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FORM N-CSR ITEM 10(c) EXHIBIT

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     The undersigned hereby certify in their capacity as Treasurer and
President, respectively, of Tax-Managed Small-Cap Growth Portfolio (the
"Portfolio"), that:

   (a)   the Semi-Annual Report of the Portfolio on Form N-CSR for the period
         ended April 30, 2003 (the "Report") fully complies with the
         requirements of Section 13(a) or 15(d) of the Securities Exchange Act
         of 1934, as amended; and

   (b)   the information contained in the Report fairly presents, in all
         material respects, the financial condition and the results of
         operations of the Portfolio for such period.

A SIGNED ORIGINAL OF THIS WRITTEN STATEMENT REQUIRED BY SECTION 906 HAS BEEN
PROVIDED TO THE PORTFOLIO AND WILL BE RETAINED BY THE PORTFOLIO AND FURNISHED TO
THE SECURITIES AND EXCHANGE COMMISSION OR ITS STAFF UPON REQUEST.

Date: June 18, 2003

/s/ Michelle A. Alexander
-------------------------
Michelle A. Alexander
Treasurer

Date: June 18, 2003

/s/ Duncan W. Richardson
------------------------
Duncan W. Richardson
PresidentQuickLinks
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Exhibit 4.5  

 
 

DEVELOPMENT AND MARKETING
  STRATEGIC ALLIANCE AGREEMENT
  AMONG
  ENDO PHARMACEUTICALS INC.
  SKYEPHARMA, INC.
  AND
  SKYEPHARMA CANADA INC.    
    

DATED AS OF

December 31, 2002  

  

 
 

TABLE OF CONTENTS    
    

	 
	 	 
	 	 
	 	Page

	1.	 	DEFINITIONS	 	1
	2.	 	THE DEVELOPMENT AND COMMERCIALIZATION PROGRAMS	 	6
	 	 	2.1	 	Overview of the Development Programs and Annual Development Plans	 	6
	 	 	2.2	 	SkyePharma Responsibilities under each Development Program	 	7
	 	 	2.3	 	Endo Responsibilities under each Development Program	 	8
	 	 	2.4	 	Overview of the Commercialization Programs	 	8
	 	 	2.5	 	Endo Responsibilities under each Commercialization Program	 	9
	 	 	2.6	 	SkyePharma Responsibilities under each Commercialization Program	 	12
	 	 	2.7	 	Conduct of Development Program and Commercialization Activities	 	13
	 	 	2.8	 	Recall	 	13
	 	 	2.9	 	Allocation of Payment Responsibilities under the Development Programs and Commercialization Programs	 	

13
	 	 	2.10	 	DepoBupivacaine Option	 	15
	 	 	2.11	 	DepoFoam-Pain Right of First Negotiation	 	16
	 	 	2.12	 	Mutual Expansion of Indications	 	17
	 	 	2.13	 	Supply Agreements and Quality Agreements	 	17
	3.	 	GOVERNANCE	 	17
	 	 	3.1	 	Joint Executive Committee	 	17
	 	 	3.2	 	Responsibilities of the Joint Executive Committee	 	17
	 	 	3.3	 	Meetings	 	19
	 	 	3.4	 	Decision-making	 	19
	 	 	3.5	 	Product Development Committee	 	20
	 	 	3.6	 	Joint Manufacturing Committee	 	21
	 	 	3.7	 	Committee Terms	 	22
	 	 	3.8	 	Expenses	 	22
	 	 	3.9	 	Alliance Managers	 	22
	4.	 	FEES, MILESTONES, AND FUNDING	 	23
	 	 	4.1	 	Up-front Payment	 	23
	 	 	4.2	 	Milestone Payments	 	24
	 	 	4.3	 	Sales Split	 	25
	 	 	4.4	 	Bartering Prohibited	 	26
	 	 	4.5	 	Bundling	 	26
	5.	 	PAYMENTS AND REPORTS	 	26
	 	 	5.1	 	Payments	 	26
	 	 	5.2	 	Sales Split Payments	 	26
	 	 	5.3	 	Mode of Payment	 	27
	 	 	5.4	 	Records Retention	 	27
	 	 	5.5	 	Payment and Other Audits	 	28
	 	 	5.6	 	Taxes	 	29
	6.	 	GRANT OF RIGHTS; RESTRICTIONS; OWNERSHIP; PATENTS	 	29
	 	 	6.1	 	License Grant to Endo	 	29
	 	 	6.2	 	License Grant to SkyePharma	 	30
	 	 	6.3	 	Retained Rights of SkyePharma	 	30
	 	 	6.4	 	Sublicensing; Subcontracting	 	30
	 	 	6.5	 	Restriction on Activities	 	31
	 	 	6.6	 	Ownership	 	31
	 	 	6.7	 	Patent Prosecution and Maintenance	 	32
	 	 	6.8	 	Patent and Trademark Enforcement	 	32
	 	 	 	 	 	 	 

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	 	 	6.9	 	Infringement Actions by Third Parties	 	34
	 	 	6.10	 	Federal Food, Drug and Cosmetic Act	 	34
	7.	 	ADVERSE REACTION REPORTING	 	35
	 	 	7.1	 	Adverse Reaction Reporting	 	35
	8.	 	REPRESENTATIONS AND WARRANTIES AND CONVENANTS	 	36
	 	 	8.1	 	Representations and Warranties of Both Parties	 	36
	 	 	8.2	 	Representations and Warranties of SkyePharma	 	37
	 	 	8.3	 	Disclaimer	 	37
	 	 	8.4	 	Freedom to Operate	 	38
	 	 	8.5	 	Negative Pledge	 	38
	9.	 	PUBLICATION; CONFIDENTIALITY	 	39
	 	 	9.1	 	Notification and Review with Respect to SkyePharma and Endo	 	39
	 	 	9.2	 	Confidentiality; Exceptions	 	40
	 	 	9.3	 	Exceptions to Obligation	 	40
	 	 	9.4	 	Remedies	 	40
	10.	 	INDEMNIFICATION; INSURANCE	 	41
	 	 	10.1	 	By SkyePharma	 	41
	 	 	10.2	 	By Endo	 	41
	 	 	10.3	 	Notice	 	42
	 	 	10.4	 	Complete Indemnification	 	42
	 	 	10.5	 	Insurance	 	42
	11.	 	TERM; TERMINATION	 	43
	 	 	11.1	 	Term	 	43
	 	 	11.2	 	Termination for Cause	 	43
	 	 	11.3	 	Termination in Connection with Bankruptcy	 	43
	 	 	11.4	 	Termination For Delay	 	43
	 	 	11.5	 	Termination For Failure to Achieve the Target Labeling	 	44
	 	 	11.6	 	Long-Term Inability to Supply	 	44
	 	 	11.7	 	Safety	 	44
	 	 	11.8	 	Other Termination	 	45
	 	 	11.9	 	Effect of Expiration or Termination	 	45
	 	 	11.10	 	Accrued Rights; Surviving Obligations	 	53
	12.	 	FORCE MAJEURE	 	54
	13.	 	MISCELLANEOUS	 	54
	 	 	13.1	 	Relationship of Parties	 	54
	 	 	13.2	 	Assignment	 	54
	 	 	13.3	 	Books and Records	 	54
	 	 	13.4	 	Further Actions	 	54
	 	 	13.5	 	Notice	 	55
	 	 	13.6	 	Use of Name	 	55
	 	 	13.7	 	Public Announcements	 	55
	 	 	13.8	 	Waiver	 	56
	 	 	13.9	 	Compliance with Law	 	56
	 	 	13.10	 	Severability	 	56
	 	 	13.11	 	Amendment	 	56
	 	 	13.12	 	Governing Law	 	56
	 	 	13.13	 	Arbitration	 	56
	 	 	13.14	 	Endo Right to Cure SkyePharma Breach	 	58
	 	 	13.15	 	Nature of Licenses	 	58
	 	 	13.16	 	Entire Agreement	 	58
	 	 	 	 	 	 	 

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	 	 	13.17	 	Liability Limitation	 	58
	 	 	13.18	 	Parties in Interest	 	58
	 	 	13.19	 	Descriptive Headings	 	59
	 	 	13.20	 	Counterparts	 	59

	 
	 	 
	 	 

	EXHIBIT A	 	FINANCIAL APPENDIX	 	A-1
	EXHIBIT B	 	TARGET LABELING	 	A-7
	EXHIBIT C	 	FORM OF PROPOFOL SUPPLY AGREEMENT	 	A-10
	SCHEDULE 3	 	INITIAL MEMBERS OF JOINT EXECUTIVE COMMITTEE	 	A-28
	SCHEDULE 8.1(e)	 	SCHEDULE OF EXCEPTIONS	 	A-29

iii

  

 
 

DEVELOPMENT, MARKETING AND STRATEGIC ALLIANCE AGREEMENT
  December 31, 2002 (the "Effective Date")    
    

        THIS DEVELOPMENT, MARKETING AND STRATEGIC ALLIANCE AGREEMENT (this "Agreement"), dated as of the date first
written above, is entered into by and among Endo Pharmaceuticals Inc., a corporation organized and existing under the laws of Delaware, having offices located at 100 Painters Drive, Chadds
Ford, PA 19317 ("Endo"), SkyePharma, Inc., a corporation organized and existing under the laws of the State of California, having offices located
at 10450 Science Center Drive, San Diego, CA 92121, for itself and on behalf of its subsidiaries, if any, and SkyePharma Canada Inc., a corporation organized and existing under the laws of
Canada, having offices located at 1000 chemin du Golf, Verdun, Quebec, H3E 1H4 Canada, for itself and on behalf of its subsidiaries (collectively, SkyePharma, Inc., SkyePharma
Canada Inc. and the subsidiaries of SkyePharma, Inc. and SkyePharma Canada Inc., "SkyePharma"). 

 
 

PRELIMINARY STATEMENTS    
    

        A.    SkyePharma
owns and has all right, title and interest in, or has acquired the exclusive rights to, the SkyePharma Product IP and SkyePharma Product Patents. 

        B.    SkyePharma
and Endo collectively possess specialized skills, knowledge, and expertise in the development, marketing and sale of products used in the treatment of pain and
desire to enter into a strategic alliance regarding the further development and the marketing of certain such products. 

        C.    SkyePharma
desires to continue its development of the Products and to apply its skills, knowledge and expertise toward obtaining the regulatory approval of such Products
under the terms and conditions set forth in this Agreement. 

        D.    Endo
desires to apply its skills, knowledge, and expertise in the marketing and sale of such Products under the terms and conditions set forth in this Agreement. 

        E.    Endo
desires to obtain an exclusive license to sell, offer to sell, import, and distribute such Products in the Territory, and SkyePharma desires to grant such exclusive
license to Endo, pursuant to the terms and conditions of this Agreement. 

        F.    Endo
desires to obtain from SkyePharma, and SkyePharma desires to provide to Endo, such Products in finished form to meet Endo's commercial requirements for such
Products, pursuant to the terms and subject to the conditions of (i) supply agreements by and between Endo and SkyePharma, Inc. (each such agreement, a "Supply
Agreement") and (ii) quality agreements governing the quality control procedures to be employed during the manufacture of the Products (each such agreement, a
"Quality Agreement"). 

        NOW,
THEREFORE, in consideration of the foregoing Preliminary Statements and the mutual agreements and covenants set forth herein, intending to be legally bound hereby, the Parties
hereby agree as follows: 

1.     DEFINITIONS.  

        As used in this Agreement and unless otherwise defined herein, the following terms shall have the meanings set forth in this Section 1: 

        "Adjusted $40 Million Milestone" shall have the meaning assigned to such term in Section 4.2. 

        "Agreement" shall have the meaning assigned to such term in the introductory paragraph of this Agreement. 

1

 

        "Affiliate," with respect to any Party, shall mean any entity controlling, controlled by, or under common control with, such Party, for
only so long as such control exists. For these purposes, "control" shall refer to: (i) the possession, directly or indirectly, of the power to direct the management or policies of an entity,
whether through the ownership of voting securities, by contract or otherwise, or (ii) the beneficial ownership, directly or indirectly, of more than 50% of the voting securities or other
ownership interest of an entity. 

        "Alliance Manager" shall have the meaning assigned to such term in Section 3.9. 

        "Allocable Overhead" shall have the meaning assigned to such term in the Financial Appendix. 

        "Annual Commercialization Plan" shall mean, as applicable, each plan and budget defined in Section 2.4(d) and, when used in the
plural, shall mean all such plans and budgets. 

        "Annual Development Plan" shall mean, as applicable, each plan defined in Section 2.1(b) and, when used in the plural, shall mean
all such plans. 

        "Audited Party" shall have the meaning assigned to such term in Section 5.5(a). 

        "Auditing Party" shall have the meaning assigned to such term in Section 5.5(a). 

        "Bankruptcy Case" shall mean a bankruptcy case (whether for liquidation or reorganization) under the Bankruptcy Laws with respect to
SkyePharma, Inc., SkyePharma Canada, Inc. or any of their respective Affiliates, successors or assignees. 

        "Bankruptcy Laws" shall mean Title 11 of the United Stated Code, 11 U.S.C. §§ 101-1330, as it may be
amended from time to time, any successor statute or any applicable state or foreign laws relating to bankruptcy, dissolution, liquidation, winding up or reorganization. 

        "Bankruptcy Rejection" shall mean the entry of an order in a Bankruptcy Case authorizing the rejection of this Agreement, a Supply
Agreement, a Quality Agreement or a Third Party Manufacturing Agreement, or any material portion of any such agreement, by SkyePharma, Inc., SkyePharma Canada, Inc. or any of their
respective Affiliates, successors or assignees, as debtor-in-possession or by such entity's bankruptcy trustee or any other person or entity authorized to exercise rejection
rights under 11 U.S.C. §365 or any other successor statute; provided, however, that nothing
in this Agreement shall be deemed an acknowledgement by any Party hereto that this Agreement, a Supply Agreement, a Quality Agreement or a Third Party Manufacturing Agreement may be rejected under the
Bankruptcy Laws. 

        "Breaching Party" shall have the meaning assigned to such term in Section 11.2. 

        "Canada" shall mean Canada, including its possessions and territories. 

        "cGMP" shall mean current Good Manufacturing Practice as defined in Parts 210 and 211 of Title 21 of the Code of Federal Regulations, as
may be amended from time to time, or any successor thereto. 

        "Commercialization Program" shall mean, as applicable, each Commercialization Program defined in Section 2.4(a) and, when used in
the plural, shall mean all Commercialization Programs for all Products. 

        "Confidential Information" shall have the meaning assigned to such term in Section 9.2. 

        "Cure Product" shall have the meaning assigned to such term in Section 2.5(b)(iii). 

        "Cure Sales Activities" shall have the meaning assigned to such term in Section 2.5(b)(iii). 

        "Cure Time Period" shall have the meaning assigned to such term in Section 2.5(b)(iii). 

        "Damages" shall have the meaning assigned to such term in Section 10.1. 

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        "DepoBupivacaine" shall mean SkyePharma's pharmaceutical composition having bupivacaine as its sole active ingredient encapsulated with
SkyePharma's DepoFoam® multivesicular liposomes technology to provide sustained release. 

        "DepoBupivacaine Notice" shall have the meaning assigned to such term in Section 2.10. 

        "DepoMorphine" shall mean SkyePharma's pharmaceutical composition having morphine sulfate as its sole active ingredient encapsulated with
SkyePharma's DepoFoam® multivesicular liposomes technology to provide sustained release. 

        "Development Costs" shall have the meaning assigned to such term in the Financial Appendix. 

        "Development Field" shall mean (a) with respect to DepoMorphine, [Confidential Information Has Been Omitted And
Furnished Separately To The Securities And Exchange Commission] (b) with respect to Propofol IDD-D, [Confidential Information Has Been Omitted And Furnished
Separately To The Securities And Exchange Commission] and (c) any other uses of DepoMorphine or Propofol IDD-D that are agreed upon by the Parties pursuant to
Section 2.12. 

        "Development Program" shall mean, as applicable, each Development Program defined in Section 2.1 and, when used in the plural,
shall mean all Development Programs for all Products. 

        "Distribution Costs" shall have the meaning assigned to such term in the Financial Appendix. 

        "Endo" shall have the meaning assigned to such term in the introductory paragraph of this Agreement. 

        "Effective Date" shall mean the date first written above. 

        "Exclusivity Field" shall mean [Confidential Information Has Been Omitted And Furnished Separately To The Securities And
Exchange Commission]. 

        "Executive Officers" shall have the meaning assigned to such term in Section 3.4(b). 

        "Expert" shall have the meaning set forth in Section 13.13(b)(i). 

        "FDA" shall mean the United States Food and Drug Administration or any successor agency. 

        "Financial Appendix" shall mean Exhibit A hereto. 

        "First Commercial Sale" shall have the meaning assigned to such term in the Financial Appendix. 

        "Freedom to Operate Opinions" shall mean those legal opinions delivered by SkyePharma to Endo prior to the Effective Date rendered by
SkyePharma's outside intellectual property counsel relating to whether the Parties are free to make, have made, use, sell, offer for sale and import the Products as contemplated by this Agreement
without infringing on any Third Party's intellectual property rights. 

        "Fully Loaded Costs" shall have the meaning assigned to such term in the Financial Appendix. 

        "GAAP" shall mean, with respect to Endo and SkyePharma, Inc., generally accepted accounting principles in the United States,
consistently applied, and, with respect to SkyePharma Canada Inc. and its consolidated Canadian subsidiaries, generally accepted accounting principles in Canada, consistently applied. 

        "HSR" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. 

        "IND" shall mean, with respect to the U.S., an effective Notice of a Claimed Investigational New Drug Exemption as defined in Title 21 of
the Code of Federal Regulations, and, with respect to every other country in the Territory, the equivalent of such notice for such country, in each case required to be on file with the applicable
Regulatory Authority in such country prior to the commencement of clinical trials of a product in humans in such country. 

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        "Indemnitee" shall have the meaning assigned to such term in Section 10.3. 

        "Infringement" shall have the meaning assigned to such term in Section 6.8(a). 

        "Invention" shall mean any new or useful process, compound, composition of matter, method of use or Know-how, whether or not
patentable, related to the Products, and any improvement, enhancement, modification or derivative work to any SkyePharma IP; in each case, conceived or first reduced to practice or first demonstrated
to have utility during the term of this Agreement by either Party or either Party's Affiliates, Sublicensees or Subcontractors in connection with the development or commercialization activities
contemplated in this Agreement. 

        "Inventory Write-offs" shall have the meaning assigned to such term in the Financial Appendix. 

        "Joint Executive Committee" or "JEC" shall have the meaning assigned to such term in
Section 3.1. 

        "Joint Manufacturing Committee" or "JMC" shall have the meaning assigned to such term in
Section 3.6(a). 

        "Know-how" shall mean any and all unpatented formulae, processes, trade secrets, technologies and know-how,
whether or not patentable, including, without limitation, synthesis, preparation, recovery and purification processes and techniques, control methods and assays, chemical data, toxicological and
pharmacological data and techniques, clinical data, medical uses, product forms and product formulations and specifications. 

        "Long-Term Inability to Supply" shall, with respect to a Product, have the meaning assigned to such term in the applicable
Supply Agreement. 

        "Manufacturing Standards" shall mean, with respect to a Product, cGMP and such additional manufacturing specifications or standards as may
be established by the JMC from time to time. 

        "Marketing Costs" shall have the meaning assigned to such term in the Financial Appendix. 

        "Marketing Trials" shall have the meaning assigned to such term in the Financial Appendix. 

        "Net Purchases" shall have the meaning assigned to such term in the Financial Appendix. 

        "Net Sales" shall have the meaning assigned to such term in the Financial Appendix. 

        "New Indication" shall have the meaning assigned to such term in Section 2.12. 

        "New Indication Development" shall have the meaning assigned to such term in Section 2.12. 

        "Non-breaching Party" shall have the meaning assigned to such term in Section 11.2. 

        "Original $40 Million Milestone" shall have the meaning assigned to such term in Section 4.2. 

        "Party" shall mean, as applicable, SkyePharma or Endo and, when used in the plural, shall mean SkyePharma and Endo. 

        "Patents" shall mean the patents and patent applications in any country in the Territory, together with any patents that may issue
therefor in any country in the Territory, including any and all extensions, renewals, continuations, continuations-in-part, divisions,
patents-of-additions, reissues, supplementary protection certificates or foreign counterparts of any of the foregoing and any patents based on applications that claim priority
from any of the foregoing; and a "Patent" shall be any one of the foregoing. 

        "Payment Period" shall have the meaning assigned to such term in Section 5.2. 

        "Person" shall mean an individual or a corporation, partnership, association, trust, or any other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof. 

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        "Product" shall mean, as applicable, DepoMorphine or Propofol IDD-D, and, when used in the plural, shall mean DepoMorphine and
Propofol IDD-D; in each case for application only in their respective Target Indications. 

        "Product Development Committee" or "PDC" shall have the meaning given to such term in
Section 3.5(a). 

        "Product Price" shall have the meaning assigned to such term in the Financial Appendix. 

        "Propofol" shall mean the nonbarbiturate sedative/anesthetic propofol. 

        "Propofol IDD-D" shall mean SkyePharma's pharmaceutical composition having Propofol in a 2% concentration as its sole active
ingredient formulated with SkyePharma's Insoluble Drug Delivery (IDD-DTM) technology. 

        "Quality Agreement" shall have the meaning assigned to such term in the Preliminary Statements and Section 2.13. 

        "Registration" shall mean, with respect to each country in the Territory, final approval of the Registration Application for a Product in
such country, which approval would allow the immediate marketing and sale of such Product in such country. 

        "Registration Application" shall mean any filing(s) made with the Regulatory Authority in any country in the Territory for regulatory
approval of the manufacture and sale, and pricing when applicable, of a Product in such country. 

        "Regulatory Authority" shall mean any United States or Canadian domestic (federal or state) or foreign court, commission or governmental,
regulatory or administrative body, board, bureau, agency, instrumentality, authority or tribunal or any subdivision thereof, including, but not limited to, the FDA and the authority(ies) in each
country in the Territory that are comparable to the FDA and have responsibility for granting regulatory approval for the manufacture, use and sale of a Product in such country, including but not
limited to pricing and reimbursement approvals. 

        "Regulatory Documentation" shall mean all submissions to Regulatory Authorities, including clinical studies, tests, and biostudies,
relating to the Products, including all INDs and NDAs, as well as all correspondence with Regulatory Authorities (registration and licenses, regulatory drug lists, advertising and promotion
documents), adverse event files, complaint files, manufacturing records and inspection reports. 

        "Sales Costs" shall have the meaning assigned to such term in the Financial Appendix. 

        "Serious Adverse Drug Experience" shall have the meaning assigned to such term in Section 7.1(b). 

        "Shortfall" shall have the meaning assigned to such term in Section 2.5(b)(iii). 

        "SkyePharma" shall have the meaning assigned to such term in the introductory paragraph of this Agreement. 

        "SkyePharma IP" shall mean all Know-how, trademarks and Patents owned or licensed by SkyePharma. 

        "SkyePharma Product IP" shall, with respect to a Product, mean all Know-how and trademarks owned or licensed by SkyePharma, to
the extent related to such Product. 

        "SkyePharma Product Patents" shall, with respect to a Product, mean all claims set forth in the Patents owned or licensed by SkyePharma
which are infringed by the making, having made, using, selling, offering for sale or importing of such Product. 

        "Special Arbitration Provisions" shall have the meaning assigned to such term in Section 13.13(b). 

5

 

        "Subcontractor" shall mean a Third Party with which a Party has entered into a contractual arrangement through which certain activities
for which such Party is responsible under this Agreement shall be carried out on behalf of such Party in accordance with Section 6.4. 

        "Sublicensee" shall mean a Third Party to which a Party has granted a sublicense under a license granted under this Agreement. 

        "Sufficient Supply" shall mean, with respect to a Product, at least [Confidential Information Has Been Omitted And Furnished
Separately To The Securities And Exchange Commission] of the commercial launch supplies of such Product as ordered by Endo in accordance with the applicable Supply Agreement. 

        "Supply Agreement" shall have the meaning assigned to such term in the Preliminary Statements and Section 2.13. 

        "Target Indications" shall have the meaning assigned to such term in Section 2.1(c). 

        "Target Labeling" shall have the meaning assigned to such term in Section 2.1(c). 

        "Territory" shall mean the U.S. and Canada. 

        "Third Party" shall mean any person who or which is neither a Party nor an Affiliate of a Party. 

        "United States" or "U.S." shall mean the United States of America, including its
possessions and territories. 

        "Units" shall have the meaning assigned to such term in the Financial Appendix. 

        "Valid Claim" shall mean any claim of any Patent issued or pending in a country in the Territory, which claim has not been held invalid or
unenforceable by decision of a court or other governmental agency of competent jurisdiction, unappealable or unappealed within the time allowed for appeal, and which is not admitted to be invalid in a
legally binding manner (through disclaimer or otherwise). 

2.     THE DEVELOPMENT AND COMMERCIALIZATION PROGRAMS.  

	2.1
	Overview of the Development Programs and Annual Development Plans.

	(a)
	The
"Development Program" for a Product with respect to each country in the Territory shall be comprised of all research, development,
and regulatory activities related to such Product in the applicable Development Field in the applicable country in the Territory up through the first Registration of such Product in such country in
the Territory and all filings, reports and related regulatory interactions and Phase IV studies required by a Regulatory Authority to maintain such first Registration. For the avoidance of doubt, the
scope of each Development Program of a Product shall at all times be limited to the Target Indications applicable to such Product and shall not extend to any other indication unless such indication
becomes a Target Indication pursuant to Section 2.12. SkyePharma shall be solely responsible for the execution of all Development Programs. 

6

 

	(b)
	For
each Product through such Product's first Registration and completion of any Phase IV studies required by a Regulatory Authority to maintain such first Registration, SkyePharma
shall prepare and deliver to the JEC a proposed Annual Development Plan for each calendar year. SkyePharma shall deliver the initial proposed Annual Development Plan to the JEC as soon as practicable
following the Effective Date (but no later than March 1, 2003), and thereafter, each successive proposed Annual Development Plan shall be due not later than November 1st of each calendar
year during the Development Program (for the immediately following calendar year). For purposes hereof, a "Annual Development Plan" shall mean a plan of
the research, development, and regulatory activities to be undertaken during the upcoming calendar year as part of each Product's Development Program and shall be prepared by SkyePharma and subject to
the approval of JEC in accordance with this Agreement. Such Annual Development Plan shall include a description of the goals and scope of such actions and a timeline and budget for undertaking the
same. Once an Annual Development Plan with respect to a Product proposed by SkyePharma has been approved by the JEC pursuant to this Agreement, it shall be deemed an "Annual
Development Plan" for such Product.

	(c)
	The
initial indications and labeling that will be pursued in the course of the Development Program for each Product is set forth on Exhibit B (the
"Target Indications" and "Target Labeling", respectively). From time to time, the parties may add to or
otherwise change the Target Labeling for each Product only pursuant to Section 2.12, or otherwise by mutual written agreement.

	2.2
	SkyePharma Responsibilities under each Development Program.    As part of the Development Program for a particular Product,
in accordance with the applicable Annual Development Plan, SkyePharma shall:

	(a)
	use
commercially reasonable efforts to conduct such research and development activities necessary or desirable to obtain Registration approval for the Products for the Target
Indications in the applicable country in the Territory, all as approved by the Joint Executive Committee, including without limitation, formulation development, pre-Registration clinical
trials, toxicology studies and post-Registration studies required to be conducted by Regulatory Authorities to maintain the first Registration of the Product;

	(b)
	use
commercially reasonable efforts to manufacture, or have manufactured, and supply the Product(s) in bulk form for use in the Development Programs;

	(c)
	use
commercially reasonable efforts to consult with and keep the PDC informed during the Development Program through regular, periodic written reports, which may be brief summaries,
to be delivered at least once in each calendar quarter, of all development progress made by SkyePharma in such calendar quarter with respect to all Products;

	(d)
	prepare,
file and maintain with the applicable Regulatory Authorities those regulatory filings (approved by the Joint Executive Committee) to obtain and maintain the first
Registration necessary to market and sell the Products for the Target Indications in the applicable country in the Territory;

	(e)
	conduct
the Development Program in good scientific manner, and in compliance in all material respects with all requirements of applicable laws, rules and regulations, and all other
requirements of any applicable cGMP, good laboratory practice and current good clinical practice to use commercially reasonable efforts to achieve the objectives of the Development Programs
efficiently and expeditiously; 

7

 

	(f)
	maintain
records, in sufficient detail and in good scientific manner, which shall be complete and accurate and shall fully and properly reflect all work done and results achieved in
connection with the Development Programs in the form required under all applicable laws and regulations. Endo shall have the right, during normal business hours and upon reasonable prior written
notice, to inspect all such records at its own expense, so long as doing so is not unreasonably disruptive. Endo shall maintain such records and information contained therein in confidence in
accordance with Section 9 and shall not use such records or information except to the extent otherwise permitted by this Agreement;

	(g)
	remain
in compliance with all filing requirements to and for applicable Regulatory Authorities and maintain all required filings in accordance with applicable law and rules and
regulations of the applicable Regulatory Authorities;

	(h)
	use
commercially reasonable efforts to provide Endo with complete copies (or copies of relevant portions) of, and grant Endo, free of charge, the right to cross-reference any INDs,
Registration Applications, Registrations or other regulatory filings made or held for the applicable Target Indications in the applicable Development Field in the Territory; in each case, solely to
assist Endo in the performance of its obligations under the Development Programs;

	(i)
	use
commercially reasonable efforts to keep the JEC reasonably promptly advised regarding any material development regarding Registration or marketing activities with respect to any
Product outside of the Territory to the extent SkyePharma's rights to do so are not limited by contractual obligations; and

	(j)
	use
commercially reasonable efforts to perform such other responsibilities with respect to the Development Programs as may be reasonably requested by the Joint Executive Committee
pursuant to this Agreement or as may be mutually agreed upon by the Parties from time to time.

	2.3
	Endo Responsibilities under each Development Program.    As part of the Development Program for a particular Product, in
accordance with the applicable Annual Development Plan, Endo shall use commercially reasonable efforts to perform such responsibilities with respect to such Development Program as may be mutually
agreed upon by the Parties from time to time; provided, that, any development activities undertaken by
Endo hereunder shall be invoiced to SkyePharma, no more frequently than [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange
Commission], at Endo's Fully Loaded Costs, and SkyePharma shall pay the portions of such invoices not subject to a good faith dispute within [Confidential Information Has Been
Omitted And Furnished Separately To The Securities And Exchange Commission] after receipt of same. Any amount subject to a good faith dispute shall be paid promptly after, and in no event
more than ten business days following, resolution of such dispute.

	2.4
	Overview of the Commercialization Programs.

	(a)
	The
"Commercialization Program" for each Product shall be comprised of all marketing, advertising, promotional, launch (including
pre-launch marketing) and sales activities related to the applicable Target Indications of such Product in the applicable Development Field in the applicable country in the Territory.

	(b)
	Endo,
either itself and/or by and through its Affiliates, Sublicensees and Subcontractors, shall be responsible for, and except for the rights specifically granted to SkyePharma in
Section 2.5(b) of this Agreement, shall have the exclusive right to engage in, all activities comprising the Commercialization Program for each Product. 

8

 

	(c)
	Endo
shall select and determine the trademarks, trade names and logos under which each Product shall be marketed and sold in the Territory.

	(d)
	The
costs actually incurred by Endo in conducting the activities comprising the Commercialization Programs for the Products shall be reported by Endo to SkyePharma in accordance with
the Financial Appendix. Beginning one year prior to the anticipated commercial launch of each Product in each country, and thereafter, not later than November 1st of each calendar year during
the Development Program for such Product and throughout the Commercialization Program for such Product, Endo shall prepare and deliver to the JEC a proposed plan for the marketing and sales activities
expected to be undertaken during the upcoming calendar year as part of each Product's Commercialization Program with regard to each country in the Territory and a timeline and budget for undertaking
the same (each such plan for each Product, an "Annual Commercialization Plan"). Without limiting the foregoing, each Annual Commercialization Plan for a
Product shall contain annual forecasts of sales, production requirements, annual marketing plans, Marketing Trials, and the number of primary details that are to be provided for such Product. Once an
Annual Commercialization Plan with respect to a Product proposed by Endo has been approved by the JEC pursuant to this Agreement, it shall be deemed an "Annual
Commercialization Plan" for such Product.

	2.5
	Endo Responsibilities under each Commercialization Program.

	(a)
	Without
limiting Endo's obligations set forth in Section 2.5(b) or Section 2.5(c):

	(i)
	Endo
shall launch each Product in the United States within six months following Registration of such Product in the United States; provided,
however, Endo's obligation to launch a Product in the United States shall be excused for so long as SkyePharma fails to provide Endo with a Sufficient Supply of such Product.
By way of clarification and not in derogation of the materiality of any other Section hereof, any breach of this Section 2.5(a)(i) by Endo shall be deemed to be a material breach of a
material obligation of this Agreement.

	(ii)
	After
the launch of a Product in each country in the Territory, Endo shall commercialize such Product in such country using a level of diligence and resources
substantially similar to those that Endo applies to comparable Endo products in such country, taking into account the sales and profitability potential of such Product and the level of supply of such
Product. The Commercialization Program and each Annual Commercialization Plan for each Product shall reflect this level of diligence and resources Endo is hereby committing to use in the
commercialization of each Product.

	(b)
	Without
limiting Endo's obligations set forth in Section 2.5(a) or Section 2.5(c):

	(i)
	If
Endo fails to provide a minimum of [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange
Commission] of the number of prescriber primary details set forth in the applicable Annual Commercialization Plan for such Product, SkyePharma may, but shall not be required to, cure some
or all of the shortfall below the number of prescriber primary details set forth in the applicable Annual Commercialization Plan for such Product during the following calendar year in accordance with
Section 2.5(b)(iii); or 

9

 

	(ii)
	If
Endo fails to provide a minimum of [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange
Commission] of the number of prescriber primary details set forth in the applicable Annual Commercialization Plans for such Product for each of two consecutive calendar years, SkyePharma
may, but shall not be required to, cure some or all of the shortfall below the number of prescriber primary details set forth in the applicable Annual Commercialization Plans for such Product during
the following two consecutive calendar years in accordance with Section 2.5(b)(iii).

	(iii)
	In
the event SkyePharma has the right to cure a shortfall under Section 2.5(b)(i) or Section 2.5(b)(ii) (the
"Shortfall") with respect to any Product (a "Cure Product"), SkyePharma may, but shall not be required
to, cure some or all of the Shortfall during the time period specified in Section 2.5(b)(i) or Section 2.5(b)(ii), as the case may be, (the "Cure Time
Period") in the following manner. During the Cure Time Period, SkyePharma, at its option, shall have the right to select from either or a combination of the following
(collectively, the "Cure Sales Activities"):

	(1)
	SkyePharma,
itself or through any other Person reasonably acceptable to Endo, shall have the right to sell or have sold the Cure Product in the Territory by having prescriber primary
details performed with respect to the Cure Product in the Territory for the benefit of the Parties. Upon receipt by Endo of written notice from SkyePharma as to the identity of the Person that
SkyePharma proposes would sell Cure Products, Endo shall promptly notify SkyePharma whether such Person is acceptable. Sales of a Product arising from such Cure Sales Activities shall be included in
Net Sales of such Product. Endo shall, at Endo's expense, provide SkyePharma with all reasonably necessary or useful assistance to enable SkyePharma to coordinate and undertake such Cure Sales
Activities. Such assistance shall include, but not be limited to, providing access to, copies of and the right to use prescriber target lists, prescriber marketing materials, prescriber marketing
plans and prescriber marketing presentations related to the Cure Product as well as advice and recommendations on which sales representatives, sales organizations and sales methods would most likely
prove most beneficial to promote sales of the Cure Product.

	(2)
	SkyePharma
shall have the right to require Endo to provide additional prescriber primary details up to the amount of the Shortfall, with respect to the Cure Product in the Territory
for the benefit of the Parties. 

10

 

	(iv)
	Endo
shall pay [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] of SkyePharma's
Fully Loaded Costs for the Cure Sales Activities. Endo shall pay SkyePharma such amounts within [Confidential Information Has Been Omitted And Furnished Separately To The Securities And
Exchange Commission] days of being invoiced for such costs by SkyePharma. For the avoidance of doubt, no Cure Sales Activities shall reduce the number of prescriber primary details
otherwise required to be performed by Endo under any Annual Commercialization Plan. Pursuant to Section 5.5(a), SkyePharma may audit the number of prescriber primary details performed by Endo
as compared to that which is required to be performed in an applicable Annual Commercialization Plan for a Product. Pursuant to Section 5.5(a), Endo may audit SkyePharma's Cure Sales
Activities. Within [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] after the end of each calendar year, Endo
shall certify the number of prescriber primary details provided with respect to each Product in each country within the Territory during the past calendar year, stating the magnitude of any Shortfall
that may exist and the reasons for any such Shortfall. The decision by SkyePharma to exercise its rights under this Section 2.5(b) shall not be deemed to obligate SkyePharma to perform for Endo
in the future, but shall constitute a waiver of any other rights or remedies SkyePharma may have under this Agreement with respect to Endo's specific failure to provide the minimum prescriber primary
details required by Section 2.5(b)(i) and Section 2.5(b) (ii) that triggered SkyePharma's ability to exercise its rights under this Section 2.5(b).

	(c)
	Without
limiting Endo's obligations set forth in Section 2.5(a) or Section 2.5(b), as part of the Commercialization Program for a Product, in accordance with the
applicable Annual Commercialization Plan, Endo shall:

	(i)
	use
commercially reasonable efforts to perform pre-commercialization analysis, planning, market preparation, and related marketing activities for the
relevant country in the Territory;

	(ii)
	use
commercially reasonable efforts to carry out the distribution, marketing and sales of each Product for the applicable Target Indications in the applicable
Development Field in the Territory;

	(iii)
	use
commercially reasonable efforts to conduct phase IV clinical trials and marketing studies as Endo deems necessary or useful for commercialization of each Product;

	(iv)
	conduct
the Commercialization Program in compliance in all material respects with applicable laws, rules and regulations;

	(v)
	maintain
records, which shall be complete and accurate in all material respects and shall fully and properly reflect all revenues and expenses in connection with the
Commercialization Programs. SkyePharma shall have the right, during normal business hours and upon reasonable prior written notice, to inspect all such records at its own expense, so long as doing so
is not unreasonably disruptive. SkyePharma shall maintain such records and information contained therein in confidence in accordance with Section 9 and shall not use such records or information
except to the extent otherwise permitted by this Agreement;

	(vi)
	use
commercially reasonable efforts to consult with and keep the Joint Executive Committee informed, through regular, periodic written reports, which shall be brief
summaries, to be delivered at least once in each calendar quarter, of all such activities conducted in such preceding calendar quarter; 

11

 

	(vii)
	use
commercially reasonable efforts to undertake, and have primary responsibility for, the filing of marketing materials with the Regulatory Authorities;

	(viii)
	assure
appropriate reporting of adverse events to SkyePharma in accordance with Section 7; and

	(ix)
	use
commercially reasonable efforts to perform such other responsibilities with respect to the Commercialization Program as may be reasonably requested by the Joint
Executive Committee pursuant to this Agreement or as may be mutually agreed upon by the Parties from time to time.

	2.6
	SkyePharma Responsibilities under each Commercialization Program.    As part of the Commercialization Program for a Product,
in accordance with the applicable Annual Commercialization Plan, SkyePharma shall use commercially reasonable efforts to:

	(a)
	except
as set forth in Section 2.5(c)(vii), undertake all communications with the applicable Regulatory Authorities regarding the Product in the applicable Development Field in
the Territory;

	(b)
	except
as set forth in Section 2.5(c)(vii), maintain all regulatory filings in good order, including timely filing of required reports regarding the Product in the applicable
Development Field in the Territory;

	(c)
	manufacture
or have manufactured finished Product, package, label and quality release such finished Product, and supply to Endo or its designees for use and sale in the Territory, and
only to Endo or its designees for use and sale in the Territory, all of Endo's requirements for the Product pursuant to the applicable Supply Agreement;

	(d)
	develop
a second source of supply for each Product in accordance with the applicable Supply Agreement;

	(e)
	continue
to provide Endo with complete copies (or copies of relevant portions) of, and hereby grant Endo, free of charge, the right to cross-reference any INDs, Registration
Applications, Registrations or other regulatory filings made or held in the applicable Target Indications in the applicable Development Field in the Territory for such Products, in each case in order
to enable Endo to undertake its responsibilities under the Commercialization Program; and

	(f)
	perform
such other activities with respect to the Commercialization Program as the Parties mutually agree in writing are necessary or useful from time to time;  provided, that, any such other activities undertaken by SkyePharma with respect to the Commercialization
Program shall (unless otherwise agreed by the Parties) be invoiced to Endo, no more frequently than [Confidential Information Has Been Omitted And Furnished Separately To The Securities
And Exchange Commission], at SkyePharma's Fully Loaded Costs, and Endo shall pay the undisputed portions of such invoices within [Confidential Information Has Been Omitted And
Furnished Separately To The Securities And Exchange Commission]days after receipt of same. Any disputed amounts shall be paid promptly after, and in no event more than
[Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] business days following, resolution of such dispute. 

12

 

	2.7
	Conduct of Development Program and Commercialization Activities.    Each Party, acting in accordance with this
Section 2, the relevant Annual Development Plan and relevant Annual Commercialization Plan, when applicable, shall:

	(a)
	reasonably
cooperate with the other Party, as requested by the Party with primary responsibility over the applicable Annual Development Plan or Annual Commercialization Plan, as the
case may be, to implement all such plans and such other activities that, from time to time, the Joint Executive Committee decides are necessary or useful for the commercial success of any of the
Development Programs or the Commercialization Programs;

	(b)
	allow
representatives of the other Party, upon reasonable prior written notice and during normal business hours, to visit such Party's facilities where any Development Program or
Commercialization Program is being conducted, and consult, during such visits and by telephone, with such Party's personnel performing work on any Development Program or Commercialization Program, so
long as such visits and consultations are not unreasonably disruptive. The other Party shall maintain any information received (whether by observation or otherwise) during such visit in confidence in
accordance with Section 9 and shall not use such information except to the extent otherwise permitted by this Agreement.

	2.8
	Recall.    In the event that a Party becomes aware that a Product may not comply with applicable rules and regulations
(either by notification from a Regulatory Authority or otherwise), such Party shall promptly notify the other Party and the Joint Executive Committee shall undertake an appropriate investigation and
make a determination with respect to the disposition of any such matter. If any Party is required, or should Joint Executive Committee deem it appropriate, to recall any Product, the Parties shall
mutually agree upon a recall plan and SkyePharma shall bear all costs and expenses (including all Fully Loaded Costs reasonably incurred by Endo) associated with conducting such recall in accordance
with such recall plan, unless such recall results predominantly from Endo's material breach of its obligations under this Agreement or unless such recall otherwise predominantly results from the gross
negligence or wrongful intentional acts or omissions of Endo, in which case Endo shall bear all costs and expenses associated with such recall. In all cases, each Party shall take all commercially
reasonable actions necessary to implement any recall of any Product.

	2.9
	Allocation of Payment Responsibilities under the Development Programs and Commercialization Programs.

	(a)
	SkyePharma
shall pay for all costs (including, without limitation, the Development Costs) it incurs under and as part of each Development Program as well as the Fully Loaded Costs, if
any, incurred by Endo in providing services as part of a Development Program that SkyePharma expressly agreed that Endo should so provide. For the avoidance of doubt, SkyePharma shall not be required
to pay the costs of any Marketing Trials. 

13

 

	(b)
	SkyePharma
shall pay Endo [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] in respect of the
first calendar year, on the [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] day following the First Commercial
Sale of the first Product launched by Endo under this Agreement; which shall be paid only if, as of the time such payment is due, Endo is in substantial compliance with the Annual Commercialization
Plan applicable to such Product, which, if this is not the case, such payment obligation shall be suspended (but not eliminated) until such non-compliance is corrected by Endo. SkyePharma
shall pay Endo an additional [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission], in respect of the second calendar
year, on the [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] day of the calendar year immediately following the
First Commercial Sale of the first Product launched by Endo under this Agreement; which additional [Confidential Information Has Been Omitted And Furnished Separately To The Securities And
Exchange Commission] shall be paid only if, as of the time such payment is due, Endo is in substantial compliance with the Annual Commercialization Plan applicable to such Product, which,
if this is not the case, such payment obligation shall be suspended (but not eliminated) until such non-compliance is corrected by Endo. The Parties acknowledge and agree that each such
payment made by SkyePharma under this Section 2.11(b) shall be made in relation to marketing activities undertaken by Endo in the calendar year in which such payment is made by SkyePharma.

	(c)
	Endo
shall pay for all costs it incurs under and as part of each Commercialization Program as well as the Fully Loaded Costs, if any, incurred by SkyePharma as part of each
Commercialization Program other than those obligations expressly set forth in Sections 2.6(a)-(e) (inclusive); provided,  that, Endo has first agreed in
writing that SkyePharma should provide such services. For the avoidance of doubt, Endo shall not at any time be
financially responsible for any Development Costs or any of SkyePharma's obligations pursuant to Sections 2.6(a)-(e) (inclusive). Endo shall deduct from each sales split payment made hereunder an
amount equal to the total actual expense incurred by Endo in connection with the supply of Product during such period. 

14

 

	2.10
	DepoBupivacaine Option.    With respect to DepoBupivacaine, upon SkyePharma's submission of a written request for a
end-of-Phase II meeting with the FDA, SkyePharma shall immediately notify Endo and provide a draft of the submission it plans to provide for such meeting, including, but not
limited to, the results of the Phase II clinical study and draft proposed protocols or draft proposed protocol outlines for the pivotal Phase III clinical studies (collectively, the
"DepoBupivacaine Notice"). SkyePharma shall give Endo the opportunity to comment on its end-of-Phase II submission before filing
it with the FDA and shall consider such comments in good faith. Endo shall have the exclusive option, beginning upon receipt of the DepoBupivacaine Notice, of entering into negotiations regarding a
definitive agreement that would incorporate DepoBupivacaine as a Product under this Agreement. Endo shall exercise such option by giving SkyePharma notice of its exercise within
[Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] days of receipt of the DepoBupivacaine Notice from SkyePharma. If
Endo elects not to exercise such option within the initial [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission]day
time period, (a) Endo shall promptly provide SkyePharma with notice acknowledging Endo's failure to exercise such option, and (b) SkyePharma shall not have any further obligation to Endo
regarding DepoBupivacaine. If Endo does exercise such option within the initial [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange
Commission]day period, the Parties shall promptly begin negotiating the terms of such transaction, and the terms under which DepoBupivacaine will be developed and commercialized. Unless
and until the Parties enter into a definitive agreement following the exercise of the aforementioned option which provides otherwise, SkyePharma may, at any time, elect, in its sole discretion, to
accelerate, suspend, abandon or otherwise change its development of DepoBupivacaine. If, despite each Party's good faith efforts, the Parties are not able to reach agreement on and do not execute such
a definitive agreement within [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] days from the date Endo exercises
its option, SkyePharma shall be free to continue with the development and commercialization of DepoBupivacaine without obligation to Endo; provided,  that,
for a period of [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange
Commission] after the cessation of such negotiations, SkyePharma shall not be permitted to enter into a commercialization or similar agreement relating to DepoBupivacaine with a Third
Party on terms more favorable to such Third Party than the terms last offered by Endo, determined based on net present value of such terms. At least [Confidential Information Has Been
Omitted And Furnished Separately To The Securities And Exchange Commission] business days prior to entering into a commercialization or similar agreement relating to DepoBupivacaine with a
Third Party during such [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] period, SkyePharma shall provide to Endo
a certification with supporting calculations to evidence compliance with the provisions in the previous sentence. Endo shall be entitled as a matter of right to equitable relief, including injunction
and specific performance, in any court of competent jurisdiction in the event of a breach by SkyePharma of its obligations under this section. 

15

 
	2.11
	DepoFoam-Pain Right of First Negotiation.    In the event SkyePharma intends to pursue the development of any
product that makes use of SkyePharma's DepoFoam technology for the prophylaxis or treatment of pain (other than (i) DepoBupivacaine or (ii) a product having as an active ingredient a new
chemical entity, the making, using, selling or offering for sale of which is, at least in part, covered or claimed by a Patent owned or controlled by a Third Party), SkyePharma shall give Endo prompt
written notice of such intent and Endo shall, within [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] days after
receipt of such notice, notify SkyePharma in writing whether it is interested in discussing jointly undertaking and/or funding such development activities. If Endo fails to exercise such right within
the initial [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission]day time period, (a) Endo shall promptly
provide SkyePharma with notice acknowledging Endo's failure to exercise such right, and (b) SkyePharma shall not have any further obligation to Endo regarding such product,  provided, that, such product is not subject to the restrictions on activities set forth in
Section 6.5. If, within [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] days after such original notice to
Endo, Endo gives SkyePharma notice of its interest in discussing jointly undertaking and/or funding such development activities, the Parties shall enter into negotiations regarding such joint
undertaking. If, despite each Party's good faith efforts, the Parties are not able to reach agreement on and do not execute (i) a non-binding term sheet within
[Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] days from the date Endo exercises its right under this
Section 2.11, or (ii) a definitive agreement within [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission]
days from the date Endo exercises its right under this Section 2.11, then for a period of [Confidential Information Has Been Omitted And Furnished Separately To The Securities And
Exchange Commission] after the cessation of such negotiations, SkyePharma shall not be permitted to enter into a commercialization or similar agreement relating to such product with a
Third Party on terms more favorable to such party than the terms last offered by Endo, determined based on net present value of such terms. At least [Confidential Information Has Been
Omitted And Furnished Separately To The Securities And Exchange Commission] business days prior to entering into a commercialization or similar agreement relating to such product with a
Third Party during such [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] period, SkyePharma shall provide to Endo
a certification with supporting calculations to evidence compliance with the prior sentence. Endo shall be entitled as a matter of right to equitable relief, including injunction and specific
performance, in any court of competent jurisdiction in the event of a breach by SkyePharma of its obligations under this section. 

16

 
	2.12
	Mutual Expansion of Indications.    In the event that the Parties mutually agree in writing to develop a Product in the
Development Field, and/or proceed with testing and preparation and filing with the applicable Regulatory Authorities those regulatory filings necessary to obtain the first Registration of such a
Product, in each case, for indications in the Development Field other than the then-applicable Target Indications, including without limitation any addition to or expansion of any Target
Indication (such indication, a "New Indication" and such development, "New Indication Development"),
such New Indication Development shall automatically, and without any further action by the Parties hereto, be made and conducted under the terms of this Agreement. However, the sales split obligations
applicable to such Product shall be equitably adjusted, and the Development Costs of the Development Program relating to such New Indication shall be shared between the Parties, in the manner, and
subject to any further conditions, agreed to in writing by the Parties. Once agreement has been reached on all such matters, the New Indication shall become a Target Indication for the applicable
Product in question. In the event that the Parties are unable to agree upon sales split payments, Development Costs or any other aspect of the New Indication or New Indication Development, the Parties
shall refer such matters to the JEC for resolution; provided the Parties agree that the JEC must reach a unanimous consensus regarding such matters and the resolution of such matter may not be
referred by action of either Party alone to arbitration for resolution.

	2.13
	Supply Agreements and Quality Agreements.    Endo and SkyePharma, Inc. shall enter into a Supply Agreement and a
Quality Agreement on even date herewith with respect to the supply and manufacture of DepoMorphine. As soon as practicable after the Effective Date, the Parties shall enter into, with one another
and/or a Third Party, a Supply Agreement and a Quality Agreement with respect to the supply and manufacture of Propofol IDD-D. The Propofol IDD-D Supply Agreement shall be in
the form annexed to this Agreement as Exhibit C with such changes as may be agreed to by the Parties. The Propofol IDD-D Quality Agreement shall as much
as practicable be based upon the DepoMorphine Quality Agreement and shall be negotiated and entered into in good faith by the Parties. 

3.     GOVERNANCE  

	3.1
	Joint Executive Committee.    The Parties hereby establish a joint executive committee (the "Joint
Executive Committee" or "JEC"), which shall have general oversight duties with respect to the Parties' activities hereunder. The
JEC shall consist of six members, namely, three members from each of SkyePharma and Endo. The initial members of the JEC are specified on Schedule 3. Each of
SkyePharma and Endo may replace any or all of its representatives on the JEC at any time upon written notice to the other in accordance with Section 13.5 of this Agreement. Any member of the
JEC may designate a substitute with due authority to temporarily attend and perform the functions of that member at any meeting of the JEC. SkyePharma and Endo each may, in its sole discretion but
subject to the written objection of the other Party (with demonstrable reason for objection), invite to attend meetings or portions of such meetings of the JEC a reasonable number of
non-member representatives of such Party (including, without limitation, its employees or non-employee professional advisors), who have a reasonable purpose for attending such
meeting or portion of such meeting. The JEC shall be co-chaired by a representative of each of SkyePharma and Endo, as such representative may be changed by the designating Party at any
time. The co-chairpersons shall appoint a secretary of the JEC, and such secretary shall serve for such term as designated by the co-chairpersons.

	3.2
	Responsibilities of the Joint Executive Committee.    The Joint Executive Committee shall:

	(a)
	coordinate
overall strategy for the development and commercialization efforts described in this Agreement; 

17

 

	(b)
	undertake
a [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] review and comparison of actual
expenses to the budgeted expenses in accordance with the Financial Appendix with respect to each Product's Annual Development Plan and Annual Commercialization Plan;

	(c)
	undertake
a [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] review and comparison of the status
of each Product's Annual Development Plans and Annual Commercialization Plans, including, without limitation the applicable timelines, and provide direction to the conduct of each Development Program
and Commercialization Program, as necessary;

	(d)
	review
and evaluate the progress of the PDC and the JMC;

	(e)
	review
and approve "go/no-go" decisions and other matters referred to the JEC by the PDC or the JMC;

	(f)
	obtain
and review updated Freedom to Operate Opinions for each Product prior to launch (the cost of each such updated Freedom to Operate Opinion shall be shared equally by the
Parties) and determine the outcome of the "go/no-go" decision for Product launch based upon the outcome of such updated Freedom to Operate
Opinions;

	(g)
	in
accordance with, and to the extent specified in, the procedures established in this Agreement, resolve disputes, disagreements and deadlocks unresolved by the PDC or the JMC;

	(h)
	[Confidential
Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] review and approve Endo's overall strategy for
the Commercialization Program;

	(i)
	at
least [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] each calendar year by a date no later
than each [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission], review and approve the Annual Development Plan for the
next calendar year for each Product;

	(j)
	at
least [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] each calendar year by a date no later
than each [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission], review and approve the Annual Commercialization Plan
for the next calendar year for each Product;

	(k)
	[Confidential
Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] review the implementation of each Annual
Commercialization Plan;

	(l)
	review
and approve any amendments or modifications to each Annual Commercialization Plan;

	(m)
	review
Endo's multi-year expense forecasts and projected financial results of each Commercialization Program; 

18

  

	(n)
	review
the trademarks, trade names and logos each Product shall be marketed and sold under in the Territory;

	(o)
	decide
whether and how to institute patent or trademark Infringement actions against Third Parties in connection with the Products;

	(p)
	determine
a course of action in the event of threatened or actual litigation in connection with Third Party infringement claims; and

	(q)
	perform
such other responsibilities as may be assigned to the Joint Executive Committee pursuant to this Agreement or as may be mutually agreed upon by the Parties from time to time.

	3.3
	Meetings.    The JEC may meet, convene or be polled in person or by video or telephone conference (where all parties can hear
and be heard). In addition, the JEC may be polled through electronic mail or correspondence. The JEC shall meet at least twice every year. The JEC shall meet on such dates, and at such places and
times or in such manner, as the members of the JEC shall agree from time to time. Meetings of the JEC that are held in person shall alternate between the offices of SkyePharma and Endo, or at such
other place as the Parties may agree.

	3.4
	Decision-making.

	(a)
	The
JEC may make decisions with respect to any subject matter that is subject to the JEC's decision-making authority and functions. Except as expressly provided in this Agreement, all
decisions of the JEC shall be made by unanimous vote or written consent, with SkyePharma and Endo each having, collectively, one vote in all decisions. The JEC shall use reasonable best efforts to
resolve the matters within its roles and functions or otherwise referred to it.

	(b)
	If,
with respect to a matter that is subject to the JEC's decision-making authority, the JEC cannot reach consensus within [Confidential Information Has Been Omitted And
Furnished Separately To The Securities And Exchange Commission] days after it has met and attempted to reach such consensus or the Parties cannot reach consensus on whether the JEC has
decision-making authority regarding a matter within [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] days after
such matter was first raised by either Party, the dispute in question shall be referred to the Chief Executive Officer of SkyePharma, Inc. on behalf of SkyePharma, or such other person holding
a similar position designated by SkyePharma, Inc. from time to time, and the Chief Executive Officer of Endo, or such other person holding a similar position designated by Endo from time to
time (such officers collectively, the "Executive Officers"), for resolution. The Executive Officers shall use reasonable efforts to resolve the matter
referred to them.

	(c)
	With
regard to matters other than (1) the addition to or any other change to the Target Labeling, Target Indications, New Indications or New Indication Development, in each
case with respect to any Product, or (2) measuring Endo's compliance with the obligations set forth in Section 2.5(a) or Section 2.5(b):

	(i)
	if
the dispute arising from the JEC pertains to any Development Program (including SkyePharma's post-registration regulatory responsibilities) or the
manufacture of any Product, and the Executive Officers cannot resolve the matter within [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange
Commission] days, then the matter shall be decided by the Executive Officer of SkyePharma in good faith, giving appropriate consideration to the reasonable business and scientific concerns
of Endo; and 

19

 

	(ii)
	if
the dispute arising from the JEC pertains to any aspect of the Commercialization Program (other than the manufacture of Product), and the Executive Officers cannot
resolve the matter within [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] days, then the matter shall be decided
by the Executive Officer of Endo in good faith, giving appropriate consideration to the reasonable business and scientific concerns of SkyePharma.

	(d)
	With
respect to any dispute arising between the Parties not covered by Section 3.4(c), if the Executive Officers cannot resolve the matter in accordance with
Section 3.4(b), such matters shall be conclusively settled in accordance with the Special Arbitration Provisions; provided, however, no Expert or
arbitrator may add to or otherwise change the Target Labeling, Target Indications, New Indications or New Indication Development, in each case with respect to any Product.

	(e)
	For
all purposes under this Agreement, any decision made pursuant to this Section 3.4 shall be deemed to be the decision of the JEC.

	3.5
	Product Development Committee.

	(a)
	The
Parties hereby establish a product development committee (the "Product Development Committee" or
"PDC"), which shall consist of representatives from each of SkyePharma and Endo, with up to four members from each Party on such Committee unless
otherwise agreed to by the Parties in writing. Each of SkyePharma and Endo may replace any or all of its representatives on the PDC at any time upon written notice to the other in accordance with
Section 13.5 of this Agreement. Such representatives shall be employees of each such Party, and those representatives of each such Party shall, individually or collectively, have expertise in
pharmaceutical drug development, regulatory matters, marketing, clinical studies, and/or other expertise to the extent relevant. Any member of the PDC may designate a substitute with due authority to
temporarily attend and perform the functions of that member at any meeting of the PDC. SkyePharma and Endo each may, in its sole discretion but subject to the written objection of the other Party
(with demonstrable reason for objection), invite to attend meetings of the PDC a reasonable number of non-member representatives of such Party (including, without limitation, its employees
or non-employee professional advisors), who have a reasonable purpose for attending such meeting. The PDC shall be chaired by a representative of SkyePharma. The secretary of the PDC shall
be a representative of SkyePharma.

	(b)
	The
PDC shall perform the following functions:

	(i)
	review
the implementation of each Annual Development Plan;

	(ii)
	review
and approve any amendments or modifications to each Annual Development Plan;

	(iii)
	evaluate
progress and determine which pre-clinical studies, clinical trials, and toxicology studies are necessary or desirable to meet the requirements of
the applicable Regulatory Authorities for the Registration of the Products in each jurisdiction within the Territory;

	(iv)
	review
and evaluate progress of the development activities; provided,  that, the PDC shall not have authority to make any determination that any Party is in breach
of this Agreement;

	(v)
	review
and approve all compassionate use of the Product;

	(vi)
	review
and recommend to the JEC "go/no-go" decisions;

	(vii)
	in
connection with clinical trials, approve protocols, trial budget and trial design; 

20

 

	(viii)
	review
regulatory data and regulatory documentation relating to any material development regarding Registration or marketing activities with respect to any Product
outside of the Territory; and

	(ix)
	have
such other responsibilities as may be assigned to the PDC pursuant to this Agreement or as may be mutually agreed upon by the Parties from time to time.

	(c)
	The
PDC may meet, convene or be polled in person or by video or telephone conference (where all parties can hear and be heard). In addition, the PDC may be polled through electronic
mail or correspondence. The PDC shall meet at least once every calendar quarter, and at least once each calendar year shall be in person. The PDC shall meet on such dates, and at such places and times
or in such manner, as the members of the PDC shall agree from time to time. Meetings of the PDC that are held in person shall alternate between the offices of SkyePharma and Endo, or at such other
place as the Parties may agree.

	(d)
	Endo
and SkyePharma have established the PDC with a belief that vigorous interaction and cooperation between the Parties are essential for the success of the Product. Each Party shall
use all reasonable efforts to reach consensus decisions at the Committee level. The PDC may make decisions with respect to any subject matter that is subject to the PDC's decision-making authority and
functions as set forth in Section 3.5(b). All decisions of the PDC shall be made by unanimous vote or written consent, with SkyePharma and Endo each having, collectively, one vote in all
decisions. If, with respect to any matter that is subject to the PDC's decision-making authority, after all reasonable efforts to reach consensus have been exhausted, the PDC cannot reach consensus
within [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] business days after it has first met and attempted to
reach such consensus, the matter shall be referred on the [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission]
business day to the JEC for resolution.

	3.6
	Joint Manufacturing Committee.

	(a)
	Within
[Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] days after the Effective Date, the
Parties shall establish a joint manufacturing committee (the "Joint Manufacturing Committee" or "JMC"),
which shall consist of representatives from each of SkyePharma and Endo, up to four members from each Party, unless otherwise agreed to by the Parties in writing. Each of SkyePharma and Endo may
replace any or all of its representatives on the JMC at any time upon written notice to the other in accordance with Section 13.5 of this Agreement. Such representatives shall be employees of
each such Party with expertise in manufacturing, distribution and/or packaging. Any member of the JMC may designate a substitute with due authority to temporarily attend and perform the functions of
that member at any meeting of the JMC. SkyePharma and Endo each may, in its sole discretion but subject to the written objection of the other Party (with demonstrable reason for objection), invite to
attend meetings of the JMC a reasonable number of non-member representatives of such Party (including, without limitation, its employees, non-employee professional advisors,
its Sublicensees and its Subcontractors), who have a reasonable purpose for attending such meeting. The JMC shall be chaired by a representative of SkyePharma. The secretary of the JMC shall be a
representative of SkyePharma.

	(b)
	The
JMC shall perform the following functions:

	(i)
	coordinate
the manufacturing, supply and packaging of Product; 

21

 

	(ii)
	oversee
the formulation and manufacturing strategy for the Product, including bulk drug procurement, formulation, filling and finishing of the Product, and approve
facilities to be used for such manufacture and production;

	(iii)
	approve
Manufacturing Standards;

	(iv)
	reconcile
the quality systems of Endo and SkyePharma, as needed; and

	(v)
	have
such other responsibilities as may be assigned to the JMC pursuant to this Agreement or as may be mutually agreed upon by the Parties from time to time.

	(c)
	The
JMC may meet, convene or be polled in person or by video or telephone conference (where all parties can hear and be heard). In addition, the JMC may be polled through electronic
mail or correspondence. The JMC shall meet at least once every calendar quarter, and at least once each calendar year shall be in person. The JMC shall meet on such dates, and at such places and times
or in such manner, as the members of the JMC shall agree from time to time. Meetings of the JMC that are held in person shall alternate between the offices of SkyePharma and Endo, or at such other
place as the Parties may agree.

	(d)
	Endo
and SkyePharma have chartered the JMC with a belief that vigorous interaction and cooperation between the Parties are essential for the success of the Product. Each Party shall
use all reasonable efforts to reach consensus decisions at the Committee level. The JMC may make decisions with respect to any subject matter that is subject to the JMC's decision-making authority and
functions as set forth in Section 3.6(b). All decisions of the JMC shall be made by unanimous vote or written consent, with SkyePharma and Endo each having, collectively, one vote in all
decisions. If, with respect to any matter that is subject to the JMC's decision-making authority, after all reasonable efforts to reach consensus have been exhausted, the JMC cannot reach consensus
within [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] business days after it has first met and attempted to
reach such consensus, the matter shall be referred on the [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission]
business day to the Joint Executive Committee for resolution.

	3.7
	Committee Terms.    Each Committee shall exist until the termination or expiration of this Agreement, unless otherwise agreed
to by the Parties.

	3.8
	Expenses.    Each Party shall be responsible for all travel and related costs and expenses for its members and other
representatives to attend meetings of, and otherwise participate on, a Committee.

	3.9
	Alliance Managers.    Each of SkyePharma and Endo shall appoint one employee representative who possesses a general
understanding of clinical, regulatory, manufacturing and marketing issues to act as its respective alliance manager for this relationship and who is not a member of the JEC (each, an
"Alliance Manager"). Each of SkyePharma and Endo may replace its respective Alliance Manager at any time upon written notice to the other. Any Alliance
Manager may designate a substitute with due authority to temporarily perform the functions of that Alliance Manager. Each Alliance Manager shall be charged with creating and maintaining a
collaborative work environment within and among the Committees. Each Alliance Manager will also be responsible for:

	(a)
	coordinating
the relevant functional representatives of the Parties, in developing and executing strategies and plans for the Products in an effort to ensure consistency and
efficiency within the Territory;

	(b)
	providing
a single point of communication for seeking consensus both internally within the respective Party's organizations and together regarding key strategy and plan issues; 

22

 

	(c)
	identifying
and raising cross-Party and/or cross-function disputes to the appropriate Committee in a timely manner; and

	(d)
	planning
and coordinating: (i) cooperative efforts in the Territory; and (ii) internal and external communications with respect to any Product. 

        The
Alliance Managers shall be entitled to attend meetings of any of the Committees, but shall not have, or be deemed to have, any rights or responsibilities of a member of any
Committee. Each Alliance Manager may bring any matter to the attention of any Committee where such Alliance Manager reasonably believes that such matter requires such attention. 

4.     FEES, MILESTONES, AND FUNDING.  

	4.1
	Up-front Payment.    In consideration for past work in respect of DepoMorphine, Endo shall pay a
non-refundable, non-creditable up-front payment of $25,000,000 to SkyePharma on or before the tenth business day after the Effective Date. 

23

 
	4.2
	Milestone Payments.    As further consideration to SkyePharma for the license granted to Endo under this Agreement, Endo
shall, upon the payment due date following the first occurrence of the milestone events set forth below, pay to SkyePharma the following non-refundable, non-creditable
development milestone payments (unless Endo has earlier exercised any of its termination rights set forth in Section 11 by delivering a notice of intent to terminate as provided in such
Section): 

	Milestone Event
 
	 	Payment Due Date
	 	Milestone Payment

	Endo's receipt of written notice from SkyePharma of the FDA's written acceptance of the Registration Application for DepoMorphine in the United States.	 	30th day following the occurrence of Milestone Event	 	$5,000,000
	

Endo's receipt of written notice from SkyePharma of the FDA's final approval of the Registration of DepoMorphine in the United States, provided SkyePharma has provided Endo with Sufficient Supply of such Product.	
 	

30th day following the occurrence of Milestone Event	
 	

$5,000,000
	

The first calendar year that Net Sales of DepoMorphine in the Territory exceed $125,000,000.	
 	

45th day following the end of a quarter in which Milestone Event occurs	
 	

$15,000,000
	

The first calendar year that Net Sales of DepoMorphine in the Territory exceed $175,000,000.	
 	

45th day following the end of a quarter in which Milestone Event occurs	
 	

$20,000,000
	

Endo's receipt of written notice from SkyePharma of the FDA's written approval and acceptance of the protocol of the first of the Phase III clinical trials for Propofol IDD-D in the United States.	
 	

30th day following occurrence of Milestone Event	
 	

$5,000,000
	

Endo's receipt of written notice from SkyePharma of the FDA's written acceptance of the Registration Application for Propofol IDD-D in the United States.	
 	

30th day following the occurrence of Milestone Event	
 	

$5,000,000
	

Endo's receipt of written notice from SkyePharma of the FDA's final approval of the Registration of Propofol IDD-D in the United States for the Target Labeling, ("Original $40 Million Milestone")
provided SkyePharma has provided Endo with Sufficient Supply of such Product.	
 	

30th day following the occurrence of Milestone Event	
 	

$40,000,000

24

 

        If
Endo receives written notice from SkyePharma of the FDA's final approval of the Registration for Propofol IDD-D in the United States but the approved labeling materially
fails to meet the Target Labeling of Propofol IDD-D such that the expected sales of Propofol IDD-D are significantly adversely affected ("Adjusted $40
Million Milestone"), then provided SkyePharma has provided Endo with Sufficient Supply of such Product, Endo shall pay to SkyePharma the $40,000,000 Milestone Payment
referenced in the chart above as follows: 

	(i)
	$15,000,000
on the Milestone Due Date which shall be the 30th day following occurrence of the Adjusted $40 Million Milestone;

	(ii)
	$5,000,000
on the 45th day following the end of the first calendar quarter in the first year in which Net Sales of Propofol IDD-D in the
Territory exceed $33,000,000;

	(iii)
	$10,000,000
on the 45th day following the end of the first calendar quarter in the first year in which Net Sales of Propofol IDD-D in the
Territory exceed $67,000,000; and

	(iv)
	$10,000,000
on the 45th day following the end of the first calendar quarter in the first year in which the Net Sales of Propofol IDD-D in the
Territory equal or exceed $100,000,000. 

        The
unpaid amounts referenced in clauses (i), (ii), (iii) and/or (iv) above shall be earlier paid (on the 30th day following the occurrence of the Original
$40 million Milestone provided SkyePharma has provided Endo with Sufficient Supply of such Product) if the Original $40 Million Milestone is achieved prior to the satisfaction of the conditions
in clauses (i) through (iv) above. 

        As
a matter of clarification, in no event shall more than $40,000,000 in the aggregate be paid by Endo to SkyePharma in respect to the FDA's final approval of the Registration of
Propofol IDD-D in the United States whether for the Target Labeling or otherwise. 

	4.3
	Sales Split.    As further consideration to SkyePharma for the license and other rights granted to Endo under this Agreement,
Endo shall pay SkyePharma a portion of Net Sales of DepoMorphine and Propofol IDD-D made by Endo and its Affiliates, Sublicensees and Subcontractors in the manner set forth in this
Section 4.3; provided, that, in the event that the Parties agree upon any New Indication(s)
pursuant to Section 2.12, the sales thresholds may be adjusted by mutual agreement of the Parties depending upon the outcome of the negotiations regarding the matters set forth in
Section 2.12.

	(a)
	Whenever
calendar year annual Net Sales of DepoMorphine and Propofol IDD-D made by Endo and its Affiliates, Sublicensees and Subcontractors are, in the aggregate, less
than or equal to $60,000,000, then, in accordance with Section 5, Endo shall pay SkyePharma:

	(i)
	20%
of Net Sales of DepoMorphine made by Endo and its Affiliates, Sublicensees and Subcontractors in such calendar year; and

	(ii)
	30%
of Net Sales of Propofol IDD-D made by Endo and its Affiliates, Sublicensees and Subcontractors in such calendar year.

	(b)
	Whenever
calendar year annual Net Sales of DepoMorphine and Propofol IDD-D made by Endo and its Affiliates, Sublicensees and Subcontractors are, in the aggregate, greater
than $60,000,000 but less than or equal to $250,000,000, then, in accordance with Section 5, Endo shall pay SkyePharma:

	(i)
	20%
of Net Sales of DepoMorphine made by Endo and its Affiliates, Sublicensees and Subcontractors in such calendar year; and

	(ii)
	35%
of Net Sales of Propofol IDD-D made by Endo and its Affiliates, Sublicensees and Subcontractors in such calendar year. 

25

 

	(c)
	Whenever
calendar year annual Net Sales of DepoMorphine and Propofol IDD-D made by Endo and its Affiliates, Sublicensees and Subcontractors are, in the aggregate, greater
than $250,000,000 but less than or equal to $400,000,000, then, in accordance with Section 5, Endo shall pay SkyePharma:

	(i)
	55%
of Net Sales of DepoMorphine made by Endo and its Affiliates, Sublicensees and Subcontractors in such calendar year; and

	(ii)
	55%
of Net Sales of Propofol IDD-D made by Endo and its Affiliates, Sublicensees and Subcontractors in the Territory arising in such calendar year.

	(d)
	Whenever
calendar year annual Net Sales of DepoMorphine and Propofol IDD-D made by Endo and its Affiliates, Sublicensees and Subcontractors are, in the aggregate, greater
than $400,000,000, then, in accordance with Section 5, Endo shall pay SkyePharma:

	(i)
	60%
of Net Sales of DepoMorphine made by Endo and its Affiliates, Sublicensees and Subcontractors in the Territory arising in such calendar year; and

	(ii)
	60%
of Net Sales of Propofol IDD-D made by Endo and its Affiliates, Sublicensees and Subcontractors in the Territory arising in such calendar year.

	4.4
	Bartering Prohibited.    Endo, its Affiliates, Sublicensees and its Subcontractors shall not solicit or accept any bartered
goods or services in exchange for the sale or transfer of DepoMorphine or Propofol IDD-D.

	4.5
	Bundling.    Endo, its Affiliates, Sublicensees and its Subcontractors shall be permitted to bundle any Product together with
any other reasonable product(s) in the sale or transfer of such product; provided, that, Endo shall
equitably allocate revenues from product bundles, and shall present the strategy for the proposed apportionment of revenues derived from a proposed bundle (as part of the Annual Commercialization Plan
or otherwise) to the JEC for approval in advance of any sales of bundled products. SkyePharma may request an audit to determine adherence to the apportionment plan approved by the JEC, in accordance
with Section 5.5 hereof. 

5.     PAYMENTS AND REPORTS.  

	5.1
	Payments.    Payments to be made in connection with the sale split of Net Sales of DepoMorphine and Propofol
IDD-D shall be made in accordance with Sections 5.2 and 5.3. All other payments to be made under this Agreement shall be made in accordance with the terms set forth in Section 5.3.
The Parties shall also follow the periodic reporting requirements set forth in the Financial Appendix.

	5.2
	Sales Split Payments.

	(a)
	All
sales split payments due under Section 4.3 shall accrue and be paid to SkyePharma quarterly within [Confidential Information Has Been Omitted And Furnished
Separately To The Securities And Exchange Commission] calendar days following the end of each calendar quarter (each calendar quarter being a period of three consecutive calendar months
commencing January 1, April 1, July 1 or October 1, as the case may be) (each such time period constituting a "Payment
Period"). 

26

 

	(b)
	Each
such sales split payment shall be accompanied by a statement showing the amounts of gross sales, Net Sales, the components of each Net Sales amount, the number of Units of
DepoMorphine and Propofol IDD-D sold by Endo and, if applicable, by its Affiliates, Sublicensees and Subcontractors, during such Payment Period (on a
product-by-product and country-by-country basis), and the amount of the sales split due on such Net Sales and the aggregate Net Sales applicable to each
such Product in the current calendar year-to-date. The statement shall also show the amounts of all Net Purchases by Endo of Product during such Payment Period and the amounts
of all Inventory Write-offs by Endo of Product during such Payment Period. Such aggregate Net Purchases of Product shall be deducted from the sales split payment otherwise due SkyePharma
and such aggregate Inventory Write-offs shall be added to the sales split payment otherwise due SkyePharma. For example, if the net sales split owed to SkyePharma is $100,000 and the Net
Purchases by Endo of Product is $40,000 and the amount of Inventory Write-offs by Endo is $10,000, the amount to be paid by Endo to SkyePharma shall equal $70,000. If as a result of the
adjustment referenced above, the sales split payment is a negative amount, such negative amount shall be carried forward and shall reduce sales split payments otherwise payable for future periods.

	(c)
	The
sales split rate applicable to each Payment Period shall be based on the rate that would be applicable to Net Sales during the 12 month period ending with such Payment
Period (as if such period were a calendar year). For example, if Net Sales for the 12 month period ending June 30 were $270,000,000 the sales split rate applicable to such Payment Period
would be 55% for DepoMorphine and Propofol IDD-D.

	(d)
	Within
[Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] days of the end of each full calendar
year after the First Commercial Sale, Endo shall deliver to SkyePharma an accounting of Net Sales during such calendar year and shall at that time inform SkyePharma of any reconciliation between the
sales split paid that year and the sales split actually owed on the basis of actual Net Sales for the calendar year and shall pay any shortfall. Endo shall be entitled to carry forward as a credit
against future payments of net sales splits any excess payment, or upon termination of this Agreement receive such excess payment.

	5.3
	Mode of Payment.    Each Party shall make all payments required under this Agreement in the United States in U.S. dollars,
via wire transfer of immediately available funds as directed by the other Party from time to time, net of any out-of-pocket transfer costs or fees. Accounting for Net Sales and
sales split due under this Agreement shall be in U.S. dollars. For billing and reporting, the statement of operations and sales shall be translated into U.S. dollars at the average rate of exchange
listed in The Wall Street Journal on the first and last business day of the applicable calendar quarter.

	5.4
	Records Retention.    The Parties shall keep complete and accurate records pertaining to the milestones and sales achieved
for each Product and the number of primary details performed by each of them with respect the Products, for a period of three calendar years after the year in which such activities occurred or sales
were made, and in sufficient detail to permit the other Party to confirm the accuracy of the milestone and sales split payments made hereunder and to confirm the accuracy of the number of primary
details performed hereunder. 

27

 
	5.5
	Payment and Other Audits.

	(a)
	Either
Party (herein, the "Auditing Party") may demand, no more than [Confidential Information Has Been Omitted And
Furnished Separately To The Securities And Exchange Commission] for any calendar year in the term of this Agreement and only within [Confidential Information Has Been Omitted
And Furnished Separately To The Securities And Exchange Commission] years following the end of such calendar year, an audit of the relevant books and records of the other Party (herein,
the "Audited Party") in order to verify the Audited Party's reports on the matters addressed in this Agreement. Upon no less than
[Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] days' prior written notice to the Audited Party, the Audited
Party shall grant reasonable access to members of a nationally recognized independent public accounting firm selected by the Auditing Party to the relevant books and records of the Audited Party in
order to conduct a review or audit thereof. Such access shall be permitted during normal business hours. The Audited Party shall cooperate with such accounting firm and provide it access to all
records required in connection with such audit. The audit shall be complete only when such accounting firm reasonably confirms that the audit is complete. The accounting firm shall report its final
conclusions and calculations to the Auditing Party. In no event shall the accounting firm disclose any information of the Audited Party to the Auditing Party except to the extent necessary to verify
the Audited Party's reporting and other compliance with the terms of this Agreement and, at the request of the Audited Party, such accounting firm will execute appropriate non-disclosure
agreements. Except as otherwise provided in this Section 5.5, the Auditing Party shall bear the full cost of the performance of any such audit.

	(b)
	If
as a result of any audit of the books and records of the Audited Party it is shown that a Party's payments to the other Party under this Agreement with respect to the period of
time audited were less than the amount that should have been paid to the other Party pursuant to this Agreement, then the paying Party shall, within [Confidential Information Has Been
Omitted And Furnished Separately To The Securities And Exchange Commission] business days after the other Party's demand therefor, either pay to the other Party the amount of such
shortfall plus interest thereon or proceed to the dispute resolution mechanism set forth in Section 5.5(c). Such interest shall be calculated from the date such amount was due until the date
such amount is actually paid, at the rate of [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] over the prime rate
of interest reported in The Wall Street Journal for the date such amount was due and shall continue to accrue during any resolution of dispute regarding payment under Section 5.5(c). In
addition, if any amount of underpayment by an Audited Party is agreed to be more than [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange
Commission] percent of the amount which should have been paid to the Auditing Party pursuant to this Agreement with respect to the period in question as a result of incorrect reporting or
calculation by the Audited Party, then the Audited Party shall also reimburse the Auditing Party for its documented reasonable out-of-pocket costs and expenses incurred in
connection with the audit (including, without limitation, fees of attorneys, accountants and other professionals). 

28

 

	(c)
	In
the event that the Parties do not agree on the amount of overpayment or underpayment, within [Confidential Information Has Been Omitted And Furnished Separately To The
Securities And Exchange Commission] business days, each Party shall select an independent public accounting firm which shall meet and discuss the amount in dispute and other related
matters within [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] business days thereafter. If such independent
public accounting firms cannot agree on a resolution mutually agreeable to the Parties, such independent public accounting firms shall, within [Confidential Information Has Been Omitted
And Furnished Separately To The Securities And Exchange Commission] business days after such selection and each Party shall pay the costs of its own accounting firm, appoint a third
independent public accounting firm which shall resolve the issue within [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange
Commission] business days after its selection and the Parties shall equally share the costs such accounting firm. The recommendation of the third independent public accounting firm shall
be final and binding upon the Parties. A judgment on such firm's disposition may be entered in any court having jurisdiction over the Parties. In addition, if in the final disposition of such matter,
the amount of underpayment by the Audited Party is more than [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission]
percent of the amount which should have been paid to the Auditing Party pursuant to this Agreement with respect to the period in question as a result of incorrect reporting or calculation by the
Audited Party, then the Audited Party shall also reimburse the Auditing Party for its documented reasonable out-of-pocket costs and expenses incurred in connection with
resolving such matter through the retention of such accounting firms (including, without limitation, fees of attorneys, accountants and other professionals).

	5.6
	Taxes.    In the event that a Party is mandated under the laws of a country or other political subdivision of competent
jurisdiction to withhold any tax to the tax or revenue authorities in such jurisdiction in connection with any payment to the other Party, such amount shall be deducted from the payment to be made by
such withholding Party; provided, that, the withholding Party shall take reasonable and lawful actions
to avoid and minimize such withholding and promptly notify the other Party so that the other Party may take lawful actions to avoid and minimize such withholding. The withholding Party shall promptly
furnish the other Party with copies of any tax certificate or other documentation evidencing such withholding as necessary to satisfy the requirements of the United States Internal Revenue Service
related to any application by such other Party for foreign tax credit for such payment. Each Party agrees to reasonably cooperate with the other Party in claiming exemptions from such deductions or
withholdings under any agreement or treaty from time to time in effect. 

6.     GRANT OF RIGHTS; RESTRICTIONS; OWNERSHIP; PATENTS.  

	6.1
	License Grant to Endo.    Subject to the terms and conditions of this Agreement and subject to the retained rights of
SkyePharma set forth in Section 6.3:

	(a)
	SkyePharma
hereby grants to Endo during the term of this Agreement with respect to each Product an exclusive license in the Territory under the SkyePharma Product IP, SkyePharma
Product Patents, and Inventions to use, sell and offer for sale such Product for the Target Indications applicable to such Product.

	(b)
	SkyePharma
hereby grants to Endo during the term of this Agreement with respect to each Product a non-exclusive license in the Territory under the SkyePharma Product IP,
SkyePharma Product Patents and Inventions to enable Endo to perform its obligations under the Development Program for such Product for the Target Indications applicable to such Product. 

29

 

	(c)
	Except
as expressly set forth in Sections 6.1(a), 6.1(b) and 6.6(d), no license is granted by SkyePharma under its rights in the SkyePharma IP, SkyePharma Product Patents, SkyePharma
Product IP, Inventions or any other intellectual property of SkyePharma.

	6.2
	License Grant to SkyePharma.    No right or license is granted by Endo under its rights in any Patents, Know-how,
trademarks or any other intellectual property owned by Endo, except:

	(a)
	Endo
hereby grants SkyePharma the right to use (i) any Phase IV clinical data of Endo, and (ii) any other non-proprietary information of Endo that SkyePharma
requests, and Endo, in its reasonable discretion, agrees to provide; in each case, solely for use outside of the Territory; and

	(b)
	Endo
hereby grants SkyePharma the right to own (and to register ownership, if desired) and to use any trademarks, trade names or logos specifically applicable to any Product(s)
outside of the Territory (excluding "Endo" and any derivatives thereof); provided,  that, no such use that
significantly derogates from the image or goodwill of the Products in the Territory shall be permitted.

	6.3
	Retained Rights of SkyePharma.    SkyePharma shall retain all rights to the Products, SkyePharma IP, SkyePharma Product
Patents, SkyePharma Product IP, and all Inventions, in each case, for any application (a) outside the Territory, whether or not in the Exclusivity Field, and (b) outside the Exclusivity
Field, whether or not in the Territory.

	6.4
	Sublicensing; Subcontracting.

	(a)
	Endo
shall have the right to grant sublicenses under the rights and licenses granted to it under this Section 6 only after obtaining the prior written consent of SkyePharma,
which, in the case of sublicenses for activities undertaken in Canada, shall not be unreasonably withheld or delayed.

	(b)
	Endo
shall have the right to subcontract its responsibilities under this Agreement, without obtaining the written consent of SkyePharma;  provided, that, Endo
shall at all times maintain direct control over all promotional and sales strategic
activities and decisions and that Endo shall at all times remain primarily responsible and liable for all such activities.

	(c)
	SkyePharma
may subcontract any responsibility under this Agreement that it reasonably deems necessary or useful without obtaining the written consent of Endo  provided, that, SkyePharma shall at all times remain primarily responsible and liable for all such
activities.

	(d)
	In
addition to the requirements set forth in Sections 6.4(a) through (c), inclusive, each sublicense or subcontracting arrangement granted under this Agreement shall provide that:
(i) the Party granting the sublicense or subcontract, as the case may be, shall guarantee and be responsible for the making of all payments due, and the making of any reports, under this
Agreement; (ii) each Affiliate, Sublicensee, and Subcontractor undertaking any work under this Agreement agrees in writing to maintain financial and scientific books and records and permit the
Parties to review such books and records and to visit such Affiliates', Sublicensee's and Subcontractor's facilities pursuant to the provisions of this Agreement applicable to the activities being
undertaken by such parties and to observe all other applicable terms of this Agreement; and (iii) in the event of a breach by such an Affiliate, Sublicensee or Subcontractor in the observance
of applicable terms of this Agreement, each Party shall be entitled to proceed either directly against such Affiliate, Sublicensee or Subcontractor or directly against the other Party, as such
proceeding Party may determine in its sole discretion, to enforce this Agreement. 

30

 

	6.5
	Restriction on Activities.    Except as expressly permitted under this Agreement, neither Party shall, and shall cause its
Affiliates not to, directly or indirectly, develop, attempt to develop, actively investigate or commercialize for its own account or grant to a Third Party any right to develop or commercialize any
indication for any product that is both in the Exclusivity Field and in the Territory; provided, that,
in the event of a change of control of a Party in which such Party becomes controlled by a Third Party that has a competing product to one or both of the Products and that is both in the Exclusivity
Field and in the Territory (either on the market or actively under development), the restrictions contained in this Section 6.5 shall [Confidential Information Has Been Omitted And
Furnished Separately To The Securities And Exchange Commission].

	6.6
	Ownership.

	(a)
	SkyePharma
shall solely own all Registration Applications, Registrations and other regulatory filings and approvals for the Products.

	(b)
	SkyePharma
shall solely own all data and information developed in connection with all Development Programs.

	(c)
	Endo
shall solely own all data and information developed in connection with all Commercialization Programs; provided SkyePharma shall be permitted to use (a) any Phase IV
clinical data, and (b) any other non-proprietary information that SkyePharma requests, that Endo, in its reasonable discretion, agrees to provide, solely for use outside of the
Territory.

	(d)
	Ownership
of Inventions shall be as follows: (i) Inventions made solely by employees or contractors of SkyePharma shall be owned solely by SkyePharma; (ii) Inventions
made solely by employees or contractors of Endo shall be owned solely by Endo, except that Inventions made solely by employees or contractors of Endo that relate to the formulation or manufacturing
process for a Product (but excluding, without limitation, use for a Product) that constitute an improvement, enhancement, modification or derivative work to any SkyePharma IP (excluding SkyePharma
Product IP) and which has general utility for other products shall be owned jointly by the Parties; and (iii) Inventions made jointly by employees or contractors of both Parties shall be owned
jointly by the Parties. To the extent an Invention owned by either Party relates to DepoMorphine or Propofol IDD-D (x) if SkyePharma is the owner, SkyePharma hereby grants Endo an
exclusive royalty free license in the Exclusivity Field and Territory under the Invention and any Patent arising therefrom to use, sell and offer for sale such product, and (y) if Endo is the
owner, Endo hereby grants SkyePharma an exclusive royalty free license in the Exclusivity Field and the Territory under the Invention and any Patent arising therefrom to manufacture such product for
Endo or its designees for use and sale in the Territory.

	(e)
	Endo
shall own all trademarks, trade names, and logos under which the Products will be marketed and sold in the Territory. SkyePharma shall be permitted to own (and to register
ownership, if desired) and to use any trademarks, trade names or logos specifically applicable to any Product(s) outside of the Territory (excluding
"Endo" and any derivatives thereof); provided, that, no
such use that in any way derogates from the image or goodwill of the Products in the Territory shall be permitted.

	(f)
	Each
Party shall be permitted to use jointly owned Inventions without obligation to the other Party with respect to such Inventions that are (i) outside the Territory, whether
or not in the Exclusivity Field, or (ii) outside the Exclusivity Field, whether or not in the Territory.

	(g)
	In
the event that a future invention solely developed by one of the Parties relates to DepoMorphine or Propofol IDD-D, such Party shall grant to the other a royalty free,
non-exclusive license to any such Patent arising therefrom outside the Territory, but solely to the extent that such Patent applies to such product and not for any other purpose. 

31

 

	6.7
	Patent Prosecution and Maintenance.

	(a)
	Each
Party shall have full responsibility for, and shall control the preparation and prosecution of, all patent applications and the maintenance of all patents relating to the
Inventions owned solely by it (including the Patents) in the Territory. Each Party shall pay all costs of filing, prosecuting and maintaining such patent applications and patents relating to
Inventions owned solely by it. SkyePharma shall control the preparation and prosecution of all patent applications and the maintenance of all patents relating to the Inventions owned jointly with Endo
(including the Patents) in the Territory. The costs of filing, prosecuting and maintaining patent applications and patents relating to jointly owned Inventions shall be borne by SkyePharma.

	(b)
	Each
Party shall promptly provide to the other Party a complete written disclosure of any Invention made by such Party. SkyePharma, in consultation with Endo, shall determine whether
any Invention owned solely by it or jointly with Endo is patentable, and if so, shall proceed with the preparation and prosecution of a patent application covering any such Invention. Endo shall
determine whether any Invention owned solely by it is patentable, and if so, shall proceed with the preparation and prosecution of a patent application covering any such Invention.

	(c)
	Each
Party shall promptly provide copies to the other Party of any filings made to, and any written communications received from, any patent office relating, in whole or in part, to
such patent applications or patents granted thereon reasonably in advance of the relevant proposed filing or response date. Each Party shall give reasonable consideration to any comments that may be
made by the other Party reasonably in advance of the relevant proposed filing or response date relating to the filing and prosecution of such patent applications or the maintenance of patents granted
thereon.

	(d)
	The
Parties shall cooperate with each other to execute all lawful papers and instruments, to make all rightful oaths and declarations, and to provide consultation and assistance as
may be necessary in the preparation, prosecution, maintenance and enforcement of all such patents.

	(e)
	Each
Party shall undertake the obligation to maintain its respective patent applications and patents within Patents directly relating to Products during the term of this Agreement.

	6.8
	Patent and Trademark Enforcement.

	(a)
	If
either Party learns of an infringement, unauthorized use, misappropriation or ownership claim or threatened infringement or other such claim (an
"Infringement") by a Third Party with respect to any Product or Product-related trademarks within the Territory, such Party shall promptly notify the
other Party in writing and shall promptly provide such other Party with available evidence of such Infringement. 

32

 

	(b)
	SkyePharma
shall have the right, but not the duty, to institute patent Infringement actions against Third Parties based on any Product in the Territory. If SkyePharma does not
institute an Infringement proceeding against an offending Third Party within [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange
Commission] days of learning of such Infringement, Endo shall have the right, but not the duty, to institute such an action with respect to any Infringement by such Third Party. Neither
Party may enter into any settlement, consent judgment or other voluntary final disposition of such action which adversely affects any Product, SkyePharma IP, SkyePharma Product Patent, SkyePharma
Product IP or Invention without the prior written consent of the other Party which consent shall not be unreasonably withheld. The costs and expenses of any such action (including reasonable fees of
attorneys and other professionals) shall be shared equally by the Parties. Each Party shall execute all necessary and proper documents, take such actions as shall be appropriate to allow the other
Party to institute and prosecute such Infringement actions and shall otherwise cooperate in the institution and prosecution of such actions (including consenting to being named as a nominal party
thereto). Each Party prosecuting any such Infringement actions shall keep the other Party reasonably informed as to the status of such actions. Any award paid by Third Parties as a result of such an
Infringement action (whether by way of settlement or otherwise) shall be applied first to reimburse the Parties for all costs and expenses incurred by the Parties with respect to such action on a pro
rata basis and, if after such reimbursement any funds shall remain from such award, they shall be deemed to Net Sales for the Product involved in such action and allocated between the Parties
accordingly.

	(c)
	Endo
shall have the right, but not the duty, to institute trademark Infringement actions against Third Parties based on any Product-related trademarks in the Territory. If Endo does
not institute an Infringement proceeding against an offending Third Party within [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange
Commission] days of learning of such Infringement, SkyePharma shall have the right, but not the duty, to institute such an action with respect to any Infringement by such Third Party.
Neither Party may enter into any settlement, consent judgment or other voluntary final disposition of such action which adversely affects any Product-related trademark without the prior written
consent of the other Party which consent shall not be unreasonably withheld. The costs and expenses of any such action (including reasonable fees of attorneys and other professionals) shall be shared
equally by the Parties. Each Party shall execute all necessary and proper documents, take such actions as shall be appropriate to allow the other Party to institute and prosecute such Infringement
actions and shall otherwise cooperate in the institution and prosecution of such actions (including consenting to being named as a nominal party thereto). Each Party prosecuting any such Infringement
actions shall keep the other Party reasonably informed as to the status of such actions. Any award paid by Third Parties as a result of such an Infringement action (whether by way of settlement or
otherwise) shall be applied first to reimburse the Parties for all costs and expenses incurred by the Parties with respect to such action on a pro rata basis and, if after such reimbursement any funds
shall remain from such award, they shall be deemed to be Net Sales for the Product involved in such action and allocated between the Parties accordingly. 

33

 

	6.9
	Infringement Actions by Third Parties.

	(a)
	In
the event of the institution or threatened institution of any suit by a Third Party against a Party for patent infringement involving the manufacture, use, distribution, sale or
marketing of a Product in the Territory, such Party shall promptly notify the other Party in writing of such suit. This Section 6.9(a) shall govern any such suit unless otherwise covered by
Section 10.1(e). The JEC shall determine how the Parties will defend such suit and how the defense of such action shall be controlled. The Parties shall equally share (a) all costs and
expenses (including, without limitation, reasonable fees of attorneys and other professionals) incurred by the Parties with respect to such defense, and (b) damages awarded to and settlements
made with Third Parties bringing such suits. Each Party shall assist and cooperate with the other Party, at the other Party's reasonable request and expense, in the defense of any such suit
(including, without limitation, consenting to being named as a nominal party thereto). During the pendency of such action, Endo shall continue to make all payments due under this Agreement. Any award
paid by Third Parties as a result of such an infringement action (whether by way of settlement or otherwise) shall be applied first to reimburse the Parties for all costs and expenses incurred by the
Parties with respect to such action on a pro rata basis and, if after such reimbursement any funds shall remain from such award, they shall be deemed to be Net Sales for the Product involved in such
action and allocated between the Parties accordingly.

	(b)
	In
the event of the institution or threatened institution of any suit by a Third Party against a Party for trademark infringement involving the manufacture, use, distribution, sale or
marketing of a Product in the Territory, such Party shall promptly notify the other Party in writing of such suit. Endo shall have the duty to defend such suit and shall control the defense of such
action. Endo shall bear (a) all costs and expenses (including, without limitation, reasonable fees of attorneys and other professionals) incurred by it with respect to such defense, and
(b) damages awarded to and settlements made with Third Parties bringing such suits. SkyePharma shall assist and cooperate with Endo, at Endo's reasonable request and expense, in the defense of
any such suit (including, without limitation, consenting to being named as a nominal party thereto). Any award paid by Third Parties as a result of such an infringement action (whether by way of
settlement or otherwise) shall be applied first to reimburse Endo for all costs and expenses incurred by Endo with respect to such action and, if after such reimbursement any funds shall remain from
such award, they shall be deemed to be Net Sales for the Product involved in such action and allocated between the Parties accordingly.

	6.10
	Federal Food, Drug and Cosmetic Act.    Notwithstanding any other provision contained in this Agreement (including, without
limitation, Section 6.8), SkyePharma shall be solely responsible for all costs and expenses (including, without limitation, reasonable fees of attorneys and other professionals) which solely
relate to legal action(s) brought in connection with a certification made by SkyePharma with respect to a Product pursuant to Section 505(b)(2)(A)(iv) of the Federal Food, Drug and
Cosmetic Act. In the event that Endo incurs such costs or expenses in connection with any such legal action(s), Endo shall be entitled to deduct such costs or expenses from sales split on the Net
Sales of Products otherwise owed to SkyePharma under this Agreement. 

34

 

7.     ADVERSE REACTION REPORTING.  

	7.1
	Adverse Reaction Reporting.

	(a)
	SkyePharma
shall record, evaluate, summarize and review all adverse drug experiences associated with the Products, and report all such information to the FDA in accordance with its
regulatory requirements as holder of the Product Registration. In addition, each Party shall:

	(i)
	in
a timely manner, provide to the other Party for initial and/or periodic submission to Regulatory Authorities significant information on the drug from preclinical
laboratory, animal toxicology and pharmacology studies, as well as adverse drug experience reports from clinical trials and commercial experiences with each Product;

	(ii)
	in
connection with investigational drugs, promptly report to the other Party the receipt of a report of any unexpected serious adverse experience with the drug, if
required for either Party to comply with regulatory requirements; and

	(iii)
	in
connection with marketed drugs, promptly report to the other Party any serious adverse experience with the drug that is unexpected.

	(b)
	For
purposes of this Agreement, "Serious Adverse Drug Experience" means any adverse drug experience occurring at any dose that results
in any of the following outcomes: death, a life-threatening adverse drug experience, inpatient hospitalization or prolongation of existing hospitalization, a persistent or significant
disability/incapacity, or a congenital anomaly/birth defect. Important medical events that may not result in death, be life-threatening, or require hospitalization may be considered a
Serious Adverse Drug Experience when, based upon appropriate medical judgment, they may jeopardize the patient or subject and may require medical or surgical intervention to prevent one of the
outcomes listed in this definition. An unexpected adverse drug experience is one that is not listed in the current labeling for the drug product. This includes events that may be symptomatically and
pathophysiologically related to an event listed in the labeling, but differ from the event because of greater severity or specificity.

	(c)
	Each
Party shall promptly report to the other Party the information set forth above affecting any of the Products in any country, within or without the Territory.

	(d)
	If
a Party contracts with a Third Party for research to be performed by such Third Party on any of the Products, that Party shall require such Third Party to report to the contracting
Party the information set forth above.

	(e)
	The
details of adverse reaction reporting during the Development Program(s) and thereafter shall be stipulated in separate agreements to be entered into by the Parties in due course.

	(f)
	Any
information required pursuant to this Section 7.1 shall be deemed to have been sufficiently given if in writing and personally delivered or sent by certified mail (return
receipt requested), facsimile transmission (receipt verified), or overnight express courier service (signature required), prepaid, to the Party for which such notice is intended, at the address set
forth for such Party below:

	(i)
	in
the case of SkyePharma, to: 

SkyePharma, Inc.

10450 Science Center Drive

San Diego, CA 92121

Attention: Dr. Gordon Schooley

Facsimile No.: (858) 623-0376

Telephone No.: (858) 625-2414 

35

 

	(ii)
	in
the case of Endo, to: 

Endo
Pharmaceuticals Inc.

100 Painters Dr.

Chadds Ford, PA 19317

Attention: Dr. Bradley Galer

Facsimile No.: (610) 558-9685

Telephone No.: (610) 558-9800 

or
to such other address for such Party as it shall have specified by like notice to the other Party; provided,  that, notices of a change of address shall be
effective only upon receipt thereof. If delivered personally or by facsimile transmission, the date of
delivery shall be deemed to be the date on which such notice or request was given. If sent by overnight express courier service, the date of delivery shall be deemed to be the next business day after
such notice or request was deposited with such service. If sent by certified mail, the date of delivery shall be deemed to be the third business day after such notice or request was deposited with the
U.S. Postal Service. 

8.     REPRESENTATIONS AND WARRANTIES AND CONVENANTS.  

	8.1
	Representations and Warranties of Both Parties.    Each Party represents and warrants to the other Party, as of the Effective
Date, that:

	(a)
	Such
Party is duly organized and validly existing and in good standing under the laws of the jurisdiction of its incorporation and has full corporate power and authority to enter into
this Agreement and to carry out the provisions hereof;

	(b)
	Such
Party has taken all corporate action necessary to authorize the execution and delivery of this Agreement and the performance of its obligations under this Agreement and has full
power and authority to enter into this Agreement and perform its obligations under this Agreement;

	(c)
	This
Agreement has been duly executed by such Party and assuming due authorization, execution and delivery by the other Party, constitutes a valid and legally binding obligation of
such Party, enforceable in accordance with its terms, subject to and limited by: (i) applicable bankruptcy, insolvency, reorganization, moratorium, and other laws generally applicable to
creditors' rights; and (ii) judicial discretion in the availability of equitable relief;

	(d)
	With
the exception of compliance with the applicable provisions of HSR and the approval of applicable Regulatory Authorities, such Party has obtained, or is not required to obtain,
the consent, approval, order, or authorization of any Third Party, or has completed, or is not required to complete any registration, qualification, designation, declaration or filing with, any
Regulatory Authority, in connection with the execution and delivery of this Agreement and the performance by such Party of its obligations under this Agreement, including any grant of rights to the
other Parties pursuant to this Agreement; and 

36

 

	(e)
	The
execution and delivery of this Agreement, and the performance by such Party of its obligations under this Agreement, including the grant of rights to the other Party pursuant to
this Agreement, does not and will not: (i) conflict with, nor result in any violation of or default under any such instrument, judgment, order, writ, decree, contract or provision to which such
Party is otherwise bound; (ii) except as disclosed by SkyePharma on Schedule 8.1(e), give rise to any lien, charge or encumbrance upon any assets of such
Party or the suspension, revocation, impairment, forfeiture or non-renewal of any material permit, license, authorization, or approval that applies to such Party, its business or
operations or any of its assets or properties, except any or all of which could not reasonably be expected to have a material adverse effect on its ability to perform its obligations under this
Agreement or on the rights of the other Party under this Agreement; or (iii) conflict with any rights granted by such Party to any Third Party or breach any obligation that such Party has to
any Third Party.

	8.2
	Representations and Warranties of SkyePharma.    SkyePharma represents and warrants to Endo, as of the Effective Date, that:

	(a)
	SkyePharma
is the owner of, or has exclusive rights to, all of the SkyePharma Product Patents in existence on the Effective Date, and has the exclusive right to grant the rights
granted under this Agreement therefor. To the knowledge of SkyePharma, all of the issued SkyePharma Product Patents in existence on the Effective Date are valid, in full force and effect and have been
maintained to date, and are not the subject of any interference or opposition proceedings;

	(b)
	SkyePharma
has provided Endo, or given Endo access to, true, complete and unredacted (except as expressly noted) copies of all (i) Regulatory Documentation, and
(ii) material agreements (including any letter agreements) between SkyePharma and any licensee, production or financing partner or other Third Party, including all effective amendments to any
such agreements, which, in any event (A) affects or may affect Endo's rights under this Agreement, or (B) relates to a Product;

	(c)
	There
is no pending or, to the knowledge of SkyePharma, threatened claim, interference, opposition or demand of any Third Party challenging the ownership, validity or scope of any
SkyePharma Product Patents in existence as of the Effective Date. To the knowledge of SkyePharma, the manufacture, use or sale of the Products as contemplated by this Agreement will not infringe or
otherwise violate any intellectual property right of any Third Party; and

	(d)
	No
representation or warranty made by SkyePharma in this Agreement, any Quality Agreement or any Supply Agreement, nor any statement or record contained in any schedule or exhibit
hereto or thereto furnished by SkyePharma, contains any untrue statement of a material fact or omits any material fact necessary to make the statements contained herein or therein not misleading.

	8.3
	Disclaimer.    EXCEPT AS EXPRESSLY SET FORTH IN THIS SECTION 8, NEITHER PARTY MAKES ANY REPRESENTATIONS OR EXTENDS ANY
WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, AND EACH PARTY EXPRESSLY DISCLAIMS ALL IMPLIED WARRANTIES OF MERCHANTABILITY AND OF FITNESS FOR A PARTICULAR PURPOSE OR USE. 

37

 
	8.4
	Freedom to Operate.    Each Freedom to Operate Opinion previously delivered to Endo concludes that there are no Third Party
intellectual property rights which adversely affect the Parties' right to make, use, sell, and offer for sale the Products as contemplated by this Agreement. In addition, the Parties expect that any
update of such Freedom to Operate Opinions sought pursuant to Section 3.2(f) will conclude that there are no Third Party intellectual property rights which adversely affect the Parties' right
to make, use, sell, and offer for sale the Products as contemplated by this Agreement. However, it is agreed and understood by both Parties that such a Freedom to Operate Opinion or any updated
Freedom to Operate Opinion shall in no way constitute a representation or warranty by or on behalf of SkyePharma that either Party is, in fact, free to make, use, sell, and offer for sale the Product
in any way, without infringing the intellectual property rights of a Third Party.

	8.5
	Negative Pledge.    SkyePharma represents, warrants, and covenants that, except as set forth on
Schedule 8.1(e), there are no liens or claims currently existing on or to the SkyePharma Product IP or SkyePharma Product Patents (including any liens or claims on
or to rights to sue for past, present and future infringements thereof, any licenses, claims, damages, and proceeds of suit arising therefrom, or any payments or rights to payments arising out of the
sale, lease, license, assignment, or other disposition thereof), any additions to, and substitutions for, any or all of the foregoing or any "proceeds"
(as defined in Article 9 of the Uniform Commercial Code) of any or all of foregoing that could reasonably be expected to adversely affect Endo's benefits and rights under this Agreement.
SkyePharma will not create, incur, or permit to exist on or to any SkyePharma Product IP or SkyePharma Product Patents, will defend such SkyePharma Product IP or SkyePharma Product Patents against,
and will take such other action as is necessary to remove in respect to such SkyePharma Product IP or SkyePharma Product Patents, any lien or claim, other than the liens or claims created hereby.
Further, SkyePharma covenants and agrees not to enter into any agreements which would prohibit the creation or attachment of a security interest upon such SkyePharma Product IP or SkyePharma Product
Patents. 

38

   9.     PUBLICATION; CONFIDENTIALITY.  

	9.1
	Notification and Review with Respect to SkyePharma and Endo.

	(a)
	Both
Parties recognize that each may wish to publish the results of their work relating to the subject matter of this Agreement. However, both Parties also recognize the importance of
acquiring patent protection and otherwise maintaining the confidentiality of commercially sensitive information. Consequently, any proposed publication, by either Party (including its Affiliates,
Sublicensees or Subcontractors), that includes information related to the Products or any Development Program, or which otherwise includes proprietary information of the other Party or Confidential
Information, may not be made by either Party without the prior written consent of the other Party, which shall not be unreasonably withheld or delayed.

	(b)
	SkyePharma
agrees not to make any public announcement or disclosure (including, without limitation, any press release, summary or Q&A) affecting the marketing or commercialization of,
or the identity or potential applications of any Product, without first obtaining the prior written approval of Endo (acting in its capacity as commercialization partner). Notwithstanding the
foregoing, on and after the Effective Date, either Party may issue a press release, the content of which will be agreed upon in advance by the Parties, with respect to the execution of this Agreement.

	(c)
	The
JDC will review the manuscript, abstract, text or any other material provided to it under this Section 9.1 to determine whether patentable subject matter is disclosed. The
JDC will notify the publishing Party within [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] days of receipt of
the proposed publication if the JDC, in good faith, determines that patentable subject matter is or may be disclosed, or if the JDC, in good faith, believes Confidential Information is or may be
disclosed. If it is determined by the JDC that patent applications should be filed, the publishing Party shall delay its publication or presentation for a period not to exceed
[Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] days from the JDC's receipt of the proposed publication or
presentation to allow time for the filing of patent applications covering patentable subject matter. In the event that the delay needed to complete the filing of any necessary patent application will
exceed the [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission]day period, the JDC will discuss the need for obtaining
an extension of the publication delay beyond the [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission]day period. If it
is determined in good faith by the JDC that Confidential Information or proprietary information is being disclosed, the Parties shall consult in good faith to arrive at an agreement on mutually
acceptable modifications to the proposed publication or presentation to avoid such disclosure.

	(d)
	Each
Party shall cooperate fully with the other with respect to all disclosures regarding this Agreement required under applicable rules and regulations promulgated by the United
States Securities and Exchange Commission and any other governmental or regulatory agencies; provided,  that, nothing herein shall restrict a Party from
making any disclosure that is required by law.

	(e)
	In
addition, neither Party shall disclose, under any circumstances except as set forth in this Section 9 or as otherwise required by law, the terms of this Agreement or the
identity or potential applications of any Products to any Third Party other than to professional advisors and financing sources, and in that case, only under confidentiality terms at least as
stringent in material respects as this Section 9. 

39

 

	9.2
	Confidentiality; Exceptions.    Except to the extent expressly authorized by this Agreement or otherwise agreed in writing,
during the term of this Agreement and for five years thereafter, the receiving Party shall keep, and shall ensure that its Affiliates, employees, officers and directors keep, confidential and shall
not publish or otherwise disclose and shall not use for any purpose except to effectuate this Agreement (a) any information furnished to it by the other Party, or (b) any information
developed under or in connection with this Agreement by either Party; except to the extent that it can be established by the receiving Party by competent proof that such information: (i) was
already known to the receiving Party, other than under an obligation of confidentiality, at the time of disclosure by the other Party; (ii) was generally available to the public or otherwise
part of the public domain at the time of its disclosure to the receiving Party; (iii) became generally available to the public or was otherwise part of the public domain after its disclosure
and other than through any act or omission of the receiving Party in breach of this Agreement; or (iv) was disclosed to the receiving Party, other than under an obligation of confidentiality,
by a Third Party who had no obligation to the disclosing Party not to disclose such information to others (all such information to which none of the foregoing exceptions applies,
"Confidential Information").

	9.3
	Exceptions to Obligation.    The restrictions contained in Section 9.2 shall not apply to Confidential Information
that (a) is submitted by the recipient to Regulatory Authorities to facilitate the issuance of Registrations for the Products, provided,  that,
reasonable measures shall be taken to assure confidential treatment of such information; (b) is provided by the recipient to Third Parties
under confidentiality agreements having provisions at least as stringent as those in this Agreement in connection with its responsibilities under the Development Programs and Commercialization
Programs; (c) is otherwise required to be disclosed in compliance with applicable laws or regulations or order by a court or other regulatory body having competent jurisdiction;  provided,
that, if a Party is required to make any such disclosure of the other Party's Confidential
Information such Party will give reasonable advance written notice to the other Party of such disclosure requirement and, except to the extent inappropriate in the case of patent applications, will
use its commercially reasonable best efforts to secure confidential treatment of such Confidential Information required to be disclosed; (d) was developed by the receiving Party independent of
any disclosure received under this Agreement; or (e) is developed under or is in connection with this Agreement by either Party and needs to be used by the Party which developed same to
prepare, file and/or prosecute patent applications in the United States, Canada and other countries consistent with the terms of this Agreement. In addition, the restrictions contained in
Section 9.1 or 9.2 shall not apply to SkyePharma to the extent the Confidential Information relates to any Product or any application of any SkyePharma IP, SkyePharma Product Patent, SkyePharma
Product IP or Invention; in each case, for any application (i) outside the Territory, whether or not in the Exclusivity Field, or (ii) outside the Exclusivity Field, whether or not in
the Territory.

	9.4
	Remedies.    Each Party shall be entitled, in addition to any other right or remedy it may have, at law or in equity, to an
injunction, without the posting of any bond or other security, enjoining or restraining the other Party from any violation found by a court of competent jurisdiction of this Section 9. 

40

 

10.   INDEMNIFICATION; INSURANCE.  

	10.1
	By SkyePharma.    SkyePharma shall indemnify, defend and hold harmless Endo and its Affiliates, Sublicensees and
Subcontractors, and their respective directors, officers, employees and agents, from and against any and all liabilities, damages, losses, costs and expenses (including the reasonable fees of
attorneys and other professionals) (collectively, "Damages") arising out of or resulting from:

	(a)
	gross
negligence, recklessness or wrongful intentional acts or omissions of SkyePharma or its Affiliates, Sublicensees or Subcontractors, and their respective directors, officers,
employees and agents, in connection with SkyePharma's activities contemplated under this Agreement, the Supply Agreements and the Quality Agreements;

	(b)
	any
warranty claims, Product recalls or any tort claims of personal injury (including death) or property damage relating to or arising out of any use, sale or offer for sale of any
Product;

	(c)
	any
breach of any representation or warranty or covenant made by SkyePharma pursuant to Section 8 or pursuant to Section 5 of the Supply Agreements;

	(d)
	any
claim made or action taken by Paul Capital Royalty Acquisition Fund, L.P., its affiliates or its or their respective successors or assigns against Endo or its Affiliates,
Sublicensees and Subcontractors in any way arising out of or resulting from the transactions contemplated by this Agreement or the Product, except for the failure by Endo to make payment either to
SkyePharma or as directed by SkyePharma to Paul Capital with respect to all or a portion of the payment to which SkyePharma is obligated to make to Paul Capital; and

	(e)
	any
claim made or action taken (including without limitation injunctive action) which is referred to in the letter from Peter Lankau to Michael R. D. Ashton, dated December 31,
2002; 

in
the case of clauses (a) through (c), only to the extent not due to the gross negligence, recklessness or wrongful intentional acts or omissions of Endo or its Affiliates, Sublicensees or
Subcontractors, and their respective directors, officers, employees and agents. 

It
is specifically agreed that in the case of indemnification pursuant to Section 10.1(e), the Damages shall include all payments made by Endo to SkyePharma relating to
[Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission]. In the event that any such amounts have been paid or credited by
SkyePharma prior to the occurrence of any of the foregoing events and subsequently such claim or action covered under Section 10.1(e) is finally determined (whether by a final court order,
final settlement or otherwise) which does not result in any of the foregoing events, such amounts so paid or credited shall become immediately due and owing from Endo to SkyePharma. 

	10.2
	By Endo.    Endo shall indemnify, defend and hold harmless SkyePharma and its Affiliates, Sublicensees and Subcontractors,
and their respective directors, officers, employees and agents, from and against any and all Damages arising out of or resulting from:

	(a)
	gross
negligence, recklessness or wrongful intentional acts or omissions of Endo or its Affiliates, Sublicensees or Subcontractors, and their respective directors, officers, employees
and agents, in connection with Endo's activities contemplated under this Agreement, the Supply Agreements and the Quality Agreements; or

	(b)
	any
claims relating to or arising out of the marketing or sales activities of Endo or its Affiliates, Sublicensees or Subcontractors, but only to the extent not covered by Sections
6.9 or 10.1; or 

41

 

	(c)
	any
breach of any representation or warranty or covenant made by Endo pursuant to Section 8 or pursuant to Section 5 of the Supply Agreements; 

in
each case, only to the extent not due to the gross negligence, recklessness or wrongful intentional acts or omissions of SkyePharma or its Affiliates, Sublicensees or Subcontractors, and their
respective directors, officers, employees and agents. 

	10.3
	Notice.    In the event that any person (an "Indemnitee") entitled to
indemnification under Section 10.1 or 10.2 is seeking such indemnification, such Indemnitee shall inform the indemnifying Party of the claim as soon as reasonably practicable after such
Indemnitee receives notice of such claim, shall permit the indemnifying Party to assume direction and control of the defense of the claim (including the sole right to settle it at the sole discretion
of the indemnifying Party, provided, that, such settlement does not impose any obligation on the
Indemnitee or the other Party) and shall cooperate as requested (at the expense of the indemnifying Party) in the defense of the claim.

	10.4
	Complete Indemnification.    As the Parties intend complete indemnification, all costs and expenses, including without
limitation, legal fees and expenses, actually incurred by an Indemnitee in connection with enforcement of this Section 10 shall also be reimbursed by the indemnifying Party.

	10.5
	Insurance.

	(a)
	Each
party shall maintain during the performance of this Agreement the following insurance or self-insurance in amounts no less than that specified for each type:

	(i)
	General
liability insurance with combined limits of not less than $ [Confidential Information Has Been Omitted And Furnished Separately To The Securities And
Exchange Commission] per occurrence and $ [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] per
accident for bodily injury, including death and property damage;

	(ii)
	Workers'
compensation insurance in the amounts required by the law of the state(s) in which such party's workers are located and employer's liability insurance with
limits of not less than $ [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] per occurrence;

	(iii)
	In
the event that the use of a company-owned motor vehicle is required in the performance of this Agreement, automobile liability insurance with combined limits of not
less than $ [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] per occurrence and $ [Confidential
Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] per accident for bodily injury, including death and property damage, is required;

	(iv)
	Product
liability insurance with limits not less than $ [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange
Commission]; and

	(v)
	Excess
insurance, in excess of all coverages set forth above, with limits not less than $ [Confidential Information Has Been Omitted And Furnished Separately
To The Securities And Exchange Commission].

	(b)
	Each
Party shall provide to the other [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] days prior
written notice of any cancellation or change in its coverage. 

42

 

11.   TERM; TERMINATION.  

	11.1
	Term.    This Agreement shall become effective as of the Effective Date and, unless earlier terminated pursuant to the other
provisions of this Section 11, shall expire:

	(a)
	on
a Product-by-Product, country-by-country basis, upon the later of (i) the expiration of the Valid Claims of all Patents
covering such Product in each country within the Territory, and (ii) the 15th anniversary of First Commercial Sale of such Product; and

	(b)
	in
its entirety upon the last to occur of the events referenced in Section 11.1(a) in respect to the last remaining Product to which this Agreement applies.

	11.2
	Termination for Cause.    Either Party (the "Non-breaching
Party") may, without prejudice to any other remedies available to it at law or in equity, terminate this Agreement in its entirety or with respect to any Product or with
respect to any Product in any country in the Territory, in the event the other Party (the "Breaching Party") shall have materially breached or defaulted
in the performance of any of its material obligations hereunder or, with respect to such Product or such Product in a country, so materially breached or defaulted with respect to that Product or that
Product in such country, and such default shall have continued for [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange
Commission] after written notice thereof was provided to the Breaching Party by the Non-breaching Party (or, if such default cannot be cured within such
[Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission]period, if the Breaching Party does not commence and diligently
continue actions to cure such default during such [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] period). Any
such termination shall become effective at the end of such [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] period
unless the Breaching Party has cured any such breach or default prior to the expiration of such [Confidential Information Has Been Omitted And Furnished Separately To The Securities And
Exchange Commission] period (or, if such default cannot be cured within such [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange
Commission] period, if the Breaching Party has commenced and diligently continued actions to cure such default). The right of either Party to terminate this Agreement as provided in this
Section 11.2 shall not be affected in any way by its waiver or failure to take action with respect to any previous default.

	11.3
	Termination in Connection with Bankruptcy.    Either Party may terminate this Agreement effective immediately in the event
that the other Party (i) has become insolvent or has been dissolved or liquidated, filed or has filed against it, a petition, case or other proceeding under any Bankruptcy Laws, and such
petition, case or proceeding if filed against it is not dismissed within [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange
Commission] of the filing; (ii) makes a general assignment for the benefit of creditors; or (iii) has a receiver, custodian, trustee or other Person exercising similar
functions appointed for all or substantially all of its assets. Notwithstanding the foregoing, Endo may elect to terminate this Agreement upon the occurrence of one of the foregoing events solely with
respect to SkyePharma Canada Inc. and/or its subsidiaries and not SkyePharma, Inc. and/or its subsidiaries if the occurrence of such event is reasonably anticipated by Endo to have a
material adverse effect on the rights and benefits of Endo under this Agreement.

	11.4
	Termination For Delay.    In the event that SkyePharma has not received written notice that the FDA has:

	(a)
	accepted
the Registration Application for DepoMorphine in the United States on or before September 1, 2004; or 

43

 

	(b)
	finally
approved the Registration of DepoMorphine in the United States with the Target Labeling on or before December 1, 2005; or

	(c)
	accepted
the Registration Application for Propofol IDD-D in the United States on or before March 31, 2006; or

	(d)
	finally
approved the Registration of Propofol IDD-D in the United States with the Target Labeling on or before June 1, 2007; 

then,
in each case, Endo shall have the right to terminate its rights and obligations under this Agreement and all ancillary agreements related thereto by giving written notice to SkyePharma as
provided in Section 11.9(i)(A). 

	11.5
	Termination For Failure to Achieve the Target Labeling.    Upon Endo's receipt of notice from SkyePharma of the FDA's final
approval of the Registration of DepoMorphine or Propofol IDD-D, as the case may be, in the United States which does not meet the applicable Target Labeling together with a copy of the
labeling that was approved by the FDA, Endo shall have the right to terminate its rights and obligations under this Agreement only if the approved labeling materially fails to meet the applicable
Target Labeling such that expected sales of DepoMorphine or Propofol IDD-D, as the case may be, are significantly adversely affected and, within [Confidential Information Has
Been Omitted And Furnished Separately To The Securities And Exchange Commission] after receiving such notice from SkyePharma, Endo gives SkyePharma notice certifying same and stating that
it is exercising this termination right as provided in Section 11.9(i)(A). In the event Endo so exercises its right to terminate, the milestone payable to SkyePharma pursuant to
Section 4.2 upon the FDA's final approval of the Registration of DepoMorphine or Propofol IDD-D, as the case may be, in the United States shall not become due.

	11.6
	Long-Term Inability to Supply.    In the event that a Long-Term Inability to Supply has occurred
with respect to a Product, Endo shall have the right, in its sole discretion, upon written notice to terminate this Agreement in its entirety or solely as to the Product not adequately supplied.

	11.7
	Safety.    If during a Product's Development Program or Commercialization Program, such Product becomes subject to a pattern
of Serious Adverse Drug Experiences or either Party receives notice from a Regulatory Authority, independent review committee, data safety monitoring board or another similar clinical trial or
post-marketing monitoring body alleging significant concern regarding a patient safety issue, in each case which Endo, in good faith, reasonably believes would seriously impact the
long-term viability of the Product, Endo shall have the right, upon [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange
Commission] prior written notice to SkyePharma setting forth the reasons therefor, to have the JEC determine whether or not there exists such serious impact on the long-term
viability of a Product and, what if anything, the Parties should do to address the matter. In the event the JEC is unable to reach a unanimous resolution of the matter within [Confidential
Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] of the matter being referred to the JEC, Endo may terminate its rights and obligations
under this Agreement upon written notice as provided in Section 11.9(i)(A) so long as Endo reasonably believes the patient safety issue would seriously impact the long-term
viability of the Product. 

44

 
	11.8
	Other Termination.    Endo shall have the right in its sole discretion to terminate this Agreement in its entirety, if not
terminated by Endo under any other provision of this Agreement, upon [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange
Commission] prior written notice; provided that in such event, Endo shall pay SkyePharma on the effective date of such termination Five
Million Dollars ($5,000,000.00); provided further that, notwithstanding the foregoing, Endo shall not be obligated to make such payment to SkyePharma in
the event that Endo has been involved in a merger, consolidation or similar transaction or sale of all or substantially all of its assets which has resulted in a change of control of Endo prior to
such termination.

	11.9
	Effect of Expiration or Termination.

	(a)
	Upon
the expiration of the term of this Agreement with respect to a Product in any country in the Territory pursuant to Section 11.1, Endo's rights and obligations with respect
to such Product shall terminate.

	(b)
	If
this Agreement is terminated by SkyePharma with respect to a particular Product in one or more countries in the Territory pursuant to Section 11.2, in addition to any other
remedies available to SkyePharma at law or in equity: (i) at Endo's expense, Endo shall promptly transfer to SkyePharma copies of all relevant data, reports, records and materials in Endo's
possession or control that relate to such Product in the country or countries, as applicable, in respect to which termination has occurred and return to SkyePharma all relevant records and materials
in Endo's possession or control containing Confidential Information of SkyePharma relating to such Product in such country or countries, as applicable
(provided, that, Endo may keep one copy of such Confidential Information of SkyePharma for archival
purposes only); (ii) to the extent Endo owns or holds any right, title and interest in trademarks, trade names, and logos under which such Product has been or is being marketed or sold in such
country or countries, as applicable, Endo shall assign the same to SkyePharma; (iii) the license granted under Section 6.1 and by SkyePharma under Section 6.6(d) shall terminate
with respect to such Product in such country or countries, as applicable; (iv) SkyePharma shall pay a royalty to Endo on the Net Sales of such Product in such country or countries, as
applicable, which shall be determined in accordance with Section 11.9(h); (v) all sublicenses granted by Endo under this Agreement shall continue in full force and effect in accordance
with the terms and conditions of the respective sublicense agreements, and Endo will assign to SkyePharma those sublicense agreements to the extent relating to such Product in such country or
countries, as applicable; (vi) if DepoMorphine is the Product being terminated, then subsections (a) and (b) of the definition of Exclusivity Field and subsection (a) of
the definition of Development Field shall terminate and no longer have any effect through the application of such terms in this Agreement in such country or countries, as applicable; (vii) if
Propofol IDD-D is the Product being terminated, then subsection (c) of the definition of Exclusivity Field and subsection (b) of the definition of Development Field shall
terminate and no longer have any effect through the application of such term in this Agreement in such country or countries as applicable; and (viii) if DepoMorphine is the Product being
terminated and is being terminated in all countries in the Territory, Section 2.11 shall terminate; and (ix) Endo shall, at Endo's expense, provide SkyePharma with all reasonably
necessary or useful assistance to enable SkyePharma to coordinate and undertake the orderly continued development and commercialization of such Product in such country or countries as applicable (such
assistance shall include, but not be limited to, providing access to, copies of and the right to use customer lists, marketing materials, marketing plans and marketing presentations solely to the
extent related to such Product in such country or countries, as applicable, as well as advice and recommendations on which sales representatives, sales organizations and sales methods would most
likely prove most beneficial to promote sales of such Product). 

45

 

	(c)
	If
this Agreement is terminated by SkyePharma in its entirety pursuant to Section 11.2, in addition to any other remedies available to SkyePharma at law or in equity:
(i) at Endo's expense, Endo shall promptly transfer to SkyePharma copies of all relevant data, reports, records and materials in Endo's possession or control that relate to a Development
Program or a Commercialization Program and return to SkyePharma all relevant records and materials in Endo's possession or control containing Confidential Information of SkyePharma
(provided, that, Endo may keep one copy of such Confidential Information of SkyePharma for archival
purposes only); (ii) to the extent Endo owns or holds any right, title and interest in any trademarks, trade names, and logos under which any Product(s) have been or are being marketed or sold
in the Territory, Endo shall assign the same to SkyePharma; (iii) the licenses granted under Section 6.1 and by SkyePharma under Section 6.6(b) shall terminate with respect to all
Products; (iv) SkyePharma shall pay a royalty to Endo on the Net Sales of the Products which shall be determined in accordance with Section 11.9(h); (v) all sublicenses granted by
Endo under this Agreement shall continue in full force and effect in accordance with the terms and conditions of the respective sublicense agreements, and Endo will assign all such sublicense
agreements to SkyePharma; and (vi) Endo shall, at Endo's expense, provide SkyePharma with all reasonably necessary or useful assistance to enable SkyePharma to coordinate and undertake the
orderly continued development and commercialization of the Products (such assistance shall include, but not be limited to, providing access to, copies of and the right to use customer lists, marketing
materials, marketing plans and marketing presentations solely to the extent related to the Products as well as advice and recommendations on which sales representatives, sales organizations and sales
methods would most likely prove most beneficial to promote sales of the Products).

	(d)
	If
this Agreement is terminated by SkyePharma in its entirety pursuant to Section 11.3, in addition to any other remedies available to SkyePharma at law or in equity:
(i) at Endo's expense, Endo shall promptly transfer to SkyePharma copies of all relevant data, reports, records and materials in Endo's possession or control that relate to a Development
Program or a Commercialization Program and return to SkyePharma all relevant records and materials in Endo's possession or control containing Confidential Information of SkyePharma
(provided, that, Endo may keep one copy of such Confidential Information of SkyePharma for archival purposes only); (ii) to the extent Endo owns
or holds any right, title and interest in any trademarks, trade names, and logos under which any Product(s) have been or are being marketed or sold in the Territory, Endo shall assign the same to
SkyePharma; (iii) the license granted to Endo under Sections 6.1 and Section 6.6(d) shall terminate with respect to all Products and SkyePharma shall be permitted to market and sell such
Product in the Territory, whether or not in the Exclusivity Field, without any obligation to Endo; and (iv) all sublicenses granted by Endo under this Agreement shall continue in full force and
effect in accordance with the terms and conditions of the respective sublicense agreements, and Endo will assign all such sublicense agreements to SkyePharma. 

46

 

	(e)
	If
this Agreement is terminated by Endo with respect to a particular Product in one or more countries in the Territory pursuant to Section 11.2, in addition to any other
remedies available to Endo at law or in equity: (i) at SkyePharma's expense, SkyePharma shall promptly transfer to Endo copies of all relevant data, reports, records and materials in
SkyePharma's possession or control that relate to such Product in the country or countries, as applicable, in respect to which termination has occurred and return to Endo all relevant records and
materials in SkyePharma's possession or control containing Confidential Information of Endo relating to such Product in such country or countries, as applicable,
(provided, that, SkyePharma may keep one copy of such Confidential Information of Endo for archival
purposes only); (ii) SkyePharma shall, upon Endo's request and at SkyePharma's expense, provide Endo with all information necessary or desirable to cross-reference and/or assume responsibility
for any of SkyePharma's INDs, Registration Applications, Registrations and other regulatory filings for the applicable Target Indications in the applicable Development Field with respect to such
Product in such country or countries, as applicable; (iii) the licenses granted under Section 6.1 and by Endo under Section 6.6(d) shall terminate with respect to such Product;
(iv) a new license is hereby granted to Endo under which Endo shall have a royalty-bearing (such royalty to be determined in accordance with Section 11.9(h)), exclusive (even as to
SkyePharma) right and license under SkyePharma's rights in any Inventions, SkyePharma Product IP and SkyePharma Product Patents in such country or countries, as applicable, in each case to enable Endo
to develop, use, make, have made, offer for sale, sell, and import such Product(s) in such country or countries, as applicable, in the Territory for the applicable Target Indications; (v) if
DepoMorphine is the Product being terminated, then subsections (a) and (b) of the definition of Exclusivity Field and subsection (a) of the definition of Development Field shall
terminate and no longer have any effect through the application of such terms in this Agreement in such country or countries, as applicable; (vi) if Propofol IDD-D is the Product
being terminated, then subsection (c) of the definition of Exclusivity Field and subsection (b) of the definition of Development Field shall terminate and no longer have any effect
through the application of such term in this Agreement in such country or countries, as applicable; (vii) all Third Party manufacturing and supply agreements entered into by SkyePharma in
connection with this Agreement shall continue in full force and effect in accordance with the terms and conditions of the respective Third Party manufacturing and supply agreement, and SkyePharma will
assign to Endo such agreements to the extent relating to such Product in such country or countries, as applicable; and (viii) SkyePharma shall, at SkyePharma's expense, provide Endo with all
reasonably necessary or useful assistance to enable Endo to coordinate and undertake the orderly continued development and commercialization of such Product in such country or countries, as applicable
(such assistance shall include, but not be limited to, providing access to, copies of and the right to use supplier lists and development and supplier materials solely to the extent related to such
Product in such country or countries, as applicable, as well as advice and recommendations on which suppliers or developers would most likely prove most beneficial in developing, manufacturing and
supplying such Product). 

47

 

	(f)
	If
this Agreement is terminated by Endo in its entirety pursuant to Section 11.2, in addition to any other remedies available to Endo at law or in equity: (i) at
SkyePharma's expense, SkyePharma shall promptly transfer to Endo copies of all relevant data, reports, records and materials in SkyePharma's possession or control that relate to a Development Program
or a Commercialization Program and return to Endo all relevant records and materials in SkyePharma's possession or control containing Confidential Information of Endo
(provided, that, SkyePharma may keep one copy of such Confidential Information of Endo for archival
purposes only); (ii) SkyePharma shall, upon Endo's request and at SkyePharma's expense, provide Endo with all information necessary or desirable to cross-reference and/or assume responsibility
for any of SkyePharma's INDs, Registration Applications, Registrations and other regulatory filings for the applicable Target Indications in the applicable Development Field in the Territory with
respect to all Products; (iii) the licenses granted under Section 6.1 and by Endo under Section 6.6(d) shall terminate with respect to all Products; (iv) a new license is
hereby granted to Endo under which Endo shall have a royalty-bearing (such royalty to be determined in accordance with Section 11.9(h)), exclusive (even as to SkyePharma) right and license
under SkyePharma's rights in Inventions, SkyePharma Product IP and SkyePharma Product Patents, in each case to enable Endo to develop, use, make, have made, offer for sale, sell, and import all
Products in the Territory for the applicable Target Indications; (v) all Third Party manufacturing and supply agreements entered into by SkyePharma in connection with this Agreement shall
continue in full force and effect in accordance with the terms and conditions of the respective Third Party manufacturing and supply agreements, and SkyePharma will assign to Endo such agreements; and
(vi) SkyePharma shall, at SkyePharma's expense, provide Endo with all reasonably necessary or useful assistance to enable Endo to coordinate and undertake the orderly continued development and
commercialization of such Product in such country or countries, as applicable (such assistance shall include, but not be limited to, providing access to, copies of and the right to use supplier lists
and development and supplier materials solely to the extent related to the Products, as well as advice and recommendations on which suppliers or developers would most likely prove most beneficial in
developing, manufacturing and supplying the Products).

	(g)
	If
this Agreement is terminated by Endo in its entirety pursuant to Section 11.3, in addition to any other remedies available to Endo at law or in equity: (i) at
SkyePharma's expense, SkyePharma shall promptly transfer to Endo copies of all relevant data, reports, records and materials in SkyePharma's possession or control that relate to a Development Program
or a Commercialization Program and return to Endo all relevant records and materials in SkyePharma's possession or control containing Confidential Information of Endo
(provided, that, SkyePharma may keep one copy of such Confidential Information of Endo for archival
purposes only); (ii) SkyePharma shall, upon Endo's request and at SkyePharma's expense, provide Endo with all information necessary or desirable to cross-reference and/or assume responsibility
for any of SkyePharma's INDs, Registration Applications, Registrations and other regulatory filings for the applicable Target Indications in the applicable Field in the Territory with respect to all
Products; (iii) the licenses granted under Section 6.1 and by SkyePharma under Section 6.6(d) shall survive with respect to all Products and (iv) all Third Party
manufacturing and supply agreements entered into by SkyePharma in connection with this Agreement shall continue in full force and effect in accordance with the terms and conditions of the respective
Third Party manufacturing and supply agreements, and SkyePharma will assign to Endo such agreements. If this Agreement is terminated by Endo pursuant to Section 11.3 in respect to SkyePharma
Canada Inc. only, then, in addition to any other remedies available to Endo at law or in equity, Endo shall have the rights and remedies referenced in clauses (i) through (iv) of
this Section 11.9(g) to the extent applicable to SkyePharma Canada Inc. 

48

 

	(h)
	Royalties,
if any, payable under Sections 11.9(b), (c), (e), (f) and (j), inclusive, shall be payable on the Net Sales of the Product(s) that are subject to such termination.
Upon such a termination occurring, the Parties shall enter into good faith negotiations regarding (i) the applicable royalty rate(s) payable with respect to such Product(s) based upon the
application of the factors set forth in the following sentence. The factors that shall be considered are: the then current market practices for pharmaceutical products of similar commercial promise,
the relative financial contributions of the Parties to the development and commercialization of such Product(s), the market potential of such Product(s), the apparent risks of going forward with
development and commercialization and the damages caused, if any, by the circumstances of the termination in question to the development and commercialization prospects for such Product(s). Such
matters on which the Parties cannot reach consensus within [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] after
such termination shall be conclusively settled in accordance with the Special Arbitration Provisions in a manner consistent with the foregoing guidelines.

	(i)
	
	(A)
	If
Endo determines to terminate this Agreement in its entirety pursuant to Sections 11.4, 11.5 or
11.7, Endo shall give notice to SkyePharma of its intent to terminate which notice will give rise to the Parties' good faith obligations to attempt to renegotiate the terms of this Agreement. To the
extent that the Parties are unable to agree to mutually acceptable terms within [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange
Commission], this Agreement shall terminate in its entirety upon a second notice from Endo and the Parties shall submit to arbitration pursuant to Section 13.13(a) to determine the
percentage interest in Net Proceeds of each Product to which each Party is entitled, based on factors such as the then current market practices for pharmaceutical products of similar commercial
promise, the relative financial contributions of the Parties to the development and commercialization of such Product(s), the market potential of such Product(s), and the apparent risks of going
forward with development and commercialization, if any. Any such termination shall be effective upon a decision of the arbitrator(s) pursuant to Section 13.13(a). Unless the Parties agree
otherwise, SkyePharma shall pay to Endo such percentage of the Net Proceeds of such Product, as and when received. For purposes of Sections 11.9(i) and 11.9(k), Net Proceeds shall mean any
payments received by SkyePharma from a Third Party in respect to the development and commercialization of a Product, whether in the form of milestone payments, royalties, sales splits, product sales
to customers or otherwise, net of the costs incurred by SkyePharma in effectuating the transactions which generate such payments. After termination, SkyePharma shall use commercially reasonable
efforts to commercialize the Products (which may include licensing such Products to a Third Party, divesting the Product or selling such Product itself or through an Affiliate). If SkyePharma fails to
so commercialize a Product within [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] months of termination, it shall
use commercially reasonable efforts to sell such Products as soon as reasonably possible and pay to Endo the percentage of Net Proceeds of a resulting sale determined as referenced above in this
paragraph. 

49

 

	(B)
	Upon
termination of this Agreement under Sections 11.4, 11.5 or 11.7, (i) at the Parties' joint expense, Endo shall promptly transfer to SkyePharma copies of all relevant data,
reports, records and materials in Endo's possession or control that relate to the Development Program or the Commercialization Program and return to SkyePharma all relevant records and materials in
Endo's possession or control containing Confidential Information of SkyePharma (provided, that, Endo may
keep one copy of such Confidential Information of SkyePharma for archival purposes only); (ii) to the extent Endo owns or holds any right, title and interest in any trademarks, trade names, and
logos under which Products have been or are being marketed or sold in the Territory, Endo shall assign the same to SkyePharma; (iii) the licenses granted under Section 6.1 and by
SkyePharma under Section 6.6(d) shall terminate and SkyePharma shall be permitted to market and sell the Products in the Territory, whether or not in the Exclusivity Field, without any
obligation to Endo except as set forth above; (iv) all sublicenses granted by Endo under this Agreement shall terminate to the extent relating to the Products; (v) Endo shall, at the
Parties joint expense, provide SkyePharma with all reasonably necessary or useful assistance to enable SkyePharma to coordinate and undertake the orderly continued development and commercialization of
the Products (such assistance shall include, but not be limited to, providing access to, copies of and the right to use customer lists, marketing materials, marketing plans and marketing presentations
solely to the extent related to the Products as well as advice and recommendations on which sales representatives, sales organizations and sales methods would most likely prove most beneficial to
promote sales of the Products). 

50

 

	(j)
	If
this Agreement is terminated by Endo with respect to a particular Product pursuant to Section 11.6, in addition to any other remedies available to Endo at law or in equity:
(i) at SkyePharma's expense, SkyePharma shall promptly transfer to Endo copies of all relevant data, reports, records and materials in SkyePharma's possession or control that relate to such
Product in respect to which termination has occurred and return to Endo all relevant records and materials in SkyePharma's possession or control containing Confidential Information of Endo relating to
such Product (provided, that, SkyePharma may keep one copy of such Confidential Information of Endo for
archival purposes only); (ii) SkyePharma shall, upon Endo's request and at SkyePharma's expense, provide Endo with all information necessary or desirable to cross-reference and/or assume
responsibility for any of SkyePharma's INDs, Registration Applications, Registrations and other regulatory filings for the applicable Target Indications in the applicable Development Field with
respect to such Product; (iii) the licenses granted under Section 6.1 and by Endo under Section 6.6(d) shall terminate with respect to such Product; (iv) a new license is
hereby granted to Endo under which Endo shall have a royalty-bearing (such royalty to be determined in accordance with Section 11.9(h)), exclusive (even as to SkyePharma) right and license
under SkyePharma's rights in any Inventions, SkyePharma Product IP and SkyePharma Product Patents, in each case to enable Endo to develop, use, make, have made, offer for sale, sell, and import such
Product(s) in the Territory for the applicable Target Indications; (v) if DepoMorphine is the Product being terminated, then subsections (a) and (b) of the definition of
Exclusivity Field and subsection (a) of the definition of Development Field shall terminate and no longer have any effect through the application of such terms in this Agreement, (vi) if
Propofol IDD-D is the Product being terminated, then subsection (c) of the definition of Exclusivity Field and subsection (b) of the definition of Development Field shall
terminate and no longer have any effect through the application of such term in this Agreement; (vii) all Third Party manufacturing and supply agreements entered into by SkyePharma in
connection with this Agreement shall continue in full force and effect in accordance with the terms and conditions of the respective Third Party manufacturing and supply agreement, and SkyePharma will
assign to Endo such agreements to the extent relating to such Product; and (viii) SkyePharma shall, at SkyePharma's expense, provide Endo with all reasonably necessary or useful assistance to
enable Endo to coordinate and undertake the orderly continued development and commercialization of such Product (such assistance shall include, but not be limited to, providing access to, copies of
and the right to use supplier lists and development and supplier materials solely to the extent related to such Product, as well as advice and recommendations on which suppliers or developers would
most likely prove most beneficial in developing, manufacturing and supplying such Product). 

51

 

	(k)
	
	(A)
	If
Endo terminates this Agreement in its entirety pursuant to Section 11.6, the Parties shall submit
to arbitration pursuant to Section 13.13(a) to determine the percentage interest in Net Proceeds of each Product to which each Party is entitled, based on factors such as the then current
market practices for pharmaceutical products of similar commercial promise, the relative financial contributions of the Parties to the development and commercialization of such Product(s), the market
potential of such Product(s), and the apparent risks of going forward with development and commercialization of such Product(s), if any, and if the Long-Term Inability to Supply is caused
by any reason other than Force Majeure, the damages caused if any, by the circumstances of the termination in question to the development and commercialization prospects of such Product(s). Any such
termination shall be effective upon a decision of the arbitrator(s) pursuant to Section 13.13(a). Unless the Parties agree otherwise, SkyePharma shall pay to Endo such percentage of the Net
Proceeds of such Product, as and when received. After termination, SkyePharma shall use commercially reasonable efforts to commercialize the Products (which may include licensing such Products to
third party, divesting the Product or selling such Product itself or through an Affiliate). If SkyePharma fails to so commercialize a Product within [Confidential Information Has Been
Omitted And Furnished Separately To The Securities And Exchange Commission] months of termination, it shall use commercially reasonable efforts to sell such Products as soon as reasonably
possible and pay to Endo the percentage of Net Proceeds of a resulting sale determined as referenced above in this paragraph.

	(B)
	Upon
termination of this Agreement in its entirety under Section 11.6, at SkyePharma's expense, Endo shall promptly transfer to SkyePharma copies of all relevant data, reports,
records and materials in Endo's possession or control that relate to the Development Program or the Commercialization Program for the Products and return to SkyePharma all relevant records and
materials in Endo's possession or control containing Confidential Information of SkyePharma relating to the Products (provided,  that, Endo may keep one
copy of such Confidential Information of SkyePharma for archival purposes only); (ii) to the extent Endo owns or holds
any right, title and interest in any trademarks, trade names, and logos under which the Products have been or are being marketed or sold in the Territory, Endo shall assign the same to SkyePharma;
(iii) the licenses granted under Section 6.1 and by SkyePharma under Section 6.6(d) shall terminate and SkyePharma shall be permitted to market and sell the Products in the
Territory, whether or not in the Exclusivity Field, without any obligation to Endo except as set forth above; (iv) all sublicenses granted by Endo under this Agreement shall terminate to the
extent relating to the Products; (v) Endo shall, at the Parties joint expense, provide SkyePharma with all reasonably necessary or useful assistance to enable SkyePharma to coordinate and
undertake the orderly continued development and commercialization of the Products (such assistance shall include, but not be limited to, providing access to, copies of and the right to use customer
lists, marketing materials, marketing plans and marketing presentations solely to the extent related to the Products as well as advice and recommendations on which sales representatives, sales
organizations and sales methods would most likely prove most beneficial to promote sales of the Products). 

52

 

	(l)
	Upon
termination of this Agreement in its entirety under Section 11.8, at Endo's expense, Endo shall promptly transfer to SkyePharma copies of all relevant data, reports,
records and materials in Endo's possession or control that relate to the Development Program or the Commercialization Program for the Products and return to SkyePharma all relevant records and
materials in Endo's possession or control containing Confidential Information of SkyePharma relating to the Products (provided,  that, Endo may keep one
copy of such Confidential Information of SkyePharma for archival purposes only); (ii) to the extent Endo owns or holds
any right, title and interest in any trademarks, trade names, and logos under which the Products have been or are being marketed or sold in the Territory, Endo shall assign the same to SkyePharma;
(iii) the licenses granted under Section 6.1 and by SkyePharma under Section 6.6(d) shall terminate and SkyePharma shall be permitted to market and sell the Products in the
Territory, whether or not in the Exclusivity Field, without any obligation to Endo except as set forth above; (iv) all sublicenses granted by Endo under this Agreement shall terminate to the
extent relating to the Products; (v) Endo shall, at the Parties joint expense, provide SkyePharma with all reasonably necessary or useful assistance to enable SkyePharma to coordinate and
undertake the orderly continued development and commercialization of the Products (such assistance shall include, but not be limited to, providing access to, copies of and the right to use customer
lists, marketing materials, marketing plans and marketing presentations solely to the extent related to the Products as well as advice and recommendations on which sales representatives, sales
organizations and sales methods would most likely prove most beneficial to promote sales of the Products).

	(m)
	At
the expiration or any termination of this Agreement in its entirety, each Party's payment obligations under this Agreement shall terminate as of the effective date of such
expiration or termination, except for payments to the other Party that accrued prior to the effective date of such expiration or termination and are due and payable by one Party to the other Party
pursuant to this Agreement and except for the payments referenced in this Agreement that are to survive termination.

	11.10
	Accrued Rights; Surviving Obligations.

	(a)
	Termination,
relinquishment or expiration of this Agreement for any reason shall be without prejudice to any rights that shall have accrued to the benefit of either Party prior to
such termination, relinquishment or expiration. Such termination, relinquishment or expiration shall not relieve either Party from obligations that are expressly indicated to survive termination or
expiration of this Agreement.

	(b)
	All
of the Parties' rights and obligations under Sections 5, 6.6 (subject to Section 11), 7, 8, 9, 10, 11, 12, and 13 shall survive termination, relinquishment or expiration of
this Agreement. 

53

 

12.   FORCE MAJEURE.  

        Neither Party shall be held liable or responsible to the other Party nor be deemed to be in default under, or in breach of any provision of, this Agreement for
failure or delay in fulfilling or performing any obligation of this Agreement when such failure or delay is due to force majeure, and without the fault
or negligence of the Party so failing or delaying. For purposes of this Agreement, force majeure is defined as causes beyond the control of the Party,
including, without limitation, acts of God; acts, regulations, or laws of any government adopted after the date of this Agreement or subject to a new interpretation after the date of this Agreement
that render impossible or illegal performance by a Party of its obligations under this Agreement; war; civil commotion; destruction of production facilities or materials by fire, flood, earthquake,
explosion or storm; labor disturbances; epidemic; and failure of public utilities or common carriers. In such event SkyePharma or Endo, as the case may be, shall immediately notify the other Party,
with written notice to follow, of such inability and of the period for which such inability is expected to continue. The Party giving such notice shall thereupon be excused from such of its
obligations under this Agreement as it is thereby disabled from performing for so long as it is so disabled. To the extent possible, each Party shall use reasonable efforts to minimize the duration of
any force majeure.

13.   MISCELLANEOUS.  

	13.1
	Relationship of Parties.    Nothing in this Agreement is intended or shall be deemed to constitute a partnership, agency,
employer-employee or joint venture relationship between the Parties. No Party shall incur any debts or make any commitments for the other, except to the extent, if at all, specifically provided
herein.

	13.2
	Assignment.    Neither Party shall be entitled to assign its rights or delegate its obligations hereunder without the
express written consent of the other Party hereto, except that each Party may assign its rights and transfer its duties hereunder (i) without obtaining such written consent in the event of such
Party's merger, consolidation or sale of all or substantially all of its assets (a "change of control"), or (ii) to an assignee of that portion
of its business to which this Agreement relates upon obtaining the express written consent of the other Party which consent shall not be unreasonably withheld as long as the assignee has the skill and
financial ability to perform the assignor's obligations hereunder and is not otherwise a competitor of the remaining Party. No assignment and transfer shall be valid or effective unless done in
accordance with this Section 13.2 and unless and until the assignee, transferee or successor-in-interest shall agree in writing to be bound by the provisions of this
Agreement, and upon such agreement, all references herein to the assignor, transferor or predecessor shall be deemed to refer and apply to the assignee, transferee or successor in interest.

	13.3
	Books and Records.    Any books and records to be maintained under this Agreement shall be maintained in accordance with
GAAP.

	13.4
	Further Actions.    Each Party shall execute, acknowledge and deliver such further instruments, and do all such other acts,
as may be necessary or appropriate in order to carry out the purposes and intent of this Agreement. If required at any time, each Party will promptly make any necessary filings required under HSR and
will share equally the filing fees related thereto, and thereafter shall comply at the earliest practicable date with any request for additional information made by any governmental authority pursuant
to HSR and use all reasonable efforts to assist the other Party in making such filings and complying with such requests. 

54

 
	13.5
	Notice.

	(a)
	Except
for notices given pursuant to Section 7.1, any notice or request required or permitted to be given under or in connection with this Agreement shall be deemed to have
been sufficiently given if in writing and personally delivered or sent by certified mail (return receipt requested), facsimile transmission (receipt verified), or overnight express courier service
(signature required), prepaid, to the Party for which such notice is intended, at the address set forth for such Party below:

	(i)
	in
the case of SkyePharma, to:

    SkyePharma, Inc.

    10450 Science Center Drive

    San Diego, CA 92121

    Attention: Steve Thornton

    Facsimile No.: (858) 623-0376

	(ii)
	in
the case of Endo, to:

    Endo Pharmaceuticals Inc.

    100 Painters Dr.

    Chadds Ford, PA 19317

    Attention: General Counsel

    Facsimile No.: (610) 558-9684 

or
to such other address for such Party as it shall have specified by like notice to the other Party, provided,  that, notices of a change of address shall be
effective only upon receipt thereof. With respect to notices given pursuant to Section 7.1 or this
Section 13.5, (i) if delivered personally or by facsimile transmission, the date of delivery shall be deemed to be the date on which such notice or request was given; (ii) if sent
by overnight express courier service, the date of delivery shall be deemed to be the next business day after such notice or request was deposited with such service; and (iii) if sent by
certified mail, the date of delivery shall be deemed to be the third business day after such notice or request was deposited with the U.S. Postal Service. 

	(b)
	All
correspondence, notices and other communications shall be promptly provided to the other Party.

	13.6
	Use of Name.    Except as otherwise provided herein, neither Party shall have any right, express or implied, to use in any
manner the name or other designation of the other Party or any other trade name, trademark or logo of the other Party for any purpose in connection with the performance of this Agreement.

	13.7
	Public Announcements.    Except as required by law (including, without limitation, disclosure requirements of the U.S.
Securities and Exchange Commission, NASDAQ or any other stock exchange on which securities issued by a Party or a Party's Affiliates are traded) and as permitted by Section 9, neither Party
shall make any public announcement concerning this Agreement or the subject matter hereof without the prior written consent of the other, which shall not be unreasonably withheld,  provided, that, it shall not be unreasonable for a Party to withhold consent with respect to any of such
Party's Confidential Information. In the event of a required public announcement, to the extent practicable under the circumstances, the Party making such announcement shall provide the other Party
with a copy of the proposed text prior to such announcement and with financial terms in advance of the scheduled release of such announcement. 

55

 
	13.8
	Waiver.    A waiver by either Party of any of the terms and conditions of this Agreement in any instance shall not be deemed
or construed to be a waiver of such term or condition for the future, or of any subsequent breach hereof. All rights, remedies, undertakings, obligations and agreements contained in this Agreement
shall be cumulative and none of them shall be in limitation of any other remedy, right, undertaking, obligation or agreement of either Party.

	13.9
	Compliance with Law.    Nothing in this Agreement shall be deemed to permit a Party to export, reexport or otherwise
transfer any Products sold under this Agreement without compliance with applicable laws.

	13.10
	Severability.    When possible, each provision of this Agreement will be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision will be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of this Agreement.

	13.11
	Amendment.    No amendment, modification or supplement of any provisions of this Agreement shall be valid or effective
unless made in writing and signed by a duly authorized officer of each Party.

	13.12
	Governing Law.    This Agreement shall be governed by and interpreted in accordance with the laws of the State of New York
without regard to conflict of law principles.

	13.13
	Arbitration.

	(a)
	Except
as expressly otherwise provided in this Agreement, any dispute arising out of or relating to the interpretation of any provisions of this Agreement or the failure of any Party
to perform or comply with any obligations or conditions applicable to such Party pursuant to this Agreement shall be first attempted to be settled by referring the dispute to the Parties' senior
management and, failing resolution, finally settled by arbitration under the then current commercial arbitration rules of the American Arbitration Association in accordance with the terms set forth in
this Section 13.13(a). In addition, such other matters shall be submitted to arbitration as specifically set forth in this Agreement.

	(i)
	The
place of arbitration shall be Philadelphia, Pennsylvania. Such arbitration shall be conducted by one arbitrator, appointed by the Parties or by the American
Arbitration Association provided, that, at the request of any Party the arbitration shall instead be
conducted by three arbitrators. Each arbitrator shall be a person with relevant experience in the pharmaceutical industry. SkyePharma and Endo shall instruct the arbitrator(s) to render a
determination within four months after the appointment of the arbitrator(s), or in the case of a submission under Section 11.9(i) or Section 11.9(k) within
[Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] after the appointment of the arbitrator(s).

	(ii)
	Any
award rendered or determination made by the arbitrator(s) shall be final and binding upon the Parties. Judgment upon any award rendered may be entered in any court
having jurisdiction, or application may be made to such court for a judicial acceptance of the award and an order of enforcement, as the case may be. Each Party shall pay its own expenses of
arbitration, and the expenses of the arbitrator(s) shall be equally shared between the Parties unless the arbitrator(s) assesses as part of the award all or any part of the arbitration expenses of a
Party or Parties (including reasonable attorneys' fees) against the other Party or Parties, as the case may be.

	(iii)
	This
Section 13.13(a) shall not prohibit a Party from seeking injunctive relief from a court of competent jurisdiction in the event of a breach or prospective
breach of this Agreement by any other Party which would cause irreparable harm to the first Party. 

56

 

	(b)
	Whenever
a dispute arising out of or relating to the interpretation of any provisions of this Agreement or the failure of any Party to perform or comply with any obligations or
conditions applicable to such Party pursuant to this Agreement arises or any other matter arising under or relating to this Agreement and such dispute is expressly designated as one to be resolved
through the Special Arbitration Provisions, then such dispute shall be finally settled by arbitration under the then current expedited procedures applicable to the then current commercial arbitration
rules of the American Arbitration Association in accordance with the terms set forth in this Section 13.13(b) (the "Special Arbitration
Provisions"). Either Party shall have the right to refer the dispute in question to an Expert for expedited arbitration as set forth in Sections 13.13(b)(i) through
(iii).

	(i)
	Upon
written request by either Party to the other Party, the Parties shall promptly negotiate in good faith to appoint a mutually acceptable independent person, with
scientific, technical and regulatory experience with respect to the development of pharmaceutical products in the same Development Field as the Products in question necessary to resolve such dispute
(an "Expert"). If the Parties are not able to agree within five business days after the receipt by a Party of the written request in the immediately
preceding sentence, the American Arbitration Association shall be responsible for selecting an Expert within ten business days of being approached by a Party. The fees and costs of the Expert and the
American Arbitration Association, if applicable, shall be shared equally by the Parties. The place of arbitration of any dispute shall be Philadelphia, Pennsylvania, unless the Parties agree otherwise
or the selection of the Expert requires otherwise.

	(ii)
	Within
[Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] business days after the
designation of the Expert, the Parties shall each simultaneously submit to the Expert and one another a written statement of their respective positions on such disagreement. Each Party shall have
[Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] business days from receipt of the other Party's submission to
submit to the Expert and the other Party a written response thereto, which shall include any scientific and technical information in support thereof. The Expert shall have the right to meet with the
Parties, either alone or together, as necessary to make a determination.

	(iii)
	No
later than [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] business days
after the designation of the Expert, the Expert shall make a determination by selecting the resolution proposed by one of the Parties that the Expert deems as a whole to be the most fair and
reasonable to the Parties in light of the totality of the circumstances. The Expert shall provide the Parties with a written statement setting forth the basis of the determination in connection
therewith. The decision of the Expert shall be final and conclusive. 

57

 

	13.14
	Endo Right to Cure SkyePharma Breach.    In the event that SkyePharma materially fails to satisfy any of its material
obligations under this Agreement, whether due to insolvency or otherwise, and this Agreement or an applicable Supply Agreement does not otherwise expressly provide Endo with a specific remedy for or
otherwise specifically address Endo's rights upon such failure, Endo, itself or through any other Person reasonably acceptable to SkyePharma shall be permitted to fulfill such obligations on behalf of
SkyePharma. Upon receipt by SkyePharma of written notice from Endo as to the identity of the Person that Endo proposes would fulfill SkyePharma's obligations, SkyePharma shall promptly notify Endo
whether such Person is acceptable. SkyePharma shall pay Endo's Fully Loaded Costs therefor, but only to the extent necessary and only for so long as SkyePharma's failure continues and  provided,
that, all such expenditures of Endo are reasonable given the circumstances under which they
are made. As work is performed by Endo pursuant to this Section 13.14, Endo shall set off its Fully Loaded Costs against any amounts due and owing from Endo to SkyePharma. Pursuant to
Section 5.5, SkyePharma may audit Endo's Fully Loaded Costs, the components thereof and cure activities undertaken by Endo, in each case undertaken under this Section 13.14. The decision
by Endo to exercise its rights under this Section 13.14 shall not be deemed to obligate Endo to perform for SkyePharma in the future, but shall constitute a waiver of any other rights or
remedies Endo may have under this Agreement with respect to the specific failure by SkyePharma which Endo seeks to fulfill pursuant to this Section 13.14.

	13.15
	Nature of Licenses.    All rights and licenses granted pursuant to this Agreement are, and shall otherwise be deemed to be,
for purposes of 11 U.S.C. § 365(n) of the Bankruptcy Laws, licenses of rights to "intellectual property" as defined under 11 U.S.C.
§ 101(35A) of the Bankruptcy Laws. The Parties agree that Endo, as a licensee of such rights under this Agreement, shall retain and may fully exercise all of its rights, including any
right to enforce any exclusivity provision of this Agreement, remedies, and elections under Bankruptcy Laws. To the fullest extent permitted by law, the Parties further agree that, in the event of the
commencement of a bankruptcy proceeding by or against SkyePharma under the Bankruptcy Laws, Endo shall be entitled to all applicable rights under 11 U.S.C. § 365(n) of the Bankruptcy Laws,
including copies and access to, as appropriate, any such intellectual property and all embodiments of such intellectual property upon written request therefor by Endo, and such, if not already in its
possession, shall be promptly delivered to Endo.

	13.16
	Entire Agreement.    This Agreement, together with the Exhibits hereto, that certain letter dated December 31, 2002
from Peter A. Lankau to Michael R. D. Ashton, every Supply Agreement, every Quality Agreement and every Annual Development Plan and Annual Commercialization Plan, sets forth the entire agreement and
understanding between the Parties as to the subject matter hereof and merges all prior discussions and negotiations between them, and neither of the Parties shall be bound by any conditions,
definitions, warranties, understandings or representations with respect to such subject matter other than as expressly provided herein or as duly set forth on or subsequent to the date hereof in
writing and signed by a proper and duly authorized officer or representative of the Party to be bound thereby.

	13.17
	Liability Limitation.    TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE PARTIES HEREBY DISCLAIM ANY AND ALL
LIABILITY FOR ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL AND INDIRECT DAMAGES.

	13.18
	Parties in Interest.    All of the terms and provisions of this Agreement shall be binding upon, inure to the benefit of
and be enforceable by the Parties hereto and their respective permitted successors and assigns. 

58

 
	13.19
	Descriptive Headings.    The descriptive headings of this Agreement are for convenience only, and shall be of no force or
effect in construing or interpreting any of the provisions of this Agreement. References to Sections herein shall refer to sections of this Agreement unless otherwise specified.

	13.20
	Counterparts.    This Agreement may be executed simultaneously in any number of identical counterparts, any one of which
need not contain the signature of more than one Party, but all such counterparts taken together shall constitute one and the same agreement. 

* * *  

59

   
        IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be executed by its duly authorized representative as of the date first above written. 

	 	 	ENDO PHARMACEUTICALS INC.
	

 	
 	
By:	

/s/  CAROL A. AMMON      
 Carol A. Ammon
 Chairman and Chief Executive Officer
	

 	
 	
SKYEPHARMA, INC.
	

 	
 	

By:	

/s/  MICHAEL R.D. ASHTON      
 Michael R.D. Ashton
 Chief Executive Officer of SkyePharma PLC
	

 	
 	
SKYEPHARMA CANADA INC.
	

 	
 	

By:	

/s/  MICHAEL R.D. ASHTON      
 Michael R.D. Ashton
 Chief Executive Officer of SkyePharma PLC

60

 

        In
order to induce Endo to enter into this Agreement, the undersigned hereby guarantees, as surety, the full and timely payment and performance by SkyePharma, Inc. and SkyePharma
Canada Inc., both Affiliates of the undersigned, of their respective payment obligations under the foregoing Agreement, including for all purposes, indemnification obligations and obligations
of the foregoing parties upon a termination of this Agreement. 

	 	 	SKYEPHARMA PLC
	

 	
 	
By:	

/s/  MICHAEL R.D. ASHTON      
 Michael R.D. Ashton
 Chief Executive Officer

61

  

 
 

EXHIBIT A
  
    FINANCIAL APPENDIX    
    

        This provides the definitions of certain financial terms applicable to the Parties for purposes of the Agreement. All capitalized terms used herein without
definition shall have the meanings ascribed thereto in the Agreement, unless otherwise expressly provided herein. 

A.1    Principles of Reporting  

        The presentation of Net Sales and Commercialization Program shall be based on Endo's financial information and shall be presented: 

	1)
	for
each seller (Endo and each Affiliate, Sublicensee and Subcontractor of Endo) for each Product in each Territory

	2)
	for
all sellers on a consolidated basis for each Product

	3)
	for
each Product on a consolidated basis 

in
the reporting format depicted as follows: 

	

	

[Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission]	
 	

 
	

	

[Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission]	
 	

 
	

	

[Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission]	
 	

 
	

	

[Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission]	
 	

 
	

	

[Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission]	
 	

 
	

	

[Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission]	
 	

 
	

	

[Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission]	
 	

 
	

	

[Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission]	
 	

 
	

	 	 	 

A-1

 

	

[Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission]	
 	

 
	

	

[Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission]	
 	

 
	

	

[Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission]	
 	

 
	

	

[Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission]	
 	

 
	

	

[Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission]	
 	

 
	

	

[Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission]	
 	

 
	

	

[Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission]	
 	

 
	

	

[Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission]	
 	

 
	

	

[Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission]	
 	

 
	

	

[Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission]	
 	

 
	

        The
presentation of the Development Program shall be based on SkyePharma's, or Endo's if applicable) financial information and shall be presented by Product and for all Products on a
consolidated basis: 

	

	

[Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission]	
 	

 
	

	

[Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission]	
 	

 
	

	 	 	 

A-2

 

	

[Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission]	
 	

 
	

        It
is the intention of the Parties that the interpretation of these definitions shall be consistent with GAAP. 

        If
necessary, a Party shall make the appropriate adjustments to the financial information it supplies under the Agreement to conform to the above format of reporting results of
operation. 

A.2    Frequency of Reporting  

        The fiscal year shall be a calendar year. 

        Reports
of Sales, Net Purchases, Inventory Write-offs and Commercialization Program Costs shall be made to the Joint Executive Committee and Development Program Costs to the
Product Development Committee on a quarterly basis and on a year-to-date basis compared against the approved budget in the format and containing the information described in
Section A1—Principles of Reporting. 

A-3

   A.3    Definitions  

        "Allocable Overhead", with respect to a Party's activities, means costs directly related to such activities and
incremental costs actually incurred by such Party or for its account including, but not limited to, those which are attributable to such Party's supervisory services, occupancy costs, and its payroll,
information systems, or purchasing functions and which are allocated to company departments based on space occupied or headcount or other activity-based method consistently applied by such Party, or a
standard rate if agreed to by the Parties, relating to activities of such Party under the Development Program or Commercialization Program, as the case may be. Allocable Overhead shall not include any
costs attributable to general corporate activities including, by way of example, executive management, investor relations, business development, legal affairs, human relations, and finance, related to
activities of such Party under the Development Program or Commercialization Program, as the case may be. 

        "Development Costs" means the development costs actually incurred by each Party with respect to any Product for the applicable Target
Indications in the applicable Development Field, in each country within the Territory including: 

	(i)
	costs
required to obtain and/or maintain the first Registration of a Product and to obtain and/or maintain the FDA or applicable regulatory approval to manufacture,
formulate, fill, use, ship and sell such Product in commercial quantities to Third Parties; and

	(ii)
	costs
of research or development including costs of studies on the toxicological, pharmacokinetic, metabolic, pharmaceutical or clinical aspects of a Product conducted
internally or by individual investigators or consultants, and costs for preparing, submitting, reviewing or developing data or information for the purpose of submission to a Regulatory Authority to
obtain and/or maintain the first Registration of a Product.

	(iii)
	expenses
for data management, statistical designs and studies, document preparation, and other administration expenses associated with the clinical testing program or
Phase IV studies required to maintain such first Registration. 

        In
determining Development Costs each Party shall use its respective project accounting systems and shall review and approve its respective project accounting systems and methodologies
with the other Party. 

        In
the event of New Indications being agreed between the Parties pursuant to Section 2.12 of this agreement the cost items included for such New Indication Development costs shall
be the same as those reported for Development Costs and the costs for each New Indication shall be separately identifiable. 

        "Distribution Costs" means the costs specifically identifiable to the distribution of a Product in the Territory, by a Party including
customer services, order entry, billing, shipping, bad debt, credit and collection and other such activities. 

        "First Commercial Sale" shall mean, with respect to DepoMorphine and Propofol IDD-D, the first sale for which payment has been
invoiced for use or consumption by the general public of DepoMorphine or Propofol IDD-D, as the case may be, in a country in the Territory after all required Registrations, including
pricing approvals (if applicable), have been granted by the Regulatory Authority in such country in the Territory. 

        "Fully Loaded Costs", with respect to the activities of a Party, shall mean such Party's direct out-of-pocket
costs and Allocable Overhead incurred due directly to such activities. 

A-4

 

        "Inventory Write-offs" of a Product means the number of units of Product multiplied by the Product Price relating to such
units of Product pursuant to a Supply Agreement which have been purchased by Endo its Affiliates, Sublicensees or Subcontractors (and are not subject to the waiver set forth in
Section 9.4(a)(ii) of the Supply Agreement) and have not been included in Net Sales due to unacceptable remaining shelf-life. 

        "Marketing Costs" means the costs actually incurred for marketing, promotion, advertising, Product promotional materials, professional
education, Product related public relations, relationships with opinion leaders and professional societies, market research (after the first Registration), collection of data about sales to hospitals
and other end users, healthcare economics studies, and other similar activities, relating to activities of a Party under a Commercialization Program for a Product. Such costs of a Party shall include,
without limitation, (i) both direct internal costs actually incurred by a Party or for its account which are attributable to activities of such Party under a Product's Commercialization Program
(e.g., without limitation, salaries, benefits, supplies and materials, etc.), and (ii) outside services and expenses (e.g., without limitation, consultants, agency fees, meeting costs, etc.),
relating to activities of such Party under a Product's Commercialization Program. Such costs of a Party shall also include, without limitation, the cost of all pre-launch marketing
activities and the cost of activities related to obtaining reimbursement from payers and costs of sales and marketing data. 

        "Marketing Trials" shall mean all Phase IV studies other than those necessary to maintain the first Registration of a Product and other
similar activities. 

        "Net Purchases" shall mean the number of units of Product which are delivered pursuant to Purchase Orders submitted by Endo pursuant to
Supply Agreements, and not returned by Endo pursuant to Supply Agreements, multiplied by the Product Price, as defined in the applicable Supply Agreement. 

        "Net Sales" 

	(a)
	"Net Sales" means, with respect to DepoMorphine and Propofol IDD-D, the gross amount invoiced for sales of DepoMorphine or
Propofol IDD-D, as the case may be, in arm's length sales by Endo or its Affiliates, Sublicensees or Subcontractors to Third Parties, commencing with the First Commercial Sale of such
product, less the following deductions from such gross amounts which are actually incurred, allowed, accrued or specifically allocated:

	(i)
	credits,
price adjustments or allowances for damaged products, returns or rejections of such products;

	(ii)
	normal
and customary trade, cash and quantity discounts, allowances and credits (other than those granted at the time of invoicing which have already been included in
the gross amount invoiced);

	(iii)
	chargeback
payments and rebates (or the equivalent thereof) granted to group purchasing organizations, managed health care organizations or to federal,
state/provincial, local and other governments, including their agencies, or to trade customers;

	(iv)
	any
freight invoiced by Endo, postage, shipping, insurance and other transportation charges (excluding such charges that are included in Distribution Costs); and

	(v)
	sales
taxes, value-added taxes (to the extent not refundable in accordance with applicable law), and excise taxes, tariffs and duties, and other taxes directly related
to the sale (but not including taxes assessed against the income derived from such sale); 

A-5

 

	(vi)
	bundling
discounts created by the bundling of product(s) in accordance with Section 4.5 of this Agreement. "Net
Sales" shall not include any provision for unpaid amounts owed by Third Party purchasers of the Products or sales of such Products among the Parties, their respective
Affiliates, Sublicensees or Subcontractors. Net Sales, as set forth in this definition, shall be calculated applying, in accordance with GAAP, the standard accounting practices Endo customarily
applies to other products sold by it. 

        "Product Price" for DepoMorphine shall mean the then ruling Price as defined pursuant to the Supply Agreement for DepoMorphine. For
Propofol IDD-D the Product Price shall be such Price agreed between the Parties pursuant to the Supply Agreement for Propofol IDD-D. 

        "Sales Costs" means costs actually incurred by the Parties or for their account and specifically identifiable to activities of a Party
under a Product's Commercialization Program in the Territory in all markets, including without limitation, the managed care market. 

        "Sales Costs" shall include, without limitation, costs associated with sales representatives for Products, including compensation,
benefits and travel, supervision and training of such sales representatives, sales meetings, and other sales related expenses. 

        "Sales Costs" shall not include the start-up costs associated with any Party's sales force relating to that Party's sales
efforts, including recruiting, relocation and other similar costs. 

        "Units" shall mean the number of units of such Product sold or transferred during the period and included in Net Sales. 

A-6

  

 
 
EXHIBIT B

TARGET LABELING  

DepoMorphine  

        Target Indication: [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] 

        Target
Profile: [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] 

        Target
Labeling: The Target Indication and Target Profile. 

Propofol IDD-D  

        Target Indication: [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] 

        Target
Profile: [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] 

        Target
Labeling: The Target Indication and Target Profile. 

A-7

 
 
 

EXHIBIT C
  
    FORM OF PROPOFOL SUPPLY AGREEMENT    
    

A-8

 
 

FORM OF PROPOFOL
  
  
  SUPPLY AGREEMENT
  
  
  By and Between
  
  
  SKYEPHARMA, INC.
  
  
  and
  
  
  ENDO PHARMACEUTICALS INC.
  
  
  Dated as
of                        , 2003    

  

 
 

Exhibit C    
    

 
 

FORM OF PROPOFOL SUPPLY AGREEMENT    
    

        THIS PROPOFOL SUPPLY AGREEMENT dated as of this    day of            , 2003, is entered into by and
between Endo Pharmaceuticals Inc., a
corporation organized and existing under the laws of Delaware, having offices located at 100 Painters Drive, Chadds Ford, PA 19317 ("Endo") and
SkyePharma, Inc., a corporation organized and existing under the laws of the State of California, having offices located at 10450 Science Center Drive, San Diego, CA 92121
("SkyePharma") (each of Endo and SkyePharma, a "Party" and, collectively, the
"Parties"). 

 
 

PRELIMINARY STATEMENTS    
    

        A.    Endo
wishes to distribute commercially a certain pharmaceutical product currently known as Propofol in finished dosage form for human use; and 

        B.    SkyePharma
has the experience and expertise necessary to perform chemical and pharmaceutical development, manufacturing, packaging, analytical testing and quality
assurance services for the manufacturing, labeling and packaging of such product for sale to Endo; and 

        C.    Endo
desires SkyePharma to perform such services or have such services performed and to supply such product to Endo; and SkyePharma desires to perform such services or
have such services performed and to sell such product to Endo, all on the terms and conditions set forth in this Agreement; 

        NOW,
THEREFORE, in consideration of the mutual covenants and promises set forth herein, the Parties agree as follows: 

1.     DEFINITIONS.  

        Capitalized terms not otherwise defined herein shall have the meanings set forth in that certain Development and Marketing Strategic Alliance Agreement between
the Parties dated as of the date hereof (the "Alliance Agreement"). The following terms, whether used in the singular or plural, shall have the meanings
assigned to them below for purposes of this Agreement: 

        "Active Ingredient" shall mean Propofol. 

        "Active Ingredient Specifications" shall mean the specifications for the Active Ingredients as set forth in a monograph for Propofol
finalized by the U.S. Pharmacopeia ("USP") or in the event a monograph has not been finalized by the USP, such specifications as determined by the JMC prior to submission of the Registration
Application for the Product, as such specifications may be amended from time to time by the JMC. 

        "Affiliate" shall mean any corporation or non-corporate entity which directly or indirectly controls, is controlled by, or is
under common control with a Party. A corporation or non-corporate entity shall be regarded as in control of another corporation if it owns or directly or indirectly controls at least fifty
percent (50%) of the voting stock of the other corporation; or (a) in the absence of the ownership of at least fifty percent (50%) of the voting stock of a corporation or (b) in the case
of a non-corporate entity, the power to direct or cause the direction of the management and policies of such corporation or non-corporate entity, as applicable. 

        "Agreement" shall mean this Supply Agreement. 

        "Breaching Party" shall have the meaning assigned to such term in Section 12.3. 

A-10

 

        "cGMP" means those practices in the manufacture of pharmaceutical products that are recognized as the current good manufacturing practices
by the FDA in accordance with FDA regulations, guidelines, other administrative interpretations, and rulings in connection therewith, including but not limited to those regulations cited in 21 C.F.R.
parts 210 and 211, all as they may be amended from time to time. 

        "Commencement Date" shall mean the date of Product Approval for commercial manufacturing at SkyePharma or at a Third Party manufacturer
subcontracted by SkyePharma. 

        "Contract Year" shall mean the period of twelve (12) successive calendar months commencing on the first day of the month in which
the FDA approves the manufacturing of the Product at SkyePharma or at a Third Party manufacturer, and each successive twelve (12) month period thereafter. 

        "Delivery Date" shall mean a date for which delivery of Product is stated in a purchase order. 

        "Effective Date" shall have the meaning first written above. 

        "Excipients" shall mean the raw materials, other than the Active Ingredient, required to manufacture the Product in accordance with the
Product Specifications. 

        "Excipient Specifications" shall mean the specifications for the Excipients which shall be determined by the JMC prior to submission of
the Registration Application for the Product, as such specifications may be amended from time to time by the JMC. 

        "FD&C Act" shall mean the United States Federal Food, Drug and Cosmetic Act, as amended. 

        "FDA" shall mean the United States Food and Drug Administration, or any successor entity. 

        "First Commercial Sale" shall mean the first commercial sale of the Product by Endo or its Affiliates in the Territory following Product
Approval. 

        "Forecast" shall have the meaning assigned to such term in Section 8.1. 

        "Force Majeure Event" shall have the meaning assigned to such term in Section 15.1(a). 

        "Long-Term Inability to Supply" shall mean, with respect to a Product, SkyePharma's failure to (a) supply Endo with at
least [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] of the quantities of Product ordered by Endo in accordance
with the terms of this Agreement for a period that exceeds (i) [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange
Commission] for any reason other than Force Majeure, or (ii) [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange
Commission] as a result of Force Majeure, or (b) supply any Product ordered by Endo in accordance with the terms of this Agreement for a period that exceeds
[Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] for any reason other than Force Majeure, provided that such
failure to supply referred to in this clause (b) has resulted in an inability for Endo to fulfill customer orders in the marketplace. 

        "Manufacturing Facility Registration" means the approvals, permits, applications, licenses or registrations which have been received for a
manufacturing facility in order to manufacture the Product or any other product at the manufacturing facility. 

        "NDA" shall mean the Product's New Drug Application as filed, amended and/or supplemented from time to time in accordance with 21 CFR
Part 314 et al. 

        "Non-breaching Party" shall have the meaning assigned to such term in Section 12.3. 

A-11

 

        "Packaging Specifications" shall mean the packaging and labeling specifications for the Product which shall be determined by the JMC prior
to submission of the Registration Application for the Product, as such specifications may be amended from time to time by the JMC. 

        "Product" shall mean a pharmaceutical product using Propofol as an active pharmaceutical ingredient in a 2% concentration in finished
dosage form, filled, labeled and packaged for commercial sale or distribution as samples, as the case may be, by SkyePharma or a Third Party Manufacturer in accordance with the Specifications. 

        "Product Approval" shall mean final FDA approval of the NDA for the Product. 

        "Product Price" shall mean the Product price set forth in Exhibit 1 attached hereto and made a part hereof, as such price may be
amended from time to time in accordance with this Agreement. 

        "Product Registration" shall mean the approvals, permits, applications, licenses or registrations (including but not limited to the NDA)
for the Product which have been received in order to market or sell same in the Territory. 

        "Product Specifications" shall mean the specifications for the Product which shall be determined by the JMC prior to submission of the
Registration Application for the Product, as such specifications may be amended from time to time by the JMC. 

        "Purchase Order" shall have the meaning assigned to such term in Section 9.1. 

        "Quality Agreement" shall mean the Quality Agreement, as further defined in Section 7, which shall be substantially in the form of
Exhibit 2 hereto. 

        "Specifications" shall mean the Active Ingredient Specifications, Excipient Specifications, Product Specifications, and the Packaging
Specifications for the Product. 

        "Territory" shall mean the United States of America and Canada, and their territories and possessions. 

        "Third Party" shall mean any party other than Endo, SkyePharma and their respective Affiliates. 

        "Unit" shall mean a single vial of Product or such other size as may be mutually agreed upon by the Parties from time to time. 

2.     SALE AND PURCHASE OF PRODUCT.  

        During each Contract Year throughout the term of this Agreement, SkyePharma agrees to manufacture, or to have manufactured, and sell to Endo, and Endo agrees to
purchase from SkyePharma, Product for marketing, sale and distribution in the Territory, in accordance with the terms and subject to the conditions of this Agreement, including the Exhibits hereto. 

3.     QUALIFICATION OF SECOND SITE.  

        3.1    Second Manufacturing Site.    SkyePharma agrees to qualify and obtain final regulatory approval for a second
manufacturing site for the Product, either internally or through a Third Party manufacturer, within [Confidential Information Has Been Omitted And Furnished Separately To The Securities
And Exchange Commission] of the date of First Commercial Sale. The identification of the second manufacturing site will be the responsibility of the JMC. 

A-12

 

        3.2    Third Party Manufacturer.    In the event that SkyePharma contracts with a Third Party to manufacture, test
and/or package the Product (either as the primary or secondary source of supply), Endo shall be given the opportunity to review and comment on such manufacturing agreement in advance of its execution,
and SkyePharma shall give good faith consideration to Endo's comments. Such Third Party manufacturing agreement(s) shall provide that Endo shall be an intended third party beneficiary of such Third
Party manufacturer's obligations to SkyePharma thereunder, including with rights of direct enforcement by Endo. In addition, each Third Party manufacturing agreement shall provide, in substance, that,
in the event that SkyePharma, or any other Person acting on behalf of SkyePharma or its estate pursuant to any Bankruptcy Laws, shall seek or obtain a Bankruptcy Rejection of such Third Party
manufacturing agreement, then the Third Party manufacturer shall (i) timely exercise its rights to continue any and all licenses (if any) thereunder, pursuant to 11 U.S.C. § 365(n)
of the Bankruptcy Laws, and (ii) to the extent that Bankruptcy Rejection effectively terminated the Third Party manufacturing agreement, immediately enter into an agreement with Endo for the
Product in the Territory, on substantially the same terms and conditions. The Third Party manufacturing agreements may contain such additional terms and conditions as SkyePharma and the Third Party
manufacturer shall agree to, subject to the review (but not the approval) of the JMC prior to the execution of such Third Party manufacturing agreement and provided that such additional terms and
conditions do not prejudice, reduce or limit Endo's rights under this Agreement (including this Section 3.2) or the Alliance Agreement. 

4.     ACTIVE INGREDIENTS; EXCIPIENTS.  

        The costs of procuring Active Ingredients and Excipients for the Product as well as all other materials required to manufacture, test, package, label and release
the Product are included as part of the Product Price. 

5.     REPRESENTATIONS AND WARRANTIES; COVENANTS  

        5.1    By Both Parties.    Each Party represents and warrants to the other Party, as of the Effective Date, that: 

	(a)
	Such
Party is duly organized and validly existing and in good standing under the laws of the jurisdiction of its incorporation and has full corporate power and authority to enter into
this Agreement and to carry out the provisions hereof;

	(b)
	Such
Party has taken all corporate action necessary to authorize the execution and delivery of this Agreement and the performance of its obligations under this Agreement and has full
power and authority to enter into this Agreement and perform its obligations under this Agreement;

	(c)
	This
Agreement has been duly executed by such Party and assuming due authorization, execution and delivery by the other Party, constitutes a valid and legally binding obligation of
such Party, enforceable in accordance with its terms, subject to and limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium, and other laws generally applicable to
creditors' rights; and (ii) judicial discretion in the availability of equitable relief;

	(d)
	With
the exception of the Product Approval, the Manufacturing Facility Registration and the Product Registration, such Party has obtained, or is not required to obtain, the consent,
approval, order, or authorization of any Third Party, or to complete any registration, qualification, designation, declaration or filing with, any governmental entity, in connection with the execution
and delivery of this Agreement and the performance by such Party of its obligations under this Agreement; and 

A-13

 

	(e)
	The
execution and delivery of this Agreement, and the performance by such Party of its obligations under this Agreement, does not: (i) conflict with, nor result in any
violation of or default under any such instrument, judgment, order, writ, decree, contract or provision to which such Party is otherwise bound; or (ii) conflict with any rights granted by such
Party to any Third Party or breach any obligation that such Party has to any Third Party. 

        5.2    By SkyePharma.    SkyePharma represents and warrants to Endo that the Product, at the time of delivery to Endo,
(a) will conform to the Specifications, as then in effect, (b) will have been manufactured in compliance with all applicable laws and regulations and in accordance with cGMPs;
(c) will not be (i) adulterated or misbranded by SkyePharma within the meaning of the FD&C Act or (ii) an article that may not be introduced into interstate commerce under the
provisions of Sections 404 or 505 of the FD&C Act; and (d) other than the first three commercial lots which require prior authorization from Endo before release by SkyePharma, shall have a
minimum of [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] of the Product shelf life as per the applicable
Product registrations still available. 

        5.3    By Endo.    Endo represents and warrants to SkyePharma that Endo will adhere to Specifications and all
applicable laws relating to the handling, storage and disposal of the Products. 

        5.4    Disclaimer of Warranties.    EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT OR THE ALLIANCE AGREEMENT, THERE
ARE NO OTHER REPRESENTATIONS OR WARRANTIES, EXPRESSED OR IMPLIED, MADE OR GIVEN BY EITHER PARTY HEREUNDER, INCLUDING WITHOUT LIMITATION, ANY WARRANTIES OF QUALITY, PERFORMANCE, MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE OF ANY PRODUCT DELIVERED HEREUNDER, WHETHER USED ALONE OR IN COMBINATION WITH OTHER SUBSTANCES. 

        5.5    Legal Compliance.    Each Party shall comply in all material respects with all federal and state laws and
regulations applicable to the conduct of its business pursuant to this Agreement, including, but not limited to, the FD&C Act. 

6.     CHANGES TO SPECIFICATIONS; VALIDATION.  

        6.1    Optional Changes to Specifications.    

	(a)
	To
the extent that SkyePharma desires to implement any change to Specifications which is not required pursuant to Section 6.2, SkyePharma shall be responsible for making or
shall cause the making of any required filing to any Product Registration or Manufacturing Facility Registration with respect to such change and seeking approval from each applicable regulatory
authority. Payment for the cost and expense of implementing such change to Specifications shall be the responsibility of SkyePharma.

	(b)
	To
the extent that Endo desires to have any change to Specifications implemented which is not required pursuant to Section 6.2, Endo shall obtain the consent of SkyePharma
regarding such proposed change to Specifications. If consent from SkyePharma is obtained, at Endo's cost and expense, SkyePharma shall be responsible for making or shall cause the making of any
required filing to any Product Registration or Manufacturing Facility Registration with respect to such change and seeking approval from each applicable regulatory authority. Payment for the cost and
expense of implementing such change to Specifications shall be the responsibility of Endo. 

A-14

 

        6.2    Required Changes to Specifications.    If any proposed change in Specifications is in response to a
pronouncement of the FDA, a change in controlling compendial monograph, a Force Majeure Event, or a change in applicable law, each Party will cooperate with the other in any reasonable manner to
effect such change in a timely manner. SkyePharma shall be responsible for making or shall cause the making of any required filing to any Product Registration or Manufacturing Facility Registration
with respect to such change and seeking approval from each applicable regulatory authority. Payment for the cost and expense of implementing such changes to Specification shall be the responsibility
of SkyePharma. 

        6.3    Cooperation.    In the event that any change to Specifications is implemented, the Parties agree to cooperate
with each other in good faith to enable each Party to comply with the terms of this Agreement. 

        6.4    Validation.    SkyePharma shall prepare or shall have prepared equipment qualification and manufacturing
validation procedures, and shall perform or have performed qualification of utilities as well as validation of the manufacturing, packaging and cleaning processes in accordance with such procedures. 

7.     QUALITY AGREEMENT.  

        The Quality Agreement attached hereto as Exhibit 2 ("Quality Agreement") further details the quality
assurance obligations and responsibilities of the Parties with respect to the Product. Notwithstanding anything to the contrary in this Agreement or in any other document or agreement, in the event of
a conflict between this Agreement and the Quality Agreement, the Quality Agreement shall govern and control. 

8.     FORECASTS AND ORDERS.

        8.1    Forecast.    Within [Confidential Information Has Been Omitted And Furnished Separately To The
Securities And Exchange Commission] of the Effective Date or [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange
Commission] before the anticipated Product launch, whichever is later, Endo shall submit to SkyePharma a written estimate of its [Confidential Information Has Been Omitted And
Furnished Separately To The Securities And Exchange Commission] requirements for Product for each of the next succeeding [Confidential Information Has Been Omitted And
Furnished Separately To The Securities And Exchange Commission] (this forecast and each succeeding forecast, a "Forecast"). Each Forecast
shall be updated [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] on the [Confidential Information Has
Been Omitted And Furnished Separately To The Securities And Exchange Commission] of the [Confidential Information Has Been Omitted And Furnished Separately To The Securities
And Exchange Commission] on a [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] rolling basis. Each
Forecast shall include, during the relevant periods, the quantities necessary for commercial launch, ramp-up and pipeline fill. Endo shall make all Forecasts in good faith given market
conditions and other information available to Endo. 

        8.2    Firm Purchase Requirement.    The forecast of the most current [Confidential Information Has Been
Omitted And Furnished Separately To The Securities And Exchange Commission] period shall be binding on the Parties and shall be deemed a firm purchase order for which Endo shall provide a
written purchase order stating in detail the required quantities of Products and the required delivery dates in accordance with Section 9.1 below. The forecast for the remaining
[Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] period of each rolling forecast is for planning purposes only and
shall not constitute a commitment to purchase or supply Product. 

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        8.3    Quantity Limits.    

	(a)
	Unless
otherwise mutually agreed upon by the Parties, all Purchase Orders submitted by Endo for delivery of Product in any given month shall not be less than [Confidential
Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] of the amount forecasted for such month in the Forecast immediately preceding the Forecast
that is deemed to be a firm purchase order for such month.

	(b)
	In
the event that Endo submits any Purchase Order to purchase Product in any given month in an amount in excess of [Confidential Information Has Been Omitted And Furnished
Separately To The Securities And Exchange Commission] of the amount forecasted for such month in the Forecast immediately preceding the Forecast that is deemed to be a firm purchase order
for such month or if Endo desires to increase the amount of Products to be manufactured pursuant to an already submitted Purchase Order, SkyePharma shall use its commercially reasonable efforts to
deliver or have delivered the quantity ordered by Endo; provided, however, SkyePharma shall not be
liable to Endo for any inability to deliver the amount of Products ordered by Endo in excess of such amount. 

9.     PURCHASE OF PRODUCT; DELIVERIES.

        9.1    Purchase Orders.    

	(a)
	Except
to the extent the Parties may otherwise agree with respect to a particular shipment, the Product shall be ordered by Endo pursuant to written purchase orders, which shall be
sent to SkyePharma not less than [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] prior to the Delivery Dates
specified in such purchase orders and which shall indicate the quantities of Product required ("Purchase Order"). Upon receipt of each Purchase Order by
SkyePharma hereunder, SkyePharma shall supply or have supplied the Product, in such quantities (with any variances permitted hereunder) and shall deliver or have delivered such Product to Endo within
[Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] of the Delivery Dates specified in such Purchase Order. Purchase
Orders are firm and may not be cancelled or modified without SkyePharma's prior written consent.

	(b)
	The
Parties specifically agree that the failure of SkyePharma to deliver Product within [Confidential Information Has Been Omitted And Furnished Separately To The
Securities And Exchange Commission] of the Delivery Dates shall not be deemed a material breach of this Agreement for purposes of Section 12.3 unless SkyePharma's failure to timely
deliver Product is a repeating occurrence. 

        9.2    Purchase Quantities.    All Product shall be ordered in lot sizes or whole multiples thereof. Each Purchase
Order shall specify the quantity of Units of Product being ordered. Quantities actually shipped pursuant to a given Purchase Order may vary from the quantities reflected in such Purchase Order by up
to [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] percent and still be deemed to be in compliance with such
Purchase Order; provided, however, that Endo shall only be invoiced and required to pay for the
quantities of Product which SkyePharma actually ships or have shipped to Endo. Endo will manage its inventory of Product in a manner reasonably consistent with its ordinary business practices. 

        9.3    Delivery Terms.    

	(a)
	SkyePharma
shall be responsible for shipping and delivery of Product to Endo's facility at Memphis, TN (including the cost of any insurance), and Endo shall be responsible for the
cost of freight for the Product between SkyePharma's or Third Party's manufacturing facility and Endo's facility, which costs are not included in the cost of goods sold. 

A-16

 

	(b)
	SkyePharma
shall package and ship or shall caused to be packaged and shipped all Products in accordance with the Packaging Specifications and each shipment shall be accompanied by
appropriate transportation and other agreed upon documentation. SkyePharma shall ship or have shipped the Products in accordance with all laws and regulations relating to the Products, including,
without limitation, those laws and regulations relating to Class II controlled substances. SkyePharma shall make all arrangements with a common carrier for delivery of the Products to Endo's
facility in Memphis, TN or other location designated by Endo.

	(c)
	Title
and risk of loss and/or damage to the Product shall pass to Endo upon delivery of the Product to Endo's facility in Memphis, TN or other location designated by Endo. 

        9.4    Late Dated Product.    

	(a)
	In
the event that SkyePharma makes available to Endo Product which does not meet the dating warranty set forth in Section 5.2(d)
(e.g., validation batches) ("Late Dated Product"), Endo may, in its sole discretion, take possession of
such Late Dated Product.

	(i)
	Notwithstanding
any other provision of this Agreement, in the event that the late dating was caused by a request initiated by Endo for delivery of a quantity of Units of
Product in excess of its Purchase Order, Endo shall not be entitled to reject such product for failure to meet the dating warranty set forth in Section 5.2(d).

	(ii)
	Notwithstanding
any other provision of this Agreement, in the event that the late dating was caused by a manufacturing problem, quality investigation or other event
which is the responsibility of SkyePharma, Endo shall take possession of such Late Dated Product without waiver of its rights to reject such Late Dated Product at any time, including, without
limitation, upon its inability to sell the Late Dated Product or upon the return of such Late Dated Product by an Endo customer, and Endo shall be entitled to all remedies for
non-conforming Product set forth herein regardless of the date of such rejection by Endo. 

        9.5    Technical Assistance.    In the event of a Long-Term Inability to Supply with respect to a Product
or termination of this Agreement by Endo pursuant to Section 12.4, SkyePharma agrees to provide Endo with all reasonable technical assistance and support to qualify a Third Party Manufacturer
to supply the Product. 

10.   PRICE.

        10.1    Price.    For all Product which is the subject of Purchase Orders submitted by Endo prior to or during the
first Contract Year, Endo shall pay to SkyePharma the Product Price set forth in Exhibit 1 hereto, subject to adjustment as set forth in Section 10.2 hereof. 

        10.2    Price Changes.    The Product Price shall be firm until the [Confidential Information Has Been
Omitted And Furnished Separately To The Securities And Exchange Commission] anniversary of the Commencement Date. After the [Confidential Information Has Been Omitted And
Furnished Separately To The Securities And Exchange Commission], the Parties shall adjust the Product Price [Confidential Information Has Been Omitted And Furnished Separately
To The Securities And Exchange Commission]. The adjusted Purchase Price shall be effective as of [Confidential Information Has Been Omitted And Furnished Separately To The
Securities And Exchange Commission] of the following calendar year. 

A-17

 

        10.3    Taxes.    The Product Price set forth in Exhibit 1 does not include sales, use, consumption, or excise
taxes of any taxing authority. The amount of such taxes, if any, will be added to the Product Price in effect at the time of shipment thereof and shall be reflected in the invoices submitted to Endo
by SkyePharma pursuant to this Agreement. Endo shall pay the amount of such taxes to SkyePharma in accordance with the payment provisions of this Agreement. 

        10.4    Method of Payment.    At the time of each shipment of Product hereunder, SkyePharma shall invoice Endo, and
Endo shall pay all undisputed invoices within [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] days of the release
of the Product by Endo's Quality Assurance Department in accordance with Section 13 hereto. All payments due hereunder to SkyePharma shall be payable in United States dollars by check or by
wire transfer to such accounts as SkyePharma may designate to Endo in writing from time to time. 

11.   RECALLS; ADVERSE EVENT REPORTING; CONFIDENTIALITY.

        The
procedures for recalls, adverse event reporting and maintenance of Confidential Information shall be in accordance with the terms set forth in the Alliance Agreement. 

12.   TERM AND TERMINATION.

        12.1    Term.    Unless sooner terminated pursuant to the terms hereof, the term of this Agreement shall commence on
the Effective Date and shall continue until the expiration or termination of the Product under the Alliance Agreement. 

        12.2    Termination by Mutual Agreement.    This Agreement may be terminated at any time upon mutual written agreement
between the Parties. 

        12.3    Termination for Default.    Either Party (the "Non-breaching
Party") may, without prejudice to any other remedies available to it at law or in equity, terminate this Agreement in its entirety, in the event the other Party (the
"Breaching Party") shall have materially breached or defaulted in the performance of any of its material obligations hereunder and such default shall
have continued for [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] after written notice thereof was provided to
the Breaching Party by the Non-breaching Party (or, if such default cannot be cured within such [Confidential Information Has Been Omitted And Furnished Separately To The
Securities And Exchange Commission] period, if the Breaching Party does not commence and diligently continue actions to cure such default during such [Confidential Information
Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] period). Any such termination shall become effective at the end of such [Confidential
Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] period unless the Breaching Party has cured any such breach or default prior to the
expiration of such [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] period (or, if such default cannot be cured
within such [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] period, if the Breaching Party has commenced and
diligently continued actions to cure such default). The right of either party to terminate this Agreement as provided in this Section 12.3 shall not be affected in any way by its waiver or
failure to take action with respect to any previous default. 

A-18

 

        12.4    Bankruptcy; Insolvency.    Either Party may terminate this Agreement effective immediately in the event that
the other Party (i) has become insolvent or has been dissolved or liquidated, filed or has filed against it, a petition, case or other proceeding under any Bankruptcy Laws, and such petition,
case or proceeding if filed against it is not dismissed within [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] of
the filing; (ii) makes a general assignment for the benefit of creditors; or (iii) has a receiver, custodian, trustee or other Person exercising similar functions appointed for all or
substantially all of its assets. The effects of such termination shall be as set forth herein and in the Alliance Agreement. 

        12.5    Consequences of Termination.    In addition to the consequences set forth in the Alliance Agreement, upon
expiration or termination of this Agreement, whichever is sooner (but in the case of termination, only if directed by the terminating Party in the notice of termination), SkyePharma shall manufacture
and ship, and Endo shall purchase in accordance with the provisions hereof any and all amounts of Product ordered by Endo hereunder prior to the date on which such notice is given. 

        12.6    Accrued Rights; Surviving Obligations.    

	(a)
	Termination
or expiration of this Agreement for any reason shall be without prejudice to any rights which shall have accrued to the benefit of either Party prior to such termination
or expiration and such termination or expiration shall not relieve either Party from its obligations which are expressly indicated to survive.

	(b)
	All
of the Parties' rights and obligations under Sections 5, 9.5, 12, 14, and 16 shall survive termination or expiration hereof. 

13.   NON-CONFORMING PRODUCTS.

        13.1    Non-conforming Products.    

	(a)
	Endo
shall promptly conduct an inspection of the Products delivered by SkyePharma for any visual defect or damage after Endo's receipt of such Product and all associated quality
assurance documents, including, without limitation, the certificate of analysis. Endo shall have [Confidential Information Has Been Omitted And Furnished Separately To The Securities And
Exchange Commission] upon such receipt to give SkyePharma written notice of rejection of such shipment of Products to the extent Endo determines that the Products fail to conform with any
warranty or Specifications set forth herein following its visual inspection. Any rejection notice given hereunder shall specify the manner in which the Product fails to meet such warranty or
Specifications.

	(b)
	If
it is determined by agreement of the Parties (or in the absence of agreement of the Parties, in accordance with the dispute resolution set forth in Article IX of the Quality
Agreement) that the Product is non-conforming, then SkyePharma shall credit Endo's account for the price invoiced for such non-conforming Product, together with all
out-of-pocket expenses (including, without limitation, all shipping and insurance charges) associated with the purchase and return of the Product. If payment therefor has
previously been made by Endo, SkyePharma shall, at Endo's option, (x) pay Endo the amount of such credit, (y) offset the amount thereof against other amounts then due SkyePharma
hereunder, or (z) replace such nonconforming Product with conforming Product at no additional cost to Endo.

	(c)
	Except
as set forth in 13.2, if Endo does not provide SkyePharma with any written notice of rejection within such [Confidential Information Has Been Omitted And Furnished
Separately To The Securities And Exchange Commission] period, Endo shall be deemed to have accepted and released the Product. 

A-19

 

        13.2    Endo
may reject Products at any time for defects that were not detected during the inspection undertaken by Endo pursuant to Section 13.1 so long as Endo
notifies SkyePharma of such rejection promptly after its discovery of such defect. 

        13.3    Disposition of Non-Conforming Product.    Endo shall not dispose of any non-conforming
Product without authorization and instructions from SkyePharma either to dispose of the non-conforming Product or to return the non-conforming Product to SkyePharma. 

        13.4    Product Holds or Rejections.    SkyePharma agrees to notify Endo of any Product hold or Product rejection that
may have a material impact on the manufacturing process or that may reasonably lead to a delay in supply of Product to Endo. 

14.   LONG-TERM INABILITY TO SUPPLY  

        14.1    In
the event that a Long-Term Inability to Supply has occurred, Endo shall have the right, at its sole discretion, to: 

	(a)
	use
a Third Party Manufacturer, and take such other related actions as may be necessary, to fill the Product supply shortfall and deduct all amounts paid to such Third Party
manufacturer relating to the Product from sales splits otherwise due SkyePharma pursuant to the Alliance Agreement; or

	(b)
	terminate
all requirements or commitments under this Agreement; or

	(c)
	terminate
this Agreement and/or the Alliance Agreement in its entirety or solely as to the Product not adequately supplied. 

        14.2    In
the event that a Long-Term Inability to Supply has occurred, SkyePharma shall have the obligation, upon request by Endo, to: 

	(a)
	provide
the Technical Assistance set forth is Section 9.5; and

	(b)
	reimburse
Endo for the costs of its Propofol sales force and non-cancellable marketing expenses incurred during the Long-Term Inability to Supply. Endo may
set-off this reimbursement obligation against amounts otherwise owed SkyePharma. For purposes of clarity, if Endo chooses to terminate this Agreement and/or the Alliance Agreement, in
whole or in part, pursuant to Section 14.1(c), Endo will not have any right to reimbursement pursuant to this Section 14.2(b). 

A-20

 

15.   FORCE MAJEURE.

        15.1    Effects of Force Majeure.    

	(a)
	Neither
Party shall be held liable or responsible to the other Party nor be deemed to be in default under, or in breach of any provision of, this Agreement for failure or delay in
fulfilling or performing any obligation of this Agreement when such failure or delay is due to force majeure, and without the fault or negligence of the
Party so failing or delaying. For purposes of this Agreement, force majeure is defined as set forth in the Alliance Agreement (a
"Force Majeure Event"). Such excuse shall continue for the shorter of (i) as long as the Force Majeure Event continues or
(ii) [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission];  provided, however, that Endo may
cancel without penalty any and all Purchase Orders in the event
SkyePharma is unable to fulfill an outstanding Purchase Order within [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange
Commission] of its scheduled delivery date due to a Force Majeure Event. Upon cessation of such Force Majeure Event, such Party shall promptly resume performance on all Purchase Orders
which have not been terminated.

	(b)
	Notice of Force Majeure Event.    In the event either Party is delayed or rendered unable to perform due to a Force Majeure
Event, the affected Party shall give notice thereof and its expected duration to the other Party promptly after the occurrence of the Force Majeure Event; and thereafter, the obligations of the
affected Party will be suspended during the continuance of the Force Majeure Event. The affected Party shall take commercially reasonable steps to remedy the Force Majeure Event with all reasonable
dispatch, but such obligation shall not require the settlement of strikes or labor controversies on terms unfavorable to the affected Party. 

16.   MISCELLANEOUS.

        16.1    Independent Contractors.    Nothing in this Agreement is intended or shall be deemed to constitute a
partnership, agency, employer-employee or joint venture relationship between the Parties. No Party shall incur any debts or make any commitments for the other, except to the extent, if at all,
specifically provided herein. 

        16.2    Assignment; Subcontractors.    

	(a)
	Except
as otherwise provided for in this Agreement, neither Party shall be entitled to assign its rights or delegate its obligations hereunder without the express written consent of
the other Party hereto, except that each Party may assign its rights and transfer its duties hereunder (i) without obtaining such written consent in the event of such Party's merger,
consolidation or sale of all or substantially all of its assets, or (ii) to an assignee of that portion of its business to which this Agreement relates upon obtaining the express written
consent of the other Party which consent shall not be unreasonably withheld as long as the assignee has the skill and financial ability to perform the assignor's obligations hereunder and is not
otherwise a competitor of the remaining Party. No assignment and transfer shall be valid or effective unless done in accordance with this Section 16.2 and unless and until the assignee,
transferee or successor-in-interest shall agree in writing to be bound by the provisions of this Agreement, and upon such agreement, all references herein to the assignor,
transferor or predecessor shall be deemed to refer and apply to the assignee, transferee or successor in interest.

	(b)
	The
Parties agree that SkyePharma may subcontract its obligations to be performed hereunder at anytime. 

A-21

 

        16.3    Books and Records.    Any books and records to be maintained under this Agreement shall be maintained in
accordance with GAAP. 

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

        16.5    Inconsistency.    

	(a)
	If
there is any inconsistency between the provisions of this Agreement and any Purchase Orders, the provisions of this Agreement shall control and be determinative.

	(b)
	If
there is any inconsistency between the provisions of this Agreement and the Quality Agreement, the provisions of the Quality Agreement shall control and be determinative.

	(c)
	If
there is any inconsistency between the provisions of this Agreement and the Alliance Agreement, the provisions of the Alliance Agreement shall control and be determinative. 

        16.6    Waiver.    A waiver by either Party of any of the terms and conditions of this Agreement in any instance shall
not be deemed or construed to be a waiver of such term or condition for the future, or of any subsequent breach hereof. All rights, remedies, undertakings, obligations and agreements contained in this
Agreement shall be cumulative and none of them shall be in limitation of any other remedy, right, undertaking, obligation or agreement of either Party. 

        16.7    Compliance with Law.    Nothing in this Agreement shall be deemed to permit a Party to export,
re-export or otherwise transfer any Products sold under this Agreement without compliance with applicable laws. 

        16.8    Severability.    When possible, each provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision will be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of this Agreement. 

        16.9    Amendment.    No amendment, modification or supplement of any provisions of this Agreement shall be valid or
effective unless made in writing and signed by a duly authorized officer of each Party. 

        16.10    Governing Law.    This Agreement shall be governed by and interpreted in accordance with the laws of the
State of New York without regard to conflict of law principles. 

        16.11    Arbitration.    Except as expressly otherwise provided in this Agreement, any dispute arising out of or
relating to the interpretation of any provisions of this Agreement, or the failure of any Party to perform or comply with any obligations or conditions applicable to such Party pursuant to this
Agreement, shall be first attempted to be settled by referring the dispute to the Parties' senior management and, failing resolution, finally settled by arbitration under the then current commercial
arbitration rules of the American Arbitration Association in accordance with the terms set forth in Section 13.13 (a) of the Alliance Agreement. 

        16.12    Descriptive Headings.    The descriptive headings of this Agreement are for convenience only, and shall be of
no force or effect in construing or interpreting any of the provisions of this Agreement. 

        16.13    Construction.    This Agreement has been jointly prepared on the basis of the mutual understanding of the
Parties and shall not be construed against either Party by reason of such Party's being the drafter hereof or thereof. 

A-22

 

        16.14    Entire Agreement.    This Agreement, together with the Exhibits hereto, and the Quality Agreement, together
with its Exhibits thereto, and the Alliance Agreement, together with its Exhibits thereto, sets forth the entire agreement and understanding between the Parties as to the subject matter hereof and
merges all prior discussions and negotiations between them, and neither of the Parties shall be bound by any conditions, definitions, warranties, understandings or representations with respect to such
subject matter other than as expressly provided herein or as duly set forth on or subsequent to the date hereof in writing and signed by a proper and duly authorized officer or representative of the
Party to be bound thereby. 

        16.15    Notices.    All notices and other communications required or permitted to be given under this Agreement shall
be in writing and shall be delivered personally or sent by (a) registered or certified mail, return receipt requested, (b) a nationally-recognized courier service guaranteeing
next-day delivery, charges prepaid or (c) facsimile (with the original promptly sent by any of the foregoing manners), and shall be deemed to have been given upon mailing or upon
transmission by facsimile, as the case may be. Any such notices shall be addressed to the receiving Party at such Party's address set forth below, or at such other address as may from time to time be
furnished by similar notice by either Party: 

	 	 	(a)	If to SkyePharma:

10450 Science Center Dr.

San Diego, CA 92121

Attn: Steve Thornton

Phone No.: 858-625-2424

Facsimile No.: 858-623-0376
	

 	
 	

(b)	

If to Endo:

Endo Pharmaceuticals, Inc.

100 Painters Drive

Chadds Ford, PA 19317

Attn: General Counsel

Phone No.: (610) 558-9800

Facsimile No.: (610) 558-9682

        16.16    Counterparts.    This Agreement may be executed simultaneously in any number of identical counterparts, any
one of which need not contain the signature of more than one Party, but all such counterparts taken together shall constitute one and the same agreement. 

A-23

 

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

	 	 	ENDO PHARMACEUTICALS INC.
	

 	
 	
By:	

 
	 	 	 	
 Carol A. Ammon
 Chairman and Chief Executive Officer
	 	 	 	 
	 	 	SKYEPHARMA, INC.
	
Date:	
 	

By:	

 
	 	 	 	
 Michael R.D. Ashton
 Chief Executive Officer of SkyePharma PLC

A-24

  

 
 

SCHEDULE 3
  
    INITIAL MEMBERS OF JOINT EXECUTIVE COMMITTEE    
    

        Endo
Representatives                                      
                                          
SkyePharma Representatives
 

        [Confidential
Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] 

A-25

 
 
 

SCHEDULE 8.1(e)
  
    SCHEDULE OF EXCEPTIONS    
    

        Pursuant to a Security Agreement dated as of December 29, 2000, SkyePharma, Inc. has granted to Paul Capital Royalty Acquisition Fund, L.P. a
security interest in certain amounts payable by Endo to SkyePharma, Inc. under this Agreement. 

        Pursuant
to a Security Agreement dated as of March 7, 2002, SkyePharma Canada Inc. has granted to Paul Capital Royalty Acquisition Fund, L.P. a security interest in certain
amounts payable by Endo to SkyePharma Canada Inc. under this Agreement. 

A-26

QuickLinks

DEVELOPMENT AND MARKETING STRATEGIC ALLIANCE AGREEMENT AMONG ENDO PHARMACEUTICALS INC. SKYEPHARMA, INC. AND SKYEPHARMA CANADA INC.

TABLE OF CONTENTS

DEVELOPMENT, MARKETING AND STRATEGIC ALLIANCE AGREEMENT December 31, 2002 (the " Effective Date ")

PRELIMINARY STATEMENTS

EXHIBIT A FINANCIAL APPENDIX

EXHIBIT B TARGET LABELING

EXHIBIT C FORM OF PROPOFOL SUPPLY AGREEMENT

FORM OF PROPOFOL SUPPLY AGREEMENT By and Between SKYEPHARMA, INC. and ENDO PHARMACEUTICALS INC. Dated as of , 2003

Exhibit C

FORM OF PROPOFOL SUPPLY AGREEMENT

PRELIMINARY STATEMENTS

SCHEDULE 3 INITIAL MEMBERS OF JOINT EXECUTIVE COMMITTEE

SCHEDULE 8.1(e) SCHEDULE OF EXCEPTIONS

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