Exhibit 10.3
FIFTH AMENDMENT TO THE AMENDED AND RESTATED STRATEGIC
ALLIANCE AGREEMENT
     This Fifth Amendment to the Amended and Restated Strategic Alliance
Agreement (this “Amendment”) dated as of June 8, 2010 is made by and between
PENWEST PHARMACEUTICALS CO., a corporation organized and existing under the laws
of the State of Washington, with its principal place of business at 2981 Route
22, Patterson, New York 12563 (“Penwest”), and ENDO PHARMACEUTICALS INC., a
corporation organized and existing under the laws of the State of Delaware, with
its principal place of business at 100 Endo Boulevard, Chadds Ford, Pennsylvania
19317 (“Endo”), and amends the Amended and Restated Strategic Alliance
Agreement, dated April 2, 2002, between Penwest and Endo (as amended, the
“Strategic Alliance Agreement”). Any capitalized terms used but not defined in
this Amendment will have the meaning ascribed to such terms in the Strategic
Alliance Agreement. Penwest and Endo are referred to in this Amendment as the
“Parties” and individually as a “Party”. Any capitalized terms used but not
defined herein will have the meaning ascribed to such terms in the Strategic
Alliance Agreement.
     In consideration of the mutual covenants and conditions herein set forth,
the receipt and sufficiency of which consideration is hereby acknowledged, the
Parties agree as follows:
1. AMENDMENT TO ROYALTIES
     1.1 Effective April 1, 2010 and continuing through December 31, 2012 (the
“First Royalty Reduction Period”), the Royalty rate set forth in Section 4.5.1
of the Strategic Alliance Agreement with respect to the Product shall not exceed
22% as a percentage of U.S. Product Net Sales during such period, subject to the
following sentences. During the fourth calendar quarter of 2012, Penwest and
Endo shall calculate the difference between the amount of Royalties for Product
that would have been payable by Endo to Penwest during the First Royalty
Reduction Period through the third calendar quarter of 2012 as if the Royalty
rate had not been capped at 22% as provided in the first sentence of this
paragraph and the amount of Royalties payable during such period giving effect
to the 22% cap on the Royalty rate as provided in this paragraph. The Royalty
rate on U.S. Product Net Sales shall be adjusted during the fourth calendar
quarter of 2012 to such percentage of U.S. Product Net Sales for Product for
such calendar quarter as will result in the Royalties payable by Endo to Penwest
in respect to U.S. Product Net Sales for Product to be $7,300,000 lower for the
First Royalty Reduction Period than the aggregate Royalties would have been for
Product for such period had the Royalty rate not been adjusted for such period
as provided in this paragraph; provided, however, that Penwest shall have no
obligation to make any payment to Endo as a result of the adjustments in this
paragraph.
     1.2 Effective January 1, 2013 and continuing through December 31, 2013 (the
“Second Royalty Reduction Period”), the Royalty rate set forth in Section 4.5.1
of the Strategic Alliance Agreement with respect to the Product shall not exceed
20% as a percentage of U.S.

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Product Net Sales during such period, subject to the following sentences. During
the fourth calendar quarter of 2013, Penwest and Endo shall calculate the
difference between the amount of Royalties for Product that would have been
payable by Endo to Penwest for the Second Royalty Reduction Period through the
third calendar quarter of 2013 as if the Royalty rate had not been capped at 20%
as provided in the first sentence of this paragraph and the amount of Royalties
payable during such period giving effect to the 20% cap on the Royalty rate as
provided in this paragraph. The Royalty rate on U.S. Product Net Sales shall be
adjusted for the fourth calendar quarter of 2013 to such percentage of U.S.
Product Net Sales for Product during such period as will result in the aggregate
Royalties payable by Endo to Penwest in respect to U.S. Product Net Sales for
Product to be $700,000 lower for the Second Royalty Reduction Period than the
aggregate Royalties would have been for Product for such period had the Royalty
rate not been adjusted for such period as provided in this paragraph; provided,
however, that Penwest shall have no obligation to make any payment to Endo as a
result of the adjustments in this paragraph.
     1.3 Notwithstanding any other provision to the contrary, the Parties agree
that sales of those Impax Products (as defined in the Settlement Agreement)
which are covered only by the Existing Patents (as defined in the Settlement
Agreement) and sold during the applicable Exclusivity Period (as defined in the
Settlement Agreement) shall not be considered sales of Licensed Oxymorphone
Products and no financial consideration, including, without limitation,
royalties or sales milestones, shall be due to Penwest with respect to such
sales. For all other Impax Product sales, any payments received by Endo from
Impax with respect to such sales shall be deemed to be “Applicable Sublicense
Consideration” and Penwest shall be entitled to payment thereon pursuant to the
Agreement. Penwest shall not be entitled to payment of any kind with respect to
the sale of any Licensed Oxymorphone Products for which Endo receives no
consideration. “Settlement Agreement” means the Settlement and License Agreement
entered into among Penwest, Endo and Impax Laboratories, Inc. (“Impax”)
concurrently herewith.
     1.4 The Parties agree that Endo shall be solely responsible for all
payments to Impax pursuant to the Settlement Agreement and that Endo may not
deduct such payments from Net Sales or offset such payments against any amounts
owed by Endo to Penwest pursuant to the Strategic Alliance Agreement.
2. MISCELLANEOUS
     2.1 Except as set forth herein, no other portion of the Strategic Alliance
Agreement is hereby amended and the terms of the Strategic Alliance Agreement
shall continue in full force and effect. All references in the Strategic
Alliance Agreement to “this Agreement” shall be deemed to include the provisions
of this Amendment.
     2.2 This Amendment, together with the Strategic Alliance Agreement,
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral between the Parties with respect to the
subject matter hereof.
     2.3 Any terms of this Amendment may be amended, modified or waived only in
a writing signed by both Parties.

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     2.4 This Amendment shall be governed by, and construed and enforced in
accordance with, the laws of the State of New York without regard to its
conflict of laws rules.
     2.5 Neither Party shall issue any press release or make any public
announcements regarding the subject matter of this Amendment and related
provisions of the Strategic Alliance Agreement, as amended hereby, without the
prior written consent of the other Party, which will not be unreasonably
withheld; provided, however, that notwithstanding the foregoing, either Party
shall have the right to issue press releases and to make public announcements
regarding the subject matter of this Amendment and related provisions of the
Strategic Alliance Agreement, as amended hereby, without the consent of the
other Party in order to comply with disclosure obligations that are imposed by
applicable law, regulation or legal process, including without limitation by
rules and regulations under applicable securities laws and by rules and
regulations of any stock exchange or NASDAQ, provided that the Party complying
with any such disclosure requirement shall, if practicable, provide the other
Party with an opportunity to review and comment on the content of any such
disclosure, to the extent such content has not previously been disclosed
publicly.
[Remainder of Page Intentionally Left Blank]

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IN WITNESS WHEREOF, the Parties have executed this Agreement on the date first
above written.

          ENDO PHARMACEUTICALS INC.    
 
       
By:
  /s/ David P. Holveck    
 
        Name and Title: President and CEO    
 
        Date: June 7, 2010    
 
        PENWEST PHARMACEUTICALS CO.    
 
       
By:
  Jennifer L. Good    
 
        Name and Title: President and CEO    
 
        Date: June 8, 2010    

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