Document:

Exhibit 10.1(a)

 

LICENSE AND SUPPLY AGREEMENT

 

This License
and Supply Agreement (the “Agreement”) is entered into this 7th day of
July 2004 by and between Cephalon, Inc., a Delaware corporation, having its
principal place of business located at 145 Brandywine Parkway, West Chester,
Pennsylvania 19380, and Barr Laboratories, Inc., a Delaware corporation, having
its principal place of business located at Two Quaker Road, P.O. Box 2900,
Pomona, New York 10970.

 

WHEREAS, on November 3, 2003, Cephalon
entered into an Agreement and Plan of Merger with CIMA LABS INC. (“CIMA”)
whereby Cephalon agreed to acquire CIMA, including the rights to CIMA’s
investigational new drug product, OraVescent® fentanyl  (“Acquisition Agreement”);

 

WHEREAS, in connection with Cephalon’s
acquisition of CIMA, Cephalon filed its pre-merger notification under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 with the Federal Trade
Commission (the “Commission”);

 

WHEREAS, Cephalon controls and has the right
to grant rights under certain patent rights relating to Cephalon’s proprietary
pharmaceutical product known as ACTIQ®, a drug indicated for the treatment of
breakthrough cancer pain, and is the assignee or exclusive licensee of certain
rights in, and has the right to grant sublicenses under certain patent rights
relating to ACTIQ®;

 

WHEREAS, Cephalon is developing a
substantially sugar-free formulation of ACTIQ® (hereinafter referred to as “ACTIQ
SF”) and controls and has the right to grant rights under certain patent rights
relating to ACTIQ SF; and

 

WHEREAS, in order to resolve the antitrust
concerns raised by the Commission in the alleged breakthrough cancer pain
market, and as a condition of Commission approval of Cephalon’s acquisition of
CIMA, Cephalon will enter into an Agreement Containing Consent Order (“Consent
Agreement”), which, if accepted by the Commission, will require Cephalon to
enter into a license and supply agreement with Barr, or other Commission
approved licensee, to effect the remedial purposes of the Commission’s Order to
enable Barr, or other Commission approved licensee, to develop, manufacture and
market generic versions of ACTIQ® and ACTIQ SF, including contingent supply of
both products, in order to compete effectively and independently in the market
with Cephalon;

 

NOW, THEREFORE, in consideration of the
foregoing and for good and valuable consideration, the receipt and adequacy of
which is hereby affirmed, and intending to be legally bound hereby, the Parties
hereby agree as follows.

 

 

1.             DEFINITIONS

 

1.1           “A/B
Rated” or “A/B Rating” means the designation of an approved drug
product by the FDA as “A/B Rated,” or the equivalent thereof, to another
approved drug product.

 

1.2           “ACTIQ”
means any product that contains a pharmaceutical troche/lozenge formulation for
oral transmucosal administration of a composition comprising fentanyl citrate
[C-II] as the active pharmaceutical ingredient, that is manufactured and sold
by or on behalf of Cephalon in the United States pursuant to the ACTIQ NDA.

 

1.3           “ACTIQ
Licensed Product” means a Barr Generic Product or a Cephalon Supplied
Product, except for a Substantially Sugar-free product.

 

1.4           “ACTIQ
NDA” means the NDA No. 20-747, as supplemented or amended from time to
time, or any other approved NDA, for the sale of ACTIQ.

 

1.5           “ACTIQ
SF NDA” means ACTIQ NDA, as supplemented or amended from time to time, for
the sale of ACTIQ SF, and any other approved NDA for the sale of ACTIQ SF in
the United States.

 

1.6           “ACTIQ
Patent Rights” means Patent Rights that relate to ACTIQ and ACTIQ Licensed
Product, where the holder of the Patent Rights is Cephalon, and the Patent
Rights include, but are not limited to, those U.S. patents and patent
applications identified as set forth in Exhibit C, Exhibit D and Exhibit E, for
purposes of clarification, ACTIQ Patent Rights do not include Patent Rights
solely related to ACTIQ SF or ACTIQ SF Licensed Product.

 

1.7           “ACTIQ
Patent Rights License” has the meaning assigned in Section 2.1(a) of this
Agreement.

 

1.8           “ACTIQ
Patent Rights License Effective Date” has the meaning assigned in Section
2.1(b).

 

1.9           “ACTIQ
Risk Management Program” means the Risk Management Program approved by the
FDA under the ACTIQ NDA or ACTIQ SF NDA, as the case may be, and incorporated
in this Agreement as Exhibit G, and as may be amended from time to time by
Cephalon.

 

1.10         “ACTIQ
SF” means ACTIQ having a Substantially Sugar-free pharmaceutical
formulation.

 

1.11         “ACTIQ
SF Licensed Product” means a Barr Generic SF Product or a Cephalon Supplied
Product that is Substantially Sugar-free.

 

1.12         “ACTIQ
SF Patent Rights” means Patent Rights that relate to ACTIQ SF and ACTIQ SF
Licensed Product, where the holder of the Patent Rights is Cephalon, and the
Patent

 

 

Rights include, but are not
limited to, those U.S. patents and patent applications identified as set forth
in Exhibit F.

 

1.13         “ACTIQ
SF Patent Rights License” has the meaning assigned in Section 2.2(a) of
this Agreement.

 

1.14         “ACTIQ
SF Patent Rights License Effective Date” has the meaning assigned in
Section 2.2(b) of this Agreement.

 

1.15         “Affiliate”
means any corporation, partnership, joint venture or firm which controls, is
controlled by or under common control with a specified person or entity.  For purposes of this definition, “control”
shall be presumed to exist if one of the following conditions is met: (a) in
the case of corporate entities, direct or indirect ownership of at least fifty
percent (50%) of the stock or shares having the right to vote for the election
of directors; and (b) in the case of non-corporate entities, direct or indirect
ownership of at least fifty percent (50%) of the equity interest with the power
to direct the management and policies decisions of such non-corporate entities.

 

1.16         “AMP”
means the Average Manufacturers Price as defined in §1927 of the Social
Security Act, 42 U.S.C. §1396r-8(k)(1).

 

1.17         “And” and “or”
have both conjunctive and disjunctive meanings.

 

1.18         “ANDA”
means an Abbreviated New Drug Application, as defined under 21 U.S.C. § 355 (j)
et seq.

 

1.19         “Anticipated
Final FDA Approval” means Cephalon’s good faith estimate of the earliest
date on which the FDA is likely to grant Final FDA Approval.

 

1.20         “Barr” means Barr Laboratories, Inc., its
directors, officers, employees, agents and representatives, predecessors,
successors, and assigns; its subsidiaries, divisions, groups, and Affiliates,
and the respective directors, officers, employees, agents and representatives,
successors, and assigns of each.

 

1.21         “Barr-Cephalon License Effective Date” means
the date this Agreement is executed, which is set forth above.

 

1.22         “Barr Generic Product” means any product, other
than a Barr Generic SF Product, having a pharmaceutical formulation for oral
transmucosal administration of a composition comprising fentanyl citrate [C-II]
as the active pharmaceutical ingredient, and that is manufactured and sold by
or on behalf of Barr in the United States pursuant to an ANDA filed by and in
the name of Barr that has received FDA ANDA Approval, for which ACTIQ is the
reference listed drug.

 

1.23         “Barr Generic SF Product” means any product
having a Substantially Sugar-free

 

 

pharmaceutical formulation for
oral transmucosal administration of a composition comprising fentanyl citrate
[C-II] as the active pharmaceutical ingredient, and that is manufactured and
sold by or on behalf of Barr in the United States pursuant to an ANDA filed by
and in the name of Barr that has received FDA ANDA Approval, for which ACTIQ or
ACTIQ SF is the reference listed drug.

 

1.24         “Cephalon” means Cephalon, Inc., its directors,
officers, employees, agents and representatives, predecessors, successors, and
assigns; its subsidiaries (including Anesta Corp.), divisions, groups, and
Affiliates, and the respective directors, officers, employees, agents and
representatives, successors, and assigns of each.

 

1.25         “Cephalon Supplied Products” means ACTIQ or
ACTIQ SF, as the case may be, sold to Barr in accordance with Section 6.1 of
this Agreement for ultimate resale in the United States.

 

1.26         “cGMP” means current good manufacturing
practices as described in 21 C.F.R. § 210 and 21 C.F.R. § 211.

 

1.27         “CIMA” has the meaning assigned in the
Recitals.

 

1.28         “Citizen Petition” means a petition filed with
the FDA pursuant to 21 C.F.R. § 10.

 

1.29         “Commercial Launch” means the date on which a
product is first commercially available for sale in the United States by any
one of the following:  pharmaceutical
wholesalers, hospitals, health maintenance organizations, pharmaceutical
benefit management organizations, group purchasing organizations and member
hospitals, retail pharmacies, supermarkets, grocery stores, discount stores,
convenience stores, mass merchandisers, non-federal non-GFO hospitals, U.S.
Veterans Affairs/military, state and local governments, clinics and long-term
care facilities, mail order, and public health provider that qualifies as a
covered entity under Section 340B of the Public Health Services Act, created
under Section 602 of the Veterans Health Care Act of 1992, Public Law 102-585.

 

1.30         “Commercially Reasonable Efforts” means efforts
and resources that would normally be expected to be used by a pharmaceutical
company to develop, seek required FDA approvals for, manufacture, control and
assure quality of, introduce into markets and otherwise commercialize a drug product
owned by it or to which it has rights, which is of similar market potential at
a similar stage of development or product life, taking into account issues of
safety and efficacy, competitiveness in the marketplace, the proprietary
position of the drug product, the regulatory structure(s) involved, the
profitability of the drug product, and other material and relevant factors.

 

1.31         “Commission” has the meaning assigned in the
Recitals.

 

1.32         “Confidential Information” has the meaning
assigned in Section 9.1 of this Agreement.

 

 

1.33         “Consent Agreement” has the meaning assigned in
the Recitals.

 

1.34         “Consent Agreement Effective Date” means the
earlier of:  (i) the date Cephalon and
CIMA close on the Acquisition Agreement; or (ii) the date the merger contemplated
by the Acquisition Agreement becomes effective by filing the certificate of
merger with the Secretary of State of the State of Delaware.

 

1.35         “Develop” means to engage in all preclinical and clinical
Development.

 

1.36         “Development” means all preclinical and
clinical drug development activities (including formulation),  including test method development and
stability testing, toxicology, formulation, process development, manufacturing
scale-up, development-stage manufacturing, quality assurance/quality control
development, statistical analysis and report writing, conducting clinical
trials for the purpose of obtaining any and all approvals, licenses,
registrations or authorizations from any agency necessary for the manufacture,
use, storage, import, export, transport, promotion, marketing and sale of a
product (including any governmental price or reimbursement approvals), product
approval and registration, and regulatory affairs related to the foregoing.

 

1.37         “FDA” means the United States Food and Drug
Administration.

 

1.38         “FDA ANDA Approval” means final approval by the
FDA under Section 505(j) of the U.S. Federal Food, Drug and Cosmetic Act, with
an A/B Rating to the reference listed drug.

 

1.39         “FDA Approvable Letter” means a letter from the
FDA that a product is basically approvable providing that certain issues are
resolved as described in 21 C.F.R. Part 314.110

 

1.40         “Final FDA Approval” means approval by the FDA
under Section 505(b) of the U.S. Federal Food, Drug and Cosmetic Act.

 

1.41         “First Delivery Date” has the meaning assigned
in Section 6.1 of this Agreement.

 

1.42         “Gross Sales” means the number of units of
ACTIQ Licensed Product or ACTIQ SF Licensed Product, as the case may be, sold
and distributed to third party customers in the United States by Barr and its
Affiliates multiplied by the invoiced price per unit for the applicable
product.  Where such product(s) are sold
as one of a number of items without a separate price, the Gross Sales applicable
to any such transaction shall be deemed to be Barr’s average gross sales for
the applicable quantity of such product(s) during the period in which the
transaction occurred.

 

1.43         “Interim Monitor” means a monitor appointed by
the Commission pursuant to the Consent Agreement.

 

 

1.44         “License Effective Date” means the ACTIQ
License Effective Date or ACTIQ SF License Effective Date, as the case may be.

 

1.45         “Manufacturing Know How” means technical
information (whether patented, patentable or otherwise), including all product
specifications, processes, product designs, plans, trade secrets, ideas,
concepts, manufacturing, engineering and other manuals and drawings, standard
operating procedures, flow diagrams, chemical, pharmacological, toxicological,
pharmaceutical, physical and analytical, safety, efficacy, stability, quality
assurance, quality control and clinical data, data, research records,
compositions, annual product reviews, process validation reports, analytical
method validation reports, specifications for stability trending and process
controls, testing and reference standards for impurities in and degradation of
products, technical data packages, chemical and physical characterizations,
dissolution test methods and results, formulations for administration, clinical
trial reports, regulatory communications and labeling and all other
confidential or proprietary technical and business information, in each such
case owned or licensed by Cephalon relating to the manufacturing of ACTIQ,
ACTIQ Licensed Product, ACTIQ SF and ACTIQ SF Licensed Product, as the case may
be.

 

1.46         “Manufacturing Technology” means all
technology, research and development, formulae, know how, inventions,
discoveries, processes, compositions, test procedures, manufacturing
procedures, techniques, developments, enhancements and modifications,
confidential, technical, or proprietary information and knowledge not generally
known to the public, whether or not patentable, commercially useful, or
reducible to writing or practice that are or have been used in the manufacture,
packaging, release testing, stability and/or shelf life of the ACTIQ, ACTIQ
Licensed Product, ACTIQ SF and ACTIQ SF Licensed Product, as the case may be,
or any component thereof; provided,
however, that Manufacturing Technology shall not include any plant, tangible
property, equipment or employees.

 

1.47         “NDA” means New Drug Application, as defined
under 21 U.S.C. § 355(b) et seq.

 

1.48         “Net Sales” means Gross Sales, less accrued deductions for the following:

 

(a)           sales
and excise taxes and duties (including import duties) paid or allowed by a
selling party and any other governmental charges imposed upon the manufacture
or sale of any products to the extent included in Gross Sales;

 

(b)           ordinary
and customary trade, quantity and cash discounts and rebates, charge-backs and
administrative fees (including rebates to social and welfare systems and
amounts paid to third parties on account of rebate payments);

 

(c)           allowances,
charge-backs and credits to third parties on account of rejected, damaged,
outdated, returned, withdrawn or recalled ACTIQ Licensed Product or ACTIQ SF
Licensed Product, as the case may be, or on account of retroactive price
reductions affecting any such products; and

 

 

(d)           any
external costs or expenses paid by or on behalf of Barr or any of its
Affiliates for carriage of goods from the location set forth in Section 5.1(d)
of this Agreement.

 

For clarity,
sales between Barr and its Affiliates shall be excluded from the computation of
Net Sales and Gross Sales, but Gross Sales and Net Sales shall include the
subsequent final sale to third parties by any such affiliate.

 

1.49         “OVF” means CIMA’s investigational new drug
product, OraVescent® fentanyl, filed with the FDA under IND No. 65,447.

 

1.50         “Party” or “Parties”
means a party, or the parties, to this Agreement.

 

1.51         “Pediatric Exclusivity” means exclusivity
obtained in accordance with the requirements of Section 505A of the U.S.
Federal Food, Drug and Cosmetic Act (21 U.S.C. § 355a).

 

1.52         “Patent Rights” means all patents and patent applications,
including any continuations, continuations-in-part, divisions, provisionals or
any substitute applications, any patent issued with respect to any such patent
applications, any reissue, reexamination, renewal or extension of any such
patent, any United States patents originating from international patent
applications designating the United States, and any patent applications filed
after the License Effective Date that claim any inventions that were conceived
prior to the License Effective Date; and the rights to which patents and patent
applications are owned by or licensed to a holder of the Patent Rights and
which patents and patent applications contain claims which would be infringed
by the manufacture, use, importation, offer for sale, sale, distribution,
promotion or advertising of ACTIQ Licensed Product, or the ACTIQ SF Licensed
Product, as the case may be, or any component thereof.

 

1.53         “Providing Party” has the meaning assigned in
Section 9.1 of this Agreement.

 

1.54         “Reasonable Best Efforts” means efforts and
resources that would normally be expected to be used by a pharmaceutical
company to develop, seek required FDA approvals for, manufacture, control and
assure quality of, introduce into markets and otherwise commercialize a drug
product owned by it or to which it has rights, which is of similar market
potential at a similar stage of development or product life.

 

1.55         “Receiving Party” has the meaning assigned in
Section 9.1 of this Agreement.

 

1.56         “Risk Management Program” (or “RMP”) means a
strategic safety program designed to decrease product risk by using one or more
interventions or tools beyond the package insert, which program may be modified
or amended from time to time and may be a condition of Final FDA Approval.

 

1.57         “Scientific and Regulatory Material” means all
technological, scientific, chemical, biological, pharmacological,
toxicological, regulatory and clinical trial materials and information related
to the ACTIQ, ACTIQ Licensed Product, ACTIQ SF and ACTIQ SF Licensed Product,

 

 

and all rights thereto, in any
and all jurisdictions.

 

1.58         “Skeeper” means a child-resistant temporary
storage container or a child-resistant disposal container for the ACTIQ
Licensed Product, ACTIQ SF Licensed Product, ACTIQ or ACTIQ SF, as the case may
be.

 

1.59         “Substantially Sugar-free” means either:  (i) a product containing less than 0.5 grams
of Sugar(s) per dosage; or (ii) a product approved by the FDA for labeling as “Sugar-Free.”
The term “Sugar(s)” means the sum of all free mono- and disaccharides (such as
glucose, fructose, lactose, and sucrose) as defined in 21 C.F.R.
§101.9(c)(6)(ii).

 

1.60         “University of Utah Research Foundation License
Agreement” means the Technology License Agreement dated as of September 16,
1985, as amended, by and between the University of Utah Research Foundation (“UURF”)
Anesta Corp., pursuant to which UURF licensed to Anesta Corp. the patents
identified in Exhibit D hereof.  A copy
of the University of Utah Research Foundation License Agreement is attached hereto
as Exhibit A.

 

 

2.             GRANT OF RIGHTS

 

2.1           License to ACTIQ Patent Rights.

 

(a)           Grant of License.  Subject to Section 2.1(b) of this Agreement,
Cephalon grants to Barr, a fully paid-up, royalty-free, except as provided
under Article 3 of this Agreement, irrevocable license, which conveys the
following rights and licenses, in the United States, to develop, make or have
made, use, sell, offer for sale, distribute or have distributed, promote or
advertise, import or have imported ACTIQ Licensed Product (the “ACTIQ Patent
Rights License”):

 

(i) a
non-exclusive right and license to ACTIQ Patent Rights, including those patents
owned by Cephalon and identified in Exhibits C and E;

 

(ii) a
non-exclusive sublicense to the ACTIQ Patent Rights licensed to Cephalon, including
those identified in Exhibit D;

 

(iii) an
exclusive, except as to Cephalon, right and license to Manufacturing Know How,
Manufacturing Technology, and Scientific and Regulatory Material, but does not
include any rights or license in the trademark ACTIQ or any goodwill associated
therewith; and

 

(iv) an
exclusive, except as to Cephalon, right and license to: (a) the U.S. Trademark
Registration No. 2,622,734 as needed for a single dose entity of an ACTIQ
Licensed Product; (b) any trademark or trade dress covering the size, shape and
color of a single dose entity of ACTIQ Licensed Product, to the extent Barr
desires; and (c) the appearance, structure, textual or graphical content and/or
color scheme of any labeling, dosing information, product

 

 

inserts, Skeeper or other
materials, and any Risk Management Program, as may be necessary for the
marketing and sale of ACTIQ Licensed Product.

 

(b)           ACTIQ Patent Rights License Effective Date.  The ACTIQ Patent Rights License granted
pursuant to Section 2.1(a)(iii) shall become effective upon the Barr-Cephalon
License Effective Date.  Except as
provided under Section 2.3 of this Agreement, the ACTIQ Patent Rights License
granted pursuant to Section 2.1 (a) (i), (ii) and (iv) shall become effective
upon the earliest of:  (1) Final FDA
Approval of OVF, (2) September 5, 2006, if Cephalon is not granted Pediatric
Exclusivity with respect to ACTIQ, or (3) February 3, 2007, if Cephalon is
granted Pediatric Exclusivity with respect to ACTIQ.

 

(c)           Pediatric Exclusivity.  Immediately upon the ACTIQ Patent Rights
License Effective Date for the ACTIQ Patent Rights License granted pursuant to
Section 2.1(a)(i),(ii) and (iv) as determined under Section 2.1(b), Cephalon
shall grant a license to Barr with respect to any Pediatric Exclusivity that
may then exist or thereafter arise with respect to ACTIQ (except for any
Pediatric Exclusivity that may exist solely with respect to ACTIQ SF). Cephalon
shall reasonably cooperate with Barr in notifying the FDA that Cephalon has
waived Pediatric Exclusivity with respect to Barr, including, but not limited
to, by filing with the FDA a dated and executed copy of the letter attached
hereto as Exhibit H.

 

2.2           Contingent License to ACTIQ SF Patent Rights.

 

(a)           Grant of License.  Subject to Section 2.2(b) of this Agreement,
Cephalon grants to Barr a fully paid-up, royalty-free, irrevocable license,
which conveys the following rights and licenses, in the United States, to
develop, make or have made, use, sell, offer for sale, distribute or have distributed,
promote or advertise, import or have imported ACTIQ SF Licensed Product (the “ACTIQ
SF Patent Rights License”):

 

(i) a
non-exclusive right and license to ACTIQ SF Patent Rights, including those
patents owned by Cephalon and identified in Exhibit F;

 

(ii) an
exclusive, except as to Cephalon, right and license to Manufacturing Know How,
Manufacturing Technology, and Scientific and Regulatory Material, but not any
rights or license in the trademark ACTIQ or any goodwill associated therewith;
and

 

(iii) an
exclusive, except as to Cephalon, right and license to:  (a) the U.S. Trademark Registration No.
2,622,734 as needed for a single dose entity of an ACTIQ SF Licensed Product;
(b) any trademark or trade dress covering the size, shape and color of a single
dose entity of ACTIQ SF Licensed Product, to the extent Barr desires; and (c)
the appearance, structure, textual or graphical content and/or color scheme of
any labeling, dosing information, product inserts, Skeeper or other materials
and any Risk Management Program, as may be necessary for the marketing and sale
of ACTIQ SF Licensed Product.

 

(b)           ACTIQ SF Patent Rights License Effective Date.  The ACTIQ SF Patent Rights License granted
pursuant to Section 2.2(a)(ii) shall become effective upon the Barr-

 

 

Cephalon License Effective
Date.  Except as provided under Section
2.3 of this Agreement, the ACTIQ SF Patent Rights License granted pursuant to
Section 2.2(a)(i) and (iii) shall become effective upon the later of: (1) the
ACTIQ Patent Rights License Effective Date; or (2) the earliest to occur of any
of the following: (a) final FDA Approval of OVF; (b) a determination by the FDA
that ACTIQ may no longer be sold in the United States; (c) a determination by
the FDA that ACTIQ SF is not A/B Rated to ACTIQ; (d) a determination by the FDA
that Barr Generic Product is not A/B Rated to either ACTIQ or ACTIQ SF; (e) no
determination by the FDA at least sixty (60) days prior to the ACTIQ Patent
Rights Effective Date that either (i) ACTIQ SF is A/B Rated to ACTIQ or (ii)
Barr Generic Product or Barr Generic SF Product is A/B rated to ACTIQ SF; and
(f) Final FDA Approval of ACTIQ SF, if Cephalon fails to include in its ACTIQ
SF NDA filing a request under 21 C.F.R.§ 355(j) to have FDA make a
determination that ACTIQ SF is A/B Rated to ACTIQ. Cephalon shall promptly
notify Barr of any FDA determinations described in this Paragraph.

 

(c)           Pediatric Exclusivity.  Immediately upon the ACTIQ SF Patent Rights
License Effective Date for the ACTIQ SF Patent Rights License granted pursuant
to Section 2.2(a)(i) and (iii) as determined under Section 2.2(b), Cephalon
shall grant a license to Barr with respect to any Pediatric Exclusivity that
may then exist or thereafter arise solely with respect to ACTIQ SF. Cephalon  shall 
reasonably cooperate with Barr in notifying the FDA that Cephalon has
waived Pediatric Exclusivity with respect to Barr, including, but not limited
to, by filing with the FDA a dated and executed copy of the letter attached
hereto as Exhibit H.

 

2.3           ACTIQ SF Incentive.  Cephalon shall use all Reasonable Best
Efforts to develop ACTIQ SF.  If Cephalon
has not obtained by July 1, 2005, either Final FDA Approval or an FDA
Approvable Letter of the ACTIQ NDA as supplemented for the marketing of ACTIQ
SF, then the ACTIQ Patent Rights License Effective Date and ACTIQ SF Patent
Rights License Effective Date shall be no later than September 5, 2006;
provided, however, that if Cephalon has obtained by July 1, 2005 an FDA
Approvable Letter but has not obtained within 180 days of the date of such an
FDA Approvable Letter Final FDA Approval of the ACTIQ NDA as supplemented for
the marketing of ACTIQ SF, then the ACTIQ Patent Rights License Effective Date
and ACTIQ SF Patent Rights License Effective Date shall be no later than
September 5, 2006.

 

2.4           Patent Rights. 
Cephalon, at its own expense, shall prepare, file, prosecute and
maintain the ACTIQ Patent Rights and ACTIQ SF Patent Rights in the United
States until the earlier of (i) August 3, 2007 or (ii) the earlier of one
hundred eighty (180) days after (a) the ACTIQ Patent Rights License Effective
Date or (b) ACTIQ SF Patent Rights License Effective Date.  Upon written request, Cephalon shall provide
a copy to Barr of any patent application that is (1) within the scope of the
ACTIQ Patent Rights or the ACTIQ SF Patent Rights and (2) regarded as abandoned
by the U.S. Patent & Trademark Office before such patent application either
is published under 35 U.S.C. §  122(b), or issues under 35 U.S.C.
§ 151 et  seq or that is the subject of a request filed with the U.S. Patent
& Trademark Office seeking to prevent publication of such patent
application under 35 U.S.C. § 122(b).

 

 

2.5           Infringement.

 

(a)           Notice Regarding and Authority to Take Action
Against Infringers.  During the
period set forth in Section 2.4 of this Agreement, each Party shall promptly
notify the other Party of any known infringement by third parties of the
proprietary rights of either Party with regard to ACTIQ Patent Rights and the
ACTIQ SF Patent Rights.  If any of the
patents of the ACTIQ Patent Rights or the ACTIQ SF Patent Rights are infringed,
Cephalon shall have the right but not the obligation to commence appropriate
legal action to enjoin such infringement at its sole expense; in such case Barr
shall provide its complete cooperation to Cephalon at its expense, but Cephalon
shall be entitled to retain any damages or awards that may result from its
initiation of said action.  If Cephalon
fails to initiate such action within ninety (90) days after being notified of
the infringement, then Barr shall have the right, but not the obligation, to
undertake such action at its own expense in the name of Cephalon, and Cephalon
shall provide its complete cooperation to Barr at its expense.  Any damages or awards resulting from the
prosecution of such claim by Barr shall be applied first to reimburse Barr for
its costs and expenses, with any balance to be shared by the Parties with an
amount equal to [**] percent ([**]%) of such balance being retained by Barr and
[**] percent ([**]%) of such balance being given to Cephalon.

 

(b)           Infringement of Third Party Patents.  Each Party shall have the right, but not the
obligation, to defend against a claim alleging infringement by its own products
of the Patent Rights of third parties. 
For purposes of clarification, Cephalon shall have the right, but not
the obligation, to defend such claims against ACTIQ, ACTIQ SF, and Cephalon
Supplied Product, and Barr shall have the right, but not the obligation, to
defend such claims against Barr Generic Product and Barr Generic SF Product.

 

3.             ACTIQ PATENT RIGHTS LICENSE MILESTONE
PAYMENTS.

 

3.1           Milestone Payment. 
In consideration of the grant by Cephalon to Barr of the ACTIQ Patent
Rights License pursuant to Section 2.1(a), and as a condition to the continued
effectiveness of the ACTIQ Patent Rights License, Barr shall make a payment to
Cephalon as set forth in Exhibit B.

 

3.2           Royalty Payments to the University of
Utah Research Foundation.  Pursuant to Section 4.1 of the University of
Utah Research Foundation License Agreement, Barr shall make payments of earned
royalty of [**]%
on Net Sales Value as defined under and required by the University of Utah
Research Foundation License Agreement directly to UURF with respect to all
sales of ACTIQ Licensed Product or ACTIQ SF Licensed Product during the period
commencing on the ACTIQ Patent License Effective Date and ending on September
5, 2006.  Barr shall be bound by the
applicable terms of the University of Utah Research Foundation License Agreement.

 

** Portions of this exhibit
have been omitted and filed separately pursuant to an application for
confidential treatment filed with the Securities and Exchange Commission
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

 

 

4.             COVENANTS OF CEPHALON; CITIZEN PETITION

 

4.1           Covenants.

 

(a)           Cephalon hereby covenants that Cephalon
shall not directly or indirectly, alone or in participation with any other
Person, seek to enjoin, or file, prosecute or maintain any suit, legal or other
action or proceeding for damages or any legal, equitable or other relief
against Barr or any sublicensees, manufacturers, suppliers, distributors, and
customers of Barr, or of such Barr-affiliated entities, for infringement of any
ACTIQ Patent Rights or ACTIQ SF Patent Rights to which Barr has an effective
license under this Agreement or of any other Patent Rights owned by or licensed
to Cephalon for infringement by any ACTIQ Licensed Product or ACTIQ SF Licensed
Product, provided, however, that nothing contained in this Section 4.1(a) shall
prevent, preclude or otherwise prohibit Cephalon from joining, filing,
prosecuting or maintaining any suit, in law or equity, against Barr with
respect to this Agreement.

 

(b)           Cephalon agrees that it will not launch,
cause to be launched or supply to a third party other than Barr, a generic
version of ACTIQ Licensed Product or ACTIQ SF Licensed Product in the United
States prior to the Commercial Launch by Barr of Barr Generic Product, Barr
Generic SF Product, or Cephalon Supplied Product, as the case may be.  For the avoidance of doubt, Cephalon’s
supplying to Barr the Cephalon Supplied Product pursuant to the terms of this
Agreement shall not be considered a breach of the foregoing sentence.

 

4.2           Citizen Petition. 
Cephalon agrees not to file or cause to be filed a Citizen Petition with
the FDA challenging: the marketing approval of ACTIQ Licensed Product, or ACTIQ
SF Licensed Product.

 

5.             TECHNICAL TRANSFER

 

5.1           Technical Transfer Assistance. 
Cephalon shall use all reasonable efforts to facilitate Barr’s ability
to manufacture and Develop Barr Generic Product and Barr Generic SF Product
(collectively hereinafter referred to as “Barr Generic Products”) and to
facilitate FDA’s approval of Barr’s ANDA for Barr Generic Products, including
but not limited to: (i) providing Barr with the appropriate and necessary
technical assistance, as requested by Barr; (ii) enabling Barr to develop the
expertise to manufacture the Barr Generic Products under this Section 5.1 within
the shortest possible period of time (in any event no later than the respective
License Effective Dates), which reasonable efforts, for purposes of clarity
does not include the payment of funds or the transfer of tangible property, by
Cephalon to Barr, except as may be provided under this Agreement; Barr shall
have the right at reasonable intervals and upon reasonable prior notice, to
visit any Cephalon plant or facility, review any equipment and observe the
processes involved in the manufacturing of Cephalon Supplied Product, ACTIQ or
ACTIQ SF, in a manner that will not interrupt Cephalon’s internal operations;
(iii) providing Barr within ten (10) days after the Consent Agreement Effective
Date a copy of each patent application that is within the scope of the ACTIQ
Patent Rights and ACTIQ SF Patent Rights and that has not been published or
issued, as provided under Section 2.4 of this Agreement; and (iv) providing
Barr access to Scientific and Regulatory Materials.  Failure of Cephalon to fulfill its technical
transfer obligations of this Section 5.1 shall constitute a material breach.

 

 

5.2           Transfer of Manufacturing Know How,
Manufacturing Technology and Scientific and Regulatory Material. 
Cephalon will transfer or make available the Manufacturing Know How,
Manufacturing Technology and the Scientific and Regulatory Material, and such
other information and materials as Barr requests, as soon as possible after the
Barr-Cephalon License Effective Date in order to enable Barr to manufacture the
Barr Generic Product and Barr Generic SF Product.  Barr shall use its Commercially Reasonable
Efforts to assume the labeling and packaging obligations with respect to the
Barr Generic Products.

 

5.3           Cost and Charges. 
Cephalon shall provide assistance as set forth in Section 5.1 above for
a cumulative period of two hundred and fifty (250) days of support free of any
charge to Barr, except that Cephalon shall be entitled to charge and Barr shall
be obligated to pay for any reasonable out of pocket costs or disbursements incurred
by Cephalon in rendering such assistance. 
For any assistance provided after such period, Cephalon will be entitled
to charge Barr Cephalon’s fully absorbed labor cost plus reasonable direct out
of pocket costs and disbursements. 
Cephalon shall render invoices for all such costs and disbursements that
it incurs to Barr and Barr shall pay to Cephalon the full amount due on all
such invoices within thirty (30) days of receipt.

 

6.             CEPHALON SUPPLIED PRODUCT

 

6.1           Contingent
Supply of Cephalon Supplied Product. 
In the event that Barr is unable to obtain, on or before 30 days prior
to the earliest of:   (i) September 5,
2006, if Cephalon is either not granted Pediatric Exclusivity with respect to
ACTIQ or Cephalon did not obtain Final FDA approval of ACTIQ NDA or ACTIQ SF
NDA, as the case may be, for the marketing of ACTIQ SF, as set forth in Section
2.3 of this Agreement; (ii) February 3, 2007, if Cephalon is granted Pediatric
Exclusivity with respect to ACTIQ; or (iii) the Anticipated Final FDA Approval
of OVF (such earliest date being the “First Delivery  Date”), FDA ANDA Approval necessary to permit
the manufacture and sale of Barr Generic Product or Barr Generic SF Product, as
the case may be, and subject to the terms and conditions set forth in this Article
6, then Cephalon will manufacture and supply to Barr for resale in the United
States Cephalon Supplied Product commencing on the First Delivery Date;
provided, however, that Cephalon shall not be required to supply Cephalon
Supplied Product in a Substantially Sugar-free formulation more than 30 days
prior to the ACTIQ SF Patent Rights License Effective Date.  Barr shall have the option to have Cephalon
manufacture and supply to Barr a Cephalon Supplied Product that is either
Substantially Sugar-free or not Substantially Sugar-free; provided, however,
that if Cephalon is simultaneously selling both ACTIQ and ACTIQ SF in the
United States, Barr shall have the option to have Cephalon manufacture and
supply both Substantially Sugar-free and not Substantially Sugar-free
formulations of Cephalon Supplied Product.

 

Cephalon
will supply such Cephalon Supplied Products in finished dosage form in bulk
containers ready for packaging and labeling by Barr, irrespective of Cephalon’s
continued manufacture or production of ACTIQ or ACTIQ SF for its own purposes.

 

For
purposes of clarification, Barr’s receipt at any time during the term of the
supply

 

 

provisions of this Agreement of Cephalon
Supplied Product that is not Substantially Sugar-free shall not otherwise terminate
Cephalon’s obligations to supply to Barr a Substantially Sugar-free formulation
of Cephalon Supplied Product under the terms and conditions of this Article 6.

 

In the
event that Barr has obtained FDA ANDA Approval necessary to permit the manufacture
and sale of Barr Generic Product, but FDA withdraws such FDA ANDA Approval
prior to Barr’s Commercial Launch of the Barr Generic Product, Cephalon will
manufacture and supply to Barr for resale in the United States Cephalon
Supplied Products, commencing as soon as reasonably practicable following Barr’s
notice to Cephalon of FDA’s withdrawal of such FDA ANDA Approval.

 

(a)           ACTIQ as Cephalon Supplied Product. 
To ensure that Barr has a timely and uninterrupted supply of Cephalon
Supplied Product, Cephalon and Barr shall prepare and file, at Cephalon’s cost
and immediately as of the Consent Agreement Effective Date, such filings and
other actions necessary to qualify Barr’s sale of Cephalon Supplied
Product.  Additionally, Cephalon and Barr
shall prepare and file, at Cephalon’s cost and immediately upon Final FDA
Approval of ACTIQ SF such filings necessary to qualify Barr’s sale of
Substantially Sugar-free formulation of Cephalon Supplied Product.  Further, Cephalon and Barr agree that in the
event of any interruptions in supply of Cephalon Supplied Product during the
term of the supply provisions of this Agreement, the manufacture and supply of
Cephalon Supplied Product shall take priority over the manufacture, supply, and
sale of Cephalon’s branded products, ACTIQ or ACTIQ SF.  Notwithstanding Cephalon’s efforts to supply
Cephalon Supplied Product in accordance with the preceding sentence, if
Cephalon is unable to meet Barr’s forecasted requirements of Cephalon Supplied
Product, then Cephalon shall provide to Barr ACTIQ and ACTIQ SF, as the case
may be, out of its existing finished goods inventory at the price per unit set
forth herein and shall promptly supplement the ACTIQ NDA to enable the
distribution by Barr of ACTIQ and ACTIQ SF.

 

(b)           Term of Supply Agreement. 
Cephalon shall supply Cephalon Supplied Products until the date that is
earlier:  (i) six (6) years from the
Barr-Cephalon License Effective Date; or (ii) three (3) years from the First
Delivery Date of Cephalon Supplied Products to Barr under this Agreement.

 

(c)           Unit Definition; Delivery.  A unit shall mean a single dose entity of the
Cephalon Supplied Products in finished dosage form, ready for packaging and
labeling by Barr.  Barr shall purchase
Cephalon Supplied Products in not less than full lot quantities of each
strength (i.e., 200mcg, 400mcg, 600mcg, 800mcg, 1200mcg, 1600mcg, or as may
otherwise be available and bioequivalent to that product as marketed by
Cephalon) of Cephalon Supplied Products. 
Cephalon Supplied Products shall be delivered FOB Cephalon’s Salt Lake
City, Utah manufacturing facility. 
Cephalon shall properly store and retain appropriate samples (identified
by lot and batch number) of each shipment in conditions and for times
consistent with all Applicable Law and to permit appropriate or required
internal and regulatory checks and references (collectively, the “Shipment Samples”).

 

 

(d)           Price/Payment. 
Barr shall purchase Cephalon Supplied Products at a price equal to the
lesser of (i) $[**] plus an adjustment to reflect the percentage increase in
the U.S. Bureau of Labor Statistics Producer Price Index for SIC 28341 in the
proceeding year (“PPI Adjustment”) per unit for the first twelve month period
commencing on the First Delivery Date; $[**] plus a PPI Adjustment per unit for
the twelve month period commencing one year after the First Delivery Date; and
$[**]  plus a PPI Adjustment per unit for
the twelve month period commencing two years after the First Delivery Date; or
(ii) [**] percent ([**]%) of the AMP for ACTIQ or ACTIQ SF, as the case may be,
on a weighted average basis across all dosage strengths.  Barr shall pay for all Cephalon Supplied
Products within thirty (30) days after receipt of Cephalon’s invoice.  If Cephalon has not received payment within
such thirty day period, Cephalon will charge Barr a penalty at the lower of (i)
interest accruing on any such unpaid balance at a rate of [**] percent ([**]%)
per month, compounded daily or (ii) the highest rate allowable under applicable
law.

 

(e)           Ordering/Forecasting.  Cephalon shall inform Barr, the Commission,
and any Interim Monitor, in writing every sixty (60) days from the Effective
Date until FDA approval of: (1) Barr Generic Product and (2) Barr Generic SF
Product, concerning the date of Anticipated Final FDA Approval of OVF.  Barr shall immediately notify Cephalon of the
receipt of FDA ANDA Approval of Barr Generic Product and Barr generic SF
Product.  Cephalon shall immediately notify
Barr, the Commission, and any Interim Monitor, in writing, upon the occurrence
of each of the following events: (i) submission of the NDA for OVF, (ii)
receipt of a FDA Approvable Letter for OVF, 
(iii) Final FDA Approval of OVF, (iv) any determination by the FDA that
ACTIQ may no longer be sold in the United States; and (v) any determination by
the FDA that ACTIQ is not A/B Rated to ACTIQ SF.  Failure of Cephalon to provide Barr with such
notifications shall constitute material breach. 
Commencing [**] months prior to the Anticipated Final FDA Approval of
OVF, as provided by Cephalon, Barr shall provide Cephalon with rolling [**]
month forecast of its requirements of Cephalon Supplied Products.  The forecasts shall be updated [**] and shall
be provided to Cephalon not less than [**] ([**]) months prior to the first
requested delivery of product under the then-current forecasts.  In addition, the first [**] months of each
forecast shall be firm purchase orders binding on Barr and Cephalon.  Within [**] ([**]) business days of receipt
of each forecast from Barr, Cephalon and Barr shall discuss the manufacturing
schedule for Cephalon Supplied Products. 
Cephalon shall use Commercially Reasonable Efforts to supply Cephalon
Supplied Products in excess of forecasted amounts.  In the event that the FDA Final Approval of
OVF occurs prior to the Anticipated Final FDA Approval of OVF previously
indicated to Barr by Cephalon, Cephalon shall supply Barr with Cephalon
Supplied Products no later than thirty (30) days following FDA Final Approval
of OVF.

 

(f)            Scope of Liability for Material Breach by Licensor.  IN THE EVENT OF ANY BREACH OF THIS AGREEMENT
BY A PARTY, THE OTHER PARTY HERETO  SHALL
BE ENTITLED TO SEEK ALL REMEDIES AVAILABLE AT LAW OR EQUITY INCLUDING, BUT NOT
LIMITED TO INDIRECT DAMAGES, SPECIAL DAMAGES, CONSEQUENTIAL DAMAGES, LOST PROFITS,
LEGAL FEES AND COSTS.   NOTWITHSTANDING
THE FOREGOING, CEPHALON SHALL NOT BE PERMITTED TO

 

** Portions of this exhibit
have been omitted and filed separately pursuant to an application for
confidential treatment filed with the Securities and Exchange Commission
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

 

 

TERMINATE OR RESCIND THE GRANT
OF RIGHTS BY CEPHALON TO BARR UNDER ARTICLE 2 OF THIS AGREEMENT OR CEPHALON’S
SUPPLY OBLIGATIONS HEREUNDER OR OTHERWISE REFUSE TO SUPPLY BARR WITH CEPHALON
SUPPLIED PRODUCT AS A RESULT OF ANY BREACH BY BARR.  HOWEVER, IN THE EVENT BARR BREACHES ITS
OBLIGATIONS UNDER SECTION 8.5 HEREOF, CEPHALON SHALL BE ENTITLED TO SEEK ANY
MONETARY REMEDIES AVAILABLE TO IT, INCLUDING THE PAYMENT BY BARR OF LIQUIDATED
DAMAGES EQUAL TO THE DOLLAR AMOUNT OF CEPHALON SUPPLIED PRODUCT PURCHASED BY
BARR UNDER ARTICLE 6 OF THIS AGREEMENT. 
FAILURE OF CEPHALON TO TIMELY PROVIDE BARR WITH CEPHALON SUPPLIED
PRODUCTS SHALL CONSTITUTE MATERIAL BREACH.

 

(g)           Inspection.

 

(i)            Barr
shall inspect or shall cause to be inspected all shipments of Cephalon Supplied
Products promptly upon receipt; provided that Barr shall have no obligation to
inspect the Cephalon Supplied Products beyond a visual inspection of each shipment
for obvious physical damage or quantity discrepancies that are evident upon
visual inspection of the Cephalon Supplied Products as shipped by
Cephalon.  Barr shall be entitled to
reject any portion or all of any shipment of Cephalon Supplied Products that
does not conform to the certificate of analysis or otherwise fails to comply
with the warranties set forth in Section 8.3 of this Agreement; provided that (i) Barr shall notify
Cephalon within [**] days after receipt of such shipment if it is rejecting a
shipment due to obvious physical damage, obvious packaging defect or quantity
discrepancies that are evident upon visual inspection of the Cephalon Supplied
Products as shipped by Cephalon and (ii) in the case of Cephalon Supplied
Products having defects other than those obvious defects, Barr shall notify
Cephalon within [**] days after receipt of such Cephalon Supplied
Products.  Any such rejection shall be
made in writing and delivered to Cephalon and shall indicate the reasons for
such rejection.

 

(ii)           If
Barr has not delivered a notice of rejection within the appropriate time period
as set forth in Section 6.1(g)(i) hereof after receipt of the shipment of
Cephalon Supplied Products, Barr shall, without in any way limiting Barr’s
rights for indemnification as set forth in Section 10.1, be deemed to have
accepted that shipment of Cephalon Supplied Products.  Once Barr has accepted or is deemed to have
accepted the Cephalon Supplied Products, Barr shall have no claim or recourse
against Cephalon relating to such Cephalon Supplied Products, other than Barr’s
rights for indemnification as set forth in Section 10.1 of this Agreement.

 

(iii)          Barr’s
payment obligations under Section 6.1(e) for a shipment shall be suspended upon
Barr’s rejection of such shipment pursuant to this Section 6.1(g) until a
determination pursuant to Section 6.1(h) whether or not such rejection is
justified.

 

(h)           Rejection of Shipment.

 

(i)            After
notice of rejection is received by Cephalon, it shall cooperate

 

** Portions of this exhibit
have been omitted and filed separately pursuant to an application for
confidential treatment filed with the Securities and Exchange Commission
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

 

 

with Barr in determining whether
rejection is justified.  Cephalon will
evaluate reasons for such non-compliance of the Cephalon Supplied Products with
applicable specifications.  Cephalon
shall notify Barr as promptly as reasonably possible whether it accepts Barr’s
rejection.

 

(ii)           Whether
or not Cephalon accepts Barr’s rejection, Cephalon shall use Commercially
Reasonable Efforts to replace such rejected Cephalon Supplied Products.  If the Cephalon Supplied Products rejected by
Barr from such original shipment ultimately is found to be nonconforming
(whether pursuant to Section 6.1(h)(iii) or if Cephalon so acknowledges in
writing), Cephalon shall bear all expenses for such replacement (including all
transportation and/or disposal charges and cost of manufacture for such replacement)
to the extent Barr previously paid for any corresponding nonconforming Cephalon
Supplied Products.  If it is determined
subsequently that such Cephalon Supplied Products were in fact conforming
(whether pursuant to Section 6.1(h)(iii) or if Barr so acknowledges in
writing), then Barr shall be responsible not only for the purchase price of the
allegedly nonconforming Cephalon Supplied Products (including all
transportation charges), but also, upon receipt and acceptance by Barr in
accordance with the procedures (and at the same price charged in the original
shipment) set forth above, the replacement. 
Replacement shipments shall also be subject to the procedures contained
in Section 6.1(g).

 

(iii)          If
Cephalon disagrees with Barr’s rejection, the parties shall submit samples of
the rejected Cephalon Supplied Products and the Shipment Sample to a mutually
acceptable third party laboratory, which shall determine whether such Cephalon
Supplied Products meets the applicable FDA approved specifications.  The parties agree that such laboratory’s
determination shall be final and determinative.

 

(iv)          If
the laboratory determines that the Cephalon Supplied Products meet the
applicable FDA approved specifications, the rejection by Barr is deemed to be
unjustified, and Barr shall pay the full invoice price for the shipment which
contained the Cephalon Supplied Products subject to the dispute.  If the laboratory determines that the
Cephalon Supplied Products do not meet the applicable specifications, the
parties shall proceed as provided in Section 6.1(h)(ii).  The party against whom the third party tester
rules shall bear the reasonable costs of the third party testing.

 

(v)           Barr
shall destroy the rejected Cephalon Supplied Products promptly upon written
instruction of Cephalon as to the lawful disposition of such Cephalon Supplied
Products and at Cephalon’s cost and provide Cephalon with certification of such
destruction.

 

(i)            cGMP Manufacture.  Cephalon Supplied Products supplied to Barr
hereunder shall be manufactured by Cephalon (or its designated Affiliates or
agents) in accordance with cGMP and other applicable rules and regulations of
the FDA and other United States governmental or regulatory agencies with
jurisdiction over the manufacture of the Cephalon Supplied Products.  At all times during the term of the supply
provisions of this Agreement, Cephalon (or its designated Affiliates or agents)
shall maintain an FDA licensed or inspected manufacturing facility for the
manufacture and supply of Cephalon Supplied Products. Cephalon’s manufacturing
facility in Salt

 

 

Lake City, Utah has been
inspected and licensed by the FDA.

 

(j)            Testing. Cephalon shall test or cause to be
tested each lot of Cephalon Supplied Products before delivery to Barr.  Each test shall set forth the items tested,
specifications and test results in a certificate of analysis for each lot
delivered to Barr under this Agreement. 
Cephalon shall send such certificate of analysis together with a
certificate of compliance to Barr together with the Cephalon Supplied Products
lot delivered.

 

(k)           
Packing and Marking.  Each lot of Cephalon Supplied Products shall
be shipped in accordance with Cephalon’s standard operating procedures.

 

(l)            Compliance with Laws.  The Parties shall comply with all applicable
laws, ordinances, codes and regulations of U.S. government agencies or other
agencies of competent jurisdiction, including but not limited to, federal,
state, municipal and local governing bodies having jurisdiction with respect to
the conduct of work toward the manufacture, storage, shipment and sale of
Cephalon Supplied Products.  Cephalon
shall maintain all government permits and licenses, including but not limited
to, health, safety and environmental permits, necessary for the conduct of the
activities and procedures that Cephalon undertakes pursuant to this Agreement.

 

(m)          Regulatory Inspections.

 

(i)            Cephalon
shall cooperate with any inspection of its facilities by a regulatory agency or
authority in or outside the United States, including but not limited to any
inspection by such regulatory agency or authority prior to the granting of FDA
Approval to market the Cephalon Supplied Products in the United States.  Cephalon shall notify Barr promptly of any
notification received by Cephalon from the FDA to conduct an inspection of its
manufacturing or other facilities used in the manufacturing, storage or
handling of Cephalon Supplied Products. 
Copies of all written correspondence relevant to the Cephalon Supplied Products
to and from any relevant regulatory authorities in the United States will be
provided by Cephalon to Barr promptly after they are received or produced by or
on behalf of Cephalon from or to the FDA or such other agency or authority.

 

(ii)           Cephalon
shall keep complete records of every production batch in accordance with
generally accepted industry practices, including, but not limited to, the batch
production records for each batch supplied to Barr.  Upon written request to Cephalon, Barr shall
have the right to have its representatives visit Cephalon’s manufacturing
areas, and review said records and books at a mutually agreed time during
normal business hours to assess Cephalon’s compliance with cGMP and quality
assurance standards.  Barr may exercise
such right no more than one (1) time per calendar year; provided that if
circumstances arise that in Barr’s reasonable judgment require that its
representatives visit Cephalon’s manufacturing areas more than once per
calendar year, the parties will discuss such circumstances and appropriate means
to address them.

 

(n)           Quality Agreement.  The Parties shall negotiate and agree within
[**] days

 

** Portions of this exhibit
have been omitted and filed separately pursuant to an application for
confidential treatment filed with the Securities and Exchange Commission
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

 

 

prior to Anticipated Final FDA
Approval of OVF a quality agreement (the “Quality Agreement”), which shall be
on terms consistent with those standard in the industry for transactions
similar to this Agreement and shall include such other provisions relating to
FDA and other regulatory matters as necessary or appropriate in connection with
Cephalon’s supply of Cephalon Supplied Products to Barr.  Each Party shall comply with the procedures
set forth in the Quality Agreement regarding quality and cGMP related
responsibilities, complaints and Adverse Event Monitoring and Reporting.

 

6.2           Disclaimer
of Warranty.  EXCEPT AS EXPRESSLY SET
FORTH HEREIN IN SECTION 8.3, NO GUARANTEE, WARRANTY, CONDITION, UNDERTAKING OR
TERM, EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE, AS TO THE CONDITION, QUALITY,
DURABILITY, PERFORMANCE, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF
THE CEPHALON SUPPLIED PRODUCTS IS GIVEN OR ASSUMED BY CEPHALON, AND ALL SUCH
GUARANTEES, WARRANTIES, CONDITIONS, UNDERTAKINGS AND TERMS ARE HEREBY EXCLUDED.

 

6.3           Records for Cephalon Supplied Products; Recalls.  Barr shall keep written records sufficient to
track the purchase and sale of Cephalon Supplied Products lots on a lot-by-lot,
and customer-by-customer basis.  Barr
shall keep written records on all Cephalon Supplied Products complaints, and
shall provide to Cephalon summaries of such Cephalon Supplied Products
complaints on a quarterly basis.  If
Cephalon, Barr or the FDA determines that a Cephalon Supplied Products recall
or withdrawal in the United States is necessary, then Barr shall take all
actions appropriate in order to recall or withdraw such Cephalon Supplied
Products sold by Barr; provided, however, that Barr shall consult with Cephalon
prior to taking any action with respect to the Cephalon Supplied Products.  Barr shall bear the costs and expenses of
such recall or withdrawal; provided, however, that if any Cephalon Supplied
Products recall or withdrawal is also caused by the breach of Cephalon of this
Agreement or its representations, warranties, covenant contained herein, such
cost and expenses shall be apportioned between Cephalon and Barr in relation to
each Party’s respective fault.

 

6.4           Supply Default.  In the event that Cephalon is unable to
supply Cephalon Supplied Products for any reason for more than [**] calendar
days following the forecasted delivery date, Barr may notify Cephalon of its
intention to manufacture or have manufactured by any third Person, for supply
to Barr or any of its designees, such Cephalon Supplied Products.  Cephalon hereby grants Barr a license (i)
under the ACTIQ Patent Rights or ACTIQ SF Patent Rights as necessary or
material for the manufacturing of such Cephalon Supplied Products, (ii) under
the ACTIQ NDA and ACTIQ SF NDA, as applicable, and (iii) all Manufacturing Know
How, Manufacturing Technology and Scientific and Regulatory Material, to
manufacture or have manufactured such Cephalon Supplied Products for such
period until the day that is six months after Cephalon has given Barr written
notice that it is ready and able to resume the performance of its obligations
under this ARTICLE 6.  Cephalon shall
promptly provide Barr with the physical embodiment of all such, ACTIQ NDA or
ACTIQ SF NDA, as the case may be, and the ACTIQ Patent Rights and ACTIQ SF
Patent Rights, and Manufacturing Know How, Manufacturing Technology, and
Scientific and Regulatory Material, and access to appropriate personnel of Cephalon
with relevant knowledge or experience with such Manufacturing Know How,

 

** Portions of this exhibit
have been omitted and filed separately pursuant to an application for
confidential treatment filed with the Securities and Exchange Commission pursuant
to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

 

 

Manufacturing Technology, and
Scientific and Regulatory Material.  In
addition, to the extent either required or permitted by FDA rules and
regulations, Cephalon shall prepare and file, at Barr’s expense, such
supplements or amendments, as applicable, to the ACTIQ NDA or ACTIQ SF NDA, as
the case may be, as required by applicable laws as is necessary for Barr to
manufacture or have manufactured such Cephalon Supplied Products at the
designated facility as permitted by the license granted under this Section 6.4.

 

7.             TERM AND TERMINATION

 

7.1           Term. 
This Agreement shall commence as of the Effective Date and shall remain
in effect as follows:

 

(a)           the
licenses granted under Section 2.1(a) and 2.2(a), and the covenants in Section
4.1(a) of this Agreement shall be perpetual except the obligations under
Section 3 shall terminate no later than the expiration of the last to expire of
the patents under the ACTIQ Patent Rights and ACTIQ SF Patent Rights, as the
case may be;

 

(b)           the
obligations of Cephalon relating to supply of Cephalon Supplied Products shall
terminate as set forth in Section 6.1(b).

 

7.2           Termination due to Material Breach by
Either Party.  Upon material breach of any term of this
Agreement, the breaching Party will be given written notice and a copy of such
notice shall be simultaneously provided to the Commission and to any Interim
Monitor, and [**] days within which to remedy such breach, or, if applicable,
such longer period (not exceeding [**] days) as would be reasonably necessary
for a diligent party to cure such material breach; provided, however,
that the breaching Party has commenced and continues diligent efforts to cure
during the initial [**] day period following receipt of such notice of
breach.   In the event of the breaching
party’s failure to remedy any such breach within this time period, the
non-breaching party shall be entitled to seek all remedies available at law or
equity as set forth in Section 6.1(f) of this Agreement; however, at no time
shall Cephalon be permitted to terminate or rescind its supply obligations
under this Agreement or otherwise refuse to supply Barr with Cephalon Supplied
Product as a result of any breach by Barr.

 

7.3           Survival of Rights and Terms.  Termination or expiration of this Agreement
shall not affect any accrued rights of either Party.  The terms of Sections 4.1(b) and Section 4.2
shall survive any termination of the licenses under Section 7.1(a) or any
termination of the supply obligations under Section 7.1(b).

 

7.4           Commission Action as Condition Precedent.  The obligations of the parties under this
Agreement are subject to the fulfillment of the following conditions:

 

(a)           A
majority of Commissioners of the Commission shall have issued a Decision and
Order concerning the pending acquisition of CIMA by Cephalon; and

 

** Portions of this exhibit
have been omitted and filed separately pursuant to an application for
confidential treatment filed with the Securities and Exchange Commission
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

 

 

(b)           That
Decision and Order shall include a requirement that Cephalon enter into a
License and Supply Agreement with Barr, or other Commission approved licensee,
and that the terms of this Agreement are acceptable.

 

8.             REPRESENTATIONS, COVENANTS AND WARRANTIES

 

8.1           General. 
Cephalon and Barr hereby represent and warrant to the other that (i) the
execution, delivery and performance of this Agreement by each of them does not
conflict with, or constitute a breach of any order, judgment, agreement, or
instrument to which they are a party; (ii) the execution, delivery and
performance of this Agreement by each of them does not require the consent of
any person or the authorization of (by notice or otherwise) any governmental or
regulatory authority (other than those relating to the granting of approvals by
the FDA as contemplated herein); and (iii) the rights granted by each of them
does not conflict with any rights granted by either of them to any third party.

 

8.2           (a)           Cephalon
warrants that it has rights to license or sublicense, as the case may be, the
ACTIQ Patent Rights of Section 1.6 and the ACTIQ SF Patent Rights of Section
1.12  to Barr, in accordance with Section
2.1 and Section 2.2 respectively, and that as of the Barr-Cephalon License
Effective Date, Exhibit C, Exhibit D, 
Exhibit E, and Exhibit F are exhaustive of patents and patent
applications owned or licensed by Cephalon that protect ACTIQ, ACTIQ SF, ACTIQ
Licensed Product and ACTIQ SF Licensed Product. 
Except as provided under Section 8.2(b) of this Agreement, so long as
Barr is using or manufacturing or otherwise making, in furtherance of seeking
regulatory approval, or selling or offering to sell ACTIQ Licensed Product and
ACTIQ SF Licensed Product under the terms of this Agreement, Cephalon will take
no action against Barr with respect to the ACTIQ Patent Rights or ACTIQ SF
Patent Rights or the subject matter of the non-exclusive license or sublicense
of Section 2.1 or Section 2.2 as further provided under this Section
8.2(a).  After the ACTIQ Patent Rights
License Effective Date or ACTIQ SF Patent Rights License Effective Date, as the
case may be, (except for the
manufacture and Development of ACTIQ or ACTIQ SF, respectively, in which case,
this Section 8.2(a) shall apply as of the Barr-Cephalon License Effective
Date), Cephalon shall not join, or file, prosecute or maintain any suit, in Law
or equity, against Barr or any entity controlled by or under common control
with Barr, or any licensees, sublicensees, manufacturers, suppliers,
distributors, and customers of Barr, or of such Barr Affiliates, for the
research, Development, manufacture, use, import, export, distribution, offer
for sale, promotion or sale of generic equivalents of ACTIQ or ACTIQ SF as the
case may be (but only as to those ACTIQ or ACTIQ SF  products that are commercialized or in
Development by Cephalon as of the  Barr-Cephalon
License Effective Date) under any Patents Rights owned or licensed by Cephalon
as of the Barr-Cephalon License Effective Date or acquired thereafter (other
than such Patents Rights that claim inventions conceived by and reduced to
practice by Cephalon’s employees after the 
Barr-Cephalon License Effective Date): (A) that claim the use of ACTIQ
or ACTIQ SF, as the case may be, in the Field of pain management; or (B) that
claim any aspect of the research, Development, manufacture, use, import,
export, distribution, or sale of  ACTIQ or
ACTIQ SF, as the case may be.

 

 

(b)           Cephalon
reserves the right to enforce its ACTIQ Patent Rights against Barr until the
ACTIQ Patent Rights License Effective Date and its ACTIQ SF Patent Rights  until the 
ACTIQ SF Patent Rights License Effective Date, respectively, but only to
the extent Cephalon seeks a remedy in the form of injunctive relief and/or
actual montetary damages upon the filing by Barr of an ANDA under Section 1.18
or NDA under Section 1.47 of this Agreement, and further provided such
enforcement action is terminated and such injunctive relief is waived upon the
respective License Effective Date.

 

8.3           Cephalon
warrants that the Cephalon Supplied Products delivered under this Agreement
will (i) be manufactured in accordance with cGMP requirements and (ii) conform
to the applicable FDA approved specifications at the time of delivery thereof
to Barr.

 

8.4           Cephalon
warrants that as of the Barr-Cephalon Licence Effective Date, it shall waive
and release during the term of this Agreement its vendors, suppliers, contract
manufacturers and all other entities possessing Cephalon Confidential
Information and supplying or have supplied in the past to Cephalon raw
materials, products, components or services used in the manufacturing of ACTIQ
or ACTIQ SF from any and all obligations of confidentially as to Barr, and
Cephalon will facilitate the disclosure of any such Confidential Information to
Barr from such entities, which waiver, release and facilitated disclosure shall
specifically include, but not be limited to such entities supplying Skeepers,
application appliances or handles, compositions to permanently affix the
application appliances or handles to the tablet formulation of ACTIQ or ACTIQ
SF, and equipment and supplies for the manufacturing, assembling, packaging and
labeling of ACTIQ or ACTIQ SF.

 

8.5           Barr
covenants that during the term of the supply provisions of this Agreement, it
will use Commercially Reasonable Efforts to secure approval for and, as the
case may be, maintain such approval for, the manufacturing, marketing and sale of
Barr Generic Product and, to the extent Barr determines to avail itself of
Cephalon Supplied Product that is Substantially Sugar-free, Barr Generic SF
Product.

 

9.             CONFIDENTIALITY

 

9.1           Confidential Information.  During the term of this Agreement, and for
ten (10) years after its termination or expiration, each Party shall maintain
in confidence any information concerning the subject matter hereof provided by
the other Party (the “Providing Party”),
and that is considered to be confidential by the Providing Party, regardless of
whether provided prior to or after the date of this Agreement.  Such information (collectively, the “Confidential Information”) includes but is not
limited to documentation, business plans, cost and operational information,
whether or not related to ACTIQ, ACTIQ SF, a Barr Generic Product, a Barr
Generic SF Product, or Cephalon Supplied Products.  Confidential Information shall not be used or
disclosed to others except for carrying out the purpose of this Agreement.  The foregoing obligation of confidentiality
shall not apply to any portion of the Confidential Information that a Party (“Receiving Party”) can

 

 

demonstrate:

 

(a)           was
already known to the Receiving Party;

 

(b)           was
generally available to the public or otherwise part of the public domain at the
time of its disclosure;

 

(c)           became
generally available to the public or otherwise part of the public domain after
its disclosure to the Receiving Party, other than through any act or omission
of the Receiving Party in breach of this Agreement;

 

(d)           was
subsequently lawfully disclosed to the Receiving Party by a third party; or

 

(e)           the
Receiving Party was compelled to disclose by governmental administrative agency
or judicial requirements; provided, however, that any disclosure under this
subsection 9.1(e) shall neither relieve the Receiving Party from attempting to
impose confidentiality obligations on the governmental administrative agency or
judicial body, to the extent feasible, nor shall it relieve the Receiving Party
from maintaining the confidentiality of the Confidential Information with
respect to third parties other than the agency or body as to which such
compelled disclosure has been made.

 

9.2           Protection of Confidential Information.  The Parties shall take all reasonable steps
to eliminate the risk of disclosure of Confidential Information, including,
without limitation, ensuring that only employees, agents, and representatives
with a need to know the Confidential Information have access thereto.  The Parties acknowledge by the signing of
this Agreement that such employees, agents, and representatives are to be bound
by substantially similar obligations of confidentiality as are established
under this Article 9.

 

9.3           Presumptive Confidentiality of Information
Exchanged.  All information exchanged
by the Parties under the terms and conditions of this Agreement shall be
considered Confidential Information and treated as such unless otherwise
specified and agreed upon by the Parties; provided, however, that the fact of
this Agreement shall not be considered Confidential Information.  In addition, Cephalon and Barr shall consult
with one another before issuing, and provide each other the opportunity to
review and make reasonable comment upon, any press release or other public disclosure
under the Securities Act of 1934, as amended, with respect to this Agreement or
the terms hereof, and shall not issue any such disclosure without the prior
consent of the other party, which will not be unreasonably withheld or delayed;
provided that a party need not obtain the consent of the other party to make
public statements consistent with any press release or other public disclosure
that previously has been issued by or consented to by the other party and may
(but after prior consultation, to the extent practicable in the circumstances)
issue such disclosure as may be required by applicable law or stock exchange
rule.

 

 

10.          INDEMNIFICATION

 

10.1         Indemnification by Cephalon.  Cephalon shall indemnify and hold Barr, its
Affiliates and subsidiaries, and the officers, directors and employees of each
of them (“Barr Indemnitees”), harmless from any and all losses, liabilities,
obligations, claims, fees or expenses, including reasonable attorneys’ fees,
that stem from claims brought by third parties that are based upon (a) any
infringement by Cephalon Supplied Products of the intellectual property rights
of third parties; (b) the death or injury to person or damage to property
resulting directly from damaged or defective, or otherwise nonconforming Cephalon
Supplied Products at the time of delivery to Barr; (c) the material breach of
any representations or warranties made by Cephalon in Article 8 herein; (d) the
negligence, recklessness or willful misconduct of Cephalon or Cephalon’s
officers, employees or agents hereunder; (e) the failure by Cephalon to deliver
Cephalon Supplied Products in a timely manner as required under Section 6.1 of
this Agreement unless, and to the extent that, Cephalon can demonstrate that
their failure was entirely beyond the control of Cephalon and in no part the
result of negligence or willful misconduct by Cephalon; or (f) the successful
enforcement by Barr of its rights under this Section 10.1.  In addition, Cephalon shall not be obligated
to indemnify Barr for any liability related to the Cephalon Supplied Products
to the extent Barr has assumed an indemnification obligation under Section 10.2
below.

 

10.2         Indemnification by Barr.  Barr shall indemnify and hold Cephalon, its
Affiliates and subsidiaries, and the officers, directors and employees of each
of them (Cephalon Indemnitees”), harmless from any and all losses, liabilities,
obligations, claims, fees or expenses, including reasonable attorneys’ fees,
that stem from claims brought by third parties that are based upon (a) any
infringement by Barr Generic Product or Barr Generic SF Product of the
intellectual property rights of third parties or by Cephalon Supplied Products
relating to the packaging or labeling of Cephalon Supplied Products by Barr;
(b) the failure by Barr to make the royalty payments to the University of Utah
Research Foundation as set forth in Section 3.2, (c) the use or sale or other
distribution of Cephalon Supplied Products by Barr or its Affiliate in
violation of the terms of this Agreement; (d) any representation made or
warranty given by Barr or subdistributors with respect to the Cephalon Supplied
Products; (e) the death or injury to person or damage to property resulting
from (i) improper handling, storage or transport of the Cephalon Supplied Products
by Barr or any agents of the foregoing, (ii) the unauthorized alteration,
modification or adulteration of the Cephalon Supplied Products by Barr; (f) the
material breach of any representation or warranties made by Barr in Article 8
herein; (g) the negligence, recklessness or willful misconduct of Barr or Barr’s
officers, employees or agents hereunder; and (h) the successful enforcement by
Cephalon of its rights under this Section 10.2. 
In addition, Barr shall not be obligated to indemnify Cephalon for any
liability related to the Cephalon Supplied Products to the extent Cephalon has
assumed an indemnification obligation under Section 10.1 above.

 

10.3         Notification. 
In the event that one Party receives notice of a claim, lawsuit, or
liability for which it is entitled to indemnification by the other Party, the
Party receiving notice shall give prompt notification to the indemnifying
Party.

 

 

10.4         Cooperation. 
The Party being indemnified shall cooperate fully with the indemnifying
Party throughout the pendency of the claim, lawsuit or liability, and the
indemnifying Party shall have complete control over the conduct and disposition
of the claim, lawsuit, or liability.

 

11.          GENERAL

 

11.1         Headings. 
The headings and captions used herein are for the convenience of the
Parties only and are not to be construed to define, limit or affect the
construction or interpretation hereof.

 

11.2         Severability. 
In the event that any provision of this Agreement is found to be invalid
or unenforceable, then the offending provision shall not render any other
provision of this Agreement invalid or unenforceable, and all other provisions
shall remain in full force and effect and shall be enforceable, unless the
provisions which have been found to be invalid or unenforceable shall
substantially affect the remaining rights or obligations granted or undertaken
by either Party.

 

11.3         Entire Agreement.  This Agreement contains the entire agreement
of the Parties regarding the subject matter hereof and supersedes all prior
agreements, understandings or conditions (whether oral or written) regarding
the same.  This Agreement may not be
changed, modified, amended or supplemented except by a written instrument
signed by both Parties.  Nothing in this
Agreement shall prevent Barr from asserting that ACTIQ Patent Rights or ACTIQ
SF Patent Rights are invalid, unenforceable or will not be infringed by
manufacture, use, sale or offer for sale of the Barr Generic Product or Barr
Generic SF Product or Cephalon from asserting its rights against such
assertions by Barr, except as provided under Section 8.2(b) of this Agreement.

 

11.4         Assignment. 
This Agreement and the rights established hereunder may not be assigned
or transferred by either Party without the prior written consent of the other
Party; provided, however, that prior written consent shall not be required in
the case of a decision on the part of Barr to discontinue the sale of the ACTIQ
Licensed Product or ACTIQ SF Licensed Product and to assign all of Barr’s
rights thereto and obligations therefor under this Agreement to a third party;
or in the case of a sale or transfer of all or substantially all of the assets
of the assigning party or a merger of the assigning party in which the holders
of such party’s capital stock prior to such merger do not hold a majority of
the capital stock immediately following such merger.  In the event that this Agreement is assigned,
it shall be binding upon and inure to the benefit of the Parties and their
respective successors and assigns.

 

11.5         Independent Contractors.  The Parties are independent contractors under
this Agreement.  Nothing contained in
this Agreement is to be construed so as to create a joint venture or to
constitute Cephalon and Barr as partners, agents or employees of the other,
including with respect to this Agreement.  
Neither Party hereto shall have any express or implied right or
authority to assume or create any obligations on behalf of, or in the name of,
the other Party or to bind the other Party to any contract, agreement or undertaking
with any third party.  Each Party is
solely responsible for the payment of any and all taxes arising from the
existence or operation of its business or from the performance of its
obligations hereunder including, without limitation, income

 

 

taxes, withholding taxes, employee payroll
and social security and welfare taxes which may be imposed upon said Party in
accordance with applicable laws. 
Similarly, each Party is solely responsible for satisfying any and all
obligations which may arise from its employment of any persons.

 

11.6         Further Assurances.  Each Party hereto shall execute, acknowledge
and deliver such further instruments, and to take such other actions, as may be
necessary or appropriate in order to carry out the purposes and intent of this
Agreement.

 

11.7         Notices and Reports.  All notices, consents or approvals required
by this Agreement shall be in writing and sent by express courier, certified or
registered air mail, postage prepaid or by facsimile or cable (confirmed by
such certified or registered mail) to the Parties at the following addresses or
such other addresses as may be designated in writing by the respective
Parties.  Notices shall be deemed
effective on the date of mailing.

 

If to
Cephalon:

Cephalon, Inc.

145 Brandywine Parkway

West Chester, Pennsylvania 19380

Attention: Senior Vice President &
General Counsel

Facsimile: (610) 344-7563

 

If to Barr:

Barr Laboratories, Inc.

400 Chestnut Ridge Road

Woodcliff Lake, NJ  07677

Attention: 
President

Facsimile: (201) 930-3335

 

11.8         Disputes; Applicable Law 

 

(a)           Governing Laws.  This Agreement shall be governed by and
interpreted in accordance with the substantive laws of the State of Delaware,
United States of America.

 

(b)           Dispute Resolution.  In the event that any dispute arising between
the Parties relating to this Agreement cannot be resolved by their respective
staffs, said dispute shall be referred promptly to the Chief Executive Officer
of Cephalon and the Chief Executive Officer of Barr, who shall make a good
faith effort to resolve the matter within thirty (30) days from the date of any
such referral.  In the event that the
Parties still cannot amicably resolve any such dispute or claim, then the
parties shall be free to seek any remedy available at law or in equity.

 

11.9         Force Majeure. 
Either party’s failure to perform its obligations hereunder (except to
make payments hereunder) shall be excused to the extent and for the period of
time such

 

 

nonperformance is caused by an event of force
majeure, including but not limited to war, invasion, fire, explosion, flood,
riot, strikes, acts of God, delays or defaults of carriers, energy shortage,
failure or curtailment in Cephalon’s usual sources of supply, acts of
government (other than acts prohibiting the sale of Product resulting from
Cephalon’s failure to supply Cephalon Supplied Product in compliance with the
specifications or cGMPs (i.e., failure to comply with 21 C.F.R. §§210 and 211),
Cephalon’s violations of EPA laws, OSHA non-compliance of Cephalon (including
facilities) or Cephalon’s violations under 21 C.F.R. §11), its agencies or
instrumentalities, or contingencies or causes beyond such party’s reasonable
control.

 

11.10       Waiver. 
The waiver by either Party of a breach of any provisions contained
herein shall be effective only if made in writing and shall in no way be
construed as a waiver of any succeeding breach of such provision or the waiver
of the provision itself.

 

11.11       Counterparts. 
This Agreement may be executed in multiple counterparts, each of which
shall be considered and shall have the force and effect of an original.

 

 

IN WITNESS WHEREOF, the Parties have executed
this Agreement by their duly authorized representatives, as of the day and year
first above written.

 

 

	
  BARR LABORATORIES, INC.

  	
  CEPHALON, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Paul M.
  Bizaro

  	
   

  	
  By:

  	
  /s/ Frank
  Baldino, Jr.

  	
   

  
	
   

  	
   

  
	
  Print Name:

  	
  Paul M.
  Bizaro

  	
   

  	
  Print Name:

  	
  Frank
  Baldino, Jr.

  	
   

  
	
   

  	
   

  
	
  Title:

  	
  President
  & COO

  	
   

  	
  Title:

  	
  Chairman
  & CEO

  	
   

  
										

 

 

Exhibit A

 

University of Utah Research Foundation
License Agreement

 

[Filed as Exhibit 10.6 to the Registration
Statement on Form S-1 filed by Anesta Corp. on May 31, 1996 (File No.
33-72608)]

 

 

Exhibit B

 

Milestone Payment pursuant to Section 3.1

 

In consideration of the grant by Cephalon to
Barr of the ACTIQ Patent Rights License pursuant to Section 2.1(a), and as a
condition to the continued effectiveness of the ACTIQ Patent Rights License,
Barr shall pay to Cephalon a milestone payment of [**]dollars ($[**]) if Net
Sales during the period beginning on the Commercial Launch of a Barr Generic
Product, Barr Generic SF Product and/or a Cephalon Supplied Product and ending
on either (1) September 5, 2006, if Cephalon is not granted Pediatric
Exclusivity with respect to ACTIQ or (2) March 5, 2007, if Cephalon is granted
Pediatric Exclusivity with respect to ACTIQ equal or exceed $[**].  For purposes of this Exhibit B, the
calculation of Net Sales shall not include: (i) sales of Barr Generic Product
prior to the ACTIQ Patent Rights License Effective Date and (ii) sales of Barr
Generic SF Product prior to the ACTIQ SF Patent Rights License Effective Date.

 

Barr shall make such payment within [**]days
after the achievement of such milestone.

 

** Portions of this exhibit have been omitted
and filed separately pursuant to an application for confidential treatment
filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under
the Securities Exchange Act of 1934, as amended.

 

 

Exhibit C

Issued United States Patents

 

 

(i)            Patent
No. US 6,173,851;

 

(ii)           Patent
No. US 6,286,698; and

 

(iii)          Patent
No. US 6,264,981.

 

 

Exhibit D

Issued United States Patents

 

(i)            Patent
No. US 4,671,953;

 

(ii)           Patent
No. US 4,863,737;

 

(iii)          Patent
No. US 5,785,989;

 

(iv)          Patent
No. US 5,132,114; and

 

(v)           Patent
No. US 5,288,497.

 

 

Exhibit E

United States Patents Issuing from the
following United States Patent Applications

 

(i)            USSN
09/798,027 (filed 02/27/01);

 

(ii)           USSN
10/013,266 (filed 12/10/01);

 

(iii)          USSN
10/145,587 (filed 05/14/02).

 

 

Exhibit F

United States Patents Issuing from the following
United States Patent Applications

 

(i)            USSN
10/771,046 (filed 02/03/04).

 

 

Exhibit G

ACTIQ Risk Management Program

 

[**]

 

** This exhibit, totaling 76
pages, has been omitted and filed separately pursuant to an application for
confidential treatment filed with the Securities and Exchange Commission
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

 

 

Exhibit H

Letter by Cephalon to FDA Waiving Pediatric
Exclusivity as to Barr

 

Director

Office of Generic Drugs, HFD-600

Food and Drug Administration

Metro Park North II

7500 Standish Place

Rockville, MD 20855-2773

 

	
  RE:

  	
  NDA 20-747/S   
  ACTIQ, Fentanyl Citrate

  
	
   

  	
   

  	
  Waiver of
  Pediatric Exclusivity as to Barr Laboratories, Inc.

  

 

Cephalon, Inc. waives the
period of Pediatric Exclusivity under NDA 20-747, as to any Abbreviated New
Drug Application (ANDA) filed under Section 505(j) or New Drug Application
(NDA) filed under Section 505(b)(2), submitted by Barr Laboratories, Inc. that
references NDA 20-747 and relates to products containing fentanyl citrate.  Cephalon, as the holder of approved NDA
20-747, authorizes the Food and Drug Administration (FDA) to act upon such ANDA
or NDA submitted by Barr Laboratories, Inc.

 

Pursuant to Section 505A of the
Federal Food, Drug, and Cosmetic Act, as amended, the FDA issued a Notification
of Acceptance to Cephalon, Inc. on [  ]
that its Submission of Pediatric Study Reports - Pediatric Exclusivity
Determination Requested relating to the use of ACTIQ (fentanyl citrate) and
filed as NDA 20-747/S     on [  ] satisfies the requirements of Section 505A
and that Pediatric Exclusivity attaches to NDA 20-747 effective [  ].

 

Cephalon, Inc., as part of a
voluntary Consent Agreement under a Decision and Order of the Federal Trade
Commission made final on [  ], entered
into a License and Supply Agreement with Barr Laboratories, Inc., effective
[  ]. 
Subject to certain conditions of the License and Supply Agreement, which
have been met, Cephalon, Inc. agreed to grant to Barr Laboratories, Inc. a
license with respect to any Pediatric Exclusivity that may then exist or
thereafter arise with respect to ACTIQ and to notify the FDA that Cephalon has
waived Pediatric Exclusivity with respect to Barr Laboratories, Inc.  This letter, hereby, accordingly serves to
notify the FDA of waiver of Pediatric Exclusivity as to Barr Laboratories, Inc.
by Cephalon, Inc. under NDA 20-747.

 

If you have any questions,
please call [         ] at [         ].

 

Sincerely

 

CEPHALON, INC.

 

Cc:         President,
Barr Laboratories, Inc.Exhibit 10.1(b)

 

July 9, 2004

 

Barr Laboratories, Inc.

Two Quaker Road

P.O. Box 2900

Pomona, New York 10970

Attention: President

 

Re:          Amendment
No. 1 to License and Supply Agreement

 

Dear Sir:

 

This letter is to confirm our understanding concerning
an amendment to be made with respect to the License and Supply Agreement dated
as of July 7, 2004 (the “Agreement”), between Cephalon, Inc. (“Cephalon”) and
Barr Laboratories, Inc. (“Barr”).  All
terms not otherwise defined herein are used as defined in the Agreement.

 

The Agreement is hereby amended as follows:

 

1.             Section
1.21 of the Agreement, the “Barr-Cephalon License Effective Date,” is hereby
deleted in its entirety and replaced with the following:

 

“1.21  ‘Barr-Cephalon License Effective Date’
means the Consent Agreement Effective Date.”

 

2.             Except
as amended hereby, the Agreement remains in full force and effect.

 

If the foregoing accurately reflects your
understanding as to these matters, please indicate your agreement in the space
provided below, and return one fully-executed original to me.

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CEPHALON, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Paul Blake

  	
   

  
	
   

  	
  Name:

  	
  Paul Blake, FRCP

  
	
   

  	
  Title:

  	
  Sr. V.P., Clinical Research &

  
	
   

  	
   

  	
  Regulatory Affairs

  
	
   

  	
   

  
	
  Acknowledged and agreed to by:

  	
   

  
	
   

  	
   

  
	
  BARR LABORATORIES, INC.

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Frederick J. Killion

  	
   

  	
   

  
	
  Name: Frederick J. Killion

  	
   

  
	
  Title: Sr. VP and General Counsel

  	
   

  
							

 

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