Exhibit 10.13

 

Certain confidential information contained in this document, marked by brackets
and asterisks, [*], has been omitted pursuant to a request for confidential
treatment pursuant to Rule 24b–2 of the Securities Exchange Act of 1934, as
amended, and has been filed separately with the Securities and Exchange
Commission.

 

UNITED STATES

COLLABORATION AGREEMENT

 

BY AND AMONG

 

SHIRE LLC

 

SHIRE PHARMACEUTICALS GROUP PLC

 

AND

 

NEW RIVER PHARMACEUTICALS INC.

 

DATED AS OF MARCH 31, 2005

 

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TABLE OF CONTENTS

 

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ARTICLE 1

  

DEFINITIONS

   2

ARTICLE 2

  

MANAGEMENT OF COLLABORATION

   13

2.1

  

General

   13

2.2

  

Joint Development Committee (JDC)

   13

2.3

  

Joint Marketing Committee (JMC)

   14

2.4

  

Joint Supply Committee (JSC)

   15

2.5

  

Joint Intellectual Property Committee (JIPC)

   17

2.6

  

General Committee Membership and Procedures

   17

2.7

  

Committee Decision-Making

   18

ARTICLE 3

  

DEVELOPMENT AND REGULATORY RESPONSIBILITIES

   20

3.1

  

Overview

   20

3.2

  

Development Plans

   20

3.3

  

Development in the US Territory for ADHD

   21

3.4

  

Right of Reference to the ROW Territory

   23

3.5

  

Reporting

   23

3.6

  

Development in the US Territory for Indications other than ADHD

   23

3.7

  

Shared Expenses

   25

3.8

  

Use of Third Parties

   26

3.9

  

Right to Audit

   27

3.10

  

Assistance

   27

3.11

  

Compliance with Laws

   27

ARTICLE 4

  

COMMERCIALIZATION OF COLLABORATION PRODUCTS

   27

4.1

  

Principles of Commercialization

   27

4.2

  

Sales and Distribution of Collaboration Products to Third Parties

   27

4.3

  

Marketing Plans and Budgets for the US Territory

   28

4.4

  

Regulatory Obligations During Commercialization

   28

4.5

  

Diligence in Commercialization

   29

4.6

  

Cost of Commercialization

   29

4.7

  

Use of Third Parties

   30

4.8

  

Promotional Materials

   30

 

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4.9

  

Provisions Applicable to Sales Representatives

   30

4.10

  

Reporting

   33

4.11

  

Compliance with Laws

   33

ARTICLE 5

  

CO-PROMOTION OF COLLABORATION PRODUCTS

   33

5.1

  

Option

   33

5.2

  

Exercise of Option

   34

5.3

  

Co-Promotion Period

   34

5.4

  

Amendment of Marketing Plan to Include Co-Promotion Activities

   34

5.5

  

Scope

   34

5.6

  

Advertising and Promotional Materials

   35

5.7

  

Shipment, Storage and Allocation of Samples

   35

5.8

  

Training

   35

5.9

  

Provisions Applicable to All New River Sales Representatives

   36

ARTICLE 6

  

MANUFACTURE OF COLLABORATION PRODUCTS

   37

6.1

  

Manufacture and Supply

   37

6.2

  

Specifications and Terms of Supply; Multiple Sources

   38

6.3

  

Manufacture by Shire; Commercial Supply by Shire

   38

6.4

  

Supply Terms

   38

ARTICLE 7

  

FINANCIAL TERMS

   39

7.1

  

Licensing Fee

   39

7.2

  

Milestone Payments

   39

7.3

  

Refunds by New River

   39

7.4

  

Sharing of US Product Profit

   39

ARTICLE 8

  

PAYMENT TERMS

   41

8.1

  

Payment Method

   41

8.2

  

Payment Schedules; Reports

   41

8.3

  

Currency Conversion

   41

8.4

  

Legal Restrictions

   42

8.5

  

Taxes

   42

8.6

  

Records Retention; Audit

   42

 

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ARTICLE 9

  

LICENSES

   44

9.1

  

Licenses to Shire

   44

9.2

  

Licenses to New River

   44

9.3

  

Sublicensing

   44

9.4

  

Scope of Licenses

   44

9.5

  

No Implied Licenses

   44

9.6

  

Exclusivity

   44

9.7

  

Nonassertion

   45

9.8

  

[*]

   45

ARTICLE 10

  

CONFIDENTIALITY

   45

10.1

  

Confidential Information

   45

10.2

  

Publicity; Filing of this Agreement

   47

10.3

  

Publication

   47

10.4

  

Use of Names

   48

10.5

  

Confidentiality of this Agreement

   48

10.6

  

Disclosures Under Existing NDA

   48

10.7

  

Survival

   48

ARTICLE 11

  

OWNERSHIP OF INTELLECTUAL PROPERTY AND PATENT RIGHTS

   49

11.1

  

Ownership

   49

11.2

  

Disclosures; Disputes Regarding Inventions

   49

11.3

  

Patent Filings

   50

11.4

  

Third-Party Patent Rights

   51

11.5

  

Enforcement and Defense of Patents

   51

11.6

  

Notice of Certification

   54

11.7

  

Patent Term Extensions

   54

11.8

  

Listing of Patents

   54

11.9

  

Trademarks and Copyrights

   55

 

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(continued)

 

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ARTICLE 12

  

REPRESENTATIONS AND WARRANTIES; EXCLUSIVITY

   57

12.1

  

Representations, Warranties and Covenants

   57

12.2

  

Limitation on Representations or Warranties

   62

12.3

  

Performance by Affiliates

   62

12.4

  

Disclaimer of Warranty

   62

12.5

  

Limitation of Liability

   62

12.6

  

Essential Basis

   63

ARTICLE 13

  

TERM AND TERMINATION

   63

13.1

  

Term

   63

13.2

  

Breaches (General)

   63

13.3

  

Allegations of Material Breach

   63

13.4

  

Other Termination by Shire

   65

13.5

  

Other Termination By New River

   66

13.6

  

Termination for Government Action

   66

ARTICLE 14

  

EFFECTS OF TERMINATION

   67

14.1

  

Post-Termination Activities by Shire

   67

14.2

  

Post-Termination Activities by New River

   69

14.3

  

Accrued Rights

   71

14.4

  

Confidential Information

   71

14.5

  

Survival

   71

14.6

  

Liability Following Termination

   71

ARTICLE 15

  

INDEMNIFICATION; INSURANCE

   71

15.1

  

Indemnification

   71

15.2

  

Notice of Claim

   72

15.3

  

Control of Defense

   72

15.4

  

Right to Participate in Defense

   72

15.5

  

Settlement

   73

15.6

  

Cooperation

   73

15.7

  

Expenses of the Indemnified Party

   73

15.8

  

Product Claims

   74

 

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15.9

  

Insurance

   74

15.10

  

Guaranty

   74

ARTICLE 16

  

DISPUTE RESOLUTION

   75

16.1

  

Disputes

   75

16.2

  

Litigation

   75

16.3

  

Injunctive Relief

   75

16.4

  

Governing Law

   75

ARTICLE 17

  

MISCELLANEOUS

   75

17.1

  

Entire Agreement; Amendment

   75

17.2

  

Force Majeure

   76

17.3

  

Notices

   76

17.4

  

Independent Contractors

   77

17.5

  

Non-Solicitation

   77

17.6

  

Maintenance of Records

   78

17.7

  

United States Dollars

   78

17.8

  

No Strict Construction

   78

17.9

  

Assignment

   78

17.10

  

Counterparts

   78

17.11

  

Further Actions

   78

17.12

  

Severability

   78

17.13

  

Ambiguities

   79

17.14

  

Headings

   79

17.15

  

No Waiver

   79

 

v

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Exhibits

 

EXHIBIT A    DETERMINATION OF CERTAIN ACCOUNTING TERMS EXHIBIT B    [*] EXHIBIT
C    INITIAL DEVELOPMENT PLAN EXHIBIT D    ADDITIONAL SUPPLY TERMS EXHIBIT E   
JOINT PRESS RELEASE EXHIBIT F    TECHNICAL TRADE SECRETS EXHIBIT G    CERTAIN
PRODUCTS OF SHIRE

 

- 1 -

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UNITED STATES

COLLABORATION AGREEMENT

 

THIS UNITED STATES COLLABORATION AGREEMENT (the “Agreement”) is dated as of
March 31, 2005 by and among SHIRE LLC, a Kentucky limited liability company
having a principal place of business at 9200 Brookfield Court, Florence,
Kentucky 41042 (“Shire”), SHIRE PHARMACEUTICALS GROUP PLC, a British public
limited company having a principal place of business at Hampshire International
Business Park, Chineham, Basingstoke, England RG24 8EP, solely for purposes of
the provisions of Section 15.10 of this Agreement, and NEW RIVER PHARMACEUTICALS
INC., a Virginia corporation having a principal place of business at 1881 Grove
Avenue, Radford, Virginia 24141 (“New River”). Shire and New River are sometimes
referred to herein individually as a “Party” and collectively as the “Parties”.

 

RECITALS

 

WHEREAS, New River is a specialty pharmaceutical company focused on developing
novel pharmaceuticals that are safer and improved versions of widely-prescribed
pharmaceutical products, and is clinically developing a proprietary amphetamine
conjugate for the treatment of attention deficit/hyperactivity disorder in
pediatric and adult patients;

 

WHEREAS, Shire is a worldwide, specialty pharmaceutical company engaged in the
development, manufacturing and marketing of pharmaceutical products;

 

WHEREAS, on January 31, 2005 (the “Effective Date”), the Parties entered into
that certain Collaboration Agreement (the “January Agreement”) that established
a broad collaboration for the further development and commercialization of
Compound in both the US Territory and ROW Territory, with the objective of
utilizing the areas of expertise of both New River and Shire to provide products
to patients;

 

WHEREAS, pursuant to Section 17.16 of the January Agreement, the Parties agreed
to divide the January Agreement into two separate agreements: one relating to
the US Territory and the other relating to the ROW Territory;

 

WHEREAS, as contemplated by Section 17.16 of the January Agreement, New River
and Shire Pharmaceuticals Ireland Limited, an Affiliate of Shire, are entering
into that certain ROW Territory License Agreement (the “ROW Agreement”)
simultaneously with the execution of this Agreement; and

 

WHEREAS, this Agreement, together with the ROW Agreement, supercede and replace
the January Agreement in its entirety.

 

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NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants contained herein, the Parties, intending to be legally bound, agree as
follows:

 

ARTICLE 1

DEFINITIONS

 

The following terms shall have the following meanings as used in this Agreement:

 

1.1 “Act” means the United States Federal Food, Drug and Cosmetics Act, as
amended from time to time, and the rules, regulations and guidelines promulgated
thereunder.

 

1.2 “ADHD” means attention deficit/hyperactivity disorder in human beings.

 

1.3 “Adolescent” means a human being that has attained the age of thirteen (13)
but is less than eighteen (18) years of age.

 

1.4 “Adult” means a human being that has attained the age of eighteen (18).

 

1.5 “Affiliate” means a Person that controls, is controlled by or is under
common control with a Party. For the purposes of this definition, the word
“control” (including, with correlative meaning, the terms “controlled by” or
“under common control with”) means the actual power, either directly or
indirectly through one or more intermediaries, to direct the management and
policies of such Person, whether by the ownership of at least fifty percent
(50%) of the voting stock of such Person (it being understood that the direct or
indirect ownership of a lesser percentage of such stock shall not necessarily
preclude the existence of control), or by contract or otherwise.

 

1.6 “Allowable Expenses” means those expenses incurred after the First
Commercial Sale of a Collaboration Product which are consistent with the budget
set forth in the applicable Marketing Plan, and are specifically attributable or
reasonably allocable to such Collaboration Product in the US Territory, and
shall consist of (i) Cost of Goods Sold, (ii) Marketing Expenses, (iii)
Distribution Expenses, (iv) product liability insurance expenses, and (v)
Regulatory Expenses (as such terms may be defined in this Article 1 or in
Exhibit A). Allowable Expenses shall exclude Development Expenses, even if
incurred after the First Commercial Sale of a Collaboration Product in the US
Territory, and shall exclude any costs that are deductible from Net Sales under
the definition thereof (e.g., distributor fees).

 

1.7 “Business Day” means any day other than (i) Saturday or Sunday or (ii) any
other day on which banks in New York, New York, United States or London, England
are permitted or required to be closed.

 

1.8 “cGCP” means the current Good Clinical Practice standards for the design,
conduct, performance, monitoring, auditing, recording, analyses, and reporting
of clinical trials, including the requirements in 21 C.F.R. Parts 11, 50, 54,
56, 312, and 314, that provide assurance that the data and reported results are
credible and accurate, and that the rights, integrity, and confidentiality of
trial subjects are protected.

 

1.9 “cGLP” means current Good Laboratory Practices (i) as promulgated under the
Act at 21 C.F.R. Part 58, as the same may be amended or re-enacted from time to
time and (ii) as required by Law in countries other than the United States where
non-clinical laboratory studies are conducted.

 

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1.10 “cGMP” means all applicable standards relating to manufacturing practices
for fine chemicals, active pharmaceutical ingredients, intermediates, bulk
products or finished pharmaceutical products, including (i) the principles
detailed in the U.S. Current Good Manufacturing Practices, 21 C.F.R. Parts 210
and 211 and The Rules Governing Medicinal Products in the European Community,
Volume IV Good Manufacturing Practice for Medicinal Products as each may be
amended from time to time, (ii) the principles detailed in the ICH Q7A
guidelines, (iii) if Shire notifies New River that Shire intends to
Commercialize a Collaboration Product in a country, Laws promulgated by any
Governmental Authority in such country having jurisdiction over the Manufacture
of Compound or Collaboration Product, or (iv) if Shire notifies New River that
Shire intends to Commercialize a Collaboration Product in a country, guidance
documents promulgated by any Governmental Authority in such country having
jurisdiction over the Manufacture of Compound or Collaboration Product
(including but not limited to advisory opinions, compliance policy guides and
guidelines), which guidance documents are being implemented within the
pharmaceutical manufacturing industry.

 

1.11 “Child” means a human being that has not attained the age of thirteen (13).

 

1.12 “Collaboration Product” means a pharmaceutical product containing or
comprising Compound in any dosage form alone, or in combination with, one or
more other pharmaceutically active ingredients, and any and all Improvements
thereto.

 

1.13 “Combination Product” means any Collaboration Product that contains the
Compound and one or more pharmaceutically active ingredients in addition to
Compound, and any and all Improvements thereto.

 

1.14 “Commercialization” means any and all activities directed to the commercial
Manufacturing, marketing, offering for sale and selling of a Collaboration
Product, including Pre-Marketing, advertising, educating, planning, marketing,
promoting, distributing and conducting market and product support studies and
post-marketing safety surveillance and reporting.

 

1.15 “Committee” means the JDC, JMC, JSC or JIPC, as the case may be.

 

1.16 “Compound” has the meaning set forth on Exhibit F.

 

1.17 “Control” means, with respect to any intellectual property right or other
intangible property, that a Party or one of its Affiliates owns or has a license
or sublicense to such item or right, and has the ability to grant access,
license or sublicense in or to such right without violating the terms of any
agreement or other arrangement with any Third Party.

 

1.18 “Controlled Substances Act” means the United States Controlled Substances
Act, as amended (21 U.S.C. 801 et seq).

 

1.19 “Co-Promotion” means those Detailing and promotional activities (including
without limitation performing Sales Calls) with respect to a Co-Promote Product
undertaken by New River Sales Representatives to encourage appropriate
prescribing of such Co-Promote Product in the US Territory.

 

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1.20 “Cost of Goods Sold” means the cost of Collaboration Product sold in
finished form by Shire or any of its Affiliates or sublicensees to a Third
Party, as calculated in the manner set forth in Exhibit A. The term “Cost of
Goods” has a separate meaning as set forth in Exhibit A.

 

1.21 “Detail” or “Detailing” means, with respect to a Collaboration Product, the
communication by a Sales Representative during a Sales Call (a) involving
face-to-face contact or by means of an e-detail or detailing through video, (b)
describing in a fair and balanced manner the FDA-approved indicated uses and
other relevant characteristics of such Collaboration Product, (c) using the
Promotional Materials in an effort to increase the prescribing and/or hospital
ordering preferences of a Collaboration Product for its FDA-approved indicated
uses, and (d) made at such medical professional’s office, in a hospital, at
marketing meetings sponsored by a Party for the Collaboration Products or other
appropriate venues conducive to pharmaceutical product informational
communication where the principal objective is to place an emphasis, either
primary or secondary, on a Collaboration Product and not simply to discuss a
Collaboration Product with such medical professional. For the avoidance of
doubt, discussions at conventions or other meetings not specifically sponsored
by a Party for a Collaboration Product shall not constitute “Details” or
“Detailing”.

 

1.22 “Development” means all activities relating to obtaining Regulatory
Approval of a Collaboration Product, including all test method development,
stability testing, toxicology, formulation, process development, cGMP audits
(but only those performed prior to Regulatory Approval and excluding any audits
for commercial Manufacture), cGLP audits, cGCP audits, validation, quality
assurance/quality control development, preclinical and clinical testing and
studies, regulatory affairs and outside counsel regulatory legal services
relating to any of the foregoing, and any activities relating to the Manufacture
of Collaboration Products other than commercial quantities thereof. For the
avoidance of doubt, the conduct of Phase III-B Clinical Studies will be
considered Development.

 

1.23 “Development Expenses” means the expenses incurred by a Party that are
consistent with a Development Plan and are specifically attributable or
reasonably allocable to the Development of a Collaboration Product. Development
Expenses shall include, but are not limited to, the following costs incurred for
the Development of a Collaboration Product: the cost of studies on the
toxicological, pharmacokinetic, metabolic or clinical aspects of a Collaboration
Product directed to obtaining Regulatory Approval of a Collaboration Product;
the cost of Phase III-B Clinical Trials, and costs (and related fees) for
preparing, submitting, reviewing or developing data or information for the
purpose of submission to a Governmental Authority to obtain Regulatory Approval
of a Collaboration Product; and manufacturing process development and scale-up
for Collaboration Products in bulk and finished form. Development Expenses shall
exclude any [*] incurred by a Party in connection with the Development of a
Collaboration Product.

 

1.24 “Diligent Efforts” means the carrying out of obligations or tasks
consistent with the reasonable best practices of the pharmaceutical industry for
the development or commercialization of a pharmaceutical product having similar
market potential, profit potential or strategic value as the applicable
Collaboration Product, based on conditions then prevailing. Diligent Efforts
requires that the Party, at a minimum: (a) determine the general industry

 

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practices with respect to the applicable activities; (b) reasonably promptly
assign responsibility for such obligations to specific employee(s) who are held
accountable for progress and monitor such progress on an on-going basis; (c) set
and consistently seek to achieve specific and meaningful objectives for carrying
out such obligations; and (d) make and implement decisions and allocate
resources designed to advance progress with respect to such objectives.

 

1.25 “Drug Approval Application” means an application for Regulatory Approval
required before commercial sale or use of a Collaboration Product as a drug in a
regulatory jurisdiction, including a new drug application (“NDA”) or
supplemental new drug application (“SNDA”) or any amendments thereto submitted
to the FDA.

 

1.26 “FDA” means the United States Food and Drug Administration or any successor
federal agency thereto.

 

1.27 “Field” means all human and veterinary pharmaceutical uses.

 

1.28 “Financial Statement” means a financial statement in a form as may be
reasonably agreed upon by the Parties from time to time in accordance with the
terms of this Agreement.

 

1.29 “First Commercial Sale” means, with respect to a Collaboration Product and
on a country-by-country basis, the first commercial sale after receipt of
Regulatory Approval of such Collaboration Product in such country. Sales for
clinical studies, compassionate use, named patient programs, sales under a
treatment IND, test marketing, any nonregistrational studies, or any similar
instance where the Collaboration Product is supplied with or without charge
shall not constitute a First Commercial Sale. For clarity, it is understood and
agreed that the First Commercial Sale of a Collaboration Product for ADHD in the
US Territory shall not occur until the receipt of Regulatory Approval, including
the receipt by New River of written notification from the FDA of approval of the
Drug Approval Application [*] for such Collaboration Product, and New River has
provided such written notification to Shire.

 

1.30 “Governmental Authority” means any court, tribunal, arbitrator, agency,
legislative body, commission, official or other instrumentality of (i) any
government of any country, (ii) a federal, state, province, county, city or
other political subdivision thereof or (iii) any supranational body, including
without limitation the European Agency for the Evaluation of Medicinal Products.

 

1.31 “Improvement” means any enhancement or modification of (i) a Collaboration
Product, (ii) the Compound’s or Collaboration Product’s use, dosage form,
indication, line extension, presentation or formulation or (iii) the process or
method for the Manufacture of the Compound or Collaboration Product, in each
case whether or not patentable, that is developed by or for, invented or
acquired by, or comes under the Control of, New River or Shire during the Term.

 

1.32 “IND” means an Investigational New Drug Application filed with FDA or a
similar application filed with an applicable Regulatory Authority outside of the
United States such as a clinical trial application (CTA) or a clinical trial
exemption (CTX).

 

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1.33 “Invention” means any discovery (whether patentable or not) conceived
during the Term and potentially useful for the Manufacture, use, Development or
Commercialization of the Compound or a Collaboration Product.

 

1.34 “Joint Invention” means an Invention that is conceived jointly by an
employee of, or person under an obligation of assignment to, each of New River
and Shire.

 

1.35 “Know-How” means any non-public information, results and data of any type
whatsoever, in any tangible or intangible form whatsoever, including without
limitation, databases, ideas, discoveries, inventions, trade secrets, practices,
methods, tests, assays, techniques, specifications, processes, formulations,
formulae, knowledge, know-how, skill, experience, materials, including
pharmaceutical, chemical and biological materials, products and compositions,
scientific, technical or test data (including pharmacological, biological,
chemical, biochemical, toxicological and clinical test data), analytical and
quality control data, stability data, studies and procedures, drawings, plans,
designs, diagrams, sketches, technology, documentation, and patent-related and
other legal information or descriptions.

 

1.36 “Law” or “Laws” means all laws, statutes, rules, codes, regulations,
orders, judgments and/or ordinances of any Governmental Authority.

 

1.37 “Licensed Know-How” means all Know-How that is Controlled by New River as
of the Effective Date or at any time during the Term and that is potentially
useful for the Development, Manufacture, use and/or Commercialization of the
Compound, a Collaboration Product and/or a New River Invention; provided,
however, that Know-How Controlled by New River disclosing New River’s
proprietary CarrierwaveTM technology shall not be included in Licensed Know-How
except to the extent necessary for Shire to exercise its rights and perform its
obligations under this Agreement. Notwithstanding anything herein to the
contrary, Licensed Know-How shall exclude Licensed Patents.

 

1.38 “Licensed Patent” means a Patent that (i) claims the Manufacture, use,
Development, Commercialization and/or export of the Compound, a Collaboration
Product and/or a New River Invention, and (ii) is Controlled by New River as of
the Effective Date or at any time during the Term. For the avoidance of doubt,
all New River Collaboration Patents shall be considered Licensed Patents.

 

1.39 “Losses” means any and all amounts paid or payable to Third Parties with
respect to a Third Party Claim, including without limitation, damages (including
all incidental and consequential damages), deficiencies, defaults, awards,
settlement amounts, assessments, fines, dues, penalties, costs, liabilities,
obligations, taxes, liens, losses, lost profits, fees and expenses (including,
without limitation, court costs, interest and reasonable fees of attorneys,
accountants and other experts).

 

1.40 “Manufacture” means all activities related to the manufacturing of a
pharmaceutical product, or any ingredient thereof, including but not limited to
manufacturing Compound or supplies for Development, manufacturing Collaboration
Product for commercial sale, packaging, in-process and finished product testing,
release of product or any component or

 

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ingredient thereof, quality assurance activities related to manufacturing and
release of product, ongoing stability tests and regulatory activities related to
any of the foregoing.

 

1.41 “Marketing Plan” means a written marketing plan and budget for a
Collaboration Product during an applicable time period that contains at least
the following for the relevant time period: (i) a rolling, good faith forecast
of [*] for at least four (4) full, consecutive calendar quarters; (ii) general
strategies and programs for promoting, Detailing and marketing such
Collaboration Product; and (iii) the definitions of the relative roles, levels,
types of efforts and spending for such period.

 

1.42 “Net Sales” means, with respect to a Collaboration Product, the amount
invoiced by Shire, its Affiliates or sublicensees for sales of such
Collaboration Product to a Third Party (“Invoiced Amount”) less: (i)
transportation charges, freight and insurance (but only insurance related to
protecting the particular shipment against physical loss or damage); (ii) taxes
(other than taxes based on income), tariffs, customs duty, excise or other duty
and any other governmental charges, all to the extent imposed upon the sale,
transportation or delivery of such Collaboration Product and paid by the seller;
(iii) Third Party distributor fees; (iv) trade discounts, quantity discounts,
cash discounts, rebates, reimbursements, cooperative advertising allowances,
credits or chargebacks actually granted, allowed or incurred in the ordinary
course of business in connection with the sale of such Collaboration Product,
including any credits, volume rebates, charge-back and prime vendor rebates,
fees, fees for services, reimbursements or similar payments granted or given to
wholesalers and other distributors, buying groups, health care insurance
carriers, pharmacy benefit management companies, health maintenance
organizations or other institutions or health care organizations; (v)
adjustments, allowances or credits (calculated on a per unit basis) to
customers, not in excess of the selling price per unit of such Collaboration
Product, including without limitation on account of price adjustments,
governmental requirements, billing errors, rejection, damage, recalls or return
of such Collaboration Product; (vi) payments or rebates paid in connection with
sales of Collaboration Products to any governmental or regulatory authority in
respect of any state or federal Medicare, Medicaid or similar programs; (vii)
royalties or technology access fees paid to a Third Party in respect of the sale
of such Collaboration Product; (viii) write-offs for bad debts incurred (net of
any bad debts later recovered); and (ix) any item substantially similar in
character/substance to the foregoing. Net Sales shall be accounted for in
accordance with generally accepted accounting principles (“GAAP”) consistently
applied in the jurisdiction in which the sales occur, it being understood that
bad debt write-off shall be deducted in arriving at Net Sales notwithstanding
that such treatment may be inconsistent with GAAP, and it being further
understood that Shire shall make bad debt write-off decisions consistent with
its usual business practices.

 

Amounts received by Shire or its Affiliates or sublicensees for the sale of
Collaboration Products among Shire and its Affiliates and sublicensees for
resale shall not be included in the computation of Net Sales hereunder. For the
avoidance of doubt, no amount of cost, expense or other reduction or adjustment,
whether or not specifically referred to in this definition of Net Sales, shall
serve to adjust the Invoiced Amount more than once in arriving at Net Sales.

 

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1.43 “New River Invention” means an Invention that is conceived, solely or
jointly with a Third Party, by an employee of New River or a person under an
obligation of assignment to New River.

 

1.44 “Patent” means (i) valid and enforceable patents, re-examinations,
reissues, renewals, extensions, supplementary protection certificates and term
restorations, any confirmation patent or registration patent or patent of
addition based on any such patent, (ii) pending applications for patents,
including without limitation continuations, continuations-in-part, divisional,
provisional and substitute applications, and inventors’ certificates, (iii) all
foreign counterparts of any of the foregoing, and (iv) all priority applications
of any of the foregoing.

 

1.45 “Patent Expenses” means the fees and expenses of outside counsel and
payments to Third Parties incurred after the Effective Date in connection with
the preparation, filing, prosecution and maintenance of the Licensed Patents,
the Joint Collaboration Patents, and the Shire Patents covering Compound and
Collaboration Products, including the costs of patent interference and
opposition proceedings, net of any reimbursement of such expenses by Third
Parties.

 

1.46 “Person” means any natural person, corporation, firm, business trust, joint
venture, association, organization, company, partnership or other business
entity, or any government, or any agency or political subdivisions thereof.

 

1.47 “Phase III-B Clinical Trials” means product support clinical trials of a
Collaboration Product (i.e., a clinical trial which is not required for receipt
of initial Regulatory Approval but which may be useful in providing additional
drug profile data or in seeking a label expansion) commenced before receipt of
Regulatory Approval for the indication for which such trial is being conducted.
For the avoidance of doubt, Phase III-B Clinical Trials shall be considered part
of Development.

 

1.48 “Phase IV and Related Expenses” means certain research and development
costs incurred by a Party in relation to a Collaboration Product after the First
Commercial Sale and shall exclude administrative expenses and costs that are
included within Costs of Goods Sold or Development Expenses. Such post-launch
research and development costs shall include the costs of: (i) Phase IV Clinical
Trials; (ii) ongoing product support; (iii) ongoing medical affairs; and (iv)
fees and expenses of outside counsel in respect of regulatory affairs unrelated
to obtaining Regulatory Approvals.

 

1.49 “Phase IV Clinical Trials” means product support clinical trials of a
Collaboration Product commenced after receipt of Regulatory Approval in the
indication for which such trial is being conducted.

 

1.50 “Pre-Marketing” means all sales and marketing activities undertaken prior
to and in preparation for the launch of a Collaboration Product in a particular
territory. Pre-Marketing shall include advertising, education, product-related
public relations, health care economic studies, governmental affairs activities
for reimbursement and formulary acceptance, sales force training, trademark
selection, filing, prosecution and enforcement, and other activities included

 

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within the Marketing Plan prior to the First Commercial Sale of a Collaboration
Product in such territory.

 

1.51 “Pre-Marketing Expenses” means, with respect to a Collaboration Product,
any Marketing Expenses incurred by a Party prior to the First Commercial Sale of
such Collaboration Product.

 

1.52 [*] means a [*] during which (i) the applicable [*] is [*] either [*] or
[*], (ii) [*] of such [*] are [*] in the [*] on such [*], and (iii) such [*] is
given the [*] of the [*] during the [*]. For clarity, no more than [*] during a
[*] shall be [*].

 

1.53 “Promotional Materials” means all written, printed, video or graphic
advertising, promotional, educational and communication materials (other than
Collaboration Product labels and package inserts) for marketing, advertising and
promotion of the Collaboration Products, including, without limitation,
copyrights in any such materials and all designs, industrial designs, design
patents, design registrations, and design patent applications developed in
connection with such materials, for use by (a) a Sales Representative or (b)
advertisements, web sites or direct mail pieces, in accordance with the terms of
the applicable Marketing Plan. For clarity, it is understood and agreed that
Promotional Materials shall not include corporate communications and general
marketing or advertising by a Party or its Affiliate; provided however, that to
the extent that such corporate communications or general marketing or
advertising include or reference a Collaboration Product or related disease
state and do not make any actual or implied claims, then such corporate
communications or general marketing or advertising shall be governed by the
provisions of Section 10.2.

 

1.54 “Regulatory Approval” means all approvals [*], product and/or establishment
licenses, registrations or authorizations of any regional, federal, state or
local regulatory agency, department, bureau or other governmental entity,
necessary for the manufacture, use, storage, import, export, transport, offer
for sale, or sale of a pharmaceutical product in a regulatory jurisdiction.

 

1.55 “ROW Territory” means the world, excluding the US Territory.

 

1.56 “Sales Call” means a personal visit by a Sales Representative to one or
several medical professional(s) having prescribing authority in the part of the
Field for the indications in which such Collaboration Product is approved, as
well as to other individuals or entities that have significant impact or
influence on prescribing decisions in the part of the Field in which such
Collaboration Product is approved during which such Sales Representative Details
a Collaboration Product.

 

1.57 “Sales Representative” means a pharmaceutical sales representative engaged
or employed by either Party to conduct Detailing and other promotional efforts
with respect to the Collaboration Products and who has been trained by Shire in
accordance with the terms of this Agreement.

 

1.58 “Samples” means Collaboration Product packaged and distributed as a
complementary trial for use with patients in the United States and in accordance
with the

 

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Prescription Drug Marketing Act of 1987, as amended (the “PDM Act”) and free
goods provided for this purpose through coupons or other mechanisms.

 

1.59 “Schedule Classification” means, with respect to a Collaboration Product,
the [*] by [*] under the [*] of a particular [*] for such Collaboration Product,
as communicated in writing either by (i) the [*] in the form of the [*] of a [*]
any [*] as to [*], if the [*] is [*], or (ii) the [*] by publication of a [*]
for the Collaboration Product in the [*].

 

1.60 “Shire Background Know-How” means all Know-How Controlled by Shire, other
than Shire Collaboration Know-How, that is potentially useful for the
Development, Manufacture, use and/or Commercialization of the Compound, a
Collaboration Product and/or Shire Invention, to the extent such Know-How is
included in a Development Plan or Marketing Plan that has been agreed to and
approved by Shire. Notwithstanding anything herein to the contrary, Shire
Background Know-How shall exclude Shire Background Patents.

 

1.61 “Shire Background Patent” means a Patent Controlled by Shire, other than a
Shire Collaboration Patent, that is potentially useful for the Development,
Manufacture, use and/or Commercialization of the Compound, a Collaboration
Product and/or Shire Invention, to the extent such Patent is included in a
Development Plan that has been agreed to and approved by Shire.

 

1.62 “Shire Collaboration Know-How” means all Know-How that is developed by
Shire or its Affiliates during the Term pursuant to this Agreement or the ROW
Agreement and that is potentially useful for the Development, Manufacture, use
and/or Commercialization of the Compound, a Collaboration Product and/or Shire
Invention. Notwithstanding anything herein to the contrary, Shire Collaboration
Know-How shall exclude Shire Collaboration Patents.

 

1.63 “Shire Invention” means an Invention that is conceived, solely or jointly
with a Third Party, by an employee or Affiliate of Shire or a person under an
obligation of assignment to Shire.

 

1.64 “Shire Know-How” means the Shire Background Know-How and the Shire
Collaboration Know-How. Notwithstanding anything herein to the contrary, Shire
Know-How shall exclude Shire Patents.

 

1.65 “Shire Patents” means the Shire Background Patents and the Shire
Collaboration Patents.

 

1.66 “[*]” means [*].

 

1.67 “Third Party” means any entity other than New River or Shire or their
respective Affiliates.

 

1.68 “US Product Profit” means the profits or losses resulting from the
Commercialization of Collaboration Products in the US Territory and shall be
equal to Net Sales of Collaboration Products in the US Territory less Allowable
Expenses less Phase IV and Related Expenses.

 

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1.69 “US Territory” means the United States of America, its territories and
possessions.

 

1.70 “Valid Claim” means: (a) a claim of an issued Patent that has not (i)
expired or been canceled, (ii) been declared invalid or unenforceable by a
decision of a court or other appropriate body of competent jurisdiction, from
which no appeal is or can be taken, (iii) been admitted to be invalid or
unenforceable through reissue, disclaimer or otherwise, or (iv) been abandoned,
disclaimed or dedicated to the public; and (b) a claim included in a pending
patent application that is being actively prosecuted in accordance with this
Agreement and that has not been (i) canceled, (ii) withdrawn from consideration,
(iii) finally determined to be unallowable by the applicable governmental
authority (from which no appeal is or can be taken), or (iv) abandoned or
disclaimed. Notwithstanding the foregoing clause (b), in the event that a
pending claim in a pending patent application is rejected and does not issue in
an issued Patent within [*] after the earliest date from which such claim was
originally presented, such a pending claim will not be a Valid Claim, unless and
until such pending claim subsequently issues in an issued Patent, at which time
such claim may again be a Valid Claim as of the date of issuance of such Patent,
if such claim also meets the requirements of this Section 1.70.

 

Interpretation. Unless the context of this Agreement otherwise requires, (a)
words of one gender include the other gender; (b) words using the singular or
plural number also include the plural or singular number, respectively; (c) the
terms “hereof,” “herein,” “hereby,” and other similar words refer to this entire
Agreement; and (d) the terms “Article” and “Section” refer to the specified
Article and Section of this Agreement. Whenever this Agreement refers to a
number of days, unless otherwise specified, such number shall refer to calendar
days.

 

Additional Definitions. Each of the following definitions is set forth in the
Section of this Agreement indicated below:

 

Definition

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

  

Section

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

Agreement

   Preamble

Benefit Plans

   Section 4.9.7

Breaching Party

   Section 13.2.1

Confidential Information

   Section 10.1.1

Contractors

   Section 12.1.3(d)(i)

Co-Promote Product

   Section 5.5

Co-Promotion Option

   Section 5.1

Co-Promotion Period

   Section 5.3

DDMAC

   Section 3.3.3(c)

Developing Party

   Section 3.6.5

Development Plan

   Section 3.2.1

Disclosing Party

   Section 10.1.1

Dollars

   Section 17.7

Effective Date

   Recitals

Existing NDA

   Section 10.6

GAAP

   Section 1.42

Hatch-Waxman Certification

   Section 11.6

 

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Definition

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

  

Section

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

Indemnification Claim Notice

   Section 15.2

Indemnified Party

   Section 15.2

Indemnifying Party

   Section 15.2

Indemnitee

   Section 15.2

Indemnitees

   Section 15.2

Invoiced Amount

   Section 1.42

January Agreement

   Recitals

JDC

   Section 2.2.1

JIPC

   Section 2.5.1

JMC

   Section 2.3.1

Joint Collaboration Patents

   Section 11.1.1

Joint Press Release

   Section 10.2

JSC

   Section 2.4.1

Material Breach

   Section 13.2.1

NDA

   Section 1.25

New River

   Preamble

New River Collaboration Patents

   Section 11.3.1

New River Marks

   Section 11.9.3

New River Report

   Section 7.4.3(a)

Notice of Termination For Material Breach

   Section 13.3.3

Notifying Party

   Section 13.2.1

Parties

   Preamble

Party

   Preamble

[*]

   Section 9.8

PDM Act

   Section 1.58

[*]

   Section 3.3.2

[*] Opt-In Right

   Section 3.6.5

Prior Consultants

   Section 10.6

Product Claim

   Section 15.8.2

Purchase Interest

   Section 13.3.5(a)

Purchase Notice

   Section 13.3.5

Purchase Price

   Section 13.3.5(a)

Receiving Party

   Section 10.1.1

Recovery

   Section 11.5.2(c)(iv)

Representatives

   Section 16.1

Required Studies

   Section 3.3.2

ROW Agreement

   Recitals

Shared Expenses

   Section 3.7.1

Shire

   Preamble

Shire Collaboration Patents

   Section 11.3.2

Shire Marks

   Section 11.9.3

Shire Report

   Section 7.4.3(b)

SNDA

   Section 1.25

Term

   Section 13.1

 

- 12 -

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Definition

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

  

Section

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

Third Party Claim

   Section 15.1.1

Third Party Manufacturers

   Section 2.4.2(a)

Unilateral Product

   Section 3.6.5

Withholding Taxes

   Section 8.5.1

Working Group

   Section 2.6.4

$

   Section 17.7

 

ARTICLE 2

MANAGEMENT OF COLLABORATION

 

2.1 General. The general purpose of the collaboration described in this
Agreement will be to Develop and Commercialize Collaboration Products. The
Parties desire to establish four (4) specialized committees to oversee the
Parties’ collaboration under this Agreement and to facilitate communications
between the Parties with respect to the Development, Commercialization,
Manufacturing and intellectual property strategy of Collaboration Products
hereunder and, where applicable, in the ROW Territory. Each of such Committees
shall have the responsibilities and authority allocated to it in this Article 2.
Each of the Committees shall have the obligation to exercise its authority
consistent with the respective purpose for such Committee as stated herein and
any such decisions shall be made in good faith. For the avoidance of doubt, the
Committees described herein are the same committees as are described in the ROW
Agreement, and each such Committee will have the responsibilities and authority
set forth in this Agreement and in the ROW Agreement (with the exception of the
JMC, which has no authority with respect to the ROW Territory).

 

2.2 Joint Development Committee (JDC).

 

2.2.1 Formation and Purpose. Promptly following the Effective Date, the Parties
shall create a joint development committee (the “JDC”) to oversee the
Development of Collaboration Products hereunder. The purposes of the JDC shall
be (a) to determine the Development strategy for the Collaboration Products in
the US Territory and Major EU Markets (as defined in the ROW Agreement), (b) to
facilitate the management and implementation of the Parties’ Development
activities hereunder, and (c) to approve plans and budgets for the Development
by New River of Collaboration Products for ADHD in the US Territory. The JDC
shall have the membership and shall operate by the procedures set forth in
Section 2.6.

 

2.2.2 Specific Responsibilities of the JDC. In addition to its overall
responsibilities described in Section 2.2.1, subject to Section 2.7.1, the JDC
shall, in particular:

 

(a) select Collaboration Products for research and Development under this
Agreement in the US Territory and Major EU Markets;

 

(b) prepare, approve and amend each Development Plan (including regulatory
submission strategies and plans) for Collaboration Products in the US Territory
and the Major EU Markets;

 

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(c) monitor the progress of the activities undertaken by the Parties pursuant to
each Development Plan;

 

(d) review and approve proposals from the Parties to Develop Improvements and/or
Combination Products;

 

(e) coordinate and oversee the Parties’ Regulatory Approval submission plans in
the US Territory;

 

(f) design and approve all clinical trials of Collaboration Products proposed to
be conducted anywhere in the world for consistency and efficiency, including
without limitation by creating the protocols, defining the end points, and
selecting the primary investigators for such trials;

 

(g) have primary responsibility for establishing the objectives for all Phase IV
Clinical Trials of Collaboration Products proposed to be conducted for the US
Territory, including without limitation by creating the protocols, defining the
end points, and selecting the primary investigators for such trials;

 

(h) manage the flow of information with respect to Development being conducted
for each Collaboration Product;

 

(i) review and approve the statistical analysis plans and protocols for all
Collaboration Product clinical studies conducted worldwide, and any
investigator’s brochure(s) and revisions thereto;

 

(j) work together with the other Committees during the Development of
Collaboration Products to assure a smooth transition from Development of such
Collaboration Product to Commercialization of such Collaboration Product;

 

(k) review and approve compliance plans whereby the Parties prepare for or
participate in a Governmental Authority inspection of the preclinical or
clinical data or preclinical sites/clinical sites or laboratories; and

 

(l) review and approve pharmacovigilance plans.

 

2.3 Joint Marketing Committee (JMC).

 

2.3.1 Formation and Purpose. Promptly after the Effective Date, the Parties
shall create a joint marketing committee (the “JMC”), which shall oversee the
Commercialization of Collaboration Products in the US Territory, including the
marketing, sales and distribution of Collaboration Products in such territory.
The JMC shall have the membership and shall operate by the procedures set forth
in Section 2.6.

 

2.3.2 Specific Responsibilities of the JMC. In addition to its overall
responsibilities described in Section 2.3.1, subject to Section 2.7.2, the JMC
shall, in particular:

 

(a) prepare, approve and amend the Marketing Plan for Collaboration Products in
the US Territory;

 

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(b) monitor the progress of the activities undertaken by the Parties pursuant to
the Marketing Plan for the US Territory;

 

(c) manage the flow of information with respect to Commercialization activities
in the US Territory for each Collaboration Product;

 

(d) coordinate and oversee the Parties’ plans for labeling and selecting
trademarks for Collaboration Products in the US Territory;

 

(e) approve packaging designs, and plan and oversee non-independent educational
and professional symposia, and speaker and peer-to-peer activity programs, for
the Collaboration Products in the US Territory;

 

(f) discuss and suggest a range of suggested prices at which Collaboration
Products will be sold to unaffiliated Third Parties in the US Territory and any
discount strategies for Collaboration Products in the US Territory; provided
that nothing contained herein, except as set forth in Section 4.2.2, shall limit
or in any way restrict Shire from having the final decision on setting the price
at which a Collaboration Product is sold; and

 

(g) recommend whether to seek new indications, formulations or uses for
Collaboration Products in the US Territory, such as for Collaboration Product
life cycle management, including the Development and Commercialization of an
authorized generic of any Collaboration Product, for approval by the JDC.

 

2.4 Joint Supply Committee (JSC).

 

2.4.1 Formation and Purpose. Promptly after the Effective Date, the Parties
shall create a joint supply committee (the “JSC”) to facilitate the management
and implementation of the Parties’ activities with regard to the Manufacture and
supply of Collaboration Products worldwide. The JSC shall have the membership
and shall operate by the procedures set forth in Section 2.6.

 

2.4.2 Specific Responsibilities of the JSC. In addition to its overall
responsibilities described in Section 2.4.1, and subject to the provisions of
Section 2.7.3 and Article 6, the JSC shall, in particular:

 

(a) select which Party and/or Third Party(ies) to engage for the Manufacture and
supply of Collaboration Products and components thereof (“Third Party
Manufacturers”), oversee auditing of Third Party Manufacturers, and approve
contracts governing such Manufacture and supply;

 

(b) delineate requirements and responsibilities for development and licensure of
manufacturing processes and facilities for Collaboration Products and for
worldwide supply of Collaboration Products;

 

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(c) jointly develop a Manufacturing strategy for the US Territory and the ROW
Territory to enable development and licensure of manufacturing processes and
facilities for Collaboration Products that includes all aspects of Manufacture
and release, including but not limited to formulations, intermediate, dosage
form, devices, product characterization studies, test methods and process
validation studies, stability studies and Manufacturing plans and forecasts and
the implementation of Manufacturing Improvements;

 

(d) determine Manufacturing plans and budgets, including timelines and inventory
strategies, and allocate responsibilities for and oversee the implementation of
such plans in accordance with this Agreement;

 

(e) oversee and approve process development plans prior to the Manufacture of
registration batches of Collaboration Products;

 

(f) oversee and approve plans to support Manufacture of commercial supply of
Compound and Collaboration Products;

 

(g) review quality assurance efforts, including but not limited to those efforts
with respect to the establishment of specifications and quality standards for
Collaboration Products;

 

(h) review and coordinate the drafting and contents of the Chemistry,
Manufacturing and Controls section of a Drug Approval Application for
Collaboration Products;

 

(i) review and approve technology transfer plans for any changes in
Manufacturing sites, testing sites, and responsibilities in the supply chain for
Collaboration Products, it being understood that decisions regarding the
selection of which of a Party’s own Manufacturing and testing sites shall be
used to manufacture any component of a Collaboration Product, if a Party
Manufactures any component of a Collaboration Product pursuant to this Agreement
or any related supply agreement, shall remain in the sole control of such Party;

 

(j) prepare for regulatory inspections and ensure adherence to compliance
standards with respect to Collaboration Products;

 

(k) ensure that future logistical strategies and capacity planning are
consistent with the forecasts provided in the Marketing Plan for the US
Territory, and the corresponding plans for the ROW Territory, as well as
inventory levels for Collaboration Products;

 

(l) review quality-related issues concerning the Collaboration Products or any
component thereof; and

 

(m) review and approve compliance plans whereby the Parties prepare for or
participate in a Governmental Authority inspection of the Manufacturing or
testing site of the Compound.

 

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2.5 Joint Intellectual Property Committee (JIPC).

 

2.5.1 Formation and Purpose. Promptly after the Effective Date, the Parties
shall create a joint intellectual property committee (the “JIPC”) to facilitate
the exchange of information between the Parties to the extent required by this
Agreement regarding the prosecution, maintenance and enforcement of the Licensed
Patents, Licensed Know-How, Shire Collaboration Patents, Shire Collaboration
Know-How, and Joint Inventions. The JIPC shall have the membership and shall
operate by the procedures set forth in Section 2.6.

 

2.5.2 Specific Responsibilities of the JIPC. In addition to its overall
responsibilities described in Section 2.5.1, subject to Section 2.7.4 and
Article 11, the JIPC shall, in particular:

 

(a) Exchange information between the Parties regarding the Parties’ activities
under this Agreement relating to the filing, prosecution, maintenance and
enforcement of the Licensed Patents, Licensed Know-How, Shire Collaboration
Patents and Shire Collaboration Know-How; and

 

(b) Consult regarding the filing, prosecution, maintenance and enforcement of
Joint Collaboration Patents and Joint Inventions.

 

2.6 General Committee Membership and Procedures.

 

2.6.1 Membership. For the JDC, JMC, JSC and JIPC, each Party shall designate an
equal number of representatives who are employees of such Party or an Affiliate
of such Party (not to exceed three (3) for each Party) with appropriate
expertise to serve as members of such Committee; provided that a Party may
designate outside legal counsel as a representative to the JIPC. Each
representative may serve on more than one Committee as appropriate in view of
the individual’s expertise. Each Party may replace its Committee representatives
at any time upon written notice to the other Party. Each Committee shall have
co-chairpersons. New River and Shire shall each select from their
representatives a co-chairperson for each of the Committees. The co-chairpersons
of each Committee shall be responsible for calling meetings, preparing and
circulating an agenda in advance of each meeting of such Committee, and
preparing and issuing minutes of each meeting within thirty (30) days
thereafter; provided, that a Committee co-chairperson shall call a meeting of
the applicable Committee promptly upon the written request of the other
co-chairperson to convene such a meeting. Such minutes will not be finalized
until both chairpersons review and confirm the accuracy of such minutes in
writing.

 

2.6.2 Meetings. Each Committee shall hold meetings at such times as it elects to
do so, but in no event shall such meetings be held less frequently than once
every four (4) months. Meetings of any Committee may be held in person or by
means of telecommunication (telephone, video, or web conferences); provided,
that at least one meeting per year will be held in person. The Parties will
alternate in designating the location for in-person meetings, with New River
selecting the first meeting location. Other employees of each Party or any of
its Affiliates involved in the Development, Manufacture or Commercialization of
Collaboration Products may attend meetings of such Committee as nonvoting
participants, and, with the

 

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consent of each Party, consultants, representatives, or advisors involved in the
Development, Manufacture or Commercialization of Collaboration Products may
attend meetings of such Committee as nonvoting observers; provided, that such
Third Party representatives are under obligations of confidentiality and non-use
applicable to the Confidential Information of each Party and that are at least
as stringent as those set forth in Article 10. Each Party shall be responsible
for all of its own expenses of participating in any Committee (including without
limitation in any Working Group).

 

2.6.3 Meeting Agendas. Each Party will disclose to the other proposed agenda
items along with appropriate information at least seven (7) Business Days in
advance of each meeting of the applicable Committee; provided, that under
exigent circumstances requiring Committee input, a Party may provide its agenda
items to the other Party within a lesser period of time in advance of the
meeting, or may propose that there not be a specific agenda for a particular
meeting, so long as such other Party consents to such later addition of such
agenda items or the absence of a specific agenda for such Committee meeting.

 

2.6.4 Working Groups. From time to time, each Committee may establish and
delegate duties to other committees, sub-committees or directed teams (each, a
“Working Group”) on an “as-needed” basis to oversee particular projects or
activities. Each such Working Group shall be constituted and shall operate as
the JDC, JMC, JSC or JIPC, as the case may be, determines; provided, that each
Working Group shall have equal representation from each Party. Working Groups
may be established on an ad hoc basis for purposes of a specific project for the
life of a Collaboration Product, or on such other basis as the applicable
Committee may determine. Each Working Group and its activities shall be subject
to the oversight, review and approval of, and shall report to, the Committee
that established such Working Group. In no event shall the authority of the
Working Group exceed that specified for the relevant Committee in this Article
2.

 

2.6.5 Limitations of Committee Powers. Each Committee shall have only such
powers as are specifically delegated to it hereunder and shall not be a
substitute for the rights of the Parties. Without limiting the generality of the
foregoing, no Committee shall have any power to amend this Agreement. Any
amendment to the terms and conditions of this Agreement shall be implemented
pursuant to Section 17.1 below.

 

2.7 Committee Decision-Making. Subject to the terms of this Section 2.7, each
Committee will take action by unanimous vote with each Party having a single
vote, irrespective of the number of representatives actually in attendance at a
meeting, or by a written resolution signed by the designated representatives of
each of the Parties. If a Committee is unable to reach unanimous consent on a
particular matter within thirty (30) days of its initial consideration of such
matter, then either Party may provide written notice of such dispute to the
Chief Executive Officer of the other Party. The Chief Executive Officers (or
their respective designees, provided that each such designee is not a member of
the applicable Committee and occupies a position senior to the positions
occupied by the applicable Party’s members of such Committee) of each of the
Parties will meet at least once in person or by means of telecommunication
(telephone, video, or web conferences) to discuss the dispute and use their good
faith efforts to resolve the dispute within thirty (30) days after submission of
such dispute to such officers. If any such dispute is not resolved by the Chief
Executive Officers or their designees within thirty (30) days

 

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after submission of such dispute to such officers, then the Chief Executive
Officer or designee of the Party specified in Section 2.7.1, 2.7.2, or 2.7.3, as
applicable, shall have the authority to finally resolve such dispute acting in
good faith.

 

2.7.1 JDC Authority.

 

(a) If a dispute in the JDC is not resolved pursuant to Section 2.7 above and
such dispute relates primarily to the Development of Collaboration Products for
ADHD in the US Territory (other than those relating to Phase IV Clinical
Trials), the Required Studies or the [*], then the Chief Executive Officer of
[*] shall have the authority to finally resolve such dispute.

 

(b) Notwithstanding anything to the contrary in subsection (a):

 

(i) If a dispute in the JDC is not resolved pursuant to Section 2.7 above and
such dispute (A) does not relate primarily to any of the activities specified in
subsection (a) above (including, without limitation [*] the [*] of [*] for [*]
in the [*] or for any [*] in the [*] for [*] in the [*] or [*] or (B) relates
primarily to [*] other than the [*] by [*] pursuant to [*] for which [*] has not
[*] at the [*] or [*] the [*] to [*] of any [*] or [*], then the Chief Executive
Officer of [*] shall have the authority to finally resolve such dispute.

 

(ii) If [*] for the first Collaboration Product for ADHD on or before [*], then,
until such time as [*], the Chief Executive Officer of [*] shall have the
authority to finally resolve a dispute that relates primarily to the Development
of Collaboration Products for ADHD in the US Territory.

 

2.7.2 JMC Authority. If a dispute in the JMC is not resolved pursuant to Section
2.7 above, then the Chief Executive Officer of [*] shall have the authority to
finally resolve such dispute.

 

2.7.3 JSC Authority. If a dispute in the JSC is not resolved pursuant to Section
2.7 above, then the Chief Executive Officer of [*] shall have the authority
finally resolve such dispute; provided, however, that with respect to any matter
over which [*] has approval (or other consent right) pursuant to Article 6
(including, without limitation, Exhibit D), such resolution shall require the
approval (or other consent) of [*] as set forth in Article 6 (including, without
limitation, Exhibit D).

 

2.7.4 JIPC Authority. If a dispute in the JIPC is not resolved pursuant to
Section 2.7 above, then [*] shall have the authority to finally resolve such
dispute. The JIPC shall not have decision making authority under this Agreement
and any dispute in the JIPC shall be resolved in accordance with the terms of
Article 16.

 

2.7.5 Casting Vote. Neither Party shall exercise its right to finally resolve a
dispute at a Committee in accordance with this Section 2.7 in a manner that
excuses such Party from any of its obligations specifically enumerated under
this Agreement.

 

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ARTICLE 3

DEVELOPMENT AND REGULATORY RESPONSIBILITIES

 

3.1 Overview. Subject to the roles of the various Committees described in
Article 2 and the terms of this Agreement, the general allocation of
responsibility for the Development and Regulatory Approval of Collaboration
Products under this Agreement is as follows:

 

(a) New River will be primarily responsible for the Development of the
Collaboration Product for ADHD in the US Territory; and

 

(b) the JDC will determine which Party will be primarily responsible for the
Development of Collaboration Products for non-ADHD indications in the US
Territory.

 

3.2 Development Plans.

 

3.2.1 Scope. The Development of each Collaboration Product in the US Territory
under this Agreement shall be governed by a development plan (each, a
“Development Plan”). Each Development Plan shall be developed in good faith in
accordance with a Party’s standard practices with the overall objective of
achieving the commercial potential of such Collaboration Product. Each
Development Plan shall describe the proposed overall program of Development for
the Collaboration Product for each indication in the US Territory, including
preclinical studies, toxicology, formulation, process development, clinical
studies, pediatric exclusivity plans and regulatory plans and other elements of
obtaining Regulatory Approval in each applicable country, as well as timelines
to key Governmental Authority meetings, Drug Approval Applications and
Regulatory Approvals. Each Development Plan shall include a summary of estimated
Development Expenses of the program expected during the Development process
through obtaining Regulatory Approval for each proposed indication and route of
delivery, to the extent such expenses are to be shared by the Parties under the
terms of this Agreement, and shall also include a detailed budget for all such
shared Development activities proposed for the following calendar year.

 

3.2.2 Preparation and Approval of Development Plans for the US Territory. Each
Development Plan for the US Territory, together with any updates thereto, shall
be prepared and approved as follows:

 

(a) Initial Development Plans for the Collaboration Product for ADHD in the US
Territory. The initial Development Plan for all Development activities for the
Collaboration Product for ADHD in the US Territory [*] is attached to this
Agreement as Exhibit C. Within [*] after the Effective Date, New River will
prepare the initial Development Plans for the first Collaboration Products for
ADHD [*]

 

(b) Development Plans for Improvements and Combination Product in the US
Territory. When an Improvement and/or Combination Product is added as a
Collaboration Product pursuant to Section 3.6, within sixty (60) days following
the date of such inclusion, the Development Plan for the Development of any such
Improvement and/or Combination Product in the US Territory will be prepared by
the Party designated by the JDC, and submitted to the JDC for its review and
approval of such Development Plan.

 

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3.2.3 Updates to the Development Plans. As early as necessary in each year
beginning with the first full calendar year after the Effective Date, the Party
responsible for preparing the initial Development Plan for a Collaboration
Product shall update and prepare the Development Plan for any such Collaboration
Product for the following calendar year to take into account completion,
commencement or cessation of Development activities not contemplated by the
then-current Development Plan, and submit such proposed Development Plan to the
JDC no later than September 30 of such year for review and approval.

 

3.2.4 Diligence. In addition to the specific diligence obligations of New River
pursuant to Section 3.3.1, each of New River and Shire will use Diligent Efforts
to carry out the activities for which it may agree to be responsible set forth
in a Development Plan.

 

3.3 Development in the US Territory for ADHD.

 

3.3.1 Diligence. New River will use Diligent Efforts to carry out the activities
set forth in the Development Plan for Collaboration Products for ADHD in the US
Territory and to seek Regulatory Approval, [*], for ADHD in the US Territory in
accordance with the Development Plan and with the terms of this Agreement.

 

3.3.2 Costs of Development. Notwithstanding Section 3.7 below, (a) New River
shall bear all Development Expenses that are related to Developing and obtaining
Regulatory Approval for the first Collaboration Products for ADHD [*] in the US
Territory, (b) New River shall be responsible for all Phase IV and Related
Expenses for all activities that are required in connection with receiving
Regulatory Approval by FDA or other Governmental Authorities in the US Territory
with respect to such Collaboration Products (“Required Studies”), and (c) if
there are any additional studies necessary to obtain [*] for the Collaboration
Product for ADHD (“[*]”), New River shall be responsible for all such
Development Expenses and/or Phase IV and Related Expenses related to such [*].

 

3.3.3 Regulatory Activities.

 

(a) Unless otherwise agreed in writing by the Parties, New River, subject to
Section 3.3.3(c), shall be responsible for preparing and filing Drug Approval
Applications and seeking Regulatory Approvals for Collaboration Products in the
US Territory in accordance with the applicable Development Plan, including
preparing all reports necessary as part of a Drug Approval Application. All such
Drug Approval Applications shall be filed in the name of New River. Each Party
shall designate an alliance manager to coordinate and review filings and
activities of the Parties in the US Territory described in this Section 3.3.3.
New River shall provide Shire with drafts of any material documents or
correspondence to be submitted to any Governmental Authority in the US Territory
that pertains to the Compound and/or Collaboration Products, including Drug
Approval Applications. New River will consult in advance with Shire with respect
to any substantive or material filings to be made by New River in accordance
with the terms of this Section 3.3.3(a), including Drug Approval Applications,
and shall consider in good faith any comments Shire may have with respect to any
such filings. New River shall permit Shire access to and grant Shire the right
to reference and use, for purposes of the Collaboration Products, all data,
regulatory filings and regulatory communications associated with any submissions
for Regulatory Approval or other issues associated with any Collaboration

 

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Product, that is or would be relevant to Shire’s Development or
Commercialization of a Collaboration Product in the US Territory. To the extent
that any such data, regulatory filings or regulatory communications are held by
a Third Party, then New River shall arrange direct access to the portions of
such data, regulatory filings or regulatory communications that are relevant to
the activities of Shire that are contemplated by this Agreement. Any information
obtained by a Party pursuant to this Section 3.3.3(a) shall be deemed
Confidential Information for purposes of Article 10. Notwithstanding the
foregoing, Shire shall be the responsible Party for preparing and filing Drug
Approval Applications and seeking Regulatory Approvals and interacting with the
Governmental Authorities in the US Territory for any Unilateral Product being
Developed by Shire under Section 3.6.5.

 

(b) New River shall provide Shire with reasonable advance notice of any meeting
or substantive or material conference call with any Governmental Authority
relating to any Drug Approval Application or Regulatory Approval for
Collaboration Products in the US Territory, and Shire shall have the right to
participate in any such meeting or material conference call as well as have the
right to participate in all substantive or material preparation, internal
caucus, and debriefing sessions related to such meetings or conference calls. If
it is not possible to provide Shire notice of any such meeting or conference
call, New River shall immediately thereafter provide Shire with a detailed
summary of any such meeting or conference call. New River shall promptly, but in
no event more than two (2) Business Days after receipt, furnish Shire with
copies of all substantive or material documents or correspondence New River has
had with or receives from any Governmental Authority, and contact reports
concerning substantive or material conversations or substantive meetings with
any Governmental Authority, in each case relating to any Drug Approval
Application or Regulatory Approval (including without limitation any minutes
from a meeting with respect thereto).

 

(c) Shire shall be primarily responsible for interfacing, corresponding, making
required filings and meeting with the Division of Drug Marketing, Advertising
and Communications of the FDA (“DDMAC”) with respect to the marketing and
promotion of the Collaboration Products in the US Territory. New River will
provide a letter to the FDA (to be prepared with assistance of Shire) notifying
the FDA that Shire has been designated as the agent of New River upon whom all
DDMAC communications should be made on behalf of New River with respect to
Collaboration Products in the US Territory. Shire, through the JMC, shall
provide New River with drafts of any substantive or material documents or
correspondence to be submitted to DDMAC in the US Territory that pertains to a
Collaboration Product. Shire, through the JMC, will consult in advance with New
River with respect to any substantive or material filings to be made by Shire in
accordance with the terms of this Section 3.3.3(c), and shall consider in good
faith any comments New River may have with respect to any such filings. Shire
shall provide New River with reasonable advance notice of any meeting or
substantive or material conference call with DDMAC relating to a Collaboration
Product in the US Territory, and New River shall have the right to participate
in any such meeting or substantive or material conference call as well as have
the right to participate in all substantive or material preparation, internal
caucus, and debriefing sessions related to such meetings or conference calls. If
it is not possible to provide New River notice of any such meeting or conference
call, Shire shall immediately thereafter provide New River with a detailed
summary of any such meeting or conference call. Shire shall promptly, but in no
event more than two (2) Business Days after receipt, furnish New River with
copies of all substantive or material documents or

 

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correspondence Shire has had with or receives from DDMAC, and contact reports
concerning substantive or material conversations or substantive or material
meetings with DDMAC, in each case relating to a Collaboration Product (including
without limitation any minutes from a meeting with respect thereto).

 

(d) Within thirty (30) days after the Effective Date, New River shall provide to
Shire copies of all substantive or material Manufacturing, pre-clinical and
clinical data compiled as of the Effective Date with respect to the
Collaboration Product, including any final versions of any study reports and any
drafts then-outstanding of any study reports. Thereafter, New River shall
provide to Shire copies of all substantive or material Manufacturing,
pre-clinical and clinical data compiled with respect to the Collaboration
Product as soon as reasonably practicable after such data or results become
available or compiled, including any drafts and final versions of any study
reports. All disclosures under this Section 3.3.3(d) shall be delivered in
electronic format. For clarity, New River shall not be required to disclose New
River’s proprietary CarrierwaveTM technology under this Agreement, except to the
extent necessary for Shire to exercise its rights and perform its obligations
under this Agreement or as otherwise specifically provided in this Agreement.

 

(e) In the event that any Governmental Authority threatens or initiates any
action to remove a Collaboration Product from the market in the US Territory,
New River shall notify Shire of such communication immediately, but in no event
later than one (1) Business Day, after receipt by New River. Either Party may
decide, in good faith, to initiate a recall or withdrawal of Collaboration
Product in the US Territory, in consultation with the JDC and JMC. Before Shire
initiates a recall or withdrawal, and upon the request for a recall or
withdrawal by either Party, the Parties shall promptly and in good faith discuss
the reasons therefor and the allocation of the costs of any such recall or
withdrawal. Under no circumstances shall either Party unreasonably object to a
recall or withdrawal requested by the other Party, and neither Party shall have
any right to object to a recall or withdrawal requested by the other Party for
failure of a Collaboration Product to meet the applicable specifications, for
material safety concerns, or for the Manufacture of such Collaboration Product
in a manner that does not comply with applicable Laws. In the event of any
recall or withdrawal for Collaboration Products sold in the US Territory, Shire
shall implement any necessary action, with assistance from New River as
reasonably requested by Shire.

 

3.4 Right of Reference to the ROW Territory. New River shall have the right of
cross-reference to all Drug Approval Applications filed by Shire or its
Affiliates in the ROW Territory for the purpose of prosecuting Drug Approval
Applications in the US Territory, and Shire shall, or shall cause its Affiliates
to, take all such reasonable actions to allow such cross-reference.

 

3.5 Reporting. At each meeting of the JDC and the JSC, each Party will present a
report describing the Development and Manufacturing activities performed by such
Party with respect to Collaboration Products in the US Territory since the last
such report.

 

3.6 Development in the US Territory for Indications other than ADHD. In the
event that Collaboration Products are to be Developed hereunder in the US
Territory for indications other than ADHD, the JDC will designate a lead
Development Party for such

 

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Development program in the applicable Development Plan, subject to the terms and
conditions of this Section 3.6. For the purposes of clarity, [*] shall have the
casting vote on the JDC as to whether a Collaboration Product is to be Developed
in the US Territory for non-ADHD indications, including all Improvements or
Combination Products; provided that [*] will not be obligated to serve as the
lead Development Party without its consent.

 

3.6.1 Submission of Proposal to JDC. If, at any time, Shire or New River desires
to Develop a Collaboration Product for a non-ADHD indication, including an
Improvement or Combination Product, for Commercialization in the US Territory,
such Party shall submit to the JDC a proposal for such Development. Such
proposal shall contain, at a minimum, all material information that would
otherwise be included in a Development Plan. Each proposal for the Development
of a Collaboration Product for a non-ADHD indication, including an Improvement
or Combination Product, for Commercialization in the US Territory shall, among
other things:

 

(a) identify all major Development tasks to be accomplished prior to submission
of filings for Regulatory Approvals;

 

(b) identify key Development objectives, expected associated resources, risk
factors, timelines, Go/No Go decision points and relevant decision criteria and,
where appropriate, decision trees; and

 

(c) include a reasonably detailed description and budget for the Development
activities that are expected to be performed.

 

3.6.2 JDC Agreement to Develop. If the JDC agrees to the Development of a
Collaboration Product for a non-ADHD indication, including an Improvement and/or
Combination Product, for Commercialization in the US Territory, it shall select
the lead Party for such Development. Once the lead Party is selected, that Party
will be responsible for the Development of the applicable Collaboration Product
for the specified indication, including the design and conduct of clinical
trials for such Collaboration Product, subject in any event to the oversight and
authority of the various Committees. The Development Expenses incurred in
connection with the performance of such Development program will be shared [*]
under the terms of Section 3.7 below. Except as set forth in Section 3.3.3(a),
New River shall be responsible for preparing and filing Drug Approval
Applications and seeking Regulatory Approvals for Collaboration Products in the
US Territory, whether or not it is the lead Development Party, including
preparing all reports necessary as part of a Drug Approval Application, and all
such Drug Approval Applications shall be filed in the name of New River.

 

3.6.3 New River Proposal. Except as provided in this Section 3.6.3, if New River
proposes the Development of an Improvement and/or Combination Product to the
JDC, but Shire does not vote in favor of such proposal, such Improvement and/or
Combination Product shall not be Developed. Notwithstanding the foregoing, after
receipt of Regulatory Approval for the first Collaboration Product for ADHD [*],
New River may propose a Combination Product that includes an active
pharmaceutical ingredient approved in the US Territory for a [*]), and the
Parties shall develop a plan to determine proof of concept and to generate
pharmacokinetic and toxicity data on such proposed Combination Product and shall
use Diligent Efforts to implement

 

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such plan. Based on such data, the JDC shall determine whether to Develop such
Combination Product. The JDC shall make such determination within a reasonable
time following receipt of such data, but in any event within [*] of the
commencement of activities pursuant to the applicable plan. If the JDC
determines not to Develop such Combination Product, then New River may elect to
conduct the Development of such Combination Product itself, pursuant to the
terms of Section 3.6.5.

 

3.6.4 Shire Proposal. If Shire proposes the Development of a Collaboration
Product for any indication other than the first Collaboration Products for ADHD
in each of Adults, Adolescents and Children, including an Improvement and/or
Combination Product, to the JDC, but New River does not vote in favor of such
proposal, then Shire shall have the right to conduct the Development of such
Collaboration Product without New River, pursuant to the terms of Section 3.6.5.

 

3.6.5 Unilateral Development. The Party independently developing a Collaboration
Product under Section 3.6.3, in the case of New River, or Section 3.6.4, in the
case of Shire (the “Developing Party”), shall have the right unilaterally to
conduct the Development of the applicable Collaboration Product (each such
Collaboration Product, a “Unilateral Product”); provided, however, that such
right shall be subject to the Developing Party conducting such Development in a
manner that would not adversely affect in any significant way any then existing
Collaboration Product being Developed or Commercialized under this Agreement.
For any Unilateral Product, the non-Developing Party shall have the opportunity
to opt back into the Development program and participate in the Development upon
the [*] for any such Unilateral Product (a “[*] Opt-In Right”). At least [*]
prior to [*] of such [*], the Developing Party shall provide to the other Party
an updated proposal that contains, at a minimum the information set forth in
Section 3.6.1, to enable such other Party to determine if it desires to exercise
its [*] Opt-In Right. Such other Party shall have [*] after receipt of such
updated proposal to exercise its [*] Opt-In Right. If such other Party exercises
its [*] Opt-In Right, then such other Party shall be required to pay the
Developing Party, within [*] days after such exercise, an amount equal to [*] in
respect of the Development of the applicable Unilateral Product prior to such
exercise, and thereafter the [*]. If the non-Developing Party does not exercise
its [*] Opt-In Right but Regulatory Approval is obtained in the US Territory for
the Unilateral Product, then the non-Developing Party shall be required to pay
the Developing Party, within [*] of receipt of such Regulatory Approval, an
amount equal to [*] in respect of such Unilateral Product. In order to conform
with the definition of [*] in Article 1 above, for purposes of this Section
3.6.5 only, all [*] in connection with the Development of a Unilateral Product
will be treated as if such [*] in connection with a Development Plan.

 

3.7 Shared Expenses.

 

3.7.1 Except as otherwise provided in Sections 3.3.2 and 3.6.5, the Parties will
share Development Expenses (“Shared Expenses”) as follows:

 

(a) any Development Expenses incurred by either Party that, as determined by the
JDC, have worldwide application to the Development or Commercialization of the
Collaboration Products will be borne [*] by Shire and [*] by New River,
regardless of whether such work is conducted inside or outside of the United
States; and

 

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(b) any Development Expenses incurred by either Party for the Development of
Collaboration Products to be Commercialized in the US Territory and which do not
have worldwide application, will be borne [*] by Shire and [*] by New River.

 

3.7.2 Quarterly Reconciliation of Development Expenses.

 

(a) Each Party shall calculate and maintain records of Shared Expenses incurred
by it in accordance with procedures to be agreed upon between the Parties.

 

(b) Within five (5) Business Days following the end of each calendar quarter,
Shire shall submit to New River a written report setting forth in reasonable
detail, separately with respect to each Collaboration Product, the Shared
Expenses it has incurred in such calendar quarter.

 

(c) Within five (5) Business Days following the end of each calendar quarter,
New River shall submit to Shire a written report setting forth in reasonable
detail, separately with respect to each Collaboration Product, the Shared
Expenses it has incurred in such calendar quarter.

 

(d) Within twenty-five (25) days following the end of each calendar quarter,
Shire shall submit to New River a written report setting forth in reasonable
detail the calculation of all Shared Expenses for each Collaboration Product,
and the calculation of any net amount owed by New River to Shire or by Shire to
New River, as the case may be, in order to ensure the appropriate sharing of
Shared Expenses in accordance with the provisions of Section 3.7. The net amount
payable shall be paid by Shire or New River, as the case may be, within thirty
five (35) days following the end of each calendar quarter; provided, that, in
the event of a dispute, the disputing Party shall pay the amount not in dispute
and provide written notice within five (5) Business Days after receipt of the
written report in question to the other, specifying such dispute and explaining
the basis of the dispute. New River and Shire shall promptly thereafter meet and
negotiate in good faith a resolution to such dispute. If such dispute is not
resolved within forty-five (45) days after delivery of a notice of dispute with
respect thereto to the other Party, the disputing Party may audit the other
Party pursuant to the provisions of Section 8.6.2.

 

3.8 Use of Third Parties. Either Party may retain Third Parties to perform
Development activities, subject to the terms provided in this Section 3.8 and
Section 9.3; provided that prior to either Party subcontracting any Development
for the US Territory it shall receive the prior written approval of the other
Party, such approval not to be unreasonably withheld, conditioned, or delayed.
Each Party shall remain liable for the performance of its obligations hereunder
which it delegates to such Third Parties. Shire acknowledges and agrees that New
River is currently subcontracting or intends to subcontract certain of the
Development in the US Territory to those subcontractors for the designated
activities set forth on Schedule 3.8. New River will not need the prior written
approval of Shire to utilize such subcontractors on Schedule 3.8 for the
indicated activities. Any Third Parties performing Development activities
hereunder shall be subject to confidentiality and non-use obligations at least
as stringent as those set forth in Article 10 and must comply with the terms of
Article 11.

 

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3.9 Right to Audit. Each Party shall use Diligent Efforts to ensure that the
other Party’s authorized representatives, and shall ensure that Governmental
Authorities, in both cases to the extent permitted by applicable Law, may,
during regular business hours, (a) examine and inspect its facilities or,
subject to any Third Party confidentiality restrictions or obligations, the
facilities of any subcontractor or any investigator site used by it in the
performance of Development of a Collaboration Product for Commercialization in
the US Territory, including those sites in the ROW Territory if the
Collaboration Product Developed at such site in the ROW Territory will be
Commercialized in the US Territory, and (b) subject to applicable Law and any
Third Party confidentiality restrictions or obligations, inspect and copy all
data, documentation and work products relating to the activities performed by
it, the subcontractor or investigator site, including, without limitation, the
medical records of any patient participating in any clinical study. This right
to inspect and copy all data, documentation, and work products relating to a
Collaboration Product for Commercialization in the US Territory, including those
sites in the ROW Territory if the Collaboration Product Developed at such site
in the ROW Territory will be Commercialized in the US Territory, may be
exercised at any time during the term of this Agreement (subject to each Party’s
record retention policies then in effect), or such longer period as shall be
required by applicable Law.

 

3.10 Assistance. Subject to the terms of this Article 3, each Party agrees to
provide the other with all reasonable assistance and take all actions reasonably
requested by the other Party that are necessary or desirable to enable the other
Party to comply with any Law applicable to the Collaboration Products,
including, but not limited to, meeting, reporting and other obligations to
maintain and update any Regulatory Approvals for the Collaboration Products.

 

3.11 Compliance with Laws. Each Party or its permitted Third Party contractors
shall perform its responsibilities under this Article 3, including those set
forth in a Development Plan, in accordance with all applicable Laws, including
without limitation cGLPs, cGCPs and cGMPs.

 

ARTICLE 4

COMMERCIALIZATION OF COLLABORATION PRODUCTS

 

4.1 Principles of Commercialization. Shire will be solely responsible for
Commercializing Collaboration Products in the US Territory during the Term;
provided, however, that, during the Co-Promotion Period, Article 5 will apply to
the Parties’ Co-Promotion of the applicable Collaboration Products in the US
Territory.

 

4.2 Sales and Distribution of Collaboration Products to Third Parties.

 

4.2.1 Terms of Sale to Third Parties. For each Collaboration Product, including
all Improvements, Combination Products and Co-Promote Products, Shire shall be
solely responsible for handling all returns, recalls, order processing,
invoicing and collection, distribution, and inventory and receivables arising
from sales to Third Parties. New River may not accept orders from a Third Party
for a Collaboration Product or make sales for its own account (except to Shire)
or for Shire’s account. If New River receives any order for a Collaboration
Product, it shall refer such orders to Shire for acceptance or rejection.
Subject to Section 4.2.2, Shire shall have the right and responsibility for
establishing and modifying the terms and conditions with respect to the sale of
all Collaboration Products in the US Territory,

 

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including any terms and conditions relating to or affecting the price at which
the Collaboration Products will be sold, discounts available to managed care
providers, any discount attributable to payments on receivables, distribution of
the Collaboration Products, and credits, price adjustments, or other discounts
and allowances to be granted or refused.

 

4.2.2 [*] If Shire or its Affiliates or sublicensees sell a Collaboration
Product to a Third Party, [*] and at a [*] Shire or its Affiliates or
sublicensees for sales of such Collaboration Product [*], then Shire [*] in
respect of such sale.

 

4.3 Marketing Plans and Budgets for the US Territory. Shire shall be responsible
for developing a Marketing Plan for each Collaboration Product in the US
Territory. Each Marketing Plan developed by Shire shall be adopted in good faith
in accordance with Shire’s standard practices with the overall objective of
achieving the commercial potential of such Collaboration Product. Each Marketing
Plan shall be deemed Confidential Information of Shire.

 

4.3.1 Preparation of Initial Marketing Plan. Commencing [*] prior to the
projected First Commercial Sale of a Collaboration Product, Shire will commence
preparing an initial [*] Marketing Plan for the US Territory for such
Collaboration Product for review and approval by the JMC; provided, however,
promptly after the Effective Date, Shire will commence preparing the initial
Marketing Plan for the first Collaboration Product for ADHD. As early as
necessary in each calendar year thereafter, Shire shall amend and update each
Marketing Plan for the US Territory for such Collaboration Products for
submission of such proposed Marketing Plan for the US Territory to the JMC no
later than September 30 of such year for review and approval.

 

4.3.2 Contents of Initial Marketing Plan. The initial Marketing Plan for each
Collaboration Product shall set forth the strategy for the commercial launch of
such Collaboration Product in the US Territory in a comprehensive plan that
describes the Commercialization activities for such Collaboration Product
(including advertising, education, planning, marketing, sales force training and
allocation). Each initial draft Marketing Plan will contain such information as
Shire believes necessary for the successful commercial launch of such
Collaboration Product in the Field and in the US Territory and shall generally
conform to the level of detail utilized by Shire in preparation of its own
product plans.

 

4.4 Regulatory Obligations During Commercialization.

 

4.4.1 New River Responsibilities. Except as otherwise set forth in Sections
3.3.3(a) and 3.3.3(c), New River will maintain all regulatory filings and
Regulatory Approvals in the US Territory for each Collaboration Product
Developed pursuant to this Agreement, including all INDs and Drug Approval
Applications. As between the Parties, New River will be solely responsible for
all activities in connection with maintaining Regulatory Approvals required for
the Commercialization of Collaboration Product in the US Territory, including
communicating and preparing and filing all reports with the applicable
Governmental Authorities, as described in further detail in and subject to
Section 3.3.3.

 

4.4.2 Pharmacovigilance. Shire shall be responsible for all processing of
information related to any adverse events, including, without limitation, any
information

 

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regarding such adverse events that is received from a Third Party, related to a
Collaboration Product after the First Commercial Sale of such Product. The Party
conducting any clinical studies prior to such First Commercial Sale shall be
responsible for all processing of information related to any adverse events
associated with such studies. New River shall be responsible for all expedited
and periodic reporting of such events to the FDA, all in accordance with 21
C.F.R. Sections 312.32 and 314.80. As soon as reasonably practicable following
the date of this Agreement, the pharmacovigilance departments of each of New
River and Shire shall meet and determine the approach to be taken for the
collection, review, assessment, tracking and filing of information related to
adverse events associated with the Products, consistent with the provisions of
this Section 4.4.2. Such approach shall be documented in a separate and
appropriate written pharmacovigilance agreement between each of New River and
Shire. Shire agrees to share relevant information it receives (either directly
or indirectly) with New River in a timely manner so as to allow New River to
comply with its responsibility to report pharmacovigilance information under
this Section 4.4.2.

 

4.5 Diligence in Commercialization.

 

4.5.1 Diligence. Shire will use Diligent Efforts in the US Territory to launch a
Collaboration Product after receiving all Regulatory Approvals for such
Collaboration Product, and thereafter will use Diligent Efforts to Commercialize
the Collaboration Product in the US Territory. With respect to the US Territory,
Shire, and if applicable New River, will use Diligent Efforts to perform all
activities set forth in the applicable Marketing Plan.

 

4.5.2 Details. Without limiting the generality of the foregoing, with respect to
the first Collaboration Product Commercialized hereunder in the US Territory for
ADHD, Shire will provide: (a) for a sales force of at least [*] Sales
Representatives to promote such Collaboration Product [*] in the US Territory
during the [*] following First Commercial Sale of such Collaboration Product in
the US Territory; (b) for a sales force of at least [*] Sales Representatives to
promote such Collaboration Product [*] in the US Territory during the next [*];
and (c) a sales force consistent with the then-applicable Marketing Plan
thereafter. For the avoidance of doubt, if New River exercises its Co-Promotion
Option, any Sales Representatives provided by New River to Co-Promote such
Collaboration Product shall count towards the amounts set forth in this Section
4.5.2.

 

4.5.3 [*]. If a Collaboration Product for ADHD is, or is [*] to, the [*] product
approved for ADHD and [*] that such Collaboration Product either (a) [*]
products for ADHD, or (b) [*], then Shire will ensure that such Collaboration
Product for ADHD is [*] of Shire in the US Territory that [*] formulated for
[*]. If a Collaboration Product for ADHD does not originally [*] but the Parties
are later able to [*], the provisions of this Section 4.5.3 shall be applicable.

 

4.6 Cost of Commercialization. In the US Territory, (a) each Party shall bear
its own costs in connection with the Commercialization of Collaboration
Products, subject to the payment provisions of Article 6 and the sharing and
reconciliation provisions described in Section 7.4, and (b) [*] shall bear [*]
of any Pre-Marketing Expenses incurred by the Parties, which shall be reported
and reimbursed through the mechanisms set forth in Section 7.4.3.

 

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4.7 Use of Third Parties. Each Party covenants and agrees not to use any Third
Parties to perform promotional activities for Collaboration Products in the US
Territory without the prior written approval of the other Party, such approval
not to be unreasonably withheld, conditioned, or delayed. If the Parties agree
to engage any such Third Party sales force, such Third Party sales force will be
directed, trained and controlled by Shire.

 

4.8 Promotional Materials.

 

4.8.1 Creation of Promotional Materials. Shire will create and develop
Promotional Materials for the US Territory in accordance with an applicable
Marketing Plan. To the extent that Shire describes in any item of the
Promotional Materials New River’s CarrierwaveTM proprietary technology, Shire
shall include in such Promotional Materials the New River trademark for such
technology. New River hereby grants Shire a royalty-free license for such
purpose. To the extent Shire shall include such description and trademark in the
Promotional Materials, Shire shall comply with New River’s then-current
guidelines for trademark usage, a copy of which shall be provided to Shire from
time to time. Shire shall provide samples of Promotional Materials for use in
the US Territory to the JMC for review, prior to distributing such Promotional
Materials for use by the Parties’ Sales Representatives in the US Territory.

 

4.8.2 Shire Ownership of Promotional Materials. Shire shall own all right, title
and interest in and to any Promotional Materials relating to the Collaboration
Products, including without limitation applicable copyrights and trademarks, but
excluding trademarks owned by New River in accordance with Section 11.9, and New
River hereby assigns all its right, title and interest to such Promotional
Materials to Shire and agrees to execute all documents and take all actions as
are reasonably requested by Shire to vest title to such Promotional Materials in
Shire.

 

4.8.3 Use of Promotional Materials Exclusively for Collaboration Products. The
Promotional Materials, and any aspects of those uniquely tied to the
Collaboration Products, shall be used exclusively in connection with the
Collaboration Products in accordance with the terms of this Agreement.

 

4.8.4 Retention of Rights. Shire and New River, or their respective Affiliates,
shall retain, throughout the Term and following termination, all rights,
including without limitation all copyrights and trademarks, to all of their
respective programs and materials in all formats (print, video, audio, digital,
computer, etc.) regarding sales training, patient education and disease
management programs owned by them as of the Effective Date or developed by them
during the Term but outside of this Agreement, regardless of the fact that such
programs or materials are shared with the other Party, as well as any
modifications of such programs or materials that they may develop in the future
which are not specific to a Collaboration Product. In accordance with Section
4.8.2, Shire shall own any such modifications specific to a Collaboration
Product.

 

4.9 Provisions Applicable to Sales Representatives. In the US Territory, Shire
agrees with respect to itself and its Affiliates and their respective Sales
Representatives, and if

 

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New River exercises its Co-Promotion Right, New River agrees with respect to
itself and its Affiliates and their respective Sales Representatives, that:

 

4.9.1 No Changes to the Promotional Materials. Each Party will instruct its
Sales Representatives to use, and will monitor its Sales Representatives to
ensure that such Sales Representatives use, only Promotional Materials, Samples,
and literature approved for use by Shire for the promotion of the Collaboration
Product. Neither Party will misbrand, change, alter or adulterate any
Promotional Material or Samples supplied to it for distribution or use by such
Party or its Sales Representatives.

 

4.9.2 Monitoring of Sales Representatives. Each Party will instruct its Sales
Representatives to do the following, and will monitor its Sales Representatives
so that such personnel do, the following: (a) limit claims of efficacy and
safety for the Collaboration Product to those that are consistent with approved
promotional claims in, and not add, delete or modify claims of efficacy and
safety in the promotion of the Collaboration Product in any respect from those
claims of efficacy and safety that are contained in, the Marketing Plan for such
Collaboration Product, with applicable Law, and with product labeling for the
Collaboration Product as approved by the FDA; (b) not make any changes in
Promotional Materials provided by Shire; (c) use Promotional Materials and
Samples in a manner that is consistent with the Marketing Plan, with applicable
Law, and with the product labeling for the Collaboration Product as approved by
the FDA; and (d) promote the Collaboration Product in adherence in all material
respects with applicable Laws, as well as the [*], the [*], the [*] for the [*]
and any other [*] generally applicable to such Sales Representative.

 

4.9.3 PDM Act and Controlled Substances Act. Each Party shall use Samples in the
US Territory strictly in accordance with the then-current applicable Marketing
Plan and shall distribute Samples in full compliance with all applicable Laws,
including the requirements of the PDM Act and the Controlled Substances Act.
Specifically, each Party shall establish, maintain and adhere to written
procedures to assure that such Party and its Sales Representatives comply with
all requirements of the PDM Act and the Controlled Substances Act, as
applicable. Such procedures shall include a requirement that each Party notify
the other Party immediately upon learning that any Samples shipped by such Party
have been lost or have not been received as scheduled. Each Party will maintain
records as required by the PDM Act and all other Laws and shall allow
representatives of the other Party to inspect such records on request. Upon
reasonable advance notice to a Party, the other Party shall be entitled to
conduct an inspection and audit of such Party’s Sample distribution practices by
its Sales Representatives in the US Territory and any facilities where Samples
are stored by such Party. Such inspection and audit shall be made in accordance
with the applicable provisions of the PDM Act and with the provisions of this
Agreement. The costs and expenses of conducting such audit shall be deemed a
Marketing Expense.

 

4.9.4 Equal Opportunity Employer. Unless exempted from such compliance, each
Party will comply with all applicable Laws in the hiring, employment, and
discharge of all Sales Representatives. Each Party represents that such Party is
an Equal Opportunity Employer and does not discriminate against any person
because of race, color, creed, age, sex, sexual preference, marital status, or
national origin.

 

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4.9.5 Compliance. Each Party will ensure that its Sales Representatives are
informed of all applicable obligations and policies relating to the performance
of this Agreement and are bound to comply with same.

 

4.9.6 Insurance. Each Party acknowledges and agrees that the other Party does
not and will not maintain or procure any worker’s compensation, healthcare, or
other insurance for or on behalf of the other Party’s Sales Representative, all
of which shall be such Party’s sole responsibility.

 

4.9.7 No Participation in Benefit Plans. Each Party acknowledges and agrees that
all Sales Representatives of such Party are not, and are not intended to be or
be treated as, employees of the other Party or any of its Affiliates, and that
such individuals are not, and are not intended to be, eligible to participate in
any benefits programs or in any “employee benefit plans” (as such term is
defined in section 3(3) of ERISA) that are sponsored by the other Party or any
of its Affiliates or that are offered from time to time by the other Party or
its Affiliates to their own employees (the “Benefit Plans”). All matters of
compensation, benefits and other terms of employment for any such Sales
Representatives shall be solely a matter between a Party and such individual. A
Party shall not be responsible to the other Party, or to its Sales
Representatives for any compensation, expense reimbursements or benefits
(including, without limitation, vacation and holiday remuneration, healthcare
coverage or insurance, life insurance, severance or termination of employment
benefits, pension or profit-sharing benefits and disability benefits),
payroll-related taxes or withholdings, or any governmental charges or benefits
(including without limitation unemployment and disability insurance
contributions or benefits and workmen’ compensation contributions or benefits)
that may be imposed upon or be related to the performance by such Party and such
individuals of this Agreement, all of which shall be the sole responsibility of
such Party, even if it is subsequently determined by any court or governmental
agency that any such individual may be a common law employee of the other Party
or any of its Affiliates or is otherwise entitled to such payments and benefits.

 

4.9.8 Responsibility for Acts and Omissions of its Personnel. Each Party shall
be solely responsible for its acts and omissions and for those acts or omissions
of its Sales Representatives while performing any of the services to be provided
under this Agreement. Each Party shall be solely responsible and liable for all
probationary and termination actions taken by it, as well as for the
formulation, content and dissemination (including content) of all employment
policies and rules (including written probationary and termination policies)
applicable to its employees and contractors.

 

4.9.9 Indemnification for Employee Reclassification. Each Party will indemnify,
defend, and hold harmless the other Party and its Affiliates, and its and their
directors, employees and agents from and against any damages, liability, loss
and costs that may be paid or payable by any such Person resulting from or in
connection with any claim or other cause of action asserted by any Sales
Representative of the other Party or any Third Party (including without
limitation federal, state or local governmental authorities) arising out of the
execution and/or performance of this Agreement that is based on or with respect
to:

 

(a) costs, damages and losses that a Party or its Affiliates may incur resulting
from any claims for benefits that any Sales Representative of the other Party
may make under or with respect to any Benefit Plan;

 

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(b) any payment or obligation to make a payment to any Sales Representative of
the other Party relating in any way to any compensation, benefits of any type
under any employee benefit plan (as such term is defined in Section 3(3) of
ERISA) and corresponding employee benefits plans under any other country’s laws,
and any other bonus, stock option, stock purchase, incentive, deferred
compensation, supplemental retirement, severance, termination benefits, and
other similar fringe or employee benefit plans, programs or arrangements that
may be sponsored at any time by Shire or any of its Affiliates or by New River
or any of its Affiliates, even if it is subsequently determined by any court or
governmental agency that any such Sales Representative may be a common law
employee of the other Party or any of its Affiliates or entitled to same;

 

(c) the payment or withholding of any contributions, payroll taxes, or any other
payroll-related item by or on behalf of a Party or any of its Sales
Representative with respect to which such Party or any such individuals may be
responsible hereunder or pursuant to applicable law to pay, make, collect,
withhold or contribute, even if it is subsequently determined by any court or
any governmental agency that any such Sales Representative may be a common law
employee of such Party or any of its Affiliates or otherwise entitled to such
benefits; and

 

(d) failure of a Party to withhold or pay required taxes or failure to file
required forms with regard to compensation paid to a Party by the other Party
and compensation and benefits paid or extended by a Party to any of its Sales
Representatives.

 

4.10 Reporting. Until the expiration of the later of (y) the period during which
Section 4.5.2 applies or (z) the Co-Promotion Period (for so long as New River
is Co-Promoting a Collaboration Product), Shire shall provide New River, within
thirty (30) days following the end of each calendar quarter, a report setting
forth the total number of Details and Primary Position Details, by decile and
target physician, actually performed by the Shire Sales Representatives for such
calendar quarter, or in such other form as Shire may regularly prepare for its
own internal purposes, redacted for confidential information not related to
Collaboration Product.

 

4.11 Compliance with Laws. Each Party or its permitted Third Party contractors
shall perform its responsibilities under this Article 4, including those set
forth in a Marketing Plan, in accordance with all applicable Laws.

 

ARTICLE 5

CO-PROMOTION OF COLLABORATION PRODUCTS

 

5.1 Option. New River will have the right (the “Co-Promotion Option”) to elect
from time to time to provide Details for each Collaboration Product in the US
Territory up to twenty-five percent (25%) of total Details for such
Collaboration Product pursuant to the provisions of this Article 5. In addition
to the then-current Marketing Plan, if prior to exercising the Co-Promotion
Option, New River reasonably requests additional information Controlled by

 

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Shire relating to the Collaboration Product in order to evaluate the exercise of
its Co-Promotion Option, Shire shall promptly provide such information to New
River for such purpose. If New River exercises its Co-Promotion Option, it will
not be entitled to [*] without the prior written approval of Shire.

 

5.2 Exercise of Option. New River shall provide to Shire at least [*] written
notice of the first exercise of its Co-Promotion Option prior to the
commencement date of such Co-Promotion. If New River terminates its Co-Promotion
with respect to a Collaboration Product in the US Territory, New River shall
provide Shire at least [*] written notice of any subsequent exercise of its
Co-Promotion Option prior to the commencement date of such Co-Promotion. In each
exercise of its Co-Promotion Option, New River will specify the date upon which
it will commence Co-Promotion, the percentage of Details that New River intends
to provide (up to twenty-five percent (25%) of the total Details for such
Collaboration Product) and will commit to Co-Promote a Collaboration Product for
at least [*]. New River may adjust the level of its Detail commitment on an
annual basis with at least [*] notice, but no such adjustment shall change its
Detail commitment by more than [*] of the total Details for such Collaboration
Product, and in no event may New River commit to providing more than twenty-five
percent (25%) of the total Details for such Collaboration Product.

 

5.3 Co-Promotion Period. The “Co-Promotion Period” for each Collaboration
Product will commence upon the date specified in New River’s exercise of the
Co-Promotion Option and will expire upon the earlier of: (a) termination of the
Parties’ Commercialization of the applicable Collaboration Product in the US
Territory; and (b) [*] following the date that New River provides written notice
to Shire terminating New River’s Co-Promotion activities hereunder.

 

5.4 Amendment of Marketing Plan to Include Co-Promotion Activities. The Parties’
Co-Promotion activities for any Collaboration Product in the US Territory shall
be governed by a Marketing Plan. After New River gives notice of its intention
to exercise a Co-Promotion Option with respect to a Collaboration Product, Shire
shall amend the applicable Marketing Plan to set forth the Co-Promotion
activities of the Parties for such Collaboration Product in a manner consistent
with the terms of this Agreement. Each Marketing Plan for a Co-Promote Product
shall set forth the compensation/incentive plans, targeting an allocation
between the Parties of the Co-Promotion activities for the Collaboration Product
in the US Territory, using reasonable and good faith efforts to allocate the
Co-Promotion activities in a manner to give effect to the sales and marketing
strategy described in the applicable Marketing Plan and in the best interests of
such Collaboration Product. If at the time of exercise of its Co-Promotion
Option, New River commits to Co-Promote a Collaboration Product for at least [*]
at a fixed level of Detail commitment, then, except with the consent of New
River, the applicable Marketing Plan will allocate between the Parties, on a
reasonable pro rata basis, the opportunity to promote such Collaboration Product
to high prescribing physicians and in centers of excellence. Each Marketing Plan
for a Co-Promote Product shall be approved by the JMC in accordance with the
terms of Article 2, and each such plan may be amended in a manner consistent
with this Agreement.

 

5.5 Scope. The Co-Promotion by New River of any Collaboration Products under
this Agreement shall be subject to the terms and conditions set forth in this
Article 5. For

 

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purposes of this Article 5, a Collaboration Product subject to Co-Promotion
under this Agreement shall be referred to as a “Co-Promote Product”.

 

5.6 Advertising and Promotional Materials.

 

5.6.1 Inclusion in Marketing Plan. Shire will describe in the applicable
Marketing Plan for a Co-Promote Product how and the manner in which the Parties
will be presented and described to the medical community in any Promotional
Materials or other materials related to the Co-Promote Product and the placement
of the names and logos of the Parties, in each case as permitted by applicable
Law and with the labeling for the Co-Promote Product approved by the FDA. The
Marketing Plan for a Co-Promote Product shall also set forth a delivery schedule
for Promotional Materials to be provided by Shire to New River.

 

5.6.2 Shire Approval. All written, electronic and visual communications,
including all Promotional Materials, provided by a Party to its Sales
Representatives Detailing the Co-Promote Product for use by such personnel
regarding the Co-Promote Product positioning, selling messages or product
strategy will be subject to prior review and approval by Shire; provided, that a
communication, once approved, need not be re-submitted for approval again prior
to its re-use unless the Co-Promote Product labeling applicable to such
communication has been changed in any way since such prior approval date;
provided that it is understood that Shire shall have the right to withdraw any
such communication even after approval.

 

5.7 Shipment, Storage and Allocation of Samples. If set forth in the applicable
Marketing Plan for a Co-Promote Product, Shire shall ship reasonable
requirements of Samples for the US Territory to New River’s distribution
facility in a timely manner in accordance with the schedule for distribution as
outlined in such Marketing Plan. New River shall be responsible for supplying
its Sales Representatives in the US Territory with Samples from New River’s
distribution facility.

 

5.8 Training.

 

5.8.1 Shire Control. The direction and training of any Sales Representatives of
New River for a Co-Promote Product shall be under the control of Shire.

 

5.8.2 Timing; Expenses. Shire shall provide sales training on the Collaboration
Products for the New River Sales Representatives who will be performing Sales
Calls for a Co-Promote Product similar to the training on such Co-Promote
Product Shire provides to its own Sales Representatives who perform Sales Calls
on such Co-Promote Product. Shire shall provide such training at a time that is
mutually acceptable to the Parties and reasonably prior to the commencement of
Co-Promotion activities by the applicable New River Sales Representative. Such
training shall be deemed a Pre-Marketing Expense or Marketing Expense, as
applicable. Notwithstanding anything to the contrary in this Agreement, New
River shall pay all travel and housing costs for its Sales Representatives to
attend such training and shall reimburse Shire for the training materials
provided to New River’s Sales Representatives. Such costs incurred by New River
pursuant the preceding sentence of this Section 5.8.2 shall not be considered or
included in Allowable Expenses or Pre-Marketing Expenses.

 

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5.8.3 Continuing Education. Shire shall provide continuing education regarding
each Co-Promote Product for Sales Representatives of New River on the same
schedule as it provides continuing education for its own Sales Representatives
for such Co-Promote Product.

 

5.8.4 Qualifications. All New River Sales Representatives who will be performing
Sales Calls for a Co-Promote Product shall be required to have similar
educational qualifications as Shire requires for its own Sales Representatives
promoting such Co-Promote Product, and Shire shall provide New River with a copy
of such educational qualifications in writing. Additionally, all New River Sales
Representatives prior to being assigned to Co-Promotion by New River shall have
had relevant experience applicable to the promoting and detailing of
pharmaceutical products and shall have received appropriate training on proper
marketing and sales techniques to be used in promoting pharmaceutical products
in accordance with all applicable Laws. The New River Sales Representatives
shall be subject to a reasonable proficiency examination relevant to the
Co-Promote Product and will require an acceptable testing performance or score,
in the same manner as Shire Sales Representatives. Shire will have an
opportunity to interview all such proposed hires and to provide feedback to New
River, which New River will consider in good faith.

 

5.9 Provisions Applicable to All New River Sales Representatives. The following
shall apply to all New River Sales Representatives used by New River in
connection with the performance of its Co-Promotion activities:

 

5.9.1 Coordination of New River Sales Representative Activity. All New River
Sales Representatives who will be performing Details shall be assigned their
responsibilities, activities, Sales Calls territory and Detail requirements by
Shire in accordance with the applicable Marketing Plan. All New River Sales
Representatives shall keep Shire fully informed of their activities and shall
provide Shire, within thirty (30) days following the end of each calendar
quarter, a report setting forth the total number of Details and Primary Position
Details, by decile and target physician, actually performed by such New River
Sales Representative for such calendar quarter, redacted for confidential
information not relating to Collaboration Product.

 

5.9.2 Noncompliance. If Shire has a reasonable basis for believing that any New
River Sales Representative may have (a) violated any applicable Law or an
applicable Shire policy provided in writing to New River, or (b) failed to
comply with industry standards or terms of this Agreement, Shire shall have the
right to request New River immediately to address the performance of such
individual, in addition to any other rights or remedies available to Shire under
this Agreement, at law or in equity. New River shall evaluate and resolve such
issue. New River shall keep Shire informed of the progress of, and information
learned during, its evaluation, and shall provide Shire with a reasonably
detailed written report summarizing any steps taken toward resolution of the
matter within ten (10) Business Days after such evaluation.

 

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ARTICLE 6

MANUFACTURE OF COLLABORATION PRODUCTS

 

6.1 Manufacture and Supply.

 

6.1.1 Manufacturing Process. New River will use Diligent Efforts to develop a
process for the Manufacture of bulk Compound and Collaboration Products and to
scale up such process to a level sufficient to Manufacture and supply in the US
Territory clinical and commercial supplies of Collaboration Products. New River
will undertake such development in consultation with the JSC, including
preparation of filings necessary to obtain Regulatory Approval for the
Manufacture of bulk Compound and Collaboration Products for the US Territory and
the selection of any Third Party Manufacturer. Once such filings are made, no
changes to the process for the Manufacture of Compound and Collaboration
Products for the US Territory shall be made without the written consent of
Shire, such consent not to be unreasonably withheld, conditioned or delayed;
provided that New River will not require the prior written consent of Shire to
make changes related to the process for the Manufacture of Compound and/or
Collaboration Products hereunder that are required by a Governmental Authority
or applicable Law. Schedule 6.1.1 sets forth: (a) a list of each Third Party
Manufacturer New River is utilizing as of the Effective Date or intends to use
to Manufacture Compound and/or Collaboration Product; and (b) a description of
the work to be done by each such Third Party Manufacturer. New River’s retention
of any Third Party Manufacturer shall be subject to the prior written approval
of Shire, not to be unreasonably withheld, conditioned, or delayed; provided,
however, that New River will not need the prior written approval of Shire to
utilize Third Party Manufacturers listed on Schedule 6.1.1 for the indicated
Manufacturing activities.

 

Notwithstanding anything to the contrary in Section 3.7, all costs related to
the foregoing activities set forth in this Section 6.1.1 shall to the extent
related to the first Collaboration Products for ADHD [*], be borne solely by [*]
pursuant to Section 3.3.2. In all other cases, all costs related to the
foregoing activities set forth in this Section 6.1.1 shall be deemed Shared
Expenses.

 

6.1.2 Development Supply. New River will Manufacture, or arrange for a Third
Party Manufacturer to Manufacture, Compound and Collaboration Products in bulk
and finished form for Development activities to be performed by a Party under
Section 3.3 of this Agreement for the US Territory. Prior to receipt of
Regulatory Approval for the first Collaboration Products for ADHD [*] in the US
Territory, the costs of manufacturing quantities of such Collaboration Products
(other than for the build-up of Commercial supply) in the US Territory shall be
borne solely by [*]. Prior to receipt of Regulatory Approval of a Collaboration
Product other than the first Collaboration Products for ADHD [*] in the US
Territory, the costs of manufacturing quantities of such Collaboration Product
(other than for the build-up of Commercial supply) in the US Territory shall be
treated as Development Expenses and the applicable Development Plan shall
designate which such costs, if any, shall be treated as Shared Expenses under
Section 3.6.1.

 

6.1.3 Commercial Supply by New River. Subject to Sections 2.4.2 and 6.3, New
River will Manufacture, or arrange for a Third Party Manufacturer to
Manufacture, finished Collaboration Products for sales for all indications in
the US Territory. Any such supply will be provided by New River to Shire at [*]
(as determined pursuant to Exhibit A). For the avoidance of doubt, the [*] used
in calculating Allowable Expenses will be [*] for such finished Collaboration
Product, as determined in accordance with Exhibit A, not [*].

 

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6.2 Specifications and Terms of Supply; Multiple Sources. New River, in
consultation with the JSC, shall establish the specifications, including any
necessary documentation, certificates of analysis and test results, for the bulk
Compound and bulk and finished Collaboration Products to be Manufactured under
this Article 6, in each case subject to the prior written approval of Shire,
such approval not be unreasonably withheld, conditioned or delayed. The Parties
shall endeavor to maintain compatible specifications for bulk Compound on a
worldwide basis, and to minimize the number of distinct specifications in
different countries. New River shall establish at least [*] sources of supply
for each of Compound and Collaboration Product to be Manufactured under this
Article 6.

 

6.3 Manufacture by Shire; Commercial Supply by Shire. Shire will have the right
to act as, or to appoint a Third Party to act as, a second source for
Collaboration Products under terms and conditions to be established by the
Parties and subject to reasonable commercial qualification by New River and
applicable regulatory requirements. In connection with such right, and based on
the specifications provided by New River under Section 6.2, Shire will prepare
all specifications required for any facility at which Shire intends to
Manufacture, or have Manufactured, Collaboration Products, including cGMP
qualification guidelines, and any QA approved procedures to be followed during
the qualification of such facility, all consistent with the specifications and
procedures approved in any existing Regulatory Approval, in each case at Shire’s
sole expense. Following validation of such facility, the JSC will task Shire
with the production of quantities of Collaboration Products at least sufficient
for Shire to maintain such validation as a second source and such quantities
shall be available for distribution by Shire. For purposes of determining the
Allowable Expenses for sales of Collaboration Products to Third Parties, the [*]
on such sales shall be equal to [*] for the quantity of such Collaboration
Products actually sold, as determined in accordance with Exhibit A. In the event
that [*] any agreement with a Third Party Manufacturer for the Manufacture of
Compound or otherwise [*] such that there is a reasonable likelihood of
insufficient quantities of Compound to satisfy the need thereof for the
Manufacture of Collaboration Products, then Shire shall be entitled, but not be
required, to assume in whole or in part New River’s rights and related
obligations under such agreement (to the extent permissible thereunder) or
otherwise direct the exercise of rights and performance of obligations by New
River under such agreement, including the establishment of additional Third
Party Manufacturers or Manufacture by Shire, in each case upon the mutual
agreement of the Parties, such agreement not to be unreasonably withheld,
delayed or conditioned. In such event the Parties shall meet and confer to
devise the most effective supply plan for the bulk Compound and/or Collaboration
Products and to consider amendments to this or other agreements, as necessary.

 

6.4 Supply Terms. The Parties, in consultation with the JSC, will establish the
terms and conditions applicable to the supply of Compound and Collaboration
Products by New River to Shire under this Article 6, and enter into an
appropriate supply agreement with respect thereto containing terms and
conditions consistent with the terms of this Agreement, including without
limitation, this Article 6 and at a minimum those terms and conditions as set
forth on Exhibit D, to the extent New River is able to obtain such terms from
Third Party Manufacturers having used Diligent Efforts to do so.

 

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ARTICLE 7

FINANCIAL TERMS

 

7.1 Licensing Fee. As partial payment for the rights and licenses granted by New
River pursuant to this Agreement, Shire shall pay to New River a license fee
equal to $48,800,000 within ten (10) Business Days after the Effective Date.
This fee shall be non-creditable and non-refundable against any future
obligations of Shire under this Agreement, subject to Section 7.3 and Section
13.6.

 

7.2 Milestone Payments. Shire shall make the following milestone payments, which
shall be non-creditable and non-refundable, subject to Section 7.3 and Section
13.6, to New River within ten (10) Business Days after the achievement of each
of the following milestones (or, in the event that any such milestone is
achieved by New River, after New River shall have given Shire written notice
that such milestone has been achieved):

 

MILESTONE EVENT

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

   MILESTONE
PAYMENT

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

(a) Upon FDA acceptance of the first, and only the first, Drug Approval
Application for Collaboration Product for ADHD in the Field in the US Territory,
as evidenced by [*]    $ 50,000,000 (b) Upon [*] of the first Collaboration
Product for ADHD in the Field in the US Territory, as follows:       

[*]

     [*]

[*]

     [*] [*]      [*] (c) At the end of the first, and only the first, calendar
year during which the cumulative worldwide Net Sales of all Collaboration
Products during such calendar year exceed [*]    $ 100,000,000

 

No milestone is to be paid more than once irrespective of the number of
Collaboration Products Developed, Manufactured or Commercialized under this
Agreement.

 

7.3 Refunds by New River. New River shall make the following refunds to Shire
within thirty (30) days after each of the following dates if New River has not
received Regulatory Approval in the US Territory for a Collaboration Product for
an ADHD indication on or before such date: (a) $[*] on [*], (b) $[*] on [*], and
(c) $[*] on [*]. The total refund amount by New River under this Section 7.3
shall not exceed $[*].

 

7.4 Sharing of US Product Profit.

 

7.4.1 US Collaboration Product for ADHD. New River and Shire or, if Shire so
nominates, its Affiliate in the US Territory shall share US Product Profit for
the first Collaboration Product approved in the US Territory for ADHD as set
forth in this Section 7.4.

 

(a) If such Collaboration Product has [*], then (i) during the period beginning
with the First Commercial Sale and ending on the last day of the month that is
twenty-four (24) months following the month in which the First Commercial Sale
of such Collaboration

 

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Product occurs, the US Product Profit for such Collaboration Product will be
allocated seventy-five percent (75%) to Shire and twenty-five percent (25%) to
New River, and (ii) after such twenty-four (24) month period, the US Product
Profit for such Collaboration Product will be allocated fifty percent (50%) to
Shire and fifty percent (50%) to New River.

 

(b) If such Collaboration Product has [*], then the US Product Profit for such
Collaboration Product will be allocated between the Parties based on the formula
set forth on Exhibit B.

 

(c) If such Collaboration Product initially [*], then, effective as of the first
day of the first calendar month following such [*], on a prospective basis only,
the allocation of US Product Profit for such Collaboration Product will be as
set forth in Section 7.4.1(a).

 

(d) If such Collaboration Product initially [*], then New River shall use
Diligent Efforts to [*]. Shire shall provide such assistance as may be
reasonably requested by New River in connection with seeking [*], at no cost to
New River. Any Development Expenses incurred in seeking [*] shall be the sole
responsibility of New River.

 

(e) In the event of a change in the regulatory scheme [*] under the [*], the
terms of this Section 7.4 (as well as any other terms of this Agreement relating
to [*]) will be interpreted in the manner that conforms most closely to the [*]
existing as of the Effective Date. In any event, if such regulatory change
results in a Collaboration Product [*] under such [*], then, for purposes of
this Agreement, New River will have been deemed to have [*]

 

7.4.2 Other Collaboration Products in the US Territory. Except as set forth in
Section 7.4.1, New River and Shire or, if Shire so nominates, its Affiliate in
the US Territory shall share [*] in the US Product Profit for each Collaboration
Product, irrespective of the [*] by such Collaboration Product.

 

7.4.3 Reporting and Payment.

 

(a) Within five (5) Business Days after the end of each calendar quarter, New
River shall report to Shire New River’s individual Allowable Expense items (with
appropriate supporting information) involved in the computation of US Product
Profit and accrued during such quarter, as well as any Pre-Marketing Expenses,
incurred and accrued during such quarter with respect to each such Collaboration
Product (the “New River Report”).

 

(b) Within five (5) Business Days after the end of each calendar quarter, Shire
shall report to New River Net Sales and Shire’s individual Allowable Expense
items (with appropriate supporting information) involved in the computation of
US Product Profit and accrued during such quarter, as well as any Pre-Marketing
Expenses, incurred and accrued during such quarter with respect to each such
Collaboration Product (the “Shire Report”).

 

(c) The New River Reports and the Shire Reports will be in such form as the
Parties may reasonably agree from time to time. The Parties shall determine and
report

 

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Marketing Expenses for their respective full-time equivalent sales force
personnel using the same mutually acceptable mechanism.

 

(d) Within twenty-five (25) days after the end of each calendar quarter, Shire
shall provide for each Collaboration Product one consolidated Financial
Statement for the US Territory to the JMC. Within ten (10) days after receipt of
the Financial Statement, the JMC shall direct the remittance between the Parties
of an amount to effectuate the sharing of the US Product Profit (including the
reimbursement of Allowable Expenses and Phase IV and Related Expenses) in
accordance with Sections 7.4.1 and 7.4.2, and Pre-Marketing Expenses in
accordance with Section 4.6 for all Collaboration Products. Any such payment
shall be made, in any event, within ten (10) days of the date that the JMC
directs the remittance.

 

7.4.4 Term. The Parties shall share US Product Profit hereunder with respect to
each Collaboration Product in the US Territory until each such Collaboration
Product is permanently withdrawn from and is no longer being sold anywhere in
the US Territory.

 

ARTICLE 8

PAYMENT TERMS

 

8.1 Payment Method. All amounts due to either Party hereunder will be paid in
United States Dollars by wire transfer in immediately available funds to an
account designated by such Party. Any payments or portions thereof due hereunder
that are not paid by the date such payments are due under this Agreement will
bear simple interest at the lower of (a) [*] the US Prime Rate, as reported in
the Wall Street Journal, Eastern Edition, on the due date (or, if the due date
is not a business day, on the last business day prior to such due date), or (b)
the maximum rate permitted by applicable Law, calculated on the number of days
such payment is delinquent; provided that such interest shall not be due to the
extent that a payment is inadvertently paid late (e.g., if such late payment is
accompanied by reasonable evidence that the payor was not aware of the due date
of the payment or reasonable explanation that such payment due date was
unintentionally missed) and if the payor acts in good faith in making payment as
soon as it discovers that a required payment has not been made.

 

8.2 Payment Schedules; Reports. The payments due pursuant to Sections 3.7.2,
7.1, 7.2, 7.3, 7.4 and 11.3.5 are due and payable on the dates described
therein. The Parties acknowledge that any expenses or costs reported or shared
in any way under this Agreement may be based upon estimates, which estimates
will be GAAP-compliant; provided that when the actual results become known
relative to any estimated amount, any difference between the actual results and
the estimate is reported and the next payment due hereunder related to such
estimated item is appropriately adjusted for such difference. The Parties
acknowledge and agree that any reports and payments relating to any cost,
expense, or other financial amount shared pursuant to this Agreement for the
fourth quarter of any calendar year shall reflect year-end reconciliations and
adjustments, if any, applicable to the previous three quarters’ reported
results.

 

8.3 Currency Conversion. For any currency conversion required in determining the
amount of US Product Profits due hereunder, such conversion will be made at the
exchange rate used by Shire, consistent with its general internal corporate
policies as they relate to its income statement, for its own consolidation
purposes for the translation of such currency into United

 

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States Dollars for any US Product Profit payments due pursuant to this
Agreement. Such policies will be made available to New River upon request and
will be consistent with customary industry practices.

 

8.4 Legal Restrictions. If at any time legal restrictions prevent the remittance
by Shire of all or any part of US Product Profits, Shire will have the right and
option to make such payment by depositing the amount thereof in local currency
to an account in the name of New River in a bank or other depository in such
country. Shire will consult with New River regarding, and promptly notify New
River of, any and all such arrangements.

 

8.5 Taxes.

 

8.5.1 Withholding Taxes. New River will be responsible for any and all income or
other taxes owed by New River and required by applicable Law to be withheld or
deducted from any of the payments made by or on behalf of Shire to New River
hereunder (“Withholding Taxes”), and Shire may deduct from any amounts that
Shire is required to pay hereunder an amount equal to such Withholding Taxes.
Shire will provide New River with reasonable advance notice of tax withholding
obligations to which it reasonably believes that it is subject. New River will
provide Shire any information available to New River that is necessary to
determine the Withholding Taxes. Such Withholding Taxes will be paid to the
proper taxing authority for New River’s account and evidence of such payment
will be secured and sent to New River within one (1) 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 New River and Shire or its Affiliates or sublicensees to take advantage
of any applicable legal provision or any treaty provisions with the object of
paying the sums due to New River hereunder with the lowest legal amount of
Withholding Taxes.

 

8.5.2 Additional Withholding Taxes. If, as a result of any change in the
corporate status or location of Shire, or the permitted assignment of this
Agreement by Shire, additional Withholding Taxes become due on payments from
Shire or its permitted assignee to New River that would not have been due absent
such change in corporate status or location or permitted assignment, and New
River is not able to claim a credit or reimbursement for such tax, in whole or
in part, then Shire will deduct Withholding Taxes in accordance with this
Section 8.5, but will, in addition to the sums otherwise payable under this
Agreement, pay to New River such further sum as will ensure that, after
deduction of Withholding Taxes on all such sums, the net amount received by New
River equals the amount that New River would have received had the
non-creditable or non-reimbursable excess portion of such additional Withholding
Taxes not been deducted. To the extent that any such amount paid by Shire to New
River in accordance with this Section 8.5 is in fact subsequently able to be
claimed by New River as a credit or reimbursement for such tax otherwise
deducted, then New River will repay such amount to Shire.

 

8.6 Records Retention; Audit.

 

8.6.1 Record Retention. Each Party will maintain complete and accurate books,
records and accounts used for the determination of expenses incurred in
connection with the performance of Development or Commercialization activities
or otherwise relevant for the

 

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calculation of Net Sales in the US Territory and US Product Profits, in
sufficient detail to confirm the accuracy of any payments required under this
Agreement, which books, records and accounts will be retained by such Party for
three (3) years after the end of the period to which such books, records and
accounts pertain, or longer as is required by applicable Law.

 

8.6.2 Audit. Each Party will have the right to have an independent certified
public accounting firm of internationally recognized standing, reasonably
acceptable to the other Party, to have access during normal business hours, and
upon reasonable prior written notice, to such of the records of the other Party
as may be reasonably necessary to verify the accuracy of any expenses shared or
paid by the other Party under this Agreement or the calculation of Net Sales in
the US Territory or US Product Profits for any calendar year ending not more
than three (3) years prior to the date of such request; provided, however, that,
no Party will have the right to conduct more than one such audit in any twelve
(12) month period and that the auditing Party shall not be permitted to audit
the same period of time more than once, unless evidence of fraud or gross
negligence arises in a subsequent audit and the auditing Party reasonably
believes that such evidence indicates the reasonable possibility of fraud or
gross negligence in any such prior period. The accounting firm will disclose to
the Parties only whether the various expenses subject to being shared by this
Agreement, Net Sales in the US Territory or US Product Profits reported by the
audited Party are correct or incorrect and the specific details concerning any
discrepancies. The auditing Party will bear all costs of such audit, unless the
audit reveals a discrepancy in the auditing Party’s favor of more than [*], in
which case the audited Party will bear the cost of the audit. If the audited
Party disputes the findings pursuant to this Section 8.6.2, the Parties shall
meet and discuss such dispute. If such dispute is not resolved within forty-five
(45) days, then it shall be subject to Article 16. Shire shall use Diligent
Efforts to obtain from any sub-licensee audit rights at least as favorable as
the audit rights set forth in this Section 8.6.2 and the right to share the
results of any such audit with New River. In the event that New River reasonably
believes that there is a material inaccuracy in the reporting by a sub-licensee
of the Net Sales in the US Territory of such sub-licensee, then New River may
direct Shire to exercise such audit rights in accordance with procedures
reasonably requested by New River. New River shall succeed to the rights and
obligations of Shire in respect of any costs or expenses associated with a
sub-licensee audit requested by New River.

 

8.6.3 Payment of Additional Amounts. If, based on the results of any audit,
additional payments are owed to either Party under this Agreement, then the
paying Party will make such additional payments within five (5) Business Days
after the accounting firm’s written report is delivered to the Parties. The
provisions of Section 8.1 shall apply to such payment.

 

8.6.4 Confidentiality. Each Party will treat all information subject to review
under this Section 8.6 in accordance with the provisions of Article 10. Prior to
conducting any audit hereunder, the Party conducting such audit will cause its
accounting firm to enter into a reasonably acceptable confidentiality agreement
with the audited Party obligating such accounting firm to maintain all such
financial information in confidence with standards no less stringent that the
terms of this Article 10 of this Agreement.

 

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ARTICLE 9

LICENSES

 

9.1 Licenses to Shire. Subject to the terms of this Agreement, New River hereby
grants to Shire an exclusive (except as to New River) license, without the right
to grant sublicenses (except to Affiliates of Shire), under the Licensed
Patents, the Licensed Know-How and New River’s interest in any Joint
Collaboration Patents (a) to Commercialize Collaboration Products in the Field
in the US Territory and (b) to Develop and use Collaboration Products for
Commercialization in the US Territory.

 

9.2 Licenses to New River. Subject to the terms of this Agreement, Shire hereby
grants to New River an exclusive (except as to Shire), paid-up license, without
the right to grant sublicenses (except to Affiliates of New River), under the
Shire Patents and Shire Know-How solely to conduct Development and
Commercialization of Collaboration Products in the Field for the US Territory
(and to supply Shire Collaboration Products and Compound for the ROW Territory)
in accordance with the terms of this Agreement and the ROW Agreement, as
applicable.

 

9.3 Sublicensing. Shire may grant sublicenses under Section 9.1 to [*];
provided, however, that the Development activities undertaken by any sublicensee
of such rights will be subject to the oversight and authority of the JDC. The
entry by Shire into a sublicense shall not relieve Shire of its obligations
under this Agreement, including the obligation to report the Net Sales of such
sublicensee.

 

9.4 Scope of Licenses. As used in this Article 9, a license that is “exclusive
except as to” the granting Party means that the Party granting the license shall
not grant any other entity (other than its Affiliates) any license under such
patent rights with the right to practice within the Field, but that otherwise
the granting Party retains all its rights of ownership in such licensed rights,
including without limitation the right to practice such patent rights, subject
only to the license granted.

 

9.5 No Implied Licenses. Except as expressly provided in this Agreement, neither
Party grants to the other Party any right or license in any intellectual
property right, whether by implication, estoppel or otherwise. No implied
licenses are granted under this Agreement. Each Party hereby covenants and
agrees not to use or sublicense any of its rights under the licenses set forth
in this Article 9 except as expressly permitted in this Agreement.

 

9.6 Exclusivity. During the Term, New River hereby covenants and agrees not to,
itself or through or with any Affiliate or Third Party, (a) develop, market,
promote, sell, or otherwise commercialize any pharmaceutical products containing
or comprising [*] or other compound where an active moiety of such compound is
[*], other than Collaboration Products, (b) or develop, market, promote, sell,
or otherwise commercialize any pharmaceutical products containing [*] formulated
for [*] for the treatment or prevention of ADHD, other than Collaboration
Products, or (c) grant any license to a Third Party to perform any activities
described in the preceding clauses (a) or (b), in each case without the express
prior written approval of Shire.

 

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9.7 Nonassertion. New River and its Affiliates hereby covenant and agree not to,
alone or in cooperation with any Third Party, [*], the manufacture, use, offer
for sale, sale, distribution, import or export of which is done under and in
accordance with the terms of this Agreement. This covenant will run with and
attach to any and all intellectual property owned or controlled, in whole or in
part, by New River and shall be binding upon any assignee of any intellectual
property from New River.

 

9.8 [*]. New River will be permitted to terminate this Agreement by written
notice effective upon receipt if [*] (each such [*]). Shire will include
provisions in all agreements granting sublicenses of Shire’s rights hereunder
providing that if the sublicensee or its Affiliates undertake a [*] with respect
to [*] under which the sublicensee is sublicensed, Shire will be permitted to
terminate such sublicense agreement. If a sublicensee of Shire (or an Affiliate
of such sublicensee) undertakes a [*] of any such [*] under which such
sublicensee is sublicensed, then Shire upon receipt of notice from New River of
such [*] will terminate the applicable sublicense agreement. If Shire fails to
so terminate such sublicense agreement, New River may terminate Shire’s right to
sublicense in the countr(ies) covered by such sublicense agreement and any
sublicenses previously granted in such countr(ies) shall automatically
terminate. In connection with such sublicense termination, Shire shall cooperate
with New River’s reasonable requests to cause such a terminated sublicensee to
discontinue activities with respect to the Collaboration Product in such
countr(ies).

 

ARTICLE 10

CONFIDENTIALITY

 

10.1 Confidential Information.

 

10.1.1 Confidential Information. As used in this Agreement, the term
“Confidential Information” means all secret, confidential or proprietary
information or data, whether provided in written, oral, graphic, video,
computer, electronic or other form, provided pursuant to this Agreement or the
ROW Agreement or generated pursuant to this Agreement or the ROW Agreement by
one Party or its Affiliates (the “Disclosing Party”) to the other Party or its
Affiliates (the “Receiving Party”), including but not limited to, information
relating to the Disclosing Party’s existing or proposed research, development
efforts, patent applications, business or products, and any other materials that
have not been made available by the Disclosing Party to the general public.
Notwithstanding the foregoing sentence, Confidential Information shall not
include any information or materials that:

 

(a) were already known to the Receiving Party (other than under an obligation of
confidentiality), at the time of disclosure by the Disclosing Party, to the
extent such Receiving Party has documentary evidence to that effect;

 

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

 

(c) became generally available to the public or otherwise part of the public
domain after disclosure or development thereof, as the case may be, and other
than

 

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through any act or omission of a Party in breach of such Party’s confidentiality
obligations under this Agreement;

 

(d) were disclosed to a 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

 

(e) were independently discovered or developed by or on behalf of the Receiving
Party without the use of the Confidential Information belonging to the other
Party, to the extent such Receiving Party has documentary evidence to that
effect.

 

10.1.2 Confidentiality Obligations. Each of New River and Shire shall keep all
Confidential Information received from the other Party with the same degree of
care it maintains the confidentiality of its own Confidential Information.
Neither Party shall use such Confidential Information for any purpose other than
in performance of this Agreement or disclose the same to any other Person other
than to such of its and its Affiliates’ directors, managers, employees,
independent contractors, agents or consultants who have a need to know such
Confidential Information to implement the terms of this Agreement or enforce its
rights under this Agreement; provided, however, that a Receiving Party shall
advise any of its and its Affiliates’ directors, managers, employees,
independent contractors, agents or consultants who receives such Confidential
Information of the confidential nature thereof and of the obligations contained
in this Agreement relating thereto, and the Receiving Party shall ensure
(including, in the case of a Third Party, by means of a written agreement with
such Third Party having terms at least as protective as those contained in this
Article 10) that all such directors, managers, employees, independent
contractors, agents or consultants comply with such obligations as if they had
been a Party hereto. Upon termination of this Agreement, the Receiving Party
shall return or destroy all documents, tapes or other media containing
Confidential Information of the Disclosing Party that remain in the possession
of the Receiving Party or its directors, managers, employees, independent
contractors, agents or consultants, except that the Receiving Party may keep one
copy of the Confidential Information in the legal department files of the
Receiving Party, solely for archival purposes. Such archival copy shall be
deemed to be the property of the Disclosing Party, and shall continue to be
subject to the provisions of this Article 10. It is understood that receipt of
Confidential Information under this Agreement will not limit the Receiving Party
from assigning its employees to any particular job or task in any way it may
choose, subject to the terms and conditions of this Agreement.

 

10.1.3 Permitted Disclosure and Use. Notwithstanding Section 10.1.2, a Party may
disclose Confidential Information belonging to the other Party only to the
extent such disclosure is reasonably necessary to: (a) obtain Regulatory
Approval of a Collaboration Product to the extent such disclosure is made to a
Governmental Authority; (b) comply with or enforce any of the provisions of this
Agreement; (c) comply with Laws; or (d) comply with applicable stock exchange or
Nasdaq regulation. If a Party deems it necessary to disclose Confidential
Information of the other Party pursuant to this Section 10.1.3, such Party shall
give reasonable advance notice of such disclosure to the other Party to permit
such other Party sufficient opportunity to object to such disclosure or to take
measures to ensure confidential treatment of such information. In addition,
notwithstanding Section 10.1.2, the Parties shall prepare standardized responses
to anticipated inquiries from the public or press, stockholders, investors

 

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and/or analysts with respect to the Compound, Collaboration Product or other
activities hereunder that may be disclosed. Notwithstanding anything to the
contrary in this Article 10, Shire shall not disclose to any Third Party
Confidential Information of New River disclosing the Manufacture of Compound,
without the prior written consent of New River, not to be unreasonably withheld,
delayed or conditioned.

 

10.1.4 Notification. The Receiving Party shall notify the Disclosing Party
promptly upon discovery of any unauthorized use or disclosure of the Disclosing
Party’s Confidential Information, and will cooperate with the Disclosing Party
in any reasonably requested fashion to assist the Disclosing Party to regain
possession of such Confidential Information and to prevent its further
unauthorized use or disclosure.

 

10.2 Publicity; Filing of this Agreement. After the execution of the January
Agreement, the Parties announced the execution of the January Agreement using
the form of the press release substantially in the form attached as Exhibit E
(the “Joint Press Release”). Any other publication, news release or other public
announcement relating to this Agreement or to the performance hereunder, shall
first be reviewed and approved by both Parties; provided, however, that any
disclosure which is required by Law as advised by the disclosing Party’s counsel
may be made without the prior consent of the other Party. To the extent
practicable, the disclosing Party shall be given at least three (3) Business
Days advance notice of any such legally required disclosure, and the other Party
shall provide any comments on the proposed disclosure during such period. To the
extent that either Party determines that it or the other Party is required to
file or register this Agreement or a notification thereof to comply with the
requirements of an applicable stock exchange or Nasdaq regulation or any
Governmental Authority, including without limitation the U.S. Securities and
Exchange Commission, the Competition Directorate of the Commission of the
European Communities or the U.S. Federal Trade Commission, such Party shall
promptly inform the other Party thereof. Prior to making any such filing,
registration or notification, the Parties shall agree on the provisions of this
Agreement for which the Parties shall seek confidential treatment, it being
understood that if one Party determines to seek confidential treatment for a
provision for which the other Party does not, then the Parties will use
reasonable efforts in connection with such filing to seek the confidential
treatment of any such provision. The Parties shall cooperate, each at its own
expense, in such filing, registration or notification, including without
limitation such confidential treatment request, and shall execute all documents
reasonably required in connection therewith. In furtherance of the foregoing,
the Parties will agree as promptly as practicable after the Effective Date on
the confidential treatment request to be filed with the U.S. Securities and
Exchange Commission and the redacted form of this Agreement related thereto. In
that connection, any redaction reasonably requested by either Party shall be
included in such filing. The Parties will reasonably cooperate in responding
promptly to any comments received from the U.S. Securities and Exchange
Commission with respect to such filing in an effort to achieve confidential
treatment of such redacted form; provided, however, that a Party shall be
relieved of such obligation to seek confidential treatment for a provision
requested by the other Party if such treatment is not achieved after the second
round of responses to comments from the U.S. Securities and Exchange Commission.

 

10.3 Publication. Each Party shall submit copies of each proposed academic,
scientific, medical and other publication or presentation that contains or
refers to the Licensed

 

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Patents, Licensed Know-How or otherwise relates to a Collaboration Product or
any research or Development activities under this Agreement to the other Party
at least sixty (60) days in advance of submitting such proposed publication or
presentation to a publisher or other Third Party. Such other Party shall have
the right to review, comment on and approve each such proposed publication or
presentation for accuracy and to ascertain whether such Party’s Confidential
Information is being inappropriately utilized and/or released. The
non-publishing Party shall have the right to remove any of its Confidential
Information prior to submission for publication or presentation. The publishing
Party shall redact or otherwise modify the proposed publication or presentation
to remove any such Confidential Information of the other Party. In addition, in
the event that the document includes data, information or material generated by
a Party’s scientists, and professional standards for authorship would be
consistent with including such Party’s scientists as co-authors of the document,
the names of such scientists will be included as co-authors. A Party may
publicly disclose without regard to the preceding requirements of this Section
10.3 any information that was previously disclosed in a public disclosure that
was in compliance with such requirements.

 

10.4 Use of Names. Neither Party shall use the name of the other Party in
relation to this transaction in any public announcement, press release or other
public document without the written consent of such other Party, which consent
shall not be unreasonably withheld or delayed; provided, however, that either
Party may use the name of the other Party in any document filed with any
regulatory agency or authority, including the FDA and the Securities and
Exchange Commission.

 

10.5 Confidentiality of this Agreement. The terms of this Agreement shall be
Confidential Information of each Party and, as such, shall be subject to the
provisions of this Article 10.

 

10.6 Disclosures Under Existing NDA. The Parties agree and acknowledge that New
River and Shire US, Inc. entered into that certain Existing NDA. For purposes of
this Section 10.6, the term “Existing NDA” means that certain Non-Disclosure and
Confidentiality Agreement, dated as of July 16, 2002, as amended by letter
agreements on July 13, 2004, October 29, 2004, November 12, 2004, November 15,
2004, by and among the Parties and various other Affiliates and independent
contractors of Shire. The Parties agree that “Confidential Information” (as such
term is used in the Existing NDA) disclosed to Shire Affiliates under the
Existing NDA prior to the Effective Date shall be deemed to have been disclosed
under this Agreement and, from and after the Effective Date, shall be held in
confidence by such Shire Affiliates in accordance with the terms of this Article
10. To the extent that Shire retains Prior Consultants to perform activities
under this Agreement in connection with which such Prior Consultant is provided
Confidential Information of New River, then such Prior Consultant shall be made
subject to the provisions of this Article 10 with respect to disclosures of
“Confidential Information,” as such term is used in the Existing NDA. The term
“Prior Consultants” means those persons added as parties to the Existing NDA
pursuant to those amendments to the Existing NDA made as of November 12, 2004
and November 15, 2004.

 

10.7 Survival. The obligations and prohibitions contained in this Article 10
shall survive the expiration or termination of this Agreement for a period of
ten (10) years.

 

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ARTICLE 11

OWNERSHIP OF INTELLECTUAL PROPERTY AND PATENT RIGHTS

 

11.1 Ownership.

 

11.1.1 New River shall solely own, and it alone shall have the right to apply
for Patents, within and outside of the United States for any New River
Inventions and Shire shall solely own, and it alone shall have the right to
apply for Patents, within and outside of the United States for any Shire
Inventions. New River and Shire will each own an undivided one-half interest in
any Joint Inventions and any Patents claiming such Joint Inventions (“Joint
Collaboration Patents”), in each case without obligation to account to the other
for the exploitation thereof or to seek consent of the other for the grant of
any licenses thereunder, subject to the licenses and rights granted by the
Parties in this Agreement. Each Party shall promptly disclose to the other Party
all Inventions made by it during the Term. The determination of inventorship for
Inventions shall be made in accordance with applicable Laws relating to
inventorship set forth in the patent Laws of the United States (Title 35, United
States Code).

 

11.1.2 Each Party will require all of its and its Affiliates’ employees to
assign all Inventions that are the subject of patent applications claiming
Inventions that are developed, made or conceived by such employees according to
the ownership principles described in this Section 11.1. Each Party will require
any agents or independent contractors performing an activity pursuant to this
Agreement to assign all Inventions that are the subject of patent applications
claiming Inventions that are developed, made or conceived by such agents or
independent contractors to New River and/or Shire according to the ownership
principles described in this Section 11.1.

 

11.2 Disclosures; Disputes Regarding Inventions. Each Party shall, before filing
a new patent application (including without limitation provisionals and
continuations-in-part, but excluding continuations, divisionals, and requests
for continued examinations) claiming an Invention, promptly disclose such
Invention to the other Party, including Joint Inventions, New River Inventions
and Shire Inventions and shall provide the other Party with a copy of the
proposed patent application at least ten (10) Business Days before filing such
application or such shorter time as may be required to preserve Patent rights,
including, without limitation, the avoidance of a statutory bar. If the
non-filing Party believes that the filing Party’s proposed patent application
discloses Confidential Information of the non-filing Party, the non-filing Party
shall so notify the filing Party within such ten (10) Business Days, and the
filing Party shall amend its proposed application to comply with the
confidentiality provisions of this Agreement. If the Parties are in agreement as
to the designation of the Invention as Joint Invention, New River Invention or
Shire Invention, they can continue as set forth in Section 11.3 below. If the
Parties disagree as to whether an Invention is a Joint Invention, New River
Invention or Shire Invention, and are unable to reach agreement within thirty
(30) days after commencing discussions, then each Party will have the right to
avail itself of any legally recognizable remedy in accordance with Article 16 of
this Agreement and applicable Law.

 

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11.3 Patent Filings.

 

11.3.1 New River Responsibilities. New River shall prepare, file, prosecute and
maintain Patents to cover (a) New River Inventions (the “New River Collaboration
Patents”), and (b) the Licensed Patents. New River shall keep Shire informed of
the status of each such Patent and shall give Shire a reasonable opportunity to
provide comments to any communication from any patent office. New River shall
give reasonable consideration to any suggestions or recommendations of Shire
concerning the preparation, filing, prosecution and maintenance thereof,
including suggestions of the JIPC pursuant to the terms set forth in Sections
2.5 and 2.7.4. Promptly after the Effective Date, New River shall provide Shire
with copies of the file histories of all Licensed Patents and shall update such
file histories promptly upon receipt of any additional communications from any
patent offices and patent counsel or agents pertaining thereto. New River shall
also provide Shire with copies of any communications from any patent offices and
patent counsel or agents pertaining to any New River Collaboration Patents. New
River, at Shire’s request, shall [*] in any New River Collaboration Patent,
Licensed Patent or a continuation or divisional of either of the foregoing, the
type of application being at New River’s discretion; provided, however, New
River may refuse to [*] if New River reasonably believes, in good faith, that
[*] If the [*], New River will [*] and shall give reasonable consideration to
any suggestions or recommendations of Shire concerning [*]. The Parties shall
cooperate reasonably in the prosecution of all Patents under this Section 11.3.1
and shall share all material information relating thereto promptly after receipt
of such information. If, during the term of this Agreement, New River intends to
allow any Licensed Patent to expire or intends to otherwise abandon any Licensed
Patent, New River shall notify Shire of such intention at least sixty (60) days
prior to the date upon which such Licensed Patent shall expire or be abandoned,
and Shire shall thereupon have the right, but not the obligation, to assume
responsibility for the preparation, filing, prosecution or maintenance thereof.

 

11.3.2 Shire Responsibilities. Shire shall file, prosecute and maintain Patents
to cover Shire Inventions conceived pursuant to this Agreement or the ROW
Agreement (the “Shire Collaboration Patents”). Shire shall keep New River
informed of the status of each such Patent and shall give reasonable
consideration to any suggestions or recommendations of New River concerning the
preparation, filing, prosecution and maintenance thereof, including the
suggestions of the JIPC pursuant to the terms set forth in Sections 2.5 and
2.7.4. The Parties shall cooperate reasonably in the prosecution of all Shire
Patents under this Section 11.3.2 and shall share all material information
relating thereto promptly after receipt of such information. If, during the
Term, Shire intends to allow any Shire Patent to which New River has a license
under this Agreement to expire or intends to otherwise abandon any Shire Patent,
Shire shall notify New River of such intention at least sixty (60) days prior to
the date upon which such Shire Patent shall expire or be abandoned, and New
River shall thereupon have the right, but not the obligation, to assume
responsibility for the preparation, filing, prosecution or maintenance thereof.

 

11.3.3 Jointly Owned Patents. The responsibility for the filing, prosecution and
maintenance of Joint Collaboration Patents shall be determined by the Parties,
including conducting related interference and opposition proceedings relating
thereto, without prejudice to ownership, on behalf of both Parties based on a
good faith determination of the relative contributions of the Parties to the
Invention and the relative level of interest of the Parties in the Invention;
provided, however that the Parties may also decide not to file a Joint
Collaboration Patent for any such Joint Invention. At least ten (10) Business
Days prior to the contemplated

 

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filing, the Party responsible for such activities for a Joint Collaboration
Patent shall submit a substantially completed draft of such Joint Collaboration
Patent to the other Party for its approval. Should the agreed upon Party elect
not to prepare and/or file any such Joint Collaboration Patent, it shall (a)
provide the other Party with written notice as soon as reasonably possible after
making such election but in any event no later than twenty (20) Business Days
before the other Party would be faced with a possible loss of rights, (b) give
the other Party the right, at the other Party’s discretion, to prepare, file,
prosecute or maintain the Joint Collaboration Patent, and (c) offer reasonable
assistance in connection with such preparation, filing, prosecution or
maintenance.

 

11.3.4 Cooperation. The Parties agree to cooperate in the preparation, filing,
prosecution and maintenance of all Patents under this Section 11.3, including
obtaining and executing necessary powers of attorney and assignments by the
named inventors, providing relevant technical reports to the filing Party
concerning the Invention disclosed in such Patent, obtaining execution of such
other documents which shall be needed in the filing and prosecution of such
Patent, and, as requested, updating each other regarding the status of such
Patent, and shall cooperate with the other Party so far as reasonably necessary
with respect to furnishing all information and data in its possession reasonably
necessary to obtain or maintain such Patents.

 

11.3.5 Patent Expenses. Patent Expenses for the US Territory shall be borne [*].
Within five (5) Business Days following the end of each calendar quarter, each
Party shall deliver a report outlining its Patent Expenses for such quarter.
Within thirty (30) days following the end of each such quarter, the Party
incurring less than [*] of such expenses during the quarter shall reimburse the
other Party an amount sufficient to [*] each Party’s share of such costs.

 

11.4 Third-Party Patent Rights. Except as otherwise provided in Section 12.1
below, neither Party makes any warranty with respect to the validity, perfection
or dominance of any Patent or other proprietary right or with respect to the
absence of rights in Third Parties which may be infringed by the Manufacture or
Commercialization of any Collaboration Product. Each Party agrees to bring to
the attention of the other Party any patent or patent application it discovers,
or has discovered, and which relates to the subject matter of this Agreement.

 

11.5 Enforcement and Defense of Patents.

 

11.5.1 Infringement of Third Party Patents.

 

(a) Third Party Claims. In the event of a Third Party Claim against Shire, New
River or their respective Affiliates alleging that the making, using, importing,
selling or offering to sell a Collaboration Product infringes or will infringe
claims in any patents of a Third Party, the Party first obtaining knowledge of
such Third Party Claim shall immediately provide the other Party notice of such
Third Party Claim with the related facts in reasonable detail. Shire shall have
the first right, but not the obligation, to control such defense with respect to
the Collaboration Product with an attorney of Shire’s choice if Shire or any of
its Affiliates are named as a party to such Third Party claim and New River or
any of its Affiliates are not. In such case, New River shall have the right to
be represented by independent counsel at New River’s own expense. New River
shall have the first right, but not the obligation, to control such defense with
respect to the Collaboration Product with an attorney of New River’s choice if
New

 

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River or any of its Affiliates are named as a party to such Third Party claim
and Shire or any of its Affiliates are not. In such case, Shire shall have the
right to be represented by independent counsel at Shire’s own expense. If either
Party refuses to accept control of the defense of a Third Party Claim for which
it has the first right to control defense hereunder within [*] after receiving
or giving notice thereof, then the other Party shall have the right to defend
against such Third Party Claim. In such case, such refusing Party shall have the
right to be represented by independent counsel at its own expense. If (1) Shire
or any of its Affiliates and (2) New River or any of its Affiliates are named as
parties to such Third Party Claim, then the Parties will have the joint right,
but not the obligation, to control such defense with respect to the
Collaboration Product with an attorney of their mutual agreement. If the Parties
are unable to agree on such joint defense, then the Parties will use good faith
efforts to determine the Party to assume control of such defense and choice of
counsel. In such case, the other Party shall have the right to be represented by
independent counsel at its own expense.

 

(b) Cooperation. If a Party shall become engaged in or participate in any suit
described in this Section 11.5.1, the other Party shall cooperate, and shall
cause its and its Affiliates’ employees to cooperate, with such Party in all
reasonable respects in connection therewith, including giving testimony and
producing documents lawfully requested, and using its reasonable and diligent
efforts to make available to the other, at no cost to the other (other than
reimbursement of actually incurred, reasonable out-of-pocket travel and lodging
expenses), such employees who may be helpful with respect to such suit,
investigation, claim, interference or other proceeding.

 

11.5.2 Prosecution of Infringers.

 

(a) Notice. If either Party learns that a Third Party is infringing or allegedly
infringing any Patent within the Licensed Patents, the Shire Patents or the
Joint Collaboration Patents or if any Third Party claims that any such Patent is
invalid or unenforceable, it will promptly notify the other Party thereof
including available evidence of infringement or the claim of invalidity or
unenforceability. The Parties will cooperate and use reasonable efforts to stop
such alleged infringement or to address such claim without litigation.

 

(b) Enforcement and Defense of Licensed Patents, Joint Collaboration Patents and
Shire Collaboration Patents.

 

(i) Shire will have the first right (but not the obligation) to take the
appropriate steps to enforce or defend any Patent within the Shire Collaboration
Patents. Shire may take steps including the initiation, prosecution and control
any suit, proceeding or other legal action by counsel of its own choice. Each of
New River and Shire will bear the costs of such enforcement or defense [*].
Notwithstanding the foregoing, New River will have the right, at its own
expense, to be represented in any such action by counsel of its own choice.

 

(ii) If, pursuant to Section 11.5.2(b)(i), Shire fails to take the appropriate
steps to enforce or defend any Patent within the Shire Collaboration Patents
within [*] of the date one Party has provided notice to the other Party pursuant
to Section 11.5.2(a) of such infringement or claim, then New River will have the
right (but not the obligation), at its own expense, to bring any such suit,
action or proceeding by counsel of its own choice and Shire

 

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will have the right, at its own expense, to be represented in any such action by
counsel of its own choice.

 

(iii) New River will have the first right (but not the obligation) to take the
appropriate steps to enforce or defend any Patent within the Licensed Patents.
New River may, in any such instance, take steps including the initiation,
prosecution and control any suit, proceeding or other legal action by counsel of
its own choice. Each of New River and Shire will bear the costs of such
enforcement or defense [*]. Notwithstanding the foregoing, Shire will have the
right, at its own expense, to be represented in any such action by counsel of
its own choice.

 

(iv) If, pursuant to Section 11.5.2(b)(iii), New River fails to take the
appropriate steps to enforce or defend any Patent within the Licensed Patents
within [*] of the date one Party has provided notice to the other Party pursuant
to Section 11.5.2(a) of such infringement or claim, then Shire will have the
right (but not the obligation), at its own expense, to bring any such suit,
action or proceeding by counsel of its own choice, and New River will have the
right, at its own expense, to be represented in any such action by counsel of
its own choice.

 

(v) In the case of Joint Collaboration Patents, the Parties will decide whether
Shire or New River will have the first right (but not the obligation) to take
the appropriate steps to enforce or defend any Patent within the Joint
Collaboration Patents. The Party so selected may, in any such instance, take
steps including the initiation, prosecution and control any suit, proceeding or
other legal action by counsel of its own choice. Each of New River and Shire
will bear the costs of such enforcement or defense [*] and the Party that is not
so selected will have the right, at its own expense, to be represented in any
such action by counsel of its own choice.

 

(vi) If, pursuant to Section 11.5.2(b)(v), the Party selected fails to take the
appropriate steps to enforce or defend any Patent within the Joint Collaboration
Patents within [*] of the date one Party has provided notice to the other Party
pursuant to Section 11.5.2(a) of such infringement or claim, then the other
Party will have the right (but not the obligation), at its own expense, to bring
any such suit, action or proceeding by counsel of its own choice, and the Party
so selected will have the right, at its own expense, to be represented in any
such action by counsel of its own choice.

 

(vii) Notwithstanding Sections 11.5.2(b)(i)-(vi), Shire will have the sole
discretion whether to [*] and the sole right to [*] which may result [*] for
such Third Party. For the avoidance of doubt, New River shall not have the right
to [*] which may result in [*] for such Third Party. Any such [*], as may be
required by Law.

 

(c) Cooperation; Damages.

 

(i) If one Party brings any suit, action or proceeding under this Section
11.5.2, the other Party agrees to be joined as party plaintiff if necessary to
prosecute the suit, action or proceeding and to give the first Party reasonable
authority to file and prosecute the suit, action or proceeding; provided,
however, that neither Party will be required to transfer any

 

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right, title or interest in or to any property to the other Party or any other
party to confer standing on a Party hereunder.

 

(ii) The Party not pursuing the suit, action or proceeding hereunder will
provide reasonable assistance to the other Party, including by providing access
to relevant documents and other evidence and making its employees available,
subject to the other Party’s reimbursement of any out-of-pocket expenses
incurred by the non-enforcing or defending Party in providing such assistance.

 

(iii) Neither Party will settle or otherwise compromise any such suit, action or
proceeding in a way that adversely affects the other Party’s intellectual
property rights or its rights or interests with respect to the Collaboration
Product without such Party’s prior written consent.

 

(iv) Any settlements, damages or other monetary awards (the “Recovery”)
recovered pursuant to a suit, action or proceeding brought pursuant to Section
11.5.2 will be allocated first to the costs and expenses of the Party taking
such action, and second, to the costs and expenses (if any) of the other Party,
and any remaining amounts (if any) with respect to the US Territory will be [*].

 

11.6 Notice of Certification. New River and Shire each shall immediately give
notice to the other of any certification filed under the U.S. Drug Price
Competition and Patent Term Restoration Act of 1984 (or its foreign equivalent)
claiming that a Licensed Patent, Joint Collaboration Patent or a Shire
Collaboration Patent is invalid or that infringement of a Licensed Patent, Joint
Collaboration Patent or Shire Collaboration Patent will not arise from the
manufacture, use, offer for sale, sale or importation product by a Third Party
(“Hatch-Waxman Certification”). Nothing in this Section 11.6 shall prevent or
otherwise limit New River’s right to take any and all such actions with regard
to the matters described in this Section 11.6 as required by applicable Law.

 

11.7 Patent Term Extensions. New River and Shire shall cooperate in good faith
in gaining patent term extensions due to delay(s) in Regulatory Approval
wherever applicable to the Licensed Patents, Joint Collaboration Patents and
Shire Collaboration Patents. However, Shire shall have the sole discretion in
determining which Licensed Patent(s), Joint Collaboration Patent(s), or Shire
Collaboration Patent(s) to extend for any particular compound, composition,
article, product, process, or use.

 

11.8 Listing of Patents. Shire shall have the right to determine which of the
[*], if any, shall be submitted for inclusion in the Approved Drug Products with
Therapeutic Equivalence Evaluations pursuant to 21 U.S.C. Section 355, or any
successor Law in the United States, together with any comparable Laws in any
other country. Shire shall notify New River at least ten (10) Business Days
prior to the deadline for any such submission, and New River shall submit the
designated Patents in accordance with applicable Law. In addition, New River may
in its discretion, and to the extent permitted by Law, submit any additional [*]
that are not designated by Shire. Nothing in this Section 11.8 shall prevent or
otherwise limit New River’s right to take any and all such actions with regard
to the matters described in this Section 11.8 as required by applicable Law.

 

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11.9 Trademarks and Copyrights.

 

11.9.1 Product Trademarks. All Collaboration Products shall be marketed and sold
worldwide under and in connection with trademarks, trade dress, logos and
slogans selected in accordance with this Section 11.9.

 

11.9.2 Trademark Selection. Under the supervision of the JMC, the Parties shall
work together and seek to agree on the selection of trademarks, trade dress,
logos and slogans for a Collaboration Product for use in the US Territory. All
uses of trademark(s), trade dress, logo(s), slogan(s), and design(s) to identify
and/or in connection with the sale or marketing of a Collaboration Product shall
be reviewed by the JMC and shall comply with all applicable Laws (including,
without limitation, those Laws and regulations particularly applying to the
proper use and designation of trademarks in the applicable countries).
Trademark(s), trade dress, logo(s) and slogan(s) under which Collaboration
Products are marketed or sold (other than either Party’s corporate trademarks or
trade names, and New River’s CarrierwaveTM mark used in connection with
technology related to the Compound) shall be used only pursuant to the terms of
this Agreement to identify and in connection with the marketing of Collaboration
Products, and shall not be used by either Party to identify or in connection
with the marketing of any other products. Each Party shall have a right to prior
review and approval of all Promotional Materials incorporating any of its
trademarks, trade dress, logos or slogans sufficient to permit such Party to
maintain quality control over its trademarks, trade dress, logos and slogans.
All trademarks shall be registered by the Party owning such trademark in its
name as owner in all applicable countries. All trade dress, logos, slogans and
designs may be registered by the Party owning such trade dress, logos or slogan,
in the discretion of such Party, in its name as owner in all applicable
countries.

 

11.9.3 Ownership of Trademarks. New River will continue to own, throughout the
world, any trademarks, trade dress, logos and/or slogans, and all registrations
therefor, used or intended to be used for a Collaboration Product which New
River owns as of the Effective Date (the “New River Marks”). Shire will own,
throughout the world, all other trademarks, trade dress, logos and/or slogans,
and all registrations therefor, used or intended to be used for a Collaboration
Product (the “Shire Marks”). All goodwill attributable to a New River Mark
generated by the Commercialization of a Collaboration Product bearing a New
River Mark shall inure to the benefit of New River. All goodwill attributable to
a Shire Mark generated by the Commercialization of a Collaboration Product
bearing a Shire Mark shall inure to the benefit of Shire. If the JMC determines,
in accordance with Section 11.9.2, to use a New River Mark for the
Commercialization of a Collaboration Product in the US Territory, New River
shall grant to Shire, a non-exclusive, royalty-free license, with the right to
grant sublicenses in accordance with Section 9.3, to use such New River Mark in
the US Territory, solely in conjunction with the Commercialization of the
Collaboration Products. Shire shall comply with New River’s then-current
guidelines for trademark usage, a copy of which shall be provided to Shire from
time to time, in connection with Shire’s use of such New River Mark. New River
shall solely bear all costs of prosecution of applications to register and to
record licenses (if applicable) for, and maintenance of, each New River Mark for
each Collaboration Product; provided, however, that with respect to the US
Territory, such costs will be included in Pre-Marketing Expenses or Marketing
Management, as applicable. Shire shall solely bear all costs of prosecution of
applications to register and to record licenses (if applicable) for, and
maintenance of, each Shire

 

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Mark for each Collaboration Product; provided, however, that with respect to the
US Territory, such costs will be included in Pre-Marketing Expenses or Marketing
Management, as applicable.

 

11.9.4 Infringement of Trademarks and Copyrights. Each Party shall take all
reasonable and appropriate steps to protect, defend and maintain each trademark
and copyright owned by such Party hereunder for use in connection with a
Collaboration Product, and all registrations therefor. Each Party shall notify
the other Party promptly upon learning of any actual, alleged or threatened
infringement of a trademark, trade dress, logo, slogan, copyright, or of any
unfair trade practices, trade dress imitation, passing off of counterfeit goods,
or like offenses. Upon learning of such offenses, the Party owning such
trademark or copyright shall have the obligation to, in consultation with the
other Party, institute and control an appropriate action or proceeding to halt
the offense, unless the Parties otherwise mutually agree. All Recoveries in
connection therewith will be allocated first to the costs and expenses of the
Party taking such action, and second, to the costs and expenses (if any) of the
other Party, and any remaining amounts (if any) with respect to the US Territory
will be included in US Product Profits for the applicable calendar year. Such
other Party shall have the right to participate fully in all such actions or
proceedings. During the Term, in the event that the Party owning such trademark
or copyright does not undertake such an infringement action then, in the case
that such owning Party is New River, Shire shall be permitted to do so and all
Recoveries in connection therewith will be allocated first to the costs and
expenses of the Party taking such action, and second, to the costs and expenses
(if any) of the other Party, and any remaining amounts (if any) with respect to
the US Territory will be included in US Product Profits for the applicable
calendar year. For the purposes of this Section 11.9.4, the Party that brings
suit to enforce a given trademark or copyright shall also have the right to
control settlement of such claim; provided, however, that no settlement shall be
entered into without the written consent of the other Party, not to be
unreasonably withheld, conditioned or delayed.

 

11.9.5 Costs of Defense. All of the unrecovered costs, expenses and legal fees
(including internal costs, expenses and legal fees) incurred by the Parties in
bringing, maintaining and prosecuting any action to maintain, protect or defend
a trademark (or registration therefor) or copyright (or registration therefor)
covering or used or intended to be used in connection with the marketing or sale
of a Collaboration Product in the US Territory shall be [*].

 

11.9.6 Acknowledgment of Ownership. Each Party acknowledges the sole ownership
by the other Party and validity of all trademarks, trade dress, logos and
slogans owned by the other Party and used or intended to be used on or in
connection with the marketing or sale of a Collaboration Product. Each Party
agrees that it will not at any time during or after the Term assert or claim any
interest in or do anything which may adversely affect the validity or
enforceability of any trademark, trade dress, logo or slogan owned by the other
Party and used or intended to be used on or in connection with the marketing or
sale of a Collaboration Product. Neither Party will register, seek to register
or cause to be registered any trademarks, trade dress, logos or slogans owned by
the other Party and used or intended to be used on or in connection with the
marketing or sale of a Collaboration Product or any variation thereof, under any
law providing for registration of trademarks, service marks, trade names,
fictitious names or similar laws, as an Internet domain name, or in the name of
a corporation, partnership, limited liability company or other entity, without
the other Party’s prior written consent, and neither Party will

 

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register, seek to register or cause to be registered any copyright, nor register
or patent, seek to register or patent or caused to be registered or patented, of
the other Party, without the other Party’s prior written consent.

 

ARTICLE 12

REPRESENTATIONS AND WARRANTIES; EXCLUSIVITY

 

12.1 Representations, Warranties and Covenants.

 

12.1.1 Each of the Parties hereby represents and warrants to the other Party
that, as of the Effective Date:

 

(a) Such Party has full corporate right, power and authority to enter into this
Agreement and to perform its respective obligations under this Agreement and
that it has the right to grant the licenses and sublicenses granted pursuant to
this Agreement.

 

(b) This Agreement is a legal and valid obligation binding upon such Party and
enforceable in accordance with its terms. The execution, delivery and
performance of the Agreement by such Party does not conflict with any agreement,
instrument or understanding, oral or written, to which it is a Party or by which
it is bound, nor violate any Law of any Governmental Authority having
jurisdiction over it.

 

(c) Such Party has not granted any right to any Third Party that would conflict
with the rights granted to the other Party hereunder.

 

(d) Except for Regulatory Approvals, pricing and/or reimbursement approvals,
manufacturing approvals and/or similar approvals necessary for the Development,
Manufacture or Commercialization of the Compound and Collaboration Products,
such Party has obtained all necessary consents, approvals and authorizations of
all Government Authorities and other Persons required to be obtained by it as of
the Effective Date in connection with the execution, delivery and performance of
this Agreement; provided, that, for clarity, it is agreed that a termination by
a Party in accordance with Section 13.6 shall not be deemed to constitute
evidence of a breach of this Section 12.1.1(d).

 

12.1.2 Each Party hereby covenants to the other Party that, during the Term:

 

(a) Such Party will not grant any right to any Third Party that would conflict
with the rights granted to the other Party hereunder.

 

(b) In the course of the Development of the Compound and Collaboration Products,
such Party will not use any employee or consultant that is debarred by the FDA
or, to such Party’s knowledge, is the subject of debarment proceedings by the
FDA.

 

12.1.3 New River hereby represents and warrants to Shire that, as of the
Effective Date:

 

(a) There is no action or proceeding pending or, to New River’s knowledge,
threatened, with respect to Collaboration Products and/or the Compound,
including

 

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without limitation the conduct of any clinical trials, manufacturing activities
or other activities, or that questions the validity of this Agreement or any
action taken by New River in connection with the execution of this Agreement.
There are no material unsatisfied judgments or outstanding orders, injunctions,
decrees, stipulations or awards (whether rendered by a court, an administrative
agency or by an arbitrator) against New River with respect to Collaboration
Products and/or the Compound, including without limitation the conduct of any
clinical trials, manufacturing activities or other activities.

 

(b) IND #67482 and IND #70109 (i) have been filed in the name of New River and
are in effect; and (ii) to New River’s knowledge, constitutes all governmental
approvals, permits and licenses required by New River in connection with the
performance of clinical trials concerning the Collaboration Product or the
Compound, as such clinical trials are conducted by New River. Attached hereto as
Schedule 12.1.3(b) is a true, correct and complete list of all INDs and Drug
Approval Applications filed with a Governmental Authority relating to the
Compound or a Collaboration Product.

 

(c) Intellectual Property.

 

(i) Schedule 12.1.3(c)(i)(I) sets forth a true and complete list of all Licensed
Patents that [*]. Schedule 12.1.3(c)(i)(II) sets forth a true and complete list
of all Patents that [*]. Such schedules contain, where relevant, all application
numbers and filing dates, registration numbers and dates, jurisdiction, next
action date with description for action to be taken, and notice of whether fees
of any kind are yet to be paid.

 

(ii) New River has submitted all information related to the Compound,
Collaboration Product and/or Licensed Patents to the United States Patent and
Trademark Office required to be submitted in accordance with 37 C.F.R. 1.56,
1.97 and 1.98.

 

(iii) The Licensed Patents and Licensed Know-How constitute all intellectual
property Controlled by New River that is necessary or useful to Manufacture,
Develop, use or Commercialize the Compound and/or Collaboration Product for
ADHD, and to the knowledge of New River there is not any other intellectual
property necessary for such purposes that is not Controlled by New River.

 

(iv) Neither New River nor any of its Affiliates has received any written notice
from any Third Party challenging or questioning the right of New River to use or
license any of the Licensed Know-How or Licensed Patents.

 

(v) Each of New River and its Affiliates owns all right, title and interest in
and to, or has a license, sublicense or otherwise permission to use and license,
all of the Licensed Know-How or Licensed Patents free and clear of all
encumbrances and no person other than New River (including any current or former
employee or consultant of New River) has any proprietary, commercial or other
interest in any of the Licensed Know-How or Licensed Patents. There are no
existing agreements, options, commitments, or rights with, of or to any person
to acquire or obtain any rights to, any of the Licensed Know-How or Licensed
Patents.

 

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(vi) The use or practice of the Licensed Know-How and Licensed Patents as it has
been and is now being conducted do not, to the knowledge of New River, infringe
or misappropriate the intellectual property rights of a Third Party. Neither New
River nor any of its Affiliates has received any written notice from any person,
or has knowledge of, any actual or threatened claim or assertion that the use or
practice of the Licensed Patents or Licensed Know-How infringes or
misappropriates the intellectual property rights of a Third Party.

 

(vii) New River has the right to grant to Shire the licenses set forth in this
Agreement under the Licensed Know-How or Licensed Patents, free of any rights or
claims of any Third Party and without payment of any royalties, license fees or
other amounts to any Third Party.

 

(viii) All Patents within the Licensed Patents are in full force and effect,
valid, subsisting and, in the case of issued patents, enforceable, and
inventorship of the Licensed Patents is properly identified on such Licensed
Patents. None of the Licensed Patents is currently involved in any interference,
reissue, reexamination, or opposition proceeding, and neither New River nor any
of its Affiliates has received any written notice from any person, or has
knowledge, of such actual or threatened proceeding.

 

(ix) To New River’s knowledge, there is [*] of any of the Licensed Know-How or
Licensed Patents by [*].

 

(x) There are no actions or proceedings (including any inventorship challenges)
pending or, to the knowledge of New River, threatened with respect to any of the
Licensed Know-How, Licensed Patents, Compound or Collaboration Products nor have
any such actions or proceedings been brought or, to the knowledge of New River,
threatened during the past six (6) years, in each case which have not been
resolved without impairment of New River’s rights in and to any of the Licensed
Know-How, Licensed Patents, Compound or Collaboration Products and without the
obligation to pay any royalties or other amounts to any Third Party with respect
to the use of such technology or the sale of such products.

 

(xi) Neither New River nor any of its Affiliates has entered into any contract
(A) granting any Third Party the right to bring infringement actions with
respect to, or otherwise to enforce rights with respect to, any of the Licensed
Know-How or Licensed Patents, or (B) expressly agreeing to indemnify any Third
Party against any charge of infringement of any of the Licensed Know-How or
Licensed Patents.

 

(xii) Neither New River nor any of its Affiliates has entered into any contract
granting any Third Party the right to control the prosecution of any of the
Patents in the Licensed Patents.

 

(xiii) All current and former employees and consultants of New River and its
Affiliates who are or have been substantively involved in the design, review,
evaluation or development of the Licensed Know-How or Licensed Patents have
executed written contracts or are otherwise obligated to protect the
confidential status and value thereof

 

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and to vest in New River or its Affiliates exclusive ownership of the Licensed
Know-How or Licensed Patents.

 

(xiv) New River has made available to or provided Shire with copies of all
material information and, as requested in writing by Shire, with copies of all
books, records and data, in each case with respect to Collaboration Products
and/or the Compound.

 

(xv) All official fees, maintenance fees and annuities for the Licensed Patents
have been paid through the Effective Date.

 

(xvi) Schedule 12.1.3(c)(i)(I) and Schedule 12.1.3(c)(i)(II) set forth a true
and complete list of all registration, application, maintenance, user, or
renewal fees due within one hundred eighty (180) days after the Effective Date
in connection with the Licensed Know-How or Licensed Patents. Any necessary
registration, application, maintenance, user or renewal fees due on or prior to
the Effective Date in connection with the Licensed Know-How or Licensed Patents
have been paid in a timely manner. All applicable government requirements that
must be met on or prior to the Effective Date in connection with the Licensed
Know-How or Licensed Patents have been met in a timely manner with the relevant
Governmental Authority.

 

(d) Compliance with Law.

 

(i) New River and its Affiliates and any outsourcing company and contract
research organization to which New River or its Affiliates have subcontracted
activities in connection with Compound and Collaboration Products (the
“Contractors”) have complied with all applicable Laws, permits, governmental
licenses, registrations, approvals, concessions, franchises, authorizations,
orders, injunctions and decrees, including the Act, in the research,
Development, Manufacture and use of the Collaboration Product for ADHD and
Compound, and neither New River nor any of its Affiliates or, to the knowledge
of New River, its Contractors, has received any written notice from any
Governmental Authority claiming that any such activities as conducted by them
are not in such compliance.

 

(ii) Since January 1, 2002, no Governmental Authority has served notice on New
River or any of its Affiliates that the Licensed Know-How or Licensed Patents
were or are in violation of any Law or the subject of any investigation.

 

(iii) Since January 1, 2002, none of New River or any of its Affiliates have
received written notice from any Governmental Authority that there are any
circumstances currently existing that might reasonably be expected to lead to
any loss or refusal to renew any material governmental licenses, permits,
registrations, concessions, franchises and authorizations relating to the
Collaboration Product for ADHD, Compound or any of the Licensed Know-How or
Licensed Patents.

 

(iv) New River and its Affiliates have complied in all material respects with
all applicable Laws in connection with the preparation and submission to the FDA
of IND #67482 and #70109, and such INDs are in effect and good standing. IND
#67482 and #70109 are the only INDs that New River or any of its Affiliates has
filed with any Governmental Authority with respect to the Compound or a
Collaboration Product. New River

 

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and its Affiliates have filed with the applicable regulatory authority all
required notices, supplemental applications and annual or other reports,
including adverse experience reports, with respect to such INDs. No Drug
Approval Application has been filed with any Governmental Authority with respect
to the Compound or a Collaboration Product.

 

(v) No Governmental Authority (including the FDA) has commenced or, to New
River’s knowledge, threatened to initiate any action to reject or withdraw IND
#67482 or #70109, or commenced or, to New River’s knowledge, threatened to
initiate any action to enjoin production of the Compound or Collaboration
Product at any facility, nor has New River or any of its Affiliates or, to the
knowledge of New River, any of its Contractors, received any notice to such
effect since January 1, 2002.

 

(vi) All manufacturing operations conducted by New River and its Affiliates and
Contractors since January 1, 2002 relating to the manufacturing of the
Collaboration Product for ADHD and/or Compound have been conducted in compliance
with all Laws, including without limitation all cGMPs.

 

(vii) All Development activities conducted by New River and its Affiliates and
Contractors since January 1, 2002 relating to the Collaboration Product for ADHD
and/or Compound have been conducted in compliance with all Laws, including
without limitation all cGCPs and cGLPs.

 

(viii) New River has delivered or otherwise made available to Shire copies of
all substantive or material (A) reports of FDA Form 483 inspection observations,
(B) establishment inspection reports, (C) warning letters, and (D) other
documents that assert ongoing lack of compliance in any material respect with
any applicable laws (including those of the FDA), in each case to the extent
received by New River or any of its Affiliates or, to the knowledge of New
River, any of its Contractors from the FDA relating to a Collaboration Product
and/or Compound. Neither New River nor any of its Affiliates has received any
such reports, letters or other documents from any other Governmental Authority
relating to a Collaboration Product and/or Compound.

 

(ix) To New River’s knowledge, no employee or agent of New River or any of its
Affiliates or Contractors has made an untrue statement of a material fact to any
Governmental Authority with respect to the Collaboration Product for ADHD and/or
Compound (whether in any submission to such Governmental Authority or
otherwise), or failed to disclose a material fact required to be disclosed to
any Governmental Authority with respect to the Collaboration Product and/or
Compound.

 

(x) In the course of the Development of the Compound and Collaboration Products,
New River has not used any employee or consultant that is debarred by the FDA
or, to New River’s knowledge, is the subject of debarment proceedings by the
FDA.

 

(xi) Representatives of New River and its Affiliates have disclosed to Shire any
facts reasonably believed in good faith to be material regarding: (A)
preclinical and clinical study results and protocols for the Collaboration
Product for ADHD and/or Compound; (B) any communications to or from any
Governmental Authority with respect

 

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to the Collaboration Product for ADHD and/or Compound, including IND
submissions, any Governmental Authority minutes of meetings and telephone
conferences; (C) any Governmental Authority requests for data and studies on the
Collaboration Product for ADHD and/or Compound; and (D) adverse drug experiences
and other IND safety reports with respect to the Collaboration Product for ADHD
and/or Compound.

 

(xii) New River and its Affiliates do not have any knowledge of any preliminary
or other results from any clinical trials relating to the lack of efficacy of
the Compound or Collaboration Product in human beings.

 

For purposes of the foregoing sections, “New River” and “its Affiliates” shall
in all cases include [*]

 

12.2 Limitation on Representations or Warranties. Notwithstanding anything to
the contrary herein, neither Party will be in breach of any representation or
warranty made pursuant to this Article 12 to the extent that the Party alleged
to have so breached can demonstrate that the Party alleging such breach had, on
or prior to the Effective Date, actual knowledge of such breach of such
representation or warranty.

 

12.3 Performance by Affiliates. The Parties recognize that each may perform some
or all of its obligations under this Agreement through Affiliates; provided,
however, that each Party shall remain responsible for and be guarantor of the
performance by its Affiliates and shall cause its Affiliates to comply with the
provisions of this Agreement in connection with such performance. Each Party
hereby expressly waives any requirement that the other Party exhaust any right,
power or remedy, or proceed against an Affiliate or subcontractor, for any
obligation or performance hereunder prior to proceeding directly against such
Party. Wherever in this Agreement the Parties delegate responsibility to
Affiliates or local operating entities, the Parties agree that such entities may
not make decisions inconsistent with this Agreement, amend the terms of this
Agreement or act contrary to its terms in any way.

 

12.4 Disclaimer of Warranty. EXCEPT FOR THE EXPRESS WARRANTIES SET FORTH IN
SECTION 12.1 OF THIS AGREEMENT, NEW RIVER AND SHIRE MAKE NO REPRESENTATIONS AND
GRANT NO WARRANTIES, EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW,
BY STATUTE OR OTHERWISE, AND NEW RIVER AND SHIRE EACH SPECIFICALLY DISCLAIMS ANY
OTHER REPRESENTATIONS AND WARRANTIES, WHETHER WRITTEN OR ORAL, EXPRESS,
STATUTORY OR IMPLIED, INCLUDING ANY WARRANTY OF QUALITY, MERCHANTABILITY OR
FITNESS FOR A PARTICULAR USE OR PURPOSE OR ANY WARRANTY AS TO THE VALIDITY OF
ANY PATENTS OR THE NON-INFRINGEMENT OF ANY INTELLECTUAL PROPERTY RIGHTS OF THIRD
PARTIES.

 

12.5 Limitation of Liability. IN NO EVENT WILL EITHER PARTY BE LIABLE FOR LOST
PROFITS 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

 

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WILL NOT LIMIT EITHER PARTY’S OBLIGATIONS TO THE OTHER PARTY UNDER ARTICLE 10
AND ARTICLE 15.

 

12.6 Essential Basis. The Parties acknowledge and agree that the disclaimers,
exclusions and limitations of liability set forth in this Article 12 form an
essential basis of this Agreement, and that, absent any of such disclaimers,
exclusions or limitations of liability, the terms of this Agreement, including,
without limitation, the economic terms, would be substantially different.

 

ARTICLE 13

TERM AND TERMINATION

 

13.1 Term. This Agreement shall commence as of the Effective Date and, unless
sooner terminated as provided herein, shall continue in effect until the date on
which the Parties are no longer Developing or Commercializing any Collaboration
Product in the US Territory (the “Term”).

 

13.2 Breaches (General).

 

13.2.1 If either Party (the “Breaching Party”) shall have committed a breach of
this Agreement, the other Party (the “Notifying Party”) shall provide written
notice of such breach to the Breaching Party. For all allegations of breach
other than an allegation of Material Breach (as defined below), the Parties
hereby agree that they shall seek to resolve the matter during the notice and
cure period provided in Section 13.2.2 and may thereafter commence litigation
pursuant to Article 16.

 

13.2.2 Upon receipt of a notice of breach other than a Material Breach, the
alleged Breaching Party shall have [*] within which to cure such breach
following receipt of such notice ([*] in the event of non-payment unless such
payment obligation is being disputed in good faith). If the matter is not
resolved to the satisfaction of the Notifying Party during such cure period,
then either Party may invoke the provisions of Article 16 with respect to claims
for damages and other requests for equitable relief, but neither Party shall
have any right to terminate this Agreement for such breach.

 

13.2.3 The Parties may resort to the dispute resolution mechanisms of Article
16, and may seek all remedies in law or equity other than termination of this
Agreement, without invoking the mechanisms of Section 13.3.

 

13.3 Allegations of Material Breach.

 

13.3.1 The Parties intend that this Agreement shall survive breach, and shall
not be terminable in the event of breach, unless the breach is [*] under this
Agreement [*] to such an extent that [*] for the [*] taken as a whole under [*],
considered in the aggregate as a single transaction and as if set forth in a
single agreement (“Material Breach”). The Parties acknowledge and agree that, so
long as such breach satisfies the standard for Material Breach described in this
Section 13.3.1, a Material Breach may result from a breach of this Agreement

 

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only (irrespective of whether any breach, material or otherwise, has occurred
with respect to the ROW Agreement), the ROW Agreement only (irrespective of
whether any breach, material or otherwise, has occurred with respect to this
Agreement), or both agreements. In the event there is a dispute as to whether a
Material Breach has occurred, this Agreement and the ROW Agreement shall survive
pending a determination pursuant to Article 16 that a Material Breach has
occurred. This Section 13.3 shall apply to any allegation of Material Breach,
with consequences as set forth herein.

 

13.3.2 If a Party believes that a Material Breach has occurred, it shall give
written notice to the Breaching Party of the nature of the breach and the reason
the Notifying Party believes it is a Material Breach. The alleged Breaching
Party shall then have a period of [*] following receipt of such notice ([*] in
the event of non-payment unless such payment obligation is being disputed in
good faith) in which to cure the breach; provided, however, that if the Material
Breach is other than the payment of money and is capable of being cured but
cannot be reasonably cured in such [*] period, then the right to terminate this
Agreement and the ROW Agreement shall not arise if the allegedly Breaching Party
has (a) during such period of time submitted a plan that, if successfully
carried out, would be effective in curing such Material Breach, and has
commenced its execution of such plan, and (b) diligently pursues such plan
thereafter for a period of up to an additional [*]. Any such notice of alleged
Material Breach by the Notifying Party shall include a reasonably detailed
description of all relevant facts and circumstances demonstrating, supporting
and/or relating to each such alleged Material Breach by the Breaching Party.

 

13.3.3 If the alleged Material Breach is not cured within the cure period
specified in Section 13.3.2, the Notifying Party may give notice of termination
(“Notice of Termination For Material Breach”). If the Breaching Party agrees
that a Material Breach has occurred, then the Parties shall proceed to terminate
this Agreement and the ROW Agreement in accordance with Section 13.3.5 and
Article 14 of this Agreement and Section 12.3.5 and Article 13 of the ROW
Agreement. If the Breaching Party does not agree that a Material Breach has
occurred, then this Agreement and the ROW Agreement shall survive, and the
Parties shall continue to perform their obligations hereunder, until the issue
of whether there has been a Material Breach by the Breaching Party is resolved
in accordance with Article 16.

 

13.3.4 If the Notifying Party gives Notice of Termination For Material Breach,
and it is later determined by a court pursuant to Article 16 that in fact there
has not been a Material Breach by the Breaching Party, then this Agreement and
the ROW Agreement shall continue in full force and effect.

 

13.3.5 If the Notifying Party gives Notice of Termination For Material Breach
and this Agreement and the ROW Agreement terminate, either because such notice
is accepted by the Breaching Party or it is determined by a court pursuant to
Article 16 that there has been a Material Breach by the Breaching Party, then
the Notifying Party shall, within [*] after such determination, deliver written
notice (the “Purchase Notice”) to the Breaching Party of the purchase by the
Notifying Party of the Purchase Interest (as such term is defined below).

 

(a) The price (the “Purchase Price”) to be paid to purchase the entire
interests, rights and obligations of the Breaching Party and/or its Affiliates
under this Agreement

 

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and the ROW Agreement (the “Purchase Interest”) shall be [*], it being
understood and agreed that [*] shall be applied [*] and that all intellectual
property rights and other assets licensed or otherwise made available by the
Parties and their respective Affiliates under this Agreement and the ROW
Agreement shall be [*].

 

(b) Each Party shall, within [*] after the delivery of the Purchase Notice,
retain an internationally recognized investment banking firm to determine the
Purchase Price. Each such investment banking firm shall set forth such
determination in a written report and, on a mutually agreeable date no later
than [*] after the delivery of the Purchase Notice, submit such report to the
other Party.

 

(c) The Purchase Price shall be the amount equal to t[*]. However, if [*], a
third internationally recognized investment banking firm (which is independent
of both Parties) shall determine such fair market value by [*]. Such third
investment banking firm shall be selected by the first two investment banking
firms; provided, however, that, if the two investment banking firms are unable
to select a third investment banking firm within twenty (20) days following
determination that [*], then each of the two initial investment banking firms
shall within twenty (20) days thereafter submit the names of three
internationally recognized investment banking firms (which are independent of
both Parties) willing to act as the third investment banking firm hereunder, one
of which firms shall be selected by lot by the Parties. The cost of such third
investment banking firm shall be borne [*].

 

(d) The purchase and sale of a Purchase Interest pursuant to this Section 13.3
shall be transferred free and clear of all liens and other encumbrances and
shall be consummated at closing at the principal offices of the Notifying Party,
on a Business Day within forty-five (45) days following the final determination
of the Purchase Price, and upon at least ten (10) Business Days’ prior notice by
the Notifying Party; provided that such period shall be extended for such period
of time as shall be necessary in order to obtain requisite governmental or
regulatory approvals. At such closing, the Notifying Party shall pay the
Breaching Party the Purchase Price by wire transfer of immediately available
funds. The Parties shall execute and deliver appropriate documentation, in form
and substance that is reasonably acceptable, to effect the transfer of the
Purchased Interest and each Party further agrees to reasonably cooperate to
effect the orderly transition of any activities then being conducted by the
Breaching Party and its Affiliates pursuant to this Agreement and the ROW
Agreement.

 

(e) The rights of the Parties set forth in this Section 13.3 are not exclusive
and are in addition to any other rights or remedies available to such Party
under this Agreement or the ROW Agreement, at law or in equity.

 

13.4 Other Termination by Shire.

 

13.4.1 Shire may terminate this Agreement at will at any time prior to the first
Regulatory Approval of a Collaboration Product in the US Territory, effective
upon [*] advance written notice to New River. At any time after the date of
first Regulatory Approval of a Collaboration Product in the US Territory, Shire
may terminate this Agreement effective upon [*] advance written notice to New
River. In the event of termination under this Section 13.4.1 no payment shall be
due on account of such termination.

 

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13.4.2 In addition to Shire’s termination right pursuant to Section 13.4.1,
within [*] following receipt of the first Regulatory Approval of the first
Collaboration Product for ADHD in the US Territory, Shire may terminate at will
both this Agreement and the ROW Agreement (but not only one such agreement). If
Shire exercises its right to terminate pursuant to this Section 13.4.2, such
termination shall be effective [*] following written notice to New River, which
shall be provided to New River within the period described in the preceding
sentence. In the event of such termination:

 

(a) if such Regulatory Approval provides for a [*], then New River shall make a
one-time termination payment to Shire in the amount of $[*]; provided that such
payment shall be made by a combination, as then agreed upon by the Parties, of
the following: [*];

 

(b) if such Regulatory Approval provides for a [*] of such Collaboration Product
as [*], no payment shall be due.

 

13.5 Other Termination By New River. New River may terminate this Agreement by
[*] advance written notice to Shire [*], other than the following products: (i)
any Collaboration Product; (ii) any product marketed by or on behalf of Shire as
of the Effective Date, as set forth on Exhibit G, and any additional dosage
strengths or line extensions thereof; and (iii) those products identified by
Shire’s internal nomenclature as [*], each as described on Exhibit G, it being
understood that each such product [*]. For avoidance of doubt, New River shall
have no right to terminate this Agreement pursuant to this Section 13.5 if Shire
files for Regulatory Approval for, or Commercializes, that product identified by
Shire’s internal nomenclature as [*] or any [*] [*] as such products do not
contain a [*] formulated for [*] for the treatment or prevention of ADHD and are
therefore outside the scope of this Section 13.5. In the event of termination
under this Section 13.5, no payment shall be due by New River to Shire on
account of such termination.

 

13.6 Termination for Government Action.

 

13.6.1 During the period from the Effective Date and expiring on [*], either
Party may terminate this Agreement and the ROW Agreement upon written notice to
the other Party at any time, if during such time there is a decree, judgment,
injunction, order, or action that restricts, prevents or prohibits the
transactions contemplated by this Agreement under applicable Law; provided that
no such termination shall occur for a period of [*] following the entry of such
decree, judgment, injunction, order or action (which period shall be reduced to
[*] if [*] in the US Territory for a Collaboration Product for an ADHD
indication occurs after [*], during which period of time the Parties shall
cooperate and use reasonable commercial efforts to respond to any government
requests for information, and to contest and resist any such decree, judgment,
injunction, order or action and to have vacated, lifted, reversed, stayed or
overturned any such decree, judgment, injunction, order or action.

 

13.6.2 If such termination is effective prior to the accomplishment of the event
described in Section 7.2(a), New River shall reimburse Shire [*] of the amount
paid by Shire pursuant to Section 7.1. Such payment shall be made within one
hundred twenty (120) days

 

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following termination; provided that interest shall accrue beginning on the
thirty-first day after termination at the rate provided for in Section 8.1.

 

13.6.3 If such termination is effective after the accomplishment of the event
described in Section 7.2(a), New River shall reimburse Shire (a) [*] of the
amount paid by Shire pursuant to Section 7.1, and (b) [*] of all other amounts
paid by Shire pursuant to Section 7.2. Such payment shall be made within one
hundred twenty (120) days following termination; provided that interest shall
accrue beginning on the thirty-first day after termination at the rate provided
for in Section 8.1.

 

ARTICLE 14

EFFECTS OF TERMINATION

 

14.1 Post-Termination Activities by Shire. Without limiting any other legal or
equitable remedies that New River may have, if this Agreement is terminated in
accordance with Sections 9.8, 13.4, 13.5 or 13.6, or if this Agreement is
terminated in accordance with Section 13.3 and Shire is the Breaching Party,
then the following provisions shall apply:

 

14.1.1 Assignments. Shire will promptly (and in each case within sixty (60) days
of receipt of New River’s request) and at no cost to New River (other than the
Purchase Price, in the event of a termination pursuant to Section 13.3):

 

(a) upon New River’s request, assign to New River all of Shire’s right, title
and interest in and to any agreements between Shire and Third Parties that are
freely assignable by Shire and that relate solely to the Development or
Manufacture of any Compound or Collaboration Product in the US Territory;

 

(b) assign to New River all of Shire’s right, title and interest in and to any
Shire Marks (including any goodwill associated therewith), any registrations and
design patents for any of the foregoing and any Internet domain name
registrations for such trademarks and slogans, all to the extent solely related
to a Collaboration Product in the US Territory;

 

(c) assign to New River, to the extent freely assignable by Shire, the
management and continued performance of any clinical trials for the
Collaboration Products ongoing as of the effective date of such termination in
the US Territory;

 

(d) transfer to New River all of Shire’s right, title and interest in and to any
and all regulatory filings and Regulatory Approvals Controlled by Shire for the
Collaboration Products in the US Territory, and grant New River the right to
reference any regulatory filings and Regulatory Approvals Controlled by Shire
for the Collaboration Products elsewhere in the world for the purpose of
Developing and Commercializing Collaboration Products in the US Territory;

 

(e) to the extent that any agreement or other asset described in this Section
14.1.1 is not assignable by Shire or does not relate solely to Compound or a
Collaboration Product, then such agreement or other asset will not be assigned,
and upon the request of New River, Shire will take such steps as may be
necessary to allow New River to

 

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obtain and to enjoy the benefits of such agreement or other asset in the form of
a license or other right to the extent Shire has the right and ability to do so;
and

 

(f) provide copies of any other books, records, documents and instruments to the
extent related to Compound or Collaboration Product.

 

14.1.2 Manufacturing Activities. Shire will:

 

(a) upon New River’s request, if Shire is then Manufacturing a Collaboration
Product, supply New River with clinical and commercial quantities of such
Collaboration Product for the shorter of (i) the period until New River or its
designee has established and validated a manufacturing process for such
Collaboration Product and is approved to Manufacture clinical trial and
commercial supplies of such Collaboration Product or (ii) eighteen (18) months
from the effective date of such termination; provided, however, that New River
will [*] (as determined pursuant to Exhibit A hereof) with respect to such
Collaboration Product; and

 

(b) if Shire is then Manufacturing a Collaboration Product, transfer the
completed manufacturing process (together with any unique mold or tooling used
solely in connection therewith) for such Collaboration Product to New River or
its designee upon New River’s request and at [*] cost and expense, and shall
cooperate with New River to effect the transition of such Manufacturing
responsibilities.

 

14.1.3 License Grant. Shire agrees to grant and hereby grants to New River,
effective upon such termination of this Agreement, an exclusive, royalty-free
right and license, with the right to sublicense and authorize the grant of
further sublicenses, under any Shire Collaboration Patents and Shire’s rights
and interest in the Joint Collaboration Patents to make, have made, use, sell,
offer for sale, and import Compound or Collaboration Products affected by such
termination in the Field and in the US Territory; provided, however, that New
River will be responsible for any payments associated with the grant of any
license pursuant to the preceding sentence (including, without limitation, any
royalty or other payment obligations to an upstream licensor of any such
Patents). In addition, if any Shire Know-How or technology claimed in a Shire
Background Patent is then used in connection with the Manufacture, Development
or Commercialization of Compound or a Collaboration Product in the US Territory,
Shire agrees to grant and hereby grants to New River, effective upon such
termination of this Agreement, a non-exclusive, royalty-free right and license,
with the right to grant sublicenses, under such Shire Background Patents and
Shire Know-How, to make, have made, use, sell, offer for sale, and import
Collaboration Products in the Field and in the US Territory. Finally, Shire
agrees to grant and hereby grants to New River, effective upon such termination
of this Agreement, a non-exclusive, royalty-free right and license, with the
right to grant sublicenses, under any copyright or Shire Confidential
Information embodied in or relating to any Marketing Plan, package inserts, or
other Promotional Materials relating solely to Collaboration Products in the US
Territory.

 

14.1.4 Disclosure and Delivery. Shire will transfer to New River any Shire
Collaboration Know-How and Shire Background Know-How, to the extent then used in
connection with the Manufacture, Commercialization or Development of the
Collaboration

 

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Products; such transfer shall be effected by the delivery of documents, to the
extent such Know-How is embodied in documents, and to the extent that such
Know-How is not fully embodied in documents, Shire shall make its employees and
agents who have knowledge of such Know-How in addition to that embodied in
documents available to New River for interviews, demonstrations and training to
effect such transfer in manner sufficient to enable New River to practice such
Know-How as theretofore practiced by Shire.

 

14.1.5 Sublicensees. Each of Shire’s sublicensees with respect to any affected
Collaboration Products in the US Territory at such time will continue to have
the rights and license set forth in their sublicense agreements, subject to the
continued performance of the obligations thereunder; provided, however, that
such sublicensee agrees in writing that New River is entitled to enforce all
relevant terms and conditions of such sublicense agreement directly against such
sublicensee; and provided, further, that such sublicensee is not then in breach
of its sublicense agreement.

 

14.1.6 Disposition of Inventory. New River shall have the option, exercisable
within thirty (30) days following the effective date of such termination, to
purchase any inventory of Collaboration Products affected by such termination at
Shire’s Cost of Goods therefor. New River may exercise such option by written
notice to Shire during such thirty (30)-day period. Upon such exercise, the
Parties will establish mutually agreeable payment and delivery terms for the
sale of such inventory. If New River does not exercise such option during such
thirty (30)-day period, or if New River provides Shire with written notice of
its intention not to exercise such option, then Shire and its Affiliates and
sublicensees will be entitled, during the period ending on the last day of the
sixth (6th) full month following the effective date of such termination, to sell
any inventory of Collaboration Products affected by such termination that remain
on hand as of the effective date of the termination, so long as Shire pays to
New River the then-applicable portion of the US Product Profit, in accordance
with the terms and conditions set forth in this Agreement.

 

14.2 Post-Termination Activities by New River. Without limiting any other legal
or equitable remedies that Shire may have, if this Agreement is terminated in
accordance with Section 13.3 and New River is the Breaching Party, then the
following provisions shall apply:

 

14.2.1 Assignments. New River will promptly (and in each case within sixty (60)
days of receipt of Shire’s request) and at no cost to Shire (other than the
Purchase Price, in the event of a termination pursuant to Section 13.3):

 

(a) upon Shire’s request, assign to Shire all of New River’s right, title and
interest in and to any agreements between New River and Third Parties that are
freely assignable by New River and that relate solely to the Development or
Manufacture of any Compound or Collaboration Products;

 

(b) assign to Shire all of New River’s right, title and interest in and to any
New River Marks (including any goodwill therewith), including any registrations
and design patents for the foregoing and any Internet domain name registrations
for such trademarks and slogans, all to the extent solely related to a
Collaboration Product;

 

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(c) assign to Shire, to the extent freely assignable by New River, the
management and continued performance of any clinical trials for Collaboration
Products ongoing as of the effective date of such termination;

 

(d) transfer to Shire all of New River’s right, title and interest in and to any
and all regulatory filings and Regulatory Approvals Controlled by New River for
Collaboration Products;

 

(e) to the extent that any agreement or other asset described in this Section
14.2.1 is not assignable by New River or does not relate solely to Compound or a
Collaboration Product, then such agreement or other asset will not be assigned,
and upon the request of Shire, New River will take such steps as may be
necessary to allow Shire to obtain and to enjoy the benefits of such agreement
or other asset in the form of a license or other right to the extent New River
has the right and ability to do so; and

 

(f) provide copies of any other books, records, documents and instruments to the
extent related to Compound or Collaboration Product.

 

14.2.2 Manufacturing Activities. New River will:

 

(a) upon Shire’s request, if New River is then Manufacturing Compound or
Collaboration Product, supply Shire with clinical and commercial quantities of
such Compound or Collaboration Product for the shorter of (i) the period until
Shire or its designee has established and validated a manufacturing process for
such Compound or Collaboration Product and is approved to Manufacture clinical
trial and commercial supplies of such Compound or Collaboration Product or (ii)
eighteen (18) months from the effective date of such termination; provided,
however, that Shire will [*] (as determined pursuant to Exhibit A hereof) for
such Compound or Collaboration Product; and

 

(b) if New River is then Manufacturing Compound or Collaboration Product,
transfer the completed manufacturing process (together with any unique mold or
tooling used solely in connection therewith) for such Compound or Collaboration
Product to Shire or its designee upon Shire’s request and at [*] cost and
expense, and cooperate with Shire to effect the transition of such Manufacturing
responsibilities.

 

14.2.3 License Grant. Each license granted by New River to Shire pursuant to
Section 9.1 shall, effective upon such termination of this Agreement, become an
exclusive, perpetual, non-terminable, royalty-free right and license, with the
right to sublicense and authorize the grant of further sublicenses, and shall
include the right to Manufacture Compound.

 

14.2.4 Disclosure and Delivery. New River shall transfer to Shire any Licensed
Know-How, to the extent then used in connection with the Manufacture,
Commercialization or Development of the Collaboration Products; such transfer
shall be effected by the delivery of documents, to the extent such Know-How is
embodied in documents, and to the extent that such Know-How is not fully
embodied in documents, New River shall make its employees and agents who have
knowledge of such Know-How in addition to that embodied in documents available
to Shire for interviews, demonstrations and training to effect such transfer in
manner sufficient to enable Shire to practice such Know-How as theretofore
practiced by New River.

 

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14.2.5 Sublicensees. Each of New River’s sublicensees with respect to any
affected Collaboration Products at such time will continue to have the rights
and license set forth in their sublicense agreements, subject to the continued
performance of the obligations thereunder; provided, however, that such
sublicensee agrees in writing that Shire is entitled to enforce all relevant
terms and conditions of such sublicense agreement directly against such
sublicensee; and provided, further, that such sublicensee is not then in breach
of its sublicense agreement.

 

14.2.6 Disposition of Inventory. Shire shall have the option, exercisable within
thirty (30) days following the effective date of such termination, to purchase
any inventory of Compound or Collaboration Products at New River’s Cost of Goods
therefor. Shire may exercise such option by written notice to New River during
such thirty (30) day period. Upon such exercise, the Parties will establish
mutually agreeable payment and delivery terms for the sale of such inventory.

 

14.3 Accrued Rights. Termination of this Agreement for any reason will be
without prejudice to any rights that will have accrued to the benefit of a Party
prior to the effective date of such termination. Such termination will not
relieve a Party from obligations that are expressly indicated to survive the
termination of this Agreement.

 

14.4 Confidential Information. Any Confidential Information assigned pursuant to
this Article 14 by the non-terminating Party shall thereafter be considered
Confidential Information of the terminating Party and may be used by the
terminating Party without regard to the restrictions otherwise imposed by
Article 10.

 

14.5 Survival. The following Articles and Sections, together with any
definitions used or exhibits referenced therein, will survive any termination or
expiration of this Agreement: Sections 3.9 (to the extent required by Law),
4.8.3, 4.8.4, 4.9.8, 4.9.9, 8.6, 11.1, 11.9.3, 11.9.6, 12.4, 12.5, 12.6, 13.3.5,
16.2, and 16.4, and Articles 10, 14, 15 (as to activities arising prior to the
termination), and 17.

 

14.6 Liability Following Termination. In the event that either Party has rights
to a Collaboration Product following termination of this Agreement, such Party
shall be solely responsible for all liabilities associated with such
Collaboration Product arising after the effectiveness of such termination.

 

ARTICLE 15

INDEMNIFICATION; INSURANCE

 

15.1 Indemnification.

 

15.1.1 Indemnification by Shire. Shire hereby agrees to save, defend and hold
New River, its Affiliates, and their respective directors, agents and employees
harmless from and against any and all Losses arising in connection with any and
all charges, complaints, actions, suits, proceedings, hearings, investigations,
claims, demands, judgments, orders, decrees, stipulations or injunctions by a
Third Party (each a “Third Party Claim”) resulting directly from [*] by [*] of
any [*] pursuant to this Agreement, [*] the [*] by [*] or their [*] in [*] under
this

 

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Agreement, [*] in connection with [*] hereunder; in each case except to the
extent that such Losses result from the negligence or willful misconduct of New
River.

 

15.1.2 Indemnification by New River. New River hereby agrees to save, defend and
hold Shire, its Affiliates, and their respective directors, agents and employees
harmless from and against any and all Losses arising in connection with any and
all Third Party Claims resulting directly from [*] by [*] of any [*] the [*] by
[*] or their [*] in [*] under this Agreement, or [*] in connection with the [*]
hereunder; in each case except to the extent that such Losses result from the
negligence or willful misconduct of Shire.

 

15.1.3 The rights of indemnification under this Section 15.1 shall be subject to
the provisions of Sections 15.2 through 15.8 and Section 4.9.9.

 

15.2 Notice of Claim. All indemnification claims in respect of any indemnitee
seeking indemnity under Section 15.1 (collectively, the “Indemnitees” and each
an “Indemnitee”) will be made solely by the corresponding Party (the
“Indemnified Party”). The Indemnified Party will give the indemnifying Party
(the “Indemnifying Party”) prompt written notice (an “Indemnification Claim
Notice”) of any Losses or the discovery of any fact upon which such Indemnified
Party intends to base a request for indemnification under Section 15.1, but in
no event will the Indemnifying Party be liable for any Losses that result from
any delay in providing such notice which materially prejudices the defense of
such Third Party Claim. Each Indemnification Claim Notice must contain a
description of the claim and the nature and amount of such Loss (to the extent
that the nature and amount of such Loss are known at such time). Together with
the Indemnification Claim Notice, the Indemnified Party will furnish promptly to
the Indemnifying Party copies of all notices and documents (including court
papers) received by any Indemnitee in connection with the Third Party Claim. The
Indemnifying Party shall not be obligated to indemnify the Indemnified Party to
the extent any admission or statement made by the Indemnified Party materially
prejudices the defense of such Third Party Claim.

 

15.3 Control of Defense. At its option, the Indemnifying Party may assume the
defense of any Third Party Claim subject to indemnification as provided for in
Sections 15.1.1 and 15.1.2 by giving written notice to the Indemnified Party
within [*] after the Indemnifying Party’s receipt of an Indemnification Claim
Notice. Upon assuming the defense of a Third Party Claim, the Indemnifying Party
may appoint as lead counsel in the defense of the Third Party Claim any legal
counsel it selects. Should the Indemnifying Party assume the defense of a Third
Party Claim, the Indemnifying Party will not be liable to the Indemnified Party
or any other Indemnitee for any legal expenses subsequently incurred by such
Indemnified Party or other Indemnitee in connection with the analysis, defense
or settlement of the Third Party Claim.

 

15.4 Right to Participate in Defense. Without limiting Section 15.3, any
Indemnitee will be entitled to participate in, but not control, the defense of a
Third Party Claim for which it has sought indemnification hereunder and to
employ counsel of its choice for such purpose; provided, however, that such
employment will be at the Indemnitee’s own expense unless (a) the employment
thereof has been specifically authorized by the Indemnifying Party in writing,
or (b) the Indemnifying Party has failed to assume the defense and employ
counsel in accordance with Section 15.3 (in which case the Indemnified Party
will control the defense).

 

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15.5 Settlement. With respect to any Losses relating solely to the payment of
money damages in connection with a Third Party Claim and that will not result in
the Indemnitee’s becoming subject to injunctive or other relief or otherwise
adversely affect the business of the Indemnitee in any manner, and as to which
the Indemnifying Party will have acknowledged in writing the obligation to
indemnify the Indemnitee hereunder, the Indemnifying Party will have the sole
right to consent to the entry of any judgment, enter into any settlement or
otherwise dispose of such Loss, on such terms as the Indemnifying Party, in its
reasonable discretion, will deem appropriate (provided, however that such terms
shall include a complete and unconditional release of the Indemnified Party from
all liability with respect thereto), and will transfer to the Indemnified Party
all amounts which said Indemnified Party will be liable to pay prior to the time
of the entry of judgment. With respect to all other Losses in connection with
Third Party Claims, where the Indemnifying Party has assumed the defense of the
Third Party Claim in accordance with Section 15.3, the Indemnifying Party will
have authority to consent to the entry of any judgment, enter into any
settlement or otherwise dispose of such Loss provided it obtains the prior
written consent of the Indemnified Party (which consent will be at the
Indemnified Party’s reasonable discretion). The Indemnifying Party that has
assumed the defense of the Third Party Claim in accordance with Section 15.3
will not be liable for any settlement or other disposition of a Loss by an
Indemnitee that is reached without the written consent of such Indemnifying
Party. Regardless of whether the Indemnifying Party chooses to defend or
prosecute any Third Party Claim, no Indemnitee will admit any liability with
respect to, or settle, compromise or discharge, any Third Party Claim without
first offering to the Indemnifying Party the opportunity to assume the defense
of the Third Party Claim in accordance with Section 15.3.

 

15.6 Cooperation. If the Indemnifying Party chooses to defend or prosecute any
Third Party Claim, the Indemnified Party will, and will cause each other
Indemnitee to, cooperate in the defense or prosecution thereof and will furnish
such records, information and testimony, provide such witnesses and attend such
conferences, discovery proceedings, hearings, trials and appeals as may be
reasonably requested in connection with such Third Party Claim. Such cooperation
will include access during normal business hours afforded to the Indemnifying
Party to, and reasonable retention by the Indemnified Party of, records and
information that are reasonably relevant to such Third Party Claim, and making
Indemnitees and other employees and agents available on a mutually convenient
basis to provide additional information and explanation of any material provided
hereunder, and the Indemnifying Party will reimburse the Indemnified Party for
all its reasonable out-of-pocket expenses incurred in connection with such
cooperation.

 

15.7 Expenses of the Indemnified Party. Except as provided above, the reasonable
and verifiable costs and expenses, including fees and disbursements of counsel,
incurred by the Indemnified Party in connection with any Third Party Claim will
be reimbursed on a calendar quarter basis by the Indemnifying Party, without
prejudice to the Indemnifying Party’s right to contest the Indemnified Party’s
right to indemnification and subject to refund in the event the Indemnifying
Party is ultimately held not to be obligated to indemnify the Indemnified Party.

 

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15.8 Product Claims.

 

15.8.1 [*] shall be solely responsible for all Losses from Third Party Claims
resulting directly from either [*] the [*] of the [*] by [*] to the [*] the [*]
of the [*] by [*] (including [*].

 

15.8.2 Notwithstanding Sections 15.1.1 and 15.1.2, but subject to Section
15.8.1, [*] shall be responsible for Losses [*] from [*] from the [*] of [*]
(including, without limitation, [*] to any [*] or any [*] other than [*]), and
[*] from [*] of the [*] any [*] to t[*]; in each case to the extent such claim
arises, directly or indirectly, out of activities related to the US Territory
(each, a “Product Claim”). All Product Claims shall be [*].

 

15.8.3 Each Party shall give the other prompt written notice of any Product
Claim (actual or potential), but the omission of such notice shall not relieve
either Party from its obligations under this Section 15.8, except to the extent
the other Party can establish actual prejudice and direct damages as a result
thereof. [*] shall assume the lead role in the defense of such Product Claim;
provided, however, that all costs and expenses of such defense shall be [*]. [*]
shall consult with [*] on all material aspects of, and shall obtain the prior
written consent of [*] (such consent not to be unreasonably withheld, refused,
conditioned or delayed) in respect of any material decisions to be taken with
regard to, the defense, including without limitation settlement of such Product
Claim, and [*] shall have a full opportunity to participate in decision-making
process with respect to the strategy of such defense, and the Parties shall
cooperate fully with each other in connection therewith. [*] shall also have the
right to participate in the defense of any Product Claim utilizing attorneys of
its choice, at its own expense. In furtherance of the Parties’ cooperation, [*]
will consult with [*] regarding strategic decisions, including without
limitation the retention of counsel and defense of each Product Claim. [*] will
otherwise keep [*] fully informed of the status and progress of the defense and
any settlement discussions concerning the Product Claim.

 

15.9 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 law applicable 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 biotechnology/pharmaceutical industry
generally for parties similarly situated. It is understood that such insurance
will not be construed to limit a Party’s liability with respect to its
indemnification obligations under this Article 15. 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 Article 15. Such certificate will provide that such insurance will
not expire or be cancelled or modified without at least thirty (30) days’ prior
notice to the other Party.

 

15.10 Guaranty. In consideration of the rights granted to Shire under this
Agreement, and to induce New River to enter into this Agreement, Shire
Pharmaceuticals Group PLC hereby unconditionally guarantees in favor of New
River the full payment and performance by Shire of all obligations of Shire
under this Agreement, in accordance with the terms and conditions of this
Agreement, including any applicable notice or cure periods. This guaranty shall
be enforceable after the failure by Shire to perform any obligation it may have
under this Agreement in accordance with its terms, and shall be effective
regardless of the solvency or insolvency of Shire

 

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at any time, the extension or modification of the obligations of this Agreement
by operation of law, or the subsequent reorganization, merger, consolidation or
other restructuring of Shire. Shire Pharmaceuticals Group PLC hereby expressly
waives any requirement that New River exhaust any right, power or remedy under
Article 16, or proceed against any other Shire entity under Article 16, for any
obligation or performance hereunder prior to proceeding directly against Shire
Pharmaceuticals Group PLC under this Section 15.10.

 

ARTICLE 16

DISPUTE RESOLUTION

 

16.1 Disputes. For all matters other than those delegated to the JDC, JMC or JSC
under this Agreement, the Parties hereby agree that the dispute shall be
referred to a senior executive of New River and a senior executive of Shire (the
“Representatives”). If any such matter has not been resolved within [*] of such
referral to the Representatives either Party may invoke the provisions of
Section 16.2 for such dispute. No dispute resolution procedure set forth in this
Agreement shall be construed as an agreement to arbitrate under any federal or
state arbitration law, including but not limited to the Federal Arbitration Act,
and shall not deprive a court of competent jurisdiction from resolving any
dispute arising under, or related to, this Agreement. In the event of any
dispute between the Parties arising in connection with Article 11 of this
Agreement, the Parties agree that the dispute resolution described under this
Article 16 will be conducted with sufficient dispatch to prevent loss of patent
rights in the disputed subject matter.

 

16.2 Litigation. Any dispute that is not resolved as provided in the preceding
Section 16.1, whether before or after termination of this Agreement, may be
submitted by either Party only to any court of competent jurisdiction in the
United States.

 

16.3 Injunctive Relief. Notwithstanding anything to the contrary in this
Agreement, either Party will have the right to seek temporary injunctive relief
in any court of competent jurisdiction as may be available to such Party under
the laws and rules applicable in such jurisdiction with respect to any matters
arising out of the other Party’s performance of its obligations under this
Agreement.

 

16.4 Governing Law. Resolution of all disputes arising out of or related to this
Agreement or the performance, enforcement, breach or termination of this
Agreement and any remedies relating thereto, shall be governed by and construed
under the substantive laws of the State of New York, without regard to conflicts
of law rules that would provide for application of the law of a jurisdiction
outside New York.

 

ARTICLE 17

MISCELLANEOUS

 

17.1 Entire Agreement; Amendment. This Agreement, together with the ROW
Agreement, including the exhibits attached hereto and thereto (each of which is
hereby and thereby incorporated herein and therein by reference), sets forth the
complete, final and exclusive agreement and all the covenants, promises,
agreements, warranties, representations, conditions and understandings between
the Parties hereto and supersedes and terminates all prior

 

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agreements (including the January Agreement) and understandings between the
Parties, except for the Existing NDA, which will continue to govern the
obligations of the Parties with respect to information disclosed thereunder with
respect to periods prior to the Effective Date, and the Material Transfer
Agreement between Shire Pharmaceuticals Inc. and New River dated January 7,
2005. There are no covenants, promises, agreements, warranties, representations,
conditions or understandings, either oral or written, between the Parties other
than as are set forth herein. No subsequent alteration, amendment, change or
addition to this Agreement shall be binding upon the Parties unless reduced to
writing and signed by an authorized officer of each Party. For the avoidance of
doubt, the Parties agree that all covenants, promises, agreements, warranties,
representations, conditions, and understandings set forth herein are made and
deemed effective as of the Effective Date, notwithstanding the execution of this
Agreement and the ROW Agreement, and that the execution of this Agreement and
the ROW Agreement shall not constitute a waiver of any right or claim of either
Party as of the Effective Date.

 

17.2 Force Majeure. Each Party shall be excused from the performance of its
obligations under this Agreement to the extent that such performance is
prevented by force majeure and the nonperforming Party promptly provides notice
of the prevention to the other Party. Such excuse shall be continued so long as
the condition constituting force majeure continues and the nonperforming Party
takes reasonable efforts to remove the condition. For purposes of this
Agreement, force majeure shall include conditions beyond the control of the
Parties, including without limitation, an act of God, voluntary or involuntary
compliance with any regulation, law or order of any government, war, civil
commotion, labor strike or lock-out, epidemic, failure or default of public
utilities or common carriers, destruction of production facilities or materials
by fire, earthquake, storm or like catastrophe; provided, however, the payment
of invoices due and owing hereunder shall not be delayed by the payer because of
a force majeure affecting the payer, unless such force majeure specifically
precludes the payment process.

 

17.3 Notices. All notices or other communications that are required or permitted
under this Agreement will be in writing and delivered personally, sent by
facsimile (and promptly confirmed by personal delivery or overnight courier as
provided in this Agreement), or sent by internationally-recognized overnight
courier to the addresses below. Any such communication will be deemed to have
been given (a) when delivered, if personally delivered or sent by facsimile on a
Business Day (so long as promptly confirmed by personal delivery or overnight
courier as provided in this Agreement), and (b) on the second Business Day after
dispatch, if sent by internationally-recognized overnight courier. Unless
otherwise specified in writing, the mailing addresses of the Parties shall be as
described below.

 

For New River:    New River Pharmaceuticals Inc.      The Governor Tyler     
1881 Grove Avenue      Radford, VA 24141      Phone: (540) 633-7978      Fax:
(540) 633-7939      Attention: President

 

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with a copy to:    Cooley Godward LLP      5 Palo Alto Square      3000 El
Camino Real      Palo Alto, CA 94306-2155      Phone: (650) 843-5000      Fax:
(650) 849-7400      Attention: Robert L. Jones For Shire:    Shire
Pharmaceuticals Group plc      Hampshire International Business Park     
Chineham, Basingstoke      Hampshire, RG24 8EP      ENGLAND      Fax: 011 44 125
689 4710      Attention: General Counsel      Shire Pharmaceuticals      725
Chesterbrook Boulevard      Wayne, Pennsylvania 19087-5637      Fax: (484)
595-8163      Attention: General Counsel with a copy to:    Morgan, Lewis &
Bockius LLP      502 Carnegie Center      Princeton, NJ 08540      Fax: (609)
919-6701      Attention: Randall B. Sunberg

 

17.4 Independent Contractors. In making and performing this Agreement, Shire and
New River shall act at all times as independent contractors and nothing
contained in this Agreement shall be construed or implied for any purpose to
create an agency, partnership, limited partnership, joint venture or employer
and employee relationship between Shire and New River and this Agreement shall
not be construed to suggest otherwise. At no time shall one Party make
commitments or incur any charges or expenses for or in the name of the other
Party. Except as otherwise provided in this Agreement, each Party shall be
solely responsible for its own costs and expenses associated with this
Agreement.

 

17.5 Non-Solicitation. From and after the Effective Date until the [*] the
termination or expiration of this Agreement, neither Party shall, and shall
cause each of its Affiliates not to, directly or indirectly, without the other
Party’s prior written consent, solicit the employment of any employee (or former
employee bound by a non-competition obligation) of the other Party or its
Affiliates with whom it has come in contact in conducting activities under this
Agreement; provided, however, that the foregoing provisions shall not apply to
(a) a general advertisement or solicitation program that is not specifically
targeted at such persons or (b) the solicitation of any employee after such time
as such employee’s employment has been terminated by the other Party or its
Affiliate.

 

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17.6 Maintenance of Records. Each Party shall keep and maintain all records
required by Law with respect to Products and shall make copies of such records
available to the other Party upon reasonable request.

 

17.7 United States Dollars. References in this Agreement to “Dollars” or “$”
shall mean the legal tender of the United States of America.

 

17.8 No Strict Construction. This Agreement has been prepared jointly and shall
not be strictly construed against either Party.

 

17.9 Assignment. Neither Party will sell, transfer, assign, delegate, pledge or
otherwise dispose of, whether voluntarily, involuntarily, by operation of Law or
otherwise, this Agreement or any of its rights or obligations under this
Agreement without the prior written consent of the other Party (which consent
may be granted, withheld or conditioned at such other Party’s sole and absolute
discretion); provided, however, that either Party may assign or transfer this
Agreement or any of its rights or obligations under this Agreement without the
consent of the other Party (a) to any Affiliate of such 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. The assigning Party (unless it is not the
surviving entity) will remain jointly and severally liable with, and will
guarantee the performance of, the relevant Affiliate or Third Party assignee
under this Agreement, and the relevant Affiliate assignee, Third Party assignee
or surviving entity will assume in writing all of the assigning Party’s
obligations under this Agreement. Any purported assignment or transfer in
violation of this Section 17.9 will be void ab initio and of no force or effect.
Upon any such assignment by New River pursuant to clause (b) of this Section
17.9 to a Third Party with a product that has received Regulatory Approval and
that competes with any Collaboration Product, any and all ongoing and future
Co-Promotion rights and activities of New River (and any such New River
assignee) pursuant to Article 5 hereof or otherwise with respect to the
applicable Collaboration Product shall automatically terminate and be of no
further force and effect if such Third Party does not divest of such competing
product.

 

17.10 Counterparts. This Agreement may be executed in two counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument. Signatures provided by facsimile transmission shall
be deemed to be original signatures.

 

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

 

17.12 Severability. If any one or more of the provisions of this Agreement is
held to be invalid or unenforceable by any court of competent jurisdiction from
which no appeal can be or is taken, the provision shall be considered severed
from this Agreement and shall not serve to invalidate any remaining provisions
hereof. The Parties shall make a good faith effort to replace any invalid or
unenforceable provision with a valid and enforceable one such that the
objectives contemplated by the Parties when entering this Agreement may be
realized.

 

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17.13 Ambiguities. Ambiguities, if any, in this Agreement shall not be construed
against any Party, irrespective of which Party may be deemed to have authored
the ambiguous provision.

 

17.14 Headings. The headings for each article and section in this Agreement have
been inserted for convenience of reference only and are not intended to limit or
expand on the meaning of the language contained in the particular article or
section.

 

17.15 No Waiver. Any delay in enforcing a Party’s rights under this Agreement or
any waiver as to a particular default or other matter shall not constitute a
waiver of such Party’s rights to the future enforcement of its rights under this
Agreement, excepting only as to an express written and signed waiver as to a
particular matter for a particular period of time.

 

[Signature Page Follows.]

 

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IN WITNESS WHEREOF, the Parties have executed this United States Collaboration
Agreement in duplicate originals by their proper officers as of the date first
written above.

 

NEW RIVER PHARMACEUTICALS INC.       SHIRE LLC

By:

 

/s/ Randal J. Kirk

     

By:

 

/s/ Matthew Emmens

   

Randal J. Kirk

         

Name:

 

Matthew Emmens

   

Chief Executive Officer

         

Title:

 

CEO

        SHIRE PHARMACEUTICALS GROUP PLC            

By:

 

/s/ Matthew Emmens

               

Name:

 

Matthew Emmens

               

Title:

 

CEO

 

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

 

EXHIBIT A

 

DETERMINATION OF CERTAIN ACCOUNTING TERMS

 

Upon the request of either Party from time to time, each Party will reasonably
consider suggestions from the other Party to review and clarify and possibly
expand any of the definitions in this Exhibit A or any of the financial terms
defined in Article 1, including financial terms whose definition is referred to
in the table at the end of Article 1; provided that no changes shall be made
without the written consent of both Parties.

 

1. COST OF GOODS SOLD

 

The provisions of this section shall govern the determination of the cost of a
unit of Compound or Collaboration Product. The accumulated costs of such unit as
determined hereunder shall be referred to as “Cost of Goods.” When such unit is
sold or transferred to Shire, in the case of New River, or to a Third Party, in
the case of Shire, the Cost of Goods of such unit shall become the unit’s Cost
of Goods Sold, subject to the selling Party’s inventory flow methods adopted.

 

  1.1. New River’s Cost of Goods. If the Manufacture of Compound and/or
Collaboration Product is performed, in any part, by one or more Third Party
Manufacturer(s) on behalf of New River, New River’s Cost of Goods shall equal
[*].

 

  1.2. Shire’s Cost of Goods. Relating to Collaboration Product transferred to
it from New River, Shire’s Cost of Goods shall equal [*].

 

  1.3. Compound and/or Collaboration Product Manufactured by a Party. If the
Manufacture of Compound and/or Collaboration Product is performed directly by a
Party, the Party conducting such activities may propose to the other Party a
methodology to determine the Cost of Goods pursuant to a cost accounting system
based on standard costs, and the Parties shall negotiate in good faith to agree
upon such methodology. The Parties agree and acknowledge that, if New River
undertakes to Manufacture Compound and/or Collaboration Product directly, [*] by
the Parties in determining New River’s Cost of Goods. Similarly, if Shire
undertakes to Manufacture Collaboration Product directly (pursuant to Shire’s
rights under the Agreement), [*] by the Parties in determining Shire’s Cost of
Goods.

 

  1.4.

Cost Adjustments. If any adjustment to New River’s Cost of Goods of a particular
quantity of Compound and/or Collaboration Product arises by way of any
adjustment to New River’s actual costs incurred and payable to a Third Party
Manufacturer subsequent to the transfer of such quantity to Shire, New River
shall promptly notify Shire of such adjustment and the

 

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

 

Parties shall reflect such adjustment for all applicable purposes under this
Agreement.

 

2. MARKETING EXPENSES

 

“Marketing Expenses” shall be the sum of Marketing Management, Market and
Consumer Research, Advertising, Trade Promotion, Detailing Expenses and
Education Expenses (as each is described below), and all other costs as
subsequently may agreed by the Parties in writing that are attributable to the
sale, promotion or marketing of a Collaboration Product, in all cases to the
extent attributable to the US Territory and the Field.

 

“Marketing Management” shall include [*].

 

“Market and Consumer Research” shall include [*].

 

“Advertising” shall mean [*]

 

“Trade Promotion” shall include [*]

 

“Detailing Expenses” shall include [*].

 

“Education” shall include [*].

 

3. DISTRIBUTION EXPENSES

 

“Distribution Expenses” shall be [*]; provided, that such Distribution Expenses
shall not include an allowance or consideration for freight or other expenses of
distributing Collaboration Products to the extent that such expenses are
included as deductions from the Invoiced Amount in determining Net Sales under
this Agreement.

 

4. REGULATORY EXPENSES

 

“Regulatory Expenses” shall means all costs incurred to comply with and to
maintain all Regulatory Approvals and all regulatory agencies, including FDA
user and other fees, reporting, and other regulatory affairs activities,
including post-marketing safety surveillance and reporting.

 

5. ALLOCATION OF COSTS.

 

Except as it relates to appropriately allocating an item of expense or cost to
more than one category of expense or cost under this Agreement, no item of
expense or cost shall be treated as being a part of more than one category of
expense or cost under this Agreement.

 

As defined above, generally, Marketing Expenses include [*] related to the
Marketing of Collaboration Product.

 

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

 

EXHIBIT B

 

CALCULATION OF US PRODUCT PROFIT

SHARE FOR SCHEDULE II CLASSIFICATION

 

[*]

 

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

 

EXHIBIT C

 

INITIAL DEVELOPMENT PLAN

 

New River Pharmaceuticals Inc.

Initial NRP104 Development Plan (Pediatric)

 

[*]

 

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

 

EXHIBIT D

 

ADDITIONAL SUPPLY TERMS

 

The following sets forth an outline of the principal terms of a supply agreement
(the “Supply Agreement”) to be negotiated pursuant to Section 6.4 of the United
States Collaboration Agreement. In each case, the terms hereof and of the Supply
Agreement will be subject to the Parties’ rights and obligations under the
United States Collaboration Agreement.

 

1. Delivery. Compound or Collaboration Product supplied by New River to Shire
shall be delivered to a facility designated by Shire and otherwise in accordance
with the applicable Third Party Manufacturer Agreement.

 

2. Shortage of Materials.

 

  (a) In the event that the materials and/or resources required to manufacture
and deliver Compound or Collaboration Product to Shire in a timely manner are,
or are reasonably anticipated to become, in short supply such that New River may
be unable to provide Shire with the quantities of Compound or Collaboration
Product forecast by Shire under the Supply Agreement, New River shall notify
Shire of such shortage as promptly as practicable. If New River so notifies
Shire, New River and Shire shall promptly meet to discuss how to address the
potential shortage.

 

  (b) In the event that New River, at any time, has any information indicating
that it may not be able to supply Shire with all forecasted or ordered
quantities of Compound or Collaboration Product (whether or not New River may be
at fault), New River shall immediately provide Shire a written notice to that
effect.

 

3. Quality Assurance. The Parties shall enter into a Quality Agreement (the
“Quality Agreement”) which shall set forth certain obligations of each Party
regarding the manufacture and supply of Compound or Collaboration Product. As
more specifically set forth in the Quality Agreement, New River shall be
responsible for all aspects of its supply chain regarding the Compound or
Collaboration Product, including without limitation quality control, quality
assurance, release testing and stability testing.

 

4. Specifications. The specifications for Compound or Collaboration Product,
including the necessary documentation, certificates of analysis and test
results, will be established according to the procedures set forth in the
Collaboration Agreement.

 

5. Location of Manufacturing. [*]. Should New River desire to change any of the
manufacturing sites for Compound or Collaboration Product, or any component
thereof, to a site other than those designated in the applicable Regulatory
Approval, New River shall notify Shire in writing and the Parties shall
thereafter meet to discuss the potential consequences of such a change. [*].

 

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

6. Back-Up Manufacturing Rights. If New River fails to supply at least [*] of
Shire’s requirements for a Collaboration Product on a rolling [*] (a “Failure to
Supply”), then Shire may, by providing written notice within [*] of the
occurrence of such Failure to Supply, elect to assume manufacturing of such
Collaboration Product. If Shire elects to assume the manufacturing of a
Collaboration Product (or if Shire is a back-up manufacturer pursuant to Section
6.3), the following provisions shall be applicable:

 

  (a) Transfer of Manufacturing Technology. New River, [*], shall be responsible
for providing Shire with the documentation, know-how and technical assistance
necessary for the successful implementation of the manufacturing process at a
location to be designated by Shire. To the extent practicable, New River shall
continue to supply Shire with its needs of Collaboration Product under the terms
of the Supply Agreement until Shire is capable of doing so.

 

  (b) Documentation to be Provided by New River. In particular, in connection
with the transfer of the manufacturing technology for a Collaboration Product,
New River shall provide the following to Shire:

 

  (i) Copies of [*] related to manufacturing the Collaboration Product;

 

  (ii) A list of all [*] in the production of the Collaboration Product;

 

  (iii) Copies of all [*], for the Collaboration Product;

 

  (iv) Copies of all [*];

 

  (v) All necessary [*] necessary to manufacture the Collaboration Product and
copies of any [*]; and

 

  (vi) Such other documentation as the Parties may agree.

 

  (c) Audit of New River Procedures. The Supply Agreement will contain
reasonable and customary provisions allowing Shire to inspect and audit those
portions of the sites at which the Collaboration Product is manufactured in
connection with the transfer of manufacturing technology for a particular
Collaboration Product. Any information obtained by Shire through such
inspections and audits or reviews of documentation shall be treated as
confidential information of New River, subject to the confidentiality
obligations under Article 10.

 

  (d) Access to New River Personnel. New River shall make available to Shire,
for a reasonable period of time, all manufacturing and operations [*] necessary
to support the transfer of the manufacturing technology to Shire, including the
[*] for the validation and qualification of the transferred manufacturing
protocol. These [*] in the implementation of the manufacturing technology until
all Installation Qualification, Operation Qualification and Process
Qualification procedures have been completed successfully.

 

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

7. Forecasts. Following the execution of the Supply Agreement, Shire will give
to New River a [*] rolling forecast of Shire’s estimated monthly requirements of
Compound or Collaboration Product. The first [*] of the forecast shall be
binding and the remainder shall be a good faith estimate of Shire’s
requirements. However, for each of the [*] in each such forecast, although the
quantities forecast may exceed [*], the supply obligations of New River shall
not exceed [*] of the amount forecast for such month in the previous forecast.
Shire will provide New River with monthly binding purchase orders for Compound
or Collaboration Product in accordance with the binding portion of the rolling
forecast.

 

8. Quality Complaints. New River shall be primarily responsible for handling
product quality complaints related to Compound or Collaboration Product. Each
Party shall promptly advise the other of any such quality complaints with
respect to Compound or Collaboration Product.

 

9. Representations and Warranties. New River shall make, and shall cause its
Affiliates to make, representations and warranties regarding the Compound or
Collaboration Product supplied under the Supply Agreement, including, without
limitation, the following representations and warranties:

 

  (a) All Compound or Collaboration Product shall (i) be manufactured in
accordance with the then-current good manufacturing practices of all applicable
Regulatory Authorities in countries reasonably designated by Shire from time to
time, and all other applicable laws, at the time of delivery of Compound or
Collaboration Product, (ii) comply with the specifications at the time of
delivery.

 

In addition, for purposes of avoiding prosecution under the Act only, New River
will guarantee that any Compound or Collaboration Product delivered under the
Supply Agreement (i) shall not be adulterated or misbranded within the meaning
of the Act and applicable foreign equivalents at the time of delivery to Shire,
and (ii) is not an article that may not, under the Act (or applicable foreign
equivalents), be introduced into interstate commerce.

 

10. Covenants. New River shall make, and shall cause its Affiliates to make,
covenants relating to Compound or Collaboration Product supplied under the
Supply Agreement, including, without limitation, the following covenants:

 

  (a) New River shall, and require its Affiliates and Third Party contract
manufacturers, if any, to maintain all regulatory and governmental permits,
licenses and approvals that may be necessary to manufacture and ship Compound or
Collaboration Product.

 

  (b) New River shall advise Shire of any information that arises out of New
River’s or its Affiliates’ or Third Party contract manufacturers’ activities of
which it is aware, that have adverse regulatory compliance and/or reporting
consequences concerning Compound or Collaboration Product.

 

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

  (c) New River shall promptly advise Shire of any requests by any Regulatory
Authority for inspections at the premises of New River or its Affiliates or
Third Party contract manufacturers, with respect to Compound or Collaboration
Product.

 

  (d) In the event New River or its Affiliates or Third Party contract
manufacturers are inspected by any Regulatory Authority relating to Compound or
Collaboration Product, [*] New River shall promptly notify Shire of any alleged
violations or deficiencies relating to a facility at which Compound or
Collaboration Product is manufactured, packaged or stored, and shall promptly
disclose to Shire all relevant portions of any notice of observations or
potential violations as well as a copy of its or its Affiliates’ or Third Party
contract manufacturers’ response thereto.

 

  (e) For the purpose of permitting a quality and compliance audit, New River
shall grant to authorized representatives of Shire (or a Third Party hired on
behalf of Shire who is reasonably acceptable to New River), upon reasonable
notice, access to areas of each of its plants, and permit Shire access to areas
of New River’s and its Affiliates’ and, to the extent practicable, Third Party
contract manufacturers’ plants, at such times as Compound or Collaboration
Product is being manufactured, packaged or tested; provided, that Shire’s audit
of any Third Party facilities will be subject to reasonable and customary
confidentiality and non-use obligations.

 

  (f) Shire shall have the right to examine those technical records made by New
River or its Affiliates or Third Party contract manufacturers that relate to the
manufacture of Compound or Collaboration Product; provided, that such records
will be subject to reasonable and customary confidentiality and non-use
obligations.

 

  (g) New River shall ensure that its Third Party contract manufacturers agree
[*]

 

11. Nonconforming Goods. If a shipment of Compound or Collaboration Product
fails, at the time of delivery, to comply with the applicable specifications,
and Shire notifies New River of such nonconformity ([*]) within [*] following
Shire’s receipt of such shipment, then New River will replace, at no additional
expense to Shire, such Compound or Collaboration Product as soon as reasonably
practicable after receipt of notification of nonconformity. Any dispute
regarding whether a shipment of Compound or Collaboration Product conforms with
the applicable specifications will be submitted to an independent laboratory
mutually acceptable to the Parties for final resolution. The costs of retaining
the laboratory will be included in Cost of Goods for the US Territory and will
be borne by the Party whose evaluation of the applicable shipment of Compound or
Collaboration Product is mistaken in the ROW Territory.

 

12. Payment Terms. Shire will pay New River [*] for any quantity of Compound and
Collaboration Product provided under the Supply Agreement. At the time of each
shipment, New River shall invoice Shire, and Shire shall pay for such shipment
within [*] of receipt of each such invoice.

 

13. Additional Provisions. In addition to more detailed terms regarding the
matters specified above in this Exhibit D, the Supply Agreement shall contain
other customary supply agreement provisions.

 

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

   

EXHIBIT E

 

JOINT PRESS RELEASE

  LOGO [g55291img_003.jpg]

Shire Pharmaceuticals Group plc

 

Hampshire International Business Park,

Chineham, Basingstoke RG24 8EP UK

Tel +44 1256 894000 Fax +44 1256 894708

http://www.shire.com

   

 

New River Pharmaceuticals

1881 Grove Avenue

Radford, VA 24141

Tel +1 540 633 7978 Fax: +1 540 633 7979

http://www.nrpharma.com

  LOGO [g55291img_004.jpg]

 

For immediate release

 

* (ET) * (GMT)

 

Shire and New River announce collaboration on Phase 3 ADHD drug candidate

 

BASINGSTOKE, UK, PHILADELPHIA, PA, US and RADFORD, Va., US January 31, 2005—
Shire Pharmaceuticals Group plc (LSE: SHP; NASDAQ: SHPGY; TSX: SHQ) and New
River Pharmaceuticals Inc. (NASDAQ: NRPH) announced today the signing of an
agreement for the global commercialization of NRP104, New River’s Phase 3
compound for treatment of Attention Deficit Hyperactivity Disorder (ADHD), as
well as for other potential indications.

 

Under the terms of the agreement the parties will collaborate on NRP104
development, manufacturing, marketing and sales in the US. Shire will book the
product sales and New River may supply up to 25% of the sales effort under a
co-promotion right. New River will be financially and operationally responsible
for clinical and manufacturing development.

 

Upon U.S. Food and Drug Administration (FDA) approval, the parties will divide
operating profit in accordance with the following general principles: Shire will
retain 75% of profits for the first two years following launch and the parties
will share the profits equally thereafter.

 

In the rest of the world, Shire has a license to develop and commercialize
NRP104 and New River will receive a low double-digit royalty on net sales.

 

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

Shire pays an initial sum of US$50 million on signing, a further US$50 million
upon acceptance of filing of the New Drug Application by the FDA and up to
US$300 million in milestone payments depending on the characteristics of the
FDA-approved product labeling. An additional US$100 million milestone would be
payable as a sales bonus upon achieving a significant sales target. Shire
currently plans to expense the first two US$50 million payments, and to
capitalize and amortize the milestone payments and the sales bonus over the life
of the product.

 

Shire may be entitled to refunds of amounts previously paid in the event of a
delayed product approval, or upon FDA approval depending on the characteristics
of the approved product labeling.

 

Matthew Emmens, Chief Executive of Shire, said:

 

“This is a strong addition to our ADHD portfolio and complements the development
strategy of Shire and its pipeline. NRP104 is in late stage development and we
are encouraged by the data that we have seen to date and hope that the new drug
has similar efficacy of currently marketed ADHD treatments with potential
additional advantages. Importantly, NRP104 could become a global ADHD product.
We have structured the financial payments for this collaboration to reflect the
potential of the new drug and look forward to progressing this product with New
River.”

 

R.J. Kirk, Chairman and Chief Executive Officer of New River, said:

 

“We are delighted to announce this collaboration with Shire, a company that we
believe will bring substantial value to this project as we plan and hopefully
execute the commercialization of NRP104. Shire’s CNS expertise and leadership
position in the ADHD market allows them to significantly contribute to this
collaboration in a manner that we believe will optimally serve the interests of
our shareholders. We therefore believe that Shire will be our ideal partner for
this product and we look forward to working with their outstanding team to fully
realize the potential of NRP104.”

 

For further information please contact:

 

Shire Pharmaceuticals Group plc         Investor Relations         Cléa
Rosenfeld (UK and Europe)       +44 1256 894 160 Brian Piper (US and Canada)    
  +1 484 595 8252

 

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

Media         Jessica Mann (UK and Europe)       +44 1256 894 280 Matthew Cabrey
(US)       +1 484 595 8248

 

New River Pharmaceuticals Inc.         Investor Relations         John Quirk    
  +1 646 536 7029 jquirk@theruthgroup.com        

 

Media         Zack Kubow       +1 646 536 7020 zkubow@theruthgroup.com        

 

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

Notes to editors

 

Shire

 

Shire Pharmaceuticals Group Plc is a global pharmaceutical company with a
strategic focus on meeting the needs of the specialist physician and currently
focuses on developing projects and marketing products in the areas of central
nervous system, gastrointestinal and renal diseases. Shire has operations in the
world’s key pharmaceutical markets (U.S., Canada, U.K., France, Italy, Spain and
Germany).

 

For further information on Shire, please visit the Company’s website:
www.shire.com

 

“SAFE HARBOR” STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995

 

Statements included herein that are not historical facts are forward-looking
statements. Such forward-looking statements involve a number of risks and
uncertainties and are subject to change at any time. In the event such risks or
uncertainties materialize, Shire’s results could be materially affected. The
risks and uncertainties include, but are not limited to, risks associated with
the inherent uncertainty of pharmaceutical research, product development,
manufacturing and commercialization, the impact of competitive products,
including, but not limited to, the impact of those on Shire’s Attention Deficit
& Hyperactivity Disorder (ADHD) franchise, patents, including but not limited
to, legal challenges relating to Shire’s ADHD franchise, government regulation
and approval, including but not limited to the expected product approval dates
of METHYPATCH® (methylphenidate) and NRP104, including its scheduling
classification by the Drug Enforcement Agency in the United States, Shire’s
ability to secure new products for development, the implementation of the
current reorganization and other risks and uncertainties detailed from time to
time in Shire’s filings, including its Annual Report on Form 10-K for the year
ended December 31, 2003, with the Securities and Exchange Commission.

 

New River

 

New River Pharmaceuticals Inc. is a specialty pharmaceutical company focused on
developing novel pharmaceuticals that are safer and improved versions of
widely-prescribed drugs, including amphetamines and opioids.

 

For further information on New River, please visit the company’s website at
www.nrpharma.com.

 

“SAFE HARBOR” STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995

 

This press release contains certain forward-looking information that is intended
to be covered by the safe harbor for “forward-looking statements” provided by
the Private

 

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

Securities Litigation Reform Act of 1995. Forward-looking statements are
statements that are not historical facts. Words such as “expect(s),” “feel(s),”
“believe(s),” “will,” “may,” “anticipate(s)” and similar expressions are
intended to identify forward-looking statements. These statements include, but
are not limited to, financial projections and estimates and their underlying
assumptions; statements regarding plans, objectives and expectations with
respect to future operations, products and services; and statements regarding
future performance. Such statements are subject to certain risks and
uncertainties, many of which are difficult to predict and generally beyond the
control of New River Pharmaceuticals, that could cause actual results to differ
materially from those expressed in, or implied or projected by, the
forward-looking information and statements. These risks and uncertainties
include: those discussed and identified in the New River Pharmaceuticals Inc.
final prospectus filed on August 5, 2004, under Rule 424(b) of the Securities
Act of 1933, as amended; the ability to successfully execute the collaboration
with Shire within a reasonable timeframe or at all; the progress of our product
development programs; the status of our preclinical and clinical development of
potential drugs, the likely success of our drug products in clinical trials and
the regulatory approval process, particularly whether and under what
circumstances NRP104 will be approved by the FDA; the ability to develop,
manufacture, launch and market NRP104; our projections for future revenues,
profitability and ability to achieve certain sales targets; our estimates
regarding our capital requirements and our needs for additional financing; the
likely scheduling and labeling of NRP104; our ability to attract partners with
acceptable development, regulatory and commercialization expertise; the
likelihood of regulatory approval under Section 505(b)(2) under the Federal
Food, Drug, and Cosmetic Act; the expected benefits of NRP104 such as efficacy
and potential advantages; our ability to develop safer and improved versions of
widely-prescribed drugs; and our ability to obtain favorable patent claims.
Readers are cautioned not to place undue reliance on these forward-looking
statements that speak only as of the date hereof. New River Pharmaceuticals does
not undertake any obligation to republish revised forward-looking statements to
reflect events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events. Readers are also urged to carefully review
and consider the various disclosures in New River Pharmaceuticals’ final
prospectus filed with the SEC on August 5, 2004, under Rule 424(b) of the
Securities Act of 1933, as amended, as well as other public filings with the
SEC.

 

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

 

EXHIBIT F

 

TECHNICAL TRADE SECRETS

 

Compound means the compound currently identified by New River as NRP104 with the
chemical structure [*] and any isomers, salts, solvates, polymorphs, esters and
derivatives of any of the foregoing, in each case where an active moiety of such
compound is [*].

 

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

 

EXHIBIT G

 

CERTAIN PRODUCTS OF SHIRE

 

Development Projects

 

[*]

 

Marketed Stimulant Products

 

[*]

 

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

 

SCHEDULE 3.7

 

NEW RIVER SUBCONTRACTORS

 

NAME OF THIRD PARTY

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

  

ACTIVITIES PERFORMED / TO BE PERFORMED

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

[*]

   Manufacture of Drug Substance (API)

[*]

   Animal toxicology and pharmacokinetic studies

[*]

   Bioanalytical method development and sample analysis; animal PK studies

[*]

   Gene toxicology studies

[*]

   Bioanalytical method development and sample analysis; human PK studies

[*]

   In vitro toxicology, liver metabolism and P450 studies

[*]

   Juvenile animal toxicology studies

[*]

   Drug Packaging and labeling for clinical trials

[*]

   CRO for all clinical studies

 

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

 

SCHEDULE 6.1.1

 

NEW RIVER MANUFACTURING CONTRACTORS AND ACTIVITIES

 

NAME OF THIRD PARTY

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

  

ACTIVITIES PERFORMED / TO BE PERFORMED

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

[*]

   Manufacture of Drug Substance (API)

[*]

   Manufacture of Drug product (formulation and encapsulation)

 

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

 

SCHEDULE 12.1.3(b)

 

INDs and DRUG APPROVAL APPLICATIONS

 

United States IND #67482

United States IND #70109

 

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

 

SCHEDULE 12.1.3(c)(i)(I)

 

LICENSED PATENTS [*]

 

Serial No.
(Filing Date)

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

  

Next Action Date
(Official fees to be paid within 180 days)1

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

[*]    [*] [*]    [*] [*]    [*] [*]    [*] [*]    [*] [*]    [*] [*]    [*] [*]
   [*] [*]    [*] [*]    [*] [*]    [*] [*]    [*] [*]    [*] [*]    [*] [*]   
[*] [*]    [*] [*]    [*] [*]    [*] [*]    [*] [*]    [*] [*]    [*] [*]    [*]
[*]    [*] [*]    [*]

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

1 Official fees do not include Attorney or Foreign Associate Fees.

 

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

Serial No.
(Filing Date)

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

  

Next Action Date
(Official fees to be paid within 180 days)1

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

[*]    [*] [*]    [*] [*]    [*] [*]    [*] [*]    [*] [*]    [*] [*]    [*] [*]
   [*] [*]    [*] [*]    [*] [*]    [*] [*]    [*] [*]    [*] [*]    [*] [*]   
[*] [*]    [*] [*]    [*] [*]    [*] [*]    [*] [*]    [*] [*]    [*] [*]    [*]
[*]    [*] [*]    [*] [*]    [*] [*]    [*] [*]    [*] [*]    [*] [*]    [*]

 

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

Serial No.
(Filing Date)

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

  

Next Action Date
(Official fees to be paid within 180 days)1

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

[*]    [*] [*]    [*] [*]    [*] [*]    [*] [*]    [*] [*]    [*] [*]    [*] [*]
   [*] [*]    [*] [*]    [*] [*]    [*] [*]    [*] [*]    [*]

 

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

 

SCHEDULE 12.1.3(c)(i)(II)

 

LICENSED PATENTS THAT DO NOT CLAIM COMPOUND OF COLLABORATION PRODUCTS

 

Serial No.
(Filing Date)

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

  

Next Action Date
(Official fees to be paid within 180 days)

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

[*]    [*] [*]    [*] [*]    [*] [*]    [*] [*]    [*]