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  Exhibit 10.4    
    

Confidential
Materials omitted and filed separately with the

Securities and Exchange Commission. Asterisks denote omissions. 

 SETTLEMENT AND LICENSE AGREEMENT  

        This SETTLEMENT AND LICENSE AGREEMENT (this "Agreement") is made and effective as of
April 30, 2008 (the "Effective Date"), by and between Sepracor Inc., a Delaware corporation having its principal place of business at 84 Waterford Drive, Marlborough, MA 10752
("Sepracor"), and Breath Limited, a United Kingdom corporation having its registered address at 930 High Road, London, N12 9RT, United Kingdom
("Breath Limited") (each a "Party" and collectively, the
"Parties"). 

RECITALS  

        WHEREAS, Sepracor and Breath Limited are parties to the patent infringement litigation captioned,  Sepracor Inc. v. Breath Limited,
Civil Action No. 06-10043 filed on January 13, 2006, pending in the United States
District Court for the District of Massachusetts before the Honorable Douglas P. Woodlock (the "Litigation"); 

        WHEREAS,
Sepracor currently manufactures and markets the Xopenex® brand (levalbuterol hydrochloride) inhalation solutions products (the "Sepracor
Products"); 

        WHEREAS,
Breath Limited filed Abbreviated New Drug Application No. 77-756 (the "ANDA") with the United States Food and
Drug Administration (the "FDA") containing a certification pursuant to 21 U.S.C. §355(j)(2)(A)(vii)(IV) ("Breath's
p(IV) certification") regarding U.S. Patent Nos. 5,362,755; 5,547,994; 5,760,090; 5,844,002; 6,083,993; and 6,451,289 owned by Sepracor (the
"Patents-in-Suit") and seeking approval to market generic versions of certain levalbuterol hydrochloride inhalation solution products ("Breath's ANDA
Product"); 

        WHEREAS,
Sepracor has alleged that the filing of the ANDA by Breath Limited containing Breath's p(IV) certification is an act of infringement of the Sepracor
Patents-in-Suit under 35 U.S.C. § 271(e)(2)(A); 

        WHEREAS,
in response to Breath Limited's p(IV) certification, Sepracor commenced the Litigation; 

        WHEREAS,
Sepracor has asserted in the Litigation that Breath Limited's ANDA Product would infringe certain claims of the Sepracor Patents-in-Suit; 

        WHEREAS,
the Parties wish to fully and finally settle the Litigation and all patent issues concerning Breath's ANDA Product, upon the terms and subject to the conditions set forth below; 

        WHEREAS,
settlement of the Litigation will help both Sepracor and Breath Limited avoid the substantial costs, uncertainty and risk involved with prolonged patent-infringement litigation,
trial and appeal; 

        WHEREAS,
settlement of the Litigation will permit both Sepracor and Breath Limited to save substantial litigation costs, as well as adhere to the judicially recognized public policy
favoring the settlement of litigation whenever possible; 

        WHEREAS,
settlement of the Litigation will permit the management of both Sepracor and Breath Limited to refocus on running their respective companies rather than devoting substantial
time and resources to the Litigation; 

        WHEREAS,
pursuant to the terms of this Agreement, Breath will have the right to enter the market for the Sepracor Products in 1.25 mg/ 3 ml, 0.63 mg/ 3 ml, and 0.31 mg/ 3 ml strengths
pursuant to the ANDA at least 8 years prior to the expiration of the last to expire of the Sepracor Patents-in-Suit in the Territory, thereby benefiting consumers by
permitting generic entry that may not have occurred if the Litigation were allowed to proceed; 

 

        WHEREAS,
the public will benefit significantly from this final settlement as it saves judicial resources and creates certainty for Sepracor and Breath Limited that will encourage the
development, investment and marketing of levalbuterol hydrochloride inhalation solution products and other pharmaceutical products; 

        WHEREAS,
by reducing litigation expenses, this Agreement allows saved money to be spent on marketing and further drug development, including development of Xopenex®
(levalbuterol hydrochloride) inhalation solutions product, allowing the products to reach a larger group of patients and thus improving lives; 

        WHEREAS,
money saved by settling the Litigation can now be invested by Sepracor and Breath Limited into research and development, thereby benefiting consumers by identifying new uses for
current drugs, as well as furthering the creation of new proprietary medications; and 

        WHEREAS,
the Parties are concurrently entering into that certain Supply Agreement, pursuant to which Sepracor shall supply Breath with levalbuterol hydrochloride product manufactured
pursuant to Sepracor's NDA No. 02-0837, attached as "Attachment B" (the "Supply Agreement"). 

        NOW,
THEREFORE, in consideration of the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties agree as follows: 

 ARTICLE 1

DEFINITIONS  

        Section 1.1.    Certain Defined Terms.    The following
terms, when used with initial capital letters shall have the meanings set forth below: 

        "Affiliate" means any entity controlling, controlled by or under common control with a Party, but only as long as such control continues,
where "control" means: (i) the ownership of at least fifty percent (50%) of the equity or beneficial interest of such entity, or the right to
vote for or appoint a majority of the board of directors or other governing body of such entity; or (ii) the power to directly or indirectly direct or cause the direction of the management and
policies of such entity by any means whatsoever. 

        "Breath" means Breath Limited and its Affiliates, including but not limited to Cobalt Laboratories Inc. 

        "Fully Loaded Manufacturing Cost" shall mean, with respect to each Licensed Product, a Party's internal and external costs, determined in
accordance with International Financial Reporting Standards, as consistently applied by such Party in accordance with its past practice and in the ordinary course of its business for products other
than Licensed Products, incurred in manufacturing, acquiring raw materials, including active pharmaceutical ingredient ("API"), excipients and other materials consumed in the manufacture of Licensed
Products including all taxes related thereto, packaging, insuring, transporting and/or storing such Licensed Product (including product testing activities relating to quality assurance, quality
control and regulatory compliance), and reasonably allocated administrative and overhead expenses associated with the Licensed Product, in each case to the extent related and allocable to the Licensed
Product. 

        "Gross Profit" means Net Sales less Fully Loaded Manufacturing Cost. 

        "Licensed Products" means Breath's ANDA Product approved by the FDA for sale pursuant to the ANDA, as existing on the Effective Date. 

        "Losses" means all pending and potential claims, demands, all manner of actions, causes of action, suits, debts, liabilities, losses,
damages, attorneys' fees, costs, expenses, judgments, settlements, interest, 

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punitive
damages and other damages or costs of whatever nature, whether known or unknown, pending or future, certain or contingent. 

        "Net Sales" means gross sales of Licensed Products in the Territory less the following deductions: 

        (a)   sales
and excise taxes, duties, and any other governmental charges imposed upon the production, importation, use or sale of Licensed Products, if and to the extent
included on the invoice that Breath provides to its customers; 

        (b)   trade,
quantity, cash and other discounts allowed on Licensed Products to wholesalers or other Third Parties to whom the Licensed Products are sold and shipped directly,
if and to the extent included on the invoice that Breath provides to its customers; 

        (c)   provisions
for actual or expected allowances or credits to customers on account of rejection or return of Licensed Products or on account of price reductions for a
Licensed Products; 

        (d)   rebates,
charge-backs and other price reduction programs for Licensed Products granted to managed care entities and pharmaceutical benefit management service entities
(if Breath chooses to contract one or more of the Licensed Products together with another Breath product with composite rebates or chargebacks, then rebates and or chargebacks for the affected
Licensed Product will be recalculated based on the then-average rebate or chargeback of the Licensed Product to the applicable customer category as if such Licensed Product is contracted
independently of any other Breath product); and 

        (e)   actual
write-offs of uncollectible customer accounts for previously recorded sales. 

in
each case determined and applied consistently in accordance with Breath's commercial and accounting policies and practices consistently applied in a manner consistent with GAAP. 

        "Person" means any individual, firm, corporation, partnership, limited liability company, trust, joint venture, governmental authority, or
other entity or organization. 

        "Proceeding" means any administrative, judicial or legislative action, audit, litigation, investigation, suit or other proceeding in any
tribunal. 

        "Sepracor Patents" means the "Patents-in-Suit" and additionally includes any other patent that Sepracor owns or
will own, in whole or in part, that is, or could alleged to be, infringed by any of Breath's Licensed Products. 

        "Territory" means the United States of America and its territories and possessions, including the Commonwealth of Puerto Rico and the
District of Columbia. 

        "Third Party" means any Person other than Sepracor and Breath. 

 ARTICLE 2

SETTLEMENT AND RELEASE  

        Section 2.1.    Mutual Release.    Upon the terms and
subject to the conditions of this Agreement, each Party, on behalf of itself and its Affiliates hereby releases, acquits and forever discharges the other Party and its Affiliates, and their respective
directors, officers, employees, agents, representatives, heirs, assigns, predecessors and successors ("Related Parties") from any and all Losses arising
out of, derived from, predicated upon or relating to infringement of the Sepracor Patents by the Licensed Products, and the actions underlying the Litigation. Notwithstanding the foregoing, nothing in
this Agreement shall prevent or impair the right of either Party to bring a Proceeding in court or any other forum for breach of this Agreement (including, without limitation, any claim for
infringement of any intellectual property based upon activities that are not the subject of the license granted hereunder) or any representation, warranty or covenant herein. 

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        Section 2.2.    Dismissal of Litigation.    The Parties agree to the entry of a Dismissal Without Prejudice of
all claims, counterclaims, and affirmative defenses in the Litigation. To effectuate this provision, within 3 business days following execution of this Agreement, the Parties shall cause the Dismissal
Without
Prejudice attached hereto as Attachment A (each Party acknowledging that the approval of the court is required in order to make such Dismissal Without Prejudice effective) to be filed with the United
States District Court for the District of Massachusetts and shall take all other necessary actions to obtain the settlement and dismissal of the Litigation. Each Party shall bear its own costs and
expenses in connection with the foregoing. 

        Section 2.3.    Mutual Agreements.    Each Party acknowledges and agrees that: 

        (a)   It
may have sustained Losses that are presently unknown and unsuspected, and that such Losses might give rise to Losses in the future. Nevertheless, each Party
acknowledges and agrees that this Agreement has been negotiated and agreed upon, notwithstanding the existence of such possible Losses, all of which have been hereby released under Section 2.1
hereof. 

        (b)   If
any fact relating to this Agreement or the Litigation and now believed to be true is found hereafter to be other than, or different from, that which is now believed,
each Party expressly assumes the risk of such difference in fact and agrees that this Agreement shall be, and will remain, effective notwithstanding any such difference in fact, subject to each
Party's right to bring a Proceeding for a breach of any representation, warranty or covenant herein. 

        (c)   This
Agreement may be pleaded as a full and complete defense to, and used as a basis for injunction against, any Proceeding that may be instituted, prosecuted or
attempted in breach hereof. 

 ARTICLE 3

LICENSE  

        Section 3.1.    License Grant.    Effective as of
August 20, 2012, or as modified in accordance with Section 3.6 (the "License Effective Date"), Sepracor hereby grants to Breath a license
under the Sepracor Patents, including any continuations, divisions, reissues or reexaminations thereof, without the right to grant sublicenses, to make, have made, use, promote, offer to sell, sell,
import, or otherwise dispose of Licensed Products in the Territory. The license granted hereunder shall be exclusive as to any other levalbuterol hydrochloride product marketed as a generic equivalent
of Xopenex® brand products covered by Sepracor NDA No. 02-0837 (and any supplements or amendments thereto) for a period of 180 days (the
"Exclusivity Period") from the License Effective Date. Following the Exclusivity Period, the license granted to Breath hereunder shall become
non-exclusive and Sepracor shall have the right to grant licenses to Third Parties under the Sepracor Patents. 

        Section 3.2.    Commercial Sales Prior to License Effective Date.    Without limiting the rights of Breath
under the Supply Agreement, Breath shall not distribute, offer to sell, sell or sell in the Territory any Licensed
Products prior to the License Effective Date. Breath agrees that any breach by Breath or its Related Parties of this Section 3.2 shall cause irreparable harm to Sepracor, and Breath and its and
Related Parties consents irrevocably and unconditionally to specific performance, or immediate entry of a temporary restraining order, preliminary injunction, and permanent injunction, to enforce this
Section 3.2. Notwithstanding anything to the contrary, Breath and its Related Parties consents irrevocably and unconditionally to personal jurisdiction and venue in the United States District
Court for the District of Massachusetts for the purpose of enforcing this Section 3.2. Notwithstanding the foregoing, Breath shall have the right and license under the Sepracor Patents,
including any continuations, divisions, reissues or reexaminations thereof, to make, have made and import Licensed Products in the Territory sufficiently in advance of a Licensed Product launch so as
to have sufficient quantities of inventory of such product for such launch. 

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        Section 3.3.    Breath's Covenant Not to Assist Challenges to the Licensed Patents.    Except to the extent
required by law or order of a court or administrative agency of competent jurisdiction, Breath shall not, and shall cause its Affiliates, Related Parties and their respective counsel who have advised
or represented Breath in connection with the Litigation not to, assist, encourage, finance, or otherwise provide any information to any Third Party attacking or who may attack the validity or
enforceability of, or assert the noninfringement of, any of the Sepracor Patents. 

        Section 3.4.    Reservation of Rights.    All rights not expressly granted to Breath hereunder or in the Supply
Agreement are expressly reserved to Sepracor, and Sepracor has no obligation to make available any intellectual property rights or to take any other actions other than as expressly set forth herein.
Without limiting the terms of the Supply Agreement, nothing in this Agreement shall be construed as granting Breath any rights: (a) with respect to any Licensed Products outside the Territory;
(b) with respect to any product other than Licensed Products; or (c) to make, have made, use, offer to sell, sell, import, or otherwise dispose of any generic version of any Sepracor
product covered by Sepracor NDA No. 02-0837 or Sepracor Patents at any time prior to the License Effective Date. 

        Section 3.5.    No Other Limitation.    Nothing in this Agreement is intended to prevent or restrict Breath
from making, having made, using, promoting, marketing, distributing, offering for sale, selling, or importing any product, the importation, manufacture, use, offering for sale or selling of which
would not infringe the Sepracor Patents under 35 U.S.C. § 271(e)(1). 

        Section 3.6.    Acceleration of License Effective Date.    Upon the occurrence of a Third Party commercial
launch of any particular strength of a generic version of levalbuterol hydrochloride solution products ("The Launch Date") pursuant to an ANDA, the License Effective Date for only that particular
strength of the Licensed Products shall be accelerated to that Launch Date. In addition, the parties may in the future mutually agree to accelerate the License Effective Date. It is understood and
agreed that, if the Parties anticipate a Third Party commercial launch, Breath may take such action as is
reasonably necessary, including manufacture and stock an inventory of Licensed Products, so as to be prepared to launch Licensed Products on the accelerated License Effective Date. 

 ARTICLE 4

ROYALTIES  

        Section 4.1.    Royalty.    During the period commencing on
the License Effective Date and ending on the later of (i) expiration of the Exclusivity Period, or (ii) the date a Third Party has commenced a commercial launch of a generic levalbuterol
product pursuant to an ANDA, Breath shall pay Sepracor a royalty of [**] percent ([**]%) of Breath's Gross Profit for sales of any Licensed
Products. Following such period, Breath shall pay Sepracor a royalty of [**] percent ([**]%) of Breath's Gross Profit for sales of the Licensed
Products. The license granted hereunder shall become fully paid-up and royalty free upon the earlier of (i) the date of the expiration of the last to expire of the Sepracor Patents,
or (ii) the date on which a court enters a final decision that is no longer subject to appeal holding that each of the unexpired patent claims included in the Sepracor Patents that were
asserted against Breath in the Litigation is invalid, unenforceable or not infringed by a product substantially similar to Breath's ANDA Product. 

        Section 4.2.    Royalty Payments.    Royalties payable by Breath to Sepracor hereunder shall be determined and
paid on a calendar quarterly basis. Within thirty (30) days following the end of each calendar quarter in which royalties are payable hereunder, Breath shall provide Sepracor with (i) a
written statement of its Net Sales and Gross Profit for such calendar quarter and the royalties payable hereunder for such quarter, and (ii) payment of the royalties then-payable
hereunder. Whenever information relating to Licensed Products is reported under this Agreement, such information shall (i) be listed separately by Licensed Product and dose, and in the
aggregate, and (ii) include a breakdown of gross sales of Licensed Products and applicable deductions therefrom. 

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        Section 4.3.    Currency.    All payments under this Agreement shall be in U.S. dollars in immediately
available funds, and, unless instructed otherwise by Sepracor, shall be made via wire transfer to an account designated from time to time by Sepracor. 

        Section 4.4.    Taxes.    Unless otherwise required by law, each Party shall be responsible for paying and
reporting all of its own taxes and fees, including without limitation income taxes, payroll taxes, franchise taxes and all taxes and fees in connection with this Agreement. 

        Section 4.5.    True-Up.    In the event Breath issues any allowances or credits or takes any
write-offs related to its recorded Gross Profit on Licensed Products in the Territory, the amount of any applicable underpayment or overpayment will be added or subtracted, as appropriate,
to or from the next royalty payment in accordance with this ARTICLE 4 or, if no further royalty payments are due, by payment to the Party owed such adjustment within thirty (30) days after
identification of such adjustment. 

        Section 4.6.    Audit.    Breath shall keep complete and accurate records of Net Sales and Gross Profit on
Licensed Products and shall retain such records for a period of at least [**] from the date of the sales reported therein. Sepracor shall have the right, through an independent
certified public accountant reasonably acceptable to Breath, upon execution of a confidentiality agreement, to examine such records during regular business hours, in a manner that does not
unreasonably interfere with ongoing operations, upon reasonable written notice for so long as any royalties are payable hereunder for Licensed Product sold in the Territory and for
[**] thereafter, provided, however, that such examination shall not take place
more often than [**] per year. Any adjustments required as a result of overpayments or underpayments identified through Sepracor's exercise of audit rights shall be made by
subtracting or adding, as appropriate, amounts from or to the next royalty payment in accordance with this ARTICLE 4 or, if no further royalty payments are due, by payment to the Party owed such
adjustment within thirty (30) days after identification of such adjustment. Sepracor shall bear the full cost and expense of the audit unless such audit correctly discloses that the discrepancy
for the year differs by more than [**] percent ([**]%) from the amount the accountant determines is correct, in such case Breath shall pay the
reasonable fees and expenses charged by the accountant. In addition, Breath shall pay interest from the original date due until payment on the amount of the underpayment at a rate equal to the average
one-year London Inter-Bank Offering Rate for the United States dollar as reported from time to time in the Wall Street Journal (or, if such rate is not regularly published, as
published in such source as the Parties agree) and calculated from the date due until the payment date. In the event that a Party disputes an invoice or other payment obligation under this Agreement,
such Party shall timely pay the amount of the invoice or other payment obligation that is not in dispute, and the Parties shall resolve such dispute in accordance with Section 7.2. 

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   ARTICLE 5

REPRESENTATIONS AND WARRANTIES  

        Section 5.1.    Mutual Representations.    Each Party hereby
represents and warrants to the other Party as follows: 

        (a)   Due Authorization.    Such Party is a corporation duly incorporated and in good standing as of the Effective
Date, and the execution, delivery and performance of this Agreement by such Party have been duly authorized by all necessary action on the part of such Party. 

        (b)   Due Execution.    This Agreement has been duly executed and delivered by such Party and, with due
authorization, execution and delivery by the other Party, constitutes a legal, valid and binding obligation of such Party, enforceable against such Party in accordance with its terms. 

        (c)   No Conflict.    Such Party's execution, delivery and performance of this Agreement do not: (i) violate,
conflict with or result in the breach of any provision of the charter or by-laws (or similar organizational documents) of the Party; (ii) conflict with or violate any law or
governmental order applicable to the Party or any of its assets, properties or businesses; or (iii) conflict with, result in any breach of, constitute a default (or event which with the giving
of notice or lapse of time, or both, would become a default) under, require any consent under, or give to others any rights of termination, amendment, acceleration, suspension, revocation or
cancellation of any note, bond, mortgage or indenture, contract, agreement, lease, sublease, license, permit, franchise or other instrument or arrangement to which it is a party. 

        Section 5.2.    Sepracor Representations and Warranties.    Sepracor represents and warrants to Breath that, as
of the Effective Date, Sepracor (i) has the right to grant to Breath the licenses granted hereunder with respect to the Sepracor Patents, (ii) has the right to settle the Litigation, and
(iii) does not license from a Third Party any patents that would preclude Breath from making, using, selling, offering for sale or importing Licensed Products in the Territory. 

        Section 5.3.    Breath Representations and Warranties.    Breath represents and warrants to Sepracor that
(i) Breath Limited owns all right, title and interest in, to and under the ANDA, and Breath has not granted or assigned to any Third Party, directly or indirectly, any rights under or to the
ANDA or Breath's ANDA Product, (ii) Breath will not transfer ownership, in whole or in part, of said ANDA, except to an Affiliate of Breath or to a successor to all or substantially all of the
business to which this Agreement pertains, until the expiration of the License granted herein, (iii) to the best of Breath's knowledge and belief, it is the sole first entity to file a
"substantially complete application" as defined in 21 U.S.C. § 355(j)(5)(B)(iv)(cc) with a paragraph IV certification seeking approval to engage in the commercial
manufacture, use, offer for sale, and sale of generic levalbuterol hydrochloride inhalation solutions in 1.25 mg/3 ml, 0.63 mg/ 3ml, and 0.31 mg/ 3 ml dosage products, and Breath has obtained final
approval with respect to these strengths, (iv) Breath is not aware of the occurrence of any forfeiture event as defined in 21 U.S.C. § 355(j)(5)(D)(i), and Breath has
received no communication from the FDA informing Breath that it believes that such forfeiture event has occurred, (v) the FDA granted tentative approval of Breath's ANDA within 30 months
after the date on which Breath filed the ANDA, (vi) Breath has not amended or withdrawn its paragraph IV certification with respect to any of the Sepracor Patents, (vii) Breath
has not withdrawn its ANDA, (viii) Breath has not entered into an agreement concerning levalbuterol hydrochloride with another party that has filed an ANDA seeking to market generic versions of
levalbuterol hydrochloride, including but not limited to Barr Laboratories, Inc., Dey, Inc., Dey, L.P., and Watson Laboratories, Inc., (ix) Breath has the right to
settle the Litigation, and (x) [**]. 

        Section 5.4.    Disclaimer.    EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, NEITHER PARTY MAKES ANY
REPRESENTATIONS OR WARRANTIES, EXPRESS OR 

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IMPLIED,
EITHER IN FACT OR BY OPERATION OF APPLICABLE LAW, AND EACH PARTY HEREBY EXPRESSLY DISCLAIMS SUCH WARRANTIES. 

 ARTICLE 6

INDEMNIFICATION  

        Section 6.1.    Sepracor Indemnification.    Sepracor shall
indemnify and hold harmless Breath and its Related Parties from and against any claims, actions, demands, suits, causes of action, losses, damages, liabilities, judgments, costs and expenses
(including reasonable attorneys' fees) arising out of or related to any breach of Sepracor's representations, warranties and covenants set forth in this Agreement. 

        Section 6.2.    Breath Indemnification.    Breath shall indemnify and hold harmless Sepracor, its Affiliates,
and its Related Parties from and against any claims, actions, demands, suits, causes of action, losses, damages, liabilities, judgments, costs and expenses (including reasonable attorneys' fees)
arising out of or related to: (i) any breach of Breath's representations, warranties and covenants set forth in this Agreement, (ii) the design, manufacture, labeling, marketing, sale or
use of any Licensed Product, including any product liability claims, (iii) the failure by Breath to comply with any FDA or other governmental requirement with respect to any Licensed Product,
and (iv) the infringement or misappropriation of any Third Party patent, copyright, trademark, service mark, trade secret or other intellectual property based on any Licensed Product. 

        Section 6.3.    Indemnification Procedures.    The obligations to indemnify, defend, and hold harmless set
forth in Section 6.1 and Section 6.2 shall be contingent upon the Party seeking indemnification (the "Indemnitee"): (i) notifying
the indemnifying Party of a claim, demand or suit within [**] of receipt thereof; provided,  however, that the Indemnitee's failure or delay in providing
such notice shall not relieve the indemnifying Party of its indemnification obligation
except to the extent the indemnifying Party is prejudiced thereby; (ii) allowing the indemnifying Party and/or its insurers the right to assume direction and control of the defense of any such
claim, demand or suit; (iii) cooperating with the indemnifying Party and/or its insurers in the defense of such claim, demand or suit at the indemnifying Party's expense; and
(iv) agreeing not to settle or compromise any claim, demand or suit without prior written authorization of the indemnifying Party. The Indemnitee shall have the right to participate in the
defense of any such claim, demand or suit referred to in this Section utilizing attorneys of its choice, at its own expense, provided,  however, that the
indemnifying Party shall have full authority and control to handle any such claim, demand or suit. 

 ARTICLE 7

MISCELLANEOUS  

        Section 7.1.    Assignment.    Neither Party hereto may
assign any of its rights or obligations under this Agreement, except to an Affiliate or successor to all or substantially all of the business of the Party to which this Agreement pertains, without the
prior written consent of the other Party. Either Party may assign this Agreement in connection with a merger, reorganization, change of control or sale of all or substantially all of the applicable
business of such Party, in each case, on written notice to the other Party, provided that the successor Person agrees in writing to adhere to all of the
terms and conditions of this Agreement. Any purported assignment in violation of the foregoing shall be null and void and of no force or effect. No assignment of this Agreement will relieve the
assigning Party from any of its obligations hereunder. In the event of a permitted assignment, this Agreement shall be binding upon and inure solely to the benefit of the Parties and their respective
successors and permitted assigns. 

        Section 7.2.    Dispute Resolution.    Any dispute, controversy or claim arising out of or relating to this
Agreement (a "Dispute") shall be attempted to be settled by the Parties, in good faith, by submitting each such Dispute to the Chief Executive Officers
of each Party by written notice from either Party to the other Party specifying the terms of such Dispute in reasonable detail. Within [**] of 

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receipt
of such notice, the Chief Executive Officers of each Party, or a member of management designated by the respective Chief Executive Officer, shall meet in person (at a mutually agreed upon time
and location) or by telephone for the purpose of resolving such Dispute. They will discuss the problems and/or negotiate for a period of up to [**] in an effort to resolve the
Dispute or negotiate an acceptable interpretation or revision of the applicable portion of this Agreement mutually agreeable to both Parties, without the necessity of formal procedures relating
thereto. If the problem is not resolved within the period set forth above, either Party shall be free to pursue all available remedies, at law or in equity, consistent with the terms of this
Agreement. Notwithstanding the foregoing, either Party may apply to a court of competent jurisdiction for a temporary restraining order, preliminary injunction of other equitable relief, where such
relief is necessary to protect its interests. 

        Section 7.3.    Governing Law and Venue.    This Agreement shall be governed by and construed in accordance
with the laws of the State of Massachusetts, without giving effect to its conflict of laws principles. The Parties hereby consent to the exclusive jurisdiction of the federal courts located in
Massachusetts, and expressly waive any objections or defenses based on lack of personal jurisdiction or venue in connection with any dispute arising out of or relating to this Agreement. 

        Section 7.4.    Bankruptcy.    All rights and licenses granted under or pursuant to any Section of this
Agreement are, and shall otherwise be deemed to be, for purposes of Section 365(n) of the U.S. Bankruptcy Code (the "Bankruptcy Code"), licenses
of "intellectual property" as defined under the Bankruptcy Code. The Parties shall retain and may fully exercise all of their respective rights and elections under the Bankruptcy Code. 

        Section 7.5.    Confidentiality.    Sepracor and Breath shall not use or disclose to Third Parties any
information received from the other Party or otherwise developed or obtained (including prior to the date hereof or during any period in which the Parties have audit rights pursuant to
Section 4.6) by either Party in the performance of activities under this Agreement without first obtaining the written consent of the disclosing Party, except as may be otherwise provided in,
or required in order for a Party to exercise its rights or fulfill its obligations under, this Agreement. This confidentiality obligation shall not apply to information that (i) is or becomes a
matter of public knowledge (other than by breach of this Agreement by the receiving Party), (ii) is required by law, regulation or order of a court or administrative agency of competent
jurisdiction, to be disclosed, (iii) the receiving Party can establish was already known to it or was in its possession at the time of disclosure, (iv) the receiving Party can establish
was independently developed by Persons in its employ who had no contact with and were not aware of the content of the confidential information, or (v) is disclosed to the receiving Party by a
Third Party having no obligation of confidentiality to the disclosing Party with respect to such information.
The Parties shall take reasonable measures to assure that no unauthorized use or disclosure is made by others to whom access to such information is granted. 

        Section 7.6.    Publicity.    Except as consistent with a press release mutually agreed by the Parties, or
other publicly disclosed information concerning this Agreement, no public announcement or other disclosure to Third Parties concerning the existence of or terms of this Agreement shall be made, either
directly or indirectly, by either Party, without first obtaining the written approval of the other Party and agreement upon the nature, text and timing of such announcement or disclosure;  provided,
however, either Party shall have the right to make any such public announcement or other
disclosure required by law after such Party has provided to the other Party a copy of such announcement or disclosure and an opportunity to comment thereon. Each Party agrees that it shall cooperate
fully with the other with respect to all disclosures regarding this Agreement to the Securities Exchange Commission and any other governmental or regulatory agencies, including requests for
confidential treatment of proprietary information of either Party included in any such disclosure. Neither Party shall be required to provide the other Party with any advance notice of any public
announcements or other disclosures related to periodic, routine financial reporting unless such announcement or other disclosure will include non-routine information relating to the
Licensed Products or this Agreement. 

9

 

        Section 7.7.    Cooperation.    Subject to confidentiality restrictions that may be reasonably requested, the
Parties shall use their respective commercially reasonable efforts to: 

        (a)   Make
all required filings with all governmental authorities and obtain all necessary approvals in connection with this Agreement to the extent required under applicable
laws. Subject to confidentiality restrictions that may be reasonably requested and to the extent permissible by law, Sepracor and Breath shall make every effort to coordinate and exchange all filings
and documents submitted to all government authorities regarding this Agreement; 

        (b)   Cooperate
with each other in any review, investigation, inquiry or proceeding regarding the Agreement by any government authority. Subject to such confidentiality
restrictions as may be reasonably requested and to the extent permissible by law, Sepracor and Breath will render reasonable assistance as the other may request in connection with this Agreement and
coordinate and cooperate with one another in exchanging information, permitting reasonable access to Sepracor's and Breath's documents, officials, and data in connection with any such review,
investigation, inquiry or proceeding by any governmental authority; 

        (c)   Promptly
inform each other of any material communication made to, or received by such party from any governmental authority regarding this Agreement; 

        (d)   Defend,
contest and resist any administrative, judicial or legislative action or proceeding that is instituted (or threatened to be instituted) challenging the
transactions contemplated by this Agreement as violative of any applicable law, and have vacated, lifted, reversed or overturned any decree, judgment, injunction or other order (whether temporary,
preliminary or permanent) that is in effect and that challenges this Agreement, including, without limitation, by pursuing all reasonable avenues of administrative and judicial appeal; 

        Without
limiting any other provision of this Agreement, take all actions and do all things reasonably necessary or proper (at its own cost and expense), including under applicable law to
make effective and further the intent and purposes of the transactions contemplated by this Agreement, including executing any further instruments reasonably requested by the other Party, and to
resist and to contest any proposals or efforts to materially alter the terms of the Agreement so as to permit the Parties to fulfill their obligations under and to obtain the full benefits
contemplated by the Agreement. 

        Section 7.8.    Government Proceedings.    Within ten (10) business days following the Effective Date,
and pursuant to current statutory law, the Parties shall file or cause to be filed this Agreement with the U.S. Federal Trade Commission Bureau of Competition
("FTC") and the Assistant Attorney General for the Antitrust Division of the U.S. Department of Justice
("DOJ") and shall request that the FTC and DOJ treat this Agreement as confidential to the fullest extent permitted under the law. 

        Section 7.9.    Notices.    All notices required or permitted under this Agreement must be in writing and must
be given by addressing the notice to the address for the recipient set forth below or at such other address as the recipient may specify in writing under this procedure. Notices will be deemed to have
been given (a) three (3) business days after deposit in the mail with proper postage for first class 

10

 

registered
or certified mail prepaid, return receipt requested, or (b) one (1) business day after sending by nationally recognized overnight delivery service. 

			
	If to Sepracor:	 	If to Breath:
	

Sepracor Inc.

Attn: Adrian Adams

President and Chief Executive Officer

84 Waterford Drive

Marlborough, MA 01752

Phone: (508) 481-6700

Fax: (508) 357-7492	
 	

Attn: Ian McAffer

Managing Director

Breath Limited

100 Paynesfield Road

Tatsfield

Westerham

Kent TN16 2BQ

United Kingdom.

Phone: +44 1959 542 578

Fax: +44 1959 542 578
	

With a copy to:	
 	

With a copy to:
	

Andrew I. Koven

Executive Vice President, General Counsel

    and Corporate Secretary

Sepracor Inc.

84 Waterford Drive

Marlborough, MA 01752

Phone: (508) 357-7307

Fax: (508) 357-7511	
 	

Francis Mifsud

Arrow International Limited

57 St Christopher Street

Valletta, VLT 08, Malta

Phone: +356 2165 3041

Fax: +356 2165 3046

        Section 7.10.    Amendment.    This Agreement may not be amended or modified except by an instrument in writing
signed by authorized representatives of Sepracor and Breath. 

        Section 7.11.    No Waiver.    The failure of either Party to enforce at any time for any period the provisions
of or any rights deriving from this Agreement shall not be construed to be a waiver of such provisions or rights or the right of such Party thereafter to enforce such provisions. 

        Section 7.12.    Severability.    If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any law or public policy, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance
of the transactions contemplated hereby is not affected in any manner materially adverse to any Party. 

        Section 7.13.    Headings.    The descriptive headings contained in this Agreement are for convenience of
reference only and shall not affect in any way the meaning or interpretation of the Agreement. 

        Section 7.14.    Counterparts.    This Agreement may be executed in one or more counterparts, and by the
respective Parties in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same Agreement. 

        Section 7.15.    Entire Agreement.    This Settlement and License Agreement and the contemporaneously executed
Supply Agreement constitute the entire agreement between the Parties with respect to the subject matter hereof, and no oral or written statement that is not expressly set forth in this Settlement and
License Agreement or the Supply Agreement may be used to interpret or vary the meaning of the terms and conditions hereof. This Settlement and License Agreement and the Supply Agreement supersede any
prior or contemporaneous agreements and understandings, whether written or oral, between the Parties with respect to the subject matter hereof. 

        Section 7.16.    Third Party Beneficiaries.    Except as expressly provided herein, nothing in this Agreement,
either express or implied, is intended to or shall confer upon any third party any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement. 

[Remainder of Page Intentionally Left Blank; Signature Page Follows]

11

 
        IN WITNESS WHEREOF, this Agreement has been executed by the Parties as of the date first written above. 

							
	SEPRACOR INC.	 	BREATH LIMITED
	

By:	

 	

/s/ Adrian Adams

	

 	

By:	

 	

/s/ Ian Gardner Cameron McAffer

	

Name:	
 	

Adrian Adams

	
 	

Name:	
 	

Ian Gardner Cameron McAffer

	

Title:	
 	

President and Chief Executive Officer

	
 	

Title:	
 	

Managing Director

 

 
ATTACHMENT A 

 UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS  

SEPRACOR INC.,

Plaintiff,

v.                                        C.
A.
No. 06-10043-DPW 

BREATH
LIMITED, 

Defendant.

DISMISSAL WITHOUT PREJUDICE  

        Plaintiff Sepracor Inc. ("Sepracor"), and Defendant Breath Limited ("Breath"), having agreed to a settlement of this action,
STIPULATE that: 

        1.     The
above parties to this Civil Action No. 06-10043 (DPW) (referred to as "the Litigation") wish to settle this dispute. 

        2.     This
Court has jurisdiction over the parties and the subject matter of the Litigation. 

        3.     Plaintiff
Sepracor owns and/or has the legal title and interest in and to United States Letters Patent Nos. 5,362,755 ("the '755 patent"), 5,547,994 ("the '994
patent"), 5,760,090 ("the '090 patent"), 5,844,002 ("the '002 patent"), 6,083,993 ("the '993 patent"), and 6,451,289 (the '289 patent") (collectively the "Sepracor Patents"). 

        4.     In
the Litigation, Sepracor alleged that Breath infringed the Sepracor Patents, under 35 U.S.C. § 271(e)(2), by virtue of Breath's submission of
Abbreviated New Drug Application No. 77-756 ("Breath's ANDA") to the United States Food and Drug Administration ("FDA") containing a certification pursuant to 21 U.S.C.
§ 355(j)(2)(A)(vii)(IV) ("paragraph IV certification"), asserting that the Sepracor patents are invalid, unenforceable and/or not infringed. 

        5.     Breath's
ANDA containing the paragraph IV certification was submitted to the FDA under 21 U.S.C. § 355(j) in order to obtain approval to engage
in the commercial manufacture, use and sale of generic copies of certain Xopenex® (levalbuterol hydrochloride) inhalation solutions in 1.25 mg/3 ml, 0.63 mg/3ml, and 0.31 mg/3 ml dosage
products prior to the expiration of the Sepracor patents. 

        6.     In
December 2007, the FDA granted tentative approval to Breath's ANDA. 

        7.     Sepracor's
filing of the Litigation caused an automatic 30 month stay of the FDA's approval of Breath's ANDA. The thirty-month stay of FDA approval of Breath's
ANDA expired on March 7, 2008, and the FDA granted final approval on April 9, 2008. 

        8.     On
March 17, 2008, Breath and Sepracor agreed and stipulated to this Court that Breath will provide Sepracor with at least 30 days' notice prior to
commencing, or authorizing a third party to commence under Breath's ANDA, the commercial launch of a generic levalbuterol hydrochloride inhalation solution product. 

        9.     Plaintiff
and Defendant have reached agreements to settle the Litigation, as set forth in this stipulated Dismissal Without Prejudice and a separate Settlement and
License Agreement and Supply Agreement, which are being executed contemporaneously. 

        10.   As
a result of the Settlement and License Agreement and the Supply Agreement there will be early, procompetitive generic competition for Xopenex®
(levalbuterol hydrochloride) inhalation 

A-1

 

solutions
in 1.25 mg/3 ml, 0.63 mg/3ml, and 0.31 mg/3 ml dosage products in the United States, which competition might have been delayed or otherwise might not have occurred or been allowed to
continue, had Sepracor prevailed in the Litigation. The settlement has a number of other procompetitive effects. Among other benefits, this settlement allows generic entry of levalbuterol
hydrochloride inhalation solutions in 1.25 mg/3 ml, 0.63 mg/3ml, and 0.31 mg/3 ml dosage products eight years in advance of the expiration of the last to expire of the Sepracor Patents. The settlement
also avoids the substantial uncertainty and risk involved with prolonged patent infringement litigation and eliminates the substantial litigation costs incurred by both Plaintiff and Defendant during
the patent litigation while also serving the public interest by saving judicial resources. 

        11.   All
affirmative defenses, claims, and counterclaims in the Litigation that have been or could have been raised by the parties in the Litigation are hereby dismissed
without prejudice. 

        12.   Each
of the parties shall bear its own costs and attorney fees. 

        13.   Both
Plaintiff and Defendant consent to personal jurisdiction and venue in the United States District Court for the District of Massachusetts for the purpose of
enforcing the Settlement and License Agreement. This Court shall retain jurisdiction over any matters related to or arising from the interpretation or enforcement of the Settlement and License
Agreement. 

A-2

 

IT
IS SO STIPULATED: 

			
	

 	 	

 
	

Dalila Argaez Wendlandt (BBO# 639280)

F. Turner Buford (BBO# 661311)

Ropes & Gray LLP

One International Place

Boston, MA 02110-2624

(617) 951-7242 (Phone)

(617) 951-7050 (Facsimile)	
 	

Alan D. Rose (BBO # 427280)

Michael L. Chinitz (BBO # 552915)

ROSE, CHINITZ & ROSE

29 Commonwealth Avenue

Boston, MA 02116

Telephone (617) 536-0040

Facsimile (617) 536-4400
	
 Attorneys for Plaintiff Sepracor Inc.	
 	

Attorneys for Defendant, Breath Limited
	

Joseph M. O'Malley, Jr. (admitted pro hac vice)

Bruce M. Wexler (admitted pro hac vice)

Paul, Hastings, Janofsky &

Walker LLP

75 East 55th Street

New York, NY 10022

(212) 318-6000 (Phone)

(212) 319-4090 (Facsimile)	
 	

E. Anthony Figg (admitted pro hac vice)

Joseph A. Hynds (admitted pro hac vice)

Sharon L. Davis (admitted pro hac vice)

R. Elizabeth Brenner-Leifer (admitted pro hac vice)

ROTHWELL, FIGG, ERNST & MANBECK, P.C.

1425 K Street, N.W. Suite 800

Washington, DC 20005

Telephone (202) 783-6040

Facsimile (202) 783-6031
	
 Attorneys for Plaintiff Sepracor Inc.	
 	

Attorneys for Defendant, Breath Limited
	

SO ORDERED	
 	

 
	

Dated:                                 	
 	

Hon. Douglas P. Woodlock

United States District Judge

A-3

 
ATTACHMENT B 

Filed
as Exhibit 10.5 to Sepracor Inc.'s Quarterly Report on Form 10-Q

for the fiscal period ended June 30, 2008 

QuickLinks

Exhibit 10.4QuickLinks
 -- Click here to rapidly navigate through this document

 
 

  Exhibit 10.5    
    

Confidential
Materials omitted and filed separately with the

Securities and Exchange Commission. Asterisks denote omissions. 

 SUPPLY AGREEMENT  

        This SUPPLY AGREEMENT (this "Supply Agreement") is made and effective as of
April 30, 2008 (the "Effective Date"), by and between Sepracor Inc., a Delaware corporation having its principal place of business at 84
Waterford Drive, Marlborough, MA 10752 ("Sepracor"), and Breath Limited, a United Kingdom corporation having its registered address at 930 High Road,
London, N12 9RT, United Kingdom ("Breath Limited") (each a "Party" and collectively, the
"Parties"). 

        WHEREAS,
Sepracor develops, manufactures, markets, sells, and distributes pharmaceutical products, including levalbuterol hydrochloride solution products for inhalation covered by
approved United States Food and Drug Administration ("FDA") New Drug Application No. 02-0837 (and any supplements or amendments
thereto) (the "Sepracor NDA" or "NDA"); 

        WHEREAS,
Breath Limited develops, manufactures, markets, sells and distributes pharmaceutical products and has filed Abbreviated New Drug Application No. 77-756 (the
"ANDA")
with the FDA seeking approval to market generic versions of certain levalbuterol hydrochloride inhalation solution products; 

        WHEREAS,
Sepracor and Breath Limited are parties to patent infringement litigation captioned, Sepracor Inc. v. Breath Limited, Civil Action No. 06-10043 filed
on January 13, 2006, pending in the United States District Court for the District of Massachusetts before the Honorable Douglas P. Woodlock (the
"Litigation"); 

        WHEREAS,
Sepracor and Breath Limited are, simultaneously with the execution of this Supply Agreement, entering a Settlement and License Agreement (the "Settlement
and License Agreement"), pursuant to which the Parties have agreed to settle and dismiss the Litigation and pursuant to which Breath receives a license under the Sepracor
patents involved in the Litigation; 

        WHEREAS,
to enable Breath Limited to enter the market with Products (as hereinafter defined) promptly on the effective date of the license granted under the Settlement Agreement, Breath
Limited wishes to enter into an agreement for the supply of Products to Breath Limited by Sepracor; and 

        WHEREAS,
Sepracor wishes to enter into such an agreement with Breath Limited. 

        NOW,
THEREFORE, in consideration of the mutual covenants and agreements set forth herein and in the Settlement and License Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows: 

 ARTICLE 1

DEFINITIONS  

        Section 1.1    Certain Defined Terms.    The following
terms, when used with initial capital letters shall have the meanings set forth below: 

        "Affiliate" means any entity controlling, controlled by or under common control with a Party, but only as long as such control continues,
where "Control" means: (i) the ownership of at least fifty percent (50%) of the equity or beneficial interest of such entity, or the right to vote for or appoint a majority of the board of
directors or other governing body of such entity; or (ii) the power to directly or indirectly direct or cause the direction of the management and policies of such entity by any means
whatsoever. 

        "Applicable Accounting Standards" means the generally accepted accounting standards applicable to each Party. As of the Effective Date,
the Applicable Accounting Standards of Sepracor means 

 

U.S. GAAP,
and the Applicable Accounting Standards of Breath means International Financial Reporting Standards. 

        "Breath" means Breath Limited and its Affiliates, including but not limited to, Cobalt Laboratories Inc. 

        "Calendar Quarter" means those three (3) month periods beginning on January 1, April 1, July 1, and
October 1. 

        "cGMPs" means Current Good Manufacturing Practices as defined in 21 CFR § 210 et seq., as amended from time to time. 

        "FFDCA" means the Federal Food, Drug and Cosmetic Act, as amended, 21 U.S.C. §301 et seq., and any related federal and/or
state law or regulation pertaining to the safety, effectiveness, adulteration, misbranding, mishandling, packaging, labeling or storage of pharmaceutical ingredients, finished pharmaceutical products,
and/or medical devices that may be applicable to the Products during the term of this Supply Agreement. 

        "Fully Loaded Manufacturing Cost" means, with respect to each Product, a Party's internal and external costs, determined in accordance
with such Party's Applicable Accounting Standards, as consistently applied by such Party in accordance with its past practice and in the ordinary course of its business for products other than
Products and all taxes related thereto, incurred in manufacturing, acquiring raw materials, including active pharmaceutical ingredient ("API"),
excipients and other materials consumed in the manufacture of Products, packaging, insuring, transporting and/or storing such Product (including product testing activities relating to quality
assurance, quality control and regulatory compliance), and reasonably allocated administrative and overhead expenses associated with the Products, in each case to the extent related and allocable to
the Product. 

        "Gross Profit" means Net Sales less Fully Loaded Manufacturing Cost. 

        "Initial Term" means the 180-day period commencing on the License Effective Date (as defined in the Settlement and License
Agreement). 

        "License Effective Date" has the meaning set forth in the Settlement and License Agreement. 

        "Losses" means all pending and potential claims, demands, all manner of actions, causes of action, suits, debts, liabilities, losses,
damages, attorneys' fees, costs, expenses, judgments, settlements, interest, punitive damages and other damages or costs of whatever nature, whether known or unknown, pending or future, certain or
contingent. 

        "Net Sales" means gross sales of Products in the Territory less the following deductions: 

        (a)   sales
and excise taxes, duties, and any other governmental charges imposed upon the production, importation, use or sale of Products, if and to the extent included on
the invoice that Breath provides to its customers; 

        (b)   trade,
quantity, cash and other discounts allowed on Products to wholesalers or other Third Parties to whom the Products are sold and shipped directly, if and to the
extent included on the invoice that Breath provides to its customers; 

        (c)   provisions
for actual or expected allowances or credits to customers on account of rejection or return of Products or on account of price reductions for a Products; 

        (d)   rebates,
charge-backs and other price reduction programs for Products granted to managed care entities and pharmaceutical benefit management service entities (if Breath
chooses to contract one or more of the Products together with another Breath product with composite rebates or chargebacks, then rebates and or chargebacks for the affected Product will be
recalculated based on the then-average rebate or chargeback of the Product to the applicable 

2

 

customer
category as if such Product is contracted independently of any other Breath product); and 

        (e)   actual
write-offs of uncollectible customer accounts for previously recorded sales. 

in
each case determined and applied consistently in accordance with Breath's commercial and accounting policies and practices consistently applied in a manner consistent with Applicable Accounting
Standards. 

        "Person" means any individual, firm, corporation, partnership, limited liability company, trust, joint venture, governmental authority, or
other entity or organization. 

        "Proceeding" means any administrative, judicial or legislative action, audit, litigation, investigation, suit or other proceeding in any
tribunal. 

        "Products" means levalbuterol hydrochloride inhalation solution products covered by Sepracor's NDA in strengths of 1.25 mg/ 3 ml, 0.63 mg/
3 ml, and 0.31 mg/ 3 ml and packaged and labeled in accordance with this Supply Agreement. 

        "Specifications" means all Product, regulatory, manufacturing, quality control, and quality assurance procedures, processes, practices,
standards, instructions and specifications comprising Sepracor's approval applicable to the manufacture and packaging of Product as set forth in the NDA, and such other FDA and/or other regulatory
requirements as may be applicable. 

        "Subsequent Term" means the term commencing on the expiration of the Initial Term and continuing until expiration or termination of this
Supply Agreement. 

        "Territory" means the United States of America and its territories and possessions, including the Commonwealth of Puerto Rico and the
District of Columbia. 

        "Third Party" means any Person other than Sepracor and Breath. 

        "Transfer Price" means [**] percent ([**]%) of Sepracor's Fully Loaded
Manufacturing Cost of Products. 

 ARTICLE 2

SCOPE OF SUPPLY AGREEMENT  

        Section 2.1    Supply of Product During the Initial
Term.    Subject to the terms and conditions of this Supply Agreement, during the Initial Term of this Supply Agreement, Breath shall purchase from Sepracor Products
as Breath may require to market, sell, promote and/or distribute the Products in the Territory. During such Initial Term, Sepracor shall sell to Breath its requirements of such Products on an
exclusive basis. This provision shall not preclude Breath from manufacturing and selling Licensed Products (as defined in the Settlement and License Agreement) during the Initial Term in accordance
with the terms of the Settlement and License Agreement. 

        Section 2.2    Supply of Product During the Subsequent Term.    Subject to the terms and conditions of this
Supply Agreement, during the Subsequent Term of this Supply Agreement, Breath may purchase Products from Sepracor, and Sepracor shall sell such Products to Breath on a non-exclusive basis. 

        Section 2.3    Sales Limited to Territory.    Breath acknowledges and agrees that the Products are only
approved by the FDA for sale in the Territory pursuant to the Sepracor NDA, and that Breath shall not market, sell, promote and/or distribute Products outside the Territory, or knowingly market, sell,
promote and/or distribute Products to any Third Party in the Territory for sale or use outside the Territory. 

        Section 2.4
Breath's Re-Sale of Products.    Breath will have the right in its sole discretion to establish
the price at which the Products will be sold to Third Parties. 

3

 
 ARTICLE 3

FORECASTS AND SUPPLY  

        Section 3.1    General Limitations on Supply.    Breath
acknowledges that (i) Sepracor shall utilize the services of a contract manufacturer for the manufacture of Products (the "Contract
Manufacturer"), (ii) significant lead times may be required to procure any molds or other equipment necessary to manufacture Products on behalf of Sepracor consistent
with this Supply Agreement, (iii) significant lead times may be required to manufacture an Inventory of Products consistent with Breath's requirements, and (iv) the Products have shelf
life limitations that may hinder
Breath's ability to maintain a desired Inventory of Products while enabling Breath to commence distribution of Products on the commencement on the License Effective Date. 

        Section 3.2    Lead Time Standards.    As soon as possible following the Effective Date, the Parties shall
cooperate to develop lead time requirements (the "Lead Time Requirements") for the ordering of Products hereunder, which lead time standards shall take
into account the factors listed in Section 3.1. Breath acknowledges that Sepracor shall be under no obligation to supply Products hereunder on any terms that are not consistent with the terms
of the Contract Manufacturer's ability to supply such Products. Sepracor acknowledges that the Lead Time Requirements shall be on a [**] of terms available from such Contract
Manufacturer, and Sepracor shall [**]. If, notwithstanding the reasonable good faith efforts of the Parties to develop Lead Time Requirements, there are
[**], the Parties shall [**]. 

        Section 3.3    Equipment Manufacture.    In the event it is necessary to procure molds or other equipment
necessary to manufacture Products, the procurement of such molds and other equipment shall be at the sole cost of Breath on a pass-through cost basis. If such additional equipment requires
validation under Sepracor's NDA, Sepracor will fully cooperate and provide commercially reasonable support and access to appropriate data to achieve such validation on an expeditious basis and
incorporate it within the NDA, provided that Breath shall be solely responsible for all costs and expenses in connection with such validation. 

        Section 3.4    Change of Contract Manufacturer.    Should Sepracor decide to change manufacturers, it shall
notify Breath in writing at least [**] before doing so. 

        Section 3.5    Forecasts.    At least [**] prior to the commencement of the Initial
Term, Breath shall prepare and deliver to Sepracor a non-binding forecast of its requirements for Products during the Initial Term; provided, however, that in the event the Initial Term
commences on an accelerated date as determined in accordance with the Settlement and License Agreement, Breath shall provide Sepracor with its forecast for Products during the Initial Term as soon as
reasonably practical to permit Sepracor to supply Products prior to such accelerated date. On the first day of each Calendar Quarter thereafter, Breath shall provide Sepracor with rolling quarterly
forecasts, each forecast covering a [**] period. The forecast for the first quarter covered by the forecast may not increase or decrease by more than
[**] percent ([**]%) from the most recent previous forecast for that quarter. 

        Section 3.6    Purchase Orders.    All purchase orders for Products under this Supply Agreement shall be
consistent with the principles discussed in Section 3.2, including Lead Time Requirements and any requirements of the Contract Manufacturer notified to Breath from
time-to-time. All purchase orders shall be subject to written acceptance by Sepracor, such acceptance [**], including a purchase order
[**], including [**] of the Contract Manufacturer, and the [**] by Breath. Breath shall address and deliver
all purchase orders as directed by Sepracor. A properly communicated purchase order shall be deemed accepted if Breath does not receive written notice of its rejection from Sepracor within
[**] of its receipt. In no event shall Sepracor have an obligation to meet any order that is not consistent with the foregoing, provided that, Sepracor shall use reasonable
efforts to meet such inconsistent order terms to the extent the Contract Manufacturer is able to accommodate the same. 

4

 

        Section 3.7    Purchase of Product for Initial Term.    At any time during the Term of this Supply Agreement,
Breath may provide Sepracor with firm purchase orders for each of the Products. With respect to all accepted purchase orders, Sepracor shall have the applicable Products available for shipment to
Breath or Breath's designee(s) on or before the delivery date set forth in the applicable purchase order, provided that applicable purchase order is consistent with the Lead Time Requirements. It is
understood and agreed that Breath may not commence sales, offers for sale, shipment and distribution of Products to Third Parties prior to the License Effective Date. 

        Section 3.8    Inventory.    In the event Breath [**] an inventory of Products,
[**], Breath shall have [**] Supply Agreement, provided that the [**]. Breath shall have [**] that are
[**] Breath hereunder. 

        Section 3.9    Manufacture of Products.    As soon as possible following the Effective Date, the Parties shall
cooperate to develop packaging and labeling requirements (the "Packaging Requirements") for the Products, which Packaging Requirements shall:
(i) include artwork to be provided by Breath, such artwork and related packing not to be confusingly similar to any artwork or trade dress of Sepracor, and (ii) meet any labeling
requirements for the Products consistent with FDA requirement and requirements of applicable law. Sepracor shall use commercially reasonable efforts to ensure that the Contract Manufacturer
manufactures, packages, labels, stores, and ships the Products in accordance with (i) the Packaging Requirements, the cost of such packaging to be included in the Fully Loaded Manufacturing
Cost of the Products, (ii) cGMPs, and (iii) the Specifications set forth in the NDA. Sepracor shall promptly and fully advise Breath of any new instructions or Specifications required by
the FDA or the FFDCA. 

        Section 3.10    Inspection.    Breath quality personnel, upon reasonable prior notice to Sepracor, shall be
permitted to observe during regular business hours and for reasonable durations the manufacture of Products being manufactured, provided that (i) unless Breath is aware of a specific quality
issue, such observation shall occur no more than once per Calendar Quarter, and (ii) such observation shall be subject to any reasonable requirements of the Contract Manufacturer. 

        Section 3.11    Cooperation by the Parties in the Event of Demand Fluctuations.    In the event of a sudden and
unexpected material increase or decrease in the demand for the Products in the marketplace, Sepracor shall use reasonable efforts to accommodate such material increase or decrease to the extent the
Contract Manufacturer is able to accommodate the same. 

 ARTICLE 4

PAYMENTS AND REPORTS  

        Section 4.1    Price and Payment.    Breath shall remit
payment for shipments of Product shipped by Sepracor to Breath or Breath's designee(s) in U.S. dollars within thirty (30) days of receipt of Sepracor's invoice. Each invoice shall set forth the
quantity of Products shipped, the Transfer Price for such Products and the total amount due. 

        Section 4.2    Additional Payments.    Within sixty (60) days following the close of each Calendar
Quarter during the Initial Term and the Subsequent Term, Breath shall submit to Sepracor a report of its Net Sales of Products to Third Parties, its Gross Profit and the Additional Payment due
Sepracor based on Gross Profit during such Calendar Quarter. The "Additional Payment" shall be (i) [**] percent
([**]%) of Breath's Gross Profit on sales during that portion of the Initial Term or Subsequent Term that Breath is the only Person selling levalbuterol hydrochloride
inhalation solution products in the Territory as generic equivalents of Sepracor's Xopenex® brand levalbuterol hydrochloride inhalation solution products, or
(ii) [**] percent ([**]%) of Breath's Gross Profit on sales during that portion of the Initial Term or Subsequent Term that Breath is not
the only Person selling levalbuterol hydrochloride inhalation solution products in the Territory as generic equivalents of Sepracor's Xopenex® brand levalbuterol hydrochloride inhalation
solution products. 

5

 

        Section 4.3    Shipment and Risk of Loss.    Sepracor shall provide all Products Ex Works at Sepracor's
Contract Manufacturer. Breath shall have the sole responsibility to arrange shipments of Products to Breath's distribution center or such other location in the Territory that Breath desires. Title and
risk of loss or damage to the Products shall remain with Sepracor until Products are tendered to Breath's designated carrier at the Contract Manufacturer's facilities. 

        Section 4.4    Audit.    Each Party shall keep complete and accurate records of information required for the
determination of Fully Loaded Manufacturing Cost, Transfer Price and Gross Profit, as applicable to
such Party, and shall retain such records for a period of at least [**] from the date of the information reported therein. Each Party shall have the right, through an
independent certified public accountant reasonably acceptable to the other Party, upon execution of a confidentiality agreement, to examine such records during regular business hours, in a manner that
does not unreasonably interfere with ongoing operations, upon reasonable written notice for so long as any payments are due hereunder and for [**] thereafter,  provided, however, that such examination shall not take place more often than
[**]per year. Any adjustments required as a result of overpayments or underpayments identified through a Party's exercise of audit rights shall be made by subtracting or
adding, as appropriate, amounts from or to the next payment in accordance with this ARTICLE 4 or, if no further payments are due, by payment to the Party owed such adjustment within
[**] after identification of such adjustment. The Party requesting the audit shall bear the full cost and expense of the audit unless such audit correctly discloses that the
discrepancy for the year differs by more than [**] percent ([**]%) from the amount the accountant determines is correct, in such case the audited
Party shall pay the reasonable fees and expenses charged by the accountant. In addition, the audited Party shall pay interest from the original date due until payment on any amount found owing to the
other Party at a rate equal to the average one-year London Inter-Bank Offering Rate for the United States dollar as reported from time to time in the Wall Street Journal (or,
if such rate is not regularly published, as published in such source as the Parties agree) and calculated from the date due until the payment date. In the event that a Party disputes an invoice or
other payment obligation under this Supply Agreement, such Party shall timely pay the amount of the invoice or other payment obligation that is not in dispute, and the Parties shall resolve such
dispute in accordance with Section 11.2 below. 

 ARTICLE 5

PRODUCTS TESTING/INSPECTION  

        Section 5.1    Quality Assurance Testing and Certificates of
Analysis.    Sepracor or its designee shall perform the same quality testing with respect to the Products sold hereunder as Sepracor performs with respect to its own
purchases of Products from the Contract Manufacturer. Sepracor shall provide the results thereof to Breath in the form of a Certificate of Analysis (a
"COA"). Sepracor will also provide Breath with Material Safety Data Sheets ("MSDS") to the extent
required for the Products, and updates of the same as necessary. 

        Section 5.2    Visits.    Breath Quality Control personnel, upon reasonable prior notice to Sepracor, shall be
permitted to visit during regular business hours and for reasonable durations any facility used for the manufacture, storage and distribution of the Products and will allow such personnel to review
and make copies of any relevant records in connection therewith, provided that (i) unless Breath is aware of a specific quality control issue, such visit shall occur no more than once per
Calendar Quarter, and (ii) such observation shall be subject to any reasonable requirements of the Contract Manufacturer. 

        Section 5.3    Inspection and Acceptance/Rejection of Products.    Breath shall have a period of
[**] from the later of (a) the date of tender of the Products to Breath's designated carrier, or (b) the date of Breath's receipt of the COA's applicable to such
Products, to inspect any shipment of Products to determine whether such shipment conforms to the Specifications. Sepracor shall use commercially reasonable efforts to extend its inspection time with
its Contract Manufacturer and, if able to do so, Sepracor will extend Breath's inspection timeframe set forth in the previous sentence accordingly. If 

6

 

Breath
determines that the Products do not conform to the Specifications, it shall immediately notify Sepracor. Breath's failure to notify Sepracor within the above-described period will be deemed,
for purposes of this Supply Agreement, as Breath's acceptance of such shipment and shall constitute a waiver of any claims Breath may have against Sepracor with respect to such shipment subject,
however, to Breath's right to reject Products for latent defects discovered by Breath or Breath's customer(s) after such stipulated period has expired. If Sepracor agrees that the Products do not
conform to the Specifications, Breath shall return the non-conforming Products to Sepracor, at a location designated by Sepracor and at Sepracor's expense. Sepracor shall use commercially
reasonable efforts to cause the Contract Manufacturer to replace any non-conforming Products within the shortest possible time. In the event that Sepracor does not agree with Breath's
determination that the Products fail to meet Specifications based on the same techniques and processes, and using the same standards, used by Sepracor to tests its own products from the Contract
Manufacturer, the Parties shall, in good faith, attempt to resolve such dispute. In the event the Parties cannot resolve said dispute among themselves they may submit the matter to an independent
Third Party testing laboratory agreeable to both Parties for a binding opinion based on the same techniques and processes, and using the same standards, used by Sepracor to tests its own products from
the Contract Manufacturer. The expenses of obtaining the opinion shall be equally shared by Sepracor and Breath and shall be binding upon the Parties. In no event shall Sepracor have any liability to
Breath in the event Sepracor or, in the case of a dispute, the Third Party testing laboratory determines the Products meet Specifications based on the same techniques and processes, and using the same
standards, used by Sepracor to tests its own products from the Contract Manufacturer. In the event it is agreed or determined by the Third Party testing laboratory that the Products do not meet the
Specifications, Sepracor shall pass through to Breath any claims that it may have against Third Parties with respect thereto, including, without limitation, warranties, indemnities, tort claims,
contract claims, implied contract claims, and statutory commercial claims, that Sepracor may have against a Contract Manufacturer or other Third Party supplier of raw materials, including API,
excipients and other materials used in the manufacture of Products. Sepracor shall cooperate with Breath in obtaining the full benefit of such rights or remedies, including being joined in any action
against such Contract Manufacturer or Third Party supplier. 

 ARTICLE 6

REGULATORY AND MEDICAL INQUIRY  

        Section 6.1    Compliance with Regulatory
Requirements.    Sepracor shall remain responsible for maintaining and fulfilling all regulatory requirements in the Territory with respect to the Products that are
imposed by law upon Sepracor as the manufacturer of the Products and the holder of the NDA in connection therewith. Breath shall be responsible for obtaining, maintaining and fulfilling all regulatory
requirements in the Territory with respect to the Products that are imposed by Law upon
Breath in connection with Breath's marketing, distribution and sale of the Products. Each Party will, on a timely basis, provide the other Party with all information that such Party has that the other
Party does not have that is reasonably necessary and relevant to either Party's obligations in fulfilling such requirements. The Parties shall cooperate in the reporting of adverse drug experience
information and other post-marketing reports as are required to be filed with the FDA. Breath shall submit to Sepracor all complaints, adverse drug experience reports and other medical
inquiries associated with the Products within [**] of Breath's receipt of such reports. Sepracor will be responsible for fulfilling any regulatory requirements with respect to
such events, including but not limited to the filing of all applicable Form FDs, and will make any necessary contact with the FDA regarding the subject matter of same. The parties will cooperate in
good faith to develop a procedure by handling adverse drug experience reports. 

        Section 6.2    Product Recalls.    In the event Sepracor or Breath shall be required or requested by any
governmental authority (or shall voluntarily decide) to recall any Products, because such Products may violate any laws or regulations or for any other reason, the Parties shall cooperate fully with
one 

7

 

another
in connection with any recall. If a recall is due to Sepracor's gross negligence, willful misconduct or material breach of this Supply Agreement, Sepracor shall reimburse Breath for the
Transfer Price and any Additional Payment paid by Breath for such recalled Products, all of the reasonable costs and expenses actually incurred by Breath in connection with the recall including, but
not limited to, costs of retrieving Products already delivered to customers, costs and expenses Breath is required to pay for notification, shipping and handling charges, and such other costs as may
be reasonably related to the recall. If a recall is due to Breath's gross negligence, willful misconduct or material breach of this Supply Agreement, Breath shall remain responsible for the Transfer
Price and any Additional Payments for such recalled Products and Breath shall reimburse Sepracor for all the reasonable costs and expenses described above actually incurred by Sepracor in connection
with such recall including administration of the recall and such other actual costs as may be reasonably related to the recall. If a recall results from a cause other than the negligence, willful
misconduct or material breach of this Supply Agreement of or by Sepracor or Breath, Breath shall remain responsible for the Transfer Price of the recalled Product, but not for any Additional Payments
associated with the recalled Products, and each Party shall be responsible for its own reasonable costs and expenses incurred in connection with such recall, including administration of the recall and
such other actual costs as may be related to the recall. Prior to any reimbursements pursuant to this Section, the Party claiming any reimbursement shall provide the other Party with reasonably
acceptable documentation of all reimbursable costs and expenses. 

        Section 6.3    Limitation of Liability.    IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY
INCIDENTAL OR CONSEQUENTIAL DAMAGES, INCLUDING, BUT NOT LIMITED TO, LOST PROFITS, PROVIDED, HOWEVER, IF
SEPRACOR FAILS TO EXERCISE COMMERCIALLY REASONABLE EFFORTS TO PROVIDE THE PRODUCT TO BREATH AS REQUIRED UNDER THIS SUPPLY AGREEMENT, [**]. 

        Section 6.4    State and Local Requirements.    Breath shall be responsible for filing and maintaining all
documentation and other information as required by each and every state and locality ("State") for the
purpose of listing the Products on each such State's formulary or other similar authority, and for obtaining such other approvals as may be necessary to sell the Products in the Territory. Sepracor
shall provide Breath with such assistance as reasonably necessary to obtain such listings. Breath will pay Medicaid and other applicable rebates required by law or contract. 

 ARTICLE 7

TERM AND TERMINATION  

        Section 7.1    Term.    This Supply Agreement shall become
effective on the Effective Date and shall continue for a period of three (3) years following the License Effective Date. 

        Section 7.2    Termination for Cause.    If either Party shall at any time materially fail to abide by or fail
to perform in accordance with any of the material provisions of this Supply Agreement, the other Party shall have the right to terminate this Supply Agreement upon at least
[**] prior written notice to the allegedly defaulting Party specifying the default complained of, setting forth the underlying reasons for its belief a default has occurred and
the remedy sought. The Party allegedly in default may cure the asserted breach, in which case this Supply Agreement shall remain in full force and effect. If the allegedly defaulting Party disagrees
that it is in breach, it may pursue whatever remedies it may have in law or equity in accordance with the procedures set forth below in Section 11.2. 

8

 

  
        Section 7.3    Bankruptcy.    If either Party (i) institutes or has instituted against it any
insolvency, receivership, bankruptcy or other proceedings for the settlement of that Party's debts, and such proceedings are not dismissed within ninety (90) days, (ii) makes an
assignment for the benefit of creditors, or (iii) dissolves or ceases to do business, the other Party may terminate this Supply Agreement on written notice. 

        Section 7.4    Applicable Law.    This Supply Agreement shall be subject to immediate termination by either
party in the event the manufacture, distribution or sale of the Products would materially contravene any applicable law or administrative order; provided however, no termination shall occur if the
manufacture, distribution or sale of the Products can be brought into compliance with such law or order within a reasonable period of time following the notice of non-compliance or
violation. 

        Section 7.5    Termination for Convenience.    Either Party may terminate this Supply Agreement effective at
any time following expiration of the Initial Term on nine (9) months written notice to the other Party. 

        Section 7.6    Effect of Termination.    Termination of this Supply Agreement for any reason shall be without
prejudice to: 

        (a)   Sepracor's
right to receive all payments due from Breath as of the effective date of such termination, if any; 

        (b)   Breath's
right to sell such Products remaining in its inventory and at Breath's option; and 

        (c)   Any
other legal, equitable, or administrative remedies as to which either Party is or may become entitled. 

 ARTICLE 8

INDEMNIFICATION AND INSURANCE  

        Section 8.1    Breath Indemnification.    Breath agrees to
indemnify, defend and hold Sepracor harmless from and against any Losses resulting from or arising out of Breath's storage, handling, marketing, promotion, distribution, and/or delivery of the
Products; the performance or breach by Breath of its representations, warranties or obligations under this Supply Agreement or the negligence or willful misconduct of Breath, its employees or its
agents, except to the extent such Losses result from Sepracor's activities for which Breath is indemnified hereunder. 

        Section 8.2    Sepracor Indemnification.    Sepracor agrees to indemnify, defend and hold Breath harmless from
and against any Losses resulting from or arising out of Third Party claims based on (i) a failure of the Products to comply with the Specifications or Sepracor's failure to meet its supply
obligations (each, only to the extent Sepracor is indemnified by the Contract Manufacturer), (ii) Sepracor's breach of its representations and warranties, or (iii) the gross negligence
or willful misconduct of Sepracor, its employees or its agents. Sepracor shall not be responsible for any Losses that it incurs that are attributable to alleged inherent characteristics of the
Products that are not attributable to defects in manufacture, packaging, storage or transport of the Products or materials used to manufacture the products. In the event of Losses attributable to
defects in the manufacture, packaging, storage or transport of the Products or materials used to manufacture the products , whether as a result of non-compliance of the Products with
Specifications or otherwise, Sepracor shall pass through to Breath any claims that it may have against Third Parties with respect thereto, including, without limitation, warranties, indemnities, tort
claims, contract claims, implied contract claims, and statutory commercial claims, that Sepracor may have against a Contract Manufacturer or other Third Party supplier of raw materials, including API,
excipients and other materials used in the manufacture of Products. Sepracor shall cooperate with Breath in obtaining the full benefit of such rights or remedies, including being joined in any action
against such Contract Manufacturer or Third Party supplier. 

9

 

        Section 8.3    Indemnification Procedures.    The obligations to indemnify, defend, and hold harmless set forth
in Section 8.1 or Section 8.2 shall be contingent upon the Party seeking indemnification (the "Indemnitee"): (i) notifying the
indemnifying Party of a claim, demand or suit within [**] of receipt thereof; provided,  however, that the Indemnitee's failure or delay in providing such
notice shall not relieve the indemnifying Party of its indemnification obligation
except to the extent the indemnifying Party is prejudiced thereby; (ii) allowing the indemnifying Party
and/or its insurers the right to assume direction and control of the defense of any such claim, demand or suit; (iii) cooperating with the indemnifying Party and/or its insurers in the defense
of such claim, demand or suit at the indemnifying Party's expense; and (iv) agreeing not to settle or compromise any claim, demand or suit without prior written authorization of the
indemnifying Party. The Indemnitee shall have the right to participate in the defense of any such claim, demand or suit referred to in this Section utilizing attorneys of its choice, at its own
expense, provided, however, that the indemnifying Party shall have full authority and control to handle
any such claim, demand or suit. 

        Section 8.4    Insurance.    The parties will provide each other with evidence of insurance reflecting the
comprehensive general liability and products liability programs each has in effect. 

 ARTICLE 9

REPRESENTATIONS AND WARRANTIES  

        Section 9.1    Mutual Representations.    Each Party hereby
represents and warrants to the other Party as follows: 

        (a)   Due Authorization.    Such Party is a corporation duly incorporated and in good standing as of the Effective
Date, and the execution, delivery and performance of this Supply Agreement by such Party have been duly authorized by all necessary action on the part of such Party. 

        (b)   Due Execution.    This Supply Agreement has been duly executed and delivered by such Party and, with due
authorization, execution and delivery by the other Party, constitutes a legal, valid and binding obligation of such Party, enforceable against such Party in accordance with its terms. 

        (c)   No Conflict.    Such Party's execution, delivery and performance of this Supply Agreement do not:
(i) violate, conflict with or result in the breach of any provision of the charter or by-laws (or similar organizational documents) of the Party; (ii) conflict with or
violate any law or governmental order applicable to the Party or any of its assets, properties or businesses; or (iii) conflict with, result in any breach of, constitute a default (or event
which with the giving of notice or lapse of time, or both, would become a default) under, require any consent under, or give to others any rights of termination, amendment, acceleration, suspension,
revocation or cancellation of any note, bond, mortgage or indenture, contract, Supply Agreement, lease, sublease, license, permit, franchise or other instrument or arrangement to which it is a party. 

        (d)   Compliance with Laws and Regulatory Actions.    Each of the Parties, in performing its obligations hereunder
shall materially comply with all applicable laws. In the event either Party receives notice of an inspection or other notification by a governmental entity, including FDA, directly relating to the
Products, promotional materials or other matters within the scope of this Supply Agreement, such Party
shall notify the other Party as soon as practicable, and provide to the other Party, within ten (ten) days, copies of all relevant documents, including pertinent FDA forms, warning letters and other
correspondence and notifications, as such other Party may reasonably request. The Parties agree to cooperate with each other during any inspection, investigation or other inquiry by FDA or any other
governmental entity, including providing information and/or documentation, as requested by FDA or other governmental entity in connection with Products. 

10

 

        Section 9.2    Representations and Warranties by Sepracor.    Sepracor hereby represents and warrants to Breath
as follows: 

        (a)   Sepracor
is not debarred and has not and will not use in any capacity the services of any person debarred under subsection 306(a) or (b) of the Generic
Drug Enforcement Act of 1992, as amended. If at any time this representation and warranty is no longer accurate, Sepracor shall immediately notify Breath of such fact; 

        (b)   Sepracor
has and will maintain throughout the term of this Supply Agreement all permits, licenses, registrations and other forms of governmental authorization and
approval as required by Law in order for Sepracor to execute and deliver this Supply Agreement and to perform its obligations hereunder in accordance with all applicable Laws; 

        (c)   To
the best of Sepracor's knowledge and belief, there are no investigations, adverse Third Party allegations or actions, or claims against Sepracor, including any
pending or threatened action against Sepracor in any court or by or before any governmental body or agency, with respect to the Products, or its obligations set forth herein which may materially
adversely affect its ability to perform its obligations under this Supply Agreement. 

        Section 9.3    Representations and Warranties by Breath.    Breath hereby represents and warrants to Sepracor
as follows: 

        (a)   Breath
is not debarred and has not and will not use in any capacity the services of any person debarred under subsections 306(a) or (b) of the Generic Drug
Enforcement Act of 1992, as amended. If at any time this representation and warranty is no longer accurate, Breath shall immediately notify Sepracor of such fact; and 

        (b)   Breath
has and will maintain throughout the term of this Supply Agreement all federal, state and local permits, licenses, registrations and other forms of governmental
authorization and approval as required by Law in order for Breath to execute and deliver this Supply Agreement and to perform its obligations hereunder. Breath will perform its obligations hereunder
in accordance with all applicable Laws. 

 ARTICLE 10

FORCE MAJEURE  

        Section 10.1 If either Party is prevented from complying, either totally or in part, with any of the terms or provisions set
forth herein, by reason of force majeure, including, by way of example and not of limitation, fire, flood, explosion, storm, strike, lockout or other labor dispute, riot, war, rebellion, act of
terrorism, accidents, acts of God, acts of governmental agencies or instrumentalities or any other cause or externally induced casualty beyond its reasonable control, whether similar to the foregoing
contingencies or not, said Party shall provide written notice of same to the other Party. Said notice shall be provided within thirty (30) working days of the occurrence of such event and shall
identify the requirements of this Supply Agreement or such of its obligations as may be affected and to the extent so affected, said obligations shall be suspended during the period of such
disability. The Party prevented from performing hereunder shall use commercially reasonable efforts to remove such disability, and shall continue performance whenever such causes are removed. The
Party so affected shall give to the other Party a good faith estimate of the continuing effect of the force majeure condition and the duration of the affected Party's nonperformance. 

 ARTICLE 11

MISCELLANEOUS  

        Section 11.1    Assignment.    Neither Party hereto may
assign any of its rights or obligations under this Supply Agreement, except to an Affiliate or successor to all or substantially all of the business of 

11

 

the
Party to which this Supply Agreement pertains, without the prior written consent of the other Party. Either Party may assign this Supply Agreement in connection with a merger, reorganization,
change of control or sale of all or substantially all of the applicable business of such Party, in each case, on written notice to the other Party. Any purported assignment in violation of the
foregoing shall be null and void and of no force or effect. No assignment of this Supply Agreement will relieve the assigning Party from any of its obligations hereunder. In the event of a permitted
assignment, this Supply Agreement shall be binding upon and inure solely to the benefit of the Parties and their respective successors and permitted assigns. 

        Section 11.2    Dispute Resolution.    Any dispute, controversy or claim arising out of or relating to this
Supply Agreement (a "Dispute") shall be attempted to be settled by the Parties, in good faith, by submitting each such Dispute to the Chief Executive
Officers of each Party by written notice from either Party to the other Party specifying the terms of such Dispute in reasonable detail. Within [**] of receipt of such notice,
the Chief Executive Officers of each Party, or a member of management designated by the respective Chief Executive Officer, shall meet in person (at a mutually agreed upon time and location) or by
telephone for the purpose of resolving such Dispute. They will discuss the problems and/or negotiate for a period of up to [**] in an effort to resolve the Dispute or negotiate
an acceptable interpretation or revision of the applicable portion of this Supply Agreement mutually agreeable to both Parties, without the necessity of formal procedures relating thereto. If the
problem is not resolved within the period set forth above, either Party shall be free to pursue all available remedies, at law or in equity, consistent with the terms of this Supply Agreement.
Notwithstanding the foregoing, either Party may apply to a court of competent jurisdiction for a temporary restraining order, preliminary injunction of other equitable relief, where such relief is
necessary to protect its interests. 

        Section 11.3    Governing Law and Venue.    This Supply Agreement shall be governed by and construed in
accordance with the laws of the State of Massachusetts. The Parties hereby consent to the exclusive jurisdiction of the federal courts located in Massachusetts, and expressly waive any objections or
defenses based on lack of personal jurisdiction or venue in connection with any dispute arising out of or relating to this Supply Agreement. 

        Section 11.4    Confidentiality.    Sepracor and Breath shall not use or disclose to Third Parties any
information received from the other Party or otherwise developed or obtained (including prior to the date hereof or during any period in which the Parties have audit rights pursuant to
Section 4.4) by either Party in the performance of activities under this Supply Agreement without first obtaining the written consent of the disclosing Party, except as may be otherwise
provided in, or required in order for a Party to exercise its rights or fulfill its obligations under, this Supply Agreement. This confidentiality obligation shall not apply to information that
(i) is or becomes a matter of public knowledge (other than by breach of this Supply Agreement by the receiving Party), (ii) is required by law, regulation or order of a court or
administrative agency of competent jurisdiction, to be disclosed, (iii) the receiving Party can establish was already known to it or was in its possession at the time of disclosure,
(iv) the receiving Party can establish was independently developed by Persons in its employ who had no contact with and were not aware of the content of the confidential information, or
(v) is disclosed to the receiving Party by a Third Party having no obligation of confidentiality to the disclosing Party with respect to such information. The Parties shall take reasonable
measures to assure that no unauthorized use or disclosure is made by others to whom access to such information is granted. 

        (a)   Publicity.    Except as consistent with a press release mutually agreed by the Parties, or other publicly
disclosed information concerning this Supply Agreement, no public announcement or other disclosure to Third Parties concerning the existence of or terms of this Supply Agreement shall be made, either
directly or indirectly, by either Party, without first obtaining the written approval of the other Party and agreement upon the nature, text and timing of such announcement or disclosure;  provided,
however, either Party shall have the right to make any such public announcement or other
disclosure required by law after such Party has provided to the other Party 

12

 

a
copy of such announcement or disclosure and an opportunity to comment thereon. Each Party agrees that it shall cooperate fully with the other with respect to all disclosures regarding this Supply
Agreement to the Securities Exchange Commission and any other governmental or regulatory agencies, including requests for confidential treatment of proprietary information of either Party included in
any such disclosure. Neither Party shall be required to provide the other Party with any advance notice of any public announcements or other disclosures related to periodic, routine financial
reporting unless such announcement or other disclosure will include non-routine information relating to the Products or this Supply Agreement. 

        (b)   Government Proceedings.    Within ten (10) business days following the Effective Date, and pursuant to
current statutory law, the Parties shall file or cause to be filed this Supply Agreement with the U.S. Federal Trade Commission Bureau of Competition
("FTC") and the Assistant Attorney General for the Antitrust Division of the U.S. Department of Justice
("DOJ") and shall request that the FTC and DOJ treat this Supply Agreement as confidential to the fullest extent permitted under the law. 

        Section 11.5    Notices.    All notices required or permitted under this Supply Agreement must be in writing
and must be given by addressing the notice to the address for the recipient set forth below or at such other address as the recipient may specify in writing under this procedure. Notices will be
deemed to have been given (a) three (3) business days after deposit in the mail with proper postage for first class registered or certified mail prepaid, return receipt requested, or
(b) one (1) business day after sending by nationally recognized overnight delivery service. 

			
	If to Sepracor:

Sepracor Inc.

Attn: Adrian Adams

President and Chief Executive Officer

84 Waterford Drive

Marlborough, MA 01752

Phone: (508) 481-6700

Fax: (508) 357-7492	 	If to Breath:

Ian McAffer

Managing Director

Breath Limited

100 Paynesfield Road

Tatsfield

Westerham

Kent TN16 2BQ

United Kingdom

Phone: +44 1959 578

Fax: +44 1959 542 578
	

With a copy to:	
 	

With a copy to:
	

Andrew I. Koven

Executive Vice President, General Counsel

    and Corporate Secretary

Sepracor Inc.

84 Waterford Drive

Marlborough, MA 01752

Phone: (508) 357-7307

Fax: (508) 357-7511	
 	

Francis Mifsud

Arrow International Limited

HF62 Hal Far Industrial Estate

Birzebbugia

BBG06

Malta

Phone: +356 2165 2207

Fax: +356 2165 2210

        Section 11.6    Amendment.    This Supply Agreement may not be amended or modified except by an instrument in
writing signed by authorized representatives of Sepracor and Breath. 

        Section 11.7    No Waiver.    The failure of either Party to enforce at any time for any period the provisions
of or any rights deriving from this Supply Agreement shall not be construed to be a waiver of such provisions or rights or the right of such Party thereafter to enforce such provisions. 

        Section 11.8    Severability.    If any term or other provision of this Supply Agreement is invalid, illegal or
incapable of being enforced by any law or public policy, all other terms and provisions of this 

13

 

Supply
Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse
to any Party. 

        Section 11.9    Headings.    The descriptive headings contained in this Supply Agreement are for convenience of
reference only and shall not affect in any way the meaning or interpretation of the Supply Agreement. 

        Section 11.10    Counterparts.    This Supply Agreement may be executed in one or more counterparts, and by the
respective Parties in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same Supply Agreement. 

        Section 11.11    Entire Agreement.    This Supply Agreement and the contemporaneously executed Settlement and
License Agreement constitute the entire agreement between the Parties with respect to the subject matter hereof, and no oral or written statement that is not expressly set forth in this Supply
Agreement or the Settlement and License Agreement may be used to interpret or vary the meaning of the terms and conditions hereof. This Supply Agreement and the Settlement and License Agreement
supersede any prior or contemporaneous agreements and understandings, whether written or oral, between the Parties with respect to the subject matter hereof. 

        Section 11.12    Third Party Beneficiaries.    Except as expressly provided herein, nothing in this Supply
Agreement, either express or implied, is intended to or shall confer upon any Third Party any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Supply
Agreement. 

        [Remainder of Page Intentionally Left Blank; Signature Page Follows]

14

 
        IN WITNESS WHEREOF, this Supply Agreement has been executed by the Parties as of the date first written above. 

							
	SEPRACOR INC.	 	BREATH LIMITED
	

By:	
 	

/s/ Adrian Adams

	
 	

By:	
 	

/s/ Ian Gardner Cameron McAffer

	

Name:	
 	

Adrian Adams

	
 	

Name:	
 	

Ian Gardner Cameron McAffer

	

Title:	
 	

President and Chief Executive Officer

	
 	

Title:	
 	

Managing Director

Signature Page to Supply Agreement  

QuickLinks

Exhibit 10.5

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