Document:

EXHIBIT 10.3

2005 Director Compensation Arrangements

The following summarizes the compensation arrangements
established between Harvard Bioscience, Inc. (the “Company”) and its
directors through verbal agreements to be effective as of immediately following
the 2005 annual meeting of stockholders of the Company:

Each non-employee Director will be entitled to receive
a non-qualified stock option to purchase 25,000 shares of common
stock vesting annually over three years and granted on the fifth business day following
his or her initial election to the Board and an annual retainer consisting of (a) $12,000
paid in four equal quarterly installments and (b) a non-qualified stock
option to purchase 2,500 shares of common stock vesting annually over
three years and granted on the fifth business day following each annual
stockholders meeting. Each non-employee Director member of the Audit Committee
will be entitled to receive an additional annual retainer of $6,000 paid in
four equal quarterly installments and an option to
purchase 2,500 shares of common stock vesting annually over three
years and granted on the fifth business day following each annual stockholders
meeting. Each non-employee Director member of the Compensation Committee will
be entitled to receive an additional annual retainer of $2,000 paid in four
equal quarterly installments. In addition, non-employee Directors are
reimbursed for their expenses incurred in connection with attending Board and
committee meetings.EXHIBIT 10.1

 

	
  DSM Pharmaceuticals, Inc.

  	
   

  	
  

  

 

April 20, 2005

 

Mr. Robert
Urban

Vice
President Technical Operations

Cephalon, Inc.

145
Brandywine Parkway

West
Chester, PA 19380-4245

 

Re: 
Amendment No. 6 to Toll Manufacturing and Packaging Agreement

 

Dear
Mr. Urban:

 

This
letter confirms recent discussions regarding the proposed amendment of the Toll
Manufacturing and Packaging Agreement dated as of August 24, 1999, as
amended by Amendment No. 1 dated July 3, 2001; by Amendment No. 2
dated October 9, 2001; by Amendment No. 3 dated June 21, 2002;
by Amendment No. 4 dated April 28, 2003; and by Amendment No. 5
dated August 15, 2003 (collectively, the “Agreement”) by and between
Cephalon, Inc. (“Cephalon”) and DSM Pharmaceuticals, Inc. (“DSM”).  All terms not otherwise defined herein are
used as defined in the Agreement.  

 

This
Amendment No. 6 amends the specific terms referenced below.  

 

1.               Schedule F of
Amendment No. 4 dated April 28, 2003 shall be revised to increase the
Minimum Quantities for Year 2005 to 55 million tablets and extend the term of
the minimum quantities from 8/24/05 to 12/31/05.  The minimum quantities for 2006 are also
included.  The revised Schedule F is attached hereto and incorporated herein
by reference.

 

2.               Section 2.5
of the Agreement shall be amended to read, in its entirety, as follows:  

 

2.5                     Term.  Unless sooner terminated with the provisions
of Article XXIII, this Agreement will remain in effect until December 31,
2006.  On the first anniversary of the
Amendment No. 6 effective date, the parties shall negotiate in good faith
for a reasonable period of time with respect to any mutually agreeable
extensions to the Term, it being understood that neither party shall be
obligated to agree to any such extension.

 

3.               Section 23.1
will be deleted in its entirety. 

 

4.               Existing
Schedule E of the Agreement
relating to Tolling Fees shall remain in effect through December 31,
2005.  Effective January 1, 2006, Schedule E will be replaced with the attached revised Schedule E.  

 

 

5.               In the
third line of Section 6.1 of the Agreement, the words “sixty (60)” are
hereby replaced with words “ninety (90)”.

 

6.               In the
fifth line of Section 7.1 of the Agreement, the words “sixty (60)” are
hereby replaced with words “ninety (90)”.

 

7.               This
Amendment No. 6 shall be effective upon the date of the last signature
below.

 

If you
are in agreement with the foregoing provisions, please so signify by signing
below.

 

THIS AMENDMENT NO. 6

AGREED AND ACCEPTED:

 

DSM Pharmaceuticals, Inc.

 

 

	
  By:

  	
  /s/
  Terence S. Novak

  	
   

  
	
  Terence
  S. Novak, Chief Marketing Officer

  
	
   

  
	
  Date:
  April 20, 2005

  
	
   

  
	
   

  
	
  Cephalon, Inc.

  
	
   

  
	
   

  
	
  By:

  	
  /s/
  Robert J. Urban

  	
   

  
	
  Robert Urban, Vice President Technical Operations

  
	
   

  
	
  Date: April 25, 2005

  

 

2

 

SCHEDULE E

 

Tolling Fees

 

Cephalon shall pay DSM the following
amounts effective January 1, 2006, in consideration of the formulations
and packaging services rendered hereunder:

 

	
  Product

  	
   

  	
  Tier 1

  10 Million

  Tablets

  	
   

  	
  Tier 2

  20 Million

  Tablets

  	
   

  	
  Tier 3

  30 Million

  Tablets

  
	
  Provigil/Modafinil
  100 mg, 100 count bottle

  	
   

  	
  $

  	
  [**]

  	
   

  	
  $

  	
  [**]

  	
   

  	
  $

  	
  [**]

  
	
  Provigil/Modafinil
  200 mg, 100 count bottle

  	
   

  	
  $

  	
  [**]

  	
   

  	
  $

  	
  [**]

  	
   

  	
  $

  	
  [**]

  
	
  Provigil/Modafinil
  200 mg, Bulk Tablets

  	
   

  	
  $

  	
  [**] per
  thousand tablets

  	
   

  	
  $

  	
  [**] per
  thousand tablets

  	
   

  	
  $

  	
  [**] per thousand
  tablets

  

 

The above prices do not
include the cost of Modafinil, but do include the packaging material
costs.  These prices are based on batches
being campaigned once per quarter.  

 

The following
considerations also apply:

 

•                  The minimum yearly purchase
requirement for 2006 is [**] tablets. 
DSM is obligated to supply the minimum yearly purchase requirement and
Cephalon is required to purchase the minimum yearly purchase requirement.

 

•                  Cephalon shall provide DSM with an
annual binding commitment of [**],[**], or [**]
tablets with written notice of such commitment by June 1, 2005.  DSM shall respond in writing within 5
business days, confirming the quantity and projected delivery per quarter.

 

•                  Unit Price based on step tiered
pricing.  Tier 1 pricing is effective on
the first 10 million tablets purchased. 
Tier 2 pricing is effective on the purchase of 10,000,001 – 20,000,000
tablets.  Tier 3 pricing is effective on
the purchase of 20,000,001 – 30,000,000 tablets.

 

•                  Pricing assumes a 15%/80%/5% split,
respectively, between the Products.

 

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

 

 

SCHEDULE F

 

The minimum annual quantities to
be purchased by CEPHALON and capacity to be reserved by DSM are as follows for
the remainder of the Initial Term of the Agreement:

 

	
  Year

  	
   

  	
  Minimum Annual Quantity

  
	
   

  	
   

  	
   

  
	
  2005

  	
   

  	
  [**]

  
	
   

  	
   

  	
   

  
	
  2006

  	
   

  	
  [**]

  

 

**Portions
of the Exhibit have been omitted and have been filed separately pursuant
to an application for confidential treatment filed with the Securities and
Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange
Act of 1934, as amended.EXHIBIT 10.2

 

Summary of Oral Agreement for Payment of Services

between Cephalon, Inc.

and

its Board of Directors

dated May 18, 2005

 

The Stock Option and
Compensation Committee (the “Committee”) of the Board of Directors reviews annually
the cash compensation paid to members of the Board.  During such review, the Committee compares the
cash compensation to that paid by other companies within its peer group, as
determined by a third party consultant.  Prior
to May 2005, non-employee members of Cephalon’s Board of Directors
received an annual retainer of $30,000 and a $3,000 fee for each Board meeting
attended.  Additionally, on an annual
basis, the members of each of the Board’s committees received a $10,000
retainer for each committee membership, while the chair of each committee
received a $12,000 retainer.  During its
most recent compensation review in May 2005, the Committee recommended a $20,000
annual cash retainer for the Board’s Presiding Director.  In addition, Board members will now receive a $2,000 fee
for each meeting of the Board they participate in by telephone.  Prior to this change, fees were paid only for
meetings attended by a director in person.  The annual base cash retainer for all Board
members remains at $30,000, and in-person per meeting fees remain $3,000.  The Board of Directors will continue to be
reimbursed for expenses incurred to attend board meetings.  All directors will continue to receive
options to purchase 15,000 shares of common stock upon their initial election
to the Board and 10,000 more upon their annual re-elections.  The initial stock option grant vests over a
four-year period.  Since the annual amount
is viewed as compensation, it is 100% vested when awarded.EXHIBIT
10.5(a)

 

 

WHENEVER CONFIDENTIAL INFORMATION IS OMITTED HEREIN (SUCH
OMISSIONS ARE DENOTED BY AN ASTERISK *), SUCH CONFIDENTIAL INFORMATION HAS BEEN
SUBMITTED SEPARATELY TO THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT.

 

 

LICENSE
AND COLLABORATION AGREEMENT

 

BETWEEN

 

ALKERMES,
INC.

 

AND

 

CEPHALON,
INC.

 

 

TABLE
OF CONTENTS

 

	
  ARTICLE 1

  	
   

  	
  DEFINITIONS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 2

  	
   

  	
  MANAGEMENT OF THE COLLABORATION

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.1

  	
   

  	
  Joint
  Steering Committee

  	
   

  	
   

  
	
  2.2

  	
   

  	
  Modifications
  to Agreement after Sharing of Distributable Loss and Distributable Profit
  Converts to a Royalty-Based Arrangement.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 3

  	
   

  	
  DEVELOPMENT

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.1

  	
   

  	
  Development
  Team

  	
   

  	
   

  
	
  3.2

  	
   

  	
  Accounting
  and Financial Reporting for DT and CT

  	
   

  	
   

  
	
  3.3

  	
   

  	
  Development Efforts

  	
   

  	
   

  
	
  3.4

  	
   

  	
  Development Responsibilities

  	
   

  	
   

  
	
  3.5

  	
   

  	
  Pharmacovigilence and Adverse Event
  Reporting

  	
   

  	
   

  
	
  3.6

  	
   

  	
  Development Costs

  	
   

  	
   

  
	
  3.7

  	
   

  	
  Development Plan Budget

  	
   

  	
   

  
	
  3.8

  	
   

  	
  Limitation on Development Team Decision
  Making

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 4

  	
   

  	
  COMMERCIALIZATION

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.1

  	
   

  	
  Commercialization Efforts

  	
   

  	
   

  
	
  4.2

  	
   

  	
  Commercialization Team

  	
   

  	
   

  
	
  4.3

  	
   

  	
  Contents of Commercialization Plan

  	
   

  	
   

  
	
  4.4

  	
   

  	
  Compliance with Law

  	
   

  	
   

  
	
  4.5

  	
   

  	
  Corporate Name and Logo

  	
   

  	
   

  
	
  4.6

  	
   

  	
  Sales and Distribution

  	
   

  	
   

  
	
  4.7

  	
   

  	
  Commercialization Costs

  	
   

  	
   

  
	
  4.8

  	
   

  	
  Commercialization Plan Budget

  	
   

  	
   

  
	
  4.9

  	
   

  	
  Product Label and Packaging

  	
   

  	
   

  
	
  4.10

  	
   

  	
  Promotional Materials

  	
   

  	
   

  
	
  4.11

  	
   

  	
  Sales Force

  	
   

  	
   

  
	
  4.12

  	
   

  	
  Training Materials

  	
   

  	
   

  
	
  4.13

  	
   

  	
  Samples

  	
   

  	
   

  
	
  4.14

  	
   

  	
  Medical Inquiries

  	
   

  	
   

  
	
  4.15

  	
   

  	
  Limitation on Commercialization Team
  Decision Making

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 5

  	
   

  	
   MANUFACTURE AND SUPPLY

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.1

  	
   

  	
  Supply Agreement

  	
   

  	
   

  
	
  5.2

  	
   

  	
  Supply Team

  	
   

  	
   

  
	
  5.3

  	
   

  	
  Supply Costs

  	
   

  	
   

  

 

i

 

	
  ARTICLE 6

  	
   

  	
  LICENSE GRANTS AND ASSIGNMENTS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.1

  	
   

  	
  Patent and Know-How License Grant

  	
   

  	
   

  
	
  6.2

  	
   

  	
  Alkermes Patents Update

  	
   

  	
   

  
	
  6.3

  	
   

  	
  Trademark Assignment

  	
   

  	
   

  
	
  6.4

  	
   

  	
  Trademark License

  	
   

  	
   

  
	
  6.5

  	
   

  	
  Corporate Name and Logo

  	
   

  	
   

  
	
  6.6

  	
   

  	
  ROW Territory

  	
   

  	
   

  
	
  6.7

  	
   

  	
  Termination of License to Contested
  Patent Rights

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 7

  	
   

  	
  INTELLECTUAL PROPERTY RIGHTS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.1

  	
   

  	
  Ownership of Intellectual Property

  	
   

  	
   

  
	
  7.2

  	
   

  	
  Disclosure of Patentable Inventions

  	
   

  	
   

  
	
  7.3

  	
   

  	
  Patent Committee

  	
   

  	
   

  
	
  7.4

  	
   

  	
  Patent Filings

  	
   

  	
   

  
	
  7.5

  	
   

  	
  Defense and Enforcement Rights

  	
   

  	
   

  
	
  7.6

  	
   

  	
  Infringement Defense

  	
   

  	
   

  
	
  7.7

  	
   

  	
  Third-Party Patent Licenses

  	
   

  	
   

  
	
  7.8

  	
   

  	
  Patent Marking

  	
   

  	
   

  
	
  7.9

  	
   

  	
  Trademark Maintenance

  	
   

  	
   

  
	
  7.10

  	
   

  	
  Trademark Infringement

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 8

  	
   

  	
  CONFIDENTIALITY

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.1

  	
   

  	
  Confidentiality

  	
   

  	
   

  
	
  8.2

  	
   

  	
  Authorized Use and Disclosure

  	
   

  	
   

  
	
  8.3

  	
   

  	
  Survival

  	
   

  	
   

  
	
  8.4

  	
   

  	
  Publications

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 9

  	
   

  	
  UP-FRONT PAYMENT, MILESTONE PAYMENTS
  AND PROFIT SPLIT

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.1

  	
   

  	
  Up-front Payment

  	
   

  	
   

  
	
  9.2

  	
   

  	
  Milestone Payments

  	
   

  	
   

  
	
  9.3

  	
   

  	
  Profit Sharing

  	
   

  	
   

  
	
  9.4

  	
   

  	
  Reporting Net Sales and Shared Expenses

  	
   

  	
   

  
	
  9.5

  	
   

  	
  Financial Reconciliation

  	
   

  	
   

  
	
  9.6

  	
   

  	
  Generic Product

  	
   

  	
   

  
	
  9.7

  	
   

  	
  Records and Reporting; Audits

  	
   

  	
   

  
	
  9.8

  	
   

  	
  Manner of Payment

  	
   

  	
   

  
	
  9.9

  	
   

  	
  Interest on Late Payments

  	
   

  	
   

  
	
  9.10

  	
   

  	
  Taxes

  	
   

  	
   

  
	
  9.11

  	
   

  	
  [**]

  	
   

  	
   

  

 

ii

 

	
  ARTICLE 10

  	
   

  	
  REPRESENTATIONS AND WARRANTIES

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.1

  	
   

  	
  Disclaimer

  	
   

  	
   

  
	
  10.2

  	
   

  	
  Mutual Representations and Warranties

  	
   

  	
   

  
	
  10.3

  	
   

  	
  Alkermes Representations and Warranties

  	
   

  	
   

  
	
  10.4

  	
   

  	
  No Guaranty of Development or
  Commercialization Success

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 11

  	
   

  	
  LIABILITY

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.1

  	
   

  	
  Limitation of Liability

  	
   

  	
   

  
	
  11.2

  	
   

  	
  Cephalon Indemnification

  	
   

  	
   

  
	
  11.3

  	
   

  	
  Alkermes Indemnification

  	
   

  	
   

  
	
  11.4

  	
   

  	
  Insurance

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 12

  	
   

  	
  DISPUTE RESOLUTION

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.1

  	
   

  	
  Disputes

  	
   

  	
   

  
	
  12.2

  	
   

  	
  Reserved Disputes

  	
   

  	
   

  
	
  12.3

  	
   

  	
  Arbitration

  	
   

  	
   

  
	
  12.4

  	
   

  	
  Jurisdiction

  	
   

  	
   

  
	
  12.5

  	
   

  	
  Determination of Disputes Relating to
  Patents and Other Intellectual Property

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 13

  	
   

  	
  TERM AND TERMINATION

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13.1

  	
   

  	
  Term

  	
   

  	
   

  
	
  13.2

  	
   

  	
  Right to Terminate for Breach

  	
   

  	
   

  
	
  13.3

  	
   

  	
  Cephalon’s Right to Terminate

  	
   

  	
   

  
	
  13.4

  	
   

  	
  Alkermes’ Rights on Termination

  	
   

  	
   

  
	
  13.5

  	
   

  	
  Cephalon’s Rights on Termination

  	
   

  	
   

  
	
  13.6

  	
   

  	
  Cephalon’s Rights on Expiration

  	
   

  	
   

  
	
  13.7

  	
   

  	
  Right to Terminate Upon Bankruptcy

  	
   

  	
   

  
	
  13.8

  	
   

  	
  Survival of Certain Provisions

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 14

  	
   

  	
  GENERAL PROVISIONS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14.1

  	
   

  	
  Notices

  	
   

  	
   

  
	
  14.2

  	
   

  	
  Governing Law

  	
   

  	
   

  
	
  14.3

  	
   

  	
  Entire Agreement; Amendment

  	
   

  	
   

  
	
  14.4

  	
   

  	
  Binding Effect and Assignment

  	
   

  	
   

  
	
  14.5

  	
   

  	
  Waiver

  	
   

  	
   

  
	
  14.6

  	
   

  	
  Severability

  	
   

  	
   

  
	
  14.7

  	
   

  	
  Publicity

  	
   

  	
   

  
	
  14.8

  	
   

  	
  Counterparts

  	
   

  	
   

  
	
  14.9

  	
   

  	
  Force Majeure

  	
   

  	
   

  
	
  14.10

  	
   

  	
  Ambiguities

  	
   

  	
   

  

 

iii

 

	
  14.11

  	
   

  	
  Headings

  	
   

  	
   

  
	
  14.12

  	
   

  	
  No Partnership

  	
   

  	
   

  
	
  14.13

  	
   

  	
  Use of Names, Trade Names and
  Trademarks

  	
   

  	
   

  
	
  14.14

  	
   

  	
  Performance by an Affiliate

  	
   

  	
   

  
	
  14.15

  	
   

  	
  Non-Solicitation of Employees

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit A

  	
  Alkermes Patents

  	
   

  	
   

  
	
  Exhibit B

  	
  Alkermes Manufacturing Patents

  	
   

  	
   

  
	
  Exhibit C

  	
  Vivitrex Trademark and Medisorb
  Trademark

  	
   

  	
   

  
	
  Exhibit D

  	
  Development Plan for Calendar Years
  2005 and 2006

  	
   

  	
   

  
	
  Exhibit E

  	
  [**]

  	
   

  	
   

  
	
  Exhibit F

  	
  Press Release

  	
   

  	
   

  
						

 

iv

 

WHENEVER
CONFIDENTIAL INFORMATION IS OMITTED HEREIN (SUCH OMISSIONS ARE DENOTED BY AN
ASTERISK *), SUCH CONFIDENTIAL INFORMATION HAS BEEN SUBMITTED SEPARATELY TO THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT.

 

LICENSE AND
COLLABORATION AGREEMENT

 

This License and
Collaboration Agreement (the “Agreement”) is entered into effective as
of June 23, 2005 (the “Effective Date”) by and between Alkermes, Inc., a
Pennsylvania corporation with its principal office at 88 Sidney Street,
Cambridge, Massachusetts 02139 (“Alkermes”), and Cephalon, Inc., a
Delaware corporation with its principal office at 41 Moores Road, Frazer,
Pennsylvania 19355 (“Cephalon”).

 

RECITALS:

 

WHEREAS, Alkermes is
developing an injectable sustained-release microsphere form of the
pharmaceutical compound naltrexone for the treatment and/or prevention of
alcohol abuse/dependence or other indications approved for development pursuant
to this Agreement; and

 

WHEREAS, Cephalon and Alkermes wish to collaborate in
the development of the Products (as defined herein) for use and sale in the
Field (as defined herein) in the Territory (as defined herein); and

 

WHEREAS, Cephalon has
experience and expertise in the commercialization of pharmaceutical products
and will promote, market and sell the Products in the Field in the Territory;
and

 

WHEREAS, Alkermes will
manufacture and supply to Cephalon the Medisorb Product (as defined herein)
pursuant to the terms of a Supply Agreement (as defined herein); and

 

WHEREAS, the Parties
intend through these various arrangements, subject to budget constraints and
other limitations set forth herein, to maximize the profitability of the
Products in the Field in the Territory; and

 

WHEREAS, Cephalon and
Alkermes therefore agree to undertake the foregoing, all under the terms and
conditions set forth in this Agreement and for the consideration set forth herein.

 

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

 

ARTICLE 1

DEFINITIONS

 

1.1          “Act”
shall mean the United States Food, Drug and Cosmetic Act, as

 

	
  **

  	
   

  	
  CONFIDENTIAL TREATMENT REQUESTED

  

 

 

amended from time to
time, and the regulations promulgated thereunder including the guidelines and
guidance issued by the FDA.

 

1.2          “Additional
Product Trademark” shall have the meaning set forth in Section 7.9.

 

1.3          “Affiliate”
with respect to any Party, shall mean any entity that controls, is controlled
by, or is under common control with such Party, but only for so long as such
control shall continue.  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 ownership of voting securities, by
contract or otherwise, or (ii) the ownership, directly or indirectly, of at
least fifty percent (50%) of the voting securities or other ownership interest
of an entity.

 

1.4          “Alkermes
Know-How” shall mean any Know-How, including any Collaboration Technology
(other than Joint Know-How), that is Controlled by Alkermes or its Affiliates
on the Effective Date or thereafter during the Term and that is necessary or
directly related to the use, sale, offer for sale or import of the Products in
the Field in the Territory, but shall not include Know-How covering only
the Manufacture of a Product.

 

1.5          “Alkermes Manufacturing
Know-How” shall
mean any Know-How that is Controlled by Alkermes or its Affiliates on the
Effective Date or thereafter during the Term and that is necessary or directly
related to the Manufacture of the Products in the Territory or the Manufacture
of the Products in the ROW Territory for use, sale, offer for sale or import in
the Territory.

 

1.6          “Alkermes Manufacturing Patents” shall
mean shall mean any Patent Rights that are Controlled by Alkermes or its
Affiliates on the Effective Date or thereafter during the Term and that are
necessary or directly related to the Manufacture of the Products in the
Territory or the Manufacture of the Products in the ROW Territory for use,
sale, offer for sale or import in the Territory, including those patents and
patent applications listed on Exhibit B.

 

1.7          “Alkermes
Patents” shall mean (i) the Patent Rights Controlled by Alkermes or its
Affiliates on the Effective Date that are necessary or directly related to the
use, sale, offer for sale or import of the Products in the Field in the
Territory, including those patents and patent applications listed on Exhibit
A, and (ii) any Patent Rights, including any patents or patent applications
that claim Collaboration Technology (other than Joint Patents), that are
Controlled by Alkermes or its Affiliates after the Effective Date and that are
necessary or directly related to the use, sale, offer for sale or import of the
Products in the Field in the Territory, but shall not include Patent Rights covering
only the Manufacture of a Product.

 

	
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1.8          “Business Day” shall
mean a day on which banking institutions in New York, New York are open for
business.

 

1.9          “Call”
shall mean a face-to-face meeting in an individual, hospital or group setting
between a Sales Representative and one or more Target Prescribers.

 

1.10        “Cephalon
Commercialization Costs” shall have the meaning set forth in Section 4.1.2.

 

1.11        “Cephalon
Know-How” shall mean any Know-How, including any Collaboration Technology
(other than Joint Know-How), that is Controlled by Cephalon or its Affiliates
on the Effective Date or thereafter during the Term and that is necessary or
directly related to the Manufacture, use, sale, offer for sale or import of the
Products in the Field in the Territory.

 

1.12        “Cephalon
Patents” shall mean any Patent Rights, including any patent or patent
applications that claim Collaboration Technology (other than Joint Patents),
that are Controlled by Cephalon or its Affiliates on the Effective Date or
thereafter during the Term and that are necessary or directly related to the
Manufacture, use, sale, offer for sale or import of the Products in the Field
in the Territory.

 

1.13        “Clinical
Studies” means human studies designed to measure the safety and/or efficacy
of a Product.  Clinical Studies include
Phase I clinical trials, Phase II clinical trials, Phase III clinical trials,
and Phase IV clinical trials other than Post Marketing Clinical Trials.

 

1.14        “Clinical
Supplies” shall mean supplies of the Products, Placebo and diluent to be
used for the conduct of pre-clinical studies and/or Clinical Studies of a
Product in the Field pursuant to a Development Plan.

 

1.15        “Code”
shall mean the Code on Interactions with Healthcare Professionals promulgated
by the Pharmaceutical Research and Manufacturers of America (PhRMA) and the
American Medical Association (AMA) Guidelines on Gifts to Physicians from
Industry, as either of the foregoing may be amended from time to time.

 

1.16        “Collaboration
Technology” shall mean any Know-How developed, made or conceived by or on
behalf of a Party pursuant to a Development Plan or Commercialization Plan that
relates to a Product or Naltrexone or the Manufacture or use in the Field of a
Product or Naltrexone.

 

1.17        “Commercial
Supplies” shall mean supplies of the Products (i) for commercial sale by
Cephalon and its Affiliates in the Field in the Territory pursuant to this
Agreement or (ii) for compassionate use, use in investigator-sponsored Clinical

 

	
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Studies or Post Marketing
Clinical Trials in the Field in the Territory pursuant to this Agreement.

 

1.18        “Commercialization” (including variations such as “Commercialize” and the like) shall mean the performance of
any and all activities directed to promoting, marketing, importing, exporting,
distributing, selling or offering to sell (including pre-marketing), sampling,
Post Marketing Clinical Trials and post-marketing drug surveillance of the
Products in the Field in the Territory.

 

1.19        “Commercialization
Costs” shall mean direct costs incurred (i.e.,
paid or accrued) after the Effective Date by or on behalf of either Party in
accordance with GAAP applied on a consistent basis to the extent attributable
to fulfilling such Party’s responsibilities under the Commercialization Plan in
accordance therewith and with this Agreement, all as calculated in accordance
with Section 9.7.  Commercialization
Costs shall also comprise the costs of Commercialization performed by Cephalon’s
or its Affiliates’ or Alkermes’ or its Affiliates’ FTEs at the
Commercialization FTE Rate or the Treatment System Specialist FTE Rate, as
applicable, and performance of the Parties’ Sales Representative FTEs at the
Sales Representative FTE Rate.  Such
direct costs shall include:

(i)            costs
of internal marketing, scientific, medical, technical or managerial personnel
engaged in such efforts, which costs shall be documented;

 

(ii)           costs
of Post Marketing Clinical Trials for a Product included within the
Commercialization Plan, as well as the Fully Burdened Manufacturing Cost of
Commercial Supplies for such trials, any shipping and storage costs relating to
such supplies;

 

(iii)         costs
of marketing, advertising, sampling and promoting the Products in the Field in
the Territory, including by way of example educational expenses, speakers’
programs and symposia, and marketing meetings, but solely to the extent
reasonably allocable to the Products and excluding the costs of activities that
promote a Party’s business as a whole;

 

(iv)          costs
of customer services, such as call centers, and services related to case
management, patient reimbursement, technical complaints and medical and patient
inquiries;

 

(v)            costs
of developing sales force training materials and conducting sales force
training sessions;

 

(vi)          costs
of primary and secondary market research for the Territory and collection of
data about sales to hospitals and other end users;

 

	
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(vii)         costs
of developing, producing and distributing Promotional Materials for the
Territory, including copyright registrations therefor;

 

(viii)        costs
of contracting with managed care organizations, hospital systems, group
purchasing organizations, physician networks, pharmacies and any other private
or government healthcare provider or reimbursement entity, in each case solely
with respect to the Products, or if not solely, as allocated among a Party’s
products on a fair and equitable basis;

 

(ix)          costs
of communications and meetings with the FDA , exchange of information,
assistance, medical inquiries, and post-market surveillance in connection with
Products sold in the Territory, following the receipt of Regulatory Approval
therefor;

 

(x)           costs
of developing and carrying out the Medical Activity Plan for the Products,
including costs for developing, producing and distributing medical information,
developing and implementing continuing medical education programs, field-based
medical affairs personnel and safety monitoring;

 

(xi)          costs incurred in connection with
receiving, investigating, recording, reviewing, communicating, and exchanging
adverse events and other reportable information as provided in a safety data
exchange agreement between the Parties to the extent relating to the
Commercialization of the Products;

 

(xii)         costs
and expenses of prosecuting, maintaining and defending the Vivitrex Trademark
and the Additional Product Trademark in the Territory pursuant to Section 7.9
and trademark enforcement costs pursuant to Section 7.10;

 

(xiii)       Sales
Representative FTE costs;

 

(xiv)        Treatment System Specialist FTE costs; and

 

(xv)          Distribution
Costs.

 

1.20        “Commercialization
FTE Rate” shall mean initially an amount equal to [**] per FTE per year; on January 1, 2006,
and annually thereafter, such amount shall be adjusted to reflect any increase,
since the prior adjustment (or the initial rate, as applicable), in the Bureau
of Labor Statistics Consumer Price Index for Urban Wage Earners and Clerical
Workers, Northeast Urban, based on the most recent monthly index available as
of the adjustment date.

 

1.21        “Commercialization
Plan” shall mean the marketing and sales plan intended to encourage sales
of the Products in the Field in the Territory, as prepared and updated at least
annually by the CT.

 

1.22        “Commercially
Reasonable Efforts” shall mean [**].

 

	
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1.23        “[**]”
shall have the meaning set forth in Section 9.11.

 

	
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1.24        “Confidential
Information” shall have the meaning set forth in Section 8.1.

 

1.25        “Controlled”
shall mean with respect to Patent Rights or Know-How that the applicable
Party or its Affiliates, in whole or in part, owns or has a license to such patents
or know-how and has the ability to grant a license or a sublicense, as
applicable, or to otherwise disclose proprietary or trade secret information,
to such other Party, without paying any consideration to any Third Party and
without either violating the terms of any agreement or other arrangement with
any Third Party existing and in effect at the time such Party would be required
hereunder to grant the other Party such license or sublicense or
misappropriating the proprietary or trade secret information of a Third Party.

 

1.26        “CT”
shall mean a commercialization team established pursuant to Section 4.2.

 

1.27        “Detail”
or “Detailing” shall mean, with respect to the Products, the activity
undertaken by a Sales Representative during a Call in which one or more Product
benefits are verbally presented to one or more Target Prescribers, but shall
exclude discussions at conventions, marketing meetings or seminars, and all
forms of communication not involving face-to-face contact by a Sales
Representative and a Target Prescriber. 
A Detail does not include a reminder or sample drop.

 

1.28        “Development”
(including variations such as “Develop” and “Developing”) shall mean the performance of any and all
activities relating to obtaining Regulatory Approval of a Product in the Field
in the Territory and to supporting and expanding such Regulatory Approval,
including activities relating to developing the ability to Manufacture and to
continue to Manufacture the Product. 
Development activities include the performance by the Parties, their
Affiliates or Third Parties of pre-clinical studies, pharmacokinetic studies,
toxicology studies, formulation, test method development and stability testing,
manufacturing process development, manufacturing technical support, validation
and scale-up (including bulk compound production), manufacturing Clinical
Supplies, quality assurance and quality control for formulations of a Product,
Clinical Studies (including post-marketing Clinical Studies to obtain or
support Regulatory Approval), and regulatory affairs including regulatory legal
services.

 

1.29        “Development
Costs” shall mean the direct costs incurred (i.e.,
paid or accrued) after the Effective Date by or on behalf of either Party in
accordance with GAAP applied on a consistent basis to the extent attributable
to fulfilling such Party’s responsibilities under the Development Plan in
accordance therewith and with this Agreement, all as calculated in accordance
with Section 9.7.  Development costs
shall also comprise costs of Development performed by Cephalon’s or its
Affiliates’ or Alkermes’ or its Affiliates’ FTEs at the Development FTE
Rate.  Such direct costs shall include:

 

	
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(i)            costs
of internal scientific, medical, technical or managerial personnel engaged in
such efforts, which costs shall be documented;

 

(ii)           costs
of research or development, including costs of studies on the toxicological,
pharmacokinetic, metabolic or clinical aspects of a Product conducted
internally or by individual investigators or consultants, necessary or
desirable for the purpose of obtaining Regulatory Approval and for conducting
post-marketing activities to support such Regulatory Approval;

 

(iii)         Fully
Burdened Manufacturing Costs of Clinical Supplies and any shipping and storage
costs relating to such supplies;

 

(iv)          costs
of manufacturing process development, validations, scale-up, quality assurance
and quality control for formulations of a Product pursued by the Parties under
any Development Plan, but excluding costs relating to the [**] Manufacturing
process scale-up, validation of the [**] Manufacturing process or the
Regulatory Approval of the [**] Manufacturing process that are required to
obtain Regulatory Approval for the Medisorb Product for the Initial Indication
(which costs shall be borne solely by Alkermes);

 

(v)            costs
of preparing and reviewing data or information for the purpose of submitting to
the FDA an NDA for a Product in the Field;

 

(vi)          costs
of communications and meetings with the FDA, exchange of information and
assistance until Regulatory Approval for the Product has been obtained; and

 

(vii)         costs incurred in connection with
receiving, investigating, recording, reviewing, communicating, and exchanging
adverse events and other reportable information as provided in a safety data
exchange agreement between the Parties to the extent relating to the
Development of a Product in the Field in the Territory. 

 

1.30        “Development
FTE Rate” shall mean initially an amount equal to [**] per FTE per year; on January 1, 2006,
and annually thereafter, such amount shall be adjusted to reflect any increase,
since the prior adjustment (or the initial rate, as applicable), in the Bureau
of Labor Statistics Consumer Price Index for Urban Wage Earners and Clerical
Workers, Northeast Urban, based on the most recent monthly index available as
of the adjustment date.

 

1.31        “Development
Plan” shall mean a plan for the Development of a Product for one or more
indications in the Field in the Territory, as prepared and updated at least
annually by the DT.

 

	
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1.32        “Distributable
Loss” and “Distributable Profit” shall mean the amount equal to Net Sales
for the Products in the Field in the Territory in the applicable reporting
period less the Shared Expenses, which shall be a Distributable Loss if
negative and a Distributable Profit if zero (0) or positive.

 

1.33        “Distribution
Costs” shall mean costs incurred (i.e., paid and
accrued) after the Effective Date by or on behalf of a Party to the extent
attributable to the distribution of Commercial Supplies, including (i)
distributor customer services, (ii) order entry, (iii) billing, (iv) warehousing,
(v) freight and transportation for delivery of the Products to the end user and
(vi) credit and collection services.

 

1.34        “DT”
shall mean a development team established pursuant to Section 3.1.

 

1.35        “Effective
Date” shall mean the date first written above.

 

1.36        “FDA”
shall mean the United States Food and Drug Administration or any successor
agency.

 

1.37        “Field”
shall mean the treatment, prevention or diagnosis of any human disease,
disorder or condition, including the treatment and/or prevention of alcohol
abuse/dependence.

 

1.38        “Filing
Party” shall have the meaning set forth in Section 7.4.

 

1.39        “Finished Product” shall mean a finished, packaged, labeled
final dosage unit of a Product plus diluent and syringes.

 

1.40        “First
Commercial Sale” shall mean the first commercial sale of a Finished Product
in the Field in the Territory after Regulatory Approval has been obtained in
the Territory for such Finished Product.

 

1.41        “FTE”
shall mean [**].

 

	
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1.42        “Fully
Burdened Manufacturing Cost” shall mean the costs incurred (i.e., paid or
accrued) by a Party, its Affiliates or agents in the Manufacture of a Product,
Placebo or diluent, as applicable, which shall be [**].  Fully Burdened Manufacturing Cost shall
exclude [**] that are required to obtain Regulatory Approval for the Medisorb
Product for the Initial Indication (which costs shall be borne solely by
Alkermes).  In addition, for the
avoidance of doubt, any Manufacturing development costs that are included in
Shared Expenses as Development Costs shall not be included as part of the Fully
Burdened Manufacturing Cost.

 

1.43        “GAAP” shall mean United States Generally Accepted
Accounting Principles.

 

1.44        “Generic
Product” shall mean [**].

 

1.45        “Government
Authority” shall mean any court,
tribunal, agency, department, legislative body, commission or other
instrumentality of any federal, state, county, city or other political
subdivision in the Territory.

 

1.46        “Initial
Indication” shall mean the alcohol abuse/dependence indication.

 

1.47        “Initial Indication Development Costs” shall mean those
Development Costs that are necessary to obtain Regulatory Approval for the
Medisorb Product for the Initial Indication at the manufacturing scale and in
the presentation form contained in NDA number 21-897 filed with the FDA by
Alkermes on March 31, 2005; provided, however, that such costs shall
only include the cost of one Phase III clinical trial (including the Fully
Burdened Manufacturing Costs of Clinical Supplies for such trial) in addition
to the Phase III clinical trial the data from which is included in such NDA and
such costs shall not include any costs incurred after the receipt of such
Regulatory Approval for the Medisorb Product, including any costs incurred to
support or expand such Regulatory Approval.

 

1.48        “IND”
shall mean an Investigational New Drug Application for a Product or a [**]
filed with the FDA pursuant to 21 C.F.R. Part 312.

 

1.49        “[**]”
shall mean [**].

 

1.50        “Joint
Know-How” shall mean any Collaboration Technology developed, made or
conceived jointly by or on behalf of Cephalon or its Affiliates and by or on
behalf of Alkermes or its Affiliates.

 

1.51        “Joint
Patents” shall mean any patent applications (including provisional patent
applications) claiming discoveries or inventions that are conceived and reduced
to practice jointly by or on behalf of Cephalon or its Affiliates and by or on
behalf of Alkermes or its Affiliates and that claim Collaboration Technology,
and all Patent Rights

 

	
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related to such patent
applications.

 

1.52        “JSC”
shall mean that joint steering committee established pursuant to Section 2.1.

 

1.53        “Know-How”
shall mean all proprietary data, technical
information, know-how, inventions, discoveries, trade secrets, processes,
techniques, compositions, material, methods, formulas or improvements, whether
patentable or not.

 

1.54        “Laws”
or “Law” shall mean all applicable laws,
statutes, rules, regulations, ordinances and other pronouncements having the
binding effect of law of any applicable Government Authority, including the
Act.

 

1.55        “Manufacturing”
(including variations such as “Manufacture”)
shall mean the performance of any and all activities directed to producing,
manufacturing, processing, filling, finishing, packaging, labeling, quality
control, quality assurance, testing and release, shipping and warehousing of
the Products, Finished Products, Placebo, or diluent as applicable.

 

1.56        “Marketing
Plan” shall mean that portion of the Commercialization Plan described in
Section 4.3.

 

1.57        “Medical
Activity Plan” shall mean that portion of the Commercialization Plan
described in Section 4.3.

 

1.58        “Medisorb
Product” shall mean a Product utilizing Alkermes’ Medisorb®
sustained-release technology as described in NDA number 21-897 filed with the
FDA by Alkermes on March 31, 2005.

 

1.59        “Medisorb
Trademark” shall mean the mark
MEDISORB, and the applications for registration of such mark listed on Exhibit
C.

 

	
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1.60        “Minimum
Sales Representatives” shall have the meaning set forth in Section 4.11.1.

 

1.61        “Naltrexone” shall mean [**].

 

1.62        “Net
Sales” shall mean, as to each calendar month, the gross amount invoiced by
Cephalon and its Affiliates to Third Parties for the sale of Finished Products
in the Territory, less accruals estimated, credits taken, and actual payments
(to the extent not previously accrued) made for:  (i) credits, fees paid to wholesalers,
retroactive price reductions, rebates (including Medicaid, managed care and
similar types of government rebates or rebates to other health care providers
and payers), refunds, charge backs, and adjustments actually granted; (ii)
trade, quantity and cash discounts actually allowed or given; (iii) sales,
excise, value-added and similar taxes assessed on the sale of the Finished
Products (other than income taxes of Cephalon and its Affiliates), and import
and customs duties; and (iv) shipping and insurance charges, postage, and
freight out (to the extent not separately paid by the Third-Party
customer).  Each of such deductions shall
only be applicable to the extent it is determined in accordance with GAAP as
consistently applied by Cephalon and its Affiliates for pharmaceutical products
other than a Finished Product.

 

[**].

 

The sale of a Finished
Product by and among Cephalon and its Affiliates intended for subsequent resale
is not a sale to a Third Party and shall be excluded from Net Sales
calculations.  Cephalon and its
Affiliates shall not sell or otherwise transfer Finished Product other than in
an arm’s length transaction exclusively for money except in accordance with
normal industry practice:  (i) for
charitable purposes; (ii) for pre-clinical studies, Clinical Studies and Post
Marketing Clinical Trials; (iii) for regulatory purposes and (iv) as
promotional samples.

 

1.63        “New Drug Application” or “NDA”
shall mean an application for Regulatory Approval required for commercial
marketing or sale of a Product as a pharmaceutical product in the Territory.

 

1.64        “New
Indication” shall mean any indication
for a Product in the Field other than the Initial Indication.

 

1.65        “Party”
shall mean Cephalon or Alkermes and, when used in the plural, shall mean both
Cephalon and Alkermes.

 

1.66        “Patent
Costs” means the (i) fees and expenses paid to outside legal counsel and
experts, or the cost of Alkermes’ or its Affiliates’ or Cephalon’s or its
Affiliates’ FTEs at the Development FTE Rate, incurred in connection with the
preparation, filing, prosecution and maintenance of Patent Rights after the
Effective

 

	
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Date, including costs of
patent interference, reexamination, reissue, revocation, opposition and appeal
proceedings, and (ii) cost to litigate the enforcement and defense of such
Patent Rights, in all cases as explicitly included in Patent Costs pursuant to
Article 7 hereof.

 

1.67        “Patent
Rights” shall mean any and all of the following:  (i) patent applications (including
provisional patent applications) and patents (including the inventor’s
certificates); and (ii) any substitution, extension (including patent term
extensions and supplementary protection certificates), registration,
confirmation, reissue, continuation, divisional, continuation-in-part,
reexamination, renewal, patent of addition or the like thereof or thereto.

 

1.68        “Placebo” shall mean an inactive substitute for a
Product.

 

1.69        “Post Marketing Clinical Trial” shall mean a clinical trial of a Product
in human patients (including investigator initiated trials) that is conducted
for a purpose other than to obtain or support Regulatory Approval.

 

1.70        “PRC”
shall have the meaning set forth in Section 4.10.2.

 

1.71        “Primary
Position Detail” shall mean a Detail in which key Product attributes are
verbally presented in the first position, consistent with the terms of this Agreement,
where the Product is given primary emphasis (i.e., an emphasis that is more
important than the emphasis given to any other product presented), and where no
more than [**] products are presented.

 

1.72        “Product”
shall mean any sustained-release, time-release or other extended-release
formulation or dosage form of a pharmaceutical product containing Naltrexone.

 

1.73        “Product Liability Claim” shall mean any
claim, action or demand by a Third Party relating to death or bodily injury
caused or allegedly caused by the use of a Product.

 

1.74        “Promotional
Materials” shall mean all written, printed, audio, video or graphic
advertising, promotional, educational and communication materials (other than
the Product label) for marketing, advertising and promotion of the Products for
use by the Parties’ sales forces in accordance with the terms of the applicable
Commercialization Plan.

 

	
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1.75        “Regulatory
Approval” shall mean any approvals of the FDA necessary for the
manufacture, marketing or sale of a Product in the Territory.

 

1.76        “ROW
Territory” shall mean all countries in the world, other than the Territory.

 

1.77        “Sales
Representative” shall mean an individual whose primary responsibility is to
engage in Detailing and other promotional efforts with respect to the Products.

 

1.78        “Sales
Representative FTE” shall mean [**].

 

1.79        “Sales
Representative FTE Rate” shall mean initially an amount equal to [**] per Sales Representative FTE per
year; on January 1, 2006, and annually thereafter, such amount shall be
adjusted to reflect any increase, since the prior adjustment (or the initial
rate, as applicable), in the Bureau of Labor Statistics Consumer Price Index
for Urban Wage Earners and Clerical Workers, Northeast Urban, based on the most
recent monthly index available as of the adjustment date.

 

1.80        “Secondary
Position Detail” shall mean a
Detail in which key Product attributes are verbally presented in the second
position, consistent with the terms of this Agreement, where the Product is
given significant but not primary emphasis (i.e., an emphasis that is at least
or more important than the emphasis given to any product presented other than
the product that is presented in the Primary Position Detail), and where no
more than three (3) products are presented.

 

1.81        “Shared
Expenses” shall mean Development
Costs, but not including the Initial Indication Development Costs; the Fully
Burdened Manufacturing Cost of Commercial Supplies (excluding such costs
relating to Post Marketing Clinical Trials that are included in
Commercialization Costs); the Commercialization Costs, but not including
Cephalon Commercialization Costs; Patent Costs; all amounts paid by Cephalon in
connection with a Third Party license that are identified as Shared Expenses
pursuant to Section 7.7; and Product Liability Claim-related costs not covered
by either Party’s indemnification obligations set forth in Article 11.

 

1.82        “ST”
shall mean a supply team established pursuant to the Supply Agreement.

 

1.83        “Standards”
shall mean the Accreditation Council for Continuing Medical Education (ACCME)
Standards for Commercial Support of Continuing Medical Education, as they may
be amended from time to time.

 

1.84        “Supply
Agreement” shall mean the Supply Agreement between the Parties for the
manufacture and supply to Cephalon of the Products, Finished Products,

 

	
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Placebo and/or diluent.

 

1.85        “Target
Prescriber” shall mean a practitioner with authority to prescribe the
Products or issue hospital orders for the Products, or with substantial
influence over the prescription of the Products or issuance of hospital orders
for the Products, in the Field in the Territory as identified in the
Commercialization Plan.

 

1.86        “Term”
shall have the meaning set forth in Section 13.1.

 

1.87        “Third
Party” shall mean any entity other than the Parties or their respective
Affiliates.

 

1.88        “Territory”
shall mean the United States of America, its territories and possessions,
including the Commonwealth of Puerto Rico.

 

1.89        “Treatment
System Specialists” shall have the meaning set forth in Section 4.11.2.

 

1.90        “Treatment System Specialist FTE” shall mean [**].

 

1.91        “Treatment
System Specialist FTE Rate” shall mean initially an amount equal to [**] per Treatment System Specialist FTE
per year; on January 1, 2006, and annually thereafter, such amount shall be
adjusted to reflect any increase, since the prior adjustment (or the initial
rate, as applicable), in the Bureau of Labor Statistics Consumer Price Index
for Urban Wage Earners and Clerical Workers, Northeast Urban, based on the most
recent monthly index available as of the adjustment date.

 

1.92        “[**]”
shall have the meaning set forth in Section 4.1.2.

 

1.93        “Valid
Claim” shall mean a claim of an issued or granted and unexpired patent,
including an Alkermes Patent or Joint Patent, which has not lapsed, been
revoked or abandoned or held permanently unenforceable or invalid by a decision
of a court or other governmental agency of competent jurisdiction, unappealable
or unappealed within the time allowed for appeal, and which has not been
disclaimed, denied or admitted to be invalid or unenforceable through reissue,
reexamination, disclaimer or otherwise.

 

1.94        “Vivitrex
Trademark” shall mean the mark VIVITREX, and the applications for registration
of such mark listed on Exhibit C.

 

Where words and phrases
are used herein in the singular, such usage is intended to include the plural
forms where appropriate to the context, and vice versa.  The words “including”, “includes”
and “such as” are used in their non-limiting sense and have the same
meaning as “including without limitation” and “including but not limited

 

	
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15

 

to”.  References to Articles, Sections,
subsections, and clauses are to the same with all their subparts as they appear
in this Agreement.  “Herein” means
anywhere in this Agreement.  “Hereunder”
and “hereto” means under or pursuant to any provision of this Agreement.

 

 

ARTICLE 2

MANAGEMENT
OF THE COLLABORATION

 

2.1          Joint
Steering Committee.

 

2.1.1       Establishment of the JSC. 
Within fifteen (15) days of the Effective Date, the Parties shall
establish a joint steering committee (the “JSC”), which shall have
overall responsibility for the collaboration between the Parties, including
overseeing the Development and Manufacturing of the Products in the Field for the
Territory, and the Commercialization of the Products in the Field in the
Territory, as contemplated by this Agreement. 
The JSC will comprise [**] representatives of each Party, who shall be
appointed (and may be replaced at any time) by such Party on notice to the
other Party in accordance with this Agreement. 
Such representatives shall include individuals within the senior
management of each Party.  To conduct the
activities described in Section 2.1.2 below, the JSC will meet at least [**] each
calendar quarter for the first [**] years following the Effective Date, and
thereafter at least [**] each calendar year, or more frequently if agreed by
the JSC.  The representatives from each
Party shall collectively have one vote in decisions, with decisions made by
unanimous vote.

 

2.1.2       JSC
Responsibilities.  The JSC shall
perform the following functions:

 

(i)            review,
coordinate and, in its discretion, approve the strategies for the Development,
Commercialization and Manufacture of the Products in the Field in the
Territory, and provide direction to the DT, CT and ST as provided herein;

 

(ii)           approve
the scope of the DT’s, CT’s and ST’s decision-making authority;

 

(iii)         except
as otherwise provided herein, review and, in its discretion, approve by [**] of
each calendar year the Development Plan for the subsequent calendar year
(including the Development Plan annual budget and the division of
responsibilities between the Parties under such plan);

 

	
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(iv)          review
and, in its discretion, approve substantive amendments to the Development Plan
(including the Development Plan annual budget);

 

(v)            review
and, in its discretion, approve the multiyear long-range plan for Development
of the Products in the Field in the Territory (including the budget for
Development Costs) formulated by the DT;

 

(vi)          review
and, in its discretion, approve recommendations for further Development of the
Products, including Development of the Products for a New Indication;

 

(vii)         review
and, in its discretion, approve by [**] of each calendar year the
Commercialization Plan for the subsequent calendar year (including the
Commercialization Plan annual budget);

 

(viii)        review
and, in its discretion, approve substantive amendments to the Commercialization
Plan (including the Commercialization Plan annual budget);

 

(ix)          review and,
in its discretion, approve the multiyear long-range plan for Commercialization
of the Products in the Field in the Territory (including the budget for
Commercialization Costs) formulated by the CT;

 

(x)           review
and, in its discretion, make a commercially reasonable determination whether the
budget for Patent Costs prepared by the Patent Committee pursuant to Section
7.3 should be approved, and if appropriate, approve the budget in accordance
with such determination;

 

(xi)          serve
as the first forum for the settlement of disputes or disagreements that are
unresolved by the DT, CT or ST, unless otherwise indicated in this Agreement;
and

 

(xii)         perform such
other functions as appropriate to further the purposes of this Agreement as determined
by the Parties.

 

2.1.3       JSC
Chairperson; Procedures.  For a [**]-year
period commencing on the Effective Date, an Alkermes representative to the JSC
shall serve as the chairperson of the JSC. 
For each subsequent [**]-year period, representatives of the Parties
shall alternate as the chairperson of the JSC. 
The chairperson shall establish the timing and agenda for all JSC
meetings and shall send notice of such meetings, including the agenda therefor,
to all JSC members; provided, however, either Party may request that
specific items be included in the agenda and may request that additional
meetings be scheduled as needed.  The
location of regularly scheduled JSC

 

	
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meetings shall
alternate between the offices of the Parties, unless otherwise agreed.  Meetings may be held telephonically or by
videoconference.  A quorum of at least [**]
JSC members appointed by each Party shall be present at or shall otherwise
participate in each JSC meeting.  The
Party hosting any JSC meeting shall appoint one person (who need not be a
member of the JSC) to attend the meeting and record the minutes of the meeting
in writing.  Such minutes shall be
circulated to the Parties promptly following the meeting for review, comment
and approval.  Any modifications to any
Development Plan or Commercialization Plan (including the work, budget, and
timeline therefor) approved at a JSC meeting shall be considered approved and
shall constitute a valid, binding amendment to such Development Plan or
Commercialization Plan, as applicable, upon JSC review and approval of the
meeting minutes related thereto.

 

2.1.4       JSC Decision Making. 
As a general principle, the JSC will operate by consensus with each
Party collectively having one vote.  In
the event that the JSC members do not reach consensus with respect to a matter
that is within the purview of the JSC within [**] days after they have met and
attempted to reach such consensus, such matter shall be resolved by the Parties
under the terms of Article 12 below; provided, however, that to the
extent any matters are required by Law or by safety concerns with respect to a
Product to be resolved within a shorter period of time, the periods set forth
in this Section 2.1.4 and in Article 12 shall be shortened as appropriate to
permit the resolution of such matters within the required period.

 

2.2          Modifications
to Agreement after Sharing of Distributable Loss and Distributable Profit
Converts to a Royalty-Based Arrangement. 
The Parties intend that in those instances where the sharing of
Distributable Loss and Distributable Profit hereunder is eliminated in favor of
a royalty-based arrangement, the DT and the CT will cease operations, the
Parties’ operational Development and Commercialization obligations and all
related collaboration governance provisions (including the provisions of
Section 12.2 relating to the resolution of disputes outside of the arbitration
provisions of Section 12.3) shall terminate, and Cephalon shall be obligated
only to use Commercially Reasonable Efforts to Commercialize the Products in
the Field in the Territory. 
Notwithstanding the foregoing, the Parties’ mutual obligations to
cooperate with one another to enable one another to comply with applicable Laws
shall continue, including Alkermes’ right to require that Cephalon not
implement decisions that adversely affect, in any material respect, the
obligation of Alkermes, as the holder of the Regulatory Approval for a Product,
to comply with applicable Law.  Cephalon
shall have the right to make all decisions regarding Development and
Commercialization, subject to the preceding sentence and to Cephalon’s royalty
and other surviving financial obligations and related reporting obligations to
Alkermes hereunder.  Section 9.11 shall
also no longer apply.  In addition, each
Party shall have the right to prosecute, defend and enforce Patent Rights owned
or controlled by it, each Party shall be responsible for the payment of any
Patent Costs it incurs, each Party shall have the right to retain all
associated recovery in connection with a patent enforcement or defense action,
and Cephalon shall be responsible for the costs and expenses incurred in
connection with

 

	
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the prosecution,
maintenance, defense and enforcement of the Vivitrex Trademark and the
Additional Product Trademark.

 

ARTICLE 3

DEVELOPMENT

 

3.1          Development
Team.

 

3.1.1       Establishment
of Development Team.  The JSC shall
establish a development team (the “DT”) no later than [**] days after
the Effective Date to coordinate and implement all activities for the
Development of the Products in the Field in the Territory, within the budgets
approved by the JSC.  One representative
from each Party shall be designated as that Party’s team leader to act as the
primary DT contact for that Party.  The
DT shall consist of an equal number of representatives of each Party as are
reasonably necessary to accomplish the goals of the DT hereunder.  Such representatives will include individuals
with expertise and responsibilities in the areas of pre-clinical and clinical
development, manufacturing process development, quality control, quality
assurance, regulatory affairs and product development, as applicable to the
stage of Development of a Product. 
Either Party may replace any or all of its representatives at any time
upon notice to the other Party.

 

3.1.2        Development Team Responsibilities.  The DT shall be responsible for:

 

(i)            developing
an overall strategy for the Development of the Products in the Field in the
Territory for review and approval by the JSC;

 

(ii)           formulating
the Development Plans (including the allocation of Development activities
between the Parties) and associated annual budgets and any substantive
amendments thereto for review and approval by the JSC, which Development Plans
will include the plans for Manufacture development and associated annual
budgets and any substantive amendments thereto received by the DT from the ST;

 

(iii)         formulating
the multiyear long-range plan for Development of the Products in the Field in
the Territory (including the budget for Development Costs) for review and
approval by the JSC;

 

(iv)          implementing
in coordination with the ST, as appropriate, all activities pursuant to the
Development Plans approved by the JSC;

 

(v)            making
recommendations for further Development of the Products, including Development
of the Products for a New Indication;

 

	
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(vi)          in
consultation with intellectual property representatives of each Party,
developing a strategy, and implementing methods for compliance, to protect
trade secrets, know-how and other confidential material, data and information
developed, made or conceived by the Parties pursuant to a Development Plan;

 

(vii)         in
consultation with the CT, developing and co-ordinating a communications and
publication strategy for the Products in the Territory;

 

(vii)         generating
forecasts of supply requirements for the Product and Placebo pursuant to the
Development Plans and delivering this forecast to the CT;

 

(ix)          exchanging
information and facilitating cooperation and coordination between the Parties
as they exercise their respective rights and meet their respective obligations
under the Development Plans and this Agreement;

 

(x)           providing
status updates to the JSC regarding Development activities in the Territory;
and

 

(xi)          performing
such other functions as appropriate to further the purposes of this Agreement
as determined by the Parties.

 

In addition, the DT may designate subteams as
appropriate to facilitate coordination and cooperation in key areas.  The Development Plan for the Medisorb Product
for the Initial Indication for calendar years 2005 and 2006 and the
accompanying budget are attached hereto as Exhibit D.  This Development Plan shall be deemed to have
been reviewed and approved by the JSC. 
The DT will prepare final Development Plans and associated budgets for
each subsequent calendar year by [**] of the then-current calendar year.  The JSC shall review and, if appropriate,
approve such Development Plans and budgets by [**] of the then-current calendar
year.  In addition, a [**]-year
long-range plan for Development of the Products in the Field in the Territory
(including the budget for Development Costs) shall be established on a yearly
basis under the direction of the DT and submitted to the JSC by [**] of each
calendar year during any year that the Parties are operating under a
Development Plan.

 

3.1.3       Development
Team Procedures.  The Alkermes team
leader shall serve as the chairperson of the DT.  The chairperson shall establish the timing
and agenda for all DT meetings and shall send notice of such meetings,
including the agenda therefor, to all DT members; provided, however,
either Party may request that specific items be included in the agenda and may
request that additional meetings be scheduled as needed.  The DT will meet at least [**] each calendar
month, or as agreed by the DT, for the first [**] years following the Effective
Date, and at least [**] each calendar quarter, or as agreed by the DT,
thereafter.  The location of regularly
scheduled DT meetings shall alternate between the offices of the Parties,
unless

 

	
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20

 

otherwise
agreed.  Meetings may be held
telephonically or by videoconference.  A
quorum of at least half the DT members appointed by each Party shall be present
at or shall otherwise participate in each DT meeting.  The Party hosting any DT meeting shall
appoint one person (who need not be a member of the DT) to attend the meeting
and record the minutes of the meeting in writing.  Such minutes shall be circulated to the
Parties promptly following the meeting for review, comment and approval.

 

3.1.4       Development
Team Decision Making.  As a general
principle, the DT will operate by consensus, with each Party collectively
having one vote.  In the event that the
DT members do not reach consensus with respect to a matter that is within the
purview of the DT within [**] days after they have met and attempted to reach
such consensus, such matter shall be presented to the JSC for resolution; provided,
however, that to the extent any matters are required by Law or by safety
concerns with respect to a Product to be resolved within a shorter period of
time, the periods set forth in this Section 3.1.4 shall be shortened as
appropriate to permit the resolution of such matters within the required
period.

 

3.2          Accounting
and Financial Reporting for DT and CT. 
Each Party will appoint a representative with expertise in the areas of
accounting, cost allocation, budgeting and financial reporting no later than [**]
days after the Effective Date.  Such
financial representatives shall work under the direction of the JSC and provide
services to and consult with the DT and CT in order to address the financial,
budgetary and accounting issues which arise in connection with any Development
Plan or Commercialization Plan. The financial representatives from Cephalon and
Alkermes shall develop systems to track their respective Sales Representatives’
Primary Position Details and Secondary Position Details and any factors used to
allocate less than full time Sales Representative FTEs, Treatment System
Specialist FTEs or other FTEs hereunder. Within [**] days of the end of each
calendar quarter the financial representatives shall review the actual
Development Costs or Commercialization Costs, as applicable, incurred during
the prior calendar quarter as charged by Alkermes and Cephalon, respectively,
and prepare a report to the DT or CT, as applicable, comparing these costs to
the comparable Development Plan budget or Commercialization Plan budget, as
applicable, specifically noting the extent, if any, to which the Development
Costs or Commercialization Costs exceed the comparable budgeted amounts.  Each financial representative may be replaced
at any time by the represented Party by providing notice thereof to the other
Party.  The financial representatives will
meet at least once each calendar quarter, or as they or the DT or CT may agree.  The financial representatives shall agree
upon the timing and agenda for all regular meetings.  The location of regularly scheduled meetings
shall alternate between the offices of the Parties, unless otherwise
agreed.  Meetings may be held telephonically
or by videoconference.  One of the
financial representatives shall record the minutes of the meeting in
writing.  Such minutes shall be
circulated to the other financial representative promptly following the meeting
for review, comment and approval. 
Following their approval, the minutes shall be provided to each Party’s
DT and CT team leaders.

 

	
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3.3          Development
Efforts.  Each Party shall use its
Commercially Reasonable Efforts to perform its respective tasks and obligations
in conducting all work assigned to it in any Development Plan.  The Parties agree that Alkermes shall be
primarily responsible for conducting Development hereunder; provided,
however, that in allocating responsibility for Development the DT shall
also consider the infrastructure and expertise of each Party and may elect to
allocate specific Development tasks and obligations to a Party to exploit such
infrastructure and expertise.  Each Party
shall also cooperate with and provide commercially reasonable support to the
other Party in connection with such other Party’s conduct of such work pursuant
to any Development Plan.  If any tasks,
obligations or support that a Party is required to perform or provide hereunder
will be performed or provided by any Affiliate or agent of such Party, such
Party shall not be relieved of its responsibilities hereunder.

 

3.4          Development Responsibilities.

 

3.4.1       Further
Development of Products in the Territory. 
If either Party wishes to further Develop the Products for use in
the Field in the Territory, including any improvements to the Products or
Development of the Products for New Indications, such Party shall notify the
DT, and the DT shall determine whether it wishes to recommend such further
Development of the Products pursuant to a Development Plan, and accompanying
budget, to the JSC for approval.  The Development
Plan shall allocate responsibility for the conduct of such activities between
the Parties.  If the DT makes such
recommendation or, at either Party’s request, even if the DT does not make such
recommendation, the JSC shall consider such further Development of the
Products.  If such further Development is
approved by the JSC or pursuant to the dispute resolution procedure set forth
in Article 12, the Parties shall perform such Development.  Notwithstanding the foregoing, such further
Development shall not be undertaken if either Party notifies the JSC of its
good faith determination [**].

 

3.4.2       Data
Transfer and Cooperation.

 

(i)            Regulatory
Submissions.  Promptly after the
Effective Date, Alkermes shall provide Cephalon
reasonable access at Alkermes’ offices at Cephalon’s request to any portion of
the NDA submission made by Alkermes on March 31, 2005 for the Medisorb Product
for the Initial Indication, including any information referenced or otherwise
incorporated therein.  All such
information shall be deemed to be Confidential Information of Alkermes subject
to the terms and conditions set forth in Article 8.

 

(ii)           Alkermes Data. 
Subject to Section 3.4.2(i), Alkermes shall provide Cephalon at Cephalon’s
request with reasonable access to all relevant materials, data and regulatory
information in Alkermes’ or its Affiliates’ possession related to any
pre-clinical studies, Clinical Studies and Post Marketing Clinical Trials of
any Product in the Field conducted or sponsored by Alkermes (including
investigator sponsored trials) pursuant to a Development Plan or a
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otherwise conducted by or
on behalf of Alkermes (and, in electronic or other form reasonably requested by
Cephalon where practicable), including all clinical safety and efficacy data
and all regulatory data and information related to the use and sale of the
Products in the Field.  Such materials,
data and information shall be delivered to Cephalon by Alkermes promptly after
the relevant request by Cephalon in an orderly fashion and in a manner such
that the value of the delivered information is preserved in all material
respects.  All such materials, data and
information shall be deemed to be Confidential Information of Alkermes subject
to the terms and conditions set forth in Article 8.

 

(iii)         Cephalon Data. 
Cephalon shall provide Alkermes at Alkermes’ request with reasonable
access to all relevant materials, data and regulatory information in Cephalon’s
or its Affiliates’ possession related to any pre-clinical studies, Clinical
Studies and Post Marketing Clinical Trials of a Product in the Field conducted
or sponsored by Cephalon (including investigator sponsored trials and Post
Marketing Clinical Trials) pursuant to a Development Plan or a
Commercialization Plan or otherwise conducted by or on behalf of Cephalon (and,
in electronic or other form reasonably requested by Alkermes where practicable),
including all clinical safety and efficacy data and all regulatory data and
information related to the use and sale of the Products in the Field.  Such materials, data and information shall be
delivered to Alkermes by Cephalon promptly after the relevant request by
Alkermes in an orderly fashion and in a manner such that the value of the
delivered information is preserved in all material respects.  All such materials, data and information
shall be deemed to be Confidential Information of Cephalon subject to the terms
and conditions set forth in Article 8.

 

(iv)          ROW
Territory.  Alkermes shall share with
Cephalon relevant materials, data and regulatory information in Alkermes’ or
its Affiliates’ possession and Control related to any pre-clinical studies,
Clinical Studies and post marketing clinical trials of a Product in the Field
resulting from its collaborations with respect to the Product for the ROW
Territory to the extent such materials, data or regulatory information are
necessary or useful for filing an IND or NDA or required to be disclosed by
Law.  In return Cephalon agrees that
Alkermes may share with its collaborators with respect to the Product in the
ROW Territory, subject to the provisions of Article 8, [**]or required to be
disclosed by law.

 

3.4.3       Regulatory Filings. 
Alkermes shall be responsible for applying for and seeking Regulatory
Approval for the Medisorb Product in the Territory for the Initial Indication,
which applications and approvals shall be held by and in the name of
Alkermes.  Alkermes shall also be responsible
for filing and maintaining all INDs and NDAs, and for seeking Regulatory
Approval for other Products in the Territory, which applications and approvals
shall be held by and in the name of Alkermes (except to the extent that
Cephalon is required to file an IND in connection with Clinical Studies or Post
Marketing Clinical Trials for which Cephalon has responsibility in accordance
with this Agreement).  Prior to
submitting any IND or NDA within the Territory, the Parties,

 

	
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through the DT, shall
consult and cooperate in preparing and reviewing such IND or NDA and its
content and scope; provided, however, that in accordance with Section
12.2 Alkermes shall have final decision making authority with respect to any
INDs, NDAs and Regulatory Approvals for a Product in the Territory.

 

3.4.4       Regulatory
Meetings and Communications.  Alkermes
shall be primarily responsible for conducting meetings and discussions related
to the Products with the FDA, provided, however, that Cephalon shall
have the right to participate in such meetings and discussions.  Alkermes shall give Cephalon reasonable
advance notice of such activities to permit Cephalon to participate.  If Alkermes has substantive written or oral
communication with the FDA relating to the Products, Alkermes shall notify
Cephalon and provide an advance copy to Cephalon of any such written
communication to the FDA at least [**] Business Days, if reasonably possible to
do so and otherwise as soon as practicable, prior to such communication’s
intended occurrence and a copy to Cephalon of any such written communication
from the FDA within [**] Business Days of such communication’s occurrence.  Alkermes shall consider in good faith any
comments provided by Cephalon regarding any planned communication to the
FDA.  In the event Cephalon receives any
written or oral communication from the FDA relating to the Products, Cephalon
shall notify Alkermes and provide a copy to Alkermes of any such written
communication within [**] Business Days of such communication’s
occurrence.  Cephalon shall not respond
to any such communication but shall permit Alkermes to respond on Cephalon’s
behalf; provided, however, that Cephalon shall have the right to respond
to FDA communication to the extent reasonably required to comply with
applicable Laws.

 

3.4.5       Debarment
Limitations.  In the course of
Development of the Products in the Territory, neither Party shall knowingly use
any employee or consultant who is or has been debarred by the FDA or any other
regulatory authority, or, to the best of such Party’s knowledge, who is or has
been the subject of debarment proceedings by the FDA or any such regulatory
authority.  Each Party shall promptly
notify the other Party of and provide such other Party with a copy of any
correspondence or other reports that such Party receives from any Third Party
with respect to any use of a debarred employee or consultant in connection with
such Party’s performance of its obligations under this Agreement.

 

3.4.6       Compliance
with Laws.  Each Party shall conduct
pre-clinical studies and Clinical Studies hereunder, and other Development of
the Products in the Field in the Territory, in compliance with all applicable
Laws.

 

3.5          Pharmacovigilence
and Adverse Event Reporting.  Within [**]
days of the Effective Date, both Parties shall enter into a mutually acceptable
safety data exchange agreement, setting forth guidelines and procedures for the
receipt, investigation, recordation, review, communication, and exchange (as between
the Parties) of adverse event reports, pregnancy reports, technical complaints
and any

 

	
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other information
concerning the safety of the Products. 
Such guidelines and procedures shall be in accordance with, and enable
the Parties and their Affiliates to fulfill, reporting obligations to the FDA
or any other regulatory authority. 
Furthermore, such guidelines and procedures shall be consistent with
relevant International Committee on Harmonization (ICH) guidelines, except
where said guidelines may conflict with reporting requirements of local
regulatory authorities, in which case local reporting requirements shall
prevail.  The Parties shall maintain a
common safety database for both clinical and post-marketing adverse event data
for the Products, which database shall be managed by Alkermes.  The Parties shall mutually agree within [**]
days on the actions necessary to address any safety concerns with respect to
the Products about which one Party provides notice to the other Party; provided,
however, that if the Parties cannot reach agreement within such [**]-day
period, the matter shall be referred to the JSC for immediate review.  If the JSC cannot reach agreement about such
matter within [**] days after referral by the Parties, then Alkermes shall have
final say with respect to such matter. 
Notwithstanding the foregoing provision, such [**]-day periods shall be
shortened if either Party provides notice to the other Party that more urgent
action is required.  The Parties’ costs
incurred in connection with receiving, investigating, recording, reviewing,
communicating, and exchanging adverse events and other reportable information
as provided in such safety data exchange agreement shall be included as an
element of Development Costs (to the extent relating to the Development of a
Product) or Commercialization Costs (to the extent relating to the
Commercialization of a Product), as applicable. 
The Parties’ costs incurred in connection with receiving, investigating,
recording, reviewing, communicating, and exchanging adverse events and other
reportable information as provided in such safety data exchange agreement prior
to the receipt of Regulatory Approval for the Medisorb Product for the Initial
Indication shall be included as an element of Initial Indication Development
Costs.

 

3.6          Development Costs.  All
Initial Indication Development Costs shall be paid by Alkermes.  All other Development Costs for activities
conducted under a Development Plan hereunder shall be Shared Expenses and shall
be subject to offset or credit against amounts due pursuant to Section 9.5
below

 

3.7          Development
Plan Budget.  Responsibility for any
Development Plan budget shall rest with the DT, which shall develop budgets for
Development, subject to final approval by the JSC.  Budgets will be prepared annually as set
forth in Section 3.1.2.  Any dispute
relating to the amount of a Development Plan budget shall be considered a
Reserved Dispute subject to resolution pursuant to Section 12.2.  Such budgets shall include Development FTE
Rates for FTEs conducting Product Development activities.  The financial representatives from Cephalon
and Alkermes appointed pursuant to Section 3.2 will be responsible for
identifying, analyzing and reporting to the DT all significant [**] between the
budget and the actual costs incurred and all [**] between the budget and such
costs.  If any costs for a Development
activity result in an increase [**] in the approved budget of more than [**]percent
([**]%) for a given calendar quarter, the DT shall forward to the JSC the
report it received from the

 

	
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financial representatives,
and the JSC shall review such costs and shall designate them as Development
Costs if the JSC determines that incurring such costs was [**].  [**].  A
[**]-year long-range plan for Development of the Products in the Field in the
Territory (including the budget for Development Costs) shall be established on
a yearly basis under the direction of the DT as set forth in Section 3.1.2 and
shall be submitted to the JSC for final approval.

 

3.8          Limitation on Development Team
Decision Making. 
Neither the DT nor the JSC shall, without the consent of Cephalon, have
any authority to modify or reduce Alkermes’ obligation under this Agreement to
use Commercially Reasonable Efforts to Develop the Product as provided
herein.  Notwithstanding anything to the
contrary herein, Alkermes shall not have any right to resolve any Reserved
Dispute in any manner that modifies or reduces Alkermes’ obligations under this
Agreement or to amend any provision of this Agreement.

 

ARTICLE 4

COMMERCIALIZATION

 

4.1          Commercialization
Efforts.

 

4.1.1       Commercially Reasonable Efforts.  Alkermes and Cephalon each agree to
collaborate in the Commercialization of the Products in the Field in the
Territory in accordance with the terms and conditions of this Agreement.  The Parties agree that Cephalon shall be
primarily responsible for conducting Commercialization hereunder; provided,
however, that in allocating responsibility for Commercialization the CT
shall also consider the infrastructure and expertise of each Party and may
elect to allocate specific Commercialization tasks and obligations to a Party
to exploit such infrastructure and expertise. 
Each Party shall use Commercially Reasonable Efforts to Commercialize
the Products in the Field in the Territory.  Each Party shall cooperate with and provide
commercially reasonable support to the other Party in connection with such
other Party’s performance of its tasks and obligations.  If any tasks, obligations or support that a
Party is required to perform or provide hereunder will be performed or provided
by any Affiliate or agent of such Party, such Party shall not be relieved of
its responsibilities hereunder.

 

4.1.2       Cephalon
Commercialization Costs.  In addition
to the foregoing obligations, Cephalon shall be solely responsible for the
payment, [**].  The Cephalon
Commercialization Costs shall not be Shared Expenses.  [**].

 

4.2          Commercialization
Team.

 

4.2.1       Establishment
of Commercialization Team.  The JSC
shall establish the commercialization team (the “CT”) no later than [**]
days after the

 

	
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Effective Date to
coordinate and implement all activities for the marketing and sale of the
Products in the Field in the Territory. 
One representative from each Party shall be designated as that Party’s
team leader to act as the primary CT contact for that Party.  The CT shall consist of an equal number of
representatives of each Party as are reasonably necessary to accomplish the
goals of the CT hereunder. The representatives of Cephalon and Alkermes to the
CT will be individuals with expertise and responsibilities in the areas of
medical affairs, strategic marketing and sales. 
Either Party may replace any or all of its representatives at any time
upon notice to the other Party.

 

4.2.2       Commercialization Team Responsibilities.  The CT shall be responsible for:

 

(i)            developing
an overall strategy for the Commercialization of the Products in the Field in
the Territory for review and approval by the JSC;

 

(ii)           formulating
the Commercialization Plans (including the allocation of Commercialization
activities between the Parties) and associated annual budgets and any
substantive amendments thereto for review and approval by the JSC;

 

(iii)         formulating
a multiyear long-range plan for Commercialization of the Products in the Field
in the Territory (including the budget for Commercialization Costs) for review
and approval by the JSC;

 

(iv)          implementing
all activities pursuant to the Commercialization Plans approved by the JSC;

 

(v)            in
consultation with the DT, developing a communications and publication strategy
for the Products in the Field in the Territory;

 

(vi)          generating
sales forecasts and measuring sales performance for the Product in the
Territory;

 

(vii)         in
accordance with the terms and conditions set forth in the Supply Agreement, by
the end of each calendar quarter, generating an [**] month rolling forecast for
Product and Placebo requirements, incorporating any forecast received from the
DT, and delivering this forecast to the ST;

 

(viii)        coordinating
with the DT with respect to regulatory issues and future Product Development
activities to be undertaken pursuant to the Development Plan and with respect
to Post Marketing Clinical Trials;

 

(ix)          developing
positioning and market strategies for the Products in the Territory;

 

	
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(x)           formulating
a life cycle plan for the Products in the Field in the Territory, including
presentations, formulations, usage or dosage form;

 

(xi)          formulating
an overall pricing strategy for the Products in the Territory;

 

(xii)         exchanging
information and facilitating cooperation and coordination between the Parties
as they exercise their respective rights and meet their respective obligations
under the Commercialization Plans and this Agreement;

 

(xiii)       providing status updates to the JSC
regarding marketing and sales activities in the Territory; and

 

(xiv)        performing
such other functions as appropriate to further the purposes of this Agreement
as determined by the Parties.

 

In addition, the CT may designate subteams as
appropriate to facilitate coordination and cooperation in key areas.  Within [**] days after the Effective Date,
the CT shall formulate a Commercialization Plan and associated budget for the
period from the Effective Date until the end of calendar year 2006 for approval
by the JSC.  Thereafter by [**] of each
calendar year during the Term, the CT shall prepare a Commercialization Plan
and associated annual budget for the following calendar year and present such
plan and budget to the JSC for approval. 
The JSC shall review and, if appropriate, approve such Commercialization
Plans and budgets by [**] of the then-current calendar year.  In addition, by [**] of each calendar year
during the Term, the CT shall prepare a [**]-year long-range plan for
Commercialization of the Products in the Field in the Territory (including the
budget for Commercialization Costs) and present such plan to the JSC for approval.  Prior to presenting this long-range plan to
the JSC for approval, the CT shall forward this
long-range plan to the ST pursuant to the Supply Agreement, and the CT team
leader, and if applicable the DT team leader, will discuss with the ST team
leader this long-range plan as provided in the Supply Agreement.

 

4.2.3       Commercialization
Team Procedures.  The Cephalon team
leader shall serve as the chairperson of the CT.  The chairperson shall establish the timing
and agenda for all CT meetings and shall send notice of such meetings,
including the agenda therefor, to all CT members; provided, however,
either Party may request that specific items be included in the agenda and may
request that additional meetings be scheduled as needed.  The CT will meet at least [**] each calendar
quarter or as agreed by the CT.  The
location of regularly scheduled CT meetings shall alternate between the offices
of the Parties, unless otherwise agreed. 
Meetings may be held telephonically or by videoconference.  The Party hosting any CT meeting shall
appoint one person (who need not be a member of the CT) to attend the meeting
and record the minutes of the meeting in writing.  Such minutes shall be circulated to the
Parties promptly following the meeting for review, comment and approval.

 

	
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4.2.4       Commercialization
Team Decision Making.  As a general
principle, the CT will operate by consensus, with each Party collectively
having one vote.  In the event that the
CT members do not reach consensus with respect to a matter that is within the
purview of the CT within [**] days after they have met and attempted to reach
such consensus, such matter shall be presented to the JSC for resolution; provided,
however, that to the extent any matters are required by Law or by safety
concerns with respect to a Product to be resolved within a shorter period of
time, the periods set forth in this Section 4.2.4 shall be shortened as
appropriate to permit the resolution of such matters within the required
period.

 

4.3          Contents of Commercialization Plan.  The Commercialization Plan shall consist of a
marketing plan (the “Marketing Plan”) and a medical activity plan (the “Medical
Activity Plan”).

 

4.3.1       Marketing
Plan.  Each Marketing Plan shall
contain at a minimum:

 

(i)            plans
for branding and positioning the Products;

 

(ii)           promotional
campaigns for the Products and messaging by audience;

 

(iii)         competitive
analysis of the Products;

 

(iv)          plans
and strategies for presentations of the Products at major meetings and
conventions;

 

(v)            market
research plans for the Products;

 

(vi)          distribution
plans for the Products;

 

(vii)         strategies
for the Products with respect to managed care organizations, hospital systems,
group purchasing organizations, physician networks, pharmacies and any other
private or government healthcare providers or reimbursement entities;

 

(viii)        pricing
and reimbursement plans for the Products;

 

(ix)          high-level
sales plans and activities for the Products;

 

(x)           concepts
for development of appropriate sales training and Promotional Materials; and

 

(xi)          sales
forecasts for the Products by year for [**] years with market sensitivities
incorporated.

 

4.3.2       Medical
Activity Plan.  Each Medical Activity
Plan shall contain at

 

	
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a minimum:

 

(i)            Post
Marketing Clinical Trial plans;

 

(ii)           market
and key opinion leader development plans for the Products, including plans to
support continuing medical education;

 

(iii)         publication
plans for the Products;

 

(iv)          plans
to ensure appropriate medical information responses with respect to the
Products;

 

(v)            safety
monitoring plans for the Products; and

 

(vi)          plans
and expected activities for field based medical affairs personnel for the
Products.

 

4.4          Compliance
with Law.  Each Party shall
Commercialize the Products in the Field in the Territory in compliance with all
applicable Laws, the Codes, the terms of this Agreement, and the then-current
Commercialization Plan.  Each Party shall
promptly notify the other Party of and provide the other Party with a copy of
any correspondence or other reports with respect to the Commercialization of
the Products that such Party receives from the FDA or any other regulatory
authority, or from the Pharmaceutical Research and Manufacturers of America
(PhRMA) or the American Medical Association (AMA) relating to its compliance
with applicable Law or the Codes.  Each
Party shall Commercialize the Products, including carrying out the Medical
Activity Plan, in conformity with the practices and procedures relating to the
education of the medical community set forth in the Standards.  Each Party shall promptly notify the other
Party of and provide the other Party with a copy of any correspondence or other
reports with respect to the Commercialization of the Products that such Party
receives from the Accreditation Council for Continuing Medical Education
(ACCME) relating to its compliance with the Standards.

 

4.5          Corporate
Name and Logo.  To the extent not
prohibited by Law and subject to Regulatory Approval, the Products (including
labels, packaging and inserts) and all Promotional Materials for the same in
the Territory will bear the company names and logos of both Alkermes and
Cephalon with equal prominence (including equal sized type face), or if equal
prominence is prohibited by Law, with such relative prominence as may otherwise
be permitted by Law.

 

4.6          Sales and
Distribution.  [**].  Cephalon will book all sales of the Products
in the Field in the Territory.

 

4.7          Commercialization
Costs.  Except for the Cephalon
Commercialization Costs, all Commercialization Costs for activities conducted
under a Commercialization

 

	
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Plan shall be Shared
Expenses and shall be subject to offset or credit against amounts due pursuant
to Section 9.5 below.

 

4.8          Commercialization
Plan  Budget. 
Responsibility for any Commercialization Plan
budget shall rest with the CT, which shall develop budgets for
Commercialization in the Field in the Territory, subject to final approval by
the JSC.  Budgets will be prepared
annually as set forth in Section 4.2.2. 
Any disputes relating to the amount of a Commercialization Plan budget
shall be considered a Reserved Dispute subject to resolution pursuant to
Section 12.2.  The budgets shall be
divided between the Marketing Plan and the Medical Activity Plan.  Such budgets shall include Sales Representative
FTE Rates for the Sales Representatives FTEs, Treatment System Specialist FTE
Rates for the Treatment System Specialists FTEs, and Commercialization FTE
Rates for other FTEs conducting Product Commercialization activities.  The financial representatives from Cephalon
and Alkermes appointed pursuant to Section 3.2 will be responsible for
identifying, analyzing and reporting to the CT all significant [**] between the
budget and the applicable Commercialization Costs and all [**] between the
budget and the Commercialization Costs. 
If any costs for a Commercialization activity result in an increase [**]
in the approved budget for a calendar quarter of more than [**] percent ([**]%),
the CT shall forward to the JSC the report it received from the financial representatives,
and the JSC shall review such costs and shall designate them as
Commercialization Costs if the JSC determines that incurring such costs was [**].  [**]. A [**]-year long-range plan for
Commercialization of the Products in the Field in the Territory (including the
budget for Commercialization Costs) shall be established on a yearly basis
under the direction of the CT as set forth in Section 4.2.2 and shall be
submitted to the JSC for final approval.

 

4.9          Product
Label and Packaging.  Pursuant to the
terms and conditions of the Supply Agreement, Alkermes
shall be responsible for ensuring that labels, inserts and packaging for the
Products are in conformity with the applicable Regulatory Approvals and
applicable Laws.

 

4.10        Promotional
Materials.

 

4.10.1     Promotional
Materials Production.  Cephalon shall
be responsible for producing all Promotional Materials for the Territory.  Cephalon shall own all right, title and
interest in and to the Promotional Materials, including all copyrights thereto.

 

4.10.2     Approval
of Promotional Materials.  Within [**] days of the Effective Date, Cephalon shall establish a promotional
review committee, or designate an existing committee, that shall be responsible
for reviewing and approving Promotional Materials, training materials for the
Product, materials that will be distributed by medical science liaisons for the
Product and comparable materials (such committee, the “PRC”).  Alkermes shall appoint a representative to
the PRC with expertise and responsibilities in the areas of regulatory
affairs.  The PRC will meet at

 

	
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least
once each calendar quarter or as otherwise agreed by the PRC.  Cephalon shall establish the timing and
agenda for all PRC meetings and shall send notice of such meetings, including
the agenda therefor, to all PRC members. 
In addition,  Cephalon will
provide to the Alkermes representative drafts of all materials to be considered
at such meeting at the same time as they are provided to the other PRC members,
which shall be a reasonable time prior to the meeting to allow review of such
materials.  As a general principle, the
PRC will operate by consensus, with each Party collectively having one
vote.  In the event that the PRC members,
including the Alkermes representative, do not reach consensus with respect to a
matter that is within the purview of the PRC within [**] days after they have attempted to reach such
consensus, such matter shall be presented to the JSC for resolution.  Cephalon and Alkermes shall maintain
Promotional Materials and any other materials reviewed by the PRC in confidence
pursuant to the terms of Article 8 and shall not publish, disseminate or use
them unless and until such materials are approved for publication, other
general dissemination or use by the PRC, the JSC or pursuant to the dispute
resolution procedure set forth in Article 12 (where any such matter shall be
considered a Reserved Dispute to be decided by Cephalon, subject to
Alkermes’ rights as the holder of the Regulatory Approval for a Product to
require that Cephalon not implement certain decisions).  Cephalon shall provide Alkermes
with six (6) final copies of all Promotional Materials concurrently with
Cephalon’s initial public dissemination thereof, and such additional copies as
may be reasonably requested by Alkermes from time to time.

 

4.10.3     Complaints
Regarding Promotional Materials. 
Each Party shall promptly notify the other Party of and provide the
other Party with a copy of any correspondence or other reports or complaints
received by such Party from the FDA, any other regulatory authority or any
Third Party claiming that any Promotional Materials are inconsistent with the
Product labeling or are otherwise in violation of the Act.

 

4.10.4     Promotional
Materials.  Each Party shall, and
shall cause its Sales Representatives and/or Treatment System Specialists, as
applicable, to, (i) use the Promotional Materials solely for the purposes of
this Agreement and (ii) immediately cease the use of any Promotional Materials
when instructed to do so by the CT.

 

4.11        Sales
Force.

 

4.11.1     Cephalon
Personnel.  Cephalon shall use
Commercially Reasonable Efforts to provide sufficient marketing and sales
support for the Products in the Territory, which shall include, unless
otherwise agreed by the Parties:  (i) an
appropriate number of Sales Representatives, including a minimum number of
Sales Representatives as established pursuant to Section 4.11.3 (the “Minimum
Sales Representatives”); (ii) appropriate national account managers
(including public and private payers and management of distribution partners);
(iii) appropriate sales force management and training personnel; (iv)
appropriate field-based personnel to support reimbursement; and (v) appropriate
field medical affairs personnel. 
Performance of the

 

	
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Sales Representative FTEs
will be charged as Commercialization Costs at the Sales Representative FTE Rate
and Commercialization activities performed by all other personnel described in
this Section 4.11.1 will be charged as Commercialization Costs at the
Commercialization FTE Rate.

 

4.11.2     Alkermes
Personnel.  As of the Effective Date,
Alkermes shall have the right to hire, in its sole discretion, such number of
treatment system specialists as both Parties agree is appropriate to provide
information and assistance to the Target Prescribers with respect to the
Products (the “Treatment System Specialists”); provided, however,
that Alkermes shall be entitled to hire at least [**] Treatment System
Specialists.  Alkermes shall also have
the right to hire appropriate Treatment System Specialist management and
training personnel, in accordance with the Commercialization Plan, provided,
however, that the CT shall be obligated to provide for, and the JSC to
approve, reasonable management and training personnel for the Treatment System
Specialists in the Commercialization Plan. 
Commercialization activities performed by the Treatment System
Specialist FTEs will be charged as Commercialization Costs at the Treatment
System Specialist FTE Rate and Commercialization activities performed by all
other personnel described in this Section 4.11.2 will be charged as
Commercialization Costs at the Commercialization FTE Rate.

 

4.11.3     Minimum
Sales Representatives.  Cephalon
shall provide at least the following Minimum Sales Representatives:  (i) by commercial launch of the Medisorb
Product for the Initial Indication and, subject to this Section 4.11.3,
thereafter during the Term, [**] Sales Representative FTEs engaged in
Detailing the Products to Target Prescribers, and (ii) by the first anniversary
of such commercial launch and, subject to this Section 4.11.3, thereafter
during the Term, an additional [**] Sales Representative FTEs, for a total of [**] Sales Representative FTEs engaged in
Detailing the Products to Target Prescribers. 
During the first [**]
months after commercial launch of the Medisorb Product for the Initial
Indication, the Minimum Sales Representatives shall be dedicated solely to
Detailing the Products.  Thereafter at
all times during the Term, at least [**] Sales Representative FTEs shall spend
at least [**] of their allocated time performing Primary Position Details and
no more than [**] of their allocated time performing Secondary Position
Details.  [**].

 

4.11.4     Expansion of the Number of Sales Representatives.  If the CT determines that it is desirable to
increase the total number of Sales Representative FTEs engaged in Detailing the
Products to Target Prescribers, the Commercialization Plan shall be amended
accordingly.  Alkermes shall have the
option to provide, using Alkermes Sales Representative FTEs, up to the first [**] of such additional Sales
Representative FTEs, which Alkermes Sales Representatives FTEs shall Detail the
Products to Target Prescribers as specified in a Detailing plan to be included
in the Commercialization Plan.  In
addition if Alkermes exercises its option to provide any Alkermes Sales
Representative FTEs, the Parties shall promptly negotiate in good faith
appropriate revisions to the Commercialization Plans and this Agreement to
specify commercially reasonable terms and conditions for the coordination of
the Cephalon and

 

	
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Alkermes Sales
Representative FTEs, including terms and conditions regarding training, sales
meetings, and communication with the Sales Representative FTEs.

 

4.11.5     Responsibility
for Sales Forces.  Subject to the
Commercialization Plan and Section 4.11.10, each Party shall have
responsibility for its Sales Representatives, Treatment System Specialists and
other personnel engaged in Commercializing the Products, including in carrying
out the Medical Activity Plan, and for performing its other obligations
hereunder, including recruiting, hiring, training, managing and compensating
its personnel.  Each Party shall ensure
that its personnel understand (as necessary) and comply with this Agreement and
applicable Laws.  Each Party shall retain
only personnel who have sufficient technical training and experience to
Commercialize the Products and to carry out the Medical Activity Plan in a
manner consistent with the practice by leading pharmaceutical and biotechnology
companies of comparable activities.

 

4.11.6     Compensation.  Each Party shall reasonably compensate its
Sales Representatives, Treatment System Specialists and other Commercialization
personnel with respect to the Products in a manner reasonably calculated to
incent such personnel to carry out their responsibilities in a manner
consistent with the objectives set forth in the Commercialization Plan.  Notwithstanding the foregoing, each of
Cephalon and Alkermes may only charge Shared Expenses with respect to the
Commercialization activities performed by such personnel in accordance with the
Sales Representative FTE Rate, the Treatment System Specialist FTE Rate or the
Commercialization FTE Rate, as applicable.

 

4.11.7     Debarment
Limitations.  In the course of
Commercialization of the Products in the Territory, neither Party shall
knowingly use any employee or consultant who is or has been debarred by the FDA
or any other regulatory authority, or, to the best of such Party’s knowledge,
who is or has been the subject of debarment proceedings by the FDA or any such
regulatory authority.  Each Party shall
promptly notify the other Party of and provide such other Party with a copy of
any correspondence or other reports that such Party receives from any Third
Party with respect to any use of a debarred employee or consultant in
connection with such Party’s performance of its obligations under this
Agreement.

 

4.11.8     Conduct
of Sales Forces.  In connection with
the Commercialization of the Products, including carrying out the Medical
Activity Plan, neither Party shall make, or permit any of its Sales
Representatives, Treatment System Specialists or other employees or agents to
make, any statement, representation or warranty, oral or written, to any Third
Party concerning the Products that is inconsistent with, or contrary to, the
approved Product labeling, the Promotional Materials, this Agreement and the
Commercialization Plan.  In addition,
each Party shall ensure that its Sales Representatives Detail the Products in a
fair and balanced manner consistent with the requirements of the Act.  Neither Party’s Sales Representatives shall
engage in any pre-marketing activities for the Products that are prohibited by
Law.

 

	
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4.11.9     Medical
Education.  The Parties shall support
medical education activities in accordance with the Medical Activity Plan and
applicable Laws.  In connection with such
medical education activities, the Parties may distribute only those materials
that have been approved pursuant to Section 4.10.2 for distribution.

 

4.11.10  Personnel
Issues.  If either Party notifies the
other Party that it believes certain Sales Representatives, Treatment System
Specialists or other employees or agents of a Party, as applicable, may (i)
have violated any Laws, (ii) be damaging relationships with health care
professionals or damaging the Product brand or (iii) have failed to comply with
this Agreement, the Party giving notice shall have the right to request that
the other Party immediately address the performance of such individual, in
addition to any other rights or remedies available to the Party giving notice
under this Agreement, at Law or in equity. 
The Party employing or contracting with such individual shall promptly
evaluate such issue in accordance with applicable policies or as it may
otherwise deem appropriate.  Such Party
shall keep the other Party reasonably informed of the progress of, and
information learned during, its evaluation. 
If determined by the Party employing or contracting with such
individual, such Sales Representative, Treatment System Specialist or other
employee or agent shall be replaced and removed from performance of
Commercialization activities for the Products pursuant to this Agreement.

 

4.12        Training
Materials.

 

4.12.1     Development.  During the Term, the Parties shall be
responsible as set forth in the Commercialization Plan for developing and
updating as appropriate materials and programs to train the Sales
Representatives, Treatment System Specialists, medical science liaisons and
other employees and agents to Commercialize the Products and to carry out the
Medical Activity Plan in the Territory.

 

4.12.2     Approval.  All Product-specific training materials
developed pursuant to Section 4.12.1 shall be prepared in compliance with all
Laws, and Cephalon shall send to Alkermes’ PRC representative pursuant to
Section 4.10.2 a master copy of all such training materials that it develops,
as well as all other training materials relating to the Products that it
intends to use in connection with the training of its personnel to
Commercialize the Products in the Territory, including to carry out the Medical
Activity Plan.  Product-specific training
materials shall be approved pursuant to Section 4.10.2 prior to their use in
training such personnel.

 

4.12.3     Return;
Confidentiality.  Each Party shall
require any of its Sales Representatives who ceases to be employed or to participate
in the promotion of the Products to return to such Party all Product training
materials and all other Confidential Information.

 

4.13        Samples.  Each Party shall use samples of the Products
strictly in accordance with the Commercialization Plan, and shall store and
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in
full compliance with all applicable Laws, including the requirements of the
Prescription Drug Marketing Act of 1987, as amended (the “PDMA”).  Each Party will maintain those records
required by the PDMA and all other Laws with respect to such Product
samples.  Each Party shall allow
representatives of the other Party to inspect such records and storage
facilities for the Product samples during regular business hours on request and
with reasonable prior notice.  Subject to
receipt of necessary information from Cephalon on a timely basis, Alkermes
shall be solely responsible for the filing of any necessary reports on the Product
samples to the FDA in connection with the PDMA, and Cephalon agrees to provide
Alkermes with any information in Cephalon’s control that is required by the
PDMA to be included in such filings.

 

4.14        Medical Inquiries.  Subject to terms and conditions of the safety
data exchange agreement for the Products executed by the Parties pursuant to
Section 3.5, the CT shall develop a set of standard operating procedures for
responding promptly to medical questions or inquiries from members of the
medical and paramedical professions and consumers relating to the
Products.  Cephalon shall be responsible
for establishing such systems and maintaining such records as are required to
respond to such questions or inquiries in accordance with all applicable Laws,
including consulting with Alkermes and reporting such information to Alkermes in
a manner that allows Alkermes to fulfill its obligations as the holder of the
Regulatory Approvals for the Products, and shall allow representatives of
Alkermes to inspect such systems and records during regular business hours on
request with reasonable prior notice.  In
response to unsolicited medical inquiries with respect to off-label use of the
Products the Parties may distribute to medical professionals, or otherwise,
only those materials that have been approved pursuant to Section 4.10.2 for
distribution.

 

4.15        Limitation on Commercialization
Team Decision Making. 
Neither the CT nor the JSC shall, without the consent of Alkermes, have
any authority to modify or reduce Cephalon’s obligation under this Agreement to
use Commercially Reasonable Efforts to Commercialize the Product as provided
herein.  Notwithstanding anything to the
contrary herein, Cephalon shall not have any right to resolve any Reserved
Dispute in any manner that modifies or reduces Cephalon’s obligations under
this Agreement or to amend any provision of this Agreement.

 

ARTICLE 5

MANUFACTURE
AND SUPPLY

 

5.1          Supply
Agreement.  Concurrently with the
execution of this Agreement, the Parties are entering into a supply agreement
(the “Supply Agreement”) pursuant to which Alkermes shall supply the
Clinical Supplies and the Commercial Supplies. 
The Parties shall negotiate within [**] days after the Effective Date an
associated Quality Agreement specifying certain quality assurance and quality
control requirements relating to the supply of Clinical Supplies and Commercial
Supplies by Alkermes.

 

	
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5.2          Supply
Team.  The Parties shall establish a
supply team, or ST, pursuant to the provisions of the Supply Agreement.

 

5.3          Supply
Costs.  The Fully Burdened
Manufacturing Costs of Clinical Supplies and Commercial Supplies (other the
costs of Clinical Supplies included within Initial Indication Development
Costs) shall be Shared Expenses and shall be subject to offset or credit
against amounts due pursuant to Section 9.5 below.

 

ARTICLE 6

LICENSE GRANTS AND ASSIGNMENTS

 

6.1          Patent and
Know-How License Grant.

 

6.1.1       By Alkermes.  Alkermes
hereby grants to Cephalon and its Affiliates a semi-exclusive license
(exclusive except as to the rights retained by Alkermes and its Affiliates to
perform their obligations and exercise their rights under this Agreement and
the Supply Agreement) under the Alkermes Patents, the Alkermes Know-How, and
Alkermes’ right, title and interest in the Joint Patents and the Joint Know-How
to use, sell, offer for sale and import (but not to make or have made) the
Products in the Field in the Territory, with the right to grant sublicenses to
Third Party contractors if and only as necessary to facilitate the performance
of Cephalon’s Development and Commercialization responsibilities hereunder; provided
that Cephalon shall not sublicense the right to sell or offer for sale Products.  [**]. Cephalon shall notify Alkermes if it
has granted a sublicense of the rights it has been licensed pursuant to this
Section 6.1.1.

 

6.1.2       By Cephalon.  Cephalon
hereby grants to Alkermes a royalty-free semi-exclusive license (exclusive
except as to the rights retained by Cephalon and its Affiliates to perform
their obligations and exercise their rights under this Agreement and the Supply
Agreement), with the right to sublicense, under the Cephalon Patents, the
Cephalon Know-How and Cephalon’s right, title and interest in the Joint Patents
and Joint Know-How to make, have made, use, offer for sale and import (but not
to sell) the Products in the Field in the Territory.  Alkermes shall notify Cephalon if it has
granted a sublicense of the rights it has been licensed pursuant to this
Section 6.1.2.

 

6.1.3       No Implied Licenses. 
Except as expressly granted herein, there are no implied licenses under
the Alkermes Patents, the Alkermes Know-How, the Cephalon Patents, the Cephalon
Know-How, the Joint Patents, the Joint Know-How or any other intellectual
property rights Controlled by Alkermes, Cephalon or their Affiliates, as
applicable.

 

	
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6.1.4       Rights
upon Bankruptcy.  With respect to
either Party, all rights and licenses granted under this Agreement by one Party
to the other Party are, and shall otherwise be deemed to be, for purposes of
Section 365 (n) of the United States Bankruptcy Code, as amended from
time to time (the “Bankruptcy Code”), licenses of rights to “intellectual
property” as defined under Section 101 (35A) of the Bankruptcy
Code.  The Parties agree that the
licensee Party shall retain and may fully exercise all of its rights and
elections under the Bankruptcy Code in the event of a bankruptcy of the
licensor Party.

 

6.2          Alkermes
Patents Update.  At the request of
Cephalon, Alkermes shall provide a list of patents and patent applications
falling within the definition of Alkermes Patents licensed to Cephalon
hereunder.

 

6.3          Trademark
Assignment.  Promptly after the
Effective Date, Alkermes shall transfer and
assign to Cephalon, and Cephalon shall acquire and accept from Alkermes,
Alkermes’ entire right, title, and interest in and to the Vivitrex Trademark in
the Territory, together with that portion of the good will of the business of
Alkermes associated with the use of and symbolized by such trademark in the
Territory and all common law rights in the Vivitrex Trademark in the Territory.  Alkermes hereby agrees that it will, upon
Cephalon’s request and at Cephalon’s cost and expense, execute all documents
that may be necessary to perfect Cephalon’s title to the Vivitrex Trademark in
the Territory.

 

6.4          Trademark
License.  Alkermes hereby grants to
Cephalon and its Affiliates a non-exclusive, royalty-free license to use the
Medisorb Trademark for the advertising, promotion, marketing, distribution and
sale of the Products in the Field in the Territory.  Cephalon hereby acknowledges Alkermes’
exclusive right, title and interest in and to the Medisorb Trademark and agrees
that Cephalon and its Affiliates will not at any time do, or cause to be done,
any act or thing contesting or in any way intending to impair the validity of
and/or Alkermes’ exclusive right, title and interest in and to the Medisorb
Trademark.  In using the Medisorb
Trademark, Cephalon and its Affiliates shall display the registration symbol ®
to the right of and slightly above or below the last letter of the Medisorb
Trademark.  Cephalon and its Affiliates
will not in any manner represent that they own the Medisorb Trademark and
Cephalon hereby acknowledges that use of the Medisorb Trademark as set forth in
this Section 6.4 shall not create any right, title or interest in or to the
Medisorb Trademark in favor of Cephalon or its Affiliates, but that all use of
the Medisorb Trademark by Cephalon and its Affiliates shall inure to the
benefit of Alkermes.

 

6.5          Corporate Name and Logo.  During
the Term, Alkermes grants Cephalon the non-exclusive right to use the Alkermes
name and corporate logo in the Territory solely for the purpose of Cephalon’s
Commercialization of the Products in accordance with the terms of this
Agreement.

 

	
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6.6          ROW
Territory.  Alkermes retains all of
its rights to use, sell, manufacture, offer for sale and import the Products in
the ROW Territory.  During the period
beginning on the Effective Date and ending one hundred eighty (180) days
thereafter (the “Option Period”), Alkermes shall not enter into any
agreement or negotiation with any Third Party regarding a license of the rights
to use, sell, offer for sale and import the Products in the ROW Territory.  If during the Option Period Cephalon notifies
Alkermes in writing of its desire to enter into an exclusive license to use,
sell, offer for sale and import the Products in the ROW Territory, then
Alkermes shall exclusively negotiate with Cephalon in good faith a definitive
agreement for such an exclusive license containing customary representations,
warranties, covenants and agreements, satisfactory in form and substance to the
Parties and their legal advisors, as are necessary or appropriate for
transactions of this type.  If Cephalon does
not notify Alkermes of its desire to enter into such an exclusive license
within the Option Period, or if at the end of the Option Period Alkermes and
Cephalon are unable to agree on terms for such a definitive license, then
Alkermes shall be free to use, sell, manufacture, offer for sale and import the
Products in the ROW Territory itself or to initiate discussions and execute a
license with one or more Third Parties to do so, with no further obligation to
Cephalon under this Agreement.  [**].

 

6.7          Termination
of License to Contested Patent Rights. 
Either Alkermes, as the licensor of the Alkermes Patents and the
Alkermes Manufacturing Patents under this Agreement, or Cephalon, as the
licensor of the Cephalon Patents under this Agreement, may at its option
terminate its licenses to the other Party under this Agreement of any of the
licensor’s Patent Rights as to which the other Party commences any action or
asserts any formal position in any forum (including a court, a patent office or
an arbitral tribunal, and whether in the form of petitions for declaratory
relief, claims, counterclaims, defenses, interferences, petitions for
reexamination or otherwise) that such Patent Right is invalid or unenforceable.

 

ARTICLE 7

INTELLECTUAL
PROPERTY RIGHTS

 

7.1          Ownership
of Intellectual Property.

 

7.1.1       Collaboration Technology. 
Alkermes shall own all Collaboration Technology, including all patents
and patent applications thereon, that are developed, made or conceived solely
by or on behalf of Alkermes or its Affiliates, subject to the rights and
licenses granted herein.  Cephalon shall
own all Collaboration Technology, including all patents and patent applications
thereon, that are developed, made or conceived solely by or on behalf of
Cephalon or its Affiliates, subject to the rights and licenses granted
herein.  All Joint Patents shall be owned
jointly by Alkermes and Cephalon, with full ownership rights in any field and
the right to license and sublicense, subject to the rights and licenses granted
herein.  The Laws of the United States
with

 

	
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39

 

respect to determining
inventorship shall govern determinations of ownership pursuant to this
Agreement.  Alkermes and Cephalon shall
jointly own all Joint Know-How, subject to the rights and licenses granted
herein.

 

7.1.2       Other
Inventions.

 

(i)            During
the Term, and pursuant to a Development Plan or Commercialization Plan,
inventions may be developed, made or conceived by employees or agents of either
Party or its Affiliates, solely or jointly, which are not Collaboration
Technology (“Other Inventions”). 
Alkermes shall own all Other Inventions developed, made or conceived
solely by or on behalf of Alkermes or its Affiliates, and Cephalon shall own
all Other Inventions developed, made or conceived solely by or on behalf of
Cephalon or its Affiliates.  All Other
Inventions developed, made or conceived jointly by or on behalf of Alkermes or
its Affiliates and by or on behalf of Cephalon or its Affiliates shall be
jointly owned by Alkermes and Cephalon with full ownership rights in any field
and the right to license and sublicense.

 

(ii)           Each
Party, at its sole discretion and responsibility, may prepare, file, prosecute
and maintain patent applications and patents claiming solely owned Other
Inventions at its sole cost and expense. 
For Other Inventions that are jointly owned by Alkermes and Cephalon,
the Parties shall jointly decide on a patent application preparation, filing,
prosecution and maintenance strategy, and shall equally share all costs and
expenses associated therewith.  Unless
otherwise agreed by the Parties, patent applications and patents claiming Other
Inventions that are jointly owned by Alkermes and Cephalon will be prepared,
filed, prosecuted and maintained by [**].

 

7.1.3       Assignment and Licenses. 
Each of Alkermes and Cephalon shall require all of its and its
Affiliates’ employees, and each Party shall use commercially reasonable efforts
to require any Third Parties working on the collaboration hereunder or who
receive materials or know-how related to a Product from a Party, including its
sublicensees, to assign all intellectual property developed, made or conceived
by such employees or Third Parties pursuant to a Development Plan or
Commercialization Plan to Alkermes and/or Cephalon according to the ownership
principles described in Sections 7.1.1 and 7.1.2 above.  In the event that a Party is unable to have a
Third Party assign such inventions, then that Party shall use commercially
reasonable efforts to require that Third Party to grant an exclusive,
royalty-free, worldwide, irrevocable license, including the right to
sublicense, to all intellectual property developed, made or conceived by that
Third Party pursuant to a Development Plan or Commercialization Plan to
Alkermes and/or Cephalon according to the ownership principles described in
Sections 7.1.1 and 7.1.2 above.

 

7.1.4       Inventorship and Ownership Procedure.  The Parties shall within a reasonable time
after the Effective Date establish a mutually agreeable procedure for
determining inventorship of intellectual property that is developed, made or
conceived

 

	
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pursuant to a Development Plan or Commercialization
Plan, provided that such determination shall be made in accordance with
applicable United States Laws relating to inventorship.  All such determinations shall be documented
to ensure that any divisional or continuation patent applications reflect
appropriate inventorship and that inventions and patent rights are assigned to
the appropriate Party.  To the extent
possible, claims shall be separated into divisional or equivalent patent applications
to permit ownership of such applications solely by one or the other of the
Parties, rather than jointly by the Parties, in accordance with the ownership
principles set forth in Sections 7.1.1 and 7.1.2 above.

 

7.2          Disclosure
of Patentable Inventions.  During any
portion of the Term during which the Parties are sharing Distributable Profit
and Distributable Losses pursuant to Section 9.5, each Party shall promptly
provide to the other Party any invention disclosure submitted in the normal
course of its business that disclose Collaboration Technology.  Any such invention disclosure shall
constitute Confidential Information of the providing Party.

 

7.3          Patent
Committee.  Each Party will appoint a
representative with patent and intellectual property expertise no later than [**]
days after the Effective Date.  Such
representatives will meet (in person, by telephone or videoconference) upon
request by either Party during the Term, and the pendency of any Joint Patents,
to coordinate, discuss, and review strategies with respect to preparing, filing,
prosecuting, maintaining, enforcing and defending patent applications and
patents that disclose Collaboration Technology. 
The patent representatives shall prepare an estimated budget for Patent
Costs for patent and patent application preparation, filing, prosecution and
maintenance during each subsequent calendar year by [**] of the then-current
calendar year and submit this budget to the JSC for review and approval.

 

7.4          Patent
Filings.

 

7.4.1       Alkermes Patents. 
Alkermes, at its sole discretion and responsibility, shall prepare,
file, prosecute and maintain the Alkermes Patents and the Alkermes
Manufacturing Patents and shall be responsible for all material actions
relating to the prosecution and maintenance of the Alkermes Patents and the
Alkermes Manufacturing Patents worldwide, including patent interferences,
reexaminations, reissuances, appeals, oppositions and revocation
proceedings.  The fees and expenses paid
to outside legal counsel and experts, or the cost of Alkermes’ or its
Affiliates’ FTEs, incurred in connection with such preparation, filing,
prosecution and maintenance of the Alkermes Patents in the Territory shall be
Patent Costs.  Any such fees and expenses
paid to outside legal counsel and experts, or the cost of Alkermes’ or its
Affiliates’ FTEs, incurred in connection with such preparation, filing,
prosecution and maintenance of the Alkermes Patents in the ROW Territory or of
the Alkermes Manufacturing Patents worldwide shall be paid by Alkermes.

 

	
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41

 

7.4.2       Cephalon Patents. 
Cephalon, at its sole discretion and responsibility, shall prepare,
file, prosecute and maintain the Cephalon Patents, and shall be responsible for
all material actions relating to the prosecution and maintenance of the
Cephalon Patents worldwide, including patent interferences, reexaminations,
reissuances, appeals, oppositions and revocation proceedings.  The fees and expenses paid to outside legal
counsel and experts, or the cost of Cephalon’s or its Affiliates’ FTEs,
incurred in connection with such preparation, filing, prosecution and
maintenance in the Territory shall be Patent Costs.  Any such fees and expenses paid to outside
legal counsel and experts, or the cost of Cephalon’s or its Affiliates’ FTEs,
incurred in connection with such preparation, filing, prosecution and
maintenance in the ROW Territory shall be paid by Cephalon.

 

7.4.3       Joint
Patents.  Alkermes, in consultation
with Cephalon, shall decide on a patent application preparation, filing and
prosecution strategy and a patent maintenance strategy with respect to Joint
Patents.  Unless otherwise agreed by the
Parties, all such Joint Patents will be prepared, filed, prosecuted and
maintained by [**].  The fees and expenses
paid to outside legal counsel and experts, or the cost of the Parties’ and
their Affiliates’ FTEs, incurred in connection with such preparation, filing,
prosecution and maintenance in the Territory shall be Patent Costs.  The fees and expenses paid to outside legal
counsel and experts, or the cost of the Parties’ and their Affiliates’ FTEs,
incurred in connection with such preparation, filing, prosecution and
maintenance in the ROW Territory shall be paid by Alkermes.

 

7.4.4       Filing,
Prosecution and Maintenance.  The
Party that is responsible for filing hereunder a patent application claiming
Collaboration Technology will be termed the “Filing Party.”  The Filing Party shall provide all draft
patent applications to the other Party sufficiently in advance of filing for
the other Party to have the opportunity to comment thereon and shall take such
comments into consideration in the application filed.  The Filing Party shall also promptly furnish
the other Party with copies of all substantive communications between the
Filing Party and applicable patent offices relating to such patent
applications, and shall take the other Party’s comments and suggestions into
consideration when framing responses and submissions to such patent
offices.  The Filing Party shall timely
inform the other Party of any patent issuing or granted from such patent
applications.  The Filing Party shall
also provide an annual summary of the status of each patent application filed
hereunder and any patent issuing or granting therefrom.

 

7.4.5       Failure
to Prepare, File, Prosecute, Maintain or Defend Patents.

 

(i)            Preparation and  Filing.

 

(A)          Alkermes shall inform Cephalon if it
elects not to prepare, file, prosecute, maintain or defend in the Territory a
patent application or patent that is an Alkermes Patent claiming Collaboration
Technology and that is the

 

	
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42

 

subject of an
unterminated license hereunder.  Cephalon
may then prepare, file, prosecute, maintain and defend any such patent
application or patent in the Territory. 
The fees and expenses paid to outside legal counsel and experts, or the
cost of Cephalon’s or its Affiliates’ FTEs, incurred in connection with such
preparation, filing, prosecution, maintenance and defense in the Territory
shall be Patent Costs.

 

(B)          Cephalon shall inform Alkermes if it
elects not to prepare, file, prosecute, maintain or defend in the Territory a
patent application or patent that is a Cephalon Patent claiming Collaboration
Technology and that is the subject of an unterminated license hereunder.  Alkermes may then prepare, file, prosecute,
maintain and defend any such patent application or patent in the Territory.  The fees and expenses paid to outside legal
counsel and experts, or the cost of Alkermes’ or its Affiliates’ FTEs, incurred
in connection with such preparation, filing, prosecution, maintenance and
defense in the Territory shall be Patent Costs.

 

(C)          If
Alkermes elects not to have a patent application or patent that is a Joint
Patent prepared, filed, prosecuted, maintained or defended, it shall so inform
Cephalon.  Cephalon may then have any
such patent application or patent prepared, filed, prosecuted, maintained or defended
using the counsel described in Section 7.4.3. 
The fees and expenses paid to outside legal counsel and experts, or the
cost of Cephalon’s or its Affiliates’ FTEs, incurred in connection with such
preparation, filing, prosecution, maintenance and defense in the Territory
shall be Patent Costs.  Any such fees and
expenses paid to outside legal counsel and experts, or the cost of the Cephalon’s
or its Affiliates’ FTEs, incurred in connection with such preparation, filing,
prosecution, maintenance and defense in the ROW Territory shall be paid by
Cephalon.

 

(ii)           Abandonment.  If the
Filing Party intends to allow any patent or patent application that is (A) a
Joint Patent, (B) in the Territory, an Alkermes Patent claiming Collaboration
Technology that is the subject of an unterminated license hereunder or (C) in
the Territory, a Cephalon Patent claiming Collaboration Technology that is the
subject of an unterminated license hereunder, to lapse or become abandoned
without having first filed a continuation or divisional application, the Filing
Party shall notify the other Party of such intention at least [**] days prior
to the date upon which such patent application or patent shall lapse or become
abandoned, and the other Party shall thereupon have the right, but not the
obligation, to assume responsibility for the prosecution and maintenance
thereof.  The fees and expenses paid to
outside legal counsel and experts, or the cost of the prosecuting and
maintaining Party’s or its Affiliates’ FTEs, incurred in connection with such
prosecution and maintenance in the Territory shall be Patent Costs and in the
ROW Territory shall be paid by the prosecuting and maintaining Party.

 

	
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43

 

7.5          Defense
and Enforcement Rights.

 

7.5.1       Notification of Infringement.  If either Party learns of any actual or
threatened infringement or any attack on the validity or enforceability by a
Third Party with respect to an Alkermes Patent, an Alkermes Manufacturing
Patent, a Cephalon Patent or a Joint Patent anywhere in the world, such Party
shall promptly notify the other Party and shall provide such other Party with
available evidence of such events.

 

7.5.2       Defense.  Except as otherwise set forth in Section
7.5.3 below, Alkermes shall be solely responsible for prosecuting an
infringement or defending any attack on the validity or enforceability of an
Alkermes Patent or Alkermes Manufacturing Patent worldwide and Cephalon shall
be solely responsible for prosecuting an infringement or defending any attack
on the validity or enforceability of a Cephalon Patent worldwide.  Except as otherwise set forth in Section
7.5.3 below, in the event of an infringement by a Third Party of a Joint Patent
or an attack by a Third Party on the validity or enforceability of a Joint
Patent, the Parties shall decide the best way to proceed.

 

7.5.3       Enforcement
of Alkermes Patents, Alkermes Manufacturing Patents, Cephalon Patents and Joint
Patents.

 

(i)            After the Effective Date, within a
reasonable time prior to (A) Alkermes bringing any legal action or proceeding
or filing any counterclaim (referred to in this Section 7.5.3 as an “Action”)
regarding an infringement of any of the Alkermes Patents or Alkermes
Manufacturing Patents in the Territory by a product that is being developed or
commercialized for the Initial Indication or any New Indication for which a
Product has received Regulatory Approval or is under Development pursuant to a
Development Plan in the Territory, (B) Cephalon bringing any Action regarding
an infringement of any of the Cephalon Patents in the Territory by a product
that is being developed or commercialized for the Initial Indication or any New
Indication for which a Product has received Regulatory Approval or is under
Development pursuant to a Development Plan in the Territory or (C) Alkermes
bringing any Action regarding an infringement of any of the Joint Patents in
the Territory, the Parties shall consult with one another to determine the best
way for the Parties to proceed.  If both
Parties agree to institute an Action regarding such infringement, the Parties
shall jointly institute, prosecute and control such Action, using mutually
agreed counsel.  In the event both
Parties desire to institute an Action, [**].

 

(ii)           If both Parties do not agree to
institute an Action pursuant to Section 7.5.3(i) within [**] days of the date
notice is received by a Party pursuant to Section 7.5.1, then Alkermes shall
have the right solely to institute, prosecute and control such an Action with
respect to the Alkermes Patents, the Alkermes Manufacturing Patents and the
Joint Patents, using counsel of its own choice, at its own [**], and Cephalon
shall have the right solely to institute, prosecute and control such an Action
with respect to the Cephalon Patents, using counsel of its own choice, at its
own cost and expense.  In the event
either Party solely institutes such an Action, (A) the

 

	
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44

 

other Party agrees to be
joined as a party plaintiff if necessary to prosecute such Action, to give the
instituting Party authority to file and prosecute the Action and to provide
reasonable assistance in connection therewith and (B) any recovery from any
settlement or judgment from such Action [**].

 

(iii)         If Alkermes does not institute an Action
pursuant to Section 7.5.3(ii) within [**] of the date notice is received by a
Party pursuant to Section 7.5.1, then Cephalon shall have the right solely to
institute, prosecute and control such an Action with respect to the Alkermes
Patents, the Alkermes Manufacturing Patents and the Joint Patents, using
counsel of its own choice, [**].  If
Cephalon does not institute an Action pursuant to Section 7.5.3(ii) within [**]
of the date notice is received by a Party pursuant to Section 7.5.1, then
Alkermes shall have the right solely to institute, prosecute and control such
an Action with respect to the Cephalon Patents, using counsel of its own
choice, [**].  In the event either Party
solely institutes such an Action, (A) the other Party agrees to be joined as a
party plaintiff if necessary to prosecute such Action, to give the instituting
Party authority to file and prosecute the Action and to provide reasonable
assistance in connection therewith and (B) any recovery from any settlement or
judgment from such Action [**].

 

(iv)          Either Party shall immediately notify the
other Party of any certification received by the Party giving notice under the
U.S. Drug Price Competition and Patent Term Restoration Act of 1984 (Public Law
98-417, the “Hatch-Waxman Act”), as amended, with respect to a Product in the
Field.  If a Party having the right to
enforce an Alkermes Patent, Alkermes Manufacturing Patent or Joint Patent
decides not to bring infringement proceedings against the Third Party making
such a certification, such Party shall give notice to the other Party of its
decision not to bring suit within [**] after receipt of notice of such
certification.  The other Party may then,
but is not required to, bring suit against the Third Party that filed the
certification.  Any suit by Alkermes or
Cephalon shall either be in the name of Alkermes or in the name of Cephalon, or
jointly by Alkermes and Cephalon, as may be required by Law.  For this purpose, the Party not bringing suit
shall execute such legal papers necessary for the prosecution of such suit as
may be reasonably requested by the Party bringing suit and shall provide the
Party bringing suit reasonable assistance in connection therewith.

 

7.5.4       Settlement
with a Third Party Infringer.  If
both Parties bring suit to enforce or defend a given Alkermes Patent, Alkermes
Manufacturing Patent, Cephalon Patent or Joint Patent [**].

 

7.6          Infringement
Defense.  After the Effective Date,
if a Third Party asserts, or if either Party otherwise becomes aware, that a
patent or other right owned by a Third Party may be infringed by the
manufacture, use, sale, offer for sale or import of a Product in the Field in
the Territory or the manufacture of a Product outside the Territory for use,
sale, offer for sale or import in the Territory, then such Party shall promptly
notify the other Party and the Parties shall [**].

 

	
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45

 

7.7          Third-Party
Patent Licenses.  If the Parties
agree pursuant to Section 7.6 or pursuant to this Section 7.7 to obtain a license
from a Third Party with respect to a patent that may be infringed by the
manufacture, use, sale, offer for sale or import of a Product in the Field in
the Territory or the manufacture of a Product outside the Territory for use,
sale, offer for sale or import in the Territory, then [**].

 

7.8          Patent Marking.  Each
Party agrees to comply with the patent marking statutes in the United States
with respect to the Products.

 

7.9          Trademark
Maintenance.  After the Effective
Date, Cephalon shall prosecute,
maintain and defend in the Territory the Vivitrex Trademark and any other
trademark (other than the Medisorb Trademark) used for the advertising,
promotion, marketing, distribution or sale of a Product anywhere in the
Territory (each an “Additional Product Trademark”) and prosecute and
maintain any applications for registration or registrations for any such
mark.  After the Effective Date, Alkermes
may, in its sole discretion, prosecute, maintain and defend in the Territory
the Medisorb Trademark and prosecute and maintain any applications for
registration or registrations for such mark. 
After the Effective Date, Alkermes may, in its sole discretion, prosecute,
maintain and defend in the Territory the Medisorb Trademark and prosecute and
maintain any applications for registration or registrations for such mark.  If Alkermes elects to abandon any
registration for the Medisorb Trademark in the Territory that is relevant to
the Products, Alkermes shall provide Cephalon with reasonable advance notice
and, subject to Alkermes’ obligations to Third Parties existing as of the
Effective Date, Cephalon shall have the right to assume responsibility for the
maintenance of such trademark registrations.

 

7.10        Trademark
Infringement.

 

7.10.1     Notification
of Infringement.  If either Party
learns that a Third Party is infringing the Vivitrex Trademark, any Additional
Product Trademark or the Medisorb Trademark, such Party shall promptly notify
the other Party.

 

7.10.2     Infringement
Action with Respect to the Vivitrex Trademark or any Additional Product
Trademark.  After the Effective Date,
Cephalon shall have the sole right to take the appropriate steps to stop the
infringement of the Vivitrex Trademark or any Additional Product Trademark in
the Territory, including instituting an action with respect to such
infringement, with counsel of its own choice. 
Such enforcement costs shall be Commercialization Costs.  Alkermes agrees to provide reasonable
assistance to Cephalon, with any costs of providing such assistance
constituting Commercialization Costs, in taking any such steps.  Any recovery from any settlement or judgment
from any such action to stop infringement of the Vivitrex Trademark or any
Additional Product Trademarks in the Territory shall be [**].

 

	
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ARTICLE 8

CONFIDENTIALITY

 

8.1          Confidentiality.  Except to the extent authorized by this
Agreement or otherwise agreed in writing, the Parties agree that the receiving
Party shall keep confidential and shall not publish or otherwise disclose or
use for any purpose any proprietary and confidential information and materials
furnished to it by the disclosing Party pursuant to this Agreement and the
Supply Agreement (collectively, “Confidential Information”), except to
the extent that it can be established by the receiving Party that such
Confidential Information:

 

(i)            was
already known to the receiving Party or its Affiliates, other than under an
obligation of confidentiality, at the time of disclosure by the disclosing
Party;

 

(ii)           was
generally available to the public or otherwise part of the public domain at the
time of its disclosure by the disclosing Party;

 

(iii)         became
generally available to the public or 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;

 

(iv)          was
disclosed to the receiving Party or its Affiliates, 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; or

 

(v)            was
subsequently developed by the receiving Party or its Affiliates without use of
the Confidential Information of the disclosing Party as demonstrated by
competent written records.

 

Alkermes Know-How,
Alkermes Manufacturing Know-How, Alkermes Patents and Alkermes Manufacturing
Patents shall be considered Confidential Information of Alkermes.  Cephalon Know-How and Cephalon Patents shall
be considered Confidential Information of Cephalon.  Joint Know-How and Joint Patents shall be
considered Confidential Information of both Parties.

 

8.2          Authorized
Use and Disclosure.  Each Party shall
maintain the Confidential Information of the other Party in confidence and may
use Confidential Information of the other Party only in performance of its
obligations under this Agreement and the Supply Agreement.  Each Party may disclose such Confidential
Information to its employees, Affiliates, sublicensees, agents, consultants or
other Third Parties who need to know such Confidential Information in
connection with the performance of such Party’s obligations under this
Agreement and the Supply Agreement and who are under a written obligation of
confidentiality and non-use at least substantially equivalent to the
obligations of this Article 8.  Each
Party shall be liable for any unauthorized use or disclosure of Confidential
Information by its

 

	
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47

 

employees, Affiliates,
sublicensees, agents, consultants or other Third Parties to which it has
disclosed or transferred such Confidential Information.

 

Without limiting the
generality of the foregoing paragraph, a Party may disclose information to the
extent that such disclosure is reasonably necessary in connection with:

 

(i)            filing
or prosecuting patent applications, subject to the terms of Section 8.4;

 

(ii)           prosecuting
or defending litigation;

 

(iii)         conducting
pre-clinical studies or Clinical Studies according to a Development Plan or
Post Marketing Clinical Trials according to a Commercialization Plan;

 

(iv)          seeking
Regulatory Approval of a Product, including Regulatory Approval of a
manufacturing facility for a Product;

 

(v)            seeking
pricing approvals from private or governmental payors;

 

(vi)          complying
with Laws, including securities Laws and the rules of any securities exchange
or market on which a Party’s securities are listed or traded;

 

(vii)         providing
information to Alkermes’ collaborators in the ROW Territory pursuant to Section
3.4.2(iv) or

 

(viii)        complying
with subpoenas or governmental requests for information.

 

In making any disclosures
set forth in clauses (i) through (viii) above, the disclosing Party shall,
except where impracticable for necessary disclosures (as in the event of
medical emergency), give such advance notice to the other Party of such
disclosure requirement as is reasonable under the circumstances and, except to
the extent inappropriate (as in the case of patent applications), will use its
reasonable efforts to cooperate with the other Party in order to secure
confidential treatment of such Confidential Information required to be
disclosed.

 

8.3          Survival.  This Article 8 shall survive the termination
or expiration of this Agreement for a period of [**] years; provided, however,
that following any termination or expiration of this Agreement either Party shall have the right use and
disclose any Joint Know-How and Joint Patents solely to the extent necessary to
Develop, Manufacture or Commercialize the Products in the Field.

 

	
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48

 

8.4          Publications.

 

8.4.1       General.  Each Party agrees that the Parties’
personnel involved in the collaboration, together or with other authors, shall
be permitted to present at symposia, national or regional professional meetings
and to publish in journals the research and development conducted pursuant to
the collaboration in accordance with the publication strategy developed from
time to time by the DT and CT and in accordance with the review process of this
Section 8.4.

 

8.4.2       Publications
Strategy.  For the Medisorb Product,
within [**] days following the Effective Date, the DT, in consultation with the
CT, shall approve a strategy for the publication or presentation of the results
of pre-clinical studies or Clinical Studies of the Medisorb Product for the
Initial Indication; provided, however, that any submissions made by
Alkermes prior to the Effective Date shall not be subject to withdrawal or
other modification.  Once Regulatory
Approval for the Medisorb Product has been received, the DT and CT shall jointly
approve a strategy for publication or presentation with respect to the Medisorb
Product for the Initial Indication for the Territory, and thereafter the DT and
CT shall jointly approve a general strategy for publication or presentation
with respect to the Products in the Field for the Territory.

 

8.4.3       Prior
Review.  Except as required by Law,
each Party agrees that it shall publish or present the results of any
pre-clinical studies, Clinical Studies or Post Marketing Clinical Trials
identified in Section 8.4.2 pursuant to the strategy approved by the DT
and CT, following prior review and approval by the other Party, in accordance
with the following provisions of this Section 8.4.3.  Notwithstanding the foregoing, any proposed
abstracts, manuscripts or presentation of the results of the Phase III clinical
trial (or extensions thereof) of the Medisorb Product for which submissions
have been made by Alkermes prior to the Effective Date as described in Section
8.4.2 shall only be provided to Cephalon for review, but not for prior
approval.  Each Party, as applicable,
shall provide to the other Party the opportunity to review proposed abstracts,
manuscripts or presentations (including information to be presented verbally)
at least [**] days prior to their presentation or intended submission for
publication.  During such [**] day
period, such other Party shall have the right to (i) require the deletion from
such proposed abstract, manuscript or presentation, prior to its publication or
presentation, of any of such other Party’s Confidential Information or any
information prohibited from publication by applicable Laws, including the Act,
and (ii) seek appropriate patent protection for any material in such abstract,
manuscript or presentation which it believes is patentable.  If Section 8.4.3(ii) above applies, the
non-publishing Party may request a delay, and the publishing Party shall delay
such publication or presentation, for a period not exceeding [**] days, to
permit the timely preparation and filing of a patent application or an
application for a certificate of invention on the information at issue.

 

8.4.4       Subsequent
Disclosures.  Notwithstanding the
foregoing, the provisions of Section 8.4.3 shall not apply to subsequent
publications or presentations

 

	
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49

 

of substantially the same
subject matter that was previously reviewed under Section 8.4.3, provided
that the disclosing Party’s patent counsel provides prior written notice of any
such subsequent publication or presentation to the other Party’s patent
counsel, and such publications or presentations are in accordance with the
strategy approved by the DT and CT for such publications or presentations.

 

8.4.5       Third
Parties.  Each of the Parties will
require its Affiliates and agents to comply with publication and presentation
restrictions compatible with those set forth herein.  Each of the Parties will also use
commercially reasonable efforts to require any other Third-Party agents who are
participating in the collaboration to comply with such publication and
presentation restrictions.

 

ARTICLE 9

UP-FRONT
PAYMENT, MILESTONE  PAYMENTS AND PROFIT SPLIT

 

9.1          Up-front
Payment.  On the Effective Date,
Cephalon shall pay, or cause to be paid, to Alkermes a one-time nonrefundable
payment in the amount of One Hundred and Sixty Million Dollars ($160,000,000).

 

	
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50

 

9.2          Milestone
Payments.  After the Effective Date,
within [**] Business Days following the occurrence of each event set forth
below, Cephalon shall pay, or cause to be paid, to Alkermes the following
nonrefundable milestone payments:

 

	
  Event

  	
   

  	
  Milestone Payment

  
	
   

  	
   

  	
   

  
	
  Receipt of the first
  Regulatory Approval for a Product in the Territory

  	
   

  	
  $

  	
  110,000,000

  
	
   

  	
   

  	
   

  
	
  Net Sales in any
  calendar year period reach or exceed $[**]

  	
   

  	
  [**], if any

  
	
   

  	
   

  	
   

  
	
  Net Sales in any
  calendar year period reach or exceed $[**]

  	
   

  	
  $

  	
  [**]

  
	
   

  	
   

  	
   

  
	
  Net Sales in any
  calendar year period reach or exceed $[**]

  	
   

  	
  $

  	
  [**]

  

 

Each Party shall promptly
notify the other of the occurrence of any milestone event of which it becomes
aware.  Each milestone payment shall be
made only once and total milestone payments shall not exceed Two Hundred and
Eighty-Five Million Dollars ($285,000,000) plus the [**], if any.

 

9.3          Profit
Sharing.  Subject to Sections 9.3.1
and 9.3.2 below, Cephalon shall receive or pay, as applicable, [**] of the
Distributable Profit (Loss) for the Products with respect to sales in the
Territory, and Alkermes shall receive or pay, as applicable, [**] of the
Distributable Profit (Loss) for the Products with respect to sales in the
Territory, to be calculated and paid in accordance with the reconciliation and
payment provisions of Section 9.5.

 

9.3.1       Alkermes
Obligations.  Notwithstanding the
foregoing, for the period from the Effective Date until the later of (a)
December 31, 2007 or (b) the date eighteen (18) months after the first
Regulatory Approval of a Product in the Territory, Alkermes shall be
responsible for the payment of monthly Distributable Losses up to an aggregate
of One Hundred and Twenty Million Dollars ($120,000,000).

 

9.3.2       Cephalon
Obligations.  Notwithstanding the
foregoing, for the period from the Effective Date until the later of (a)
December 31, 2007 or (b) the date eighteen (18) months after the first
Regulatory Approval of a Product in the Territory, Cephalon shall be
responsible for the payment of monthly Distributable Losses exceeding an
aggregate of One Hundred and Twenty Million Dollars ($120,000,000).

 

9.4          Reporting
Net Sales and Shared Expenses.  Within
[**] Business Days after the end of each calendar month, Cephalon shall submit
to Alkermes a true and

 

	
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51

 

accurate report providing
in reasonable detail (i) an accounting of all Net Sales made in the Territory
during such calendar month, including the total gross sales and the allowable
deductions therefrom (the “Net Sales Report”); and (ii) within [**]
Business Days after the end of each calendar month, Cephalon shall submit to
Alkermes a true and accurate report providing in reasonable detail all Shared
Expenses incurred by Cephalon (the “Cephalon Incurred Shared Expenses”
and such report the “Cephalon Incurred Shared Expenses Report”),
including a calculation showing as separate line items each component of Shared
Expenses.  Within [**] Business Days
after the end of each calendar month, Alkermes shall submit to Cephalon a true
and accurate report providing in reasonable detail all Shared Expenses incurred
by Alkermes (the “Alkermes Incurred Shared Expenses” and such report the
“Alkermes Incurred Shared Expenses Report”), including a calculation
showing as separate line items each component of Shared Expenses.  Each such report shall be considered
Confidential Information of the submitting Party, subject to the terms and
conditions of Article 8 hereof.

 

9.5          Financial
Reconciliation.  Within [**] Business
Days after the end of each calendar month, Cephalon shall, using the Net Sales
Report, the Cephalon Incurred Shared Expenses Report and the Alkermes Incurred
Shared Expenses Report, prepare a reconciliation report for the Products for
such calendar month (the “Reconciliation Report”).  The Reconciliation Report shall set forth, in
reasonable detail:

 

(i)            a
statement of the Cephalon Incurred Shared Expenses, the Alkermes Incurred
Shared Expenses and the total Shared Expenses;

 

(ii)           a
calculation of Distributable Profit or Distributable Loss, as applicable;

 

(iii)         a
statement of any amount (“Reconciliation Payment”) owed by one Party to
the other Party in accordance with the following:

 

(A)          If
there is a Distributable Profit, Cephalon shall pay to Alkermes an amount equal
to Alkermes’ Incurred Shared Expenses plus forty-nine percent (49%) of the
Distributable Profit.

 

(B)          Subject
to adjustment as set forth in Section 9.5(iii)(C) below, if there is a
Distributable Loss during any month in the period from the Effective Date until
the later of (a) December 31, 2007 or (b) the date eighteen (18) months after
the first Regulatory Approval of a Product in the Territory, then neither Party
individually shall have a profit during such month and Alkermes shall bear the
Distributable Loss as follows:

 

(x)           If
the net amount that Cephalon has received is negative or a loss (that is, Net
Sales minus Cephalon’s Incurred Shared Expenses is less than zero (0)), then
Alkermes shall pay the amount of such difference to Cephalon; and

 

	
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52

 

(y)           If
the net amount that Cephalon has received is positive or a profit (that is, Net
Sales minus Cephalon’s Incurred Shared Expenses is greater than zero (0)), then
Cephalon shall pay the amount of such difference to Alkermes.

 

(C)          If
the cumulative Distributable Loss from all months in which there is a
Distributable Loss, during the period from the Effective Date until the later
of (a) December 31, 2007 or (b) the date eighteen (18) months after the first
Regulatory Approval of a Product in the Territory, exceeds One Hundred and
Twenty Million Dollars ($120,000,000), then the amounts payable to Cephalon
under Section 9.5(iii)(B) above shall be reduced and/or the amounts payable by
Cephalon under Section 9.5(iii)(B) above shall be increased, as applicable, so
that Cephalon bears the amount of such cumulative Distributable Loss in excess
of One Hundred and Twenty Million Dollars ($120,000,000).

 

(D)          If
there is a Distributable Loss during the period after the later of (a) December
31, 2007 or (b) the date eighteen (18) months after the first Regulatory
Approval of a Product in the Territory, then neither Party individually shall
have a profit and each Party shall share such Distributable Loss as follows:

 

(x)           If
Alkermes has paid more than [**] of the Distributable Loss (that is, the amount
of Alkermes’ Incurred Shared Expenses exceeds [**] of the Distributable Loss),
then Cephalon shall pay such difference to Alkermes; and

 

(y)           If
Alkermes has paid less than [**] of the Distributable Loss (that is, the amount
of Alkermes’ Incurred Shared Expenses is less than [**] of the Distributable
Loss), then Alkermes shall pay such difference to Cephalon.

Within [**] Business Days
after delivery by Cephalon of a Reconciliation Report to Alkermes, Cephalon or
Alkermes, as the case may be, shall pay the Reconciliation Payment to the other
Party; provided, however, that if within [**] days of receipt of the
Reconciliation Report by Alkermes, the Alkermes financial representative informs
the Cephalon financial representative that it disputes the amount of all or a
portion of the Reconciliation Payment, the financial representatives of the
Parties shall meet and attempt in good faith to resolve such dispute.  To the extent the dispute is not resolved by
such financial representatives, such matter shall be presented to the JSC for
resolution.

 

9.6          Generic Product.

 

9.6.1       [**].  [**].

 

9.6.2       Royalty
Report.  Within [**] Business Days
after the end of each calendar month for which royalties are payable by
Cephalon to Alkermes, or by Alkermes to Cephalon, with respect to Net Sales in
the Territory pursuant to Sections

 

	
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53

 

9.6.1, 13.4 or 13.5,
Cephalon shall deliver to Alkermes, or Alkermes shall deliver to Cephalon, as
applicable, in addition to a Net Sales Report as provided herein, a true and
accurate calculation of the applicable royalties due under Section 9.6.1, 13.4
and 13.5.  Simultaneous with the
submission of such report, Cephalon shall pay to Alkermes or Alkermes shall pay
to Cephalon, as applicable, all royalties payable by it under Sections 9.6.1,
13.4 or 13.5, as applicable, as indicated in such calculation.

 

9.7          Records
and Reporting; Audits.

 

9.7.1       Records
and Reporting.  Each Party shall
keep, and shall cause its Affiliates to keep, such accurate and complete
records of Net Sales and its Commercialization Costs, Development Costs and
Fully Burdened Manufacturing Costs as are necessary to determine the amounts
due to Cephalon and Alkermes under this Agreement, including time records.  In determining Commercialization Costs and
Development Costs chargeable under this Agreement, each Party will use its
project accounting systems and will review and approve its project accounting
systems and methodologies with the other Party within [**] days of the
Effective Date.  Each Party shall report
its Commercialization Costs and Development Costs in a manner consistent with
such project accounting system.  Records
of Net Sales, Commercialization Costs, Development Costs and Fully Burdened
Manufacturing Costs shall be retained by each Party or any of its Affiliates
(in such capacity, the “Recording Party”) for three (3) years following
the end of the calendar year to which they pertain.

 

9.7.2       Audits.  During normal business hours and with
reasonable advance notice to the Recording Party, such records shall be made
available for inspection, review and audit, at the request and expense of the
other Party (the “Auditing Party”), by an independent certified public
accountant, appointed by such Auditing Party and reasonably acceptable to the
Recording Party, for the sole purpose of verifying the accuracy of the
Recording Party’s accounting reports and payments made or to be made pursuant
to this Agreement; provided, however, that such audits may not be
performed by the Auditing Party more than once per calendar year and that such
Auditing Party shall not be permitted to audit the same period of time more
than once.  Such accountants, prior to
any review hereunder, shall have entered into an appropriate confidentiality
agreement with the Recording Party on mutually acceptable terms and shall have
been instructed not to reveal to the Auditing Party the details of its review,
except for (i) such information as is required to be disclosed under this
Agreement and (ii) such information presented in a summary fashion as is
necessary to report the accountants’ conclusions to the Auditing Party.  The report prepared by such accountants shall
be sent or otherwise provided to the Recording Party by such accountants at the
same time it is sent or otherwise provided to the Auditing Party.  All costs and expenses incurred in connection
with performing any such audit shall be paid by the Auditing Party unless the
audit uncovers a net underpayment or overreporting of expenses by a Recording
Party of [**] percent ([**]%) of total amounts owed or expenses reported by
such Recording Party for any calendar year period covered by the audit, in
which case the Recording Party will bear the full cost of such audit.  The

 

	
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54

 

Auditing Party will be
entitled to recover any underpayment or will be paid the amount of any
overreported expenses, plus interest calculated in accordance with Section 9.9
within [**] days after receipt of such audit report, or alternatively shall
have the right to offset any such amounts against payments the Auditing Party
is otherwise required to make to the Reporting Party under this Agreement.

 

9.7.3       Binding
Effect.  If a Party fails to invoke
its audit rights pursuant to this Section 9.7 with respect to a calendar year
within [**] years following the end of such year, the calculation of royalties,
Net Sales, Development Costs, Commercialization Costs, Fully Burdened
Manufacturing Costs and Distributable Profits (Losses) with respect to such
year shall be binding and conclusive upon the other Party, and each Party and
its Affiliates and sublicensees shall be released from any liability or
accountability with respect to royalties, Net Sales and Distributable Profits
(Losses), as the case may be.

 

9.8          Manner
of Payments.  All sums due to
Alkermes or Cephalon under this Article 9 shall be payable by bank wire
transfer in immediately available funds to such bank account(s) as Alkermes and
Cephalon, respectively, shall designate from time to time.  Each Party shall endeavor to notify the other
Party as to the date and amount of any such wire transfer to the other Party at
least [**] Business Days prior to such transfer, but in no event later than the
Business Day of such transfer.

 

9.9          Interest
on Late Payments.  Without limitation
on other available rights or remedies, all amounts payable under this Agreement
will bear interest at the rate of [**] per calendar month from the date due
until paid.

 

9.10        Taxes.

 

9.10.1     Withholding. 
Cephalon will make all payments to Alkermes under this Agreement, and
Alkermes will make all payments to Cephalon, as applicable, without deduction or
withholding except to the extent that any such deduction or withholding is
required by Law to be made on account of Taxes (as that term is defined in
Section 9.10.4 below).

 

9.10.2     Payment of Taxes. 
Any Tax required to be withheld by Law on amounts payable under this
Agreement will promptly be paid by Cephalon on behalf of Alkermes or Alkermes
on behalf of Cephalon, as applicable, to the appropriate governmental
authority, and the Party making such payment will furnish the other Party with
proof of payment of such Tax within [**] calendar month of such payment.  With the exception of Tax on any royalty
payments made by Alkermes to Cephalon hereunder, any such Tax required to be
withheld will be an expense of and borne by Alkermes.  The Party making Tax payments hereunder will
give notice of its intention to begin withholding any such Tax in advance of
such withholding and will use reasonable and legal efforts to cooperate with
the other Party to reduce such Tax on payments made to the other Party
hereunder.

 

	
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55

 

9.10.3     Documentation. 
Cephalon and Alkermes will cooperate with respect to producing all
documentation required by any government taxing authority or reasonably
requested by Cephalon or Alkermes, as applicable, to secure a reduction in the
rate of applicable withholding Taxes.

 

9.10.4     Tax. 
Solely for purposes of this Section 9.10, “Tax” or “Taxes”
means any present or future taxes, levies, imposts, duties, charges,
assessments or fees of any nature (other than incomes taxes and excluding
interest, penalties and additions thereto) that are imposed by a taxing
authority with respect to amounts payable under this Agreement.

 

9.11        [**].

 

9.11.1     Decision to
Develop.  For [**] from the date of
the First Commercial Sale of a Finished Product in the Territory if either
Party or its Affiliates (such Party, the “Developing Party”) wishes,
directly or indirectly, to develop for sale, or sell, in the Territory [**] the
Developing Party shall provide written notice and a detailed information
package concerning such [**] to the other Party.  Within [**] days of receipt of such notice
and information package the other Party shall notify the Developing Party in
writing if it wishes to participate in the development or acquisition of such
[**] pursuant to the terms and conditions of this Agreement (the “Initial
Notice”).  If the other Party
provides an Initial Notice, then such [**]. 
If the other Party does not provide an Initial Notice within [**] days
of receipt of the notice and information package from the Developing Party,
then [**].

 

9.11.2     [**] Option.  Promptly
following the completion of [**], the Developing Party shall provide to the
other Party a detailed information package concerning such [**] (the “[**] Data Package”).  Upon receipt of such [**] Data Package, the
other Party shall have a period of [**] days in which to notify the Developing
Party in writing that it wishes to have the [**] become [**] under this Agreement,
subject to Section 9.11.5 (the “[**] Notice”).  If the other Party provides an [**] Notice to
the Developing Party, it shall pay the Developing Party within [**] days of the
date of such [**] Notice an amount equal to [**] percent ([**]%) [**].  If the other Party does not provide an [**]
Notice within [**] days of receipt of the [**] Data Package from the Developing
Party, then the other Party shall [**], and the Developing Party shall be free
to develop for sale or sell such [**] in the Territory subject to the
obligations set forth in Sections 9.11.3 and 9.11.4.  [**].

 

9.11.3     [**] Option.  No later
than [**] days after the [**], the Developing Party shall provide to the other
Party a detailed information package concerning the [**] (the “[**] Data Package”).  Upon receipt of such [**] Data Package, the
other Party shall have a period of [**] days in which to notify the Developing
Party in writing that it wishes to have the [**] become a [**] under this
Agreement, subject to Section 9.11.5 (the “[**]

 

	
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56

 

Notice”).  If the other Party provides a [**] Notice to
the Developing Party, it shall pay the Developing Party within [**] of the date
of such [**] Notice an amount equal to [**]. 
If the other Party does not provide a [**] Notice within [**] days of
receipt of the [**] Data Package from the Developing Party, then the other
Party shall be [**], and the Developing Party shall be free to develop for sale
or sell such [**] in the Territory subject to the obligations set forth in
Section 9.11.4.  [**].

 

9.11.4     [**] Option.  No later
than [**] days after the date [**], the Developing Party shall notify the other
Party of such filing and provide the other Party with an estimation of the
total [**] (as defined below) incurred in [**]. 
Upon receipt of such notice, the other Party shall have until the date
[**] days after such filing in which to notify the Developing Party in writing
that it wishes to have [**] become a [**] under this Agreement, subject to
Section 9.11.5 (the “[**] Notice”). 
If the other Party provides an [**] Notice to the Developing Party, it
shall pay the Developing Party within [**] days of the date of such [**] Notice
an amount equal to [**] percent ([**]%) of the [**].  If the other Party does not provide an [**]
Notice within [**] days after such [**], then the other Party shall be [**],
and the Developing Party shall be free to develop for sale or sell such [**] in
the Territory.  [**].

 

9.11.5     Terms Applicable to a [**]. 
If the [**] becomes a [**] under this Agreement pursuant to Sections
9.11.1, 9.11.2, 9.11.3 or 9.11.4 hereof, then such [**] shall be subject to the
applicable terms of this Agreement, including payments pursuant to Section 9.5
hereof, but excluding Section 9.6 hereof. 
In addition the Term shall be extended until [**].  The Parties shall also negotiate the terms
and conditions for the manufacture and supply of such [**].  For the avoidance of doubt, any [**] for
which payments have been made by one Party to the other Party pursuant to
Sections 9.11.2, 9.11.3, or 9.11.4 may not be included as part of the cost of
goods for any [**].

 

ARTICLE 10

REPRESENTATIONS
AND WARRANTIES

 

10.1        Disclaimer.  EXCEPT AS EXPRESSLY PROVIDED HEREIN, EACH
PARTY DISCLAIMS ALL REPRESENTATIONS AND WARRANTIES, EXPRESS OR IMPLIED,
INCLUDING WARRANTIES OF COMMERCIAL UTILITY, MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, VALIDITY OR SCOPE OF PATENT RIGHTS OR NON-INFRINGEMENT OF
THIRD PARTY INTELLECTUAL PROPERTY RIGHTS.

 

10.2        Mutual
Representations and Warranties.  Each
Party represents, warrants and covenants to the other that as of the Effective
Date:

 

(i)            This
Agreement and the Supply Agreement have been duly executed and delivered by
such Party and constitute the valid and binding obligation of

 

	
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57

 

such Party, enforceable
against that Party in accordance with each of their terms, except as
enforceability may be limited by bankruptcy, fraudulent conveyance, insolvency,
reorganization, moratorium and other Laws relating to or affecting creditors’
rights generally and by general equitable principles.  Such Party has the right, power and authority
to execute, deliver and perform this Agreement and the Supply Agreement,
including making the grant of rights described in Article 6.  The execution, delivery and performance of
this Agreement and the Supply Agreement have been duly authorized by all
necessary action on the part of such Party and its officers and directors.  The execution, delivery and performance of
this Agreement and the Supply Agreement do not breach, violate, contravene or
constitute a default under any contracts, arrangements or commitments to which
such Party is a party or by which it is bound nor do the execution, delivery
and performance of this Agreement or the Supply Agreement by such Party violate
any order, Law or regulation of any court, governmental body or administrative
or other agency having authority over it; and

 

(ii)           Such
Party will not enter into any contract, arrangement or commitment in the future
which conflicts with or violates any term or provision of this Agreement or the
Supply Agreement.

 

10.3        Alkermes Representations and Warranties.  Alkermes further represents, warrants and
covenants to Cephalon that as of the Effective Date:

 

(i)            the
Alkermes Patents [**] and the Alkermes Manufacturing Patents [**] are all
patent applications and patents Controlled by Alkermes or its Affiliates as of
the Effective Date that are necessary or directly relate to the manufacture, use, sale or offer for sale of the
Medisorb Product in the Field in the Territory;

 

(ii)           Alkermes
has given Cephalon access to all clinical and pre-clinical data and information
for the Medisorb Product that is in Alkermes’ or its Affiliates’ possession;

 

(iii)         none of
the issued Alkermes Patents listed on Exhibit A has been found invalid
and unenforceable by a court of competent jurisdiction, and Alkermes is not
aware of any facts that would render such Alkermes Patents invalid or
unenforceable;

 

(iv)          Alkermes
is not required to obtain the consent of any Third Party to make the grant of
rights to Cephalon described in Article 6;

 

(v)            Alkermes
has not received written notice from a Third Party claiming that a patent owned
by such Third Party would be infringed by the manufacture, use, sale, offer for
sale or import of the Medisorb Product in the Field in the Territory, no Third
Party has threatened in writing to make any such claim and Alkermes is not
aware of any Third Party issued patents or published patent

 

	
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58

 

applications that if
issued would be infringed by the making, using, selling, or importing of the
Medisorb Product in the Field in the Territory;

 

(vi)          Alkermes
or its Affiliates Control the Alkermes Patents and the Alkermes Know How
existing as of the Effective Date;

 

(vii)         except
as previously disclosed by Alkermes to Cephalon in writing, Alkermes is
not aware of any claim made against it asserting the invalidity, misuse,
unregisterability, unenforceability or non-infringement of any Alkermes Patents
listed on Exhibit A or Alkermes Manufacturing Patents listed on Exhibit
B in the Territory and is not aware of any claim made against it
challenging its right to use or ownership of any Alkermes Patents, Alkermes
Manufacturing Patents, Alkermes Know How or Alkermes Manufacturing Know-How or
making any adverse claim of ownership thereof;

 

(viii)        except
as previously disclosed by Alkermes to Cephalon in writing, Alkermes is
not aware of the use or sale by any Third Party in the Territory of a product
that is being developed or commercialized for the Initial Indication that would
infringe the Alkermes Patents listed on Exhibit A or the Alkermes
Manufacturing Patents listed on Exhibit B in the Territory;

 

(ix)          Alkermes
has given Cephalon access to the INDs, the NDA and related filings with the FDA
for the Medisorb Product and all material correspondence to and from the FDA
relating to the foregoing matters; and

 

(x)           the
Development of the Medisorb Product for the Initial Indication, including the
Clinical Studies, has been conducted by Alkermes in material compliance with
all applicable Laws, including the Act.

 

10.4        No Guaranty
of Development or Commercialization Success. 
The Parties each specifically acknowledge and agree that the
Development to be performed by the Parties hereunder, including the Clinical
Studies, is research based and as such there is no guaranty that such
Development will be successful, in whole or in part.  The Parties each further specifically
acknowledge and agree that the Commercialization to be performed by the Parties
hereunder may be affected by various market, regulatory and other factors and
as such there is no guaranty that such Commercialization will be successful, in
whole or in part.

 

ARTICLE 11

LIABILITY

 

11.1        Limitation
of Liability.  Except pursuant to
Sections 11.2 and 11.3 below, neither Party shall be liable to the other for
indirect, incidental, special, punitive, exemplary, or consequential damages
arising out of or resulting from this Agreement

 

	
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and the Supply Agreement.

 

11.2        Cephalon
Indemnification.

 

11.2.1     Obligation.  Cephalon shall indemnify, defend and hold
harmless Alkermes and its Affiliates and their respective directors, officers,
employees and agents (each an “Alkermes Indemnified Party”) from and
against all costs, losses, liabilities, expenses (including reasonable
attorneys’ fees, experts’ fees and other costs of investigation or defense at
any stage of the proceedings) and damages to the extent relating to a claim,
action or demand by a Third Party or Governmental Authority arising out of or
resulting from:

 

(i)    any
breach of this Agreement or the Supply Agreement by Cephalon, including the
breach of any of Cephalon’s representations or warranties in Section 10.2;

 

(ii)   the
violation of any Law by or on behalf of Cephalon or its Affiliates;

 

(iii) negligence
or willful misconduct by or on behalf of Cephalon or its Affiliates relating to
the Development, Manufacture, Commercialization or use of a Product for sale in
the Territory by or on behalf of Cephalon or its Affiliates; or

(iv)  without
limiting the generality of clause (iii) above, Product Liability Claims arising
out of or resulting from the negligence or willful misconduct by or on behalf
of Cephalon or its Affiliates relating to the Development, Manufacture,
Commercialization or use of a Product for sale in the Territory by or on behalf
of Cephalon or its Affiliates;

 

except to the extent such
claim, action or demand arose or resulted from the negligence or willful
misconduct of any Alkermes Indemnified Party.

 

11.2.2     Process.  In the event that an Alkermes Indemnified
Party seeks indemnification under this Section 11.2, Alkermes shall:  (i) give prompt notice to Cephalon of any
such claim, action or demand; (ii) permit Cephalon to assume direction and control
of the defense of such claim, action or demand (including decisions regarding
its settlement or other disposition, which may be made in Cephalon’s sole
discretion except as otherwise provided herein); (iii) assist Cephalon at
Cephalon’s expense in defending such claim, action or demand; and (iv) not
compromise or settle such claim, action or demand without Cephalon’s prior
written consent, which shall not be unreasonably withheld or delayed.  Alkermes may participate in the defense of
such claim, action or demand through counsel of its choice, but the cost of
such counsel shall be borne solely by Alkermes.  Except with the approval of Alkermes, which
approval shall not be unreasonably withheld or delayed, Cephalon shall not
consent to

 

	
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entry of any judgment or
enter into any settlement which (i) would result in injunctive or other relief
being imposed against an Alkermes Indemnified Party; or (ii) does not include
as an unconditional term thereof the giving by the claimant or plaintiff to all
applicable Alkermes Indemnified Parties of a release from all liability in
respect to such claim or litigation.  If
an Alkermes Indemnified Party in good faith determines that such party may have
available to it one or more defenses or counterclaims that are inconsistent
with one or more of those defenses or counterclaims that may be available to
Cephalon in respect of any claim, action or demand, then the Alkermes Indemnified
Party shall have the right at all times to assume control over the defense or
settlement of any such claim, action or demand at Cephalon’s cost and expense; provided,
however, that if the Alkermes Indemnified Party does so assume control,
the Alkermes Indemnified Party shall not consent to entry of any judgment or
enter into any settlement without the consent of Cephalon, which consent shall
not to be unreasonably withheld or delayed.  Third-Party claims, actions or demands subject
to the indemnification, defense and hold harmless obligations hereunder shall
not include any claims, actions or demands asserted by any agent of Alkermes.

 

11.3        Alkermes
Indemnification.

 

11.3.1     Obligation.  Alkermes shall indemnify, defend and hold
harmless Cephalon and its Affiliates and their respective directors, officers,
employees and agents (each a “Cephalon Indemnified Party”) from and
against all costs, losses, liabilities, expenses (including reasonable attorney’s
fees, experts’ fees and other costs of investigation or defense at any stage of
the proceedings) and damages relating to a claim, action or demand by a Third
Party or Governmental Authority to the extent arising out of or resulting from:

 

(i)    any
breach of this Agreement or the Supply Agreement by Alkermes, including the
breach of any of Alkermes’ representations or warranties in Section 10.2 and
10.3;

 

	
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(ii)   the
violation of any Law by or on behalf of Alkermes or its Affiliates;

 

(iii) negligence
or willful misconduct by or on behalf of Alkermes or its Affiliates relating to
the Development, Manufacture, Commercialization or use of a Product for sale in
the Territory by or on behalf of Alkermes or its Affiliates;

 

(iv)  without limiting the generality of clause (iii)
above, Product Liability Claims
arising out of or resulting from (A) the negligence or willful misconduct by or
on behalf of Alkermes or its Affiliates relating to the Development,
Manufacture, Commercialization or use of a Product for sale in the Territory by
or on behalf of Alkermes or its Affiliates or (B) any breach of Alkermes’
obligations under the Supply Agreement; or

 

(v)    the Development, Manufacture, Commercialization
or use of a Product for sale outside the Territory by or on behalf of Alkermes
or its Affiliates;

 

except to the extent such
claim, action or demand arose or resulted from the negligence or willful
misconduct of any Cephalon Indemnified Party.

 

11.3.2     Process.  In the event that an Cephalon Indemnified
Party seeks indemnification under this Section 11.3, Cephalon shall:  (i) give prompt notice to Alkermes of any
such claim, action or demand; (ii) permit Alkermes to assume direction and
control of the defense of such claim, action or demand (including decisions
regarding its settlement or other disposition, which may be made in Alkermes’
sole discretion except as otherwise provided herein); (iii) assist Alkermes at
Alkermes’ expense in defending such claim, action or demand; and (iv) not compromise
or settle such claim, action or demand without Alkermes’ prior written consent,
which shall not be unreasonably withheld or delayed.  Cephalon may participate in the defense of
such claim, action or demand through counsel of its choice, but the cost of
such counsel shall be borne solely by Cephalon. 
Except with the approval of Cephalon which approval shall not be
unreasonably withheld or delayed, Alkermes shall not consent to entry of any
judgment or enter into any settlement which (i) would result in injunctive or
other relief being imposed against a Cephalon Indemnified Party; or (ii) does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to all applicable Cephalon Indemnified Parties of a release from all
liability in respect to such claim or litigation.  If a Cephalon Indemnified Party in good faith
determines that such party may have available to it one or more defenses or
counterclaims that are inconsistent with one or more of those defenses or
counterclaims that may be available to Alkermes in respect of any claim, action
or demand, then the Cephalon Indemnified Party shall have the right at all
times to assume control over the defense or settlement of any such claim,
action or demand at Alkermes’ cost and expense; provided, however,
that if the Cephalon Indemnified Party does so assume control, the Cephalon

 

	
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Indemnified Party shall
not consent to entry of any judgment or enter into any settlement without the
consent of Alkermes, which consent shall not to be unreasonably withheld or
delayed.  Third-Party claims, actions or
demands subject to indemnification, defense and hold harmless obligations
hereunder shall not include any claims, actions or demands asserted by any
agent of Cephalon.

 

11.3.3     Indemnification for Patent Liability.  If the Parties agree pursuant to Section 7.7
to obtain a license from a Third Party pursuant to Section 7.7 with respect to
any Indemnification Patent, then the payment obligations to the Third Party
incurred in connection with such license shall be borne solely by
Alkermes.  If Alkermes otherwise
determines pursuant to Section 7.7 to obtain a license from a Third Party
pursuant to Section 7.7 with respect to any Indemnification Patent, then the
payment obligations to the Third Party incurred in connection with such license
shall be borne solely by Alkermes.  If
neither Cephalon or Alkermes takes a license with respect to an Indemnification
Patent, and a Third Party with right, title or interest in an Indemnification
Patent makes a claim, action or demand against a Cephalon Indemnified Party
arising out of or resulting from the alleged infringement of such
Indemnification Patent by the use, sale, offer for sale or import of a Product
in the Field in the Territory, then Alkermes shall indemnify, defend and hold
harmless such Cephalon Indemnified Party from and against all costs, losses,
liabilities, expenses (including reasonable attorneys’ fees, experts’ fees and
other costs of investigation or defense at any stage of the proceedings) and
damages to the extent relating to such claim, action or demand pursuant to the
terms and conditions of Section 11.3.2.

 

11.4        Insurance

 

11.4.1     Cephalon Coverage.  Cephalon
agrees to carry and maintain in full force and effect during the Term
Commercial General Liability Insurance and Product Liability/Completed
Operations Insurance, including contractual liability coverage, in an amount
not less than [**] Dollars ($[**]) per occurrence bodily
injury/property damage combined and [**]Dollars ($[**]) aggregate annually.  Such
insurance shall be primary to any insurance owned, secured or put in
place by Alkermes.  The policies shall provide for [**] days written notice to Alkermes of cancellation,
suspension, non-renewal, or reduction in scope or limits.  All such policies shall be written by insurance companies with an A.M.
Best’s rating (or its equivalent) of A- or higher.  Upon written request, Cephalon
shall provide Alkermes with a certificate of insurance attesting to such
coverage.  It is understood and
agreed that this insurance shall not be construed to limit Cephalon’s liability
with respect to its indemnification obligations hereunder.

 

11.4.2     Alkermes Coverage.  Alkermes
agrees to carry and maintain in full force and effect during the Term
Commercial General Liability Insurance and Product Liability/Completed
Operations Insurance, including contractual liability coverage, in an amount
not less than [**]Dollars ($[**]) per occurrence bodily

 

	
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injury/property
damage combined and [**]Dollars ($[**]) aggregate
annually.  Such insurance shall be
primary to any insurance owned, secured or put in place by Cephalon.  The
policies shall provide for [**] days
written notice to Cephalon of cancellation, suspension, non-renewal, or
reduction in scope or limits.  All
such policies shall be written by insurance companies with an A.M. Best’s
rating (or its equivalent) of A- or higher.  Upon written request, Alkermes
shall provide Cephalon with a certificate of insurance attesting to such
coverage.  It is understood and
agreed that this insurance shall not be construed to limit Alkermes’ liability
with respect to its indemnification obligations hereunder.

 

ARTICLE
12

DISPUTE RESOLUTION

 

12.1        Disputes.

 

12.1.1     Objective.  The
Parties recognize that disputes, controversies or claims arising out of or
relating to this Agreement or the Supply Agreement (the “Agreements”),
or the interpretation, breach, termination or invalidity thereof (each a “Dispute”),
may from time to time occur during the Term. 
It is the objective of the Parties to establish procedures to facilitate
the resolution of Disputes occurring with respect to any of the Agreements, in
an expedient manner by mutual cooperation and without resort to
litigation.  To accomplish this
objective, the Parties agree to follow the procedures set forth in this Article
12 if and when a Dispute occurs with respect to an Agreement.

 

12.1.2     Resolution
by the JSC and CEOs.  Unless
otherwise specifically recited in the relevant Agreement, any Disputes relating
to the Agreements shall be first referred to the JSC by either Party at any
time after such Dispute has arisen; provided, however, that any Dispute
relating to the scope, validity or enforceability of an Alkermes Patent,
Alkermes Manufacturing Patent, Cephalon Patent or Joint Patent may only be
determined in accordance with Section 12.5 hereof.  If the JSC is unable to resolve such a
Dispute within [**] days of being requested by a Party to do so, unless
otherwise agreed by the Parties, or the JSC is unable to resolve a Dispute
among its members, either Party may present the Dispute to the Chief Executive
Officer (“CEO”)) of each of Alkermes and Cephalon for resolution by
providing a dispute notice (the “Dispute Notice”) to the CEOs and the
other Party.  The Dispute Notice shall
set concisely forth the Dispute, the Parties’ respective positions, and the
specific relief requested.  If the Party
providing the Dispute Notice (the “Complaining Party”) contends that the
dispute is a Reserved Dispute as defined in Section 12.2 below, the Dispute
Notice shall so state.  Within [**] days
after receipt of the Dispute Notice, the other Party (the “Responding Party”)
shall provide a concise written response (the “Response”) to the Dispute
Notice to the CEOs and the Complaining Party. 
If the Responding Party does not agree with the Complaining

 

	
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Party’s contention
regarding whether the Dispute is a Reserved Dispute, the Response shall so
state.  The CEOs shall attempt to resolve
the Dispute within [**] days after their receipt of the Response.  If the Dispute Notice and Response indicate
that the Parties are in disagreement about whether a Dispute is a Reserved
Dispute, the CEOs shall also attempt to resolve that disagreement.  In the event that the CEO’s cannot resolve a
Dispute within this period, unless otherwise agreed by the Parties, [**] and
any other Dispute may be referred by either Party to arbitration in accordance
with Section 12.3 upon written notice to the other Party.  [**].

 

12.2        Reserved
Disputes.  [**].

 

(i)            [**];

 

(ii)           [**];

 

(iii)         [**]:

 

(A)          [**];
and

 

(B)          [**].

 

(iv)          [**]

 

(v)            [**].

 

12.3        Arbitration.  The Parties agree that any Dispute
referred for arbitration by a Party pursuant to Section 12.1 shall be resolved
through binding arbitration in accordance with the CPR Institute for Dispute
Resolution Rules for Non-Administered Arbitration.  Any Dispute in which either Party seeks in
excess of [**] Dollars ($[**]) in damages, or in which any
equitable relief is sought by either Party, shall be resolved by an arbitral
tribunal consisting of three (3) arbitrators, one of whom shall be designated
by each Party in accordance with the screened appointment procedure provided in
CPR Rule 5.4, and a third arbitrator who shall chair the tribunal and who shall
be selected as provided in CPR Rule 5.2. 
Any other Dispute shall be submitted to a sole arbitrator, appointed by
CPR pursuant to CPR Rule 6.  The
arbitrator(s) shall render a written opinion setting forth findings of fact and
conclusions of Law with the reasons therefor stated.  Arbitration pursuant to this Section 12.3
shall be governed by the Federal Arbitration Act, 9 U.S.C. § § 1-16, and
judgment upon the award rendered by the arbitrators may be entered by any court
having jurisdiction thereof.  If Alkermes
has tendered the Dispute for resolution, the arbitration proceedings shall be
conducted in the Commonwealth of Pennsylvania. 
If Cephalon has tendered the Dispute for resolution, arbitration
proceedings shall be conducted in the Commonwealth of Massachusetts.  Each Party shall continue to perform its
obligations under the Agreements pending final resolution of any Dispute unless
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impossible or impracticable
under the circumstances.  The Parties
agree that they shall share equally the cost of arbitration filing and hearing
fees, and the cost of the arbitrators. 
Each Party must bear its own attorney’s fees and associated costs and
expenses.  Unless otherwise specifically
provided herein, the arbitrator(s) shall base his/her decision on the stated
goal of the Parties in entering into this Agreement which is to maximize,
subject to budget constraints set forth herein, the overall profits for the Products,
rather than the value of the Products, or associated profits, for either
individual Party.

 

12.4        Jurisdiction.  For the purposes of this Article 12,
the Parties agree to accept the jurisdiction of the federal courts located in
the State of Delaware for the purposes of enforcing awards entered pursuant to
this Article and for enforcing the agreements reflected in this Article 12.

 

12.5        Determination
of Disputes Relating to Patents and Other Intellectual Property.  Notwithstanding the foregoing, any dispute
relating to the determination of scope, validity or enforceability of an
Alkermes Patent, Alkermes Manufacturing Patent, Cephalon Patent or Joint Patent
shall be submitted exclusively to the federal court having jurisdiction over
the disputed patent.

 

	
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66

 

ARTICLE 13

TERM AND
TERMINATION

 

13.1        Term.  This Agreement shall commence as of the
Effective Date and, unless sooner terminated as provided in this Article 13, shall
continue in effect until the later of (i) the expiration of the last to expire
Valid Claim of an Alkermes Patent or Joint Patent or (ii) fifteen (15) years
from the date of the First Commercial Sale of a Finished Product in the
Territory (such period, the “Term”).

 

13.2        Right to
Terminate for Breach.  Except as
otherwise provided herein, if either Party shall commit a material breach with
respect to any material provision of this Agreement and the other Party shall
have given the breaching Party written notice of such breach, the breaching
Party shall have [**] days to cure such breach. 
If such breach is not cured in all material respects within such [**]
day period, the non-breaching Party shall have the right, upon notice to the
breaching Party and without prejudice to any other rights the non-breaching
Party may have, to terminate this Agreement, unless the breaching Party is in
the process of attempting in good faith to cure such breach, in which case the [**]
day cure period shall be extended by an additional [**] days.

 

13.3        Cephalon’s
Right to Terminate.

 

13.3.1     Termination.  Cephalon shall have the right to
terminate this Agreement at any time by providing one hundred eighty (180) days
prior written notice to Alkermes.

 

13.3.2     Cephalon’s Obligations upon Termination.  In addition to Cephalon’s other obligations
upon termination set forth elsewhere in this Agreement, if Cephalon terminates
this Agreement pursuant to Section 13.3.1:

 

(i)    The
Parties shall, subject to the provisions of this Agreement providing for the
sharing of Shared Expenses, complete, or facilitate the completion (including
the completion of final reports for such studies) of, all ongoing Clinical
Studies and Post Marketing Clinical Trials being conducted by the Parties for
the Territory (without the obligation to enroll any additional patients after
the notice of termination hereunder); provided, however, Cephalon may
complete, or facilitate the completion of, a Clinical Study or Post Marketing
Clinical Trial by ending a Clinical Study or Post Marketing Clinical Trial if
it is medically reasonable to do so, but only after giving Alkermes prior
notice of Cephalon’s intention to end such Clinical Study or Post Marketing
Clinical Trial and providing Alkermes the opportunity to continue the Clinical
Study or Post Marketing Clinical Trial; and

 

(ii)   in
connection with any termination after the commercial launch of the Products in
the Territory, Cephalon shall continue to market and sell the

 

	
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Products in the Territory in accordance with the terms of this
Agreement for a period of [**] calendar months after the effective date of
termination.

 

13.4        Alkermes’
Rights on Termination.

 

13.4.1     License Grant.  If
Alkermes terminates this Agreement pursuant to Section 13.2 hereof, or Cephalon
terminates this Agreement pursuant to Section 13.3 hereof, (i) Alkermes
shall be automatically granted a non-exclusive, worldwide, sublicensable,
perpetual license under the Cephalon Patents and Cephalon Know-How to make,
have made, use, sell, offer for sale and import the Products in the Field; and (ii) all licenses and rights
granted to Cephalon under this Agreement shall terminate subject only to a
non-exclusive license to the extent and for the term necessary to permit the
performance of Cephalon’s obligations pursuant to Sections 13.3 and 13.4.

 

13.4.2     Documents; Contracts, Intellectual Property.  Following the effective date of termination
of this Agreement by Alkermes pursuant to Section 13.2 hereof, or termination
of this Agreement by Cephalon pursuant to Section 13.3 hereof, Cephalon shall
have the following obligations:

 

(i)    Cephalon
shall promptly provide Alkermes with copies of all relevant documentation
regarding Cephalon Patents and Cephalon Know-How, whether written or
electronic, and materials composing Cephalon Know-How, in the form existing as
of the effective date of such termination, reasonably necessary for Alkermes to
exercise its license rights under Section 13.4.1 above.  Such transfer shall be made in a timely and
orderly fashion and in a manner such that the value of what is being
transferred is preserved in all material respects.  In the exercise of its license rights under
Section 13.4.1 above, Alkermes may use and disclose any Confidential
Information of Cephalon contained in such documentation or otherwise furnished
to Alkermes by Cephalon pursuant to this Agreement;

 

(ii)   Cephalon shall promptly transfer and
assign to Alkermes its and its Affiliates’ entire right, title and interest in
and to any copyrights for Promotional Materials and training materials for the
Products in the Territory.  Cephalon will
execute all documents that may be necessary to transfer the title to such
copyrights to Alkermes.  Cephalon shall
also promptly, at Alkermes request, transfer copies of such materials to
Alkermes;

 

(iii) Cephalon shall promptly transfer and
assign to Alkermes its and its Affiliates’ entire right, title, and interest in
and to the Vivitrex Trademark and any Additional Product Trademarks in the
Territory, together with that portion of the good will of the business of
Cephalon and its Affiliates associated with the use of and symbolized by such
trademarks in the Territory and all common law rights in such trademarks in the
Territory.  Cephalon will execute all
documents that may be necessary to perfect the title to such trademarks by
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(iv)  at Alkermes’ written request, Cephalon or
its Affiliates shall promptly assign to Alkermes or its nominee such agreements
as Alkermes designates between Cephalon or its Affiliates and Third Parties
that are freely assignable and relate solely to Development and Commercialization;
and

 

(v)    at Alkermes’ written request, Cephalon
shall promptly transfer to Alkermes Cephalon’s system for responding to medical
questions or inquiries from members of the medical and paramedical professions
and consumers regarding the Products.

 

[**].

 

13.4.3     Cephalon’s
Right to Sell Inventory.  Following
the effective date of termination of this Agreement by Alkermes pursuant to
Section 13.2 hereof, Cephalon and its Affiliates shall have the right to sell
their inventory of the Products for a period of [**] calendar months from the
date of termination; provided, however, that Cephalon shall within [**]
Business Days of the end of each such calendar month pay Alkermes a royalty of [**] percent ([**]%) of Net Sales of such Products during the prior calendar
month, and Cephalon shall comply with the provisions of Sections 9.6.2 and 9.7
through 9.10 hereof.

 

13.5        Cephalon’s
Rights on Termination.  If Cephalon
terminates this Agreement pursuant to Section 13.2 hereof, then:

 

(i)            all
licenses and rights granted to Cephalon under this Agreement shall survive;

 

(ii)           Alkermes
shall provide to Cephalon copies of all relevant documentation regarding
Alkermes Patents and Alkermes Know-How, whether written or electronic, and
materials composing Alkermes Know-How, in the form existing as of the effective
date of such termination, as reasonably necessary for Cephalon to continue to
exercise its license rights under Section 13.5(i) and meet its obligations as
the holder of the NDA pursuant to Section 13.5(iv), and not previously provided
to Cephalon.  Such transfer shall be made
in a timely and orderly fashion and in a manner such that the value of what is
being transferred is preserved in all material respects.  In the exercise of its license rights under
Section 13.5(i) above, Cephalon may use and disclose any Confidential
Information of Alkermes contained in such documentation or otherwise furnished
to Cephalon by Alkermes pursuant to this Agreement;

 

(iii)         Alkermes
shall take all appropriate and necessary actions, including action before the
FDA, to transfer to Cephalon or its designee any Regulatory Approvals, NDAs and
INDs held by or on behalf of Alkermes for the Products, along with all
supporting data and information necessary for Cephalon to continue to prosecute
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(iv)          at Cephalon’s
written request, Alkermes shall assign to Cephalon or its nominee such
agreements between Alkermes or its Affiliates and Third Parties that Cephalon
designates and that are freely assignable and relate solely to Development and
Commercialization;

 

(v)            Alkermes shall
promptly transfer to Cephalon or its designee the common safety database for
both clinical and post-marketing adverse event data for the Products described
in Section 3.5;

 

(vi)          if Cephalon
at the time of such termination does not have the ability to Manufacture the
Products, Alkermes shall continue to Manufacture the Products for Cephalon
pursuant to the provisions of the Supply Agreement until manufacturing
operations for the Products have been transferred to Cephalon pursuant to the
terms set forth in Section 6.3 of the Supply Agreement; and

 

(vii)         [**].

 

13.6        Cephalon’s
Rights on Expiration.  Upon the
expiration of this Agreement, Cephalon shall have a non-exclusive, perpetual,
fully paid-up license, without the right to sublicense, under the Alkermes
Patents and the Alkermes Know-How to use, sell, offer for sale and import the
Products in the Field in the Territory.  If either Party wishes to negotiate terms and
conditions upon which the Parties will continue to collaborate in the
Development, Commercialization or Manufacture of the Products in the Field in
the Territory following the expiration of this Agreement, then such Party shall
notify the other Party and following the other Party’s receipt of such notice,
the Parties shall negotiate in good faith the terms and conditions for such
continued collaboration.

 

13.7        Right to
Terminate upon Bankruptcy.  Either
Party may, in addition to any other remedies available to it by Law or in
equity, terminate this Agreement, in whole or in part as the terminating Party
may determine, by notice to the other Party in the event (i) the other Party
shall have become bankrupt or shall have made an assignment for the benefit of
its creditors; (ii) there shall have been appointed a trustee or receiver for
the other Party or for all or a substantial part of its property; or (iii) any
case or proceeding shall have been commenced or other action taken by or
against the other Party in bankruptcy or seeking reorganization, liquidation,
dissolution, winding-up, arrangement, composition or readjustment of its debts
or any other relief under any bankruptcy, insolvency, reorganization or other
similar act or Law of any jurisdiction now or hereafter in effect, and any such
event shall have continued for [**] days undismissed, unbonded and/or
undischarged.

 

13.8        Survival of
Certain Provisions.  Termination of
this Agreement for any reason or expiration of this Agreement shall not release
either Party from any obligation arising prior to the date of termination.  The rights and obligations under
Sections  3.5,

 

	
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70

 

7.1.2, 7.4.3, 7.4.5 and
7.5 (with respect to the Joint Patents), 9.6.2, 9.7 — 9.10, 13.3.2, 13.4, 13.5,
13.6, and this Section 13.8 and Articles 8, 11, 12 and 14, in each case only in the event and to the
extent applicable and subject to the
terms and conditions stated therein, shall survive any termination or
expiration of this Agreement.  In addition, any other provision required to
interpret and enforce the Parties’ rights and obligations under this Agreement
shall also survive, but only to the extent required for the full performance of
this Agreement.  Any right to
terminate this Agreement, and any rights a Party has under Sections 13.3,
13.4 and 13.5, as applicable, shall be in addition to and not in lieu of all
other rights or remedies that the Party giving notice of termination may have
at Law or in equity or otherwise.

 

ARTICLE 14

GENERAL
PROVISIONS

 

14.1        Notices.  All notices, reports, requests or demands
required or permitted under this Agreement shall be sent by air courier or by
facsimile, with confirmed transmission, properly addressed to the respective
Parties as follows:

 

If to Alkermes:

Alkermes, Inc.

88 Sidney Street

Cambridge, Massachusetts 02139

Attention:  Chief Executive
Officer

Facsimile No.: [**]

 

with a copy to:

 

Alkermes, Inc.

88 Sidney Street

Cambridge, Massachusetts 02139

Attention:  General Counsel

Facsimile No.: [**]

 

If to Cephalon:

Cephalon,
Inc.

41 Moores Road

Frazer, Pennsylvania 19355

Attn:  Chief Executive Officer

Facsimile No.:  [**]

 

	
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with a copy to:

 

Cephalon, Inc.

41 Moores Road

Frazer, Pennsylvania
19355

Attn:  General Counsel

Facsimile No.:  [**]

 

or to such addresses or
addresses as the Parties hereto may designate for such purposes during the
Term.  Notices shall be deemed to have
been sufficiently given or made: (i) if by facsimile with confirmed
transmission, when performed, and (ii) if by air courier upon receipt by the
Party.

 

14.2        Governing
Law.  This Agreement shall be
governed by and construed in accordance with the Laws of the State of Delaware
(other than its choice of law principles).

 

14.3        Entire
Agreement; Amendment.  This
Agreement, together with the Exhibits hereto and the Supply Agreement,
including all consideration and the rights and obligations of the Parties under
such agreements, represents the entire agreement between the Parties regarding
the subject matter hereof and thereof, and there are no prior or
contemporaneous written or oral promises or representations relating to this
subject not incorporated herein.  No
amendment or modification of the terms and conditions of this Agreement shall
be binding on either Party unless reduced to writing referencing this Agreement
and signed by an authorized officer of the Party to be bound.  In the event of a conflict between the
provisions of this Agreement and those of the Supply Agreement, the provisions
of the Supply Agreement shall control.

 

14.4        Binding
Effect and Assignment.  This
Agreement shall be binding upon and inure to the benefit of the Parties hereto
and their respective permitted successors and assigns.  This Agreement shall not be assignable by
either Party without the other’s prior written consent; provided, however,
that either Party may assign this Agreement, without the other Party’s written
consent but after providing [**] days prior notice to the other Party, to an
Affiliate or to any successor pursuant to a sale, license, lease or other
transfer or disposition to such successor of more than fifty percent (50%) of
the assets of such Party; or an acquisition, reorganization, merger,
consolidation, business combination, share exchange or similar transaction or
series of related transactions with such successor that results in an
acquisition by such successor of fifty percent (50%) or more of the voting
control or other ownership interest in such Party.

 

14.5        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
other term or condition hereof.  All
rights, remedies, undertakings, obligations and agreements contained in this
Agreement shall

 

	
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72

 

be cumulative and none of
them shall be in limitation of any other remedy, right, undertaking, obligation
or agreement of either Party.

 

14.6        Severability.
 If any part of this Agreement shall
be found to be invalid or unenforceable under applicable Law in any
jurisdiction, such part shall be ineffective only to the extent of such
invalidity or unenforceability in such jurisdiction, without in any way
affecting the remaining parts of this Agreement in that jurisdiction or the
validity or enforceability of the Agreement as a whole in any other
jurisdiction.  In addition, the part that
is ineffective shall be reformed in a mutually agreeable manner so as to as
nearly approximate the intent of the Parties as possible.

 

14.7        Publicity.  Subject to the further provisions of this
Section 14.7, neither Party shall originate any written publicity, news release
or public announcement, whether to the public or press, concerning this
Agreement or the Supply Agreement other than such announcements that are
required to be made by Law (or the applicable rules of any securities exchange
or market on which a Party’s securities are listed or traded) or that are
otherwise agreed by the Parties or expressly permitted under this Agreement or
the Supply Agreement.  An approved press
release announcing this Agreement is attached hereto as Exhibit F.  Routine references to this Agreement, the
Supply Agreement and the arrangements hereunder and thereunder shall be allowed
in the usual course of a Party’s business. 
Once information has been approved for disclosure or publication under
this Section 14.7, either Party may use such approved information in written
publicity, news releases, public announcements and other future communications
with Third Parties.  If a Party decides
to make an announcement or any filing with a governmental agency or securities
exchange or market as required by Law or the applicable rules of any securities
exchange or market on which a Party’s securities are listed or traded, it will
give the other Party at least [**] days advance notice, where possible, of the
text of the announcement or content of the filing so that the other Party will
have an opportunity to comment upon the announcement or filing.  To the extent that the non-disclosing Party
reasonably requests that any information in the materials proposed to be
disclosed be maintained as confidential, the disclosing Party shall use
commercially reasonable efforts to request confidential treatment of such
information, except to the extent that the disclosing Party receives advice
from its legal counsel that such information is required to be disclosed under
applicable Laws.

 

14.8        Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original for all purposes, but
all of which together shall constitute one and the same instrument.

 

14.9        Force
Majeure.  Neither Party shall be held
liable or responsible to the other Party or be deemed to have breached or
defaulted under this Agreement for failure or delay in performing its
obligations hereunder (except for payment of money) to the extent, and as long
as, such failure or delay is caused by or results from causes beyond the
reasonable control of the affected Party (a “Force Majeure Delay”),
including fire, floods, embargoes, war, insurrections, riots, civil commotions,
terrorism,

 

	
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73

 

strikes, lockouts or
other labor disturbances, sabotage, acts of God, failure or delay of
transportation, prevention from or hindrance in obtaining energy or other
utilities, omissions or delays in acting by any governmental authority, acts of
a government or agency thereof or judicial orders or decrees.  In the event of a Force Majeure Delay, the
affected Party shall give prompt notice thereof to the other Party, shall use
commercially reasonable efforts to mitigate the adverse consequences thereof
and shall resume performance hereunder with dispatch whenever the consequences
of the Force Majeure Delay have been mitigated; provided, however, in no
event shall a Party be required to settle any labor dispute or disturbance.

 

14.10      Ambiguities.  Ambiguities, if any, in this Agreement
shall not be construed against any Party, irrespective of which Party may be
deemed to have authorized the ambiguous provision.

 

14.11      Headings.  Headings are for the convenience of
reference only and shall not control the construction or interpretation of any
of the provisions of this Agreement.

 

14.12      No
Partnership.  Nothing in this
Agreement is intended or shall be deemed to constitute a partnership, agency,
or joint venture relationship between the Parties.  Notwithstanding any of the provisions of this
Agreement, neither Party shall at any time enter into, incur, or hold itself
out to Third Parties as having authority to enter into or incur, on behalf of
the other Party, any commitment, expense, or liability whatsoever.

 

14.13      Use of Names,
Trade Names and Trademarks.  Except
as expressly provided in this Agreement or the Supply Agreement neither Party
shall have the right to use in advertising, publicity, other promotional
activities or otherwise any name, trade name, trademark, corporate logo or
other designation of the other Party hereto or its Affiliates or sublicensees,
including any contraction or abbreviation of any of the foregoing, unless the
express written permission of such other Party has been obtained.

 

14.14      Performance by
an Affiliate.  Each of Cephalon and
Alkermes acknowledge that obligations under this Agreement may be performed by
Affiliates of Cephalon and Alkermes. 
Each of Cephalon and Alkermes guarantee performance of this Agreement by
its Affiliates, notwithstanding any assignment to Affiliates in accordance with
Section 14.4 of this Agreement.

 

14.15      Non-Solicitation of Employees. 
During the [**] year period following the Effective Date, neither Party
shall, directly or indirectly, recruit or solicit any employee of the other
Party or any of such other Party’s Affiliates if such employee has been
materially involved in the performance of this Agreement or the Supply
Agreement, except pursuant to general solicitations not targeted at such
employees.

 

	
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74

 

[Signature
page follows]

 

	
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75

 

IN WITNESS WHEREOF, each
of the Parties has caused this Agreement to be executed and delivered by its
duly authorized representatives to be effective as of the date set forth above.

 

	
  ALKERMES,
  INC.

  	
   

  	
  CEPHALON,
  INC.

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Michael J. Landine

  	
   

  	
   

  	
  By:

  	
  /s/ J. Kevin Buchi

  	
   

  
	
  Name: Michael J.
  Landine

  	
   

  	
  Name: J. Kevin Buchi

  
	
  Title: Vice President, Corporate

  Development

  	
   

  	
  Title: Senior Vice President and Chief

  Financial Officer

  
							

 

	
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76

 

Exhibit A

 

Alkermes Patents

 

[**]

	
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Exhibit B

 

Alkermes Manufacturing Patents

 

[**]

 

	
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Exhibit
C

 

Vivitrex Trademark and Medisorb Trademark

 

	
  VIVITREX

  	
   

  	
  Registered

  	
   

  	
  US Registration No. 2,660,659

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  VIVITREX and Design

  	
   

  	
  Pending

  	
   

  	
  US Application No. 76544129

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  MEDISORB

  	
   

  	
  Registered

  	
   

  	
  US Registration No. 2,217,667

  

 

	
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Exhibit
D

 

Development Plan for Calendar Years 2005 and 2006

 

 

[**]

 

	
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Exhibit E

 

[**]

 

	
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Exhibit
F

 

Press Release

 

Filed as Exhibit 99.1 to
the Company’s Current Report on Form 8-K dated June 29, 2005

 

	
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