**Exhibit 10.4**

 

Confidential Materials omittedand filed separately with theSecurities and Exchange Commission. Asterisks denote omissions.

 

**CONFIDENTIAL**

 

**DEVELOPMENT, LICENSE ANDCOMMERCIALIZATION AGREEMENT**

 

ThisDEVELOPMENT, LICENSE AND COMMERCIALIZATION AGREEMENT (“Agreement”) isentered into between **Sepracor Inc.**,a company organized under the laws of the State of Delaware, United States, andhaving its principal place of business at 84 Waterford Drive, Marlborough,MA 01752-7010, United States, and **Glaxo Group Limited**,a company organized under the laws of England & Wales and having itsprincipal place of business at Glaxo Wellcome House, Berkeley Avenue,Greenford, Middlesex, UB6 0NN, United Kingdom (“GSK”).

 

**WHEREAS**

 

A.            Sepracor has conducted non-clinical and clinicaltrials, and has been granted Marketing Approval by the FDA to commercialize,and is commercializing in the United States, the LUNESTA®eszopiclone-based insomnia product; and

 

B.            Sepracor owns or controls certain patents,know-how, trademarks and other intellectual property relating to the Product inthe GSK Territory; and

 

C.            GSK is experienced in developing, registering,securing pricing approvals, marketing and distributing pharmaceutical productsin the GSK Territory; and

 

D.            On the terms and conditions set forth in thisAgreement:

 

1.             Sepracor and GSK wish to collaborate on thepotential for further development (if any), as well as the registration andcommercialization of the Product in the GSK Territory;

 

2.             Sepracor is willing to grant to GSK, and GSKdesires to obtain from Sepracor, certain exclusive rights and licenses withrespect to the potential development (if any), registration andcommercialization of the Product in the GSK Territory; and

 

3.             Sepracor is willing to supply GSK with BulkTablets of the Product for packaging and commercial sale by GSK in the GSKTerritory.

 

**NOW,THEREFORE**, inconsideration of the foregoing premises and the mutual covenants hereincontained, and for other good and valuable consideration, the receipt andsufficiency of which are hereby acknowledged, Sepracor and GSK hereby agree asfollows:

 

----

 

**CONFIDENTIAL**

 

**ARTICLE I.DEFINITIONS**

 

## As used in this Agreement, thefollowing terms shall have the meanings set out in this Article 1 unlessthe context clearly and unambiguously dictates otherwise.

##  

## 1.1.          “Active Ingredient” shall mean thechemical compound known as eszopiclone, also identified by the chemical name(+) 6-(5-chloro-2-pyridinyl)-6,7-dihydro-7-oxo-5H-pyrrolo **[3,4b]**pyrazin- 5-yl 4-methylpiperazine-1-carboxylate or (+) 6-(5-chloropyri-2-dyl)-5-(4-methylpiperazin-1-yl) carbonyloxy-7-oxo-6,7-dihydro-5H-pyrrolo **[3,4b]**pyrazine,****and all pharmaceutically activederivatives thereof, such as, but not limited to, its metabolites, and allesters, salts, hydrates, solvates, polymorphs and isomers of all the above.

##  

## 1.2.          “Actual Cost” shall mean, the fullyloaded cost incurred by Sepracor to manufacture or have manufactured BulkTablets, including for avoidance of doubt the overhead associated withperforming its obligations, as may be agreed by the parties, under theSupply Agreement. The Actual Cost may be more specifically defined in theSupply Agreement, consistent with ***Schedule 10.2***herein, and shall be documented by Sepracor to GSK to the reasonable satisfactionof GSK.

##  

## 1.3.          “Affiliate” of a Party shall mean anyperson, corporation or other entity that, directly or indirectly, through oneor more intermediaries, controls, is controlled by, comes to control, or isunder common control with such Party, as the case may be. As used in this Section 1.3,“control” shall mean:  (i) topossess, directly or indirectly, the power to direct the management andpolicies of such person, corporation or other entity, whether through ownershipof voting securities or by contract relating to voting rights or corporategovernance; or (ii) direct or indirect beneficial ownership of at leastfifty percent (50%) (or such lesser percentage which is the maximum allowed tobe owned by a foreign corporation in a particular jurisdiction) of the votingshare capital in such person, corporation or other entity.

##  

## 1.4.          “Acquired Competing Product” shall meanany product, in respect of which GSK or its Affiliates, during the Term,acquires the rights (by license, purchase or otherwise) to promote, market orsell in the GSK Territory, which at the time of acquisition: (i) [**]; (ii) [**];or (iii) [**].

##  

## 1.5.          “Acquisition Transaction” shall mean theacquisition of the assets of a Third Party, whether through merger, purchase ofstock representing fifty percent (50%) or more of the outstanding voting stock,purchase of all or substantially all of the assets of such entity or otherwise.

##  

## 1.6.          “Blocking Patent” means any Patent issuedto a Third Party that would be infringed by the manufacture, use, sale, offerfor sale or importation of the Product in the GSK Territory.

##  

## 

 

**CONFIDENTIAL**

 

## 1.7.          “Bulk Tablets” shall mean finishedtablets containing the Active Ingredient which meets the relevantspecifications, to be defined more specifically in the Supply Agreement, and tobe shipped to GSK by Sepracor inbulk in the manner set forth in the Supply Agreement, and then to be packagedas the Product by or on behalf of GSK.

##  

## 1.8.          “Business Day” shall mean a day otherthan a (i) Saturday, (ii) Sunday or (iii) public holiday in theUnited States or England. For the avoidance of doubt, references in thisAgreement to “days” shall mean calendar days.

##  

## 1.9.          “Calendar Quarter” shall mean a period ofthree (3) consecutive months during a Calendar Year beginning on andincluding 1st January, 1st April, 1st July or1st October.

##  

## 1.10.        “Calendar Year” shall mean a period oftwelve (12) consecutive months beginning on and including 1stJanuary.

##  

## 1.11.        “Clinical Supplies” shall mean thosequantities of Bulk Tablets and placebo tobe supplied by Sepracor to GSK in the manner to be set forth in the SupplyAgreement for use in the following scenarios where the Bulk Tablets are not tobe packaged and labeled for commercial sale: (i) any Developmental Study; (ii) validationstudies or any other studies to confirm packaging or formulation or othermanufacturing requirements; or (iii) for any other non-commercial usesnecessary for obtaining the Marketing Approval for the Product in any countryin the GSK Territory.

##  

## 1.12.        “Commercialization Studies” shall meanany clinical studies GSK wishes to be conducted by or on behalf of GSK in the GSKTerritory in support of GSK’s commercialization of the Product in the GSKTerritory and which will be initiated in a country after Marketing Approval ofthe Product in such country. Such studies may include, but shall not belimited to, “marketing studies” to support market uptake, acceptance anddifferentiation of the Product, epidemiological studies, modeling andpharmacoeconomic studies, and studies in support of modifications or additionalsleep disorder related indications. Commercialization Studies shall not includestudies designed to generate data in support of new indications unrelated tosleep disorders, or studies investigating the safety or efficacy of the Productin a modified release formulation or a combination product. For the avoidance of doubt, CommercializationStudies shall not include Required Studies, Investigator Sponsored ClinicalStudies, Sepracor Studies, studies Sepracor initiated prior to the EffectiveDate in support of the Product, any studies relating to the Product thatSepracor may initiate in the Sepracor Territory or any other studies thatSepracor may initiate anywhere in the world which do not relate to theProduct.

##  

## 1.13.        “Commercially Reasonable Efforts” meansthose diligent efforts and resources, with respect to a particular Party, atthe relevant point in time, that are comparable to those generally used by thatParty, in good faith, in the exercise of its reasonable and prudent scientificand business judgment relating to other prescription pharmaceutical productsowned or licensed by it or to which it has exclusive rights, which have marketpotential and are at a stage of development or product life similar to theProduct, taking into account measures of relative safety and efficacy, productprofile, the competitiveness of the marketplace, the proprietary

##  

## 

 

**CONFIDENTIAL**

 

## position of the compound or product, the regulatory structure involved,the relative profitability of the products, and other relevant factors,including without limitation comparative technical, legal, scientific, and/ormedical factors. Such Commercially Reasonable Efforts shall include, withoutlimitation, comparable efforts with respect to (i) promptly assigningresponsibility for development and commercialization activities to specificemployees who are held accountable for progress and monitoring such progress onan on-going basis, (ii) setting and consistently seeking to achievespecific and meaningful objectives and timelines for carrying out suchdevelopment and commercialization activities, (iii) consistently makingand implementing decisions and allocating resources designed to advanceprogress with respect to such objectives and timelines, and (iv) employingcompensation systems for its employees working with the Product that aresimilar to the compensation systems the applicable Party applies with respectto its other programs with products of similar potential.

##  

## 1.14.        “Confidentiality Agreement” shall meanthat certain letter agreement dated January 11, 2005 entered into by andbetween Sepracor and GlaxoSmithKline Research & Development Limited.

##  

## 1.15.        “Control” (including any variations suchas “Controlled” and “Controlling”), in the context ofintellectual property rights and Know-How, shall mean rights to intellectualproperty sufficient to grant the applicable license under this Agreement,without violating the terms of an agreement with a Third Party.

##  

## 1.16.        “Core Campaign Product Strategies” shallmean those materials proposed by the GSK European marketing group which outlinethe core marketing materials to be used in relation to the Product and tospecifically include trade dress, core claims and visuals.

##  

## 1.17.        “Data” shall mean, subject to theprovisions of Section 5.10, any and all research data, pharmacology data,preclinical data, clinical data, manufacturing data and/or all regulatorydocumentation, information and submissions pertaining to, or made inassociation with, an IND or a Marketing Authorization Application for theProduct, in each case which are Controlled by a Party as of the Effective Dateor during the Term of this Agreement, including but not limited to theDevelopment Data.

##  

## 1.18.        “Developmental Studies” means any (i) RequiredStudies or (ii) CommercializationStudies, both as set forth in the Development Plan. For the avoidance of doubt, DevelopmentalStudies shall not include Investigator Sponsored Clinical Studies of theProduct in the GSK Territory.

##  

## 1.19.        “Effective Date” shall mean the later of:(i) the date on which an authorized representative of Sepracor executesthis Agreement, and (ii) the date on which an authorized representative ofGSK executes this Agreement.

##  

## 1.20.        “EMEA” shall mean the European MedicinesAgency, or any other successor agency that is responsible for approving thesale of pharmaceutical products across the European Union.

##  

## 

 

**CONFIDENTIAL**

 

## 1.21.        “European Union” shall mean the membercountries of the European Union at the relevant point in time.

##  

## 1.22.        “FDA” shall mean the United States Foodand Drug Administration, or any successor entity thereto performing similarfunctions.

##  

## 1.23.        “GSK Competing Product” shall have themeaning stated in Section 9.1(e) of this Agreement. For the avoidanceof doubt, GSK Competing Products may include, but shall not be limited to,compounds, other than Acquired Competing Products, acquired by GSK (by licence,purchase or otherwise) during the Term of this Agreement.

##  

## 1.24.        “GSK Territory” shall mean all countriesand territories of the world excluding the Sepracor Territory.

##  

## 1.25.        “Improvements” shall mean any new oruseful process, technique, formula, invention or know-how, formulation, orcomposition of matter relating to or comprising the Product, or any SepracorTechnology, whether patentable or unpatentable, or any improvement,enhancement, modification or derivative work thereof, that is conceived orfirst reduced to practice or first demonstrated to have utility during the Termof this Agreement in connection with the Parties’ activities under thisAgreement.

##  

## 1.26.        “IND” shall mean an Investigational NewDrug Application (including any amendments thereto) filed with the FDA pursuantto 21 C.F.R. §312 before commencement of clinical trials of a pharmaceuticalproduct, or any comparable filings with any Regulatory Authority in any otherjurisdiction, including, but not limited to, clinical trial applications.

##  

## 1.27.        “International Financial Reporting Standards”shall mean the International Financial Reporting Standards and InternationalAccounting Standards issued by the International Accounting Standards Board (“IASB”)and interpretations issued by the International Financial ReportingInterpretations Committee of the IASB.

##  

## 1.28.        “Major Market” shall mean each of theU.K., Germany, Italy, France, Spain, China, Australia, Brazil and South Korea, *provided*, however, with respect to Sections 6.1, 6.3(l),6.4(b), 14.4(c) and 16.2(e), Major Markets shall only include U.K.,Germany, Italy, France and Spain. A country shall no longer be included in thedefinition of Major Market for the purposes of Sections 2.1(b), 6.1, 6.3(l),7.3(d) and 16.2(e) once a Generic Product has been launched in suchcountry.

##  

## 1.29.        “Marketing Approval” shall mean all approvals,licenses, registrations or authorizations of Regulatory Authorities in acountry necessary for the manufacture, use, storage, import, export,distribution, promotion, marketing, offer for sale and sale of the Product insuch country. For countries where governmental approval is required for pricingand/or reimbursement for the Product to be reimbursed by national healthinsurance (or its local equivalent), “Marketing Approval” shall not be deemedto occur until such pricing and/or reimbursement approval is obtained.

##  

## 

 

**CONFIDENTIAL**

 

## 1.30.        “Marketing Authorization Application” (or“MAA”) shall mean a filing, comparable to a New Drug Application (asdefined in 21 C.F.R. § 314.50 *et. seq*.), forMarketing Approval (not including pricing or reimbursement approval) for theProduct in a country within the GSK Territory.

##  

## 1.31.        “Net Sales” shall mean the gross amountsreceived for sales of the Product by or on behalf of GSK, its Affiliates and/orSublicensees (the “Selling Party”) to Third Parties, less deductions actuallyallowed or specifically allocated to the Product by the Selling Party usingInternational Financial Reporting Standards for:

##  

### (a)        transportation charges to the extent that theyare included in the price or otherwise paid by the purchaser, including,without limitation, insurance, for transporting Product and separatelyidentified on the invoice or in other documentation maintained in the ordinarycourse of business; and;

###  

### (b)        trade, quantity and cash discounts, orcharge-backs, refunds or other rebates actually granted to the customer(including, if applicable, hospitals or private or public health insuranceentities);

###  

### (c)        credits, rebates and allowances to the customeron account of rejection or returns of the Product (including wholesaler andretailer returns), or on account of non-discretionary retroactive pricereductions affecting such Product;

###  

### (d)        sales and excise taxes, other consumption taxes,customs duties and customary compulsory payments to governmental authoritiesand any other governmental charges imposed upon the production, importation,use or sale of the Product actually paid and separately identified on theinvoice or in other documentation maintained in the ordinary course ofbusiness; and

###  

### (e)        any other items actually deducted from grossinvoices sales amounts as reported by the Selling Party in its financialstatements in accordance with the International Financial Reporting Standards,applied on a consistent basis

###  

In no event will any particular amount, identified above, be deductedmore than once in calculating Net Sales (i.e., no “double counting” ofreductions). Sales of the Product between GSK and its Affiliates orSublicensees shall be excluded from the computation of Net Sales, but thesubsequent resale of such the Product to a Third Party shall be included withinthe computation of Net Sales.

 

In the case of any sale or disposal for value, other than in an armslength transaction exclusively for money, such as barter or counter trade, NetSales shall be calculated as above on the value of the consideration receivedor the fair market value (if higher) of the Product in the country of sale ordisposal.

 

## 1.32.        “Non-Severable Improvements” shall meanan Improvement to the Sepracor Technology which is incapable of exploitationindependently of the Sepracor Technology

##  

## 

 

**CONFIDENTIAL**

 

## Controlled by Sepracor or itsAffiliates as of the Effective Date and during the Term of this Agreement.

##  

## 1.33.        “Party” shall mean Sepracor or GSKindividually, and “Parties” shall mean Sepracor and GSK collectively.

##  

## 1.34.        “Patent(s)” shall mean patents and patentapplications, together with all additions, divisions, continuations,continuations-in-part, provisionals, substitutions, reissues, re-examinations,extensions, registrations, patent term extensions, supplemental protectioncertificates and renewals of a patent or patent application, and anyconfirmation patent or registration patent or patent of addition based on anysuch patent.

##  

## 1.35.        “Person” shall mean any individual,corporation, partnership, limited liability company, trust, governmentalentity, or other legal entity of any nature whatsoever.

##  

## 1.36.        “Phase III Clinical Trial” shall mean ahuman clinical trial, the principal purpose of which is to gather safety andefficacy data for a Product Indication of one or more particular doses inpatients being studied that is needed to evaluate the overall benefit and riskrelationship of the product and to provide adequate basis for labeling, asrequired in 21 C.F.R. §312(c), or such similar clinical study in a countryother than the United States of America.

##  

## 1.37.        “Product” shall mean the ActiveIngredient, in the form and dosages approved as of the Effective Date bythe FDA as LUNESTA® (eszopiclone), for all indications which are or may beapproved by Regulatory Authorities in the GSK Territory for those forms anddosages. The Product shall also include any additional immediate release formsor dosages of LUNESTA® (eszopiclone) that may be developed bySepracor or GSK during the term of the Agreement.

##  

## Forthe avoidance of doubt, Product shall not mean, inter alia: (i) anyproduct containing Active Ingredient in [**]; or (ii) any product with theActive Ingredient used [**]. All such products to be referred to herein as “ExcludedProducts”.

##  

## 1.38.        “Product Indication” shall mean, on acountry-by-country basis, any indication for which the Product has MarketingApproval in such country.

##  

## 1.39.        “Product Trademarks” shall mean thetrademark(s) owned by Sepracor which are available for use with the Product, aslisted in Part A of ***Schedule 1.39.***

##  

## 1.40.        “Regulatory Authority” shall mean theEMEA and any other national, regional, state or local regulatory agency,department, bureau, commission, council or other governmental entity whosereview and/or approval is necessary for the manufacture, packaging, use,storage, import, export, distribution, promotion, marketing, offer for sale andsale of the Product in the GSK Territory. For countries where governmentalapproval is required for pricing or reimbursement for the Product to bereimbursed by national health insurance (or its local equivalent), “RegulatoryAuthority” shall also include any national, regional, state or local

 

## 

 

**CONFIDENTIAL**

 

## regulatory agency, department, bureau, commission, council or othergovernmental entity whose review and/or approval of pricing or reimbursement isrequired.

##  

## 1.41.        “Required Studies” shall mean anypre-clinical or clinical studies (other than those initiated by Sepracor priorto the Effective Date) that are required or requested in writing by anyRegulatory Authority as a condition of, or in connection with, obtainingMarketing Approval for the Product in one of more countries in the GSK Territory.

##  

## 1.42.        “Sepracor” shall mean Sepracor Inc. andits Affiliates.

##  

## 1.43.        “Sepracor Know-How” shall mean, subjectto Section 5.10 and the last sentence of Section 7.6, all present andfuture scientific, medical, technical, manufacturing, regulatory and otherinformation relating to the Product (including results of any DevelopmentalStudy and Data), which are owned or Controlled by Sepracor as of the EffectiveDate or during the Term of this Agreement. Sepracor Know-How shall include allsuch items that are generated by or under authority of Sepracor during the Termof this Agreement.

##  

## 1.44.        “Sepracor Patents” shall mean, subject toSection 7.6, all present and future Patents owned or Controlled bySepracor, which generically or specifically claim Product, a compositioncomprising Product, or a use of Product. The current list of Patents is setforth in ***Schedule 1.44***, and suchlist shall be updated by Sepracor during the Term of the Agreement, at least ona semi-annual basis***.***

##  

## 1.45.        “Sepracor Studies” shall mean anypre-clinical or clinical studies (other than those initiated by Sepracor priorto the Effective Date) that Sepracor wishes to conduct or have conducted for it in the GSKTerritory related to: (i) theProduct; or (ii) the Excluded Products. For the avoidance of doubt, thisdoes not include any study Sepracor may conduct or have conducted for itoutside of the GSK Territory.

##  

## 1.46.        “Sepracor Technology” shall mean, subject to Section 7.6, allSepracor Know-How, and Sepracor Patents, which are Controlled by Sepracor orits Affiliates, prior to the Effective Date, and all Improvements Controlled bySepracor or its Affiliates during the Term of this Agreement, if any. SepracorTechnology excludes Product Trademarks and Other Trademarks.

##  

## 1.47.        “Sepracor Territory” shall mean Canada,United States (and its incorporated and unincorporated territories), Mexico andJapan.

##  

## 1.48.        “Severable Improvements” shall mean anImprovement to the Sepracor Technology which is capable of exploitationindependently of the Sepracor Technology Controlled by Sepracor or itsAffiliates as of the Effective Date and during the Term of this Agreement.

##  

## 1.49.        “Sublicensee” shall mean a Third Partyapproved by Sepracor, or a GSK Affiliate, to whom GSK, under the terms of thisAgreement, has granted a right to sell, market, distribute

##  

## 

 

**CONFIDENTIAL**

 

## and/or promote the Product in the GSK Territory and “Sublicense”shall mean an agreement or arrangement between GSK and a Sublicensee grantingsuch rights. As used in this Agreement, Sublicensee shall not include (i) awholesaler, distributor or reseller of the Product who does not market orpromote the Product, (ii) a contract manufacturer or packager or (iii) acontract research organization.

##  

## 1.50.        “Target Label” shall mean approvedlabeling for the Product with: (i) an indication for the treatment ofinsomnia; (ii) [**] which would [**], and (iii) [**] attached at ***Schedule 1.50***. For theavoidance of doubt, the label requirements at Section 1.50(ii), above,shall not apply to [**].

##  

## 1.51.        “Term” shall mean the period described inSection 14.1 of this Agreement.

##  

## 1.52.        “Third Party” shall mean any Person otherthan Sepracor, GSK and their respective Affiliates.

##  

## 1.53.        “Third Party Technology” means anyPatents, know-how, inventions, or other intellectual property owned orcontrolled by a Third Party but not owned or Controlled by a Party or itsAffiliates.

##  

## 1.54.        “Transition Period” shall mean the periodof time beginning on the Effective Date of the Agreement and ending on theearlier of (i) the date of final approval of a MAA filed with the EMEA; or(ii) a date indicated in a written agreement by Sepracor and GSK.

##  

## 1.55.        “Valid Claim” shall mean a claim of anyissued, unexpired patent that has not been revoked or held unenforceable orinvalid by a decision of a court or governmental agency of competentjurisdiction from which no appeal can be taken, or with respect to which anappeal is not taken within the time allowed for appeal, and that has not beendisclaimed or admitted to be invalid or unenforceable through reissue,disclaimer or otherwise.

##  

## 1.56.        “VAT”shall mean the tax imposed by Council Directive 2006/112/EC of the EuropeanCommunity and any national legislation implementing that directive togetherwith legislation supplemental thereto and in particular, in relation to theUnited Kingdom, the tax imposed by the Value Added Tax Act of 1994 or other taxof a similar nature imposed elsewhere instead of or in addition to value addedtax.

##  

## 1.57.        “Wind-downPeriod” shall mean any period after the date of termination of thisAgreement, in its entirety or on a country-by-country basis, during whichpursuant to Sections 15.2(a) or 15.3(a), GSK is required to continue toperform certain activities.

##  

## 1.58.        OtherDefinitions. Each of the followingdefined terms shall have the meaning set forth in the indicated Section ofthis Agreement**:**

##  

## 

 

**CONFIDENTIAL**

 
| **Defined Term**                    | ** ** | **Section**  |
|------------------------------------------|------------|--------------|
| Acquired Competing Product               |       | 9.1(b)       |
| Agreement                                |       | Introduction |
| Commercialization Plan                   |       | 6.1          |
| Confidential Information                 |       | 11.1         |
| Commercialization Option                 |       | 9.1(e)       |
| Company RA Executives                    |       | 7.2(c)(i)    |
| Development Data                         |       | 11.2         |
| Development Plan                         |       | 5.6          |
| Disclosing Party                         |       | 11.1         |
| DMF                                      |       | 5.10(a)      |
| Excluded Products                        |       | 1.37         |
| Fault of GSK                             |       | 17.4(b)(ii)  |
| Fault of Sepracor                        |       | 17.4(b)(i)   |
| Generic Product                          |       | 7.3(c)(ii)   |
| GSK Indemnities                          |       | 17.2         |
| Indemnitee                               |       | 17.3         |
| Indemnitor                               |       | 17.3         |
| Independent RA Expert                    |       | 7.2(c(i)     |
| Infringing Product                       |       | 12.3         |
| Infringing Trademark                     |       | 12.4         |
| Initial Commercialization  Plan          |       | 6.1          |
| Intervening Event                        |       | 19.1         |
| Investigator Sponsored  Clinical Studies |       | 5.5          |
| JSC                                      |       | 3.1          |
| Liabilities                              |       | 17.1         |
| Other Trademarks                         |       | 13.1         |
| Pharmacovigilance Agreement              |       | 5.14(c)      |
| Product Liability Claim                  |       | 17.5(a)      |
| Quality Agreement                        |       | 10.2         |
| Recall Costs                             |       | 17.4(b)      |
| Receiving Party                          |       | 11.1         |
| Reconciliation Report                    |       | 7.3(e)(ii)   |
| Reconciliation Review Period             |       | 7.3(e)(ii)   |
| SEC                                      |       | 11.6         |
| Selling Party                            |       | 1.31         |
| Senior Executives                        |       | 3.4(b)       |
| Sepracor Development Plan                |       | 5.8          |
| Sepracor Indemnitees                     |       | 17.1         |
| Subcommittee                             |       | 3.2          |
| Supply Agreement                         |       | 10.2         |
| Third Party Claim                        |       | 17.1         |
| Trademark Infringing Product             |       | 12.4         |

 

----

 

**CONFIDENTIAL**

 

**ARTICLE II.GRANT OF LICENSE**

 

## 2.1.          Licenses.

##  

### (a)           Sepracor hereby grants to GSK an exclusive (evenas to Sepracor), royalty-bearing license throughout the GSK Territory under theSepracor Technology to use, sell, have sold and import the Bulk Tablets andProduct. The license shall include, but not be limited to the rights to:  (i) purchase Clinical Supplies and theProduct in Bulk Tablets for use in the GSK Territory in accordance with thisAgreement and the Supply Agreement, (ii) package and/or have packaged theBulk Tablets, (iii) conduct the activities set forth in theCommercialization Plan with respect to the Product, (iv) offer for sale,sell and distribute the Product, and (v) market and promote the Productunder the Product Trademarks and Other Trademarks.

###  

### (b)           GSK has the right to grant sublicenses underthis Agreement to its Affiliates. Except as otherwise provided in Section 19.10,GSK shall not have the right to sublicense, transfer or assign the rightsgranted under this Agreement to a Third Party without Sepracor’s prior writtenconsent, which shall not be unreasonably withheld or delayed, provided thatprior written consent shall not be required in relation to any sublicense ofrights territorially limited to those countries in the GSK Territory other thanthe Major Markets. Where a sublicense of any of the rights or obligations ispermitted hereunder, each Sublicensee must enter into a Sublicense Agreement,which must be consistent with the terms and conditions of this Agreement. GSKshall also enforce the performance by any Sublicensee of the terms of each suchSublicense Agreement in order to ensure that any Sublicensee complies with theapplicable terms and conditions of this Agreement. The grant of any suchsublicense to an Affiliate or a Third Party will not relieve GSK of itsobligations under this Agreement, except to the extent they are satisfactorilyperformed by such Sublicensee and GSK hereby guarantees the satisfactoryperformance of GSK’s obligations hereunder where performed by its Affiliates.

###  

### (c)           Sepracor hereby grants to GSK, a non-exclusivelicense throughout the GSK Territory under the Sepracor Technology to undertakeDevelopmental Studies and any other activities specified in the DevelopmentPlan with respect to the Product and consistent with this Agreement.

###  

### (d)           Sepracor hereby grants to GSK an exclusivelicense to use the Product Trademarks and Other Trademarks in the GSK Territoryon the terms of Section 13.4.

###  

## 2.2.          Activities Outside the GSKTerritory.

##  

### (a)           GSK agrees that neither it, nor any of itsAffiliates or Sublicensees, will (i) export the Product outside of the GSKTerritory, or (ii) sell or provide the Product to any Third

###  

### 

 

**CONFIDENTIAL**

 

### Party if GSK and/or its relevant Affiliate or Sublicensee believes, orit would be reasonable to assume, that the Product sold or provided to suchThird Party will be exported for use outside the GSK Territory.

###  

### (b)           Sepracor agrees that neither it, nor any of itsAffiliates, will (i) export the Product within the GSK Territory (otherthan to GSK, its Affiliates, or Sublicensees), or (ii) sell or provide theProduct to any Third Party if Sepracor or its relevant Affiliate or Third Partysub-licensee believes, or it would be reasonable to assume, that the Productsold or provided to such Third Party will be imported for use in the GSKTerritory.

###  

## 2.3.                    No Other Rights. Except for the rights and licenses expresslygranted in this Agreement, Sepracor retains all rights under its intellectualproperty and no additional rights shall be deemed granted to GSK byimplication, estoppel or otherwise. For the avoidance of doubt, Sepracorspecifically retains, without limitation, its rights to (i) develop,manufacture, license, use, store, import, export, distribute, promote, market,offer for sale and sell the Excluded Products in the GSK Territory, (ii) develop,manufacture, license, use, store, import, export, distribute, promote, market,offer for sale and sell within the GSK Territory products which are notspecifically covered under this Agreement; and (iii) manufacture or havemanufactured Product within the GSK Territory for use or sale outside of theGSK Territory.

##  

**ARTICLE III.GOVERNANCE**

 

## 3.1.                    Steering Committee. The Parties shall establish a joint steeringcommittee (the “JSC”) consisting of an equal number of representativesof senior management from each Party, each such representative having theauthority to act on behalf of the Party such individual represents, the exactnumber of which shall be as the Parties may agree, from time to time. Initially,the JSC shall consist of six (6) individuals; three (3) of whom shallbe nominated by Sepracor; and three (3) of whom shall be nominated by GSK.Any member of the JSC may designate a substitute to attend and perform thefunctions of that member at any meeting of the JSC. Each Party may, with theconsent of the other Party, such consent not to be unreasonably withheld ordelayed, invite non-member, non-voting representatives of such Party to attendmeetings of the JSC. Each Party shall on an alternate year basis designate thechairperson and the other Party shall designate the secretary of the JSC. Theinitial chairperson shall be designated by GSK; and the initial secretary shallbe designated by Sepracor. The JSC shall perform the followingresponsibilities:

##  

### (a)           oversee the overall strategy for the development(if any) and commercialization of the Product in the GSK Territory;

###  

### (b)           facilitate communication between the two Partiesand provide a forum to review any development, regulatory, manufacturing andcommercialization matters pertaining to the Product;

###  

### 

 

**CONFIDENTIAL**

 

### (c)           provide a forum for communication of GSK’sactivities in the GSK Territory, and Sepracor’s and Third Party licensees’activities in the Sepracor Territory, with respect to the Product;

###  

### (d)           review any Regulatory Authority requirements forRequired Studies;

###  

### (e)           undertake a bi-annual (two times per year)review and comparison of the status of the Development Plan (if any) andCommercialization Plan, including, without limitation the applicable timelines,and provide direction to the conduct of the Development Plan andCommercialization Plan, as necessary;

###  

### (f)            review and approve the proposed Development Planand any fundamental amendments or modifications thereto;

###  

### (g)           review any Sepracor Studies which are planned tobe conducted in the GSK Territory, provided that the extent of such reviewshall be limited to a brief description of the Sepracor Study, including thelocation(s) and primary purpose of such study, and shall not include a reviewof the protocol or investigator brochure for such study;

###  

### (h)           review and approve the first proposed CoreCampaign Product Strategy and any subsequent versions which are a materialchange of strategy or visuals, proposed by GSK for the GSK Territory anddiscuss any potential benefits from synergies of such activities in the GSKTerritory with efforts in the Sepracor Territory;

###  

### (i)            review and approve any additional brand namesand Other Trademarks, subject to Article XIII;

###  

### (j)            coordinate, oversee and delegate the activitiesof any Subcommittees established pursuant to Section 3.2 of thisAgreement;

###  

### (k)           in accordance with Section 3.2, resolvedisputes, disagreements and deadlocks unresolved by any Subcommitteesestablished pursuant to Section 3.2 of this Agreement; and

###  

### (l)            perform such other responsibilities as may beassigned to the JSC pursuant to this Agreement or as may be mutuallyagreed upon by the Parties from time to time.

###  

## 3.2.                    Subcommittees. From time to time, the JSC may establish subcommittees to overseeparticular projects or activities within the scope of authority of the JSC, asit deems necessary or advisable (each, a “Subcommittee”). EachSubcommittee shall consist of such number of representatives of each Party asthe JSC determines is appropriate from time to time. Each Subcommittee shallmeet with such frequency as the JSC shall determine. All decisions of eachSubcommittee shall be made by unanimous vote or written consent, with Sepracorand GSK each having, collectively, one vote in all decisions. If, with respectto a matter that is subject to a Subcommittee’s decision-making authority, theSubcommittee cannot reach unanimity, the

##  

## 

 

**CONFIDENTIAL**

 

## matter shall be referred to the JSC, which shall resolve such matter inaccordance with Section 3.4. The Parties envisage that the JSC willestablish Subcommittees shortly after the Effective Date to oversee each of thefollowing areas: (i) regulatory matters; (ii) manage transitionactivities; (iii) advise on optimum commercial strategies; and (iv) supplymatters. If one Party expressly requires that a Subcommittee be appointed, thenit will be promptly established by the JSC.

##  

## 3.3.                    Meetings. All JSC and Subcommittee meetings shall be as often as the members may determine,but in any event JSC meetings shall occur not less than twice per calendar year.Such meetings may be held in person, or any means of telecommunications orvideo conference, as the members deem necessary or appropriate; *provided*, however, that at least one JSC meeting per yearshall be held in person and the location of such in person meeting shallalternate between Sepracor’s and GSK’s offices. A quorum for JSC meetings shallbe four (4) members, with at least two (2) members from each Party.

##  

## 3.4.                    Decision-making of Joint Steering Committee.

##  

### (a)           The JSC may make decisions with respect toany subject matter that is subject to the JSC’s decision-making authority orwithin the purview of any other Subcommittee organized as part of thisAgreement. Except as expressly provided in this Agreement, all decisions of theJSC shall be made by unanimous vote or written consent, with Sepracor and GSKeach having, collectively, one vote in all decisions. The JSC shall usereasonable efforts to resolve any disputes concerning the matters within itsroles and functions or otherwise referred to it.

###  

### (b)           If, with respect to a matter that is subject tothe JSC’s decision-making or oversight authority, the JSC cannot reachconsensus within fifteen (15) days after it has met and attempted to reach suchconsensus or the Parties cannot reach consensus on whether the JSC hasdecision-making authority regarding a matter within fifteen (15) days aftersuch matter was first raised by either Party, the dispute in question shall bereferred to the Chief Executive Officer of Sepracor and the President,Pharmaceuticals Europe of GSK (collectively, the “Senior Executives”),for resolution. The Senior Executives shall use reasonable efforts to resolvethe matter referred to them with fifteen (15) days of such referral.

###  

### (c)           If the Senior Executives cannot resolve thematter in accordance with Section 3.4(b), matters in dispute shall befinally determined as follows:

###  

#### (i)            all regulatory matters shall be finallydetermined by the President, Pharmaceuticals Europe of GSK, except as to mattersotherwise more specifically discussed in Sections 4.2(b) and (c), whichshall be finally determined by the Chief Executive Officer of Sepracor;

####  

#### (ii)           all commercialization issues (except as tomatters otherwise more specifically discussed in Sections 5.7 and 6.2) shall befinally determined by the President, Pharmaceuticals Europe of GSK;

####  

#### 

 

**CONFIDENTIAL**

 

#### (iii)          all matters regarding the Developmental Studiesto be conducted by GSK (except as to matters otherwise more specificallydiscussed in Section 5.7) shall be finally determined by the President,Pharmaceuticals Europe of GSK; and

####  

#### (iv)          all matters regarding Sepracor Studies shall befinally determined by the Chief Executive Officer of Sepracor.

####  

### (d)           For all purposes under this Agreement, anydecision made pursuant to this Section 3.4 shall be deemed to be thedecision of the JSC.

###  

### (e)           Neither Party will exercise its right to finallyresolve a dispute in accordance with this Section 3.4 in a manner thatexcuses such Party from any of its obligations specifically enumerated underthis Agreement.

###  

### (f)            Notwithstanding this Section 3.4, anydispute regarding the interpretation of this Agreement or any alleged breach ofthis Agreement will be resolved in accordance with the terms of Article 18.

###  

## 3.5.                    Minutes. Minutes for each of the JSC meetings shall be drafted by the secretaryof the meeting and sent to the chairperson of the applicable committee forcomment promptly after each such meeting (but in no event more than thirty (30)days). All actions noted in the minutes are to be reviewed and approved atsubsequent meetings of the JSC; *provided*, thatif the Parties cannot agree as to the content of the minutes, such minutes willbe finalized to reflect such disagreement.

##  

## 3.6.                    Expenses. Each Party shall bear all its own costs, including expenses incurredby the members nominated by it in connection with their activities as membersof the JSC.

##  

## 3.7.                    Alliance Managers. Promptly after the Effective Date, each Partyshall appoint an individual to act as the alliance manager for such Party (the “AllianceManager”). Each Alliance Manager who is not otherwise a member of the JSCshall thereafter be permitted to attend meetings of the JSC. The AllianceManagers shall be the primary contact for the Parties regarding the activitiescontemplated by this Agreement and shall facilitate all such activitieshereunder. Each Party may replace its Alliance Manager with an alternativerepresentative at any time with prior written notice to the other Party. TheAlliance Managers shall not, in any manner, take over the role of the JSC andshall not have any rights, powers or discretion except as expressly granted tothe Alliance Managers hereunder. In no event shall the Alliance Managers haveany power to modify or amend this Agreement

##  

## 

 

**CONFIDENTIAL**

 

**ARTICLE IV.TRANSITION ACTIVITIES**

 

## 4.1.                    Current Status; General. Prior to the Effective Date, Sepracor (aloneor with Third Parties) has conducted pre-clinical and clinical studies of theProduct, and on 23rd July 2007 submitted a MAA for theProduct to the EMEA for review under the centralized procedure.

##  

## 4.2.                    Regulatory Matters.

##  

### (a)           During the TransitionPeriod, Sepracor shall retain all right, title and interest in and to allMarketing Authorization Applications for the Product in the GSK Territory,subject to the licenses granted to GSK pursuant to this Agreement.

###  

### (b)           During the Transition Period, Sepracor shallsupport the MAA filed with the EMEA on 23rd July 2007 and useits Commercially Reasonable Efforts to obtain approval for the MAA from theEMEA for the Product with labeling consistent with, or less restrictive than,the Target Label. Sepracor shall be responsible for liaising with and managingall interactions with the EMEA in relation to the Product in connection withsuch MAA. Sepracor shall provide GSK with reasonable advance notice of anymeetings with the EMEA (including any oral hearings), if practicable, and GSKshall have the right, but not the obligation, to attend and participate in suchmeetings where legally permissible. In addition, Sepracor shall promptlyprovide GSK with copies of all material correspondence from the EMEA (includingany assessment reports) related to the Product in the GSK Territory, and shallprovide GSK with draft copies of all material correspondence intended for theEMEA (including any response documents) for review and agrees to consider ingood faith any prompt comments GSK may have with respect to any suchregulatory filings or interactions.

###  

### (c)           During the Transition Period, Sepracor shallremain responsible for liaising with and managing all interactions with otherRegulatory Authorities in relation to the Product in connection with a MAA forany country in the GSK Territory, except for those countries where the Partieshave mutually agreed to earlier transfer responsibility to GSK. Sepracor shallnot however initiate the filing of any new MAA, or initiate any interaction,with any Regulatory Authorities (other than the EMEA) within the GSK Territoryrelated to the Product without the prior approval of GSK. Sepracor shallprovide GSK with reasonable advance notice of any meetings with any suchRegulatory Authority (including any oral hearings) about the Product, ifpracticable, and GSK shall have the right, but not the obligation, to attendand participate in such meetings where legally permissible. In addition,Sepracor shall promptly provide GSK with copies of all material correspondencefrom any such Regulatory Authorities (including any assessment reports) relatedto the Product in the GSK Territory, and shall provide GSK with draft copies ofall material correspondence intended for any such Regulatory Authorities(including any response documents) for review and agrees to consider in goodfaith any comments GSK may have with respect to any such regulatoryfilings or interactions with respect to the Product. Where the Parties haveagreed to transfer responsibility

###  

### 

 

**CONFIDENTIAL**

 

### to GSK for any country in the GSK Territory before the expiration ortermination of the Transition Period, Sections 4.2(d), 5.1 and 5.14 shall apply*mutatis mutandis*.

###  

### (d)           Subject to obtaining all required consents orapprovals from all relevant Regulatory Authorities, as soon as reasonablypracticable following the expiration or termination of the Transition Period,Sepracor shall transfer to GSK all Marketing Approvals and/or MAAs for theProduct in the GSK Territory (except for DMFs), with Sepracor to invoice GSKfor one-half of any out-of-pocket costs for so doing. In addition, Sepracoragrees to promptly execute, acknowledge and deliver such further instruments,and to do all such other reasonable acts, as may be necessary in order tocarry out the transfer of such Marketing Approvals and/or MAAs, as the case may berelated to the Product in the GSK Territory.

###  

### (e)           Within [**] following the Effective Date, GSKand Sepracor shall provide for review by the JSC an outline showing inreasonable detail GSK’s provisional plans for filing Marketing AuthorizationApplications and obtaining Marketing Approvals in the GSK Territory, with aparticular focus on the overall strategy and timeline of material submissionsand filings (if any) during the Transition Period and how the variousregulatory interactions will be managed during the Transition Period.

###  

## 4.3.                    Required Studies (EMEA). In the event that the EMEA requires orrequests in writing that Required Studies (other than those already initiatedby Sepracor as of the Effective Date) to be performed as a condition of, or inconnection with, granting Marketing Approval, GSK shall have the right, at itsabsolute discretion, to perform or have performed such Required Studies atGSK’s expense. If GSK decides to perform or have performed such RequiredStudies, the JSC will review and discuss which of the Parties should undertakesuch Required Studies. Sepracor will provide all reasonable incidentalassistance to GSK and/or its Affiliates if GSK wishes to undertake the RequiredStudies itself, or via its Affiliates or any sub-contractor. Sepracor shallprovide such assistance free of charge, unless otherwise agreed in writing byGSK. In the event that GSK notifies Sepracor that it does not desire to incursuch expense, at any time after such notification Sepracor may, but shall notbe obligated to, terminate the Agreement with respect to the European Union(but not the rest of the GSK Territory) upon sixty (60) days written notice. Forthe avoidance of doubt, a decision not to pursue such Marketing Approval by GSKshall not be deemed a failure to exercise its Commercially Reasonable Efforts.

##  

## Inthe event that Sepracor believes that the use of the results of any RequiredStudy could be of material benefit to Sepracor in the Sepracor Territory, forexample, if the Required Study were the development of a [**] of the Product,the Parties shall [**], taking into account the costs of any assistance which may havebeen provided by Sepracor under this Section.

##  

## 4.4.                    Reporting: Adverse Drug Reactions. During the Transition Period, Sepracor shall,in accordance with Section 5.14, be responsible for filing all reportsrequired to be filed in order to maintain any IND, MAA and/or any MarketingApprovals filed or granted for the Product in the GSK Territory, includingreporting of adverse drug experiences.

##  

## 

 

**CONFIDENTIAL**

 

## **ARTICLE V.**

**REGULATORY MATTERS AND DEVELOPMENT ACTIVITIES**

 

## 5.1.                 Regulatory Matters.

##  

### (a)           Following the TransitionPeriod and for the Term of this Agreement, GSK shall retain all right, titleand interest in and to all Marketing Authorization Applications and MarketingApprovals for the Product in the GSK Territory, subject to the licenses grantedto Sepracor pursuant to Section 5.12 and the assignment and transfer ofsuch Marketing Authorization Applications and Marketing Approvals pursuant to Section 15.2(b).

###  

### (b)           Upon expiration or termination of the TransitionPeriod, GSK shall have sole responsibility for liaising with and managing allinteractions with Regulatory Authorities in relation to the Product in the GSKTerritory in connection with any and all regulatory filings. GSK shall provideSepracor with reasonable advance written notice of any meetings with theRegulatory Authorities related to the Product in Major Markets of the GSKTerritory and Sepracor shall have the right, but not the obligation, to attendand participate in such meetings in the Major Markets where legally permissible.Notwithstanding the foregoing, GSK shall provide Sepracor with a copy of anyregulatory submission and other substantive written material to be sent to anyRegulatory Authority in the GSK Territory for review and agrees to consider ingood faith any prompt comments Sepracor may have with respect to any suchregulatory filings or interactions.

###  

### (c)           Sepracor shall provide GSK with all reasonableassistance, in a timely manner, to support GSK’s activities in seeking andmaintaining Market Approval in the GSK Territory. Without limiting the above,Sepracor accepts that such assistance may extend to obtaining Certificatesof Pharmaceutical Product on behalf of GSK.

###  

### (d)           Following the Transition Period GSK shall report to the JSC the overall strategy and timeline of all material submissions and filings withany Regulatory Authority relating to the Product in the GSK Territory.

###  

### (e)           Each Party shall promptly notify the other Partyin writing of any material changes ormaterial issues that may arise in connection with any IND, MAA and/or anyMarketing Approvals in any country within their respective territories.

###  

### (f)            Sepracor acknowledges that in order forMarketing Approval to be obtained in many countries within the GSK Territorybut outside of the European Union, it will be necessary for GSK to obtain aCertificate of Pharmaceutical Product from a suitable reference country, eitherin the GSK Territory or in the Sepracor Territory. Sepracor agrees to provideGSK will all reasonable assistance in obtaining such Certificate ofPharmaceutical Product, and without limiting the foregoing, agrees inparticular to:

###  

### 

 

**CONFIDENTIAL**

 

### (i)            work with GSK to establish a supply route forthe Product which is capable of supporting the issue of a Certificate ofPharmaceutical Product from a suitable reference country;

###  

### (ii)           generate, if not already available, at GSK’sexpense, 30/75 stability data for the Product using the supply routeestablished under Section 5.1(f)(i) above;

###  

### (iii)          generate sufficient number of Product samples,at GSK’s expense, to support GSK’s activities in seeking and maintaining MarketApproval in the GSK Territory.

###  

### (g)                           Sepracor further acknowledges that until asupply route has been established under Section 5.1(f)(i), GSK will beunable to provide detailed regulatory orcommercialization plans, where required under this Agreement, in respect ofsuch countries where a Certificateof Pharmaceutical Product is required.

###  

## 5.2.                 Regulatory Plan. Within ninety (90) days following the expiryor termination of the Transition Period, GSK shall provide for review by theJSC an outline plan showing GSK’s plans for filing Marketing AuthorizationApplications and obtaining Market Approval in the GSK Territory. The regulatoryplan shall include a description of material regulatory activities to beundertaken during the following [**] years, including but not limited to,planned tasks and timelines for the conduct of the regulatory activities withrespect to all matters necessary to obtain Marketing Approval for the Productin each Major Market of the GSK Territory.

##  

## 5.3.                 Required Studies (Non-EMEA). In the event that any Regulatory Authority inthe GSK Territory (other than the EMEA) requires or requests in writing thatRequired Studies (other than those already initiated by Sepracor as of theEffective Date) be performed as a condition of, or in connection with, grantingMarketing Approval, [**] whether or not to conduct such Required Studies andcontinue to [**] in such country. If [**] shall undertake such Required Studies[**]. In the event that [**] does not [**], in relation to countries other thanthose within the European Union or for which a date for accession to theEuropean Union has been agreed, Sepracor may, but shall not be obligated to,terminate the Agreement with respect to the particular country or countrieswhere such Regulatory Authority has required such clinical trials and [**], andthe Agreement shall remain in full force and effect in the rest of the GSKTerritory. For the avoidance of doubt, a [**] shall not be deemed a failure toexercise its Commercially Reasonable Efforts.

##  

## Inthe event that [**] to undertake such Required Study, and Sepracor believesthat the use of the results of any Required Study could be of material benefitto Sepracor in the Sepracor Territory, for example, if the Required Study werethe development of a [**] of the Product, the Parties [**].

##  

## 5.4.                 Additional Development Activities of GSK. In addition to the studies permitted inSections 4.3 and 5.3, and in accordance with the then applicable approvedDevelopment Plan, GSK shall have the right, but not the obligation, toundertake, at GSK’s sole

##  

## 

 

**CONFIDENTIAL**

 

## expense, Commercialization Studies in the GSK Territory in support of GSK’scommercialization of the Product. GSK shall inform Sepracor pursuant to Section 5.6of its intention to pursue such Commercialization Studies prior to theirinitiation.

##  

## 5.5.                 Investigator Sponsored Clinical Study. For the avoidance of doubt, GSK shall be free,at GSK’s sole expense, to provide financial or in-kind support to clinicalstudies of the Product that are sponsored and conducted by a Third Party andundertaken in the GSK Territory (“Investigator Sponsored Clinical Studies”). GSK shall inform Sepracorpursuant to Section 5.6 of its intention to provide financial or in-kind support to such Investigator Sponsored Clinical Studiesprior to providing such support.

##  

## 5.6.                 Development Plan. In the event that GSK plans during the Term ofthis Agreement to undertake any Required Studies or Commercialization Studies,or to support any Investigator Sponsored Clinical Studies in the GSK Territory,GSK shall generate a Development Plan which shall be presented promptly to theJSC for review to ensure that the Development Plan takes into account and isconsistent with the global branding strategy for the Product. The DevelopmentPlan shall be supplemented, modified and updated regularly by GSK as and whenadditional relevant data and information become available, but in any event notless frequently than annually. Required Studies, Commercialization Studies andsupport for Investigator Sponsored Clinical Studies shall not commence untilsuch studies have been presented to the JSC for review and written notice ofthe studies sent to Sepracor. GSK shall keep the JSC advised on a timely basisof the progress of each such study.

##  

## 5.7.                 Sepracor’s Review and Final Approval. Notwithstanding anything to the contrarycontained in this Agreement, in the event that Sepracor in good faith believesthat any Development Studies GSK wishes to undertake or sponsor pursuant toSections 5.3 or 5.4, or any Investigator Sponsored Clinical Studies GSK wishesto support pursuant to Section 5.5 has a [**], Sepracor may providewritten notice to GSK within [**] of such studies being presented to the JSC,requesting that GSK shall not perform such Developmental Studies and/orshall not support such Investigator Sponsored Clinical Studies.

##  

### (a)           If such notice is received by GSK within the[**] period, GSK shall not commence such Developmental Study or support suchInvestigator Sponsored Clinical Study until mutual agreement or resolution ofany dispute has been achieved in respect of the performance of such study.

###  

### (b)           If GSK disputes the assessment of the [**], GSK may referthedispute to the Senior Executives. The Senior Executives shall negotiate in goodfaith to resolve the dispute within [**], or such longer period as mutuallyagreed. If the Senior Executivesare unable to resolve the dispute within such time period, [**].

###  

### (c)           For the avoidance of doubt, if Sepracor does notprovide such written notice with the above stated period, Sepracor’s approvalwill be deemed to have been received.

###  

### 

 

**CONFIDENTIAL**

 

## 5.8.                 Development Activities of Sepracor in the GSKTerritory. Sepracor shall havethe right, but not the obligation, to undertake future development within theGSK Territory in support of the commercialization of Product in the SepracorTerritory and the right, but not the obligation, to undertake futuredevelopment within the GSK Territory of Excluded Products. However, withrespect to Sepracor Studies, Sepracor shall generate a Sepracor DevelopmentPlan (the “Sepracor Development Plan”) which shall be presented promptlyto the JSC for review to ensure that the Sepracor Development Plan takes intoaccount, and is not inconsistent with, the branding strategy for the Product inthe GSK Territory. The Sepracor Development Plan shall include reasonablydetailed information regarding all such activities. It is acknowledged howeverthat in respect of Sepracor Studies not directly related to the Product, thelevel of information that will be required to be disclosed to enableappropriate review may be limited (except in respect of matters relating tosafety).

##  

## 5.9.                 Conduct of Activities. The Parties shall carry out all pre-clinicaland clinical studies related to the Product that they respectively undertake inthe GSK Territory in compliance with all applicable laws, rules and regulationsand in accordance with good scientific and clinical practices, applicable underthe laws and regulations of the relevant country in the GSK Territory.

##  

## 5.10.               Drug Master File.

##  

### (a)           Responsibility for Maintaining. Notwithstanding Section 5.1(a), Sepracor shallbe responsible for filing and maintaining Drug Master Files (“DMF”)relating to the Product and Active Ingredient contained in the Product, wheresuch DMF is either required by a Regulatory Authority or it is determined bythe JSC that DMF submission is preferable to incorporation of the DMFinformation in the applicable MAA. Sepracor shall file and maintain such DMFsin its own name, and/or in the name of its relevant suppliers, and shall permitGSK, its Affiliates and Sublicensees, to cross-reference such DMFs in theirregulatory filings for the Product in the GSK Territory.

###  

### (b)           Costs. Responsibility for the costs of filing and maintaining such DMFs shallbe Sepracor’s.

###  

### (c)           Closed Portions. Notwithstanding any other provisions of thisAgreement, the definitions of “Data” and “Sepracor Know-How”shall not include the closed portions of any such DMF, nor any informationcontained in any such portions of the DMF and thus, notwithstanding any otherprovision of this Agreement, Sepracor shall have no obligation to disclose toGSK or any of its Affiliates or Sublicensees the closed portions of such DMFsor any information contained therein. For the avoidance of doubt, RegulatoryAuthorities in the GSK Territory shall have the right to access the entire DMF,including any closed portions.

###  

## 5.11.               Exchange of Data and Know-How.

##  

### (a)           By Sepracor. Subject to the terms and conditions of this Agreement, Sepracor shall promptly make available to GSK all relevant SepracorKnow-How relating to the

###  

### 

 

**CONFIDENTIAL**

 

### Product, including all Data from any and all clinical trials andpreclinical studies for the Product that are Controlled by Sepracor as of theEffective Date or that will be obtained by Sepracor thereafter, subject in eachcase to Section 5.10. Sepracor shall also use its Commercially ReasonableEfforts to provide to GSK any Third Party manufacturer’s know-how which isnecessary for GSK to obtain Marketing Approval in the GSK Territory,

###  

### (b)           New Data. Notwithstanding Sections 5.10, 5.11(a) and 5.12, in the event that GSKrequires information relating to the Bulk Tablets in addition to that providedby or otherwise readily available to Sepracor to support GSK’s regulatoryfilings for Product in the GSK Territory, Sepracor shall conduct, at GSK’sexpense, such work as is necessary to produce the necessary chemistry,manufacturing and controls (“CMC”) information or other regulatorydocumentation reasonably required to support such regulatory filings (providedthat GSK shall be responsible for, at its expense, any additional clinicaltrial work required for such filings). The obligation of Sepracor to providesuch CMC data or other regulatory documentation reasonably required to supportsuch regulatory filings will include, without limitation, CMC information orother regulatory documentation reasonably required to support such regulatoryfilings beyond what was required for the U.S.A. regulatory approval, to supportinitial as well as filed regulatory submissions for Product in the GSKTerritory, support on an ongoing basis to deal with regulatory questions,provision of on-going stability data, batch analysis, etc. for licenserenewals, CMC data for variations, any response to questions relating torenewals and variations, as well as any other data required to meet anyregulatory inspection requirements. For the avoidance of doubt, Sepracor’sobligations do not extend to questions regarding finishing operations performedby GSK.

###  

### (c)           Provision of Data to JSC. Upon request by the JSC, GSK and Sepracorshall promptly provide the JSC with summaries in reasonable detail of all Datagenerated or obtained in the course of the performance of activities under theDevelopment Plan or the Sepracor Development Plan respectively. For the avoidanceof doubt, this obligation shall not extend to provision of data not related tothe Product and only relating to Excluded Products.

###  

## 5.12.               Sharing of Regulatory Filings. Without limiting Section 5.11 above, andwithout prejudice to the terms of the Supply Agreement, GSK and Sepracor shallpermit the other to access, and shall provide the other Party with sufficientrights to reference and use in association with exercising its rights andperforming its obligations under this Agreement, all of such Party’s, itsAffiliates’ and Sublicensees’ Data, regulatory filings and material regulatorycommunications associated with any submissions of INDs, MAAs, MarketingApprovals or other approvals for the Product in the GSK Territory and in theSepracor Territory, respectively. It is understood that such rights and accessshall be limited respectively to Sepracor’s, its Affiliate’s and sublicensees’commercialization of the Product in the Sepracor Territory and to GSK’s, itsAffiliate’s and Sublicensee’s commercialization of the Product in the GSKTerritory.

##  

## 5.13.               Regulatory Co-operation. Without limiting Section 5.11 above, in theevent that either Party receives enquiries from a Regulatory Authority in theirrespective territory, regarding filings or communications made, or activitiesbeing undertaken in the other Party’s

##  

## 

 

**CONFIDENTIAL**

 

## respective territory, the other Party shallprovide all reasonable co-operation to enable the original Party to respond tothe Regulatory Authority’s enquiries.

##  

## 5.14.               Reporting: Adverse Drug Reactions.

##  

### (a)           Sepracor and GSK shall be responsible for filing all reports required tobe filed in order to maintain any IND, MAA and/or any Marketing Approvalsgranted for the Product in the Sepracor Territory or the GSK Territory, respectively,including reporting of adverse drug experiences; *provided,however*, that during the Transition Period, Sepracor shall beresponsible for such filings in the GSK Territory.

###  

### (b)           The Parties shall be responsible to ensure that their respective Affiliatesand sublicensees comply with all such reporting obligations.

###  

### (c)           The Parties will exchange all pharmacovigilance relevant informationpursuant to a separate pharmacovigilance agreement to be executed within ninety(90) days of the Effective Date (the “Pharmacovigilance Agreement”). Thestandards set forth in the Pharmacovigilance Agreement shall be no lessstringent than those set forth in the ICH Guidelines and shall provide, amongother things, that:

###  

#### (i)            The Parties will comply with regulatory requirementsfor the reporting of safety data in accordance with standards stipulated in theICH Guidelines, and all applicable regulatory and legal requirements regardingthe management of safety data;

####  

#### (ii)           The Parties will exchange relevant safety datawithin appropriate timeframes and in an appropriate format to enable them tomeet both expedited and periodic local and international regulatory reportingrequirements and to facilitate appropriate safety reviews; and

####  

#### (iii)          Sepracor shall be the holder of the world-widesafety database for all adverse events.

####  

### (d)           Furthermore, Sepracor commits to the establishment of pharmacovigilancesystems in compliance with applicable regulatory requirements and todemonstrate comprehensively those systems, particularly their system forproducing PSURs, to GSK prior to the end of the Transition Period. In the eventthat GSK has any reasonable concerns after such demonstration, GSK and Sepracorwill co-operate in good faith to resolve such concerns.

###  

### (e)           Prior to the end of the Transition Period, Sepracor shall establish aseparate pharmacovigilance agreement with each Third Party to which Sepracorhas granted rights to promote, market and sell the Product in the SepracorTerritory, or part thereof. In the event that after the Effective Date,Sepracor grants to any Third Party rights to promote, market and sell theProduct in the Sepracor Territory, or any part thereof, Sepracor shall enterinto a separate pharmacovigilance agreement in connection with such grant. Thestandards set forth in

###  

### 

 

**CONFIDENTIAL**

 

### such pharmacovigilance agreement(s) shall be not less stringent than asprovided for under (c) above.

###  

## 5.15             Marketing Approval Challenge. In the event that Sepracor or GSK becomesaware of an actual or threatened challenge to the data exclusivity rightsrelating to any Marketing Approval within the GSK Territory, that Party shallpromptly notify the other Party in writing. The Parties shall meet to discuss acoordinated response to such challenge prior to any action being taken. NeitherParty shall be required by the other Party to take any action in relation tosuch challenge, which in its absolute discretion it does not want to take. EachParty shall be entitled, without obligation, toindependently initiate proceedings or take other appropriate action in relationto such challenge at its own expense. The Party conducting such action shallhave full control over its conduct, including settlement thereof; *provided*, however, that the Party conducting such action maynot settle any such action, or make any admissions or assert any position insuch action, in a manner that would materially adversely affect the rights orinterests of the other Party whether within or outside the jurisdiction inwhich the action is brought, without the prior written consent of the otherParty, which consent shall not be unreasonably withheld or delayed.

##  

**ARTICLEVI.COMMERCIALIZATION, MARKETING AND PROMOTION**

 

## 6.1.                 Commercialization Plan. The parties understand that the level ofspecificity of the Commercialization Plan will vary according to the stage ofdevelopment of the Product relative to Marketing Approval and/or determinationof pricing in the Major Markets. However, the following shall apply to thedevelopment, review and approval of such Commercialization Plan:

##  

### (a)           On an annual basis, GSK shall prepare and deliver to the JSC, for itsreview, a proposed plan for the marketing, sale, advertising, and salesactivities (including pre-launch market development and market research) forthe Product in the GSK Territory. For the Major Markets, the plan will outlinein as much detail as practicable given the stage of commercialization of theProduct annual [**]. (The first such plan being the “InitialCommercialization Plan” and such later plans, including any amendments tothe Initial Commercialization Plan, as amended from time to time, herein afterreferred to as the “Commercialization Plan”). The InitialCommercialization Plan shall be delivered on or before [**].

###  

### (b)           The Commercialization Plan shall be supplemented, modified and updatedregularly by GSK as and when additional relevant data and information becomeavailable, but in any event not less frequently than annually. Any fundamentalmodifications made to the Commercialization Plan shall be delivered to the JSCfor review promptly following such modifications, even when such may occurbetween regularly scheduled meetings.

###  

### 

 

**CONFIDENTIAL**

 

## 6.2.                 Marketing and Advertising Campaign. GSK shall provide the JSC with a detailed overview of the first proposed CoreCampaign Product Strategy and any subsequent versions which are a materialchange of strategy or visuals (and any local core marketing materials that falloutside the Core Campaign Product Strategies) to be used in the GSK Territory,which the JSC shall review to ensure that the Core Campaign Product Strategy shall beconsistent with the global branding strategy for the Product. Notwithstanding anything to the contrarycontained in this Agreement, in the event that Sepracor in good faith believesthat any part of the proposed Core Campaign Product Strategy has a reasonablelikelihood of materially adversely affecting the volume of net sales in theSepracor Territory, Sepracor may provide written notice to GSK within [**] ofsuch Core Campaign Product Strategybeingpresented to the JSC requesting that such part of the Core Campaign Product Strategy not beimplemented.

##  

### (a)           If such notice is received by GSK within the [**] period, GSK shall notimplement such part of the core marketing and advertising campaign until mutualagreement or resolution of any dispute has been achieved in respect of the useof the proposed core marketing and advertising campaign.

###  

### (b)           If GSK disputes the assessment of the reasonable likelihood of materialadverse effect, GSK may refer the dispute to the Senior Executives. The SeniorExecutives shall negotiate in good faith to resolve the dispute within [**]. If the Senior Executives are unable to resolvethe dispute within such time period, Sepracor’s decision shall be binding.

###  

### (c)           For the avoidance of doubt, if Sepracor does not provide such writtennotice with the above stated period, Sepracor’s approval will be deemed to havebeen received.

###  

## 6.3.                 Responsibilities of GSK under theCommercialization Plan. Otherthan manufacturing of the Product, GSK shall have the exclusive right to engagein, and shall be solely responsible for, all activities set forth in theCommercialization Plan and [**]. As part of the Commercialization Plan, GSKshall:

##  

### (a)           use its Commercially Reasonable Efforts to commercialize the Product inthe GSK Territory, including seeking approval from relevant RegulatoryAuthorities regarding price and reimbursement of the Product in the GSKTerritory;

###  

### (b)           use its Commercially Reasonable Efforts to perform pre-commercializationanalysis, planning, market preparation and related marketing activities in theGSK Territory;

###  

### (c)           use its Commercially Reasonable Efforts to carry out the distribution,marketing and sales of the Product in the GSK Territory;

###  

### (d)           incur at least an aggregate of [**] Dollars ($[**]) in support ofpre-launch marketing efforts allocated amongst all the countries in the GSKTerritory;

###  

### 

 

**CONFIDENTIAL**

 

### (e)           conduct the Commercialization Plan in compliance with all applicablelaws;

###  

### (f)            provide suitable storage and handling inaccordance with the labeling and specifications for the Product and otherappropriate facilities and services as needed for the storage and continuoussale and distribution of the Product throughout the GSK Territory;

###  

### (g)           provide all medical information services for the Product in the GSKTerritory, which may include, telephone hotlines, informational fax programs,mail response programs;

###  

### (h)           administer and pay any chargebacks, rebates, administrative service feesand other discounts and fees with respect to the Product in the GSK Territorywhich from time to time GSK may agree to give or may be required underapplicable laws to give to payors or purchasers of the Product;

###  

### (i)            use its Commercially Reasonable Efforts toadequately train sales representatives;

###  

### (j)            use its Commercial Reasonable Efforts toundertake an analysis of the intellectual property position in any country ofthe GSK Territory where a launch of the Product is anticipated, and wheredeemed necessary by GSK, develop Other Trademarks for review and approval bythe JSC;

###  

### (k)           use Commercially Reasonable Efforts to conduct its commercialization ofthe Product in accordance with the Commercialization Plan ; and

###  

### (l)            [**] after the end of each Calendar Year,furnish Sepracor with reasonably detailed summary written reports on allactivities conducted by GSK under the Commercialization Plan during suchcalendar year. Information shall be provided on a country by country basis forthe Major Markets.

###  

## 6.4.                 Failure to Launch.

##  

### (a)           For the avoidance of doubt and subject to the other terms in thisSection 6.4, the Parties hereby accept that the failure to launch the Productin any country or countries shall not, *per se*, bedeemed a breach of GSK’s obligations to use Commercially Reasonable Efforts tocommercialize the Product. Where GSK’s decision not to launch in any specificcountry is founded on GSK’s good faith belief that the Product is notcommercially viable in such country, for example because of pricing andreimbursement concerns or that the launch of the Product in such country wouldadversely affect the amount of Net Sales that would be achieved in the GSKTerritory, GSK shall not be required to and Sepracor shall not have the rightto terminate this Agreement in such country, except as described in Section6.4(b). However, for the avoidance of doubt: (i) GSK’s good faith belief mustbe supported by actual interactions with Regulatory Authorities or other goodfaith objective evidence which supports

###  

### 

 

**CONFIDENTIAL**

 

### GSK’s conclusions; (ii) GSK must share its financial assessment, inreasonable detail, setting forth why the Product is not in good faith deemedcommercially viable; and (iii) the JSC is to be notified and have theopportunity to review any such decision not to launch the Product in a country.

###  

### (b)           Nothwithstanding anything else herein, where (i) the GSK decisions inSection 6.4(a) at any time combine so that GSK has decided that it will notlaunch in [**], or (ii) GSK has failed to launch in [**] following EMEAapproval, Sepracor has the right to terminate this Agreement, on acountry-by-country basis, in [**] by giving GSK sixty (60) days written noticeto that effect at any time thereafter, provided that GSK has not in theinterim, prior to receipt of notice of termination from Sepracor, notifiedSepracor that it plans to launch in [**].

###  

## 6.5.              Price and Reimbursement. GSK shall be solely responsible for anydecisions and negotiations with relevant Regulatory Authorities regarding priceand reimbursement of the Product in the GSK Territory. Sepracor shall be fullyand contemporaneously updated of on all efforts by GSK with respect to pricingand reimbursement matters provided that the disclosure of such information isfor information purposes only.

##  

## 6.6.              Booking Sales. GSK will book all sales for the Product in the GSK Territory.

##  

## 6.7.              Sepracor Support. Sepracor shall provide GSK with reasonableassistance, in a timely manner, to support GSK’s activities in commercializingthe Product in the GSK Territory, including but not limited to provision of arepresentative set of Sepracor Materials (as defined below). Sepracor Materialsshall mean copies of advertising, promotional, educational and communicationmaterials, produced by Sepracor for marketing, advertising and promotion ofProduct for distribution to Third Parties (including medical professionals) andto Sepracor’s sales forces in the United States, together with programs relatedto patient education, physician education and disease management programs.

##  

**ARTICLEVII.PAYMENTS**

 

## 7.1.                 Initial License Fee. In consideration for the licenses grantedhereunder under Sepracor Patents and Sepracor Know-How, GSK shall pay toSepracor an initial license fee in the amount of Twenty Million US Dollars ($20,000,000)within five (5) Business Days followingGSK’s receipt of an invoice for such license fee in accordance with the paymentprovisions of Article VIII. Sepracor intends to deliver to GSK within five (5)Business Days of the Effective Date such invoice for the license fee. Theinitial license fee set forth in this Section shall not be refundable orcreditable against any future milestone payments, royalties or other paymentsby GSK to Sepracor under this Agreement.

##  

## 

 

**CONFIDENTIAL**

 

## 7.2.                 Milestone Payments.

##  

### (a)           Milestone Payments. In further consideration for the licensesgranted hereunder under Sepracor Patents and Sepracor Know-How, GSK shall payto Sepracor the milestone payments set out below following the firstachievement by GSK, or any of its Affiliates or Sublicensees, individually orin the aggregate, of the corresponding milestone, in accordance with thisSection 7.2 and the payment provisions in Article VIII:

###  

| **Milestone  Events**                                                            | ** ** | **Milestone  Payments** | ** ** |
|----------------------------------------------------------------------------------|------------|-------------------------|------------|
| Centralized  EMEA approval with new active substance status and Target Label     |       | $                       | [**]       |   |
| Positive  [**]                                                                   |       | $                       | [**]       |   |
| Approved  reimbursement price of €[**] or more per [**]mg tablet in France  |       | $                       | [**]       |   |
| Approved  reimbursement price of €[**] or more per [**]mg tablet in Germany |       | $                       | [**]       |   |

 
| **Sales  Threshold Milestones**                                 | ** ** | **Milestone  Payments** | ** ** |
|-----------------------------------------------------------------|------------|-------------------------|------------|
| First  achievement of Calendar Year Net Sales of €[**] (2) |       | $                       | [**]       |   |
| First  achievement of Calendar Year Net Sales of €[**]     |       | $                       | [**]       |   |
| First  achievement of Calendar Year Net Sales of €[**]     |       | $                       | [**]       |   |

 
| **Total Potential Milestones**                                 | ** ** | **Total** | ** **      |
|--------------------------------------------------------------------------|------------|-----------|-----------------|
| **Potential Milestone Events plus Potential Sales Threshold Milestones** | ** ** | **$**     | **135,000,000** | ** ** |
|                                                                          |            |           |                 |  |

 

----

[**]

 

(2)For the avoidance of doubt, in the event that, for example, the first time NetSales of the Product in the GSK Territory in any Calendar Year reaches €[**],is the same Calendar Year that Net Sales of the Product in the GSK Territoryreaches €[**] for the first time, Sepracor shall be entitled to a milestonepayment equal to $[**] for such Calendar Year (calculated by [**]).

 

### (b)           Reports and Payments. GSK shall notify Sepracor in writing withinthirty (30) days after the achievement of each milestone set out in Section7.2(a) by GSK, or any of its Affiliates or Sublicensees. GSK shall makepayments within thirty (30) days of receipt of invoice issued by Sepracorfollowing achievement of such milestone. Any milestone payable by GSK pursuantto Section 7.2(a) shall be made no more than once with respect to theachievement of each such milestone and no payment shall be due for a milestonewhich is not achieved. The milestone payments set forth in Section 7.2(a) shallnot be refundable and shall not be creditable against future milestonepayments, royalties or other payments to Sepracor under this Agreement.

###  

### (c)           Target Label Dispute. Any dispute regarding the Target Label shall beresolved in the following manner:

###  

#### (i)            GSK and Sepracor shall each appoint a [**] (“Company RA Executives”) to meet todiscuss whether the Target Label has been met. If, after [**], the Company RAExecutives are unable to agree about whether the Target Label has been met,they shall agree upon one additional independent party, unaffiliated witheither party, who is an acknowledged expert in product labeling within the EU(“Independent RA Expert”). If the Parties are unable to agree on theselection of an Independent RA Expert within a further [**],

####  

#### 

 

**CONFIDENTIAL**

 

#### either Party may apply to the World IntellectualProperty Organization Arbitration and Mediation Center to seek theirappointment of an Independent RA Expert.

####  

#### (ii)           The Independent RA Expert shall meet with theCompany RA Executives, alone, within [**] of his/her appointment and the groupshall work for up to [**] to agree unanimously upon a conclusion. If the groupis unable to make a unanimous decision in that period of time, then a majorityvote shall prevail.

####  

#### (iii)          All costs of the above procedure to be borne bythe party incurring them, except that the costs related to the Independent RAExpert are to be jointly and evenly shared.

####  

## 7.3.              Royalty Payments.

##  

### (a)           Royalty Rate. Subject to the terms and conditions of this Agreement, in furtherconsideration of the rights granted to GSK under this Agreement, GSK shall payto Sepracor royalties at the rates set out below on Calendar Year Net Sales ofthe Product in the GSK Territory;

###  

| **Calendar  Year Net Sales****In GSK Territory**                                                                    | ** ** | **Royalty Rate** | ** ** |
|---------------------------------------------------------------------------------------------------------------------|------------|------------------|------------|
| On  the first €[**] of Net Sales of Product in the GSK Territory in each Calendar  Year                        |       | [**]             | %          |
| On  additional Net Sales of Product in the GSK Territory in each Calendar Year  > €[**] but < €[**] |       | [**]             | %          |
| On  additional Net Sales of Product in the GSK Territory in each Calendar Year  > €[**]                     |       | [**]             | %          |

###  

### (b)           Royalty Term. GSK’s obligation to make royalty payments pursuant to Section 7.3(a)will commence upon the first commercial sale of the Product in the GSKTerritory by GSK, its Affiliates or Sublicensees and will continue on acountry-by-country basis for the Term.

###  

### (c)           Royalty Rate Reduction. On a country-by-country basis, GSK’s royaltyrate obligation set forth in Section 7(a) shall be reduced by [**]% upon theearlier occurring of:

###  

#### (i)            Upon the later of (I) the expiration of the lastValid Claim within a Patent Controlled by Sepracor that would be infringed bythe licensed activities in such country

####  

#### 

 

**CONFIDENTIAL**

 

#### in the absence of the licenses granted hereunderto GSK, or (II) ten (10) years post first launch in the GSK Territory.

####  

#### (ii)           Upon the total amount of Third Party sales of Generic Products in anycountry in the GSK Territory first exceeding [**] percent ([**]%) of the totalsales by GSK, its Affiliates and Sublicensees of Product in such country in anyCalendar Quarter, measured on a unit basis. For the purposes of this Section7.3(c)(ii), the amount of sales of Products shall be ascertained by reputablepublished marketing data for such country (e.g. by reference to Standard Units data collected by IMS) or as otherwise mutually agreed. The term “GenericProduct” refers to a pharmaceutical product, which is marketed by an entityother than GSK, its Affiliates or its Sublicensees, containing the ActiveIngredient as the single therapeutically active ingredient, in a form anddosage capable of being prescribed as an alternative to the Product.

####  

#### *provided*, however, such royalty reduction shall only beimplemented once per country of the GSK Territory.

####  

#### (iii)          Net Sales in countries where a royalty rate reduction is appliedpursuant to Section 7.3(c)(i) or 7.3(c)(ii) shall not be included in thecalculation of Calendar Year Net Sales in GSK Territory for the purpose ofdetermining royalty rate thresholds pursuant to Section 7.3(a).

####  

#### (iv)          A hypothetical example showing how royaltieswould be calculated in a situation where royalties are payable in full in somecountries and at the reduced rate in others, is attached hereto as ***Schedule 7.3(c)***.

####  

### (d)           Reports and Royalty Payment. During the Term of this Agreement, followingthe first commercial sale of the Product within the GSK Territory, within [**]after the end of each Calendar Quarter, GSK shall deliver to Sepracor a reportsetting out (on a country by country basis and in the aggregate) Net Sales inthe relevant Calendar Quarter and all exchange rate conversions in accordancewith Section 8.2(b). In addition, in such report GSK shall set out for [**]:

###  

#### (i)            units of the Product sold during the relevantCalendar Quarter;

####  

#### (ii)           gross sales figure of the Product in the relevantCalendar Quarter; and

####  

#### (iii)          a summary of deductions made in accordance withSections 1.31 and 7.3(c).

####  

Allpayment amounts due under Section 7.3(a) for such Calendar Quarter shallaccompany such statement.

 

----

 

**CONFIDENTIAL**

 

### (e)           Limitation on Royalties; Annual RoyaltyReconciliation.

###  

#### (i)            Subject to Section 7.3(e)(ii), in any givenCalendar Year, the amount of the royalties paid hereunder plus the aggregateprice paid by GSK for Bulk Tablets for Product sold in such Calendar Year shallnot exceed [**]% of the aggregate Net Sales in such Calendar Year. On a dosageform basis, the aggregate price paid by GSK for Bulk Tablets for Product soldin such Calendar Year shall be determined by calculating the average priceinvoiced during such Calendar Year for the volume of Bulk Tablets required onaverage to make one unit of Product, and multiplying such average price by thenumber of units of Product sold during such Calendar Year. A hypotheticalexample showing how the above calculation would operate is attached hereto as ***Schedule 7.3(e)***.

####  

#### (ii)           Within [**] following the end of each CalendarYear, GSK shall provide Sepracor with a reconciliation of royalties due androyalties paid during such Calendar Year (the “Reconciliation Report”),including but not limited to the information required in Section 7.3(d) and astatement regarding (i) the aggregate price paid by GSK for Bulk Tablets forProduct sold in such Calendar Year; (ii) the average price invoiced during such Calendar Year for the volume ofBulk Tablets required on average to make one unit of Product; and (iii) thenumber of units of Product sold during such Calendar Year. Copies of GSK’sreports setting forth its computation of such amounts shall be submitted toSepracor with the Reconciliation Report. Unless Sepracor notifies GSK within[**] (the “Reconciliation Review Period”) after its receipt of theReconciliation Report that it objects to the computation, the report shall bebinding and conclusive.

####  

#### (iii)          During the Reconciliation Review Period, GSK shallpermit an independent certified public accounting firm of internationallyrecognized standing selected by Sepracor and reasonably acceptable to GSK, atSepracor’s expense, to have access to the relevant books and records of GSK(including, without limitation, records of barters and counter-trades) duringGSK’s normal business hours to verify the Reconciliation Report. Sepracor willprocure in such inspection to minimize disruption of the normal businessactivities of GSK to the extent reasonably practicable. The accounting firmshall disclose to Sepracor only whether the royalty reports are correct orincorrect and the specific details concerning any discreprencies. In the eventthat such independent accountant’s review of the Reconciliation Report determinesthat there has been an underpayment by GSK of royalties and that suchunderpayment exceeds five percent of the total amount owed for the CalendarYear, GSK shall reimburse Sepracor the reasonable and necessary fees andexpensed of the independent accountant performing the audit.

####  

#### (iv)          If the reconciliation determines that payment isowed from one Party to the other, the Party owing payment shall pay the amountowed within thirty (30) days of the Parties’ agreement on the ReconciliationReport or the independent accountant’s determination of such amount.

####  

## 7.4.                 Discounting. In the event that GSK or any of its Affiliates sell the Product to aThird Party as part of a bundle of products or services being purchased fromGSK or its Affiliates, and GSK or its Affiliates discount the sales price ofthe Product to a greater degree than GSK or its Affiliate discounts the priceof their other products or services to such customer then, in such case, theNet Sales for the sale of the Product to such Third Party shall be deemed

##  

## 

 

**CONFIDENTIAL**

 

## to equal the arm’s length price that ThirdParties would generally pay for the Product alone when not purchasing any otherproduct or service from GSK or its Affiliate.

##  

## 7.5.                 Third Party Licenses

##  

### (a)           If either Party deems it necessary or advisable to obtain a license, orother rights to any Patent which may be or have the potential of being aBlocking Patent(s), such Party shall notify the other Party in writing. If theother Party agrees, then the Parties shall discuss in good faith the procedureby which the Parties will seek to obtain such license or other rights. Thecosts paid to a Third Party (including royalties, upfront, initial, milestonesand periodic payments) associated with obtaining such license or other rights inrelation to the GSK Territory shall be shared equally by the Parties.

###  

### (b)           If the other Party disagrees with the initial assessment that it isnecessary or advisable to obtain such license or rights to any Patent referredto in Section 7.5(a), the Party desiring the license shall obtain an opinion ofindependent patent counsel approved by the other Party (such approval not to beunreasonably withheld or delayed) to review infringement, validity andenforceability of the Patent(s) and the conclusions contained in such opinionshall be binding on both Parties. In the event that in the opinion of suchindependent patent counsel the identified Patent(s) may reasonably beexpected to be held in subsequent legal proceedings to be infringed, valid andenforceable by any one of the activities licensed hereunder to GSK, then the Parties shall immediately proceed inthe manner provided in Section 7.5(a) as if both Parties had initially agreedto seek the license or other rights. The fees, costs and expenses of the aboveindependent patent counsel incurred in connection with this Section 7.5(b)shall be [**].

###  

## 7.6.                 Third Party Technology. If after the Effective Date Sepracor or any ofits Affiliates acquires an assignment of, or license under, Third PartyTechnology (other than Patents licensed or otherwise acquired pursuant toSection 7.5) for use in connection with the research, development,commercialization or manufacture of the Product in or for the GSK Territory,then Sepracor will promptly provide GSK with written notice of such acquisitionand any additional financial terms to which Sepracor would be subject if GSKwere to exploit a license under such Third Party Technology. If GSK desires toobtain such license, the Parties will promptly amend this Agreement to reflectsuch additional financial terms and to provide that the applicable Patents,know-how, data, or filings will be included in the definition of SepracorTechnology under this Agreement. For the avoidance of doubt, if GSK does notdesire to obtain such license, such Third Party Technology shall not beincluded in the definition of Sepracor Technology under this Agreement.

##  

## 7.7.                 Compulsory licenses. 

##  

### (a)           In the event that a governmental agency in any country in the GSKTerritory grants or compels Sepracor to grant a compulsory license to any ThirdParty with respect to the Product, GSK shall have the benefit in such countryof the terms granted to such Third Party to the extent that such terms are morefavorable than those of this Agreement.

###  

### 

 

**CONFIDENTIAL**

 

### (b)           If under applicable law in any country in the GSK Territory agovernmental agency in any country grants or compels GSK to grant a compulsorylicense to any Third Party with respect to the Product, insofar as GSK iscompensated on a royalty basis (as a percentage of the Sublicensee’s Net Sales)at a royalty rate lower than the royalty rate provided by Section 7.3, then theroyalty rate to be paid to Sepracor by GSK on Net Sales in that country underSection 7.3 shall be reduced to the rate paid to GSK by the compulsorylicensee.

###  

## 7.8.                 Other Provisions**.**All royalties aresubject to the following conditions:

##  

(a)               only one royalty shall be due with respect tothe same unit of Product; and

 

(b)               no royalties shall accrue on the disposition, inreasonable quantities, of Product by GSK, its Affiliate or Sublicensees assamples (promotion or otherwise) or as donations (for example, to non-profitinstitutions or government agencies for a non-commercial purpose) and withoutdirect or indirect consideration.

 

**ARTICLE VIII.**

** **

**PAYMENTS, BOOKS AND RECORDS**

** **

## 8.1.                 Payment Method. All payments under this Agreement shall be made by bank wire transferin immediately available funds to an account, capable of receiving UnitedStates Dollars, designated in writing by Sepracor. Payments hereunder will beconsidered to be made as of the day on which they are received by Sepracor’sdesignated bank.

##  

## 8.2.                 Payment Currency: Currency Conversion.

##  

### (a)           United States Dollars. Unless otherwise expressly stated in thisAgreement, all amounts specified to be payable under this Agreement are inUnited States Dollars and shall be paid in United States Dollars.

###  

### (b)           Currency Conversion. Net Sales in countries invoiced in currencyother than United States Dollars or European Euros, as appropriate, shall betranslated to United States Dollars or European Euros, as necessary, using [**]for the translation of foreign currency into United States Dollars or EuropeanEuros, as appropriate, as employed on a consistent basis by [**] and publishedaccounts. GSK confirms that as of the Effective Date its current standardexchange rate methodology sources exchange rates from Reuters.

###  

## 8.3.                 Fees, Expenses and Taxes

##  

### (a)           Fees and Expenses. Each Party shall pay all fees and expensesincurred by such Party in connection with this Agreement, except as otherwiseexpressly provided herein.

###  

### 

 

**CONFIDENTIAL**

 

### (b)           Withholding Taxes. If laws or regulations require withholding byGSK of any taxes imposed upon Sepracor on account of any royalties or otherpayments paid under this Agreement, such taxes shall be deducted by GSK asrequired by law from such payment and shall be paid by GSK to the proper taxingauthorities. Official receipts of payment of any withholding tax shall promptlybe secured and promptly sent to Sepracor as evidence of such payment. TheParties will cooperate and exercise their reasonable efforts to ensure that anywithholding taxes imposed are reduced as far as possible under the provisionsof any applicable tax treaty and shall cooperate in filing any forms requiredfor such reduction.

###  

Sepracor warrants that Sepracor is resident for taxpurposes in the United States and that Sepracor is entitled to relief fromUnited Kingdom income tax under the terms of the double tax agreement betweenthe United Kingdom and the United States. Sepracor shall notify GSK promptly inwriting in the event that Sepracor ceases to be entitled to such relief.

 

### Pending receipt of formalcertification from the United Kingdom Inland Revenue, GSK may pay royaltyincome and any other payments under this Agreement to Sepracor by deducting taxat a rate specified in the double tax treaty between the United Kingdom and theUnited States. Sepracor agrees to indemnify and hold harmless GSK against anyloss, damage, expense or liability arising in any way from a breach of theabove warranties or any future claim by a United Kingdom tax authority or othersimilar body alleging that GSK was not entitled to deduct withholding tax onsuch payments at source at the treaty rate.

###  

### (c)           Sales Taxes. All amounts to be paid under this Agreement are stated exclusive ofany sales, use, value-added, goods and services or other applicable taxes,which shall be invoiced separately. Where appropriate, Sepracor shall provide GSKwith a valid tax invoice. GSK shall upon receipt from Sepracor of a valid taxinvoice pay to Sepracor the amount of any such applicable tax. Should anyamounts of VAT paid by GSK to Sepracor be refunded subsequently by the fiscalauthorities to Sepracor, Sepracor will refund these monies to GSK within thirty(30) days of receipt.

###  

## 8.4.                 Records: GSK shall keep, and require its Affiliates and Sublicensees to keep,complete, true and accurate books of accounts and records for the purpose ofdetermining the amounts payable to Sepracor pursuant to this Agreement. Suchbooks and records shall be kept for such period of time required by law, but noless than at least [**] years following the end of the Calendar Quarter towhich they pertain. Such records shall be subject to inspection in accordancewith Section 7.3(e).

##  

## 8.5.                 Late Payments. Any payments or portions thereof due under this Agreement that are notpaid by the date such payment is due shall bear interest at an annual rateequal to the prime rate as published in the *Wall Street Journal*,Eastern edition, plus two percent (2%) per year, calculated on the number ofdays such payment is delinquent, compounded annually, and computed on the basisof a three hundred sixty five (365) day year. The provisions of this Section8.5 shall in no way limit any other remedies available to Sepracor. The Partiesagree that this provision, unless otherwise provided, will not apply topayments that are the result of a subsequent adjustment of an estimatedpayment, including rebates, adjustments, returns or

##  

## 

 

**CONFIDENTIAL**

 

## reconciliations, nor to payments that are thesubject matter of a good faith dispute between the Parties.

##  

**ARTICLE IX.**EXCLUSIVITY OBLIGATIONS****

 

## 9.1           GSK Commitments.

##  

### (a)           Subject to Section 9.1(b) below, on a country-by-country basis withinthe GSK Territory, during the Term of the Agreement, neither GSK nor any of itsAffiliates shall promote, market orsell any Acquired Competing Product for any Product Indication.

###  

### (b)           It shall not be a breach of Section 9.1(a) above for GSK or itsAffiliates to promote, market or sell an Acquired Competing Product to whichrights were acquired as part of an Acquisition Transaction until such time asGSK or its Affiliate has divested such Acquired Competing Product in accordancewith Section 9.1(c) below.

###  

### (c)           On a country-by-country basis within the GSK Territory, during the Termof the Agreement, in the event that GSK or its Affiliates acquire rights aspart of an Acquisition Transaction to develop, promote, market or sell in acountry in the GSK Territory any Acquired Competing Product, GSK or itsAffiliates shall give written notice to Sepracor within [**] and use itsreasonable endeavors to divest its rights to such Acquired Competing Product insuch country within [**] of acquiring the rights to such Acquired CompetingProduct. If GSK or its Affiliates fail to divest such Acquired CompetingProduct within [**] of acquiring the rights to such Acquired Competing Product,and GSK or its Affiliates are actively promoting the Acquired Competing Product,Sepracor shall have the right to give ninety (90) days written notice to GSKterminating this Agreement on a country-by-country basis where the rights tosuch Acquired Competing Product have not been divested, provided that suchtermination shall not take effect in the event that during such notice periodGSK or its Affiliates have divested the rights to such Acquired CompetingProduct.

###  

### (d)           On a country by country basis within the GSK Territory, during the Termof this Agreement, neither GSK nor any of its Affiliates shall promote, marketor sell, or enter into any agreement to promote, market or sell for thetreatment of any Product Indication(s) any compound, other than the Product, which specifically and selectivelytargets [**].

###  

### (e)           Subject to the above, GSK and its Affiliates retain the absolute freedomwithout restriction or limitation to research, develop, manufacture andcommercialize products for Product Indication(s) which may compete with theProduct in the GSK Territory or any part thereof (“GSK Competing Products”). Inthe event, however, that in any country in the GSK Territory during the TermGSK or any of its Affiliates file a MAA in which approval is sought for themarketing of a GSK Competing Product for a Product Indication, within [**] offiling such MAA, GSK shall notify the JSC whether GSK has decided to exerciseits right to either: (i) terminate this Agreement in its entirety by providingtwelve months’ notice to Sepracor; or (ii) to

###  

### 

 

**CONFIDENTIAL**

 

### continue the commercialization of the Product, based on GSK’s medicaland commercial assessment that the Product and the GSK Competing Product canadequately be positioned in the marketplace (“Commercialization Option”). Inthe event that the Commercialization Option is selected, GSK shall on acountry-by-country basis make minimum royalty payments under Section 7.3(a) foreach subsequent Calendar Year, or for part thereof, where GSK is simultaneouslycommercializing in such country the Product and a GSK Competing Product for oneor more Product Indications, as stated below:

###  

(I)            During the period from the date of [**] until[**], the minimum annual royalty payment payable by GSK to Sepracor in relationto [**] would be [**] percent ([**]%) of the royalties received by Sepracorfrom GSK in respect of [**] during the full Calendar Year [**] in the [**].

 

(II)           During the period from [**] until [**], theminimum annual royalty payment payable by GSK to Sepracor in relation to [**]would be [**] percent ([**]%) of the royalties received by Sepracor from GSK inrespect of [**] during the full Calendar Year [**] in the [**].

 

(III)         During the period following [**] until [**], theminimum annual royalty payment payable by GSK to Sepracor in relation to [**]would be [**] percent ([**]%) of the royalties received by Sepracor from GSK inrespect of [**] during the full Calendar Year [**] in the [**].

 

### For the avoidance of doubt, theabove minimum annual royalty payments will be prorated for any Calendar Year inwhich GSK is simultaneously commercializing in a country the Product and a GSKCompeting Product for one or more Product Indications, for part but not thewhole Calendar Year.

###  

### (f)            Sections 9.1(a)-(e) shall cease to apply on acountry-by-country basis on the occurrence of any of the following:

###  

#### (i)            Expiry or termination, for whatever reason, ofGSK’s rights under this Agreement to sell the Product in such country;

####  

#### (ii)           Launch of a Generic Product in such country;

####  

#### (iii)          The promotion, marketing or sale by Sepracor,its Affiliates or its sublicensees of any product with the Active Ingredientused in combination with another active ingredient for any ProductIndication(s);

####  

#### (iv)          Any Regulatory Authority or court of competentjurisdiction in such country issuing a directive, order or request that theProduct be withdrawn;

####  

#### (v)           GSK electingnot to launch the Product pursuantto Section 6.4.

####  

#### 

 

**CONFIDENTIAL**

 

## 9.2.                 Sepracor’s Commitments. During the Term of the Agreement, neitherSepracor nor any of its Affiliates shall promote, market or sell, or enter intoany agreement to promote, market or sell, in any country of the GSK Territorywhere the Agreement has not been terminated, any product containing the ActiveIngredient as the sole therapeutic ingredient. However, this restriction shallnot apply to any Excluded Products. For the avoidance of doubt, and consistentwith the definition of Excluded Products, this provision is not intended topermit the promotion, marketing or sale of a product in which the ActiveIngredient is simply co-packaged and/or co-administered with another productcontaining a different therapeutically active substance.

##  

## 9.3.                 Non-prescription products. Sections 9.1 shall not apply in relation toproducts for promotion, marketing or sale without the legal requirement for aprescription.

##  

**ARTICLE X.MANUFACTURE AND SUPPLY**

 

## 10.1.               General. During the Term of this Agreement, Sepracor shall at GSK’s request,and in accordance with the Supply Agreement, supply all of GSK’s, itsAffiliates’ and its Sub-licensees’ requirements of Bulk Tablets, sufficient toenable GSK, its Affiliates and its Sub-licensees to meet their respective needsfor Product for the GSK Territory.

##  

## 10.2.               Supply Agreement and Quality Agreement. Promptly following the Effective Date andwithin ninety (90) days thereof (or as otherwise agreed in writing by theParties), GSK and Sepracor (or their respective Affiliates) shall negotiate ingood faith and shall enter into a Supply Agreement (the “Supply Agreement”)and a Quality Agreement (the “Quality Agreement”) for the supply of BulkTablets by (or on behalf of) Sepracor for use in connection with DevelopmentalStudies and for commercialization (including physician samples) of the Productin the GSK Territory, which shall reflect, among other things, the termsoutlined in ***Schedule 10.2***.

##  

## 10.3.               Supply Price.

##  

### (a)           Bulk Tablets for use in Clinical Supplies, physician samples, or to beprovided in support of Investigator Sponsored Clinical Studies shall beprovided at [**]. Placebo for use in Clinical Supplies or to be provided insupport of Investigator Sponsored Clinical Studies shall also be provided at[**].

###  

### (b)           All other supplies of Bulk Tablets shall be provided at [**].

###  

### (c)           Appropriate terms will be included in the Supply Agreement forcalculation of [**] on an annual basis, using open book pricing.

###  

### 

 

**CONFIDENTIAL**

 

## 10.4.               Minimum Price. Subject to Section 10.3, notwithstanding anyprovisions to the contrary in this Agreement, Sepracor shall not be required tosupply Bulk Tablets to GSK at a cost below [**].

##  

## 10.5.               Pre-Supply Approval.****GSK will havethe right to conduct pre-supply approval audits of those manufacturingfacilities of Sepracor, and any appointed third party manufacturer(s), whichare used in the manufacture of Bulk Tablets for GSK, prior to taking supply.Thereafter, Sepracor shall not appoint any other third party manufacturer norchange the location of any part of the manufacturing process for themanufacture of Bulk Tablets for GSK without GSK’s prior written consent, not tobe unreasonably withheld, and subject to the change control procedure set outin the Quality Agreement.

##  

**ARTICLEXI.CONFIDENTIALITY**

 

## 11.1.               Confidential Information. Except to the extent expressly authorized bythis Agreement or otherwise agreed in writing, the Parties agree that thereceiving Party (the “Receiving Party”) shall keep confidential andshall not publish or otherwise disclose or use for any purpose other than asprovided for in this Agreement any confidential or proprietary information andmaterials, patentable or otherwise, in any form (written, oral, photographic,electronic, magnetic, or otherwise) which is disclosed to it by the other Party(the “Disclosing Party”) including, but not limited to, all informationconcerning the Product, information disclosed by one Party to the otherpursuant to the Confidentiality Agreement, the contents of this Agreement andany other technical or business information of whatever nature (collectively, “ConfidentialInformation”).

##  

## 11.2.               Development Data. Except to the extent expressly authorized bythis Agreement or otherwise agreed in writing, the Parties agree that theyshall keep confidential and shall not publish or otherwise disclose or use forany purpose other than as provided for in this Agreement any Data, results,reports or other know-how directly related to the Product which is generated inthe performance of the Developmental Studies (“Development Data”).

##  

## 11.3.               Exceptions. Notwithstanding Sections 11.1 and 11.2, the obligations ofconfidentiality shall not apply to Confidential Information or Development Datathat, in each case as demonstrated by competent evidence:

##  

### (a)           was already known to the Receiving Party or any Affiliate, other thanunder an obligation of confidentiality, at the time of disclosure;

###  

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

###  

### 

 

**CONFIDENTIAL**

 

### (c)           became generally available to the public or otherwise part of the publicdomain after its disclosure by the Disclosing Party and other than through anyact or omission of the Receiving Party or any Affiliate in breach of thisAgreement;

###  

### (d)           was subsequently lawfully disclosed to the Receiving Party or anyAffiliate by a Person other than the Disclosing Party, and who, to the bestknowledge of the Receiving Party, did not directly or indirectly receive suchinformation from the Disclosing Party under an obligation of confidence; or

###  

### (e)           is developed by the Receiving Party or its Affiliate without use of orreference to any information or materials disclosed by the Disclosing Party.

###  

## 11.4.               Permitted Disclosures. Notwithstanding the provisions of Section 11.1above, and subject to Sections 11.5 and 11.6 below, each Party hereto maydisclose Confidential Information of the other Party and Development Data toits Affiliates, permitted Sublicensees and any other Third Parties to theextent such disclosure: (a) is for the purpose of exercising the rights grantedto it under this Agreement; (b) is reasonably necessary to prosecute or defendlitigation; (c) is reasonably necessary to comply with applicable governmentallaws or regulations; (d) is reasonably necessary to submit information to taxor other governmental authorities; or (e) is reasonably necessary toconduct clinical trials hereunder with respect to the Product. If a Party isrequired by law or regulations to make any such disclosure of ConfidentialInformation of the other Party or Development Data, to the extent it maylegally do so, it will give reasonable advance notice to the other Party ofsuch disclosure and, save to the extent inappropriate in the case of patentapplications or otherwise, will use its good faith efforts to secureconfidential treatment of such Confidential Information or Development Data priorto its disclosure (whether through protective orders or otherwise) and discloseonly the minimum amount of Confidential Information or Development Datanecessary to comply with the requirement. For all other disclosures ofConfidential Information of the other Party or Development Data permittedpursuant to this Section 11.4, including to Affiliates, permitted Sublicenseesand other Third Parties, a Party shall ensure that the recipient thereof isbound by a written confidentiality agreement as materially protective of suchConfidential Information or Development Data as this Article XI.

##  

## 11.5.               Confidentiality of this Agreement and its Terms. Except as otherwise provided in Section 11.6,each Party agrees not to disclose to any Third Party the existence of thisAgreement or the terms of this Agreement without the prior written consent ofthe other Party hereto, except that each Party may disclose the terms of thisAgreement: (a) to advisors (including financial advisors, attorneys andaccountants) in each case under confidentiality obligations substantiallyequivalent to those in this Agreement; or (b) actual or potential acquisitionor merger partners or Sublicensees on a need to knowbasis, in each case under written confidentiality agreements substantiallyequivalent to those in this Agreement.

##  

## 

 

**CONFIDENTIAL**

 

## 11.6.               PublicAnnouncements.

##  

### (a)           As soon as practicable following the datehereof, the Parties will issue a joint press release announcing the existenceof this Agreement. Except as required by law (including, withoutlimitation, disclosure requirements of the U.S. Securities and ExchangeCommission (“SEC”), the London, New York and NASDAQ stock exchanges, orany other stock exchange on which securities issued by a Party or itsAffiliates are traded), neither Party shall make any other public announcementconcerning this Agreement or the subject matter hereof without the priorwritten consent of the other, which shall not be unreasonably withheld ordelayed; *provided*, that**itshall not be unreasonable for a Party to withhold consent with respect to anypublic announcement containing any financial terms or any of such Party’sConfidential Information. In the event of a required public announcement, tothe extent practicable under the circumstances, the Party making suchannouncement shall provide the other Party with a copy of the proposed text ofsuch announcement sufficiently in advance of the scheduled release to affordsuch other Party a reasonable opportunity to review and comment upon the proposedtext.

###  

### (b)           The Parties will coordinate in advance with eachother in connection with the redaction of certain provisions of this Agreementwith respect to any filings with the SEC, the London, New York, and NASDAQ stockexchanges or any other stock exchangeor governmental agency on which securities issued by a Party or its Affiliateare traded, and each Party will use reasonable efforts to seek confidentialtreatment for such terms; *provided*, thateach Party will ultimately retain control over what information to disclose tothe SEC, London, New York, and the NASDAQ stock exchange or any other stock exchange or governmentalagency, as the case may be, and *provided**further* that the Parties will use their reasonable effortsto file redacted versions with any governing bodies which are consistent withredacted versions previously filed with any other governing bodies. Other thansuch obligation, neither Party (or its Affiliates) will be obligated to consultwith or obtain approval from the other Party with respect to any filings to theSEC, the NASDAQ stock exchange orany other stock exchange or governmental agency.

###  

## 11.7.               Publication of the Product Information. At least thirty (30) days prior to publishing,publicly presenting, and/or submitting for written or oral publication amanuscript, abstract or the like that includes Development Data or otherinformation relating to the Product supplied or generated by GSK under thisAgreement that has not been previously published, GSK shall provide to Sepracora draft copy thereof for its review and approval (unless GSK is required by lawto publish such information sooner). In addition, GSK shall, at the request ofSepracor, remove therefrom any Confidential Information of Sepracor (other thanDevelopment Data), except GSK shall have the right to publicly disclose anyinformation, including Confidential Information, pertaining to safety of theProduct that GSK has been advised by its legal counsel to disclose. For theavoidance of doubt, and without limiting in any way the above, GSK may postsummaries on the GSK Clinical Trial Register of the results of any clinicaltrials conducted with respect to the Product pursuant to this Agreement withoutfurther approval from Sepracor.

##  

## 11.8.               Prior Non-Disclosure Agreements. As of the Effective Date of this Agreement,the terms of this Article XI shall supersede any prior non-disclosure, secrecyor confidentiality agreement between the Parties (or their Affiliates) dealingwith the subject of this

##  

## 

 

**CONFIDENTIAL**

 

## Agreement, including without limitation theConfidentiality Agreement. Any information disclosed under such prioragreements shall be deemed disclosed under this Agreement.

##  

**ARTICLEXII.PATENT PROSECUTION AND ENFORCEMENT**

 

## 12.1.               Ownership of Intellectual Property.

##  

### (a)           Subject to the licensesgranted to GSK pursuant to Section 2, Sepracor has, and shall retain all right,title and interest in and to, the Sepracor Technology (including withoutlimitation the Sepracor Patents and Sepracor Know-How).

###  

### (b)           Subject to Section12.1(c) below, each Party shall have and retain all right, title and interestin all inventions, discoveries and know-how which are made, conceived, reducedto practice or generated by its employees, agents or other persons acting underits authority in the course of or as a result of this Agreement.

###  

### (c)           Sepracor shall solelyown all right, title and interest in and to any Non-Severable Improvements. GSKshall promptly disclose to Sepracor any and all Non-Severable Improvementsconceived or reduced to practice by GSK, its Affiliates and Sublicensees, orany of its or their officers, directors, employees, consultants or otherpersonnel in the performance of the Developmental Studies. All Non-SeverableImprovements shall be the exclusive property of Sepracor and GSK shall take,and shall cause its Affiliates and Sublicensees to take, appropriate steps toensure that its, or their officers, directors, employees, consultants and allother personnel are obligated to assign to Sepracor all right, title and interesteach may have in any such Non-Severable Improvement and will cooperate toeffect the foregoing. In consideration of this assignment, Sepracor agrees thatin the event that the last ValidClaim within a Patent Controlled by Sepracor that would be infringed by thelicensed activities in such country in the absence of the licenses grantedunder this Agreement covers a Non-Severable Improvement, then for the purposesof Section 7.3(c)(i), it shall be deemed that such Valid Claim has expired.

###  

### (d)           GSK hereby grantsSepracor a worldwide, non-exclusive, irrevocable and fully paid up license,with right to sub-license, to use in relation to Sepracor’s, its Affiliate’sand sublicensees’ commercialization of the Product in the Sepracor Territoryany Severable Improvements or Development Data which are made, conceived,reduced to practice or generated by GSK, its Affiliates and Sublicensees, orany of its or their officers, directors, employees, consultants or otherpersonnel in the performance of the Development Studies.

###  

### (e)           Joint Inventions. Subject to the rights granted under thisAgreement, each Party can use, and grant non-exclusive licenses to use, aninvention or discovery jointly owned by GSK and Sepracor pursuant to Section12.1(b) without the other Party’s consent and has no duty to account to theother Party for such use or license, and each Party hereby waives any right itmay have under the laws of any country to require any such consent oraccounting.

###  

### 

 

**CONFIDENTIAL**

 

### (f)            Inventorship. For purposes of determining questions of inventorship for purposes ofSection 12.1(b) the Parties shall apply the law of the country in which thepatent applications directed to the relevant inventions are filed.

###  

## 12.2.                  Prosecution and Maintenance of Sepracor Patents.

##  

### (a)           Prosecution. Sepracor shall, [**], be responsible for the filing, prosecution andmaintenance of all Sepracor Patents in the GSK Territory, [**]. GSK shall havethe right to review new or pending patent applications in the GSK Territory andmake recommendations to Sepracor concerning such patent applications. Sepracorwill consider in good faith all reasonable suggestions of GSK with respectthereto, and agrees to keep GSK generally informed of the course of patentprosecution or other proceedings with respect to the Sepracor Patents withinthe GSK Territory, including without limitation providing confirmation that allrenewal and maintenance fees have been paid in a timely fashion. GSK shallprovide such patent consultation to Sepracor at no cost to Sepracor but shallhave no obligation to provide such. GSK shall hold all information disclosed toit under this Section as Confidential Information. If Sepracorelects not to undertake the filing, prosecution and/or maintenance of anySepracor Patents in the GSK Territory (or, after commencement of such filing,prosecution and/or maintenance, desires to cease the prosecution or themaintenance of any such Sepracor Patents in the GSK Territory), then Sepracorwill notify GSK of such election with at least thirty (30) days’ prior writtennotice, identifying the specific Sepracor Patent(s) to which such electionpertains and GSK will be, at its own expense and discretion, entitled to file,prosecute and/or maintain such Sepracor Patent(s) in the GSK Territory in thename of Sepracor, GSK, or both GSK and Sepracor, as the case may be.

###  

### (b)           Patent Term Extensions. The Parties will discuss and recommend for which, ifany, of the Patents within the Sepracor Patents in the GSK Territory shouldseek patent term extensions. Sepracorshall have the final decision-making authority whether, atits own expense, to file all applications and take actions necessary to obtainpatent term extensions with respect to the Product pursuant to statutes in theGSK Territory, which extensions shall be owned by Sepracor. If Sepracordeclines to pursue such patent term extensions in the GSK Territory, then GSKshall have the right at its own expense on behalf of Sepracor to file all suchapplications and take all such actions necessary to obtain such patent termextensions with respect to the Product. In each case, the Parties shall providereasonable cooperation to the other Party which is seeking to obtain suchextensions and additional protection. In the event that GSK has exercised the rightto file, prosecute and/or maintain any Sepracor Patents pursuant to Section12.2(a) above, the decision as to whether to pursue patent term extensions onsuch Sepracor Patents shall be at GSK’s sole discretion.

###  

## 12.3.               Patent Enforcement. In the event that Sepracor or GSK becomesaware of (i) an actual or threatened infringement or misappropriation of anySepracor Technology in the GSK Territory by the manufacture, sale, offer forsale or use of any product (“Infringing Product”), or (ii) an actual orthreatened challenge to any Sepracor Patents within the GSK Territory, thatParty shall promptly notify the other Party in writing. Sepracor shall have thefirst right, but not the obligation, to initiate proceedings or take otherappropriate action, at its own

##  

## 

 

**CONFIDENTIAL**

 

## expense, against any Third Party taking orthreatening to take such action. If Sepracor does not initiate proceedings or take other appropriate action within[**] of a request by GSK to initiate an enforcement proceeding or defense to achallenge to the Sepracor Patents then GSK shall be entitled, without obligation, to initiate infringement proceedings or takeother appropriate action against an Infringing Product or Sepracor Patentchallenge at its own expense and to include Sepracor as a nominal partyplaintiff. The Party conducting such action shall have full control over itsconduct, including settlement thereof; *provided*,however, that the Party conducting such action may not settle any such action,or make any admissions or assert any position in such action, in a manner thatwould materially adversely affect the rights or interests of the other Partywhether within or outside the jurisdiction in which the action is brought,without the prior written consent of the other Party, which consent shall notbe unreasonably withheld or delayed. In any event, the Parties shall assist oneanother and cooperate in any such litigation at the reasonable request of theother Party.

##  

## 12.4.               Trademark Enforcement and Protection. In the event that Sepracor or GSK becomesaware of (i) actual or threatened infringement, passing off, misappropriationor unfair advantage being taken of a Product Trademark or Other Trademark ormisappropriation of any Product Trademark or Other Trademark in the GSK Territoryby the manufacture, marketing, promotion, distribution, sale or use of anyproduct (“Trademark Infringing Product”) or trademark (“InfringingTrademark”), or (ii) an actual or threatened challenge, such as an invalidityor revocation action, to any Product Trademark or Other Trademark within theGSK Territory, that Party shall promptly notify the other Party in writing. GSKshall have the first right, but not the obligation, to initiate proceedings ortake other appropriate action, at its own expense, against any Third Partytaking or threatening to take such action. Sepracor shall also have the right,but not the obligation, to participate in any legal proceedings in connectionwith such action initiated by GSK at Sepracor’s own expense and to make recommendationsto GSK concerning such action; GSK shall consider in good faith all reasonablesuggestions of Sepracor with respect thereto. If the applicable law in acountry of the GSK Territory does not permit GSK, as an exclusive licensee, toinitiate such actions, GSK shall be entitled to require Sepracor to initiateand diligently pursue such action on GSK’s behalf and at GSK’s expense. If GSK does not initiate proceedings or take otherappropriate action within [**] of a request by Sepracor to initiate anenforcement proceeding or defense to a trademark challenge, then Sepracor shallbe entitled, without obligation, toinitiate infringement proceedings or take other appropriate action against aTrademark Infringing Product, Infringing Trademark or trademark challenge atits own expense and to include GSK as a nominal party plaintiff. The Partyconducting such action shall have full control over its conduct, includingsettlement thereof; *provided*,however, that the Party conducting such action may not settle any such action,or make any admissions or assert any position in such action, in a manner thatwould materially adversely affect the rights or interests of the other Partywhether within or outside the jurisdiction in which the action is brought, withoutthe prior written consent of the other Party, which consent shall not beunreasonably withheld or delayed. In any event, the Parties shall assist oneanother and cooperate in any such litigation at the reasonable request of theother Party.

##  

## 

 

**CONFIDENTIAL**

 

## 12.5.               Recovery. With respect to any suit or action referred toin Sections 12.3 and 12.4 any recovery obtained as a result of any suchproceedings, by settlement or otherwise, shall be applied in the followingorder of priority:

##  

### (a)           First, [**];

###  

### (b)           Second, GSK shall recover [**], and Sepracor shall recover [**]; and

###  

### (c)           Third, [**].

###  

## 12.6.               Cooperation. The Parties shall keep one another informed of the status of theirrespective activities regarding any litigation or settlement thereof concerningSepracor Technology, Product Trademarks and Other Trademarks within the GSKTerritory and shall assist one another and cooperate in any such litigation atthe reasonable request of the other (including, without limitation, joining as a party plaintiff to the extentnecessary and requested in writing by the other Party).

##  

## 12.7.               Infringement of Third Party IntellectualProperty. In the event anyaction is taken by a Third Party against GSK or any Affiliate on the basis ofalleged infringement of a Patent of such Third Party or of misappropriation ofthe know-how of a Third Party, or alleged infringement or passing off ormisappropriation of a Third Party trademark, pursuant to the exercise by GSK orany Affiliate or Sublicensee of its rights hereunder, GSK shall promptly informSepracor and GSK shall be entitled at GSK’s expense to take whatever reasonableaction it considers necessary or useful and Sepracor will provide any and allreasonable assistance, free of charge, to GSK. Sepracor shall also have the right,but not the obligation, to participate in any legal proceedings in connectionwith such action at its own expense and make recommendations to GSK concerning suchaction. GSK will consider in good faith all reasonable suggestions of Sepracorwith respect thereto, and agrees to keep Sepracor informed of the course suchaction or legal proceedings with respect thereto. GSK shallcontrol the legal proceedings, including the right to enter into anysettlement, in order to be able to resume the exercise of the rights granted toGSK under the terms if this Agreement; *provided*,however, that GSK may not settle any such action, or make any admissions orassert any position in such action, in a manner that would adversely affect therights or interests of Sepracor (whether within the GSK Territory orotherwise), or make any financial payment without the prior written consent ofSepracor, which consent shall not be unreasonably withheld or delayed. If as aresult of such action or settlement, GSK has to pay any amount to the ThirdParty, including damages, license fees or royalties on sales of the Product,any and all such amounts as well as the cost related to such action or settlement shall be borneequally by Sepracor and GSK.

##  

## 12.8.               Patent Marking. GSK agrees to mark, and have its Affiliatesand Sublicensees mark, all patented Products they sell or distribute pursuantto this Agreement in accordance with the applicable patent statutes andregulations in the country or countries of sale thereof.

##  

## 

 

**CONFIDENTIAL**

 

**ARTICLE XIII.TRADEMARKS**

 

## 13.1.               Cooperation.Through the JSC, the Parties will jointly determine whether the Product in eachof the countries of the GSK Territory will use the Product Trademarks listed in***Schedule 1.39***, or other Product-specifictrademarks (“Other Trademarks”). Upon the determination of an OtherTrademark, or at the request of GSK any time thereafter, the Parties shallpromptly amend this Agreement to update Part B of ***Schedule1.39***, at which time the representations and warranties providedby Sepracor under Section 16.2 shall be repeated in respect of such OtherTrademarks.

##  

## 13.2.               Ownership. Sepracorshall own, and is hereby assigned, all right, title and interest in and to alltrademarks used for the Product in the GSK Territory, including, the ProductTrademarks and Other Trademarks, and including any intellectual property rightsin the Product Trademarks and Other Trademarks, but not including any companymarks or logos of GSK or its Affiliates.

##  

## 13.3.               Registration ofTrademarks of the Product in the GSK Territory. Sepracor shall, in a timelymanner, file, seek registration and maintain, for the Term of this Agreementand for any time GSK continues to use the Product Trademarks and OtherTrademarks in accordance with the Wind-down Period in Section 15.2(a) and/orSection 15.3(a), [**], appropriate registrations and prosecute and defendoppositions to applications for such registrations for the Product Trademarksand Other Trademarks in the GSK Territory. For the avoidance of doubt, Sepracorshall perform such actions in all countries in the GSK Territory where theProduct Trademarks and Other Trademarks will be used in accordance with thisAgreement and shall file applications in time for relevant MAAs to be grantedand for launch of the Product to progress in accordance with theCommercialization Plan. At GSK’s request, Sepracor will keep GSK informed ofthe status of such applications, registrations, actions and relevantproceedings.

##  

## 13.4.               Grant of License.Subject to the terms and conditions of this Agreement, Sepracor hereby grantsto GSK an exclusive license to use the Product Trademarks and Other Trademarks,including as a domain name or part thereof, to package, market, promote,distribute, import, offer for sale and sell the Product in the GSK Territoryduring the Term and in accordance with this Agreement. Any use of the ProductTrademarks and Other Trademarks shall inure to the sole benefit of Sepracor.

##  

## 13.5.               TrademarkRestrictions. During the Term of this Agreement, Sepracor may not use, orauthorize a Third Party not already authorized to use, the Product Trademarksand Other Trademarks (or any marks which are confusingly similar to the ProductTrademarks and Other Trademarks taking into account the nature of the use,including the similarity or dissimilarity of the relevant goods) in any countryof the GSK Territory or Sepracor Territory for the packaging, marketing,promotion, distribution, importation, offering for sale and sale of the Productor any other product. Sepracor also agrees not to use or authorize another touse during the Term of this Agreement, the LUNESTA® trademark (orany confusingly similar mark taking

 

----

 

**CONFIDENTIAL**

 

into account the nature of the use, including the similarity ordissimilarity of the relevant goods) in any country of the GSK Territory forthe packaging, marketing, promotion, distribution, importation, offering forsale and sale of any products within the GSK Territory. For the avoidance ofdoubt, where this Agreement allows Sepracor or GSK to terminate the Agreementin a particular country, then upon such termination and in conjunction with thetransfer obligations in Section 13.9 herein, Sepracor shall have the right touse or allow the use of any Product Trademark, Other Trademark or the LUNESTA®trademark in such country. Sepracor shall promptly notify GSK in the event thatSepracor becomes aware that any Third Party to which Sepracor has, as of theEffective Date, already authorized to use the Product Trademarks and/or OtherTrademarks in the Sepracor Territory is using or planning to use the ProductTrademarks and/or Other Trademarks for the packaging, marketing, promotion,distribution, importation, offering for sale and sale of the Product or anyother product. In such event, Sepracor will cooperate in good faith and use itsreasonable endeavours to resolve with GSK and the Third Party any concerns thatGSK has regarding the use of the Product Trademarks and/or Other Trademarks bysuch Third Party.

##  

## 13.6.               Recordation ofLicenses. If a trademark license must be recorded in the GSK Territory, or if GSK wishes to record its interest as alicensee on a trademarks register anywhere in the GSK Territory and a trademarklicence is required to do so, Sepracor will provide reasonable assistance toallow GSK to become recorded as a licensee of the Product Trademarks and OtherTrademarks on any trademarks register in the GSK Territory, including, withoutlimitation, promptly providing to GSK, at GSK’s written request, a separatetrademark license for the Product Trademarks and/or Other Trademarks on termsthat are consistent with, and no broader or more onerous than, the terms ofthis Agreement, and GSK will arrange for the prompt recordation of suchtrademark license with the appropriate governmental agency, at GSK’s expense.GSK shall cooperate in the preparation and execution of such documents. No suchrecordation shall give GSK any ownership or claim to ownership of the ProductTrademarks or Other Trademarks.

##  

## 13.7.               Display. Allpackaging materials, labels and promotional materials for the Product in theGSK Territory shall display the Product Trademarks and/or Other Trademarksapproved by the JSC and no other product-specific trademarks or branding. Inaddition, such packaging materials, labels and promotional materials shalldisplay the trade name(s) of GSK, or its Affiliates or Sublicensees, inreasonable size and prominence as allowed by applicable local regulations. Thetrademarks of GSK, trade dress, style of packaging and the like with respect tothe Product in the GSK Territory may be determined by GSK in a manner that isconsistent with GSK’s standard trade dress and style. All packaging materials,labels and promotional materials for the Product in the GSK Territory shalldisplay the following: “Manufactured and sold under license from Sepracor Inc.”and “[the Product Trademark or Other Trademark] is a trademark of Sepracor Inc.”.GSK shall make no other use of Sepracor’s name or logo on packaging materials.

##  

## 13.8.               Approval of Packaging.So that Sepracor can properly evaluate the protection of its trademarks andother trade dress, GSK shall submit representative examples of packaging andthe Product displaying the Product Trademarks and/or Other Trademarks, to

 

----

 

**CONFIDENTIAL**

 

## Sepracor for review and written approval at least [**] prior to the first use of suchpackaging for or on the Product and [**] priorto use of any subsequent packaging which are a material change to suchpackaging. For the avoidance of doubt, such review does not extend to a rightto review and approve the trademarks, trade dress and style of packaging andthe like of GSK which may be determined by GSK in accordance with Section 13.7.Sepracor shall not unreasonably withhold or delay approval, but in any event,if Sepracor has not responded in writing within [**] after the submission toSepracor of such packaging for or on the Product, Sepracor’s approval will bedeemed to have been received.

##  

## 13.9.               Termination ofTrademark License. GSK’s right to use the Product Trademarks and OtherTrademarks) shall terminate on a country-by-country basis when GSK’s rights tothe Product pursuant to this Agreement are terminated or expire in any country.GSK shall take all such steps as Sepracor may reasonably request to give effectto the termination of any license to the Product Trademarks and OtherTrademarks, and to record any documents that may be required to evidence thetermination of such licenses and transfer to Sepracor of all rights,registrations, recordation and the like for such Product Trademarks and OtherTrademarks.

##  

**ARTICLE XIV.**

 

**TERM AND TERMINATION**

 

## 14.1.               Term.         This Agreement shallcommence on the Effective Date and, unless earlier terminated pursuant toSections 14.2, 14.3 or 14.4, shall continue in each country of the GSKTerritory on a country by country basis until the later of (a) the tenthanniversary of the Effective Date, and (b) the date on which GSK ceases tocontinue to market, promote, distribute, import or sell the Product in anycountry of the GSK Territory (the “Term”).

##  

## 14.2.               EarlyTermination. Each Party shall have the right to terminate this Agreement inits entirety before the end of the Term;

##  

### (a)           bymutual written agreement of the Parties;

###  

### (b)           uponwritten notice by either Party if the other Party is in material breach of thisAgreement and has not cured such breach after notice from the terminating Partyrequesting cure of the breach; provided, however, in the event ofa good faith dispute with respect to the existence of a material breach, thecure period shall be tolled until such time as the dispute is resolved pursuantto Section 18; and provided that the terminating Party has given the defaultingParty the following opportunities to remedy any breach:

###  

#### (i)            the written notice ofbreach referenced above shall detail the specific obligation under thisAgreement which is alleged to have been breached; the manner of such allegedbreach; and the steps which must be taken in order to remedy such breach; and

 

----

 

**CONFIDENTIAL**

 

#### (ii)           the terminating Partyhas provided the defaulting Party with a reasonable amount of time (but no morethan [**]) in which (x) to complete any steps which might be taken to remedythe breach, as stated in the notification of breach, or (y) if completion ofthose steps is not possible within a [**] period, to commence those stepsrequired as stated in the notification of breach, on the condition that thedefaulting Party continues to perform those steps with due diligence and thebreach can be cured within a mutually agreeable period of time; or

####  

### (c)           uponthe bankruptcy or insolvency, or the filing of an action to commence insolvencyproceedings against the other Party, or the making or seeking to make orarrange an assignment for the benefit of creditors of the other Party, or theinitiation of proceedings in voluntary or involuntary bankruptcy, or theappointment of a receiver or trustee of such Party’s property that is notdischarged within ninety (90) days.

###  

## 14.3.               Other GSKTermination Rights.

##  

### (a)           GSKhas the right to terminate this Agreement in its entirety at any timeprior to the earlier of (i) first launch of the Product in the GSK Territory or(ii) the date six months after EMEA approval of the Product, by giving at leastsixty (60) days’ written notice to Sepracor.

###  

### (b)           Ona country-by-country basis, GSK has the right to terminate this Agreement inrespect of any country in the GSK Territory in which the Product has not beenlaunched at the time of providing notice of termination, by giving at leastsixty (60) days’ written notice to Sepracor.

###  

### (c)           Ona country-by-country basis, GSK has the right to terminate this Agreement inrespect of any country in the GSK Territory in which the Product has alreadybeen launched at the time of providing notice of termination, by giving atleast one hundred and eighty (180) days’ written notice to Sepracor. For theavoidance of doubt, in relation to any country in which the CommercializationOption has been exercised, if GSK exercises its right to terminate under thisSection 14.3(c) during the twelve month period following GSK’s decision toexercise the Commercialization Option pursuant to Section 9.1(e)(ii), thetermination under this Section 14.3(c) shall not take effect until the laterof: (i) expiry of the (180) days’ written notice provided hereunder and (ii)expiry of the twelve month period following GSK’s decision to exercise theCommercialization Option pursuant to Section 9.1(e)(ii).

###  

### (d)           GSKhas the right to terminate this Agreement, on a country-by-country basis, atany time upon ten (10) days’ written notice to Sepracor, if the applicableRegulatory Authority decides to withdraw the Product from such country in theGSK Territory.

###  

### (e)           GSKhas the right to terminate this Agreement with immediate effect in itsentirety, or on a country-by-country basis, upon termination of the SupplyAgreement for any reason.

 

----

 

**CONFIDENTIAL**

 

### (f)            Pursuantto and on the terms of Section 9.1(e).

###  

## 14.4.               Other SepracorTermination Rights.

##  

### (a)           Sepracormay terminate this Agreement in its entirety upon thirty (30) days priorwritten notice to GSK, if GSK or its Affiliates challenge any of the ProductTrademarks or Sepracor Technology that relates to the Product, including,without limitation, the Sepracor Patents specified on ***Schedule1.44*** of this Agreement. Any such termination shall only becomeeffective if GSK and its Affiliates have not withdrawn such challenge beforethe end of the above notice period.

###  

### (b)           Sepracormay terminate this Agreement in its entirety upon sixty (60) days prior writtennotice to GSK, if any of GSK’s Sublicensees challenge any of the ProductTrademarks or Sepracor Technology that relates to the Product, including,without limitation, the Sepracor Patents specified on ***Schedule1.44*** of this Agreement. Any such termination shall only becomeeffective if GSK’s Sublicensee has not withdrawn such challenge before the endof the above notice period.

###  

### (c)           Sepracormay terminate this Agreement in its entirety upon sixty (60) days prior writtennotice to GSK, if launch of the Product has not occurred in [**] within the[**] period following EMEA approval. However, for the avoidance of doubt,failure to [**] shall not be counted under this Section 14.4(c) if GSK hasgiven proper notice under Section 6.4(a) and complied with the terms of thatSection in respect of that country.

###  

### (d)           Pursuantto and on the terms of Section 4.3, Sepracor may terminate this Agreement inrelation to the European Union in the event that GSK notifies Sepracor that itdoes not wish to undertake the Required Studies.

###  

### (e)           Pursuantto and on the terms of Section 5.3, Sepracor may terminate this Agreement on acountry-by-country basis in the event that GSK notifies Sepracor that it doesnot wish to undertake the Required Studies in such country.

 

### (f)            Pursuantto and on the terms of Section 6.4(b).

###  

### (g)           Pursuantto and on the terms of Section 9.1(c).

###  

**ARTICLE XV.EFFECT OF TERMINATION**

 

## 15.1.               AccruedObligations. The termination of this Agreement, in whole or part, for anyreason shall not release either Party from any liability which, at the time ofsuch termination, has already accrued to such Party or which is attributable toa period prior to such termination, nor will any termination of this Agreementpreclude either Party from pursuing all

 

----

 

**CONFIDENTIAL**

 

## rights and remedies it may have under this Agreement, at law or inequity, with respect to breach of this Agreement.

##  

## 15.2.               Rights onTermination. This Section 15.2 shall apply upon the termination of GSK’srights under this Agreement if, and only if, such termination is made bySepracor pursuant to Sections 14.2(b), 14.4(a), 14.4(b), or 14.4(g) or is madeby GSK pursuant to Section 14.3(c):

##  

### (a)           Wind-downPeriods.

###  

#### (i)            Development. Inthe event there are any on-going Developmental Studies of the Product in theGSK Territory (or, if the termination is limited to a specific country, withinsuch country), at Sepracor’s request in writing, GSK agrees:  (A) to complete, [**], any suchDevelopmental Studies, or (B) to the extent so requested by Sepracor, to promptlytransition, [**], to Sepracor or its designee such Developmental Studies orportions thereof for Sepracor or its designee to complete [**]. If GSK shallcontinue to conduct any such Developmental Studies, it shall do so inaccordance with the terms and conditions of this Agreement; provided, however,that in no case shall GSK be obligated to pursue such activities for a periodexceeding [**] after the date of notice of such termination.

####  

#### (ii)           Packaging. GSKshall, at the written request of Sepracor, continue to package the Bulk Tabletsat costs to be negotiated in good faith at the time  until Sepracor notifies GSK in writing thatit has made other arrangements. GSK’s packaging obligations under this Section15.2(a)(ii) shall not exceed [**] following the effective date of thetermination. Upon notification by Sepracor or the expiry of the [**], whicheveris sooner, GSK shall cease packaging of the Product unless the parties mutuallyagree terms under which packaging may be continued.

####  

#### (iii)          Commercialization.GSK, its Affiliates and Sublicensees, shall continue, to the extent that GSK,its Affiliates and Sublicensees continue to have stocks of usable Product, tofulfill orders received from customers for the Product in the GSK Territory(or, if the termination is limited to a specific country, within such country)until up to [**] days after the later of (A) the date on which Sepracornotifies GSK in writing that Sepracor has secured an alternative distributor orlicensee for the Product in the GSK Territory and (B) GSK has initiatedtransition of the MAAs and Marketing Approvals for the Product in the GSKTerritory (or, if the termination is limited to a specific country, within suchcountry) to such distributor or licensee, but in no event for more for than[**] after the date of notice of termination. For the Products sold by GSKafter the effective date of a termination (i.e., after the expiration of theapplicable termination notice period), GSK shall continue to pay royalties onthe amount of Net Sales from such sales pursuant to Section 7.3.Notwithstanding the foregoing, GSK, its Affiliates and its Sublicensees shallcease such activities in the GSK Territory (or, if termination is limited to aspecific country, within such country), as the case may be, upon [**] writtennotice given by Sepracor at any time after the effective date of a terminationrequesting that such activities (or portion thereof) cease. In the case of atermination of this Agreement in its entirety, within [**] after Sepracor has givennotice to GSK requesting the cessation of activities pursuant to the

 

----

 

**CONFIDENTIAL**

 

#### provision of this Section, GSK shall notify Sepracor of an estimate ofthe quantity of the Product and its shelf life remaining in GSK’s inventory andSepracor shall have the right to purchase any such quantities of the Productfrom GSK for [**], being the amount [**]. To the extent Sepracor does notpurchase such quantities, GSK may sell such quantities in the GSK Territoryduring the [**] after the effective date of such termination within the shelflife remaining for the Product.

####  

### (b)           Assignmentof Filings and Marketing Approvals. As soon as practicable following theeffective date of termination, GSK shall assign or cause to be assigned toSepracor or its designee (or to the extent not so assignable, GSK shall takeall reasonable actions to make available to Sepracor or its designee thebenefits of) all regulatory filings and registrations (including INDs, MAAs andMarketing Approvals) for the Product in the GSK Territory (or, if terminationis limited to a specific country, within such country), including any suchregulatory filings and registrations made or owned by its Affiliates and/orSublicensees. Sepracor shall notify GSK before the effective date of termination,whether the regulatory filings and registrations should be assigned to Sepracoror its designee, and if the latter, identify the designee, and provide GSK withall necessary details to enable GSK to effect the assignment (or availability).If Sepracor fail to provide such notification prior to the effective date oftermination, GSK shall assign the regulatory filings and registrations toSepracor.

###  

### (c)           Transition.GSK shall use diligent efforts to cooperate with Sepracor and/or its designeeto effect a smooth and orderly transition in the development, sale andmarketing, promotion and commercialization of the Product in the GSK Territory(or, if termination is limited to a specific country, within such country)during the notice and the Wind-down Periods. Without limiting the foregoing,GSK shall use diligent efforts to conduct, in an expeditious manner, anyactivities to be conducted under this Section 15.2. Sepracor shall use diligentefforts to identify and finalize an agreement or other arrangement with a ThirdParty in relation to the Product and/or, to the extent Sepracor is able to takeover such activities under applicable law or regulations, take over, directlyor through an Affiliate, all activities related to the Product, and inparticular development activities on-going at the time of the effective date ofthe termination and the transfer of the regulatory filings and registrations(including INDs, MAAs and Marketing Approvals) into the name of Sepracor orSepracor’s designee so that the Wind-down Period be as limited as possible.

###  

### (d)           RightsBecome Non-Exclusive. Notwithstanding any other provision of thisAgreement, following the effective date of termination and during the Wind-downPeriods, GSK’s, its Affiliates’ and Sublicensees’, rights with respect to theProduct in the GSK Territory (or, if termination is limited to a specificcountry, within such country) shall be non-exclusive, and, without limiting theforegoing, Sepracor shall have the right to engage one or more otherdistributors and/or licensees of the Product in all or part of the GSKTerritory.

###  

### (e)           ContinuingPayment Obligations. Any Product sold or disposed of by GSK, its Affiliatesor Sublicensees, in the GSK Territory in accordance with this Section 15.2shall be subject to the applicable payment obligations under Article VII above.

 

----

 

**CONFIDENTIAL**

 

### (f)            Licenses.Sepracor hereby grants to GSK a limited, non-exclusive license under theSepracor Technology, the Product Trademarks and Other Trademarks, from theeffective date of any termination until the expiration of the applicableWind-down Period(s), solely for the purposes of permitting GSK to comply withits obligations under this Section 15.2 and Section 15.3. Effective as the dateof transfer of any packaged Product from GSK to Sepracor pursuant to Section15.2(a)(iii), GSK hereby grants to Sepracor a limited, non-exclusive license touse any trade names, trademarks, or other identifying markings of GSK or itsAffiliates included in the packaging and labeling of such Product, solely forthe purposes of selling and distributing any Product, within the shelf liferemaining for the Product, which has already been packaged by GSK, itsAffiliates or Sublicensees to include such markings as at the date of transfer;  the “use” rights granted by GSK do notinclude a right to print any GSK trade names, trademarks or other identifyingmarkings of GSK, its Affiliates or Sublicensees.

###  

### (g)           Sublicensees;Third Party Agreements. Upon the completion of the obligations defined inSections 15.2 and 15.3, any contracts with Sublicensees of the Product in theGSK Territory engaged by GSK shall terminate at the same time as the Agreementwith GSK. At the written request of Sepracor, GSK will assign anyProduct-specific Third Party Agreements requested by Sepracor for assignment tothe furthest extent possible, provided that such assignment is permitted underthe Product-specific Third Party Agreement or accepted by the Third Party. Inthe event such assignment is not requested by Sepracor or is not accepted bysuch Third Party, then the rights of such Third Party with respect to theProduct shall terminate upon termination of GSK’s rights. GSK shall ensure thatits Affiliates, Sublicensees and such Third Party (if its contract is notassigned to Sepracor pursuant to this Section 15.2(g)) shall transition anyremaining Product back to Sepracor in the manner set forth in this Section15.2(a)(iii) as if such Affiliate or Third Party were named herein. GSK shallinclude provisions requiring compliance with these provisions in the agreementswith Sublicensees and Third Parties.

###  

## 15.3.               Rights onTermination under Section 14.3(b). This Section 15.3 shall apply upon thetermination of GSK’s rights under this Agreement if, and only if, suchtermination is made by GSK pursuant to Section 14.3(b):

##  

### (a)           Wind-downPeriod for Development. In the event there are any on-going DevelopmentalStudies of the Product in the GSK Territory (or, if the termination is limitedto a specific country, within such country), at Sepracor’s request in writing,GSK agrees:  (A) to complete, at GSK’sexpense, any such Developmental Studies, or (B) to the extent so requested bySepracor, to promptly transition, at GSK’s expense, to Sepracor or its designeesuch Developmental Studies or portions thereof for Sepracor or its designee tocomplete at their expense. If GSK shall continue to conduct any suchDevelopmental Studies, it shall do so in accordance with the terms andconditions of this Agreement; provided, however, that in no case shall GSK beobligated to pursue such activities for a period exceeding twelve (12) calendarmonths after the date of notice of such termination.

###  

## 15.4.               No Renewal,Extension or Waiver. Acceptance of any order from, or sale or license ofany the Product to GSK after the notice or effective date of termination ofthis

 

----

 

**CONFIDENTIAL**

 

## Agreement shall not be construed as a renewal or extension hereof, oras a waiver of termination of this Agreement.

##  

## 15.5.               Survival. Uponthe termination of this Agreement, all rights and obligations of the Partiesunder this Agreement shall terminate for the country(ies) effected by suchtermination, except those described in the following Articles and Sections:Articles I, VIII, XI, XIV, XV, XVI, XVII, XVIII, XIX and XX and Sections 5.14,12.1 and 13.2. Termination shall not affect any rights to receive payments thathave accrued under Sections 7.2 and 7.3 at the time of termination. Thesurvival of rights and obligations under the Supply Agreement and QualityAgreement shall be determined under the terms of such agreements.

##  

**ARTICLE XVI.REPRESENTATIONS, WARRANTIES AND COVENANTS**

 

## 16.1.               GeneralRepresentations. Each Party hereby represents and warrants to the otherParty, as of the Effective Date, as follows:

##  

### (a)           DulyOrganized. Such Party is a corporation duly organized, validly existing andin good standing under the laws of the jurisdiction of its incorporation, isqualified to do business and is in good standing as a foreign corporation ineach jurisdiction in which the conduct of its business or the ownership of itsproperties requires such qualification and failure to have such would preventsuch Party from performing its obligations under this Agreement.

###  

### (b)           DueExecution Binding Agreement. This Agreement is a legal and valid obligationbinding on such Party and enforceable in accordance with its terms. Theexecution, delivery and performance of this Agreement by such Party have beenduly authorized by all necessary corporate action and do not and will not: (i)require any consent or approval of its stockholders; (ii) to such Party’sknowledge and belief, violate any law, rule, regulation, order, writ, judgment,decree, determination or award of any court, governmental body oradministrative or other agency having jurisdiction over such Party; nor (iii)conflict with, or constitute a default under, any agreement, instrument orunderstanding, oral or written, to which such Party is a party or by which itis bound.

###  

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

###  

### (d)           Debarment.  Such Party is not debarredunder the United States Federal Food, Drug and Cosmetic Act and it does not, andwill not during the term of this Agreement, employ or use the services of anyPerson who is debarred, in connection with the development, manufacture orcommercialization of the Product. In the event that either Party becomes awareof the debarment or threatened debarment of any Person providing services tosuch Party,

 

----

 

**CONFIDENTIAL**

 

### including theParty itself and its Affiliates or Sublicensees, which directly or indirectlyrelate to activities under this Agreement, the other Party shall be immediatelynotified in writing.

###  

## 16.2.               Representationsand Warranties of Sepracor. Sepracor represents and warrants to GSK that,as of the Effective Date:

##  

### (a)           ithas the full right and authority to grant the rights and licenses providedherein;

###  

### (b)           Sepracoris the exclusive owner of all right, title and interest in the Sepracor Patentslisted in ***Schedule 1.44***. To the best ofSepracor’s knowledge, the issued claims in the Sepracor Patents listed in ***Schedule 1.44*** are valid andenforceable, and the patent applications have been duly filed;

###  

### (c)           tothe best of Sepracor’s knowledge, neither the development, use, sale or importof the Product in the GSK Territory, as currently being manufactured andcommercialized in the Sepracor Territory, infringes any Third Party’s validpatents or constitutes a misappropriation of a Third Party’s trade secrets orother intellectual property rights. For purposes of this Section 16.2(c) andSection 16.2(d) below, the phrase “to the best of Sepracor’s knowledge” meansthe actual knowledge of the attorneys in Sepracor’s legal department and themembers of Sepracor’s corporate senior management team;

###  

### (d)           tothe best of Sepracor’s knowledge, in the GSK Territory, there is no Third Partyinfringing any of the Sepracor Patents or misappropriating Sepracor Know-How inderogation of the rights granted to GSK in this Agreement with respect to theProduct;

###  

### (e)           Sepracoris the exclusive owner of all right, title and interest in the ProductTrademarks. The Product Trademarks are available for valid registration, orhave been validly registered, by Sepracor in all the Major Markets except asset forth on ***Schedule 16.2(g)***;

###  

### (f)            ithas not previously granted any right, license or interest in or to the SepracorTechnology, or any portion thereof, or the Product Trademarks, or any confusingsimilar trademarks, that is in conflict with the rights or licenses granted toGSK under this Agreement;

###  

### (g)           exceptas set forth on ***Schedule 16.2(g),***there areno actual or to the best of Sepracor’s knowledge, threatened, anticipated,pending or alleged actions, suits, claims, interference proceedings orgovernmental investigations in the GSK Territory involving the Product,Sepracor Technology or the Product Trademarks by or against Sepracor, or any ofits Affiliates;

###  

### (h)           toSepracor’s knowledge, there is no actual, pending, alleged or threatenedproduct liability action nor intellectual property right litigation in relationto the Product, all the foregoing being applicable for the GSK Territory;

 

----

 

**CONFIDENTIAL**

 

### (i)            toSepracor’s knowledge, there is no actual, pending, alleged or threatenedinfringement in the GSK Territory by a Third Party of any of the SepracorTechnology or Product Trademarksrelating to the Product in the GSK Territory; and

###  

### (j)            Sepracorhas not failed to furnish GSK with any information requested by GSK, orintentionally concealed from GSK, any information in its possession whichSepracor reasonably believes would be material to GSK’s decision to enter intothis Agreement and undertake the commitments and obligations set forth herein

###  

## 16.3.               Representationsand Warranties of GSK. GSK represents and warrants to Sepracor that, as ofthe Effective Date it has the full right and authority to grant the rightsgranted herein.

##  

## 16.4.               DISCLAIMER. EXCEPTAS EXPRESSLY SET FORTH IN THIS AGREEMENT, OR ANY OTHER AGREEMENT CONTEMPLATEDHEREUNDER, NEITHER PARTY MAKES ANY REPRESENTATIONS OR EXTENDS ANY WARRANTIES OFANY KIND, EITHER EXPRESS OR IMPLIED, AND EACH PARTY EXPRESSLY DISCLAIMS ALLIMPLIED WARRANTIES OF MERCHANTABILITY AND OF FITNESS FOR A PARTICULAR PURPOSEOR USE, NON-INFRINGEMENT, VALIDITY AND ENFORCEABILITY OF PATENTS, OR THEPROSPECTS OR LIKELIHOOD OF DEVELOPMENT OR COMMERCIAL SUCCESS OF THE PRODUCT. INNO EVENT WILL EITHER PARTY BE LIABLE FOR THE OTHER PARTY’S LOST PROFITS, LOSSOF DATA, OR FOR ANY SPECIAL, INDIRECT, INCIDENTAL, CONSEQUENTIAL OR PUNITIVEDAMAGES, HOWEVER CAUSED, ON ANY THEORY OF LIABILITY AND WHETHER OR NOT SUCHPARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, ARISING UNDER ANYCAUSE OF ACTION AND ARISING IN ANY WAY OUT OF THIS AGREEMENT. THE FOREGOINGLIMITATIONS WILL NOT LIMIT EITHER PARTY’S OBLIGATIONS TO THE OTHER PARTY UNDERSECTION XVII OF THIS AGREEMENT.

##  

## 16.5.               Prior Knowledge.No liability for any breach of anyrepresentation or warranty given by a Party under this Section 16 shall ariseto the extent to which the other Party has knowledge at the Effective Date thatsuch representation or warranty is untrue or inaccurate.

##  

**ARTICLE XVII.INDEMNIFICATION; RECALLS**

 

## 17.1.               Indemnificationof Sepracor. GSK shall indemnify and hold harmless each of Sepracor, itsAffiliates and the directors, officers, shareholders and employees of suchentities and the successors and assigns of any of the foregoing (the “SepracorIndemnitees”), from and against any and all liabilities, damages,penalties, fines, costs and expenses (including, reasonable attorneys’ fees andother expenses of litigation) (“Liabilities”) from any claims,

 

----

 

**CONFIDENTIAL**

 

## actions, suits or proceedings brought by a Third Party (a “ThirdParty Claim”) incurred by any Sepracor Indemnitee, arising from, oroccurring as a result of: (a) packaging, use, marketing, distribution,importation, offer for sale or sale of the Product by GSK, its Affiliates orSublicensees including, any Products Liability Claim (subject to and shared inaccordance with the mechanism set forth in Section 17.5, below); (b) theperformance of any Developmental Study regarding the Product commenced by GSK,its Affiliates or Sublicensees and (c) any material breach of anyrepresentations, warranties or covenants by GSK under this Agreement; except tothe extent such Third Party Claims fall within the scope of the indemnificationobligations of Sepracor set forth in Section 17.2, below, or result from thegross negligence or willful misconduct of a Sepracor Indemnitee.

##  

## 17.2.               Indemnificationof GSK. Sepracor shall indemnify and hold harmless each of GSK, itsAffiliates and Sublicensees, and the directors, officers and employees of GSK,its Affiliates and Sublicensees, and the successors and assigns of any of theforegoing (the “GSK Indemnitees”), from and against any and allLiabilities from any Third Party Claims incurred by any GSK Indemnitee, arisingfrom, or occurring as a result of: (a) the manufacturing, use, marketing,distribution, offer for sale or sale of the Product by Sepracor, an Affiliateor its licensee, including any Products Liability Claim (subject to and sharedin accordance with the mechanism set forth in Section 17.5, below); (b) thedevelopment of the Product by Sepracor (but only where not performed under GSK’sdirection); (c) the use of the Product Trademarksby GSK in the GSK Territory in accordance with this Agreement, and (d) any material breach of anyrepresentations, warranties or covenants by Sepracor under this Agreement,except to the extent such Third Party Claims falls within the scope of theindemnification obligations of GSK set forth in Section 17.1, above, or resultfrom the gross negligence or willful misconduct of an GSK Indemnitee.

##  

## 17.3.               Procedure. Exceptwith respect to the Product Liability Claims subject to Section 17.5, below, aParty that intends to claim indemnification under this Article XVII (the “Indemnitee”)shall promptly notify the other Party (the “Indemnitor”) in writing ofany Third Party Claim, in respect of which the Indemnitee intends to claim suchindemnification, and the Indemnitor shall have sole control of the defenseand/or settlement thereof. The indemnity arrangement in this Section 17.1, 17.2 and 17.3 shall not apply toamounts paid in settlement of any action with respect to a Third Party Claim,if such settlement is effected without the consent of the Indemnitor, whichconsent shall not be withheld or delayed unreasonably. The failure to deliverwritten notice to the Indemnitor within a reasonable time after thecommencement of any action with respect to a Third Party Claim shall onlyrelieve the Indemnitor of its indemnification obligations under this Article XVIIif and to the extent the Indemnitor is actually prejudiced thereby. TheIndemnitee shall cooperate fully with the Indemnitor and its legalrepresentatives in the investigation of any action with respect to a ThirdParty Claim covered by this indemnification.

##  

## 17.4.               Recalls.

##  

### (a)           Voluntaryand Mandatory Recalls: Decision-Making. To the extent that: (i) anyRegulatory Authority in the GSK Territory issues a directive or order orrequests that the

 

----

 

**CONFIDENTIAL**

 

### Product berecalled or withdrawn; (ii) a court of competent jurisdiction orders a recallor withdrawal of the Product in the GSK Territory or (iii) GSK, afterconsultation with Sepracor, determines that an event, incident or circumstancehas occurred that means that the Product should be recalled or withdrawnvoluntarily in the GSK Territory, the Parties shall recall or withdraw theProduct as set forth in this Section 17.4. As between the Parties, GSK shallcontrol and coordinate all activities that GSK deems reasonably necessary inconnection with such recall or withdrawal of the Product in the GSK Territory,including making all contact with relevant Regulatory Authorities*; provided*, however, that GSK shall not take any action withrespect to any such recall without first notifying Sepracor in writing, and tothe extent practical, consulting in good faith with Sepracor. GSK shallconsider in good faith any comments of Sepracor in connection with any aspectof the management of any such recall. For clarity, all matters relating to awithdrawal or recall of the Product in the Sepracor Territory shall bedetermined, controlled and coordinated solely by Sepracor.

###  

### (b)           Costsof Recall. All actual direct and documented out-of-pocket expenses for theexecution of any recall or withdrawal of the Product (including the cost of anyinvestigation leading to the decision to recall) (“Recall Costs”)pursuant to Section 17.4(a), above, shall initially be shared equally betweenthe Parties*; provided* that, in each case,responsibility for the Recall Costs shall be subject to the final allocationbetween the Parties as set out in paragraphs (i) to (iii) below. For clarity,Recall Costs do not include any lost or refunded sales. In the event that it isfinally determined, or agreed between the Parties, that such recall orwithdrawal is caused by:

###  

#### (i)            breach of Sepracor’srepresentations, warranties or covenants as set forth in this Agreement,including failure to supply Bulk Tablets conforming to the standards set forth in the Supply Agreement or Quality Agreement,or the gross negligence or willful misconduct of Sepracor or Sepracor’s failureto comply with applicable laws and regulations including cGMP (to be defined inthe Quality Agreement) (collectively, the “Fault of Sepracor”), Sepracorshall be responsible for all Recall Costs;

####  

#### (ii)           failure of GSK, or itsAffiliates or Sublicensees, to handle, store, package, transport, distribute oruse the Bulk Tablets supplied by Sepracor or Product in accordance withapplicable laws and regulations or the terms of the applicable MarketingApproval, the Supply Agreement, the Quality Agreement or the gross negligenceor willful misconduct of GSK, its Affiliates or Sublicensees, (collectively, “Faultof GSK”), GSK shall be responsible for all Recall Costs; and

####  

#### (iii)          in all other cases, theRecall Costs shall be borne equally by Sepracor and GSK.

####  

## 17.5.        Product Liability Claims.

##  

### (a)           Notificationto the Other. Each Party shall notify the other Party as promptly aspracticable if any Third Party Claim is commenced or threatened against suchParty alleging Product liability, Product defect, design, packaging or labelingdefect, failure to warn

 

----

 

**CONFIDENTIAL**

 

### or any similaraction relating to the use or safety of the Product sold by or under authorityof GSK in the GSK Territory (the “Product Liability Claim”).

###  

### (b)           Cooperation,Counsel and Control. Each Party shall cooperate with the other Party inconnection with any such Product Liability Claim that is commenced orthreatened against the other Party. If a Product Liability Claim is assertedagainst both Parties, each Party will have the right to designatecounsel to defend itself in the Product Liability Claim. If a Product LiabilityClaim is brought against one Party but not the other Party, the named Partyshall control the defense and/or settlement thereof at its own expense withcounsel of its choice, subject to this Section 17.5. In such case, the otherParty may participate in the defense and/or settlement thereof at its ownexpense with counsel of its choice. In any event, the Party that is subject toa Product Liability Claim (if not asserted against both Parties) agrees to keepthe other Party hereto informed of all material developments in connection withany such Product Liability Claim.

###  

### (c)           Settlement,Admissions and Asserting Positions. Neither Party shall settle any ProductLiability Claim, or make any admissions or assert any position in such ProductLiability Claim, in a manner that would adversely affect the other Party, theProduct or the development, manufacture, use or sale thereof without the priorwritten consent of the other Party, which shall not be unreasonably withheld ordelayed.

###  

### (d)           Bearingthe Liabilities. To the extent a Product Liability Claim is caused by: (i)the Fault of Sepracor, Sepracor shall bear all Liabilities from such ProductLiability Claim to the extent of its fault; (ii) the Fault of GSK, GSK shallbear all Liabilities from such a Product Liability Claim to the extent of itsfault or (iii) circumstances other than those described in Sub-section (i) or(ii), above, the Parties shall share equally the Liabilities from such ProductLiability Claim.

###  

**ARTICLE XVIII.DISPUTE RESOLUTION**

 

## 18.1.               DisputeResolution Process. TheParties recognize that disputes as to certain matters may from time to timearise during the Term of this Agreement that relate to a Party’s rights and/orobligations hereunder. If the Parties cannot resolve any such dispute withinthirty (30) days after written notice of a dispute from one Party to another,any Party may, by written notice to the other Party, have such dispute referredto the Senior Executives. The Senior Executives shall negotiate in good faithto resolve the dispute within thirty (30) days. During such period ofnegotiations, any applicable time periods under this Agreement shall be tolled.If the Senior Executives are unable to resolve the dispute within such timeperiod, either Party may pursue any remedy available to such Party at law or inequity, subject to the terms and conditions of this Agreement and the otheragreements expressly contemplated hereunder.

##  

## 18.2.               Governing Law;Litigation; Exclusive Venue. This Agreement and all questions regarding itsexistence, validity, interpretation, breach or performance of this

 

----

 

**CONFIDENTIAL**

 

## Agreement, shall be governed by, and construed and enforced inaccordance with, the laws of the State of New York, United States, withoutreference to its conflicts of law principles. If any dispute cannot be resolvedby, and subject to the exhaustion of the procedure set out in Section 18.1,above, any dispute shall be finally settled by litigation brought solely in aUnited States Federal Court of competent jurisdiction (or state court if noFederal Court has jurisdiction) located in the State of New York, UnitedStates, and the Parties hereby submit to the exclusive jurisdiction of suchcourts.

##  

**ARTICLE XIX.GENERAL PROVISIONS**

 

## 19.1.               InterveningEvents. If the performance of any part of this Agreement by either Party isprevented, restricted, interfered with or delayed by any reason or cause beyondthe reasonable control of such Party (including: fire, flood, embargo, powershortage or failure, acts of war, insurrection, riot, terrorism, strike,lockout or other labor disturbance, acts of God or any acts, omissions ordelays in acting of the other Party) (an “Intervening Event”), the Partyso affected shall, upon giving written notice to the other Party, be excusedfrom such performance to the extent of such Intervening Event, provided thatthe affected Party shall use its substantial efforts to avoid or remove suchcauses of non-performance and shall continue performance with the utmostdispatch whenever such causes are removed.

##  

### (a)           Notificationof the Other. If either Party becomes aware that such an Intervening Eventhas occurred, is imminent or likely, it will immediately notify the other;

###  

### (b)           Effortsto Overcome. The Party which is subject to such Intervening Event shallexert all reasonable efforts to overcome it;

###  

### (c)           Keepingthe Other Informed. Such Party will keep the other informed as to theprogress of overcoming it; and

###  

## 19.2.               Waiver of Breach.The failure of either Party at any time or times to require performance of anyprovision of this Agreement shall in no manner affect its rights at a latertime to enforce such rights. No waiver by either Party of any condition or termin any one or more instances shall be construed as a further or continuingwaiver of such condition or term or of another condition or term.

##  

## 19.3.               Performance byAffiliates. To the extent that this Agreement imposes obligations onAffiliates of a Party, such Party agrees to cause its Affiliates to performsuch obligation. Either Party may use one or more of its Affiliates to performits obligation hereunder, provided that the Parties will remain liablehereunder for the prompt payment and performance of all their respectiveobligations hereunder.

##  

## 19.4.               Performance bySubcontractors. Either Party may perform any of its obligations or exerciseany of its rights under this Agreement through subcontractors. Such

 

----

 

**CONFIDENTIAL**

 

## Party shall ensure that all of its subcontractors comply with, andperform its obligations in accordance with, the terms of this Agreement;provided, however, that the use of such subcontractors by such Party shall notrelieve such Party of its respective obligations under this Agreement.

##  

## 19.5.               Modification.No amendment or modification of any provision of this Agreement shall beeffective unless in a prior writing signed by both Parties hereto. No provisionof this Agreement shall be varied, contradicted or explained by any oralagreement, course of dealing or performance or any other matter not set forthin an agreement in writing and signed by both Parties hereto.

##  

## 19.6.               Severability.In the event any provision of this Agreement should be held invalid, illegal orunenforceable in any jurisdiction, the Parties shall negotiate, in good faithand enter into a valid, legal and enforceable substitute provision that mostnearly reflects the original intent of the Parties. All other provisions ofthis Agreement shall remain in full force and effect in such jurisdiction. Suchinvalidity, illegality or unenforceability shall not affect the validity,legality or enforceability of such provision in any other jurisdiction.

##  

## 19.7.               Entire Agreement.This Agreement (including the Exhibits and Schedules attached hereto) and theSupply Agreement, Pharmacovigilance Agreement, and Quality Agreementconstitutes the entire agreement between the Parties relating to the subjectmatter hereof and supersedes and cancels all previous express or impliedagreements and understandings, negotiations, writings and commitments, eitheroral or written, in respect to the subject matter hereof. Each of the parties acknowledges and agrees that inentering into this Agreement, and the documents referred to in it, it does notrely on, and shall have no remedy in respect of, any statement, representation,warranty or understanding (whether negligently or innocently made) of anyperson (whether party to this Agreement or not) other than as expressly set outin this Agreement. Nothing in this clause shall, however, operate to limit orexclude any liability for fraud.

##  

## 19.8.               Language.The language of this Agreement and all activities to be pursued under thisAgreement is English. Any and all documents proffered by one Party to the otherin fulfillment of any provision of this Agreement shall only be in complianceif in English. Any translation of this Agreement in another language shall bedeemed for convenience only and shall never prevail over the original Englishversion. This Agreement is established in the English language.

##  

## 19.9.               Notices.Unless otherwise agreed by the Parties in writing or specified in thisAgreement, all communications between the Parties relating to, and all writtendocumentation to be prepared and provided under, this Agreement shall be in theEnglish language. Any notice required or permitted under this Agreement shallbe in writing in the English language, delivered personally, sent by facsimile(and promptly confirmed by personal delivery, registered or certified mail orovernight courier), sent by internationally-recognized courier or sent byregistered or certified mail, postage prepaid to the following addresses of the

 

----

 

**CONFIDENTIAL**

 

## Parties (or such other address for a Party as may be at any timethereafter specified by like notice):

##  

| **To Sepracor:**                                                     | ** **          | **To GSK:**                   |
|----------------------------------------------------------------------|---------------------|-------------------------------|
|                                                                 |                |                          |
| Sepracor Inc.                                                        |                | Glaxo Group Limited           |
| 84 Waterford Drive                                                   |                | Glaxo Wellcome House          |
| Marlborough, MA 01752-7010                                           |                | Berkeley Avenue               |
| USA                                                                  |                | Greenford                     |
| Telephone:                                                           | + 1- 508-481- 6700  |                          | Middlesex |
| Facsimile:                                                           | + 1-508-357-7492    |                          | UB6 0NN |
| Attention:                                                           | Adrian Adams        |                          | UK |
|                                                                 | President & CEO |                          | Facsimile: + 44-20-8047- 6905 |
|                                                                 |                | Attention: Company Secretary  |
|                                                                 |                |                          |
| **with a copy to:**                                                  | ** **          | **with a copy to:**           |
|                                                                 |                |                          |
| Sepracor Inc.                                                        |                | GlaxoSmithKline               |
| 84 Waterford Drive                                                   |                | 980 Great West Road           |
| Marlborough, MA 01752-7010                                           |                | Brentford                     |
| USA                                                                  |                | Middlesex                     |
| Telephone: + 1- 508-481- 6700                                        |                | TW8 9GS, UK.                  |
| Facsimile: + 1-508-357- 7506                                         |                | Facsimile: + 44-20-8047- 6897 |
| Attention:       Andrew I.  Koven |                | Attention: Legal Operations,  |
| Executive Vice President, General                                    |                | Business Development          |
| Counsel and Corporate Secretary                                      |                | Transactions                  |

 

Any such notice shall bedeemed to have been given: (a) when delivered if personally delivered; (b) onthe next Business Day after dispatch if sent by facsimile or byinternationally-recognized overnight courier; and/or (c) on the fifth (5th)Business Day following the date of mailing if sent by mail or otherinternationally-recognized courier. Notices hereunder will not be deemedsufficient if provided only between or among each Party’s representatives onthe JSC.

 

## 19.10.             Assignment. ThisAgreement shall not be assignable or otherwise transferred, nor may any rightor obligations hereunder be assigned or transferred, by either Party to anyThird Party without the prior written consent of the other Party; except eitherParty may assign this Agreement without the consent of the other Party to anentity that acquires all or a substantial part of the business or assets of theassigning Party, whether by merger, acquisition or otherwise, provided that theacquiring Party assumes this Agreement in writing or by operation of law. Inaddition, either Party shall have the right to assign this Agreement to anAffiliate upon written notice to the non-assigning Party; *provided*,however, the assigning Party hereby guarantees the performance of thisAgreement by such Affiliate. Subject to the foregoing, this

 

----

 

**CONFIDENTIAL**

 

## Agreement shall inure to the benefit of each Party, its successors andpermitted assigns. Any assignment of this Agreement in contravention of thisSection 19.10 shall be null and void.

##  

## 19.11.             No Partnership orJoint Venture. Nothing in this Agreement or any action which may be takenpursuant to its terms is intended, or shall be deemed, to establish a jointventure or partnership between GSK and Sepracor. Neither Party to thisAgreement shall have any express or implied right or authority to assume orcreate any obligations on behalf of, or in the name of, the other Party, or tobind the other Party to any contract, agreement or undertaking with any ThirdParty.

##  

## 19.12.             Interpretation.The captions to the several Articles and Sections of this Agreement are not apart of this Agreement but are included for convenience of reference and shallnot affect its meaning or interpretation. In this Agreement: (a) the word “including”shall be deemed to be followed by the phrase “without limitation” or likeexpression; (b) the singular shall include the plural and vice versa; and (c)masculine, feminine and neuter pronouns and expressions shall beinterchangeable. Each accounting term used herein that is not specificallydefined herein shall have the meaning given to it under generally acceptedaccounting principles in the International Financial Reporting Standardsconsistently applied, but only to the extent consistent with its usage and theother definitions in this Agreement.

##  

## 19.13.             Counterparts.This Agreement may be executed in any number of counterparts each of whichshall be deemed an original, and all of which together shall constitute one andthe same instrument.

##  

**ARTICLE XX.COMPLIANCE WITH LAW**

 

## 20.1.               Export Laws.Notwithstanding anything to the contrary contained herein, all obligations ofSepracor and GSK are subject to prior compliance with export and importregulations and such other laws and regulations in effect in such jurisdictionsor any other relevant country as may be applicable, and to obtaining allnecessary approvals required by the applicable agencies of the governments ofany relevant countries. Sepracor and GSK shall cooperate with each other andshall provide assistance to the other as reasonably necessary to obtain anyrequired approvals.

##  

## 20.2.               Securities Laws.Each of the Parties acknowledges that it is aware that the securities laws ofthe United States and the securities laws of other countries prohibit anyperson who has material non-public information about a publicly listed companyfrom purchasing or selling securities of such company or from communicatingsuch information to any person under circumstances in which it is reasonablyforeseeable that such person is likely to purchase or sell such securities. EachParty agrees to comply with such securities laws make its Affiliates, 

 

----

 

**CONFIDENTIAL**

 

## Sublicensees, employees and agents aware of the existence of suchsecurities laws and their need to comply with such laws.

##  

## 20.3.               Certain Payments.Each of the Parties acknowledges that it is aware that the United States andother countries have stringent laws which prohibit persons directly orindirectly to make unlawful payments to, and for the benefit of, governmentofficials and related parties to secure approvals or permission for theiractivities. Each Party agrees that it will make no such prohibited payments, itwill not indirectly make or have made such payments and it will make itsAffiliates, employees and agents aware of the existence of such laws and theirneed to comply with such laws.

##  

## 20.4.               Conduct ofActivities. As to all matters contained in this Agreement, each Party shallconduct the activities allocated to it in compliance in all material respectswith all applicable laws, rules and regulations and in accordance with goodscientific, clinical and manufacturing practices, applicable under the laws andregulations of the country in which such activities are conducted.

 

----

 

**CONFIDENTIAL**

 

IN WITNESS WHEREOF, **SepracorInc.** and **Glaxo Group Limited**,have executed this Development, License and Commercialization Agreement as ofthe Effective Date.

 

**Sepracor Inc.**

 
|                    | BY:                                         | /s/ Adrian Adams    |   | Date: | 9/10/07 |   |
|-------------------------|---------------------------------------------|---------------------|--------|-------|---------|--------|
|                    |                                        |                |
|                    | NAME: Mr. Adrian Adams                      |                |
|                    |                                        |                |
|                    | TITLE: President &  CEO                 |                |
|                    |                                        |                |
|                    |                                        |                |
| **Glaxo Group Limited** |                                        |
|                    |                                        |                |
|                    | BY:                                         | /s/ Paul Williamson |   | Date: |    |   |
|                    |                                        |                |
|                    | NAME: Paul Williamson  on behalf of         |                |
|                    |                                        |                |
|                    | Edinburgh Pharmaceutical Industries Limited |                |
|                    |                                        |                |
|                    | TITLE: Corporate  Director                  |                |
|                         |                                             |                     |        |       |         |        |  |

 

----

 

**CONFIDENTIAL**

 

**Schedules and Exhibits**

 
| **Schedules**    |               |                                                            |
|------------------|--------------------|-----------------------------------------------------------------|
| ** **       |               |                                                            |
| Schedule 1.39    |               | Trademarks                                                      |
| Part A:          | Product Trademarks |
| Part B:          | Other Trademarks   |
| Schedule 1.44    |               | Sepracor Patents                                                |
| Schedule 1.50    |               | FDA-approved label                                              |
| Schedule 7.3(c)  |               | Hypothetical Royalty  Calculation                               |
| Schedule 7.3(e)  |               | Hypothetical  Calculation of Cost of Bulk Tablets and Net Sales |
| Schedule 10.2    |               | Heads of Terms for  Supply Agreement                            |
| Schedule 16.2(g) |               | Threatened and Pending  Litigation in GSK Territory             |

 

----

 

**CONFIDENTIAL**

 

**SCHEDULE****1.39**

 

**TRADEMARKS**

 

**Part A:Product Trademarks**

** **
| **Jurisdiction**   | ** ** | **Trademark** | ** ** | **Status** | ** ** | **App. No.** | ** ** | **Filing  Date** | ** ** | **Reg. No.** | ** ** | **Reg.  Date** |
|--------------------|------------|---------------|------------|------------|------------|--------------|------------|------------------|------------|--------------|------------|----------------|
| Brazil             |       | LUNIVIA       |       | Published  |       | 825757444    |       | 11-Aug-2003      |       |         |       |           |
| Chile              |       | LUNIVIA       |       | Registered |       | 617060       |       | 08-Aug-2003      |       | 787236       |       | 15-May-2007    |
| China              |       | LUNIVIA       |       | Registered |       | 3516600      |       | 07-Apr-2003      |       | 3516600      |       | 07-Feb-2005    |
| Colombia           |       | LUNIVIA       |       | Registered |       |         |       |             |       | 296477       |       | 27-Apr-2004    |
| European Community |       | LUNIVIA       |       | Registered |       | 3077088      |       | 10-Mar-2003      |       | 3077088      |       | 23-Nov-2004    |
| Hong Kong          |       | LUNIVIA       |       | Registered |       | 300003040    |       | 07-Apr-2003      |       | 300003040    |       | 06-Oct-2003    |
| Indonesia          |       | LUNIVIA       |       | Registered |       |         |       | 07-Apr-2003      |       | IDM000029089 |       | 04-Feb-2005    |
| Peru               |       | LUNIVIA       |       | Registered |       |         |       |             |       | 93025        |       | 12-Nov-2003    |
| Belarus            |       | LUNIVIA       |       | Pending    |       | 20070930     |       | 16-Mar-2007      |       |         |       |           |
| United Kingdom     |       | LUNIVIA       |       | Published  |       | 2449182      |       | 12-Mar-2007      |       |         |       |           |
| Ireland            |       | LUNIVIA       |       | Published  |       | 235997       |       | 12-Mar-2007      |       |         |       |           |
| Russia             |       | LUNIVIA       |       | Pending    |       | 708067       |       | 14-Mar-2007      |       |         |       |           |
| Korea              |       | LUNIVIA       |       | Pending    |       | 25997        |       | 14-May-2007      |       |         |       |           |
| Venezuela          |       | LUNIVIA       |       | Registered |       | 11085        |       | 11-Nov-2005      |       | P264537      |       | 11-Nov-2005    |
| Switzerland        |       | LUNIVIA       |       | Registered |       | 01636        |       | 18-Mar-2003      |       | 510653       |       | 22-May-2003    |
| Taiwan             |       | LUNIVIA       |       | Registered |       | 92017207     |       | 10-Apr-2003      |       | 1074103      |       | 01-Nov-2003    |
| Thailand           |       | LUNIVIA       |       | Registered |       | 515824       |       | 01-Aug-2002      |       | KOR2215802   |       | 10-Apr-2003    |

 

----

 

**CONFIDENTIAL**

 

**SCHEDULE****1.39**

 

**TRADEMARKS**

 

**Part B: Other Trademarks**

 

**None**

 

----

 

**CONFIDENTIAL**

 

**SCHEDULE1.44**

 

**SEPRACOR  PATENTS**

 
| **COUNTRY**    | ** ** | **PATENT  NO.** | ** ** | **FILING  DATE** |
|----------------|------------|-----------------|------------|------------------|
| Argentina      |       | 248024          |       | 16 Jan. 1992     |
| Australia      |       | 671797          |       | 16 Jan. 1992     |
| Austria        |       | 121089          |       | 16 Jan. 1992     |
| Bangladesh     |       | 1002434         |       | 15 Jan. 1992     |
| Belarus        |       | 1854            |       | 16 Jan. 1992     |
| Belgium        |       | EP609210 B1     |       | 16 Jan. 1992     |
| Czech Republic |       | 281011          |       | 16 Jan. 1992     |
| Denmark        |       | EP609210 B1     |       | 16 Jan. 1992     |
| Finland        |       | 100331          |       | 16 Jan. 1992     |
| France         |       | EP609210 B1     |       | 16 Jan. 1992     |
| Germany        |       | EP609210 B1     |       | 16 Jan. 1992     |
| Great Britain  |       | EP609210 B1     |       | 16 Jan. 1992     |
| Greece         |       | EP609210 B1     |       | 16 Jan. 1992     |
| Hungary        |       | 218928          |       | 16 Jan. 1992     |
| Ireland        |       | 66110           |       | 16 Jan. 1992     |
| Israel         |       | 100677          |       | 16 Jan. 1992     |
| Italy          |       | EP609210 B1     |       | 16 Jan. 1992     |
| Luxembourg     |       | EP609210 B1     |       | 16 Jan. 1992     |
| Morocco        |       | 22392           |       | 15 Jan. 1992     |
| Netherlands    |       | EP609210 B1     |       | 16 Jan. 1992     |
| New Zealand    |       | 241313          |       | 16 Jan. 1992     |
| Nigeria        |       | 11252           |       | 16 Jan. 1992     |
| Norway         |       | EP609210 B1     |       | 16 Jan. 1992     |
| Pakistan       |       | 132928          |       | 16 Jan. 1992     |
| Philippines    |       | 30982           |       | 16 Jan. 1992     |
| Poland         |       | 166976          |       | 16 Jan. 1992     |
| Portugal       |       | EP609210 B1     |       | 16 Jan. 1992     |
| Russia         |       | 2110519         |       | 16 Jan. 1992     |
| Serbia         |       | 48878           |       | 17 Jan. 1992     |
| Slovakia       |       | 279060          |       | 16 Jan. 1992     |
| South Africa   |       | 92302           |       | 15 Jan. 1992     |
| Spain          |       | 2071486         |       | 16 Jan. 1992     |
| Sweden         |       | EP609210 B1     |       | 16 Jan. 1992     |
| Switzerland    |       | EP609210 B1     |       | 16 Jan. 1992     |
| Tunisia        |       | 16531           |       | 17 Jan. 1992     |

 

----

 

**CONFIDENTIAL**

 

**SCHEDULE****1.50**

 

**FDA-APPROVED LABEL**

 

(Attached)

 

----

 
| **Rx  only** | ** ** | **C-IV** |
|--------------|------------|----------|

 

**LUNESTA®(eszopiclone) TABLETS**

**1 mg, 2mg, 3 mg**

 

**PRESCRIBING INFORMATION**

 

**DESCRIPTION:**

 

LUNESTA (eszopiclone)  is a nonbenzodiazepine hypnotic agentthat is a pyrrolopyrazine derivative of the cyclopyrrolone class. The chemicalname of eszopiclone is(+)-(5S)-6-(5-chloropyridin-2-yl)-7-oxo-6,7-dihydro-5H-pyrrolo[3,4-b]pyrazin-5-yl 4-methylpiperazine-1-carboxylate. Its molecular weight is 388.81,and its empirical formula is C17H17ClN6O3.Eszopiclone  has a single chiralcenter with an (*S*)-configuration. It has thefollowing chemical structure:

 

 

Eszopiclone  is a white to light-yellow crystallinesolid. Eszopiclone  is very slightlysoluble in water, slightly soluble in ethanol, and soluble in phosphate buffer (pH 3.2).

 

Eszopiclone is formulatedas film-coated tablets for oral administration. LUNESTA tablets contain 1 mg, 2mg, or 3 mg eszopiclone and the following inactive ingredients:  calcium phosphate, colloidal silicon dioxide,croscarmellose sodium, hypromellose, lactose, magnesium stearate,microcrystalline cellulose, polyethylene glycol, titanium dioxide, andtriacetin. In addition, both the 1 mg and 3 mg tablets contain FD&C Blue#2.

 

# **CLINICAL PHARMACOLOGY:**

 

## **Pharmacodynamics**

## ** **

The precise mechanism of action of eszopiclone as ahypnotic is unknown, but its effect is believed to result from its interactionwith GABA-receptor complexes at binding domains located close to orallosterically coupled to benzodiazepine receptors. Eszopiclone is anonbenzodiazepine hypnotic that is a pyrrolopyrazine derivative of thecyclopyrrolone class with a chemical structure unrelated topyrazolopyrimidines, imidazopyridines, benzodiazepines, barbiturates, or otherdrugs with known hypnotic properties. 

 

1

----

 

## **Pharmacokinetics**

## ** **

Thepharmacokinetics of eszopiclone havebeen investigated in healthy subjects (adult and elderly) and in patients withhepatic disease or renal disease. In healthy subjects, the pharmacokineticprofile was examined after single doses of up to 7.5 mg and after once-dailyadministration of 1, 3, and 6 mg for 7 days. Eszopiclone is rapidly absorbed, with a time to peakconcentration (tmax) ofapproximately 1 hour and a terminal-phase elimination half-life (t1/2)of approximately 6 hours. In healthyadults, LUNESTA does not accumulate with once-daily administration, and itsexposure is dose-proportional over the range of 1 to 6 mg.

 

### *Absorption And Distribution*

### * *

Eszopiclone******is rapidly absorbed following oraladministration. Peak plasma concentrations are achieved within approximately 1hour after oral administration. Eszopiclone is weakly bound to plasma protein (52-59%). The large free fractionsuggests that eszopiclonedisposition should not be affected by drug-drug interactions caused by proteinbinding. The blood-to-plasma ratio for eszopiclone is less than one, indicating no selective uptakeby red blood cells.

 

### *Metabolism*

### * *

Following oral administration, eszopiclone isextensively metabolized by oxidation and demethylation. The primary plasma metabolitesare (*S*)-zopiclone-N-oxide and (*S*)-N-desmethyl zopiclone; the lattercompound binds to GABA receptors with substantially lower potency thaneszopiclone, and the former compound shows no significant binding to thisreceptor. *In vitro* studies have shown that CYP3A4and CYP2E1 enzymes are involved in the metabolism of eszopiclone. Eszopiclonedid not show any inhibitory potential on CYP450 1A2, 2A6, 2C9, 2C19, 2D6, 2E1,and 3A4 in cryopreserved human hepatocytes.

 

### *Elimination*

### * *

Afteroral administration, eszopiclone iseliminated with a mean t1/2  of approximately 6 hours. Up to 75% of an oral dose of racemic zopicloneis excreted in the urine, primarily as metabolites. A similar excretion profilewould be expected for eszopiclone, the S-isomer of racemic zopiclone. Less than10% of the orally administered eszopiclone dose is excreted in the urine asparent drug.

 

### *EffectOf Food*

### * *

In healthy adults, administration of a 3 mg dose of eszopiclone  after a high-fat meal resulted in nochange in AUC, a reduction in mean Cmax of 21%, and delayed tmaxby approximately 1 hour. The half-life remained unchanged, approximately 6hours. The effects of LUNESTA on sleep onset may be reduced if itis taken with or immediately after a high-fat/heavy meal.

 

2

----

 

## **Special Populations**

## ** **

### *Age*

### * *

Comparedwith non-elderly adults, subjects 65 years and older had an increase of 41% intotal exposure (AUC) and a slightly prolonged elimination of eszopiclone (t1/2 approximately 9 hours). Cmax was unchanged. Therefore, in elderly patientsthe starting dose of LUNESTA shouldbe decreased to 1 mg and the dose should not exceed 2 mg.

 

### *Gender*

### * *

Thepharmacokinetics of eszopiclone inmen and women are similar.

 

### *Race*

### * *

Inan analysis of data on all subjects participating in Phase 1 studies of eszopiclone, the pharmacokinetics for all races studiedappeared similar.

 

### *Hepatic Impairment*

### * *

Pharmacokineticsof a 2 mg eszopiclone dose were assessed in 16 healthy volunteers and in8 subjects with mild, moderate, and severe liver disease. Exposure wasincreased 2-fold in severely impaired patients compared with the healthyvolunteers. Cmax and tmaxwere unchanged. The dose of LUNESTA shouldnot be increased above 2 mg in patients with severe hepatic impairment. No doseadjustment is necessary for patients with mild-to-moderate hepatic impairment. LUNESTAshould be used with caution in patients with hepatic impairment. (See **Dosage AND Administration.**)

 

### *Renal Impairment*

### * *

Thepharmacokinetics of eszopiclone werestudied in 24 patients with mild, moderate, or severe renal impairment. AUC andCmax were similar in thepatients compared with demographically matched healthy control subjects. Nodose adjustment is necessary in patients with renal impairment, since less than10% of the orally administered eszopiclone dose is excreted in the urine asparent drug.

 

## **Drug Interactions**

## ** **

Eszopiclone ismetabolized by CYP3A4 and CYP2E1 via demethylation and oxidation. There were no pharmacokinetic or pharmacodynamicinteractions between eszopiclone andparoxetine, digoxin, or warfarin. When eszopiclone was coadministered witholanzapine, no pharmacokinetic interaction was detected in levels ofeszopiclone or olanzapine, but a pharmacodynamic interaction was seen on ameasure of psychomotor function. Eszopiclone and lorazepam decreased eachother’s Cmax by 22%. Coadministration of eszopiclone 3 mg to subjects receivingketoconazole 400 mg, a potent inhibitor of CYP3A4, resulted in a 2.2-fold

 

3

----

 

increasein exposure to eszopiclone. LUNESTA would not be expected to alter theclearance of drugs metabolized by common CYP450 enzymes. (See **PRECAUTIONS.**)

 

# **Clinical Trials:**

# ** **

The effect of LUNESTA onreducing sleep latency and improving sleep maintenance was established in studies with 2100 subjects (ages 18-86) with chronicand transient insomnia in six placebo-controlled trials of up to 6 months’duration. Two of these trials were in elderly patients (n=523). Overall, at therecommended adult dose (2-3 mg) and elderly dose (1-2 mg), LUNESTA significantly decreased sleep latency andimproved measures of sleep maintenance (objectively measured as wake time aftersleep onset [WASO] and subjectively measured as total sleep time).

 

## **Transient Insomnia**

## ** **

Healthyadults were evaluated in a model of transient insomnia (n=436) in a sleeplaboratory in a double-blind, parallel-group, single-night trial comparing twodoses of eszopiclone and placebo. LUNESTA 3 mg was superior to placebo on measures ofsleep latency and sleep maintenance, including polysomnographic (PSG)parameters of latency to persistent sleep (LPS) and WASO.

 

## **Chronic Insomnia (Adults And Elderly)**

## ** **

The effectiveness ofLUNESTA was established in five controlledstudies in chronic insomnia. Three controlled studies were in adult subjects,and two controlled studies were in elderly subjects with chronic insomnia.

 

### *Adults*

### * *

In the first study, adults with chronic insomnia (n=308) wereevaluated in a double-blind, parallel-group trial of 6 weeks’ durationcomparing LUNESTA 2 mg and 3 mg withplacebo. Objective endpoints were measured for 4 weeks. Both 2 mg and 3 mg weresuperior to placebo on LPS at 4 weeks. The 3 mg dose was superior to placebo onWASO.

 

Inthe second study, adults with chronic insomnia (n=788) were evaluated usingsubjective measures in a double-blind, parallel-group trial comparing thesafety and efficacy of LUNESTA 3 mg with placebo administered nightly for6 months. LUNESTA was superior to placebo on subjective measures of sleeplatency, total sleep time, and WASO.

 

Inaddition, a 6-period cross-over PSG study evaluating eszopiclone doses of 1 to3 mg, each given over a 2-day period, demonstrated effectiveness of all doseson LPS, and of 3 mg on WASO. In this trial, the response was dose-related.

 

4

----

 

### *Elderly*

### * *

Elderly subjects (ages65-86) with chronic insomnia were evaluated in two double-blind, parallel-grouptrials of 2 weeks’ duration. One study (n=231) compared the effects of LUNESTAwith placebo on subjective outcome measures, and the other (n=292) on objectiveand subjective outcome measures. The first study compared 1 mg and 2 mg ofLUNESTA with placebo, while the second study compared 2 mg of LUNESTA withplacebo. All doses were superior to placebo on measures of sleep latency. Inboth studies, 2 mg of LUNESTA was superior to placebo on measures of sleepmaintenance.

 

## **Studies Pertinent To Safety Concerns ForSedative/Hypnotic Drugs**

## ** **

### *Cognitive, Memory, Sedative, and PsychomotorEffects*

### * *

In two double-blind,placebo-controlled, single-dose cross-over studies of 12 patients each (onestudy in patients with insomnia; one in normal volunteers), the effects ofLUNESTA 2 and 3 mg were assessed on 20 measures of cognitive function and memoryat 9.5 and 12 hours after a nighttime dose. Although results suggested thatpatients receiving LUNESTA 3 mg performed more poorly than patients receivingplacebo on a very small number of these measures at 9.5 hours post-dose, noconsistent pattern of abnormalities was seen.

 

In a 6-monthdouble-blind, placebo-controlled trial of nightly administered LUNESTA 3 mg,8/593 subjects treated with LUNESTA 3 mg (1.3%) and 0/195 subjects treated with placebo (0%) spontaneously reportedmemory impairment. The majority ofthese events were mild in nature (5/8), and none were reported as severe. Fourof these events occurred within the first 7 days of treatment and did not recur.The incidence of spontaneously reported confusion in this 6-month study was0.5% in both treatment arms. In a 6-week adult study of nightly administeredLUNESTA 2 mg or 3 mg or placebo, the spontaneous reporting rates for confusionwere 0%, 3.0%, and 0%, respectively, and for memory impairment were 1%, 1%, and0%, respectively.

 

In a 2-week study of 264elderly insomniacs randomized to either nightly LUNESTA 2 mg or placebo,spontaneous reporting rates of confusion and memory impairment were 0% vs. 0.8%and 1.5% vs. 0%, respectively. In another 2-week study of 231 elderlyinsomniacs, the spontaneous reporting rates for the 1 mg, 2 mg, and placebogroups for confusion were 0%, 2.5%, and 0%, respectively, and for memoryimpairment were 1.4%, 0%, and 0%, respectively. 

 

A study of normalsubjects exposed to single fixed doses of LUNESTA from 1 to 7.5 mg using theDSST to assess sedation and psychomotor function at fixed times after dosing(hourly up to 16 hours) found the expected sedation and reduction inpsychomotor function. This was maximal at 1 hour and present up to 4 hours, butwas no longer present by 5 hours.

 

In another study,patients with insomnia were given 2 or 3 mg doses of LUNESTA nightly, with DSSTassessed on the mornings following days 1, 15, and 29 of treatment. While boththe placebo and LUNESTA 3 mg groups showed an improvement in DSST scoresrelative to baseline the following morning (presumably due to a learningeffect), the improvement in the

 

5

----

 

placebo group was greaterand reached statistical significance on night 1, although not on nights 15 and29. For the LUNESTA 2 mg group, DSST change scores were not significantlydifferent from placebo at any time point.

 

### *Withdrawal-Emergent Anxiety And Insomnia*

### * *

During nightly use for anextended period, pharmacodynamic tolerance or adaptation has been observed withother hypnotics. If a drug has a short elimination half-life, it is possiblethat a relative deficiency of the drug or its active metabolites (i.e., inrelationship to the receptor site) may occur at some point in the intervalbetween each night’s use. This is believed to be responsible for two clinicalfindings reported to occur after several weeks of nightly use of other rapidlyeliminated hypnotics:  increasedwakefulness during the last quarter of the night and the appearance ofincreased signs of daytime anxiety. 

 

In a 6-monthdouble-blind, placebo-controlled study of nightly administration of LUNESTA3 mg, rates of anxiety reported as an adverse event were 2.1% in theplacebo arm and 3.7% in the LUNESTA arm. In a 6-week adult study of nightlyadministration, anxiety was reported as an adverse event in 0%, 2.9%, and 1.0%of the placebo, 2 mg, and 3 mg treatment arms, respectively. In this study,single-blind placebo was administered on nights 45 and 46, the first and seconddays of withdrawal from study drug. New adverse events were recorded during thewithdrawal period, beginning with day 45, up to 14 days after discontinuation. Duringthis withdrawal period, 105 subjects previously taking nightly LUNESTA 3 mg for44 nights spontaneously reported anxiety (1%), abnormal dreams (1.9%),hyperesthesia (1%), and neurosis (1%), while none of 99 subjects previouslytaking placebo reported any of these adverse events during the withdrawalperiod.

 

Rebound insomnia, definedas a dose-dependent temporary worsening in sleep parameters (latency, sleepefficiency, and number of awakenings) compared with baseline followingdiscontinuation of treatment, is observed with short- and intermediate-actinghypnotics. Rebound insomnia following discontinuation of LUNESTA relative toplacebo and baseline was examined objectively in a 6-week adult study on thefirst 2 nights of discontinuation (nights 45 and 46) following 44 nights ofactive treatment with 2 mg or 3 mg. In the LUNESTA 2 mg group, compared withbaseline, there was a significant increase in WASO and a decrease in sleepefficiency, both occurring only on the first night after discontinuation oftreatment. No changes from baseline were noted in the LUNESTA 3 mg group on thefirst night after discontinuation, and there was a significant improvement inLPS and sleep efficiency compared with baseline following the second night ofdiscontinuation. Comparisons of changes from baseline between LUNESTA andplacebo were also performed. On the first night after discontinuation ofLUNESTA 2 mg, LPS and WASO were significantly increased and sleep efficiencywas reduced; there were no significant differences on the second night. On thefirst night following discontinuation of LUNESTA 3 mg, sleep efficiency wassignificantly reduced. No other differences from placebo were noted in anyother sleep parameter on either the first or second night followingdiscontinuation. For both doses, the discontinuation-emergent effect was mild,had the characteristics of the return of the symptoms of chronic insomnia, andappeared to resolve by the second night after LUNESTA discontinuation.

 

6

----

 

# **INDICATIONS AND USAGE:**

 

LUNESTA is indicated forthe treatment of insomnia. In controlled outpatient and sleep laboratorystudies, LUNESTA administered at bedtime decreased sleep latency and improvedsleep maintenance. 

 

The clinical trialsperformed in support of efficacy were up to 6 months in duration. The finalformal assessments of sleep latency and maintenance were performed at 4 weeksin the 6-week study, at the end of both 2-week studies and at the end of the6-month study.

 

# **CONTRAINDICATIONS:**

# ** **

None known.

 

# **WARNINGS:**

# ** **

Because sleepdisturbances may be the presenting manifestation of a physical and/orpsychiatric disorder, symptomatic treatment of insomnia should be initiatedonly after a careful evaluation of the patient. **The failure of insomnia to remit after 7 to 10 days of treatment mayindicate the presence of a primary psychiatric and/or medical illness thatshould be evaluated.**Worsening of insomnia or the emergence of newthinking or behavior abnormalities may be the consequence of an unrecognizedpsychiatric or physical disorder. Such findings have emerged during the courseof treatment with sedative/hypnotic drugs, including LUNESTA. Because some ofthe important adverse effects of LUNESTA appear to be dose-related, it isimportant to use the lowest possible effective dose, especially in the elderly(see **DOSAGE AND ADMINISTRATION**).

 

A variety of abnormalthinking and behavior changes have been reported to occur in association withthe use of sedative/hypnotics. Some of these changes may be characterized bydecreased inhibition (e.g., aggressiveness and extroversion that seem out ofcharacter), similar to effects produced by alcohol and other CNS depressants. Otherreported behavioral changes have included bizarre behavior, agitation,hallucinations, and depersonalization. Complex behaviors such as“sleep-driving” (i.e., driving while not fully awake after ingestion of asedative-hypnotic, with amnesia for the event) have been reported. These eventscan occur in sedative-hypnotic-naïve as well as insedative-hypnotic-experienced persons. Although behaviors such as sleep-drivingmay occur with LUNESTA alone at therapeutic doses, the use of alcohol and otherCNS depressants with LUNESTA appears to increase the risk of such behaviors, asdoes the use of LUNESTA at doses exceeding the maximum recommended dose. Due tothe risk to the patient and the community, discontinuation of LUNESTA should bestrongly considered for patients who report a “sleep-driving” episode. Othercomplex behaviors (e.g., preparing and eating food, making phone calls, orhaving sex) have been reported in patients who are not fully awake after takinga sedative-hypnotic. As with sleep-driving, patients usually do not rememberthese events. Amnesia and other neuropsychiatric symptoms may occurunpredictably. In primarily

 

7

----

 

depressed patients,worsening of depression, including suicidal thinking, has been reported inassociation with the use of sedative/hypnotics. 

 

It can rarely bedetermined with certainty whether a particular instance of the abnormal behaviorslisted above are drug-induced, spontaneous in origin, or a result of anunderlying psychiatric or physical disorder. Nonetheless, the emergence of anynew behavioral sign or symptom of concern requires careful and immediateevaluation. 

 

Following rapid dosedecrease or abrupt discontinuation of the use of sedative/hypnotics, there havebeen reports of signs and symptoms similar to those associated with withdrawalfrom other CNS-depressant drugs (see **DrugAbuse and Dependence**). 

 

LUNESTA, like otherhypnotics, has CNS-depressant effects. Because of the rapid onset of action,LUNESTA should only be ingested immediately prior to going to bed or after thepatient has gone to bed and has experienced difficulty falling asleep. Patientsreceiving LUNESTA should be cautioned against engaging in hazardous occupationsrequiring complete mental alertness or motor coordination (e.g., operatingmachinery or driving a motor vehicle) after ingesting the drug, and becautioned about potential impairment of the performance of such activities onthe day following ingestion of LUNESTA. LUNESTA, like other hypnotics, mayproduce additive CNS-depressant effects when coadministered with otherpsychotropic medications, anticonvulsants, antihistamines, ethanol, and otherdrugs that themselves produce CNS depression. LUNESTA should not be taken withalcohol. Dose adjustment may be necessary when LUNESTA is administered withother CNS-depressant agents, because of the potentially additive effects.

 

**Severeanaphylactic and anaphylactoid reactions**

** **

Rare cases of angioedemainvolving the tongue, glottis or larynx have been reported in patients aftertaking the first or subsequent doses of sedative-hypnotics, including LUNESTA. Somepatients have had additional symptoms such as dyspnea, throat closing, ornausea and vomiting that suggest anaphylaxis. Some patients have requiredmedical therapy in the emergency department. If angioedema involves the tongue,glottis or larynx, airway obstruction may occur and be fatal. Patients who developangioedema after treatment with LUNESTA should not be rechallenged with thedrug.

 

# **PRECAUTIONS:**

# ** **

## **General**

## ** **

## **Timing Of Drug Administration**

## ** **

LUNESTA should be takenimmediately before bedtime. Taking a sedative/hypnotic while still up and aboutmay result in short-term memory impairment, hallucinations, impairedcoordination, dizziness, and lightheadedness.

 

8

----

 

## **Use In The Elderly And/Or Debilitated Patients**

 

Impairedmotor and/or cognitive performance after repeated exposure or unusualsensitivity to sedative/hypnotic drugs is a concern in the treatment of elderlyand/or debilitated patients. The recommended starting dose of LUNESTA for thesepatients is 1 mg. (See **DOSAGE AND ADMINISTRATION.**)

 

## **Use In Patients WithConcomitant Illness**

## ** **

Clinicalexperience with eszopiclone in patients with concomitant illness is limited. Eszopicloneshould be used with caution in patients with diseases or conditions that couldaffect metabolism or hemodynamic responses.

 

Astudy in healthy volunteers did not reveal respiratory-depressant effects atdoses 2.5-fold higher (7 mg) than the recommended dose of eszopiclone. Cautionis advised, however, if LUNESTA is prescribed to patients with compromisedrespiratory function. 

 

Thedose of LUNESTA should be reduced to 1 mg in patients with severe hepaticimpairment, because systemic exposure is doubled in such subjects. No doseadjustment appears necessary for subjects with mild or moderate hepaticimpairment. No dose adjustment appears necessary in subjects with any degree ofrenal impairment, since less than 10% of eszopiclone is excreted unchanged inthe urine.

 

Thedose of LUNESTA should be reduced in patients who are administered potentinhibitors of CYP3A4, such as ketoconazole, while taking LUNESTA. Downward doseadjustment is also recommended when LUNESTA is administered with agents havingknown CNS-depressant effects.

 

## **Use In Patients WithDepression**

## ** **

Sedative/hypnoticdrugs should be administered with caution to patients exhibiting signs andsymptoms of depression. Suicidal tendencies may be present in such patients,and protective measures may be required. Intentional overdose is more common inthis group of patients; therefore, the least amount of drug that is feasibleshould be prescribed for the patient at any one time.

 

## **Information For Patients**

## ** **

Patientinformation is printed at the bottom of this insert. To assure safe andeffective use of LUNESTA, this information and the instructions provided in thepatient information section should be discussed with patients.

 

## **SPECIAL CONCERNS “Sleep-Driving” and othercomplex behaviors**

 

There have been reportsof people getting out of bed after taking a sedative-hypnotic and driving theircars while not fully awake, often with no memory of the event. If a patientexperiences

 

9

----

 

such an episode, itshould be reported to his or her doctor immediately, since “sleep-driving” canbe dangerous. This behavior is more likely to occur when LUNESTA is taken withalcohol or other central nervous system depressants (see WARNINGS). Othercomplex behaviors (e.g., preparing and eating food, making phone calls, orhaving sex) have been reported in patients who are not fully awake after takinga sedative-hypnotic. As with sleep-driving, patients usually do not rememberthese events.

 

## **Laboratory Tests**

 

There are no specificlaboratory tests recommended.

 

## **Drug Interactions**

## ** **

### *CNS-Active Drugs*

### * *

*Ethanol:*  An additive effect on psychomotor performancewas seen with coadministration of eszopiclone and ethanol 0.70 g/kg for up to 4hours after ethanol administration.

 

*Paroxetine:*  Coadministration of single doses ofeszopiclone 3 mg and paroxetine 20 mg daily for 7 days produced nopharmacokinetic or pharmacodynamic interaction.

 

*Lorazepam:*  Coadministration of single doses ofeszopiclone 3 mg and lorazepam 2 mg did not have clinically relevant effects onthe pharmacodynamics or pharmacokinetics of either drug.

 

*Olanzapine:*  Coadministration of eszopiclone 3 mg and olanzapine10 mg produced a decrease in DSST scores. The interaction was pharmacodynamic;there was no alteration in the pharmacokinetics of either drug.

 

### *Drugs That Inhibit CYP3A4 (Ketoconazole)*

### * *

CYP3A4 is a majormetabolic pathway for elimination of eszopiclone. The AUC of eszopiclone wasincreased 2.2-fold by coadministration of ketoconazole, a potent inhibitor ofCYP3A4, 400 mg daily for 5 days. Cmax and t1/2 wereincreased 1.4-fold and 1.3-fold, respectively. Other strong inhibitors ofCYP3A4 (e.g., itraconazole, clarithromycin, nefazodone, troleandomycin,ritonavir, nelfinavir) would be expected to behave similarly.

 

### *Drugs That Induce CYP3A4 (Rifampicin)*

### * *

Racemic zopiclone exposure was decreased 80% by concomitantuse of rifampicin, a potent inducer of CYP3A4. A similar effect would beexpected with eszopiclone.

 

### *Drugs Highly Bound To Plasma Protein*

 

Eszopicloneis not highly bound to plasma proteins (52-59% bound); therefore, thedisposition of eszopiclone is not expected to be sensitive to alterations inprotein binding. Administration of

 

10

----

 

eszopiclone3 mg to a patient taking another drug that is highly protein-bound would not beexpected to cause an alteration in the free concentration of either drug.

 

### *Drugs With A Narrow Therapeutic Index*

### * *

*Digoxin:*  A singledose of eszopiclone 3 mg did not affect the pharmacokinetics of digoxinmeasured at steady state following dosing of 0.5 mg twice daily for one day and0.25 mg daily for the next 6 days.

 

*Warfarin:*  Eszopiclone3 mg administered daily for 5 days did not affect the pharmacokinetics of (*R*)- or (*S*)-warfarin,nor were there any changes in the pharmacodynamic profile (prothrombin time)following a single 25 mg oral dose of warfarin. 

 

## **Carcinogenesis, Mutagenesis, Impairment OfFertility**

## ** **

### *Carcinogenesis*

### * *

In a carcinogenicitystudy in Sprague-Dawley rats in which eszopiclone was given by oral gavage, noincreases in tumors were seen; plasma levels (AUC) of eszopiclone at thehighest dose used in this study (16 mg/kg/day) are estimated to be 80 (females)and 20 (males) times those in humans receiving the maximum recommended humandose (MRHD). However, in a carcinogenicity study in Sprague-Dawley rats inwhich racemic zopiclone was given in the diet, and in which plasma levels ofeszopiclone were reached that were greater than those reached in the abovestudy of eszopiclone, an increase in mammary gland adenocarcinomas in femalesand an increase in thyroid gland follicular cell adenomas and carcinomas inmales were seen at the highest dose of 100 mg/kg/day. Plasma levels ofeszopiclone at this dose are estimated to be 150 (females) and 70 (males) timesthose in humans receiving the MRHD. The mechanism for the increase in mammaryadenocarcinomas is unknown. The increase in thyroid tumors is thought to be dueto increased levels of TSH secondary to increased metabolism of circulatingthyroid hormones, a mechanism that is not considered to be relevant to humans.

 

In a carcinogenicitystudy in B6C3F1 mice in which racemic zopiclone was given in the diet, anincrease in pulmonary carcinomas and carcinomas plus adenomas in females and anincrease in skin fibromas and sarcomas in males were seen at the highest doseof 100 mg/kg/day. Plasma levels of eszopiclone at this dose are estimated to be8 (females) and 20 (males) times those in humans receiving the MRHD. The skintumors were due to skin lesions induced by aggressive behavior, a mechanismthat is not relevant to humans. A carcinogenicity study was also performed in whichCD-1 mice were given eszopiclone at doses up to 100 mg/kg/day by oral gavage;although this study did not reach a maximum tolerated dose, and was thusinadequate for overall assessment of carcinogenic potential, no increases ineither pulmonary or skin tumors were seen at doses producing plasma levels ofeszopiclone estimated to be 90 times those in humans receiving the MRHD — i.e.,12 times the exposure in the racemate study. 

 

Eszopiclone did notincrease tumors in a p53 transgenic mouse bioassay at oral doses up to300 mg/kg/day.

 

11

----

 

### *Mutagenesis*

### * *

Eszopiclone was positivein the mouse lymphoma chromosomal aberration assay and produced an equivocalresponse in the Chinese hamster ovary cell chromosomal aberration assay. It wasnot mutagenic or clastogenic in the bacterial Ames gene mutation assay, in anunscheduled DNA synthesis assay, or in an *in vivo* mousebone marrow micronucleus assay.

 

(*S*)-N-desmethyl zopiclone, a metabolite ofeszopiclone, was positive in the Chinese hamster ovary cell and humanlymphocyte chromosomal aberration assays. It was negative in the bacterial Amesmutation assay, in an *in vitro*32P-postlabelingDNA adduct assay, and in an *in vivo* mousebone marrow chromosomal aberration and micronucleus assay.

 

### *Impairment Of Fertility*

### * *

Eszopiclone was given byoral gavage to male rats at doses up to 45 mg/kg/day from 4 weeks prematingthrough mating and to female rats at doses up to 180 mg/kg/day from 2 weekspremating through day 7 of pregnancy. An additional study was performed inwhich only females were treated, up to 180 mg/kg/day. Eszopiclone decreasedfertility, probably because of effects in both males and females, with nofemales becoming pregnant when both males and females were treated with thehighest dose; the no-effect dose in both sexes was 5 mg/kg (16 times the MRHDon a mg/m2 basis). Other effects included increased pre-implantationloss (no-effect dose 25 mg/kg), abnormal estrus cycles (no-effect dose 25mg/kg), and decreases in sperm number and motility and increases inmorphologically abnormal sperm (no-effect dose 5 mg/kg). 

 

## **Pregnancy**

## ** **

### *Pregnancy Category C*

### * *

Eszopiclone administeredby oral gavage to pregnant rats and rabbits during the period of organogenesisshowed no evidence of teratogenicity up to the highest doses tested (250 and 16mg/kg/day in rats and rabbits, respectively; these doses are 800 and 100 times,respectively, the maximum recommended human dose [MRHD] on a mg/m2basis). In the rat, slight reductions in fetal weight and evidence ofdevelopmental delay were seen at maternally toxic doses of 125 and 150mg/kg/day, but not at 62.5 mg/kg/day (200 times the MRHD on a mg/m2basis).

 

Eszopiclone was alsoadministered by oral gavage to pregnant rats throughout the pregnancy andlactation periods at doses of up to 180 mg/kg/day. Increased post-implantationloss, decreased postnatal pup weights and survival, and increased pup startleresponse were seen at all doses; the lowest dose tested, 60 mg/kg/day, is 200times the MRHD on a mg/m2 basis. These doses did not producesignificant maternal toxicity. Eszopiclone had no effects on other behavioralmeasures or reproductive function in the offspring. 

 

There are no adequate andwell-controlled studies of eszopiclone in pregnant women. Eszopiclone should beused during pregnancy only if the potential benefit justifies the potentialrisk to the fetus.

 

12

----

 

## **Labor And Delivery**

## ** **

LUNESTA has noestablished use in labor and delivery.

 

## **Nursing Mothers**

## ** **

It is not known whetherLUNESTA is excreted in human milk. Because many drugs are excreted in humanmilk, caution should be exercised when LUNESTA is administered to a nursingwoman.

 

## **Pediatric Use**

## ** **

Safety and effectivenessof eszopiclone in children below the age of 18 have not been established.

 

## **Geriatric Use**

## ** **

A total of 287 subjectsin double-blind, parallel-group, placebo-controlled clinical trials whoreceived eszopiclone were 65 to 86 years of age. The overall pattern of adverseevents for elderly subjects (median age = 71 years) in 2-week studies withnighttime dosing of 2 mg eszopiclone was not different from that seen inyounger adults (see **ADVERSE REACTIONS,**Table 2). LUNESTA 2 mg exhibited significant reduction in sleep latency andimprovement in sleep maintenance in the elderly population.

 

# **Adverse Reactions:**

# ** **

The premarketingdevelopment program for LUNESTA included eszopiclone exposures in patientsand/or normal subjects from two different groups of studies:  approximately 400 normal subjects in clinicalpharmacology/pharmacokinetic studies, and approximately 1550 patients inplacebo-controlled clinical effectiveness studies, corresponding toapproximately 263 patient-exposure years. The conditions and duration oftreatment with LUNESTA varied greatly and included (in overlapping categories)open-label and double-blind phases of studies, inpatients and outpatients, andshort-term and longer-term exposure. Adverse reactions were assessed bycollecting adverse events, results of physical examinations, vital signs,weights, laboratory analyses, and ECGs.

 

Adverse events duringexposure were obtained primarily by general inquiry and recorded by clinicalinvestigators using terminology of their own choosing. Consequently, it is notpossible to provide a meaningful estimate of the proportion of individualsexperiencing adverse events without first grouping similar types of events intoa smaller number of standardized event categories. In the tables andtabulations that follow, COSTART terminology has been used to classify reportedadverse events.

 

13

----

 

The stated frequencies ofadverse events represent the proportion of individuals who experienced, atleast once, a treatment-emergent adverse event of the type listed. An event wasconsidered treatment-emergent if it occurred for the first time or worsenedwhile the patient was receiving therapy following baseline evaluation.

 

## **Adverse Findings Observed In Placebo-ControlledTrials**

## ** **

### *Adverse Events Resulting In Discontinuation OfTreatment*

 

In placebo-controlled,parallel-group clinical trials in the elderly, 3.8% of 208 patients whoreceived placebo, 2.3% of 215 patients who received 2 mg LUNESTA, and 1.4%of 72 patients who received 1 mg LUNESTA discontinued treatment due to anadverse event. In the 6-week parallel-group study in adults, no patients in the3 mg arm discontinued because of an adverse event. In the long-term6-month study in adult insomnia patients, 7.2% of 195 patients who receivedplacebo and 12.8% of 593 patients who received 3 mg LUNESTA discontinueddue to an adverse event. No event that resulted in discontinuation occurred ata rate of greater than 2%.

 

### *Adverse Events Observed At An Incidence Of >2% In Controlled Trials*

 

Table 1 shows theincidence of treatment-emergent adverse events from a Phase 3placebo-controlled study of LUNESTA at doses of 2 or 3 mg in non-elderlyadults. Treatment duration in this trial was 44 days. The table includes onlyevents that occurred in 2% or more of patients treated with LUNESTA 2 mg or 3mg in which the incidence in patients treated with LUNESTA was greater than theincidence in placebo-treated patients.

 

14

----

 

**Table 1:**         Incidence (%) of Treatment-EmergentAdverse Events in a 6-Week Placebo-Controlled Study in Non-Elderly Adults with LUNESTA(1)

 
| **Adverse Event** | ** ** | **Placebo  (n=99)** | ** ** | **LUNESTA 2 mg  (n=104)** | ** ** | **LUNESTA 3 mg  (n=105)** | ** ** |
|------------------------|------------|---------------------|------------|-------------------------------------|------------|-------------------------------------|------------|
| Body as a Whole        |       |                |       |                                |       |                                |       |
| Headache               |       | 13                  |       | 21                                  |       | 17                                  |       |
| Viral Infection        |       | 1                   |       | 3                                   |       | 3                                   |       |
| Digestive System       |       |                |       |                                |       |                                |       |
| Dry Mouth              |       | 3                   |       | 5                                   |       | 7                                   |       |
| Dyspepsia              |       | 4                   |       | 4                                   |       | 5                                   |       |
| Nausea                 |       | 4                   |       | 5                                   |       | 4                                   |       |
| Vomiting               |       | 1                   |       | 3                                   |       | 0                                   |       |
| Nervous System         |       |                |       |                                |       |                                |       |
| Anxiety                |       | 0                   |       | 3                                   |       | 1                                   |       |
| Confusion              |       | 0                   |       | 0                                   |       | 3                                   |       |
| Depression             |       | 0                   |       | 4                                   |       | 1                                   |       |
| Dizziness              |       | 4                   |       | 5                                   |       | 7                                   |       |
| Hallucinations         |       | 0                   |       | 1                                   |       | 3                                   |       |
| Libido Decreased       |       | 0                   |       | 0                                   |       | 3                                   |       |
| Nervousness            |       | 3                   |       | 5                                   |       | 0                                   |       |
| Somnolence             |       | 3                   |       | 10                                  |       | 8                                   |       |
| Respiratory  System    |       |                |       |                                |       |                                |       |
| Infection              |       | 3                   |       | 5                                   |       | 10                                  |       |
| Skin and  Appendages   |       |                |       |                                |       |                                |       |
| Rash                   |       | 1                   |       | 3                                   |       | 4                                   |       |
| Special Senses         |       |                |       |                                |       |                                |       |
| Unpleasant Taste       |       | 3                   |       | 17                                  |       | 34                                  |       |
| Urogenital  System     |       |                |       |                                |       |                                |       |
| Dysmenorrhea *         |       | 0                   |       | 3                                   |       | 0                                   |       |
| Gynecomastia **        |       | 0                   |       | 3                                   |       | 0                                   |       |

 

----

(1)   Events for which the LUNESTA incidence was equal to or lessthan placebo are not listed on the table, but included the following:  abnormal dreams, accidental injury, backpain, diarrhea, flu syndrome, myalgia, pain, pharyngitis, and rhinitis.

*      Gender-specific adverseevent in females

**   Gender-specific adverse eventin males

 

Adverse events from Table1 that suggest a dose-response relationship in adults include viral infection,dry mouth, dizziness, hallucinations, infection, rash, and unpleasant taste,with this relationship clearest for unpleasant taste.

 

Table 2 shows theincidence of treatment-emergent adverse events from combined Phase 3 placebo-controlledstudies of LUNESTA at doses of 1 or2 mg in elderly adults (ages 65-86). Treatment duration in these trials was 14days. The table includes only events that occurred in 2% or more of patientstreated with LUNESTA 1 mg or 2 mg inwhich the incidence in patients treated with LUNESTA was greater than the incidence in placebo-treatedpatients.

 

15

----

 

**Table 2:**         Incidence (%) of Treatment-Emergent AdverseEvents in Elderly Adults (Ages 65-86) in 2-Week Placebo-Controlled Trials with LUNESTA(1)

 
| **Adverse Event**   | ** ** | **Placebo  (n=208)** | ** ** | **LUNESTA 1 mg  (n=72)** | ** ** | **LUNESTA 2 mg  (n=215)** | ** ** |
|--------------------------|------------|----------------------|------------|------------------------------------|------------|-------------------------------------|------------|
| Body as a Whole          |       |                 |       |                               |       |                                |       |
| Accidental  Injury       |       | 1                    |       | 0                                  |       | 3                                   |       |
| Headache                 |       | 14                   |       | 15                                 |       | 13                                  |       |
| Pain                     |       | 2                    |       | 4                                  |       | 5                                   |       |
| Digestive System         |       |                 |       |                               |       |                                |       |
| Diarrhea                 |       | 2                    |       | 4                                  |       | 2                                   |       |
| Dry Mouth                |       | 2                    |       | 3                                  |       | 7                                   |       |
| Dyspepsia                |       | 2                    |       | 6                                  |       | 2                                   |       |
| Nervous System           |       |                 |       |                               |       |                                |       |
| Abnormal Dreams          |       | 0                    |       | 3                                  |       | 1                                   |       |
| Dizziness                |       | 2                    |       | 1                                  |       | 6                                   |       |
| Nervousness              |       | 1                    |       | 0                                  |       | 2                                   |       |
| Neuralgia                |       | 0                    |       | 3                                  |       | 0                                   |       |
| Skin and  Appendages     |       |                 |       |                               |       |                                |       |
| Pruritus                 |       | 1                    |       | 4                                  |       | 1                                   |       |
| Special Senses           |       |                 |       |                               |       |                                |       |
| Unpleasant Taste         |       | 0                    |       | 8                                  |       | 12                                  |       |
| Urogenital  System       |       |                 |       |                               |       |                                |       |
| Urinary Tract  Infection |       | 0                    |       | 3                                  |       | 0                                   |       |

 

----

(1)   Events for which the LUNESTA incidence wasequal to or less than placebo are not listed on the table, but included thefollowing:  abdominal pain, asthenia,nausea, rash, and somnolence.

 

Adverse events from Table2 that suggest a dose-response relationship in elderly adults include pain, drymouth, and unpleasant taste, with this relationship again clearest forunpleasant taste.

 

These figures cannot beused to predict the incidence of adverse events in the course of usual medicalpractice because patient characteristics and other factors may differ fromthose that prevailed in the clinical trials. Similarly, the cited frequenciescannot be compared with figures obtained from other clinical investigationsinvolving different treatments, uses, and investigators. The cited figures,however, do provide the prescribing physician with some basis for estimatingthe relative contributions of drug and non-drug factors to the adverse eventincidence rate in the population studied.

 

## **Other Events Observed During The PremarketingEvaluation Of LUNESTA**

## ** **

Following is a list ofmodified COSTART terms that reflect treatment-emergent adverse events as definedin the introduction to the **ADVERSE REACTIONS**section and reported by approximately 1550 subjects treated with LUNESTA atdoses in the range of 1 to 3.5 mg/day during Phase 2 and 3 clinical trialsthroughout the United States and Canada. All reported events are includedexcept those already listed in Tables 1 and 2 or elsewhere in labeling, minorevents common in the general population, and events unlikely to be drug-related.Although the events reported occurred during treatment with LUNESTA, they werenot necessarily caused by it. 

 

16

----

 

Events are furthercategorized by body system and listed in order of decreasing frequencyaccording to the following definitions:  **frequent**adverse events are those that occurred on one ormore occasions in at least 1/100 patients; **infrequent**adverseevents are those that occurred in fewer than 1/100 patients but in at least1/1,000 patients; **rare** adverse events are those thatoccurred in fewer than 1/1,000 patients. Gender-specific events are categorizedbased on their incidence for the appropriate gender.

 

Body as a Whole:  **Frequent:** chest pain; **Infrequent:** allergic reaction, cellulitis, faceedema, fever, halitosis, heat stroke, hernia, malaise, neck rigidity, photosensitivity.

 

Cardiovascular System:  **Frequent:**migraine; **Infrequent:**hypertension; **Rare:** thrombophlebitis.

 

Digestive System:  **Infrequent:** anorexia,****cholelithiasis,increased appetite, melena, mouth ulceration, thirst, ulcerative stomatitis; **Rare:** colitis,dysphagia, gastritis, hepatitis, hepatomegaly, liver damage, stomach ulcer,stomatitis, tongue edema, rectal hemorrhage. 

 

Hemic and LymphaticSystem:  **Infrequent:** anemia,lymphadenopathy.****

 

Metabolic and Nutritional:  **Frequent:** peripheral edema; **Infrequent:** hypercholesteremia, weight gain, weight loss; **Rare:** dehydration,gout, hyperlipemia, hypokalemia.

 

Musculoskeletal System:  **Infrequent:** arthritis, bursitis, joint disorder(mainly swelling, stiffness, and pain), leg cramps, myasthenia, twitching; **Rare:** arthrosis,myopathy, ptosis. 

 

Nervous System:  **Infrequent:** agitation, apathy, ataxia, emotionallability, hostility, hypertonia, hypesthesia, incoordination, insomnia, memoryimpairment, neurosis, nystagmus, paresthesia, reflexes decreased, thinking abnormal(mainly difficulty concentrating), vertigo; **Rare:** abnormal gait, euphoria,hyperesthesia, hypokinesia, neuritis, neuropathy, stupor, tremor. 

* *

Respiratory System:  **Infrequent:** asthma, bronchitis, dyspnea,epistaxis, hiccup, laryngitis. 

 

Skin and Appendages:  **Infrequent:** acne, alopecia, contact dermatitis,dry skin, eczema, skin discoloration, sweating, urticaria; **Rare:** erythema multiforme, furunculosis, herpes zoster, hirsutism,maculopapular rash, vesiculobullous rash. 

 

Special Senses:  **Infrequent:**conjunctivitis, dry eyes, ear pain, otitis externa, otitis media, tinnitus,vestibular disorder; **Rare:** hyperacusis, iritis, mydriasis,photophobia. 

 

Urogenital System:  **Infrequent:** amenorrhea,****breastengorgement, breast enlargement, breast neoplasm, breast pain, cystitis,dysuria, female lactation, hematuria, kidney calculus, kidney pain, mastitis,menorrhagia, metrorrhagia, urinary frequency, urinary incontinence, uterinehemorrhage, vaginal hemorrhage, vaginitis; **Rare:** oliguria,pyelonephritis, urethritis.

 

17

----

 

# **DRUG ABUSE AND DEPENDENCE:**

# ** **

## **Controlled Substance Class**

## ** **

LUNESTA is a Schedule IVcontrolled substance under the Controlled Substances Act. Other substancesunder the sameclassification are benzodiazepines and the nonbenzodiazepine hypnotics zaleplonand zolpidem. While eszopiclone is a hypnotic agent with a chemical structureunrelated to benzodiazepines, it shares some of the pharmacologic properties ofthe benzodiazepines.

 

## **Abuse, Dependence, And Tolerance**

## ** **

### *Abuse And Dependence*

### * *

Abuse and addiction are separate and distinct fromphysical dependence and tolerance. Abuse is characterized by misuse of the drugfor non-medical purposes, often in combination with other psychoactivesubstances. Physical dependence is a state of adaptation that is manifested bya specific withdrawal syndrome that can be produced by abrupt cessation, rapiddose reduction, decreasing blood level of the drug and/or administration of anantagonist. Tolerance is a state of adaptation in which exposure to a druginduces changes that result in a diminution of one or more of the drug’seffects over time. Tolerance may occur to both the desired and undesiredeffects of drugs and may develop at different rates for different effects.

 

Addiction is a primary,chronic, neurobiological disease with genetic, psychosocial, and environmentalfactors influencing its development and manifestations. It is characterized bybehaviors that include one or more of the following:  impaired control over drug use, compulsiveuse, continued use despite harm, and craving. Drug addiction is a treatabledisease, utilizing a multidisciplinary approach, but relapse is common.

 

In a study of abuse liability conducted in individualswith known histories of benzodiazepine abuse, eszopiclone at doses of 6 and 12mg produced euphoric effects similar to those of diazepam 20 mg. In this study,at doses 2-fold or greater than the maximum recommended doses, a dose-relatedincrease in reports of amnesia and hallucinations was observed for both LUNESTAand diazepam.

 

The clinical trial experience with LUNESTA revealed noevidence of a serious withdrawal syndrome. Nevertheless, the following adverseevents included in DSM-IV criteria for uncomplicated sedative/hypnotic withdrawalwere reported during clinical trials following placebo substitution occurringwithin 48 hours following the last LUNESTA treatment: anxiety, abnormal dreams,nausea, and upset stomach. These reported adverse events occurred at anincidence of 2% or less. Use of benzodiazepines and similar agents may lead tophysical and psychological dependence. The risk of abuse and dependenceincreases with the dose and duration of treatment and concomitant use of otherpsychoactive drugs. The risk is also greater for patients who have a history ofalcohol or drug abuse or history of psychiatric disorders. These patientsshould be under careful surveillance when receiving LUNESTA or any otherhypnotic.

 

18

----

 

### *Tolerance*

### * *

Some loss of efficacy to the hypnotic effect ofbenzodiazepines and benzodiazepine-like agents may develop after repeated useof these drugs for a few weeks.

 

No development oftolerance to any parameter of sleep measurement was observed over six months. Toleranceto the efficacy of LUNESTA 3 mg was assessed by 4-week objective and 6-weeksubjective measurements of time to sleep onset and sleep maintenance forLUNESTA in a placebo-controlled 44-day study, and by subjective assessments oftime to sleep onset and WASO in a placebo-controlled study for 6 months.

 

# **OVERDOSAGE:**

# ** **

There is limitedpremarketing clinical experience with the effects of an overdosage of LUNESTA. Inclinical trials with eszopiclone, one case of overdose with up to 36 mg ofeszopiclone was reported in which the subject fully recovered. Individuals havefully recovered from racemic zopiclone overdoses up to 340 mg (56 times themaximum recommended dose of eszopiclone).

 

## **Signs And Symptoms**

## ** **

Signs and symptoms ofoverdose effects of CNS depressants can be expected to present as exaggerationsof the pharmacological effects noted in preclinical testing. Impairment ofconsciousness ranging from somnolence to coma has been described. Rareindividual instances of fatal outcomes following overdose with racemiczopiclone have been reported in European postmarketing reports, most oftenassociated with overdose with other CNS-depressant agents.

 

## **Recommended Treatment**

## ** **

General symptomatic andsupportive measures should be used along with immediate gastric lavage whereappropriate. Intravenous fluids should be administered as needed. Flumazenilmay be useful. As in all cases of drug overdose, respiration, pulse, bloodpressure, and other appropriate signs should be monitored and generalsupportive measures employed. Hypotension and CNS depression should bemonitored and treated by appropriate medical intervention. The value ofdialysis in the treatment of overdosage has not been determined.

 

## **Poison Control Center**

 

As with the management ofall overdosage, the possibility of multiple drug ingestion should be considered.The physician may wish to consider contacting a poison control center forup-to-date information on the management of hypnotic drug product overdosage.

 

19

----

 

# **DOSAGE AND ADMINISTRATION:**

 

The dose of LUNESTAshould be individualized. The recommended starting dose for LUNESTA for mostnon-elderly adults is 2 mgimmediately before bedtime. Dosing can be initiated at or raised to 3 mg ifclinically indicated, since 3 mg is more effective for sleep maintenance (see **Precautions**).

 

The recommended startingdose of LUNESTA for elderly patients whose primary complaint is difficultyfalling asleep is 1 mg immediately before bedtime. In these patients, the dosemay be increased to 2 mg if clinically indicated. For elderly patients whoseprimary complaint is difficulty staying asleep, the recommended dose is 2 mgimmediately before bedtime (see **Precautions**).

 

Taking LUNESTA with orimmediately after a heavy, high-fat meal results in slower absorption and wouldbe expected to reduce the effect of LUNESTA on sleep latency (see **Pharmacokinetics** under **Clinical Pharmacology**).

 

## **Special Populations**

## ** **

### *Hepatic*

### * *

The starting dose ofLUNESTA should be 1 mg in patients with severe hepatic impairment. LUNESTAshould be used with caution in these patients.

 

### *Coadministration With CYP3A4 Inhibitors*

### * *

The starting dose ofLUNESTA should not exceed 1 mg in patients coadministered LUNESTA with potentCYP3A4 inhibitors. If needed, the dose can be raised to 2 mg.

 

# **HOW SUPPLIED:**

# ** **

LUNESTA 3 mg tablets areround, dark blue, film-coated, and identified with debossed markings of S193 onone side, and are supplied as:

 
| NDC 63402-193-10 |   | bottle of 100 tablets |
|------------------|--------|-----------------------|
| NDC 63402-193-09 |   | carton of 90 tablets  |

 

LUNESTA 2 mg tablets areround, white, film-coated, and identified with debossed markings of S191 on oneside, and are supplied as:

 
| NDC 63402-191-10 |   | bottle of 100 tablets |
|------------------|--------|-----------------------|
| NDC 63402-191-09 |   | carton of 90 tablets  |

 

LUNESTA 1 mg tablets areround, light blue, film-coated, and identified with debossed markings of S190on one side, and are supplied as:

 

20

----

 
| NDC 63402-190-10 |   | bottle of 100 tablets |
|------------------|--------|-----------------------|

 

Store at 25°C (77°F);excursions permitted to 15°C to 30°C (59°F to 86°F) [see USP Controlled RoomTemperature].

 

21

----

 

 

Manufactured for: 

**Sepracor Inc.**

Marlborough, MA 01752  USA

by Patheon Inc., Mississauga, Ontario  L5N 7K9 Canada 

 

For customer service, call 1-888-394-7377.

To report adverse events, call 1-877-737-7226.

For medical information, call 1-800-739-0565.

 

April 2007

 

PHARMACIST — DETACH HERE AND GIVE INFORMATIONTO PATIENT.

** **
| **Rx only** | ** ** | **C-IV** |
|-------------|------------|----------|

 

**LUNESTA®(eszopiclone) TABLETS**

**1 mg, 2mg, 3 mg**

 

# **INFORMATION FOR PATIENTS TAKING LUNESTA**

 

Your doctor hasprescribed LUNESTA to help you sleep. The following information is intended toguide you in the safe use of this medicine. It is not meant to take the placeof your doctor’s instructions. If you have any questions about LUNESTA tablets,be sure to ask your doctor or pharmacist. 

 

LUNESTA is used to treatdifferent types of sleep problems, such as difficulty in falling asleep,difficulty in maintaining sleep during the night, and waking up too early inthe morning. Most people with insomnia have more than one of these problems. Youshould take LUNESTA immediately before going to bed because of the risk offalling.

 

LUNESTA belongs to agroup of medicines known as “hypnotics” or, simply, sleep medicines. There aremany different sleep medicines available to help people sleep better. Insomniais often transient and intermittent. It usually requires treatment for only ashort time, usually 7 to 10 days up to 2 weeks. Some people have chronic sleepproblems that may require more prolonged use of sleep medicine. However, youshould not use these medicines for long periods without talking with yourdoctor about the risks and benefits of prolonged use.

 

22

----

 

## **Side Effects**

 

All medicines have sideeffects. The most common side effects of sleep medicines are: 

 

·      Drowsiness 

·      Dizziness 

·      Lightheadedness 

·      Difficulty with coordination

 

Sleep medicines can makeyou sleepy during the day. How drowsy you feel depends upon how your bodyreacts to the medicine, which sleep medicine you are taking, and how large a doseyour doctor has prescribed. Daytime drowsiness is best avoided by taking thelowest dose possible that will still help you sleep at night. Your doctor willwork with you to find the dose of LUNESTA that is best for you. Some patientstaking LUNESTA have reported next-day sleepiness.

 

To manage these sideeffects while you are taking this medicine: 

 

·      When you first start takingLUNESTA or any other sleep medicine, until you know whether the medicine willstill have some effect on you the next day, use extreme care while doinganything that requires complete alertness, such as driving a car, operatingmachinery, or piloting an aircraft. 

 

·      Do not drink alcohol whenyou are taking LUNESTA or any sleep medicine. Alcohol can increase the sideeffects of LUNESTA or any other sleep medicine. 

 

·      Do not take any othermedicines without asking your doctor first. This includes medicines you can buywithout a prescription. Some medicines can cause drowsiness and are bestavoided while taking LUNESTA. 

 

·      Always take the exact doseof LUNESTA prescribed by your doctor. Never change your dose without talking toyour doctor first.

 

## **Special Concerns**

## ** **

There are some specialproblems that may occur while taking sleep medicines. 

 

### *Memory Problems*

 

Sleep medicines may causea special type of memory loss or “amnesia.” When this occurs, a person may not remember what has happened forseveral hours after taking the medicine. This is usually not a problem sincemost people fall asleep after taking the medicine. Memory loss can be aproblem, however, when sleep medicines are taken while traveling, such asduring an airplane flight and the person wakes up before the effect of themedicine is gone. This has been called “traveler’s amnesia.”  Memory problems have been reported rarely bypatients taking LUNESTA in clinical studies. In most cases, memory problems canbe avoided if you take 

 

23

----

 

LUNESTA only when you areable to get a full night of sleep before you need to be active again. Be sureto talk to your doctor if you think you are having memory problems.

 

### *Tolerance*

 

When sleep medicines areused every night for more than a few weeks, they may lose their effectivenessin helping you sleep. This is known as “tolerance.”  Development of tolerance to LUNESTA was notobserved in a clinical study of 6 months’ duration. Insomnia is often transientand intermittent, and prolonged use of sleep medicines is generally notnecessary. Some people, though, have chronic sleep problems that may requiremore prolonged use of sleep medicine. If your sleep problems continue, consultyour doctor, who will determine whether other measures are needed to overcomeyour sleep problems.

 

### *Dependence*

### * *

Sleep medicines can causedependence in some people, especially when these medicines are used regularlyfor longer than a few weeks or at high doses. Dependence is the need tocontinue taking a medicine because stopping it is unpleasant.

 

When people developdependence, stopping the medicine suddenly may cause unpleasant symptoms (see *Withdrawal* below).They may find they have to keep taking the medicine either at the prescribeddose or at increasing doses just to avoid withdrawal symptoms. 

 

All people taking sleepmedicines have some risk of becoming dependent on the medicine. However, peoplewho have been dependent on alcohol or other drugs in the past may have a higherchance of becoming addicted to sleep medicines. This possibility must beconsidered before using these medicines for more than a few weeks. If you havebeen addicted to alcohol or drugs in the past, it is important to tell yourdoctor before starting LUNESTA or any sleep medicine. 

 

### *Withdrawal*

### * *

Withdrawal symptoms mayoccur when sleep medicines are stopped suddenly after being used daily for along time. In some cases, these symptoms can occur even if the medicine hasbeen used for only a week or two. In mild cases, withdrawal symptoms mayinclude unpleasant feelings. In more severe cases, abdominal and muscle cramps,vomiting, sweating, shakiness, and, rarely, seizures may occur. These moresevere withdrawal symptoms are very uncommon. Although withdrawal symptoms havenot been observed in the relatively limited controlled trials experience withLUNESTA, there is, nevertheless, the risk of such events in association withthe use of any sleep medicine.

 

Another problem that mayoccur when sleep medicines are stopped is known as “rebound insomnia.”  This means that a person may have moretrouble sleeping the first few nights after the medicine is stopped than beforestarting the medicine. If you should experience rebound insomnia, do not getdiscouraged. This problem usually goes away on its own after 1 or 2 nights. 

 

24

----

 

If you have been takingLUNESTA or any other sleep medicine for more than 1 or 2 weeks, do not stoptaking it on your own. Always follow your doctor’s directions.

 

### *Changes In Behavior And Thinking*

### * *

Some people using sleepmedicines have experienced unusual changes in their thinking and/or behavior. Theseeffects are not common. However, they have included: 

 

·      More outgoing or aggressivebehavior than normal 

·      Confusion 

·      Strange behavior 

·      Agitation 

·      Hallucinations 

·      Worsening of depression 

·      Suicidal thoughts 

 

How often these effectsoccur depends on several factors, such as a person’s general health, the use ofother medicines, and which sleep medicine is being used. Clinical experiencewith LUNESTA suggests that it is rarely associated with these behavior changes.

 

It is also important torealize that it is rarely clear whether these behavior changes are caused bythe medicine, are caused by an illness, or have occurred on their own. In fact,sleep problems that do not improve may be due to illnesses that were presentbefore the medicine was used. If you or your family notice any changes in yourbehavior, or if you have any unusual or disturbing thoughts, call your doctorimmediately.

 

### *Pregnancy And Breastfeeding*

 

Sleep medicines may causesedation or other potential effects in the unborn baby when used during thelast weeks of pregnancy. Be sure to tell your doctor if you are pregnant, ifyou are planning to become pregnant, or if you become pregnant while takingLUNESTA. 

 

In addition, a very smallamount of LUNESTA may be present in breast milk after use of the medication. Theeffects of very small amounts of LUNESTA on an infant are not known; therefore,as with all other prescription sleep medicines, it is recommended that you nottake LUNESTA if you are breastfeeding a baby.

 

## **Safe Use Of Sleep Medicines**

## ** **

To ensure the safe andeffective use of LUNESTA or any other sleep medicine, you should observe thefollowing cautions: 

 

1.         LUNESTA is a prescriptionmedicine and should be used ONLY as directed by your doctor. Follow yourdoctor’s instructions about how to take, when to take, and how long to takeLUNESTA. 

 

25

----

 

2.         Never use LUNESTA or anyother sleep medicine for longer than directed by your doctor. 

 

3.         If you notice any unusualand/or disturbing thoughts or behavior during treatment with LUNESTA or anyother sleep medicine, contact your doctor. 

 

4.         Tell your doctor aboutany medicines you may be taking, including medicines you may buy without aprescription and herbal preparations. You should also tell your doctor if youdrink alcohol. DO NOT use alcohol while taking LUNESTA or any other sleepmedicine. 

 

5.         Do not take LUNESTAunless you are able to get 8 or more hours of sleep before you must be activeagain. 

 

6.         Do not increase theprescribed dose of LUNESTA or any other sleep medicine unless instructed byyour doctor. 

 

7.         When you first starttaking LUNESTA or any other sleep medicine, until you know whether the medicinewill still have some effect on you the next day, use extreme care while doinganything that requires complete alertness, such as driving a car, operatingmachinery, or piloting an aircraft. 

 

8.         Be aware that you mayhave more sleeping problems the first night or two after stopping any sleepmedicine. 

 

9.         Be sure to tell yourdoctor if you are pregnant, if you are planning to become pregnant, if youbecome pregnant, or if you are breastfeeding a baby while taking LUNESTA. 

 

10.       As with all prescriptionmedicines, never share LUNESTA or any other sleep medicine with anyone else. Alwaysstore LUNESTA or any other sleep medicine in the original container and out ofreach of children.

 

11.       Be sure to tell your doctorif you suffer from depression. 

 

12.       LUNESTA works very quickly.You should only take LUNESTA immediately before going to bed.

 

13.       For LUNESTA to work best,you should not take it with or immediately after a high-fat, heavy meal.

 

14.       Some people, such as olderadults (i.e., ages 65 and over) and people with liver disease, should startwith the lower dose (1 mg) of LUNESTA. Your doctor may choose to start therapyat 2 mg. In general, adults under age 65 should be treated with 2 or 3 mg. 

 

15.       Each tablet is a singledose; do not crush or break the tablet.

 

26

----

 

 

Manufactured for: 

**Sepracor Inc.**

Marlborough, MA 01752  USA

by Patheon Inc., Mississauga, Ontario  L5N 7K9 Canada 

 

For customer service, call 1-888-394-7377.

To report adverse events, call 1-877-737-7226.

For medical information, call 1-800-739-0565.

 

April 2007

 

27

----

 

**CONFIDENTIAL**

 

**SCHEDULE 7.3(c)**

 

**Hypothetical Royalty Calculation**

 

Hypothetical Scenario:  In the third Calendar Year following firstlaunch in the GSK Territory, the following Net Sales were achieved by GSK, itsAffiliates and Sublicensees:

 

•      Net Sales within countrieswithin the GSK Territory where in each country sales of Generic Products exceed[**] percent ([**]%) of the total sales of Product by GSK, its Affiliates andSublicensees in such country (“Generic Countries”):

 
| Q1 |   | [**] |   | Q2 |   | [**] |   | Q3 |   | [**] |   | Q4 |   | [**] |
|----|--------|------|--------|----|--------|------|--------|----|--------|------|--------|----|--------|------|

 

•      Net Sales within countrieswithin the GSK Territory where there are no Generic Products or sales ofGeneric Products are less than [**] percent ([**]%) of the total sales ofProduct by GSK, its Affiliates and Sublicensees in such country (“Non-GenericCountries”):

 
| Q1 |   | [**] |   | Q2 |   | [**] |   | Q3 |   | [**] |   | Q4 |   | [**] |
|----|--------|------|--------|----|--------|------|--------|----|--------|------|--------|----|--------|------|

 

•      Total Net Sales within theGSK Territory:

 
| Q1 |   | [**] |   | Q2 |   | [**] |   | Q3 |   | [**] |   | Q4 |   | [**] |
|----|--------|------|--------|----|--------|------|--------|----|--------|------|--------|----|--------|------|

 

Royalty calculation:

 

Q1           Total sales in Non-Generic Countries isUS$[**]. Royalty rate applicable in those countries during Q1 is therefore[**]%.

 

**Royalties payable in Q1 for Non-Generic Countries**=[**]

 

Total sales in Generic Countries is US$[**]. As cumulative year to datesales in Non-Generic Countries is less than US$[**], royalty rate applicable inGeneric Countries during Q1 is [**]%.

 

**Royalties payable in Q1 for Generic Countries**= [**]

 

Q2           Cumulative year to date sales in allNon-Generic Countries is US$[**]. Of the US$[**] sales occurring in Q2, US$[**]will attract the [**]% royalty rate and US$[**] will attract the [**]% royalty rate.

 

**Royalties payable in Q2 for Non-Generic Countries**= [**].

 

Royaltiespayable in Generic Countries will payable in same proportions, applied to the salesoccurring in Q2, 

i.e  [**]

 

**Royalties payable in Q2 for Generic Countries**= [**]

 

----

 

**CONFIDENTIAL**

 

Q3           Cumulative year to date sales in allNon-Generic Countries is US$[**]. Of the US$[**] sales occurring in Q3, US$[**]will attract the [**]% royalty rate, and US$[**] will attract the [**]% royaltyrate.

 

**Royalties payable in Q3 for Non-Generic Countries**= [**].

 

Royaltiespayable in Generic Countries will payable in same proportions, applied to thesales occurring in Q3,  i.e  [**]

 

**Royalties payable in Q3 for Generic Countries**= [**]

 

Q4           Cumulative year to date sales in allNon-Generic Countries is US$[**]. Of the US$[**] sales occurring in Q4, all ofthe US$[**] will attract the [**]% royalty rate.

 

**Royalties payable in Q4 for Non-Generic Countries**= [**].

 

Royalties payable in Generic Countries will payable in same proportions,applied to sales occurring in Q4, i.e. [**]% will be payable at [**]%.

 

**Royalties payable in Q4 for Generic Countries**= [**]

 

----

 

**CONFIDENTIAL**

 

**SCHEDULE 7.3(e)**

 

**Hypothetical Calculation of Cost of BulkTablets and Net Sales**

 

#### In a hypothetical Calendar Year:

####  

#### (A)          theaverage price invoiced during such Calendar Year for the supply by Sepracor toGSK of a [**]mg Bulk Tablets of Product was US$[**] and

####  

#### (B)           thenumber of [**]mg tablets of Product sold by GSK, its Affiliates orSub-licensees during such Calendar Year was [**].

####  

#### The aggregate price paid by GSK for [**]mg BulkTablets for Product sold in such Calendar Year is therefore A x B = US$[**]

####  

#### A similar calculation for other dosage forms, meantthat in this hypothetical Calendar Year, the aggregate price paid by GSK forBulk Tablets in all forms for Product sold in such Calendar Year was, for thesake of this example, US$[**].

####  

#### If the Net Sales in that Calendar Year were US$[**],and the royalties payable on such Net Sales were  US$[**], the calculation required underSection 7.3(e) would be:          [**]

####  

#### In this example, the [**]% cap would not be reached,and there would be no adjustment made under Section 7.3(e).

####  

#### If however, the aggregate price paid by GSK for BulkTablets in all forms for Product sold in such Calendar Year had been, for thesake of this example, US$[**], the calculation required under Section 7.3(e)would be:       [**]

 

#### In this case, as [**]% of US$[**] is US$[**], anadjustment of US$[**] would need to be made to the royalties paid for suchCalendar Year [**]

 

----

 

**CONFIDENTIAL**

 

# **SCHEDULE 10.2**

 

# **TERM SHEET FOR MANUFACTURING AND SUPPLY**

 

1.     **Definitive Agreement.**Followingexecution of the Development, License and Commercialization Agreement betweenSepracor and GSK (“License Agreement”), Sepracor and GSK shall, in goodfaith, negotiate and enter into a manufacturing and supply agreement thatincorporates, among other things, the terms and conditions set forth in thisterm sheet (the “Supply Agreement”). Capitalized terms used but nototherwise defined herein shall have the meaning ascribed to such terms in theLicense Agreement.

 

2.     **Supply of Products.**Sepracorshall manufacture or have manufactured exclusively for GSK’s use in the GSKTerritory Bulk Tablets for commercial sale (including physician samples) andClinical Supplies. Based on the Forecast as described herein, Sepracor shallmaintain at all times sufficient capacity to meet all GSK’s, GSK’s Affiliates’and GSK’s Sublicensees’ requirements for Bulk Tablets to enable them to meettheir respective needs for Product for the GSK Territory.

 

3.     **Product Requirements.**AllBulk Tablets supplied by Sepracor will be manufactured in accordance with therelevant standards of cGMP and applicable laws and regulations (both at thesite of manufacture and where the Bulk Tablets are to be supplied) and willcomply with the relevant specifications, each Marketing Approval, and will befit for purpose. The parties recognize that they will need to agree uponspecifics of manufacturing requirements for individual countries or regulatoryareas either in advance of, or as part of, the Marketing Approval process.

 

4.     **Price.**Thepurchase price of Bulk Tablets for commercial supplies shall be Sepracor’s[**], and for Clinical Supplies and physician samples shall be [**]. For theavoidance of doubt, in any country of the GSK Territory where market pricingdoes not allow for GSK to profitably sell the Product with Bulk Tablets beingpurchased at this rate, Sepracor is under no obligation to supply Product at apurchase price lower than as stated above. Subject to GSK agreeingconfidentiality terms in the Supply Agreement, on terms no less onerous thanthose contained in Section 11 of the License Agreement, the parties willoperate on [**] (with associated audit rights) and shall meet regularly (and noless than once each calendar year) to agree the [**] to be invoiced to GSK aswell as the division between Clinical Supplies, physician samples andcommercial supplies. The Supply Agreement will also provide for initiatives tomanage costs and identify potential areas for cost reduction as part of acontinuous improvement programme.

 

5.     **Forecasts and Firm Orders**.Upon the execution of the Supply Agreement and [**] thereafter, GSK shallprovide Sepracor with a rolling [**] forecast of its estimated quarterlypurchases of Bulk Tablets (the “Forecast”) for both commercial andClinical

 

----

 

**CONFIDENTIAL**

 

Supply needs. Except as set forth below, each Forecast will benon-binding and will represent only GSK’s good faith estimate of expectedorders for the Bulk Tablets. However, for each such Forecast, the [**] will bea firm order (purchase orders for such firm orders will also be provided inaccordance with Supply Agreement) and will represent GSK’s commitment toSepracor to purchase the amount of Bulk Tablets indicated in such portion ofthe Forecast. For the [**] period of each such Forecast, the quantities of BulkTablets actually purchased by GSK shall not be [**]. GSK shall also provideSepracor with non-binding mid-term and long-term forecasts on a yearly basis(for years [**]), which shall not exceed [**] years.

 

6.     **Shipping and Delivery.**The delivery terms in the SupplyAgreement shall be Ex Works (Incoterms 2000). Risk of loss and title shalltransfer at the time of delivery of Bulk Tablets to the carrier. Each deliverywill be accompanied by the corresponding Certificate of Analysis and relevantdelivery documentation.

 

7.     **Packaging and Labeling.**GSK will package (including label) (or have packaged and labelled) theBulk Tablets for commercial sale (including physician samples) andClinical Supplies. BulkTablets supplied to GSK will be appropriately packaged and labeled based uponspecifications agreed between the Parties and in accordance with all applicablelaws and regulations.

 

8.     **Acceptance and Rejection.**GSKshall have [**] from its receipt of the Bulk Tablets at GSK’s designated facility tonotify Sepracor of its rejection of the Bulk Tablets for any defects which areapparent from carrying out incoming inspection and control procedures (to befurther defined in the Quality Agreement). This shall be without prejudice torights and obligations of the Parties in respect of latent defects. The SupplyAgreement shall include provisions for the referral of disputes over allegeddefects in Bulk Tablets to an independent laboratory for resolution.

 

9.     **Payment.**Sepracor shall invoice GSK uponshipment of each released batch of Bulk Tablets. Payment terms will bethirty (30) days from date of receipt of the Bulk Tablets (with a paper copy ofthe related invoice being sent electronically and by post). Any payments orportions thereof due under this Agreement that are not paid by the date suchpayment is due shall bear interest at the rate set forth in Section 8.5 of theLicense Agreement.

 

10.   **Term.**TheSupply Agreement shall be coterminous with the License Agreement, on acountry-by-country basis.

 

11.   **Inability to Supply.**Sepracorwill maintain an inventory of API equivalent to [**] forward cover of BulkTablets (or such other inventory as mutually agreed) (“Reserve Supply”), whichshall be used to meet any disruption or shortfall in supply that may occur forany reason during the term of the Supply Agreement.

 

----

 

**CONFIDENTIAL**

 

In the event of any Inability to Supply, (or any anticipated Inabilityto Supply) Sepracor shall notify GSK immediately and shall cooperate with GSKin taking at Sepracor’s cost (except where the Inability to Supply is due to anevent of force majeure, in which case the parties will agree an equitableallocation of the costs) all actions that are reasonably necessary in order toremedy such Inability to Supply, including making up the shortfall from theReserve Supply.

 

An “Inability to Supply” shall mean Sepracor’s failure for anyreason, including without limitation forcemajeure or otherwise,to supply GSK with at least, in the aggregate, [**] percent ([**]%) of thequantities of the Bulk Tablets Forms ordered by GSK for any [**] period.

 

In the eventof any Inability to Supply, the Parties will review through the JSC the amountof Bulk Tablets available and if necessary will agree appropriate rationing ofavailable supply as between the Sepracor Territory and the GSK Territory toensure that supply to GSK is not disproportionately disadvantaged.

 

In the event of an Inability to Supply where Sepracor is unable to makeup the shortfall from the Reserve Supply or otherwise by way of productrationing from the available supply, upon written request by GSK, Sepracorshall provide GSK with such assistance (other than financial assistance) andany know-how Controlled by Sepracor, as reasonably necessary for manufacturingBulk Tablets Forms including, without limitation, setting up a manufacturingfacility at GSK. In connection with the foregoing, GSK shall be permitted toconsult with Sepracor’s technical personnel, and such technical personnel willprovide such assistance as may be necessary to transfer the specifiedmanufacturing activities and relevant Sepracor Know-How to GSK (or itsnominated contract manufacturer) and Sepracor shall immediately grant GSK alimited, non-exclusive royalty free license under the Sepracor Technology forthe sole purpose of manufacturing (or having manufactured) Bulk Tablets in oroutside the GSK Territory for packaging into Product for commercial sale(including physician samples) and Clinical Supplies in the GSK Territory, andwith the agreement of GSK make any necessary consequential amendments to theLicense Agreement. Sepracor shall be responsible for Sepracor’s actual costsand expenses incurred in connection with such technology transfer.

 

The remedies set out in this paragraph 11 shall be without prejudice toany other rights and remedies under the Supply Agreement for failure to meetfirm orders for Bulk Tablets.

 

12.   **Quality Agreement andPharmacovigilance Agreement.**In addition to the execution of theSupply Agreement, the Parties will enter into a Quality Agreement and aPharmacovigilance Agreement incorporating terms required in the LicenseAgreement and such other terms appropriate for manufacture of Bulk Tablets forcommercial distribution (including physician samples) and Clinical Supplies.

 

----

 

**CONFIDENTIAL**

 

13.   **Pre-Supply Approval.**GSKwill have the right to conduct pre-supply approval audits of thosemanufacturing facilities of Sepracor, and any appointed third partymanufacturer, which are used in the manufacture of Bulk Tablets for GSK, priorto taking supply. Thereafter, Sepracor shall not appoint any other third partymanufacturer nor change the location of any part of the manufacturing processfor the manufacture of Bulk Tablets for GSK without GSK’s prior writtenconsent, not to be unreasonably withheld, and subject to the change controlprocedure set out in the Quality Agreement.

 

14.   **Audits & Inspections.**GSKshall have the right to carry out, not more than annually (except for “forcause” audits), upon reasonable prior notice (or at any time for cause),regular GMP, EHS and loss prevention audits of those parts of Sepracor’smanufacturing site(s) used in the manufacture of Bulk Tablets for GSK. Sepracorshall use Commercially Reasonable Efforts to procure the same rights for GSK atthe premises of its third party manufacturers. If Sepracor is unable to procuresuch rights, Sepracor shall carry out such audits and inspections itself onbehalf of GSK and shall report the results to GSK. Where any audit identifieswork to be completed to ensure cGMP compliance or to meet the requirements ofthe Supply Agreement or the Quality Agreement, the cost of such activity will beborne by Sepracor.

 

15.   **Other Standard Terms.**TheSupply Agreement will also contain other provisions customary for agreements ofthis nature addressing the effect of termination, regulatory inspections,supply performance, quality assurance and assurance of supply, representationsand warranties, indemnification, insurance and confidentiality and such otherterms as may be necessary to reflect GSK or Sepracor corporate policies(including GSK’s policy on Ethics & Human Rights).

 

----

 

**CONFIDENTIAL**

 

# **SCHEDULE 16.2(g)**

 

# **THREATENED AND PENDING LITIGATION IN GSK TERRITORY**

 

**None**

 

----