Collaboration Agreement

Exhibit 10.17(c)


Dated 27th November 2000


CEPHALON INC


and


NOVARTIS AG


---------------------------------------------


COLLABORATION AGREEMENT


----------------------------------------------


CMS Cameron McKenna
Mitre House
160 Aldersgate Street
London EC1A 4DD


T +44(0)20 7367 3000
F +44(0)20 7367 2000


Doc Ref: (51771728.05)


**Certain portions of this exhibit have been omitted based upon a request for confidential treatment that has been filed with the Commission. The omitted portions have been filed separately with the Commission.


Table of Contents


1. Definitions and Interpretation..............................................1 2. The Collaboration...........................................................7 3. Ancillary Agreements and Obligations........................................8 4. Collaboration Committee.....................................................8 5. Executive Committee........................................................11 6. Disputes...................................................................12 7. Operating Committee........................................................13 8. Finance and Accounting Matters.............................................14 9. Supply of Product..........................................................16 10. Warranties................................................................16 11. Indemnity.................................................................18 12. Special Payments..........................................................20 13. Force Majeure.............................................................23 14. Term and Termination......................................................24 15. Confidential information..................................................25 16. Competition Restrictions..................................................26 17. Medical Information and Reporting.........................................27 18. Notices...................................................................28 19. Relationship of Parties...................................................29 20. Waiver....................................................................29 21. Severability..............................................................30 22. Third Party Rights........................................................30 23. Governing Law.............................................................30 24. Transmission of Rights....................................................31 25. Whole Agreement...........................................................31 26. Variations................................................................31 27. Costs.....................................................................31 28. Publicity.................................................................31 29. Counterparts..............................................................32


Schedule 1....................................................................34


Calculation and Allocation of Collaboration Profits......................34


Schedule 2....................................................................36


The Products.............................................................36


**Certain portions of this exhibit have been omitted based upon a request for confidential treatment that has been filed with the Commission. The omitted portions have been filed separately with the Commission.


Schedule 3....................................................................38


Trade Marks..............................................................38


Schedule 4....................................................................39


Collaboration Plan............................................................39


Schedule 5....................................................................40


Supply and Distribution of Novartis Products.............................40


Schedule 6....................................................................48


Part I - Collaboration Committee.........................................48
Part II - Executive Committee............................................48


Schedule 7....................................................................49


Special Payments ...................................Error! Bookmark not defined.


Schedule 8 Cephalon Licence Fee Payment.......................................50


**Certain portions of this exhibit have been omitted based upon a request for confidential treatment that has been filed with the Commission. The omitted portions have been filed separately with the Commission.


THIS AGREEMENT is made on 27th November 2000


BETWEEN


(1) CEPHALON, INC. a company incorporated in Delaware, USA whose principal
office is at 145, Brandywine Parkway, West Chester, 19380-4245,
Pennsylvania, USA ("C. Inc"); and


(2) NOVARTIS AG a company incorporated in Basel Switzerland whose principal
office is at Lichtstrasse 35 CH-4056 Basel Switzerland ("NAG").


WHEREAS


(A) The parties hereto or their Affiliates are engaged in the manufacture,
marketing, distribution and sale of pharmaceutical products.


(B) By a Licence of even date herewith, NAG will license to C. Inc for a
period of 10 (ten) years the Trademarks and Product Licences relating to
the Novartis Products.


(C) The parties wish to collaborate directly and through their respective
Affiliates in the promotion and sale of certain products of each of them.


NOW IT IS AGREED as follows:-


1. Definitions and Interpretation


1.1 In this Agreement the following terms shall have the following meanings:


"Affiliate" means any company, partnership or other entity which directly
or indirectly Controls, is Controlled by or is under common Control with
the Party in question including as a Subsidiary or Holding Company;


"Agreement" means this agreement and any and all schedules, appendices and
other addenda to it as may be varied from time to time in accordance with
the provisions of this Agreement.


1


**Certain portions of this exhibit have been omitted based upon a request for confidential treatment that has been filed with the Commission. The omitted portions have been filed separately with the Commission.


"Annual Operating Plan" means the budget and operating plan of the
Collaboration in respect of any particular financial year;


"Cephalon" means C. Inc or any of its Affiliates as the context may
require;


"Cephalon Product" means the product listed in Part I of Schedule 2
together with such additions as the Parties may agree in writing to add to
the Collaboration from time to time;


"Collaboration" means the collaboration between Cephalon and Novartis
pursuant to the Collaboration Agreements for the promotion, marketing and
sale of the Products in the Territory;


"Collaboration Agreements" means this Agreement, the Licence, the
Distribution Agreement and the Managed Services Agreement;


"Collaboration Committee" or "CC" means the committee to be established
pursuant to Clause 4.1 hereof;


"Collaboration Plan" means the financial plan for the Collaboration set
out in Schedule 4 or the same as from time to time amended with the
agreement of the Collaborators.


"Collaborator" means Cephalon or Novartis as the case may be.


"Commencement Date" means 1 January 2001;


"Control" means the ownership(direct or indirect) of more than 50% of the
issued share capital, or the legal power to direct or cause the direction
of the general management and policies of the Party in question and
"Controlled" and "Controller" shall be construed accordingly;


"Cost of Goods" means the cost of goods determined as per Schedule 1;


2


**Certain portions of this exhibit have been omitted based upon a request for confidential treatment that has been filed with the Commission. The omitted portions have been filed separately with the Commission.


"Distribution Agreement" means the Agreement in the agreed terms for the
supply and distribution of the Cephalon Product to be entered into
pursuant to Clause 2;


"Executive Committee" or "EC" means the committee to be established
pursuant to Clause 5 hereof;


"Force Majeure" means in relation to any Party any event or circumstance
which is beyond the reasonable control of that Party which event that
Party could not reasonably be expected to have taken into account at the
date of this Agreement including acts of God, war, riot, civil commotion,
any overriding emergency, fire, flood, storm and industrial dispute (other
than industrial dispute affecting only the employees of the Party
suffering the event of force majeure or any of its agents or
subcontractors);


"Good Manufacturing Practice" or "GMP" means the regulatory standards and
principles and guidelines of good manufacturing practice in effect from
time to time relating to the manufacture of medicinal products including,
without limitation, standards for equipment, facilities, production and
quality control established by the applicable Governmental or Regulatory
Authority;


"Governmental or Regulatory Authority" means any local or national agency,
authority, department, court, tribunal, arbitrator, inspectorate,
minister, ministry official or public or statutory person (whether
autonomous or not) of, or of any government of, any country having
jurisdiction over this Agreement or any of the Parties or any of the
Products or in respect of the regulation of medicinal products in the
Territory including the European Commission and the European Court of
Justice;


"IAS" means the international generally accepted accounting principles;


"Insolvency Event" means in relation to any Party any one of the
following:-


(a) a notice shall have been issued to convene a meeting for the purpose
of passing a resolution to wind up that Party or such a resolution
shall have


3


**Certain portions of this exhibit have been omitted based upon a request for confidential treatment that has been filed with the Commission. The omitted portions have been filed separately with the Commission.


been passed other than a resolution for the solvent reconstruction
or reorganisation of that Party; or


(b) a resolution (other than a resolution for the solvent reconstruction
or reorganisation of that Party) shall have been passed by that
Party's Directors to seek a winding up or administration order or a
petition for a winding up or administration order shall have been
presented against that Party or such an order shall have been made;
or


(c) a receiver, administrative receiver, receiver and manager, interim
receiver, custodian, sequestrator or similar officer is appointed in
respect of that Party or over a substantial part of its assets or
any third party takes steps to appoint such an officer in respect of
that Party or an encumbrancer takes steps to enforce or enforces its
security; or


(d) a proposal for a voluntary arrangement shall have been made in
relation to that Party under Part I Insolvency Act 1986; or


(e) a step or event shall have been taken or arisen outside the
Territory which is similar or analogous to any of the steps or
events listed above; or


(f) that Party suspends or threatens to suspend making payments to all
or some of that Party's creditors or the Party submits to any type
of voluntary arrangement; or


(g) where that Party is resident in the Territory it is deemed to be
unable to pay its debts within the meaning of Section 123 Insolvency
Act 1986;


"Licence" means the Licence of even date between NAG and C. Inc under
which NAG licenses to C.Inc the Trademarks and Product Licences to the
Novartis Products for a period of up to 10 (ten) years;


"Managed Services Agreement" means the Agreement in the agreed terms for
the provision of certain services to the Collaboration by Cephalon to be
entered into pursuant to Clause 2;


4


**Certain portions of this exhibit have been omitted based upon a request for confidential treatment that has been filed with the Commission. The omitted portions have been filed separately with the Commission.


"Net Profit" means Net Sales less the Cost of Goods and other items
customarily subtracted in accordance with IAS and agreed by the CC;


"Net Sales Revenue" means in relation to the Products the aggregate amount
of sales to third parties represented by invoices and/or other sales
documentation prepared or presented by or on behalf of Novartis
facilitating or making sales of Products on its own behalf or on behalf of
Cephalon but less the following amounts:-


i) discounts, including cash discounts, trade allowances or
rebates actually allowed or granted; and,


ii) credits or allowances actually granted upon claims or returns,
regardless of the party requesting the return in accordance
with criteria agreed between the Collaborators;


"Novartis" means NAG or any of its Affiliates as the context may require;


"Novartis Products" means the Products listed in Part II of Schedule 2
together with such additions as the Parties may agree in writing to add to
the Collaboration from time to time;


"Operating Committee" or "OC" means the committee to be established
pursuant to Clause 7.1 hereof;


"Party" means C. Inc or NAG (or their respective successors) and "Parties"
shall mean both of them;


"Products" means the Cephalon Product and the Novartis Products taken
together;


"Product Licence" means the authorisation for the sale and marketing of a
Product in the Territory granted by a Governmental or Regulatory Authority
as may be varied from time to time by Cephalon in the case of Cephalon
Products or Novartis in the case of the Novartis Products;


5


**Certain portions of this exhibit have been omitted based upon a request for confidential treatment that has been filed with the Commission. The omitted portions have been filed separately with the Commission.


"Rights" means all or any copyright, design right, trademarks, tradenames,
patents, know how, trade secrets and other intellectual property or other
proprietary rights which may at any time subsist throughout all or any
part of the world whether registered or otherwise including, without
limitation the Trademarks and all extensions and renewals thereof;


"SKU" means stock keeping unit;


"Specification" means the specification for a Product set out in the
relevant Product Licence;


"Subsidiaries" or "Holding Company" has the meaning ascribed to those
expressions by Section 736 of the Companies Act 1985 as amended;


"Term" means the period of [**] from the Commencement Date;


"Territory" means the United Kingdom together (in the case of the Cephalon
Product only) with the Republic of Ireland or as may be agreed between the
parties from time to time;


"Trademarks" means the registered trademarks for the Products set out in
Schedule 3;


"Working Day" means a day other than a Saturday, Sunday, bank or other
public holiday in the United Kingdom, the USA or Switzerland;


1.2 In this Agreement:


1.2.1 unless the context otherwise requires all references to a particular
Clause, Schedule or paragraph shall be a reference to that Clause,
Schedule or paragraph, in or to this Agreement as it may be amended
from time to time pursuant to this Agreement;


1.2.2 the table of contents and headings are inserted for convenience only
and shall be ignored in construing this Agreement;


6


**Certain portions of this exhibit have been omitted based upon a request for confidential treatment that has been filed with the Commission. The omitted portions have been filed separately with the Commission.


1.2.3 unless the contrary intention appears words importing the masculine
gender shall include the feminine and vice versa and words in the
singular include the plural and vice versa;


1.2.4 unless the contrary intention appears words denoting persons shall
include any individual, partnership, company, corporation, joint
venture, trust, association (incorporated or unincorporated),
organisation or other entity, in each case whether or not having
separate legal personality;


1.2.5 reference to any statute or regulation includes any modification or
re-enactment of that statute or regulation; and


1.2.6 reference to the words "include" or "including" are to be construed
without limitation to the generality of the preceding words.


2. The Collaboration


2.1 The Parties hereby establish the Collaboration and agree to collaborate in
accordance with the terms of this Agreement, the Licence, the Distribution
Agreement and the Managed Services Agreement to promote, market, sell, and
distribute the Products in the Territory.


2.2 Both Parties shall use and shall procure that their Affiliates shall use
all reasonable endeavours (subject to provisions of any of the
Collaboration Agreements) to promote the business and operations of the
Collaboration in accordance with the best interests of the Collaboration
from time to time and to further the marketing and sale of the Products in
the Territory in accordance with the Collaboration Plan.


2.3 C. Inc hereby undertakes with Novartis to perform and/or to procure the
due performance by its Affiliates of all obligations and the due
compliance by its Affiliates with all limitations under or pursuant to the
Collaboration Agreements and to indemnify NAG and its relevant Affiliates
against all claims damages losses liabilities penalties and expenses
arising from any breach by any of C. Inc's Affiliates of their obligations
as aforesaid.


7


**Certain portions of this exhibit have been omitted based upon a request for confidential treatment that has been filed with the Commission. The omitted portions have been filed separately with the Commission.


2.4 NAG hereby undertakes with Cephalon to perform and/or to procure the due
performance by its Affiliates of all obligations and the due compliance by
its Affiliates with all limitations under or pursuant to the Collaboration
Agreements and to indemnify C. Inc and its relevant Affiliates against all
claims, damages, losses, liabilities, penalties and expenses arising from
any breach by any of NAG's Affiliates of the obligations as aforesaid.


2.5 The liability of a Party under Clauses 2.3 or 2.4 shall not be discharged
or impaired by any amendment to or variation of any agreement any release
of or granting of time or other indulgence to any of its Affiliates or any
third party or any other act, event or omission which but for this Clause
would operate to impair or discharge the liability of such Party under
this Clause.


3. Ancillary Agreements and Obligations


3.1 Upon the execution hereof the Parties shall execute the Licence and shall
procure their relevant Affiliates to enter into the Distribution Agreement
and the Managed Services Agreement.


3.2 In the event of any conflict between the provisions of this Agreement and
any other of the Collaboration Agreements, the provisions of this
Agreement shall prevail.


3.3 The Parties agree that the provisions of Schedule 5 will govern the
obligations of the Parties in relation to the sale, promotion, marketing
and distribution of the Novartis Products in the Territory.


4. Collaboration Committee


4.1 The Parties shall establish a Collaboration Committee ("CC") which shall
be charged with the management and administration of the Collaboration and
the promotion, distribution and sale of the Products in the Territory. The
CC shall have the responsibility to take all decisions as to the marketing
of the Products, their manufacture and distribution, the approval of the
Annual Operating Plan


8


**Certain portions of this exhibit have been omitted based upon a request for confidential treatment that has been filed with the Commission. The omitted portions have been filed separately with the Commission.


pursuant to Clause 7 and the setting of annual budgets and forecasts for
the Collaboration and shall have full authority and discretion with
respect to the management of the Collaboration, subject to (i) the
authority of the EC in certain matters as set out in Clause 5 and (ii) the
budget for the first three years of the Collaboration being set out in
Schedule 4 hereto.


4.2 The CC shall comprise six members of whom three shall be appointed by each
of Cephalon ("Cephalon Members") and Novartis ("Novartis Members"). The
initial CC members shall be those persons listed in Schedule 6 Part I.


4.3 A Party may remove any CC Member appointed by it and appoint any person in
his place. Any appointment or removal shall be in writing signed by the
appointing Party and shall take effect (unless the appointment or removal
specifies to the contrary) upon delivery to the other Party of the
appropriate notice. The Parties shall procure that the persons appointed
to the CC shall be suitably qualified and experienced to carry out the
responsibilities thereof as set out herein in a competent and professional
manner.


4.4 The provisions of this Clause 4.4 shall apply to meetings of the CC:


4.4.1 No business shall be transacted at any meeting of the CC unless at
least one member appointed by Cephalon and one member appointed by
Novartis is present. The Cephalon Members shall collectively have
one vote and the Novartis Members shall collectively have one vote
and in the event that the Cephalon Members or the Novartis Members
shall not agree as to which way to exercise their respective
collective vote they shall be deemed to have voted against the
proposed resolution in question;


4.4.2 A resolution of the CC shall be binding on the Parties if approved
by the collective vote of the Cephalon Members present and the
collective vote of the Novartis Members present and reflected in
minutes of the relevant meeting signed by a Cephalon Member and a
Novartis Member;


9


**Certain portions of this exhibit have been omitted based upon a request for confidential treatment that has been filed with the Commission. The omitted portions have been filed separately with the Commission.


4.4.3 Meetings of the CC shall take place alternately at premises
nominated by Cephalon and premises nominated by Novartis. It shall
be the responsibility of the Party at whose premises a meeting is to
take place to prepare and issue a notice of meeting, agenda and
minutes of the meeting and to nominate the Chairman of the meeting;


4.4.4 Not less than 5 Working Days' notice of any meeting of the CC
(including a detailed agenda) shall be given to each of the CC
Members unless such notice is waived by all the CC Members.


4.5 Any CC Member may participate in a meeting of the CC by means of a
conference telephone, video link or similar communicating equipment
whereby all persons participating in the meeting can hear each other.
Resolutions and decisions of the kind normally made or taken at a physical
meeting of the CC can accordingly be so made or taken in circumstances
where none or only some of the CC Members are physically present with each
other. Such a meeting shall be deemed to take place where the largest
group of those participating is assembled, or, if there is no such group,
where the chairman of the meeting is.


4.6 A meeting of the CC shall be held on a quarterly basis (unless otherwise
agreed) for the purpose, without limitation, of:


(i) reviewing all financial information and reports provided under
Clause 7.2 during or in respect of the previous quarterly period or
in respect of any accounting period terminating at the end of that
period;


(ii) reviewing the cash flow and funding position of the Collaboration
during such quarterly period and considering, and if thought fit,
approving any measures necessary for easing any adverse situation in
the ensuing periods;


(iii) reviewing and approving the Annual Operating Plan for the
Collaboration for the following year presented by the Operating
Committee pursuant to Clause 7.2; and


(iv) reporting to the Executive Committee in respect of the above
matters.


10


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