding non-refundable and non-creditable (except as provided
in Section 4.2.2) payments

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will be due and payable from Kos to Jagotec and shall be payable within ****
days of the occurrence of such success event:

                      Success Event   Success Fee           1.    
The first time Net Sales of the Product in the United States in any consecutive
**** period reaches **** (“Success Event 1”)
  ****        
 
      2.    
The first time Net Sales of the Product in the United States reaches **** in any
consecutive **** month period starting with the month following the month in
which Success Event 1 is reached (“Success Event 2”)
  ****        
 
      3.    
The first time Net Sales of the Product in the United States reaches **** in any
consecutive **** month period starting with the month following the month in
which Success Event 2 is reached
  ****

     For the avoidance of doubt, in the event that, for example, the first time
Net Sales of the Product in the Territory in any consecutive **** month period
reaches **** is **** of a given year, then Jagotec shall be entitled to a
success fee of **** within **** thereafter. The first month of Net Sales of the
Product in the Territory which can be included for purposes of reaching Success
Event 2 will be **** of such year. In the event that Net Sales of the Product in
the Territory reach **** during the period from **** such given year through
**** of the following year, Jagotec shall be entitled to the success fee of ****
within **** thereafter.
     6.3 Royalty Payments to Jagotec. During the term of this Agreement, Kos
shall also pay to Jagotec royalties at a royalty rate as set forth below:

              Annual Net Sales   Royalty Rate   1.    
On Net Sales of the Product in the Territory which are < **** in any Calendar
Year
  ****        
 
      2.    
On Net Sales of the Product in the Territory which are > **** but < **** in any
Calendar Year
  ****        
 
      3.    
On Net Sales of the Product in the Territory which are > **** in any Calendar
Year
  ****

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     By way of example but not limitation, if Net Sales of the Product in a
Calendar Year are **** Jagotec shall received a royalty equal to ****,
calculated as follows: (i) **** of the first **** of Net Sales, or **** plus
(ii) **** of Net Sales from ****, or ****, plus (iii) **** of Net Sales over
**** or ****.
     6.4 Royalty Reductions.
          6.4.1 If either Party deems it necessary to obtain a license, or other
rights to any Blocking Patents with respect to the Product, such Party shall
notify the other Party.
               (a) If the other Party agrees, then the Parties shall discuss in
good faith the procedure by which the Parties will seek to obtain such license
or other rights. The costs paid to a Third Party (including royalties upfront,
initial, milestone and periodic payments, court awarded damages and settlement
payments) associated with obtaining such license or other rights shall be ****
by the Parties in the following manner: all costs shall be paid by **** to such
Third Party, provided that **** of such costs shall be reimbursed to **** by
crediting at any one time (until such time as **** has recovered such costs) up
to **** of, at **** election: (i) any **** upon obtaining the first Registration
of the Product as provided therein; (ii) any ****; and/or (iii) any ****; and
**** may carry forward any unreimbursed amount to be credited against future
payments until the full fifty percent (50%) of such costs (including royalties
upfront, initial, milestone and periodic payments, court awarded damages and
settlement payments) paid by *** have been fully recaptured by ****.
Notwithstanding the foregoing, the aggregate costs recaptured pursuant to this
Section 6.4.1(a) and Section 4.2.2(c) shall in no event exceed **** of any
payment due to ****.
               (b) If the other Party disagrees with the initial assessment, the
Parties shall obtain an opinion of independent patent counsel reasonably
acceptable to both Parties to make such determination, and such opinion shall be
binding on both Parties. In the event that such opinion indicates that there is
a Blocking Patent, then the Parties shall immediately proceed in the manner
provided in Section 6.4.1(a). The Party making the incorrect assessment shall be
solely responsible for all attorney fees incurred in connection with this
Section 6.4.1(b).
          6.4.2 If a Generic Product is being marketed and sold in the
Territory, for any **** in which sales of the Product measured on a number of
units sold basis are at least **** lower than the average number of units of
Product sold by Kos and its Affiliates during the **** prior to the launch of
such Generic Product the royalty rate with respect to Net Sales in such ****
shall be **** of the royalty rate which would otherwise apply to such Net Sales
during such **** as set forth in Section 6.3. For purposes of clarity, the
foregoing royalty reduction shall not apply to any **** in which the number of
units of Product sold by Kos and its Affiliates are not at least **** lower than
the average number of units of Product sold in the **** prior to launch of such
Generic Product, as described above.
          6.4.3 Upon the expiration of the term of this Agreement pursuant to
Section 13.1, if the Parties agree in writing to extend the term of this
Agreement pursuant to Section 13.2, and provided that a Generic Product is not
being marketed and sold in the Territory, the

28

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royalty rate with respect to Net Sales during such extended term shall be ****
of the royalty rate which would otherwise apply to such Net Sales as set forth
in Section 6.3. Notwithstanding the foregoing, in the event that a Generic
Product is being marketed and sold in the Territory in the manner set forth in
Section 6.4.2 and the Parties have agreed to extend the term of this Agreement
pursuant to Section 13.2, the royalty rate for Net Sales specified in
Section 6.3 which would otherwise apply to Net Sales during the applicable
Calendar Quarter shall be reduced to ****.
          6.4.4 For the sake of clarity, in no event shall the royalty rate for
Net Sales during any period be less than ****.
     6.5 Material Breach. Without limiting or otherwise defining what might be
other material breaches of this Agreement by Kos, any failure to make payment
pursuant to this Section 6 in accordance with the terms of this Agreement by Kos
shall be deemed to be a material breach of this Agreement, subject to the notice
and cure provisions set forth in Section 13.3.
     6.6 Bartering and Bundling Prohibited. Kos and its Affiliates shall not
accept or solicit any bartered goods or services for the sale of any Product. If
Kos or any of its Affiliates that distribute the Product, sells any Product to a
customer who also purchases other products from such entity, Kos agrees that if
it bundles or includes any Product as part of any multiple product offering in a
manner that is reasonably likely to disadvantage the Product in order to benefit
sales or prices of other products offered for sale by Kos or its Affiliates,
then for purposes of calculating the payments due hereunder, the Net Sales shall
be adjusted to reverse any discount which was given to a customer that was in
excess of customary discounts for the Product (or, in the absence of relevant
data for the Product, other similar products under similar market conditions),
if such discount was given in order to gain or maintain sales of other products.
7. Payments and Reports.
     7.1 Payments.
          7.1.1 Beginning with the Calendar Quarter in which the First
Commercial Sale of the Product is made in the Territory, and for each Calendar
Quarter thereafter, (i) royalty payments shall be made to Jagotec pursuant to
Section 6.3 within **** days following the end of each such Calendar Quarter for
the first, second and third Calendar Quarters in each Calendar Year; and
(ii) royalty payments pursuant to Section 6.3 for the fourth Calendar Quarter of
each Calendar Year shall be made to Jagotec within **** days following the end
of each such Calendar Quarter; provided, however, that Kos shall provide Jagotec
with an interim report detailing an estimate of the royalty payments for each
such fourth Calendar Quarter within **** days following the end of such Calendar
Quarter. Each royalty payment shall be accompanied by a report, summarizing the
total gross sales and total Net Sales (including an itemization of the
deductions applied to the gross sales to derive such Net Sales), the number of
units of Product sold (less damaged, rejected, returned or recalled Product)
during the relevant Calendar Quarter and the calculation of royalties, if any,
due. Each such statement shall be accompanied by the

29

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payment of the royalties due to Jagotec. No invoice shall be required from
Jagotec in this respect.
          7.1.2 All other payments to be made under this Agreement shall be made
in accordance with the terms set out in the applicable Section(s) regarding such
payments.
     7.2 Mode of Payment; Interest. All payments under this Agreement shall be
made in U.S. Dollars, via wire transfer of immediately available funds or check
as directed by the other Party from time to time. Such payments shall be without
deduction of exchange, collection, transfer or other charges. Jagotec shall be
entitled to interest on all late payments. Such interest shall be calculated
from the date such amount was due until the date such amount is actually paid,
at the rate of **** over the prime rate of interest reported in The Wall Street
Journal (East Coast Edition) for the date such amount was due.
     7.3 Records Retention.
          7.3.1 Commencing with the First Commercial Sale of a Product, Kos
shall keep, and shall require its relevant Affiliates to keep, complete and
accurate records pertaining to the sale of Product for the later of (a) a period
of **** after the year in which such sales occurred, and (b) **** after
expiration of the shelf life for Product, and in sufficient detail to permit
Jagotec to confirm the accuracy of the royalty payments paid by Kos pursuant to
Section 6.3.
          7.3.2 To enable Jagotec to confirm the Marketing Costs, Kos shall
keep, and shall require its relevant Affiliates to keep, complete and accurate
records pertaining to the Marketing Costs incurred for a period of **** after
the year in which such costs were actually incurred.
     7.4 Audits.
          7.4.1 At the request **** of Jagotec, Kos (and its Affiliates, if
applicable) shall permit an independent, certified public accountant appointed
by Jagotec and reasonably acceptable to Kos, at reasonable times and upon
reasonable written notice, to examine such records as may be necessary for the
sole purpose of verifying the calculation and reporting of Net Sales, Marketing
Costs, and the correctness of any royalty payment or other payment made under
this Agreement for any period within the preceding ****; provided, however,
Jagotec shall be permitted only one (1) such audit in any twelve (12) month
period. Said accountant shall not disclose to Jagotec or any other person any
information, except that such accountant may disclose to Jagotec the fact of a
deficiency, the lack of a deficiency or any overpayment, and the degree thereof,
including the dollar amount. All results of any such examination shall be made
available to Kos.
          7.4.2 In the event that any audit reveals an overpayment or an
underpayment in the amount of any payments that should have been paid by Kos to
Jagotec, then the overpayment or underpayment amount, as the case may be, shall
be paid within **** days after receipt of the final audit report, ****. ****. In
addition, if the underpayment is in excess of **** of the amount that actually
should have been paid, then Kos shall reimburse Jagotec for the reasonable cost
of such audit.

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          7.4.3 Except in the case of circumstances which would have prevented
an error or anomaly from being disclosed during an audit performed under this
Section 7.4, such as fraud, misrepresentation or other willful misconduct or
gross negligence to provide accurate information, upon the expiration of ****
following the end of any Calendar Year, the calculation of royalties payable
with respect to such year will be binding and conclusive upon each Party and Kos
will be released from any liability or accountability with respect to royalties
for such Calendar Year.
     7.5 Taxes.
          7.5.1 Jagotec will be responsible for any income or other taxes owed
by Jagotec or required by Applicable Laws to be withheld or deducted from any of
the royalty and other payments made by or on behalf of Kos to Jagotec hereunder
(“Withholding Taxes”), and Kos may deduct from any amounts that Kos is required
to pay to Jagotec hereunder an amount equal to such Withholding Taxes as relate
to such payments. Jagotec will provide Kos any information available to Jagotec
that is necessary to determine the Withholding Taxes. Kos will pay such
Withholding Taxes to the proper taxing authority for Jagotec’s account and will
send evidence of such payment to Jagotec within one month of such payment. The
Parties will do all such lawful acts and things and sign all such lawful deeds
and documents as either Party may reasonably request from the other Party to
enable Jagotec and Kos to take advantage of any applicable legal provision or
any double taxation treaties with the object of paying the sums due to Jagotec
hereunder without withholding or deducting any Withholding Taxes, or the
recovery thereof.
          7.5.2 Without limiting the immediately preceding sentence, Kos agrees
that, with respect to any royalty or other payment made by or on behalf of Kos
to Jagotec (as the beneficial owner) hereunder, after Kos has received both:
               (a) a properly executed Form W-8BEN from Jagotec, certifying
that: (a) Jagotec (the beneficial owner) is a resident of Switzerland within the
meaning of the income tax treaty between the United States and Switzerland (the
“Treaty”); (b) the beneficial owner’s U.S. taxpayer identification number is
stated on the Form W-8BEN; (c) the beneficial owner derives the item (or items)
of income for which the Treaty benefits are claimed; and (d) the beneficial
owner meets the requirements of the Treaty provision dealing with limitation on
benefits; and
               (b) such other documents as Kos determines constitute a
sufficient basis upon which Kos may rely to establish that Kos does not know or
have reason to know that it is, by reason of this Agreement, a financed entity
in a conduit financing arrangement (as such terms are defined by Section 1.881-3
of the Treasury Regulations),
Kos will not, for the period during which such Form W-8BEN is in effect and
during which Kos does not know or have reason to know that it is, by reason of
this Agreement, a financed entity in a conduit financing arrangement, deduct or
withhold any amount as Withholding Taxes for United States federal income tax
purposes except to the extent that the United States is permitted, by the
Treaty, to impose tax in such amount on income of the same type as such payment,
derived by a resident of Switzerland that meets the requirements of the Treaty
provision dealing with limitation on benefits with respect to such payment.

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          7.5.3 Should Jagotec be required by Applicable Laws to account for
Swiss VAT, Kos shall also pay Jagotec such additional VAT. This shall apply only
if Jagotec provides Kos with an invoice compliant with all the formal VAT
requirements. Kos shall not be obliged to pay any additional VAT to Jagotec
should the services be subject to Swiss VAT only because of Jagotec neglecting
any formal requirements.
8. Ownership; Patents and Trademarks.
     8.1 Ownership; Validity; Enforceability.
          8.1.1 Subject to the licenses granted to Kos pursuant to Section 2,
Jagotec has and shall retain all right, title and interest in and to the Jagotec
Technology (including without limitation the Patents set forth on Schedule 1.60)
and all Registration Applications, Registrations and other regulatory filings
and approvals, except as otherwise provided in Section 8.1.2.
          8.1.2 Promptly following receipt of a Registration for the Indications
in the Territory, Jagotec shall transfer and assign to Kos all right, title and
interest in and to such Registration.
          8.1.3 Each Party shall solely own all right, title and interest in and
to any and all data and information, other than Inventions, created or developed
in connection with the Development Program exclusively by or on behalf of such
Party (the “Data"). Notwithstanding the foregoing, each Party shall have the
non-exclusive right to have access to, use and reference the Data of the other
Party for its own purposes with respect to its rights to the Product in the
Field.
     8.2 Inventions.
          8.2.1 Each Party shall solely own all rights, title and interest in
and to any Inventions developed independently by such Party in the course of its
performance of, and arising directly from, the Development Program; ****. Each
Party shall promptly disclose any Invention made by such Party to the other
Party. Inventions jointly conceived and developed during the performance of the
Development Program and directly related to the Product shall be jointly owned
by Jagotec and Kos, other than that portion of any Inventions ****. Each Party
shall be permitted to use jointly owned Inventions without obligation to the
other Party.
          8.2.2 Kos and Jagotec shall not unreasonably refuse to grant each
other release from confidentiality obligations set forth in this Agreement and
the Confidentiality Agreement to the extent that such release is necessary to
permit the filing of a patent application for an Invention. Further, each Party
agrees to execute at any time all instruments of assignment and other
documentation necessary or requested by the other Party, at such other Party’s
expense, for the purpose of perfecting or maintaining ownership rights in all of
its Inventions as set forth in this Section 8.2.
          8.2.3 Each Party shall have full responsibility for, and shall control
the preparation, prosecution and maintenance of, all patents and patent
applications relating to Inventions owned by such Party as set forth in this
Section 8.2 and shall pay all costs and expenses of filing, prosecuting and
maintaining such patents.

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          8.2.4 For Inventions owned jointly, **** shall have the right to
control the preparation, filing, prosecution and maintenance of Patents arising
from such Inventions. Costs in connection with the preparation, filing,
prosecution and maintenance of Patents covering such jointly owned Inventions
shall be **** by both Parties, to the extent both Parties agree to pursue and
maintain such Patents. Notwithstanding the foregoing, **** shall, significantly
in advance of the projected filing date, provide draft patent applications to
**** for its review and will consider and include any timely suggested revisions
thereto. **** shall also keep **** apprised of all office actions and other
developments in the course of a patent approval process.
          8.2.5 Where one Party does not wish to file, prosecute or maintain a
Patent for any jointly owned Inventions, it shall promptly so notify the other
Party and the other Party may, at its own expense, pursue and maintain Patents
for the jointly owned Inventions. The non-filing Party shall take all reasonable
steps to cooperate and assist the filing Party with respect to the pursuit of
Patents on jointly owned Inventions. The filing Party shall thereafter
exclusively own all rights, title and interest in such Inventions.
     8.3 Patent and Trademark Enforcement.
          8.3.1 If either Party gains knowledge of an infringement, unauthorized
use, misappropriation or ownership claim or threatened infringement or other
such claim, including an ANDA filing (an "Infringement”) by a Third Party with
respect to the Jagotec Technology or the Jagotec Marks within the Territory,
such Party shall promptly notify the other Party in writing and shall promptly
provide such other Party with available details and information of such
Infringement.
          8.3.2 In connection with an ANDA filing which may adversely affect
sales of the Product, Kos shall have the first right, but not the duty, to
institute Infringement actions or make objections against such Third Party
filing the ANDA. If Kos does not institute an Infringement actions or otherwise
object to such ANDA filing within **** of when such ANDA filing is made, Jagotec
shall have the right, but not the obligation, to institute Infringement action
or make objections with respect to such ANDA filing by such Third Party.
          8.3.3 Jagotec shall have the first right, but not the duty, to
institute Infringement actions (other than those covered by Section 8.3.2)
against Third Parties based on any Jagotec Technology or any Jagotec Mark owned
by Jagotec or any of its Affiliates. If Jagotec does not secure actual cessation
of such Infringement (except by granting said Third Party a license under the
infringed Jagotec Technology, which such license shall not be granted without
Kos’ written consent) or institute an Infringement proceeding against an
offending Third Party within **** of learning of such Infringement, Kos shall
have the right, but not the obligation, to institute such an action with respect
to any Infringement by such Third Party, provided that, in no event shall Kos
enter into any settlement, consent judgment or other voluntary final disposition
of such action which adversely affects the Product, any Jagotec Technology or
any Jagotec Mark without the prior written consent of Jagotec. If Kos chooses
not to act within **** of obtaining such right, the right to institute
Infringement actions against Third Parties revert back to Jagotec.

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          8.3.4 Each Party prosecuting any such Infringement actions pursuant to
Section 8.3.2 or 8.3.3 (also referred to herein as “an Infringement action”)
shall keep the other Party reasonably informed as to the status of such actions
including, but not limited to, providing the other Party with copies of all
pleadings and other material documents filed with the court and will consider
reasonable input from the other Party during the course of the proceedings. Each
Party shall cooperate with the other Party and shall execute all necessary and
proper documents, take such actions as shall be appropriate to allow the other
Party to institute and prosecute such Infringement actions and shall otherwise
cooperate in the institution and prosecution of such actions (including, without
limitation, consenting to being named as a party thereto).
          8.3.5 Any costs and expenses associated with such an Infringement
action, including fees for attorneys and other professionals, and any award,
including enhanced damages, paid by such Third Parties as a result of any such
Infringement action (whether by way of settlement or otherwise) shall first be
used to reimburse the Party that instituted and maintained such action alone for
all costs and expenses, including reasonable fees for attorneys and
professionals, incurred for instituting and maintaining such action, and any
award remaining shall be divided evenly between the Parties. To the extent that
the Parties have cooperated in instituting and maintaining such action, the
Parties shall share costs and expenses, including reasonable fees for attorneys
and professionals, equally and shall apportion any awards between themselves in
a manner commensurate with each Party’s pro-rata share of the costs and expenses
in instituting and maintaining such action. After the recovery of all such costs
by both Parties, any award remaining thereafter shall be shared as follows:
               (a) Except as otherwise provided in Section 8.3.5(b), any award
remaining thereafter shall be divided between the Parties with **** to Kos and
**** to Jagotec.
               (b) Notwithstanding the foregoing and anything to the contrary
contained herein, in the event that any portion of any award is specifically
attributed by a court (or agreed upon in a settlement) to lost sales, such
portion shall be shared by the Parties as if such amount constituted Net Sales
in the Calendar Year in which such award is finally awarded by the court (or
such settlement entered into), and any remaining portion of any such award shall
be shared by the Parties equally.
     8.4 Infringement Action by Third Parties. Unless otherwise covered by
Jagotec’s indemnification obligation pursuant to Section 12.1.2, in the event of
the institution or threatened institution of any suit by a Third Party against:
(i) Kos, or its Affiliates, for Infringement involving the Jagotec Technology or
Jagotec Marks, including the manufacture, use, offer to sell, sale, distribution
or marketing of the Product in the Territory or importation of the Product into
the Territory; and/or (ii) Jagotec or any other Person for Infringement
involving the Jagotec Technology or Jagotec Marks in the Territory, Kos or
Jagotec, as the case may be, shall promptly notify the other Party in writing of
such suit or threatened suit. Except for suits covered by Jagotec’s
indemnification obligation pursuant to Section 12.1.2, Kos shall determine how
the Parties shall defend such suit or threatened suit and how the defense of
such action shall be controlled; provided that Kos shall consult Jagotec about
its defense strategy and keep Jagotec informed of the status of such suit. Kos
may not enter into any settlement of such suit which adversely affects Jagotec
without the prior written consent of Jagotec, which consent shall not be
unreasonably withheld or delayed. The Parties shall equally share: (i) all costs
and expenses

34

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(including fees for attorneys and professionals) of such suit or threatened suit
(including fees for attorneys and professionals) incurred by the Parties with
respect to such action; and (ii) any damages awarded to and settlements made
with any Third Party resulting from such suit or threatened suit. To the extent
any award or damages are granted to Jagotec and/or its Affiliates, and/or Kos
and/or its Affiliates, resulting from such suit or threatened suit (whether by
way of judgment, award, decree, settlement or otherwise), the amount of the
recovered award or damages shall first be used to reimbursing each Party for all
costs and expenses (including fees for attorneys and professionals) incurred by
each Party in defending against the suit or threatened suit on a pro-rata basis.
Any remaining award or damages after reimbursement of Jagotec and Kos shall be
split equally between the Parties. Each Party shall assist and cooperate with
the other Party, at the other Party’s reasonable request and expense, in the
defense of any such suit or threatened suit (including, without limitation,
consenting to being named as a party thereto). During the pendency of such
action, Kos shall continue to make all payments due under this Agreement.
9. Regulatory Matters.
     9.1 Adverse Event Reporting. Jagotec and Kos shall report to the other any
information of which they have knowledge concerning any adverse drug experience
in connection with the use of the Product, including the incidence or severity
thereof, associated with non-clinical toxicity studies, clinical uses,
Post-Registration Studies, investigations or tests, whether or not determined to
be attributable to the Product. Reports of non-serious adverse drug experiences
of the type defined in Section 314.80 (or Section 600.80, as applicable) of
Title 21 of the U.S. Code of Federal Regulations shall be exchanged by each
Party on a monthly basis for the first three (3) years following Registration
and annually thereafter. Reports of Serious Adverse Drug Experiences (as
hereinafter defined) shall be made available to the other Party as soon as
practicable but in no event more **** after a Party becomes aware of same and
shall be submitted as required to the FDA by Kos. Upon receipt of any such
information concerning any Serious Adverse Drug Experience by either Jagotec or
Kos, the Parties shall promptly consult each other and use Commercially
Reasonable Efforts to arrive at a mutually acceptable procedure for taking such
possible actions as appropriate or required under the circumstances. Kos shall
make the required report or submission to the FDA, and shall be required to
maintain a worldwide database and report the same to the FDA in accordance with
Applicable Laws, or take any other action that the Parties deem to be
appropriate or required by Applicable Laws.
          9.1.1 For purposes of this Agreement, “Serious Adverse Drug
Experience” means any adverse drug experience occurring at any dose that results
in any of the following outcomes: death, a life-threatening adverse drug
experience, inpatient hospitalization or prolongation of existing
hospitalization, a persistent or significant disability/incapacity, or a
congenital anomaly/birth defect. Important medical events that may not result in
death, be life-threatening, or require hospitalization may be considered a
serious adverse drug experience when, based upon appropriate medical judgment,
they may jeopardize the patient or subject and may require medical or surgical
intervention to prevent one of the outcomes listed in this definition as more
fully defined in Section 314.80 (or Section 600.80, as applicable) of Title 21
of the U.S. Code of Federal Regulations in the U.S.

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          9.1.2 Each Party agrees that if it contracts with a Third Party,
including but not limited to any Licensee, for research to be performed by such
Third Party relating to the Product, that Party agrees to require such Third
Party to report to the contracting Party the information set out above.
          9.1.3 Notwithstanding anything contained in the Section 9, the Parties
will enter into a separate pharmacovigilance agreement consistent with the terms
of this Section 9, to be executed within **** after the Effective Date. In the
event of any Licensees, such Licensees will be included as a party in such
agreements, as appropriate, in due course. Periodic Safety Update Reports
(“PSURs”) shall conform with the requirements and format of the February 2004
FDA Guidance or any amendment thereto. Kos shall submit the required PSURs to
the FDA.
          9.1.4 Any information required pursuant to this Section 9.1 shall be
deemed to have been sufficiently given if in writing and personally delivered or
sent by certified mail (return receipt requested), facsimile transmission
(receipt verified), e-mail or overnight express courier service (signature
required), prepaid, to the Party for which such notice is intended, at the
address set out for such Party below:

                         (a)   in the case of Jagotec, to:

Jagotec AG
Eptingerstrasse 51
CH—132 Muttenz
Switzerland
Attention: Head of Pharmacovigilance
Facsimile No.: ****
Telephone No.: ****

and a copy to:

SkyePharma PLC
105 Piccadilly
London W1J 7NJ
United Kingdom
Attention: General Counsel
Facsimile No.: ****
Telephone No.: ****

                         (b)   in the case of Kos, to:

Kos Life Sciences, Inc.
2200 N. Commerce Parkway
Suite 300
Weston, FL 33326-3258

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                            Attention: Suzanne Balandis,
Vice President, S&S and Drug Information Service
Facsimile No.: ****
Telephone No.: ****
Email: ****

and copies to:

Kos Life Sciences, Inc.
2200 N. Commerce Parkway
Suite 300
Weston, FL 33326-3258
Attention: Marvin Blanford,
Senior Vice President, Drug, Regulatory, Safety and Compliance
Facsimile No.: ****
Telephone No.: ****
E-mail: ****

or to such other address for such Party as it shall have specified by like
notice to the other Party; provided, that notices of a change of address shall
be effective only upon receipt thereof. If delivered personally or by facsimile
transmission, the date of delivery shall be deemed to be the date on which such
notice or request was given. If sent by overnight express courier service, the
date of delivery shall be deemed to be the next business day after such notice
or request was deposited with such service. If sent by certified mail, the date
of delivery shall be deemed to be the third (3rd) business day after such notice
or request was deposited with the postal service of the country from which the
notice is being sent.
     9.2 Recall.
          9.2.1 In the event that any Product sold pursuant to this Agreement
should be alleged or proven not to meet the Specifications or other mandatory
standards for the Product, either Party shall notify the other Party
immediately, and both Parties shall cooperate fully regarding the investigation
and disposition of any such matter. If Kos, in its discretion, recalls, detains
or retains the Product (voluntarily or by order of a Regulatory Authority),
Jagotec agrees to use Commercially Reasonable Efforts to cooperate in such
actions, at Kos’ sole expense, except as set out in Section 9.2.2(a).
          9.2.2 In the event a recall, detention or retention action of the
Product is:
               (a) a direct result of any negligence, breach of representation
or warranty or breach of this Agreement or Applicable Laws by Jagotec, its
designees or its Affiliates, then and in such event, **** shall bear all
reasonable direct, documented costs associated with said action, including,
without limitation, expenses of replacement stock, and shall bear the actual
cost of conducting such action or withdrawal, including costs imposed by the FDA
such as costs for detention and inspection, in accordance with the recall
guidelines of the FDA; and

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               (b) a direct result of any negligence, breach of representation
warranty or breach of this Agreement or Applicable Laws by Kos its designees or
its Affiliates, then and in such event, Kos shall bear all reasonable direct,
documented costs associated with said action, including, without limitation,
expenses of replacement stock, and shall bear the actual cost of conducting such
action or withdrawal, including costs imposed by the FDA such as costs for
detention and inspection, in accordance with the recall guidelines of the FDA.
     9.3 Access, Use and Reference Rights to Data and Filings.
          9.3.1 Upon the filing of any Registration Application by either Party
for the Product in the Territory, such Party will provide the other Party with
unlimited access to an electronic version of: (i) any clinical safety data and
(ii) any clinical efficacy data, relating to the Product in the Field and
maintained or otherwise Controlled by such Party, in each case for the purpose
of promoting and commercializing Products in accordance with the terms and
conditions of this Agreement. Such Party shall segregate such data by
indication.
          9.3.2 During the term of this Agreement, each Party will provide to
the other Party access, during regular business hours and at mutually agreeable
times, to all other Data with respect to the Product that are Controlled by such
Party. Further, such Party hereby grants the other Party the right to use and
reference all Data and regulatory filings and approvals Controlled by such Party
relating to Product in the Field for the purpose of developing and
commercializing Product: (i) with respect to Kos, in the Field and in the
Territory in accordance with the terms of this Agreement; and (ii) with respect
to Jagotec, outside of the Territory. Such right of reference will be
transferable to such Party’s Affiliates. To the extent that any such Data or
regulatory filings are held by a Third Party, such Party will use Commercially
Reasonable Efforts to arrange direct access to the portions of such Data and
regulatory filings that are relevant to the activities of the other Party as
provided above.
10. Representations, Warranties and Covenants.
     10.1 Representations, Warranties and Covenants of Both Parties. Each Party
represents, warrants and covenants to the other Party that:
          10.1.1 as of the Effective Date, such Party is duly organized and
validly existing and in good standing under the laws of the jurisdiction of its
incorporation and has full corporate power and authority to enter into this
Agreement and to carry out the provisions hereof;
          10.1.2 as of the Effective Date, such Party has taken all corporate
action necessary to authorize the execution and delivery of this Agreement and
the performance of its obligations under this Agreement and has full power and
authority to enter into this Agreement and perform its obligations under this
Agreement;
          10.1.3 as of the Effective Date, this Agreement has been duly executed
by such Party and assuming due authorization, execution and delivery by the
other Party, constitutes a valid and legally binding obligation of such Party,
enforceable in accordance with its terms, subject to and limited by:
(1) applicable bankruptcy, insolvency, reorganization, moratorium, and

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other laws generally applicable to creditors’ rights; and (2) judicial
discretion in the availability of equitable relief;
          10.1.4 as of the Effective Date, such Party has obtained, or is not
required to obtain, the consent, approval, order or authorization of any Third
Party, or has completed, or is not required to complete any registration,
qualification, designation, declaration, or filing with, any Governmental
Authority and Regulatory Authority, in connection with the execution and
delivery of this Agreement and the performance by such Party of its obligations
under this Agreement;
          10.1.5 the execution and delivery of this Agreement, and the
performance of such Party of its obligations under this Agreement, does not and
will not: (1) conflict with, or result in any violation or default under any
instrument, judgment, order, writ, decree, contract or provision to which such
Party is otherwise bound; (2) give rise to any lien, charge or encumbrance upon
any assets of such Party or the suspension, revocation, impairment, forfeiture
or non-renewal of any material permit, license, authorization, or approval that
applies to such Party, its business or operations or any of its assets or
properties, except any or all of which could not reasonably be expected to have
a material adverse effect on its ability to perform under this Agreement or on
the rights of the other Party under this Agreement; or (3) conflict with any
rights granted by such Party to any Third Party or breach any obligation that
such Party has to any Third Party; and
          10.1.6 as of the Effective Date, such Party is not debarred under the
Generic Drug Enforcement Act of 1992 and it does not, and will not during the
term of this Agreement, employ or use the services of any Person who is
debarred. In the event that either Party becomes aware of the debarment or
threatened debarment of any Person providing services to such Party, including
the Party itself and its Affiliates, which directly or indirectly relate to
activities under this Agreement, the other Party shall be promptly notified in
writing.
     10.2 Representations and Warranties of Jagotec. Jagotec represents and
warrants to Kos, as of the Effective Date, that:
          10.2.1 Jagotec has the right to grant the licenses under the Jagotec
Technology and Third Party Licenses as set forth in this Agreement;
          10.2.2 Jagotec has not previously granted, and is not currently
obligated (whether or not contingent on any future event or state of affairs) to
negotiate with any Third Party with respect to granting, any license or other
right in the Field in the Territory under the Jagotec Technology licensed to Kos
by this Agreement;
          10.2.3 Jagotec has not encumbered, with liens, mortgages, security
interests or otherwise, the Jagotec Technology, and any future encumbrance will
be subject to the rights granted to Kos under this Agreement;
          10.2.4 Jagotec has not received: (i) any notice of infringement or
misappropriation of any alleged intellectual property rights asserted by any
Third Party in relation to the Jagotec Technology and Third Party Licenses,
(ii) any material and negative communication (whether formal or informal) with
respect to any Jagotec Technology from any

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Governmental Authority, whether inside or outside the Territory; or (iii) any
notice from any Governmental Authority (aside from any rejections from the U.S.
Patent and Trademark Office which have been overcome) that the claims set forth
in any issued Patents contained in Jagotec Technology and Third Party Licenses
are invalid; in each case, which could reasonably be expected to materially
adversely affect its or Kos’ ability to carry out either of their respective
responsibilities under this Agreement or the development, manufacture, use or
sale of the Product or the rights or licenses granted to Kos under this
Agreement;
          10.2.5 To Jagotec’s Knowledge, none of the claims contained in any
issued Patents contained in the Jagotec Technology are invalid or unenforceable;
          10.2.6 Jagotec has no Knowledge of any patents (other than the Patents
included in the Jagotec Technology) that would be infringed by the manufacture,
development, use, sale, offer for sale, distribution or importation of the
Existing Product in the Field in the Territory;
          10.2.7 All Jagotec Technology is Controlled by Jagotec, and Jagotec
has no Knowledge of any intellectual property of any Third Party that would or
could reasonably constitute infringement or misappropriation of the Jagotec
Technology;
          10.2.8 To Jagotec’s Knowledge, the studies comprising the Core
Clinical Program are the only clinical studies necessary for Registration in the
Territory of the Existing Product for the Indications;
          10.2.9 Jagotec has the expertise and personnel to meet its obligations
under this Agreement;
          10.2.10 All Jagotec Marks are Controlled by Jagotec and do not
infringe any intellectual property right of any Third Party;
          10.2.11 To Jagotec’s Knowledge, there have been no ex parte or inter
partes proceedings (such as oppositions, interferences, reexaminations,
reissues, or nullity actions) in or outside the Territory, regarding any of the
Patents contained in the Jagotec Technology; and
          10.2.12 Jagotec and its Affiliates are in compliance in all material
respects with, and have not received any notice of breach pursuant to, any
agreement relating to the Jagotec Technology, including without limitation the
Third Party Licenses attached as Schedule 1.83A and 1.83B, where such breach or
failure to comply could reasonably be expected to materially adversely affect
its or Kos’ ability to carry out either of their respective responsibilities
under this Agreement or the development, manufacture, use or sale of the Product
or the rights or licenses granted to Kos under this Agreement.
          10.2.13 Prior to the execution of this Agreement, to the extent in
Jagotec’s or any of its Affiliates’ possession or control, Jagotec has provided
Kos with a copy of the following:

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               (a) all legal opinions and memoranda (including the date, author,
recipient and subject matter of the foregoing) directly relating to the
development, manufacturing, commercialization or use of the Existing Product and
the Jagotec Technology;
               (b) all Patents included as part of Jagotec Technology in
existence as of the Effective Date, and the associated file wrappers (with
references), existing immediately prior to the Parties’ execution of this
Agreement, and all of the related prosecution files and correspondence, and has
provided Kos’ in-house patent counsel with the opportunity to fully review and
discuss such patent rights with Jagotec’s patent counsel who prosecuted such
patent rights, performed any review thereof, or rendered any opinion thereon;
               (c) all material agreements to which Jagotec or any of its
Affiliates is a party and which directly relate to the Existing Product or
Jagotec Technology, including all license or use agreements, manufacturing or
supply agreements, marketing agreements, distribution agreements and option
agreements (but excluding pre-clinical trial, clinical trial, and CRO agreements
and other agreements of a similar nature);
               (d) the results of all patentability and validity searches
relating to the Existing Product (including methods of making or using the
same);
               (e) all other material documents directly relating to the
Existing Product or the Jagotec Technology.
               (f) all documents relating to any dispute regarding inventorship,
ownership, validity, misappropriation, infringement or license rights of the
Jagotec Technology;
               (g) to Jagotec’s Knowledge, all written notices, claims, demands
or filings relating to any arbitral, governmental or other proceeding directly
relating to the Product and Jagotec Technology;
               (h) a copy of all material manufacturing, production and market
research reports and studies relating to the Product; and
               (i) Schedule 10.2.13(i) sets forth a true and accurate, in all
material respects, list and description of each of the documents referred to in
this Section 10.2.13, all of which Jagotec has provided to Kos prior to the
Effective Date.
     10.3 Representations, Warranties and Covenants of Kos. Kos represents,
warrants and covenants to Jagotec that:
          10.3.1 Kos shall perform those activities assigned to it under the
Commercialization Program in material compliance with cGMP and all Applicable
Laws, and will conduct such activities in accordance in all material respects
with the provisions of this Agreement including, without limitation, the PhRMA
Code and Section 5;
          10.3.2 Kos has the expertise and personnel to meet its obligations
under this Agreement; and

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          10.3.3 all Kos Marks are Controlled by Kos and do not infringe any
intellectual property right, of any Third Party.
     10.4 Disclaimer. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER
PARTY MAKES ANY REPRESENTATIONS OR EXTENDS ANY WARRANTIES OF ANY KIND, EITHER
EXPRESS OR IMPLIED, AND EACH PARTY EXPRESSLY DISCLAIMS ALL IMPLIED WARRANTIES OF
MERCHANTABILITY AND OF FITNESS FOR A PARTICULAR PURPOSE OR USE, OR
NON-INFRINGEMENT.
     10.5 Limitation on Damages. IN NO EVENT WILL EITHER PARTY BE LIABLE FOR THE
OTHER PARTY’S LOST PROFITS, LOSS OF DATA, OR FOR ANY SPECIAL, INDIRECT,
INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES, HOWEVER CAUSED, ON ANY THEORY OF
LIABILITY AND WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF
SUCH DAMAGES, ARISING UNDER ANY CAUSE OF ACTION AND ARISING IN ANY WAY OUT OF
THIS AGREEMENT. THE FOREGOING LIMITATIONS WILL NOT LIMIT EITHER PARTY’S
OBLIGATIONS TO THE OTHER PARTY UNDER SECTIONS 11 AND 12 OF THIS AGREEMENT.
11. Confidentiality.
     11.1 Confidential Information. Except to the extent expressly authorized by
this Agreement or otherwise agreed in writing, the Parties agree that the
receiving Party (the “Receiving Party”) shall keep confidential and shall not
publish or otherwise disclose or use for any purpose other than as provided for
in this Agreement any confidential and proprietary information and materials,
patentable or otherwise, in any form (written, oral, photographic, electronic,
magnetic, or otherwise) which is disclosed to it by the other Party (the
“Disclosing Party”) or is otherwise received, accessed or developed by a
Receiving Party in the course of performing its obligations under this Agreement
including, but not limited to, all information concerning the Product, the
Jagotec Technology, information disclosed by one Party to the other pursuant to
the Confidentiality Agreement, the contents of this Agreement and any other
technical and business information of whatever nature (collectively,
“Confidential Information”). For the purposes of this Agreement, any data,
results, reports or analysis pursuant to the activities under the Development
Program and any other clinical trials shall be deemed Confidential Information
of the Party responsible for such activities or clinical trials, except with
respect to Inventions, which shall be deemed to be Confidential Information of
the Party who owns such Inventions.
     11.2 Exclusions. The obligations of confidentiality and non-use set forth
in Section 11.1 shall not apply to any portion of the Confidential Information
which the Receiving Party is able to establish by competent proof: (1) was
already legally in the possession of the Receiving Party, other than under an
obligation of confidentiality, at the time of disclosure by the Disclosing
Party; (2) was generally available to the public or otherwise part of the public
domain at the time of its disclosure to the Receiving Party; (3) became
generally available to the public or was otherwise part of the public domain
after its disclosure and other than through any act or omission of the Receiving
Party in breach of this Agreement; (4) was disclosed to the Receiving Party,
other than under an obligation of confidentiality, by a Third Party who had no
obligation to the Disclosing Party not to disclose such information to others or
(5) was independently

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discovered or developed by the Receiving Party or its Affiliates, as evidenced
by their written records, without the use of, and by personnel who had no access
to, Confidential Information belonging to the Party that controls such
information and Know-how.
     11.3 Exceptions. The obligations of this Section 11 shall not apply to
Confidential Information that: (i) is submitted to a Regulatory Authority to
facilitate the issuance of, or otherwise in connection with, the Registrations
for the Product, provided, that, reasonable measures shall be taken to assure
confidential treatment of such information; (ii) is provided by the Receiving
Party to Third Parties under confidentiality agreements having provisions at
least as stringent as those in this Agreement, for consulting, manufacturing
development, manufacturing, external testing and marketing research with respect
to any of the subject matter of this Agreement; or (iii) is otherwise required
to be disclosed in compliance with Applicable Laws or regulations (including,
without limitation and for the avoidance of doubt, the requirements of the U.S.
Securities and Exchange Commission, the London Stock Exchange, NASDAQ Stock
Exchange or any other stock exchange on which securities issued by a Party are
traded) or order by a court or other Governmental Authority having competent
jurisdiction; provided, that, if a Party is required to make any such disclosure
of the other Party’s Confidential Information such Party will give reasonable
advance written notice to the other Party of such disclosure requirement and,
except to the extent inappropriate in the case of patent applications, will use
its Commercially Reasonable Efforts to secure confidential treatment of such
Confidential Information required to be disclosed.
     11.4 Limitations on Use. Each Party shall limit the use, and cause each of
its Affiliates to limit the use, of any Confidential Information obtained by
such Party from the other Party, or its Affiliates, pursuant to this Agreement
or otherwise, so that such use is solely in connection with the activities or
transactions contemplated hereby or as expressly permitted hereunder.
     11.5 Remedies. Each Party shall be entitled, in addition to any other right
or remedy it may have, at law or in equity, to seek an injunction, enjoining or
restraining the other Party from any violation or threatened violation of this
Section 11.
     11.6 Duration. All obligations of confidentiality, limited use and
non-disclosure imposed by this Section 11 with respect to any and all items of
Confidential Information shall expire **** after the termination of this
Agreement.
12. Indemnification; Insurance.
     12.1 By Jagotec. Except as otherwise provided in this Agreement, Jagotec
shall indemnify, defend and hold harmless Kos, its Affiliates, and their
respective directors, officers, employees, contractors, consultants and agents,
from and against any and all liabilities, damages, losses, costs and expenses
(including the reasonable fees of attorneys and other professionals) for claims
of any Third Party arising out of or resulting from:
          12.1.1 negligence or wrongful intentional acts or omissions of Jagotec
or its Affiliates, and their respective directors, officers, employees,
contractors, consultants and agents, in connection with the activities
contemplated under this Agreement; or

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          12.1.2 any breach of any representation, warranty or covenant of
Jagotec (including, without limitation, ****, including but not limited to a
****) contained in this Agreement.
     12.2 By Kos. Except as otherwise provided for in this Agreement, Kos shall
indemnify, defend and hold harmless Jagotec, its Affiliates, and their
respective directors, officers, employees, contractors, consultants and agents,
from and against any and all liabilities, damages, losses, costs and expenses
(including the reasonable fees of attorneys and other professionals) for claims
of any Third Party arising out of or resulting from:
          12.2.1 negligence or wrongful intentional acts or omissions of Kos,
its Affiliates, or their respective directors, officers, employees and agents,
in connection with the activities contemplated under this Agreement; or
          12.2.2 any claims relating to or arising out of the marketing or sales
activities of Kos or its Affiliates with respect to the Product; or
          12.2.3 any breach of any representation, warranty or covenant of Kos
contained in this Agreement.
     12.3 Notice. In the event that any person (an “Indemnitee”) entitled to
indemnification under Section 12.1 or 12.2 is seeking such indemnification, such
Indemnitee shall inform the indemnifying Party of the claim as soon as
reasonably practicable after such Indemnitee receives notice of such claim,
shall permit the indemnifying Party to assume direction and control of the
defense of the claim (including the sole right to settle it at the sole
discretion of the indemnifying Party, provided that, such settlement does not
impose any obligation on the Indemnitee or the other Party) and shall cooperate
as requested (at the expense of the indemnifying Party) in the defense of the
claim.
     12.4 Complete Indemnification. As the Parties intend complete
indemnification, all costs and expenses, including without limitation,
reasonable legal fees and expenses, actually incurred by an Indemnitee in
connection with enforcement of Sections 12.1 or 12.2 shall also be reimbursed by
the indemnifying Party.
     12.5 Insurance. Each Party will obtain and keep in force, through self
insurance or otherwise, in a form reasonably acceptable to the other Party
hereto, insurance in scope and amount as required by Applicable Law to a Party’s
activities hereunder and such additional amounts as may be reasonably necessary
to cover such Party’s indemnity obligations under this Agreement with scope and
coverage as is normal and customary in the industry within the Territory for
parties similarly situated, but in no event in an amount less than **** per
occurrence and in the aggregate. It is understood that such insurance will not
be construed to limit a Party’s liability with respect to its indemnification
obligations under this Section 12. Each Party will, except to the extent self
insured, provide to the other Party upon request, a certificate evidencing the
insurance such Party is required to obtain and keep in force under this
Section 12.

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13. Term; Termination.
     13.1 Term. This Agreement shall become effective as of the Effective Date
and, unless earlier terminated pursuant to the other provisions of this
Section 13, shall expire on the expiration of the last valid Patent covering the
Product in the Territory; provided, however, that Kos shall have the right to
extend the term of this Agreement as provided in Section 13.2.
     13.2 Right to Extend Term. Kos shall have the right to extend the term of
this Agreement on the following terms and conditions:
          13.2.1 Kos shall notify Jagotec in writing at least **** prior to the
anticipated expiration of the term of this Agreement pursuant to Section 13.1
that Kos desires to extend the term of this Agreement, and shall include a term
sheet with Kos’ proposal for the terms of such extension, including the length
of the extended term.
          13.2.2 upon receipt of such notice, Jagotec shall enter into good
faith negotiations with Kos regarding the terms of such extension. The terms of
such extension shall include the applicable reductions in the royalty rates
specified in Section 6.4.3. If the Parties reach an agreement on such terms no
later than **** prior to the anticipated expiration of the original term of this
Agreement pursuant to Section 13.1, the Parties shall execute an amendment to
this Agreement reflecting such terms.
     13.3 Termination for Cause.
          13.3.1 Either Party (the “Non-breaching Party”) may terminate this
Agreement, without prejudice to any other remedies available to it at law or in
equity, in the event the other Party (the “Breaching Party”) shall have breached
any representation or warranty, or breached or defaulted in the performance of
any of its material obligations hereunder and such breach or default shall have
continued for **** after written notice thereof was provided to the Breaching
Party by the Non-breaching Party (or, if such breach or default cannot be cured
within such **** period, if the Breaching Party does not commence and diligently
continue actions to cure such breach or default during such ****). Any such
termination under this Section 13.3 shall become effective at the end of such
**** notice period unless the Breaching Party has cured any such noticed
breach(es) or default(s) prior to the expiration of such **** period (or, if
such breach(es) or default(s) cannot be cured within such **** period, if the
Breaching Party has commenced and diligently continues actions to cure such
breach(es) or default(s)). The right of either Party to terminate this Agreement
as provided in this Section 13.3 shall not be affected in any way by its waiver
or failure to take action with respect to any previous breach or default.
          13.3.2 If Kos is entitled to terminate this Agreement pursuant to
Section 13.3.1 due to Jagotec’s breach of this Agreement, then Kos may, at its
sole discretion, by written notice to Jagotec, either (a) terminate this
Agreement in its entirety, or (b) terminate this Agreement in part as described
in further detail in Section 13.9.
     13.4 Termination Upon Withdrawal of the Product. This Agreement may be
terminated at any time upon **** written notice by either Party, if the Product
is permanently withdrawn from the market in the Territory.

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     13.5 Termination for Safety Concerns. If: (i) after the filing of a
Registration Application for the Product, Kos determines, in its reasonable
judgment after discussions with Jagotec, that the Product should be withdrawn
due to a significant concern for the safety of the study subjects, which concern
is based on a reasonable review of clinical data developed during the
Development Program; or (ii) during the Product’s Commercialization Program,
such Product becomes subject to a pattern of Serious Adverse Drug Experiences or
either Party receives notice from a Regulatory Authority relating to a
significant concern for safety, in each case which Kos, in good faith,
reasonably believes would significantly impact the long-term viability of the
Product; Kos shall have the right, upon **** prior written notice to Jagotec
setting forth the reasons therefor in reasonable detail, to have the Steering
Committee determine whether or not there exists such significant safety concerns
or such significantly impact on the long-term viability of a Product and what,
if anything, the Parties should do to address the matter; provided, however,
that Kos shall have the right to immediately temporarily cease the marketing,
sale and distribution of the Product until a final resolution is reached as
provided in this Section 13.5. In the event the Steering Committee is unable to
reach a unanimous resolution of the matter within **** of the matter being
referred to the Steering Committee, Kos may terminate this Agreement upon ****
prior written notice to Jagotec only if Kos, in good faith, reasonably believes
that the patient safety issue would significantly eliminate the long-term
viability of such Product and certifies the same to Jagotec in such written
notice.
     13.6 Termination upon Insolvency. Either Party may terminate this
Agreement, if, at any time, the other Party shall file in any court or agency
pursuant to any statute or regulation of any state or country, a petition in
bankruptcy or insolvency or for reorganization or for an arrangement or for the
appointment of a receiver or trustee of the Party or of substantially all of its
assets, or if the other Party proposes a written agreement of composition or
extension of substantially all of its debts, or if the other Party shall be
served with an involuntary petition against it, filed in any insolvency
proceeding, and such petition shall not be dismissed within **** after the
filing thereof, or if the other Party shall propose or be a party to any
dissolution or liquidation, or if the other Party shall make an assignment of
substantially all of its assets for the benefit of creditors.
     13.7 Other Termination Rights.
          13.7.1 **** may terminate this Agreement in its entirety upon ****
prior written notice **** is acquired (whether through merger, sale of stock
representing fifty percent (50%) or more of the outstanding voting stock of
****, sale of all or substantially all of **** assets or otherwise) by, or the
division or portion of the business of **** to which the Agreement relates is
sold or otherwise transferred to, a company which promotes an **** product in
the Territory and such acquirer does not (i) provide notice to **** within ****
of its acquisition of **** (or the division or portion of the business of ****
to which this Agreement relates), as applicable, of its intention to divest
itself of such **** product; or (ii) having provided such notice to **** does
not, actually divest itself of such **** product within **** of such
acquisition. In any event, if such acquirer provides notice of its intention to
divest itself of such **** product, such acquirer shall use Commercially
Reasonable Efforts to consummate such divestiture within **** of such
acquisition.

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          13.7.2 **** may terminate this Agreement in its entirety upon ****
prior written notice to ****, if **** challenges any of the **** or **** that
relate to the Product, including, without limitation, those Patents specified on
Schedule 1.60 of this Agreement provided, that such termination right will
expire **** after such interference or opposition becomes known to ****.
          13.7.3
               (a) If the first **** the Territory has not been obtained on or
before ****, **** may terminate this Agreement upon **** prior written notice to
****.
               (b) In the event that the Regulatory Authority requires any
clinical or other trials in addition to the Core Clinical Program to be
conducted in order to obtain Registration of the Existing Product for the
Indications as provided in Section 4.2.2, and either Party reasonably believes
that such requirements **** Product in the Territory to a date on or before
****, then such Party shall submit the concern to **** for a determination of
whether such belief is accurate or not. If the **** determines (whether by
consensus or through the use of an Expert as provided in Section 3.5.4) that
such belief is accurate, such Party may terminate this Agreement upon **** prior
written notice to the other Party. If the **** determines (whether by consensus
or through the use of an Expert as provided in Section 3.5.4) that such belief
is not accurate, then neither Party shall have the right to terminate this
Agreement in such event.
          13.7.4 **** may terminate this Agreement if the **** reasonably
determines that the costs for the additional trials required by the Regulatory
Authority as provided in Section 4.2.2 will exceed ****, and if the ****
reasonably determines that the costs for the additional trials required by the
Regulatory Authority as provided in Section 4.2.2 will exceed ****, **** may
terminate this Agreement.
     13.8 Effect of Expiration or Termination. Following the expiration of the
term of this Agreement or upon the termination of this Agreement pursuant to
this Section 13 (other than by Kos for breach by Jagotec), in addition to any
other remedies available at law or in equity:
          13.8.1 all licenses and rights granted by Jagotec to Kos under this
Agreement shall terminate;
          13.8.2 at **** (unless this Agreement is terminated by Kos, in which
case it shall be ****), Kos shall promptly but no later than **** after such
expiration or termination: (a) transfer to Jagotec all relevant Know-how, data,
reports, records and materials in Kos’ possession or control that relate to the
Product, including the Development Program but excluding the Commercialization
Program; (b) assign or transfer to Jagotec any Registrations relating to the
Product which were transferred from Jagotec to Kos pursuant to Section 8.1.2, in
accordance with all Applicable Laws including, but not limited to 21 C.F.R
314.72; (c) provide Jagotec with all information, and execute all documents,
necessary or desirable to cross-reference any other regulatory filings in Kos’
name with respect to the Product; and (d) return to Jagotec all relevant records
and materials in Kos’ possession or control containing Jagotec’s

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Confidential Information (provided that Kos may keep one (1) copy of such
Confidential Information for archival purposes only);
          13.8.3 to the extent Kos owns or holds any right, title and interest
in any Kos Marks covering the brand name(s) of the Product or any Product
Trademarks under which the Product has been or is being marketed, promoted or
sold in the Territory, Kos shall promptly assign the same to Jagotec for no
additional cost and agrees to provide **** any necessary papers to effectuate
such assignment; provided that such trademarks shall not include the Kos Marks
other than the brand name(s) of the Product or the Kos company name or
trademarks only tangentially or secondarily associated with the marketing,
promotion or sale of the Product; and
          13.8.4 during the **** period following termination or expiration of
this Agreement, Kos may sell its then-existing inventory of Products for the
Field in the Territory and will pay all amounts due to Jagotec hereunder with
respect to any Net Sales of such inventory occurring during such **** period.
Additionally, the Parties’ rights and obligations under this Agreement will
continue during such **** after the expiration or termination of this Agreement,
to the extent applicable to such sales.
     13.9 Partial Termination for Jagotec Breach. Notwithstanding Section 13.8
of this Agreement, if Kos terminates this Agreement in part pursuant to
Section 13.3.2, this Agreement will terminate except that the Parties’ rights
and obligations under Sections 2 (except Section 2.1.2 and 2.2.4), 6, 7, 8 and
13, and the surviving provisions described in Section 13.11.1 below, will
continue in full force and effect.
     13.10 Assignment of Supply Agreements with Third Parties. If this Agreement
is terminated by Kos pursuant to Section 13.3 or Section 13.6, to the extent
that Jagotec has the right to do so, Jagotec shall assign to Kos its supply
agreements relating to the Product in the Territory with Third Parties, if any,
to the extent necessary to meet Kos’ Product supply needs.
     13.11 Accrued Rights; Surviving Obligations. Termination, relinquishment or
expiration of this Agreement for any reason shall be without prejudice to any
rights that shall have accrued to the benefit of either Party prior to such
termination, relinquishment or expiration. Such termination, relinquishment or
expiration shall not relieve either Party from obligations that are expressly
indicated to survive termination or expiration of this Agreement.
          13.11.1 In addition to the provisions of this Agreement which
expressly survive as set out in this Section 13 or elsewhere in this Agreement,
all of the Parties’ rights and obligations under, and/or the provisions
contained in, Sections 1, 7.3, 7.4, 7.5, 8.1.1, 8.1.3, 8.2, 8.3 and 8.4 (solely
with respect to claims identified during the term of this Agreement), 9, 10.5,
11, 12, 13.8, 13.10, 13.11 and 15 shall survive the expiration, termination, or
relinquishment of this Agreement.
     13.12 Section 365(n) of the Bankruptcy Code. All rights and licenses
granted under or pursuant to any Section of this Agreement are and shall
otherwise be deemed to be for purposes of Section 365(n) of Title 11, United
States Code (the “Bankruptcy Code”) licenses of rights to “intellectual
property” as defined in Section 101(56) of the Bankruptcy Code. The Parties
shall retain and may fully exercise all of their respective rights and elections
under the Bankruptcy

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Code. Upon the bankruptcy of any Party, the non-bankrupt Party shall further be
entitled to a complete duplicate of, or complete access to, any such
intellectual property, and such, if not already in its possession, shall be
promptly delivered to the non-bankrupt Party, unless the bankrupt Party elects
to continue, and continues, to perform all of its obligations under this
Agreement.
14. Force Majeure.
     Any delay in the performance of any of the duties or obligations of either
Party hereto (except the payment of money due hereunder arising prior to the
force majeure event) shall not be considered a breach of this Agreement, and the
time required for performance shall be extended for a period equal to the period
of such delay, if such delay has been caused by or is the result of acts of God;
acts of public enemy; insurrections; riots; injunctions; embargoes; labor
disputes, including strikes of employees of non-affiliated Third Parties,
lockouts, or boycotts; fires; explosions; earthquakes; floods; shortages of
energy; governmental prohibition or restriction; or other similar unforeseeable
causes beyond the reasonable control and without the fault or negligence of the
Party so affected. The Party so affected shall give prompt notice to the other
Party of such cause, and shall take whatever Commercially Reasonable Efforts are
necessary to relieve the effect of such cause as rapidly as reasonably possible.
The Party giving such notice shall be excused from the performance, or the
punctual performance, of such obligations, as the case may be, from the date of
such notice, up to a maximum of ****, after which time (or such earlier time if
it is readily apparent to the Party not affected by the event of force majeure
that such event will exceed **** in duration) the Party not affected, may
terminate this Agreement.
15. Miscellaneous.
     15.1 Relationship of Parties. Nothing in this Agreement is intended or
shall be deemed to constitute a partnership, agency, employer-employee or joint
venture relationship between the Parties. No Party shall incur any debts or make
any commitments for the other.
     15.2 Assignment. Neither Party shall be entitled to assign, sell, transfer,
delegate, pledge or otherwise dispose of, whether voluntarily, involuntarily, by
operation of law or otherwise, its rights or obligations hereunder without the
express written consent of the other Party, which consent shall not be
unreasonably withheld or delayed, provided that, subject to Section 13.2.1,
either Party may assign or transfer this Agreement or any of its rights or
obligations hereunder without the consent of the other Party (a) to any
Affiliate of the assigning Party; or (b) to any Third Party with which it merges
or consolidates, or to which it transfers all or substantially all of its assets
to which this Agreement relates. No assignment and transfer shall be valid or
effective unless done in accordance with this Section 15.2 and unless and until
the assignee/transferee shall agree in writing to be bound by the provisions of
this Agreement.
     15.3 Subcontracting. Either Party may subcontract any responsibility under
this Agreement that it reasonably deems necessary or useful without obtaining
the consent (written or otherwise) of the other Party, except as provided in
Section 5.5; provided that, in any event, the subcontracting Party, shall at all
times remain primarily responsible and liable for all such activities.

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     15.4 Books and Records. Any books and records to be maintained under this
Agreement by a Party shall be maintained in accordance with GAAP.
     15.5 Further Actions. Each Party shall execute, acknowledge and deliver
such further instruments, and do all such other reasonable acts, as may be
necessary or appropriate in order to carry out the purposes and intent of this
Agreement.
     15.6 Notice. Any notice or request required or permitted to be given under
or in connection with this Agreement shall be deemed to have been sufficiently
given if in writing and personally delivered or sent by certified mail (return
receipt requested), facsimile transmission (receipt verified), or overnight
express courier service (signature required), prepaid, to the Party for which
such notice is intended, at the address set out for such Party below:

                         (a)   in the case of Jagotec, to:

Jagotec AG
Eptingerstrasse 51
CH — 4132 Muttenz
Switzerland
Attention: President
Facsimile No.: ****
Telephone No.: ****

and with a copy to:

SkyePharma PLC
105 Piccadilly
London W1J 7NJ
UK
Attention: General Counsel
Facsimile No.: ****
Telephone No.: ****

                         (b)   in the case of SkyePharma, to:

SkyePharma PLC
105 Piccadilly
London W1J 7NJ
UK
Attention: General Counsel
Facsimile No.: ****
Telephone No.: ****

                         (c)   in the case of Kos, to:

Kos Life Sciences, Inc.
2200 N. Commerce Parkway

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                                 Suite 300
Weston, Florida 33326
Attention: Mark McGovern, President
Facsimile No.: ****
Telephone No.: ****

and copies to:

Kos Pharmaceuticals, Inc.
1 Cedar Brook Drive
Cranbury, NJ 08512
Attention: Adrian Adams, President and
Chief Executive Officer
Facsimile No.: ****
Telephone No.: ****

Kos Pharmaceuticals, Inc.
1 Cedar Brook Drive
Cranbury, NJ 08512
Attention: Andrew I. Koven, Executive Vice President
General Counsel and Corporate Secretary
Facsimile No.: ****
Telephone No.: ****

                         (d)   in the case of Kos Pharmaceuticals, to:

Kos Pharmaceuticals, Inc.
1 Cedar Brook Drive
Cranbury, NJ 08512
Attention: Adrian Adams, President and
Chief Executive Officer
Facsimile No.: ****
Telephone No.: ****

and copies to:

Kos Pharmaceuticals, Inc.
1 Cedar Brook Drive
Cranbury, NJ 08512
Attention: Andrew I. Koven, Executive Vice President
General Counsel and Corporate Secretary
Facsimile No.: ****
Telephone No.: ****

or to such other address for such Party as it shall have specified by like
notice to the other Party; provided that, notices of a change of address shall
be effective only upon receipt thereof. With

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respect to notices given pursuant to this Section 15.6: (i) if delivered
personally or by facsimile transmission, the date of delivery shall be deemed to
be the date on which such notice or request was given; (ii) if sent by overnight
express courier service, the date of delivery shall be deemed to be the next
business day after such notice or request was deposited with such service; and
(iii) if sent by certified mail, the date of delivery shall be deemed to be the
third (3rd) business day after such notice or request was deposited with the
postal service of the country from which the notice is being sent.
     15.7 Use of Name. Except as otherwise provided herein, neither Party shall
have any right, express or implied, to use in any manner the name or other
designation of the other Party or any other trade name, trademark or logo of the
other Party for any purpose in connection with the performance of this
Agreement.
     15.8 Public Announcements.
          15.8.1 Except as required by law (including, without limitation,
disclosure requirements of the U.S. Securities and Exchange Commission (“SEC”),
the London Stock Exchange, the NASDAQ stock exchange, or any other stock
exchange on which securities issued by a Party are traded), neither Party shall
make any public announcement concerning this Agreement or the subject matter
hereof without the prior written consent of the other, which shall not be
unreasonably withheld or delayed, provided that, it shall not be unreasonable
for a Party to withhold consent with respect to any public announcement
containing any financial terms or any of such Party’s Confidential Information.
In the event of a required public announcement, to the extent practicable under
the circumstances, the Party making such announcement shall provide the other
Party with a copy of the proposed text prior to such announcement sufficiently
in advance of the scheduled release of such announcement to afford such other
Party a reasonable opportunity to review and comment upon the proposed text.
          15.8.2 The Parties will coordinate in advance with each other in
connection with the redaction of certain provisions of this Agreement with
respect to any filings with the SEC, London Stock Exchange, the NASDAQ stock
exchange or any other stock exchange on which securities issued by a Party are
traded, and each Party will use reasonable efforts to seek confidential
treatment for such terms; provided, that each Party will ultimately retain
control over what information to disclose to the SEC, London Stock Exchange or
any other stock exchange, as the case may be, and provided further that the
Parties will use their reasonable efforts to file redacted versions with any
governing bodies which are consistent with redacted versions previously filed
with any other governing bodies. Other than such obligation, neither Party (or
its Affiliates) will be obligated to consult with or obtain approval from the
other Party with respect to any filings to the SEC, London Stock Exchange, the
NASDAQ stock exchange or any other stock exchange.
     15.9 Waiver. No failure or delay on the part of either Party in exercising
any right, power or remedy hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any such right, power or remedy preclude
any other or further exercise thereof or the exercise of any other right, power
or remedy hereunder. No waiver of any provision hereof shall be effective unless
the same shall be in writing and signed by the Party giving such waiver. The

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remedies herein provided are cumulative and not exclusive of any remedies
provided by Applicable law.
     15.10 Compliance with Law. Nothing in this Agreement shall be deemed to
permit a Party to export, re-export or otherwise transfer any Product sold under
this Agreement without compliance with Applicable Laws.
     15.11 Severability. When possible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under Applicable Law,
but if any provision of this Agreement is held to be prohibited by or invalid
under Applicable Law, such provision will be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of this
Agreement; provided that, the Parties shall negotiate, in good faith,
modification(s) of this Agreement with a view to revising this Agreement in a
manner which reflects, as closely as is reasonably practicable, the commercial
terms of the Agreement as originally signed.
     15.12 Amendment. No amendment, modification or supplement of any provisions
of this Agreement shall be valid or effective unless made in writing and signed
by a duly authorized officer of each Party.
     15.13 Governing Law. This Agreement shall be governed by, and interpreted
in accordance with, the laws of the state of New York without regard to conflict
of law principles.
     15.14 Jurisdiction; Service of Process. The sole and exclusive forum with
respect to any action or proceeding seeking to enforce any provision of, or
based on any right arising out of, this Agreement shall be the courts of the
State of New York, County of New York, or, if it has or can acquire
jurisdiction, in the United States District Court for the Southern District of
New York, and each of the Parties consents to the jurisdiction of such courts
(and of the appropriate appellate courts) in any such action or proceeding and
waives any objection to venue laid therein. Process may be served in accordance
with Section 15.6 in any action or proceeding referred to in the preceding
sentence may be served on any party anywhere in the world.
     15.15 Dispute Resolution. The Parties recognize that disputes as to certain
matters may from time to time arise during the term of this Agreement which
relate to a Party’s rights and/or obligations hereunder. If the Parties cannot
resolve any such dispute within thirty (30) calendar days after written notice
of a dispute from one Party to another, prior to initializing any action in any
court, any Party may, by written notice to the other Party, have such dispute
referred to the Executive Officers. The Executive Officers shall negotiate in
good faith to resolve the dispute within thirty (30) days. During such period of
negotiations, any applicable time periods under this Agreement shall be tolled.
     15.16 Entire Agreement. This Agreement, together with all schedules and
exhibits hereto, and the Confidentiality Agreement, sets out the entire
agreement and understanding between the Parties as to the subject matter hereof
and merges all prior discussions, agreements and negotiations between them, and
neither of the Parties shall be bound by any conditions, definitions,
warranties, understandings or representations with respect to such subject
matter other than as expressly provided herein or as duly set out on or
subsequent to the date hereof in

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writing and signed by a proper and duly authorized officer or representative of
the Party to be bound thereby.
     15.17 Parties in Interest. All of the terms and provisions of this
Agreement shall be binding upon, inure to the benefit of and be enforceable by
the Parties hereto and their respective permitted successors and assigns. The
representations, warranties, covenants and agreements set forth in this
Agreement are for the sole benefit of the Parties and their successors and
permitted assigns, and they will not be construed as conferring any rights on
any other parties.
     15.18 Descriptive Headings. The descriptive headings of this Agreement are
for convenience only, and shall be of no force or effect in construing or
interpreting any of the provisions of this Agreement.
     15.19 Construction of Agreement. The terms and provisions of this Agreement
represent the results of negotiations between the Parties and their
representatives, each of which has been represented by counsel of its own
choosing, and neither of which has acted under duress or compulsion, whether
legal, economic or otherwise. Accordingly, the terms and provisions of this
Agreement shall be interpreted and construed in accordance with their usual and
customary meanings, and each of the Parties hereto hereby waives the application
in connection with the interpretation and construction of this Agreement of any
rule of law to the effect that ambiguous or conflicting terms or provisions
contained in this Agreement shall be interpreted or construed against the Party
whose attorney prepared the executed draft or any earlier draft of this
Agreement.
     15.20 Counterparts. This Agreement may be signed in counterparts, each and
every one of which shall be deemed an original, notwithstanding variations in
format or file designation which may result from the electronic transmission,
storage and printing of copies of this Agreement from separate computers or
printers. Facsimile signatures shall be treated as original signatures.
     15.21 Guaranties.
          15.21.1 Kos Pharmaceuticals shall cause Kos to (i) take actions that
are necessary for Kos to fulfill its obligations under this Agreement, and
(ii) fulfill its obligations under this Agreement. The guaranty provided in this
Section shall survive the consummation of any transaction to which Section 15.2
applies.
          15.21.2 SkyePharma shall cause Jagotec to (i) take actions that are
necessary for Jagotec to fulfill its obligations under this Agreement, and
(ii) fulfill its obligations under this Agreement. The guaranty provided in this
Section shall survive the consummation of any transaction to which Section 15.2
applies.
* * * * *
- Signature page follows —

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     IN WITNESS WHEREOF, each of the Parties has caused this Development,
License and Marketing Agreement to be executed by its duly authorized
representative as of the date first above written.

            Kos Life Sciences, Inc.
      By:   /s/         Name:           Title:           Kos Pharmaceuticals,
Inc. (with respect to Section 15.21.1 only)
      By:           Name:           Title:           Jagotec AG
      /s/       Name:         Title:           SkyePharma PLC (with respect to
Section 15.21.2 only)
      /s/       Name:         Title:        

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