Contract

Exhibit 10.2

EXECUTION VERSION

CERTAIN MATERIAL (INDICATED BY AN ASTERISK) HAS BEEN OMITTED FROM THIS DOCUMENT PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

Dated 11 September 2014

Xx. Xxxx Pharma GmbH

- and -

Salix Pharmaceuticals, Inc.

FIRST AMENDMENT TO LICENSE AGREEMENT

(Budesonide)

THIS FIRST AMENDMENT TO LICENSE AGREEMENT is made to be effective as of the 11th day of September, 2014

BETWEEN:

(1) Xx. Xxxx Pharma GmbH, a company organized under the laws of Germany, with its principal offices at Xxxxxxxxxxxxxxxxxx 0, 00000 Xxxxxxxx, Xxxxxxx (“Xxxx”); and

(2) Salix Pharmaceuticals, Inc., a company incorporated in the State of California whose principal place of business is 0000 Xxxxxxxxx Xxxxxx Xxxxx, Xxxxxxx, Xxxxx Xxxxxxxx 00000, X.X.X. (“Salix”).

WHEREAS:

(a) Xxxx and Salix are parties to that certain License Agreement, dated 13 March 2008 (the “Original Agreement”);

(b) Xxxx and Salix are parties to litigation, Civil Action No. 12-cv-1104-GMS (D. Del.), with Lupin Limited and Lupin Pharmaceuticals, Inc. relating to Salix’s APRISO® product (the “Litigation”);

(c) Xxxx and Salix desire to settle the Litigation and in connection therewith to grant to Lupin Ltd. (as hereinafter defined) the right to distribute the Foam Product (as such term is defined in the Original Agreement) in Canada; and

(d) In order to effect the afore-described arrangements, Xxxx and Salix wish to expand the territory covered by the Original Agreement to include Canada and in connection therewith to make certain modifications to the arrangements set forth in the Original Agreement;

NOW THEREFORE, in consideration of the foregoing premises and other good and valuable consideration, the sufficiency and receipt of which is hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

1.	DEFINITIONS

1.1.

In this First Amendment the following definitions shall apply unless the context requires otherwise:

“Applicable Laws” means the applicable laws, rules and regulations that may be in effect from time to time.

1.2.

Terms defined in the Original Agreement or in Clause 2 of this First Amendment are used in this First Amendment with the same meanings accorded to them in the Original Agreement (as amended by Clause 2, if relevant) or in Clause 2, as the case may be.

2.	AMENDMENTS TO DEFINITIONS IN ORIGINAL AGREEMENT

2.1.

Clause 1.1 of the Original Agreement is amended by adding at the end thereof the following definitions:

2.1.1.

“Agreement” shall mean this License Agreement as from time to time amended in accordance with the provisions of Clause 23 hereof.

2.1.2.

“Authorized Generic” shall mean any product that (i) contains the Compound, including without limitation Product, (ii) is approved for distribution in the United States under or pursuant to any NDA filed by or on behalf of Xxxx or Salix in respect of such product, and (iii) is distributed without the trademark used by Xxxx and/or Salix for purposes of distribution and sale of the branded version of the product.

2.1.3.

“Canada Term” shall commence on the First Amendment Date and continue in respect of each Product until whichever is the later of: (a) the Patent Expiry Date (Canada) as applicable to such Product or (b) the seventeenth (17th) anniversary of the Launch of such Product, but subject always to earlier termination under Clause 17.

2.1.4.

“Canada Territory” shall mean Canada.

2.1.5.

“First Amendment” shall mean that certain First Amendment to License Agreement, dated the First Amendment Date, between Xxxx and Salix, as the same may be amended from time to time in accordance with the provisions of the said document.

2.1.6.

“First Amendment Date” shall mean 11 September 2014.

2.1.7.

“Generics Manufacturer” shall mean any Third Party that as a material part of its business markets or sells Generic Products anywhere in the world or has any Affiliate that does so.

2.1.8.

“Generic Product” shall mean a product that gains marketing approval without de novo evidence of safety and efficacy, such as through an abbreviated new drug application (ANDA) as defined in 21 U.S.C. 355(j) or an application submitted pursuant to 21 U.S.C. 355(b)(2) or an application submitted pursuant to equivalents of such statutory provisions in jurisdictions other than the United States.

2.1.9.

“Lupin Atlantis” shall mean Lupin Atlantis Holdings S.A., a Swiss company.

2.1.10.

“Lupin Canada Distribution Agreement” shall mean that certain Distribution Agreement (Canada), dated the First Amendment Date, between Salix and Lupin Atlantis.

2.1.11.

“Lupin Ltd.” shall mean Lupin Limited, an Indian corporation.

2.1.12.

“Lupin Parties” shall mean, collectively, Lupin Atlantis, Lupin Ltd., and Lupin Pharma.

2.1.13.

“Lupin Pharma” shall mean Lupin Pharmaceuticals, Inc., a Virginia corporation.

2.1.14.

“Lupin Settlement Agreement” shall mean that certain Settlement Agreement, dated the First Amendment Date, between Xxxx, Salix, Lupin Ltd., and Lupin Pharma.

2.1.15.

“Lupin Sublicense Agreement” shall mean that certain Sublicense Agreement (Apriso®), dated the First Amendment Date, between Xxxx, Salix, Lupin Ltd., and Lupin Pharma.

2.1.16.

“Patent Expiry Date (Canada),” in respect of each Product, shall mean the date on which such Product shall cease to be the subject of any Valid Claim in any Xxxx Patents in the Canada Territory.

2.1.17.

“Patent Expiry Date (U.S.),” in respect of each Product, shall mean the date on which such Product shall cease to be the subject of any Valid Claim in any Xxxx Patents in the United States Territory.

2.1.18.

“Salix COGS” has the meaning set forth in Schedule A to the First Amendment.

2.1.19.

“Sublicense Revenue” shall mean all payments directly or indirectly by or on behalf of a Sublicensee to Salix or its Affiliates relating to, or resulting from, in either case directly or indirectly, an arrangement respecting a Sublicense in respect of the Canada Territory, including

(a) all upfront and other payments payable to Salix upon execution of such a Sublicense with a Sublicensee in respect of Salix’s rights hereunder;

(b) all development, regulatory, commercialization or other milestone payments for milestones under any such Sublicense;

(d) all payments to Salix for the supply of a Product for purposes of its Exploitation under such Sublicense;

(e) all payments to Salix under any such Sublicense for the reimbursement of research and development costs incurred by Salix;

(f) the fair market value of any equity securities issued in respect of any such Sublicense to Salix that exceeds any amount paid by Salix for such securities;

(g) the amount by which any amount paid by a Sublicensee to Salix for equity securities issued to such Sublicensee in respect of any such Sublicense exceeds the fair market value of such equity securities;

(h) all royalties, profit share payments, distribution fees, and other payments under such Sublicense based on the sales of Products; and

(i) the fair market value of any other form of consideration paid to Salix by a Sublicensee for such a Sublicense,

but excluding in all cases Salix COGS to procure or Manufacture a Product for which payments under Clause (d) above are made to Salix and Salix’s actual cost to perform activities in and specifically for the sublicensed territory for which payments under Clause (e) above are made to Salix. The amount of Sublicense Revenue for any Quarter shall be reduced by any amount of Sublicense Revenue previously received by Salix that Salix is required to return or refund to the payor thereof during such Quarter.

2.1.20.

“Sublicensee” shall mean any Third Party who is granted a Sublicense and, for the avoidance of doubt, shall include Lupin Atlantis in its capacity as Salix’s counterparty for the Lupin Canada Distribution Agreement.

2.1.21.

“United States Term” shall commence on the Effective Date and continue in respect of each Product until whichever is the later of (a) the Patent Expiry Date (U.S.) as applicable to such Product or (b) the seventeenth (17th) anniversary of the Launch of such Product, but subject always to earlier termination under Clause 17.

2.1.22.

“United States Territory” shall mean the United States of America and its territories and possessions and the commonwealth of Puerto Rico.

2.2.

The definition of “ANDA Date” contained in Clause 1.1 of the Original Agreement is amended by replacing the term “Territory” with the term “United States Territory.”

2.3.

The definition of “Approval” contained in Clause 1.1 of the Original Agreement is amended by replacing the acronym “USA” with the term “United States Territory.”

2.4.

The definition of “Xxxx Patents” contained in Clause 1.1 of the Original Agreement is amended to read in its entirety as follows:

“Xxxx Patents” shall mean, (a) insofar as the context relates to the Canada Territory (but without thereby limiting Clause (b)), any Patent in the name of Xxxx or any Xxxx Affiliate existing at any time during the Canada Term relating in any manner to the Exploitation of the Compound in any formulation (including any foam or oral formulation and whether alone or in combination with any other Compound) in the Canada Territory and, (b) insofar as the context relates to the United States Territory (but without thereby limiting Clause (a)), any Patent in the name of Xxxx or any Xxxx Affiliate existing at any time during the United States Term, including the Patents listed in Schedule 1, relating in any manner to the Exploitation of the Compound in any formulation (including any foam or oral formulation and whether alone or in combination with any other Compound) in the United States Territory.

2.5.

The definition of “Launch” contained in Clause 1.1 of the Original Agreement is amended by replacing the term “Territory” with the term “United States Territory.”

2.6.

The definition of “Market Assumption” contained in Clause 1.1 of the Original Agreement is amended by replacing term “Territory” with the term “United States Territory.”

2.7.

The definition of “Net Sales” contained in Clause 1.1 of the Original Agreement is amended as follows:

2.7.1.

The clause beginning with “shall mean” and ending with “following items” contained in the said definition is amended to read in its entirety as follows:

shall mean gross amounts invoiced in respect of sales to Third Parties of such Product, in the United States Territory, by Salix, its Affiliates or Sublicensees and, in the Canada Territory, by Salix or its Affiliates (but not by Sublicensees), less the following items:

2.7.2.

The following provision shall be added at the end thereof:

For the avoidance of doubt, no sales of a Product that give rise to, or are made pursuant to arrangements involving, Sublicense Revenue that is shared between Xxxx and Salix pursuant to Clause 3.3 shall constitute or be included in Net Sales.

2.8.

The definition “Patent Expiry Date” contained in Clause 1.1 of the Original Agreement is deleted.

2.9.

The definition of “Product” contained in Clause 1.1 of the Original Agreement is amended to read in its entirety as follows:

“Product” shall mean any formulation of the Compound (alone or in combination with another active ingredient) in the Field the Exploitation of which, (a) in respect of the Canada Territory, falls within any Valid Claim of the Xxxx Patents in the Canada Territory and, (b) in respect of the United States Territory, falls within any Valid Claim of the Xxxx Patents in the United States Territory, and in both cases ((a) and (b)) shall include the Foam Product and the Oral Product, as the context may require.

2.10.

The definition of “Sublicense” contained in Clause 1.1 of the Original Agreement is amended to read in its entirety as follows:

“Sublicense” shall mean (a) a sublicense granted by Salix to a Third Party of the rights granted under Clause 2.1 or (b) the Lupin Canada Distribution Agreement. For the avoidance of doubt, (a) except for the Lupin Canada Distribution Agreement and the arrangements contemplated thereby, the appointment by Salix of any distributor, wholesaler or dealer of a Product shall not be a Sublicense; and (b) the appointment of a manufacturer to manufacture a Product for or on behalf of Salix shall not be deemed a Sublicense.

2.11.

The definition of “Term” contained in Clause 1.1 of the Original Agreement is amended to read in its entirety as follows:

“Term” shall mean the Canada Term and the United States Term or either of them. When the context so requires, Term shall be understood to mean the later to expire of the Canada Term and the United States Term.

2.12.

The definition of “Territory” contained in Clause 1.1 of the Original Agreement is amended to read in its entirety as follows:

“Territory” shall mean the Canada Territory and the United States Territory or either of them.

2.13.

The definition of “Third Party Patents” contained in Clause 1.1 of the Original Agreement is amended by replacing the term “Territory” with the term “United States Territory.”

2.14.

The definition of “Valid Claim” contained in Clause 1.1 of the Original Agreement is amended to read in its entirety as follows:

“Valid Claim” shall mean, (a) in respect of the Canada Territory, a claim of any issued and unexpired Patent in the Canada Territory and, (b) in respect of the United States Territory, a claim of any issued and unexpired Patent in the

United States Territory, in each case ((a) and (b)) which has not been held permanently revoked, 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 admitted to be invalid or unenforceable through reissue or disclaimer or otherwise.

3.	LICENSE GRANT

3.1.

Clause 2.1 of the Original Agreement is amended to read in its entirety as follows:

2.1 Xxxx grants to Salix:

2.1.1 from the Effective Date for the United States Term in respect of the Xxxx Patents, the Xxxx IP and the Xxxx Product Data the sole and exclusive royalty bearing right and license to use the same and to develop, use and Exploit Products in the Field throughout the United States Territory (subject only to the CyDex License, as acknowledged in Clause 2.2) and a non-exclusive right and license to manufacture and have manufactured Products in the Field in any part of the world for Exploitation in the United States Territory and Xxxx therefore undertakes:

(a) not at any time during the United States Term to grant or purport to grant to any Third Party any rights to Exploit a Product in the Field in the United States Territory; and

(b) not itself to Exploit a Product in the Field during the United States Term in the United States Territory; and

(c) to maintain during the United States Term as Confidential Information (subject to the provisions of Clause 11), all Product Data (including Joint Product Date) and not to disclose any Product Data to any Third Party otherwise than under terms relating to confidentiality and restricting the use of such Product Data in any manner in the Field in the United States Territory.

2.1.2 from the First Amendment Date for the Canada Term in respect of the Xxxx Patents, the Xxxx IP and the Xxxx Product Data the sole and exclusive royalty bearing right and license to use the same and to develop, use and Exploit any Product that is a Foam Product in the Field throughout the Canada Territory (subject only to the CyDex License, as acknowledged in Clause 2.2) and a non-exclusive right and license to manufacture and have manufactured any Product that is a Foam Product in the Field in any part of the world for Exploitation in the Canada Territory and Xxxx therefore undertakes:

(a) not at any time during the Canada Term to grant or purport to grant to any Third Party any rights to Exploit a Product that is a Foam Product in the Field in the Canada Territory; and

(b) not itself to Exploit a Product that is a Foam Product in the Field during the Canada Term in the Canada Territory; and

(c) to maintain during the Canada Term as Confidential Information (subject to the provisions of Clause 11), all Product Data (including Joint Product Data) and not to disclose any Product Data to any Third Party otherwise than under terms relating to confidentiality and restricting the use of such Product Data in any manner in the Field in the Canada Territory.

For clarity, the license granted to Salix under Cause 2.1.2 is limited to any Product that is a Foam Product.

In the event that any of the following events occurs:

(1) At any time following the first anniversary of the first commercial sale of a Foam Product in the United States Territory by or on behalf of Salix following receipt of regulatory marketing approval for the Foam Product in the United States Territory, and Salix has not then provided a Future Canadian Product Notice (as such term is defined in the Lupin Canada Distribution Agreement) to Lupin in respect of at least one Foam Product, or

(2) Any time,

(y) in respect of any and all Future Canadian Product Notices provided by Salix to Lupin under the Lupin Canada Distribution Agreement that refer to a Foam Product, the times provided in Section 2.3(b) of the Lupin Canada Distribution Agreement for delivery by Lupin of a timely Exercise Notice (as such term is defined in the Lupin Canada Distribution Agreement) with respect thereto have expired without Lupin having provided a timely Exercise Notice in respect of any such Future Canadian Product Notice, or

(z) in respect of any and all Future Canadian Product Notices provided by Salix to Lupin that refer to a Foam Product and as to which Lupin has provided a timely Exercise Notice, the times provided in Section 2.3(c)(i) and (ii) of the Lupin Canada Distribution Agreement (determined without regard to any extension of such time periods that might otherwise be agreed by Salix and Lupin pursuant to such Section 2.3 of the Lupin

Canada Distribution Agreement) for Salix and Lupin to have reached agreement pursuant to which a Foam Product will become a Distribution have expired without any Foam Product becoming a Distribution Product,

then the license granted by Xxxx to Salix in respect of the Canada Territory, and all other provisions of this Agreement as they relate to such license in respect of the Canada Territory, shall terminate and be of no further force or effect and the Canada Term shall end. Upon any such termination, Xxxx and Salix shall cooperate in good faith to restore to Xxxx all rights in respect of the Foam Products in respect of the Canada Territory.

3.2.

Clause 2.4 of the Original Agreement is amended by adding an additional sentence at the end thereof, such sentence to read as follows:

Notwithstanding the foregoing, Xxxx approves and consents to the Lupin Canada Distribution Agreement as it exists on the Second Amendment Date, subject to the following:

(a)

any amendment or modification or waiver of any of the provisions of the Lupin Canada Distribution Agreement that

(i)

concern or relate to, directly or indirectly, the rights granted to Salix under this Agreement (for clarity, and without limitation, as amended by the First Amendment) or under the First Amendment;

(ii)

concern or relate to, directly or indirectly, any Xxxx IP or any Products;

(iii)

concern or relate to, directly or indirectly, any sublicense of any Xxxx IP granted by Salix;

(iv)

would impact or adversely affect any payments that Xxxx would be entitled to receive under this Agreement (for clarity, and without limitation, as amended by the First Amendment), their amount, or calculation, including without limitation any Shared Sublicense Revenue;

(v)

impose upon Xxxx any additional obligations,

shall require the prior written consent of Xxxx;

(b) notwithstanding any other provision hereof, Salix may not, without the prior written consent of Xxxx, which Xxxx may

withhold in its discretion, sublicense or otherwise grant any rights to manufacture and have manufactured any Product to any of the Lupin Parties or their respective Affiliates; and

(c) Xxxx’x consent to and approval of the Lupin Canada Distribution Agreement hereunder extends, subject to the other terms and conditions of this Agreement, to the Foam Product only.

Salix will keep Xxxx reasonably informed of each Commercialization Plan (as defined in the Lupin Canada Distribution Agreement) with respect to any Product proposed, developed or agreed by Salix and Lupin pursuant to the Lupin Canada Distribution Agreement, including without limitation Sections 2.3 and 3.3 of the Lupin Canada Distribution Agreement, and any updates thereof or modifications thereto, and the Salix COGS and any changes to Salix COGS (as defined in the Lupin Canada Distribution Agreement) with respect to any Product agreed upon by Lupin and Salix, including copies of the documents setting forth any such Commercialization Plan and Salix COGS.

3.3.

Clause 2 of the Original Agreement is amended by adding a new Clause 2.5 at the end thereof, such new Clause 2.5 to read in its entirety as follows:

2.5 The parties acknowledge and confirm that Salix prior to the First Amendment Date validly terminated its obligations under this Agreement in respect of the Oral Product pursuant to Clause 17.4 and that accordingly the Oral Product as of the First Amendment Date was a Terminated Product for purposes of this Agreement and will remain so from and after the First Amendment Date (notwithstanding anything in the First Amendment).

4.	CONSIDERATION

4.1.

Clause 3.1.8 of the Original Agreement is amended by replacing the term “Patent Expiry Date” with the term “Patent Expiry Date (U.S.).”

4.2.

Clause 3.1.9 of the Original Agreement is amended by replacing the term “Patent Expiry Date” with the term “Patent Expiry Date (U.S.).”

4.3.

Clause 3 of the Original Agreement is amended by adding a new Clause 3.3 at the end thereof, such new Clause 3.3 to read in its entirety as follows:

3.3 When Salix enters into arrangements with one or more Sublicensees relating to the Canada Territory, Salix shall pay Xxxx *** of all Sublicense Revenues received by Salix pursuant to any such arrangements (such amount the “Shared Sublicense Revenues”).

***

Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

In respect of the Lupin Canada Distribution Agreement, the obligation of Salix to pay to Xxxx the amounts contemplated by this Clause 3.3 shall survive the termination of the Canada Term (including as a result of the occurrence of the Patent Expiry Date (Canada)) in respect of any product that was at any time prior to the expiration of the Canada Term a “Product” as defined herein and was marketed, distributed or sold by Lupin Atlantis pursuant to the Lupin Canada Distribution Agreement and continue thereafter for so long as the Lupin Canada Distribution Agreement, or any similar or follow-on arrangement between Salix and Lupin Ltd. and its Affiliates for the marketing, distribution or sale of such product in Canada, remains in effect.

Xxxx and Salix acknowledge and agree that this continued consideration payable by Salix is fair and reasonable in light of Salix’s continued use of the Xxxx IP (other than any expired Xxxx Patents) in continuing to perform the Lupin Canada Distribution Agreement. Notwithstanding any provision herein to the contrary, failure by Salix to make the payments due hereunder following expiration of the Canada Term shall entitle Xxxx to terminate this Agreement pursuant to Clause 18.6, including the licenses granted pursuant to Clause 19.4. Should a court of competent jurisdiction rule, in a final, unappealable or unappealed ruling, that Xxxx’x right to such continued consideration is not enforceable, the parties will promptly commence negotiations to establish appropriate consideration payable to Xxxx.

5.	MINIMUM ROYALTY PAYMENTS

5.1.

Clause 4.1 of the Original Agreement is amended by replacing the term “Patent Expiry Date” with the term “Patent Expiry Date (U.S.).”

5.2.

Clause 4.3 of the Original Agreement is amended by replacing the term “Patent Expiry Date” in all three places it appears with the term “Patent Expiry Date (U.S.).”

5.3.

Clause 4.4 of the Original Agreement is amended by replacing the term “Patent Expiry Date” with the term “Patent Expiry Date (U.S.).”

6.	PAYMENT

6.1.

Clause 5.1 of the Original Agreement is amended to read in its entirety as follows:

5.1 Salix shall prepare a statement in respect of each Quarter which shall show in reasonable detail for the Quarter in question the calculation of Royalties due to Xxxx with respect to aggregate Net Sales and Shared Sublicense Revenues due to Xxxx. Such statement shall specify in reasonable detail the calculation of Net Sales and Sublicense Revenues (in each case in accordance with the definition set out in Clause 1) in respect of each Product and the applicable Royalties and Shared Sublicense Revenues due to Xxxx and such other information relating to the calculation of Net Sales and Sublicense Revenues as Xxxx may reasonably request from time to time. Such statement shall be submitted to Xxxx within ninety (90) days of the end of the Quarter to which it relates together with remittance for Royalties due to Xxxx under Clauses 3.1.8, 3.1.9 and 3.1.10 (as applicable) and Shared Sublicense Revenues due to Xxxx under Clause 3.3.

6.2.

Clause 5.2.1 of the Original Agreement is amended by adding a new sentence at the end thereof, such sentence to read as follows:

For clarity, the records that may be accessed and inspected by such accounting firm pursuant to this Clause 5.2.1 shall include any relevant documents or information received by Salix from any Lupin Party or their Affiliates.

7.	OBLIGATIONS OF SALIX

7.1.

Clause 6.1.3 of the Original Agreement is amended by replacing the term “Term” with the term “United States Term” and by replacing the term “Territory” with the term “United States Territory.”

7.2.

Clause 6.2.7 of the Original Agreement is amended by replacing the term “Term” with the term “United States Term.”

7.3.

Clause 6.3.5 of the Original Agreement is amended by replacing the term “Term” with the term “United States Term.”

7.4.

Clause 6.7 of the Original Agreement is amended by replacing the term “Territory” with the term “United States Territory.”

7.5.

Clause 6 of the Original Agreement is amended by adding new Clauses 6.13, 6.14 and 6.15 at the end thereof, such new Clauses 6.13, 6.14 and 6.15 to read as follows:

6.13 In no event shall Salix, without Xxxx’x prior written consent, use, or commit to use, as a manufacturer of Product any Generics Manufacturer or any of its Affiliates.

6.14 In no event shall Salix, without Xxxx’x prior written consent, appoint or use, or commit to appoint or use, any Generics Manufacturer or any of its Affiliates as a distributor in or for the United States Territory of any Authorized Generic upon terms that would permit such Generics Manufacturer or its Affiliate to sell any Authorized Generic in the United States Territory prior to the first commercial sale of a Generic Product that is approved for distribution and sale in the United States Territory under or pursuant to an ANDA or other regulatory filing for which the product described in the NDA under which the Authorized Generic is to be distributed or sold in the United States Territory is the reference-listed drug.

6.15 Salix shall not transfer, assign or make available to any Lupin Party or any Generics Manufacturer or any of their respective Affiliates any NDA or any NDS (as that term is defined in the Lupin Canada Distribution Agreement) with respect to any Product. For clarity, the foregoing prohibition shall also apply even if any Lupin Party or any Generics Manufacturer or any of their respective Affiliates acts as a distributor of any Authorized Generic.

8.	PRODUCT DATA

The first sentence of Clause 8.3 of the Original Agreement is amended to read in its entirety as follows:

All right, title and interest in all Product Data arising from any Studies shall be jointly owned by Salix and Xxxx and either may use such Joint Product Data without further payment or obligation to the other and each of the Parties shall be free to use and Exploit such Joint Product Data and to incorporate it in any regulatory filing Provided that Xxxx acknowledges that during the United States Term it shall not, and shall not authorise or permit any Third Party to, use any Joint Product Data in the United States Territory and that during the Canada Term is shall not, and shall not authorise or permit any Third Party to, use any Joint Product Data in the Canada Territory.

9.	TRADEMARKS

Clause 9.1 of the Original Agreement is amended by adding at the end thereof a new sentence, such sentence to read as follows:

Salix shall not grant any right to use any Salix trademark for any Product in the Territory to any Lupin Party except for purposes of the marketing, distribution and sale of Product in

Canada as and to the extent contemplated by Lupin Canada Distribution Agreement as it exists on the First Amendment Date.

10.

INTELLECTUAL PROPERTY OWNERSHIP AND INFRINGEMENT

10.1.

The introductory clause in Clause 10.3 of the Original Agreement is amended to read in its entirety as follows:

In the event that Salix at any time during the Canada Term or the United States Term becomes aware of any misappropriation or infringement or alleged misappropriation or infringement by a Third Party (the “Infringer”) of any part of the Xxxx IP in the Canada Territory or United States Territory, respectively, Salix shall give prompt written notice thereof to Xxxx (save only in respect of the Joint Product Data, under Clause 10.4):

10.2.

Clause 10.3.2 of the Original Agreement is amended by replacing the term “Territory” with the phrase “Canada Territory or United States Territory, as applicable pursuant to the forepart of this Clause 10.3”.

10.3.

The first sentence of Clause 10.4 of the Original Agreement is amended to read in its entirety as follows:

In the event that Salix at any time during the Canada Term or the United States Term becomes aware of any misappropriation or infringement or alleged misappropriation or infringement by an Infringer of any part of the Joint Product Data in the Canada Territory or United States Territory, respectively, Salix shall give prompt written notice thereof to Xxxx and Salix shall have the first right (but not the obligation) to take such Remedies as may be necessary or desirable to prevent such infringement and preserve the Joint Product Data.

10.4.

The introductory clause in Clause 10.6 of the Original Agreement is amended to read in its entirety as follows:

In the event that a Third Party institutes a patent, trade secret or other infringement suit against Salix or its Affiliates during the Canada Term or the United States Term, alleging that its Exploitation of the Product in the Canada Territory or United States Territory, respectively, infringes one or more Patents or other Intellectual Property rights held by such Third Party (an “Action”), Salix shall promptly notify Xxxx thereof in writing and promptly discuss with Xxxx the best way to respond.

11.

CONFIDENTIALITY

Clause 11.5 of the Original Agreement is amended by adding a new sentence at the end thereof, such new sentence to read as follows:

In no event shall Salix disclose any Confidential Information of Xxxx that constitutes or relates to Manufacturing Technology or any NDA or any NDS or any other regulatory filings or submissions, or drafts thereof, in the United States Territory or the Canada Territory, including without limitation any dossiers related to regulatory filings, to any Lupin Party or any Generics Manufacturer or any of their respective Affiliates without the prior written consent of Xxxx. Salix shall not appoint any of the Lupin Parties or their Affiliates as Salix’s administrative agent or other agent, or otherwise grant any authority to Lupin Party or any of their Affiliates, for purposes of making any filings with regulatory authorities in the Canada Territory or the United States Territory without the prior written consent of Xxxx.

12.

FILINGS; CONFIDENTIALITY AND NON-DISCLOSURE

12.1.

Xxxx and Salix each agrees to make such filings in respect of this First Amendment and the other agreements being executed by Xxxx and Salix and other persons in connection herewith as may be required by Applicable Laws, including those filings with the United State Federal Trade Commission and the United States Department of Justice required by Clause 1112 of Subtitle B of Title XI of the United States Medicare Prescription Drug, Improvement, and Modernization Act of 2003. Each of Xxxx and Salix agrees that filings contemplated by the preceding sentence shall be permitted to be made by the other notwithstanding any provision contained in Clause 11 of the Original Agreement to the contrary.

12.2.

Subject to Clause 10.1 of this First Amendment, disclosure of this First Amendment and its terms shall be governed by the provisions of Clause 11 of the Original Agreement mutatis mutandis.

13.

RESTRICTIONS

Clause 15.2 of the Original Agreement is amended to read in its entirety as follows:

15.2 Xxxx undertakes and covenants as follows:

15.2.1 Subject to Clause 15.2.3, it shall not within the Canada Territory either directly or indirectly during the Canada Term be involved in the marketing, use, sale or exploitation of any product containing the Compound. For clarity, the provisions of this Clause 15.2.1 shall cease to apply if the rights with respect to the Canada Territory revert back to Xxxx as provided for in Clause 2.1.2.

15.2.2 Subject to Clause 15.2.3, it shall not within the United States Territory either directly or indirectly during the United States Term be involved in the marketing, use, sale or exploitation of any product containing the Compound.

15.2.3 The restriction set forth in Clauses 15.2.1 and 15.2.2 shall cease to apply in respect of the marketing, use, sale or exploitation in the Territory of any Terminated Product under Clause 18.1 after the effective date of termination of the rights and obligations of Salix under this Agreement in respect of the Terminated Product.

14.

TERMINATION

Clause 17.1 of the Original Agreement is amended to read in its entirety as follows:

17.1 This Agreement shall become effective in respect of the United States Territory as of the Effective Date and in respect of the Canada Territory as of the First Amendment Date and unless earlier terminated pursuant to the other provisions of this Clause 17 or, in the case of the Canada Territory, Clause 2.1.2, shall continue in full force and effect, in respect of the United States Territory, for the United States Term and, in respect of the Canada Territory, for the Canada Term.

15.

CONSEQUENCES OF TERMINATION

15.1.

Clause 18.3.3 is amended to add a sentence at the end of said Clause 18.3.3 which shall read as follows:

Without limiting the foregoing, the provisions of Clause 2.4 requiring the consent of Xxxx, the last sentence of Clause 9.1, and the provisions of Clauses 3.3, 5, 6.13, 6.14, 6.15 and 11.5 shall survive termination or expiration of this Agreement.

15.2.

Clause 18.5 is amended to read in its entirety as follows:

18.5 If this Agreement as it relates to the Canada Territory expires upon the expiration of the Canada Term in respect of all Products, the licenses granted hereunder in respect of the Canada Territory shall continue thereafter on a non exclusive basis and shall, subject to Clause 18.5.1, be fully paid-up and perpetual:

18.5.1 Salix shall thereafter, and notwithstanding anything in Clause 3 to the contrary, be entitled to Exploit Products in the Canada Territory subject to continued payment by Salix to Xxxx as and to the extent required by Clause 3.3 and in respect of Royalties due in respect of Net Sales in the United States Territory;

18.5.2 Xxxx shall be entitled either itself or by a Third Party to exploit Products in the Canada Territory; and

18.5.3 in that event, the provisions of Clause 2.4 requiring the consent of Xxxx, the last sentence of Clause 9.1, and the provisions of Clauses 3.3, 5, 6.13, 6.14, 6.15 and 11.5 shall survive termination or expiration of this Agreement.

For clarity, the provisions of this Clause 18.5 are subject to the provisions of Clause 3.3 and shall not alter or qualify the obligation of Salix to make the payments contemplated thereby to Xxxx.

15.3.

Clause 18 is amended by adding a new Clause 18.6 at the end thereof, such new Clauses 18.6 to read in its entirety as follows:

18.6 If this Agreement as it relates to the United States Territory expires upon the expiration of the United States Term in respect of all Products, the licenses granted hereunder in respect of the United States Territory shall continue thereafter on a non exclusive basis and shall be fully paid-up and perpetual and for the avoidance of doubt:

18.6.1 Salix shall thereafter, and notwithstanding anything in Clause 3 to the contrary, be entitled to Exploit Products in the United States Territory free of any further payment to Xxxx except in respect of Royalties due in respect of Net Sales in the Canada Territory and Shared Sublicense Revenues due in respect of Sublicenses granted by Salix in respect of the Canada Territory; and

18.6.2 Xxxx shall be entitled either itself or by a Third Party to exploit Products in the United States Territory.

16.

LAW AND ARBITRATION

Any controversy or claim of whatsoever nature arising out of or relating in any manner whatsoever to this First Amendment or any breach of any terms of this First Amendment shall be governed by and construed in all respects in accordance with the laws of England without regard to any choice of law provisions or rule that might otherwise refer construction or interpretation of this First Amendment to the substantive law of another jurisdiction. Any dispute arising out of or relating to the existence, negotiation, validity, formation, interpretation, breach, performance or application of this First Amendment shall be subject to resolution exclusively in accordance with the provisions of Clauses 27 and Clauses 28.2, 28.2 [sic], and 28.3 of the Original Agreement.

17.

ENTIRE AGREEMENT AND SEVERABILITY

17.1.

This First Amendment and the Original Agreement, as amended by this First Amendment, constitute the entire agreement between the Xxxx and Salix with respect to the subject matter thereof. This First Amendment supersedes all prior agreements, whether written or oral, with respect to the subject matter of this First Amendment. Each of Xxxx and Salix confirms that it is not relying on any representations, warranties or covenants of the other in entering into this First Amendment except as specifically set out in this First Amendment. Nothing in this First Amendment is intended to limit or exclude any liability for fraud.

17.2.

The Original Agreement, as amended by this First Amendment, is ratified by the parties hereto and as so amended shall continue in full force and effect.

17.3.

This First Amendment is intended to be valid and effective under any Applicable Laws and, to the extent permissible under Applicable Laws, shall be construed in a manner to avoid violation of or invalidity under any Applicable Laws. Should any provisions of this First Amendment be or become invalid, illegal or unenforceable under any Applicable Laws, the other provisions of this First Amendment shall not be affected and shall remain in full force and effect and, to the extent permissible under Applicable Laws, any such invalid, illegal or unenforceable provision shall be deemed amended lawfully to conform with the intent of the parties.

18.

EXPENSES

Subject to the ongoing indemnification obligations of Xxxx and Salix under Clause 13 of the Original Agreement, each of Xxxx and Salix shall pay the fees and expenses of its respective lawyers and other experts and all other expenses and costs incurred by such party incidental to the negotiation, preparation, execution and delivery of this First Amendment.

19.

REPRESENTATIONS AND WARRANTIES

Clause 12.2.15 of the Original Agreement is hereby amended by adding at the beginning thereof the phrase “to the knowledge of Xxxx.”

20.

OTHER AGREEMENTS

Simultaneously herewith, Xxxx and Salix are entering into the Lupin Sublicense Agreement with Lupin Ltd. and Lupin Pharma; Xxxx and Salix are entering into the Lupin Settlement Agreement with Lupin Ltd. and Lupin Pharma; and Salix is entering into the Lupin Canada Distribution Agreement with Lupin Atlantis. The effectiveness of this First Amendment is explicitly conditioned on the simultaneous execution and delivery by each of the parties thereto of each and every one of the aforesaid agreements.

21.

COUNTERPARTS

This First Amendment may be executed in two or more counterparts, each of which shall be deemed an original and all of which taken together shall be deemed to constitute one and the same instrument. An executed signature page of this First Amendment delivered by facsimile or other electronic transmission shall be effective as an original executed signature page.

[Signatures appear on the next page.]

IN WITNESS WHEREOF, Xxxx and Salix have executed this First Amendment to be effective the day and year first above written.


XX XXXX PHARMA GmbH

By:		/s/ Xxxxxx Xxxx

Name:		Xxxx Xxxxxx

Title:		CEO

SALIX PHARMACEUTICALS, INC.

By:		/s/ Xxxx Xxxxxxx

Name:		Xxxx Xxxxxxx

Title:		EVP of Business Development

[Signature page for First Amendment to License Agreement]

SCHEDULE A

Salix COGS

As used in this Agreement, “Salix COGS” means:

For Products that are manufactured for Salix by a Third Party:

The price paid by Salix to such Third Party for such Products, together with warehousing, freight, duty, insurance and any other out-of-pocket costs or expenses incurred by Salix in respect of such Products, without markup.

For Products that are manufactured by Salix or its Affiliates:

I. Salix COGS includes the costs of all direct materials, direct labor and manufacturing overhead consumed, provided or procured by a manufacturing facility in the manufacture of a particular Product, together with appropriate: (i) allowances for manufacturing variances, (ii) inventory carrying charges, and (iii) adjustments for inventory valuations as calculated using GAAP.

For such purposes:

A. Direct material costs include:

1. The cost of raw materials, process consumables (i.e., resins, membranes, etc. to the extent not renewable and depreciable and more appropriately captured by Item I.C.2. (below), containers, container components, packaging, labels and other printed materials used in the production of the Product.

2. Scrap of raw materials, work in progress and finished goods (exclusive of losses in excess of a reasonable allowance for wastage limits within normal industry standards for the Product.)

B. Direct labor costs include:

1. Salaries and fringe benefits for personnel directly involved in the manufacturing process of the Product.

C. Manufacturing overhead is limited to costs that can be identified in a practical manner with specific units of production in accordance with GAAP but cannot be included in specific direct material or direct labor costs. Such overhead costs may include:

1. Department-specific manufacturing overhead allocations, including, but not limited to, utilities (e.g., oil, electric, steam, water), indirect manufacturing materials and supplies, consumables (e.g., production supply materials, tools, spare parts), supervision, production management, plant management, engineering and development support, maintenance and repair of the production plant and production equipment, taxes (excluding income taxes) and insurance with respect to the Product.

Schedule A - page 1

2. Depreciation, which reflects on a pro rata basis over the reasonably estimated life thereof, the use of assets in the manufacture of the Product.

3. Overhead allocations of costs from service areas directly involved in the manufacture of a Product, including human resources, IT, quality assurance analysis of raw materials in production, including analysis of semi-finished and finished goods produced, materials management (including wages and salaries relating to materials administration, purchasing and warehousing), regulatory affairs, validation, inventory storage, process documentation, and other services required to be performed in connection with the Manufacture of the Product.

4. Rent and other costs allocable to the lease of facilities, equipment or materials used to Manufacture the Product.

D. Allowances for manufacturing variances, including yield variances within cGMP tolerances.

E. Allowances for adjustments to inventory, valuation, including reasonable charges for spoilage, expiration of shelf life and like charges related to the Product Manufactured.

F. Property and sales taxes on shipment and warehousing related to finished goods.

II. Without limitation, Salix COGS does not include:

A. Costs incurred due to Product rework, except the reasonable allowance included under item I.A.2.

B. Research and development costs.

C. Intercompany margins/markups on intercompany transfers between or among manufacturing plants or Affiliates.

D. Insurance related to product liability.

E. Commercialization costs.

F. Overhead (including administrative, legal, accounting and similar costs), except as specified in item I.C.

Schedule A - page 2

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