SCHERING-PLOUGH CORPORATION REDACTED VERSION
[***] Indicates information omitted pursuant to a request for confidential
treatment and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 under the Securities Exchange Act of
1934, as amended.
Exhibit 99.3
THIS FIRST AMENDMENT TO THE CHOLESTEROL GOVERNANCE AGREEMENT is made as of
December 18, 2001, by and among MSP Distribution Services (C) LLC, MSP Marketing
Services (C) LLC, MSP Technology (US) Company LLC, Merck Cardiovascular Health
Company, Merck Technology (US) Company, Inc., Schering MSP Corporation, Schering
Sales Management, Inc., Schering Sales Corporation, Schering MSP Pharmaceuticals
L.P., MSP Singapore Company, LLC (the "Singapore Partnership"), MSD Technology
Singapore Pte. Ltd., MSD Ventures Singapore Pte. Ltd., Schering-Plough
(Singapore) Pte. Ltd., Schering-Plough (Singapore) Research Pte. Ltd., Schering
Corporation, Schering-Plough Corporation, a New Jersey corporation ("S-P"), and
Merck & Co., Inc., a New Jersey corporation ("M").
WHEREAS, the parties listed above are parties to the Cholesterol
Governance Agreement, dated as of May 22, 2000, (the "Governance Agreement"),
and desire to amend the Governance Agreement as provided in this First
Amendment.
NOW, THEREFORE, in consideration of the agreements and obligations set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. Amendments to the Governance Agreement.
1.1. Section 1.2 of the Governance Agreement is hereby amended by adding
the following definitions in alphabetical order:
"Canadian General Manager" has the meaning set forth in Section 1.2
of the Master Agreement.
"ECLAFE" has the meaning set forth in Section 1.2 of the Master
Agreement.
"ECLAFE Cholesterol Business" has the meaning set forth in Section
1.2 of the Master Agreement.
"EMEA General Manager" has the meaning set forth in Section 1.2 of
the Master Agreement.
"Far East Co-Marketing Country" has the meaning set forth in Section
1.2 of the Master Agreement.
"Far East Operating Board" has the meaning set forth in Section 1.2
of the Master Agreement.
"Far East Co-Promotion Country" has the meaning set forth in Section
1.2 of the Master Agreement.
"Far East Single Presence Country" has the meaning set forth in
Section 1.2 of the Master Agreement.
"Latin America" has the meaning set forth in Section 1.2 of the
Master Agreement.
"Master Agreement" means the Master Agreement, dated as of the date
hereof, by and among the Technology LLC, Singapore Partnership, M,
Schering Corporation and S-P.
"M Indemnified Parties" means M, its Affiliates and each of their
respective officers, directors, partners, shareholders, members,
agents, representatives, successors and assigns.
"MSP Technology Agreement" means the Limited Liability Company
Agreement of MSP Technology (US) Company LLC.
"S-P Indemnified Parties" means S-P, its Affiliates and each of
their respective officers, directors, partners, shareholders,
members, agents, representatives, successors and assigns.
"Special Damages" has the meaning set forth in Section 8.5.4 of this
Agreement.
"U.S. Termination Assets" has the meaning set forth in Section
7.3(a) of this Agreement.
1.2. The definition of "Interests" in Section 1.2 is amended by including
the following sentence at the end of such definition:
"For the purposes of this Agreement, "Interests" shall not include
(x) the Interests (as defined in the Master Agreement) of the
Terminated Party and (y) in the event the Master Agreement has been
terminated prior to, and not simultaneously with, this Agreement,
the ECLAFE Termination Assets, if any (as defined in the Master
Agreement)."
1.3. The definition of "Standstill Period" in Section 1.2 is deleted in
its entirety and replaced with the following:
"Standstill Period" means the period beginning on the date hereof
and ending upon the later to occur of (x) three years after
termination of this Agreement, (y) three years after termination of
the Respiratory Governance Agreement, and (z) three years after
termination of the Master Agreement.
1.4. The second sentence of Section 5.1 of the Governance Agreement is
hereby amended by adding "in the Territory" after the words "The
marketing of each Cholesterol Product".
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1.5. Section 5.2 of the Governance Agreement is hereby deleted in its
entirety and replaced with the following:
"Section 5.2. Product Recalls. Subject to Section 7.1(b), if an
Executive Sponsor in the Territory or an Executive Sponsor in an
applicable ECLAFE region believes that a recall of a Cholesterol
Product is necessary in the Territory or a country in ECLAFE, such
executive sponsor shall notify his or her counterpart executive
sponsor, within forty-eight (48) hours of its determination. S-P, M,
the relevant Members and the relevant local M and S-P subsidiaries
shall cooperate to allow such recall to occur to the extent
determined by the Singapore Board (other than for safety which shall
be solely governed by and resolved pursuant to Section 7.1(b)). The
General Manager, EMEA General Manager and the Canadian General
Manager shall be responsible for the execution of such recall of the
Cholesterol Products in the region in which he or she serves as the
general manager. In Far East Co-Promotion Countries, the Far East
Operating Board shall be responsible for the execution of such
recall of the Cholesterol Products. In Latin America, Far East
Co-Marketing Countries and Far East Single Presence Countries, the
local M and/or S-P Affiliates, as applicable, shall be responsible
for the execution of such recall of the Cholesterol Products."
1.6. Section 7.1 of the Governance Agreement is hereby amended as
follows:
1.6.1. The fourth and fifth sentence of subparagraph (b)A(x) is
deleted in its entirety and replaced with the following:
[***]
1.6.2. The third sentence of subparagraph (b)A(y) is deleted in its
entirety and replaced with the following:
[***]
1.6.3. The second and third sentence of subparagraph (b)B shall be
deleted in its entirety and replaced with the following:
[***]
1.7. The first sentence of Section 7.2(c) of the Governance Agreement is
hereby amended by inserting "(to the extent such Related Agreement
and such Material Breach directly relate to the Cholesterol
Business)" after each of the first two uses of "Related Agreement"
in that sentence.
1.8. The second sentence of Section 7.2(c) of the Governance Agreement is
hereby amended by inserting "(to the extent such Related Agreement
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and such breach directly relate to the Cholesterol Business)" after
the first use of "Related Agreement" in that sentence.
1.9. Section 7.3(a) of the Governance Agreement is hereby deleted in its
entirety and replaced with the following:
"(a) General. With respect to any event of termination, each party
shall undertake, during the pendency of the procedure to determine
whether such event of termination has occurred and the
implementation of the consequences of such termination, to maintain
the Cholesterol Business in the Territory as a going concern, so
that all of the rights, title and interests in the Companies (other
than the Singapore Partnership and the Technology LLC, to the extent
the Master Agreement is not being terminated prior to or
simultaneously with this Agreement pursuant to Section 7.2(b)
[Bankruptcy], 7.2(c) [Material Breach due to a breach of Section 9.9
[Standstill] of the Governance Agreement], Section 7.2(d) [Change of
Control] or [***]) and the Cholesterol Businesses in the
Territory may be conveyed. The parties acknowledge that in the
event of a termination of this Agreement that results in
one party acquiring the Interests of another party hereto and the
U.S. Termination Assets (as described below), if any, (i) the
acquiring party may determine to continue operating the Cholesterol
Business through one or more of the Companies, (ii) appropriate
adjustments to the Singapore Partnership Agreement shall be made to
provide (A) that profit and loss arising from the Cholesterol
Business in the Territory shall be specially allocated to the Party
(or its Affiliates) that acquires the Interests of the other Party
and its Affiliates and (B) that, to the extent the Master Agreement
has not been, or is not being, terminated simultaneously with this
Agreement pursuant to Section 5.2.2 of the Master Agreement, that
the assets and liabilities of the Singapore Partnership, to the
extent they relate to the Cholesterol Business in the Territory (the
"Singapore Termination Assets") can be sold as set forth in the last
sentence of this Section 7.3(a), or the rights thereto otherwise
transferred, to the Terminating Party or its Affiliates pursuant to
this Section 7.3 and (iii) appropriate adjustment to the MSP
Technology Agreement will be made to provide that, to the extent the
Master Agreement has not been terminated or is not being terminated
simultaneously with this Agreement pursuant to Section 5.2.2 of the
Master Agreement, the assets and liabilities of MSP Technology
Partnership, to the extent they relate to the Cholesterol Business
in the Territory (the "Technology Termination Assets," and together
with the Singapore Termination Assets, the "U.S. Termination
Assets"), can be sold as set forth in the last sentence of this
Section 7.3(a), or the rights thereto transferred, to the
Terminating Party or its Affiliates pursuant to this Section 7.3. In
the event of any such termination, the Parties will enter into such
agreements as are necessary or appropriate to provide for the
transfer of the U.S. Termination Assets and
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will endeavor in good faith to arrange for such transfer to be
effected in a manner that is tax efficient, to the maximum extent
reasonably practicable, to both the Terminated Party and the
Terminating Party, and any other agreements as may be necessary or
appropriate to effectuate the foregoing."
1.10. The first sentence of Section 7.3(d) of the Governance Agreement is
hereby amended by inserting "(other than the Singapore Partnership
and Technology LLC, to the extent this Agreement is not terminated
prior to or simultaneously with the Master Agreement) and US
Termination Assets, if any," after "Companies," and "of the
Companies (other than the Singapore Partnership and Technology LLC,
to the extent this Agreement is not terminated prior to or
simultaneously with the Master Agreement) and US Termination Assets,
if any," after "Interests" in the third and fourth sentences
thereof.
1.11. Section 7.3(h) is amended by inserting the following sentence after
the first sentence:
[***]
1.12. Section 8.5 of the Governance Agreement is hereby deleted in its
entirety and replaced with the following:
"Section 8.5. Indemnification.
Section 8.5.1. Indemnification by the Singapore Partnership. The
Singapore Partnership shall indemnify, defend and hold harmless the M
Indemnified Parties and the S-P Indemnified Parties from and against
all Losses incurred or suffered by any of them as a result of, arising
from, or in connection with any claim, action, proceeding or
investigation of any Third Party relating to:
(a) the development, testing, use, marketing, distribution,
promotion, supply or sale of the Cholesterol Products in the Field
in the Territory.
Notwithstanding the foregoing, no M Indemnified Party and no S-P
Indemnified Party shall be entitled to any indemnification pursuant to
this Section 8.5.1 to the extent the Loss for which indemnification is
being sought is caused by the gross negligence or willful misconduct of
the party seeking indemnification.
Section 8.5.2. Indemnification by M. M shall indemnify, defend and hold
harmless the S-P Indemnified Parties and the Singapore Partnership from
and against all Losses incurred or suffered by any of them as a result
of, arising from, or in connection with:
(a) the breach by M of any of its representations, warranties or
covenants in this Agreement, the Development Agreement, any License
Agreements, or any governing document of any of the Companies,
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provided that no claim may be made for indemnification under this
Section 8.5.2 for breaches of representations or warranties until
the aggregate dollar amount of all such claims exceeds $2 million;
(b) the gross negligence or willful misconduct by M or any of its
Affiliates in the performance of any of their obligations under this
Agreement or the Related Agreements (other than manufacturing
agreements or packaging agreements);
(c) the development, testing, use, marketing, distribution,
promotion, supply or sale by M or its Affiliates of the Cholesterol
Products outside the Field; or
(d) the development, testing, use, marketing, distribution,
promotion, supply or sale by M or its Affiliates (or Banyu
Pharmaceutical Company, Ltd.) of the Cholesterol Products in Japan
to the extent such Cholesterol Products are developed, tested, used,
marketed, distributed, promoted, supplied or sold either (i) under a
Product Marketing Authorization that includes, directly or by
reference, data comprising "Merck Clinical IP", "Schering Clinical
IP" or "Merck Formulation IP" (each as defined in the Development
Agreement), or (ii) under a trademark, tradename or other form of
brand protection owned or used by the Singapore Partnership.
Notwithstanding the foregoing, neither any S-P Indemnified Party nor
the Singapore Partnership shall be entitled to any indemnification
pursuant to this Section 8.5.2 to the extent the Loss for which
indemnification is being sought is caused by the gross negligence,
willful misconduct or willful violation of law of the party seeking
indemnification.
Section 8.5.3. Indemnification by S-P. S-P shall indemnify, defend and
hold harmless the M Indemnified Parties and the Singapore Partnership
from and against all Losses incurred or suffered by any of them as a
result of, arising from, or in connection with:
(a) the breach by S-P of any of its representations, warranties or
covenants in this Agreement, the Development Agreement, any License
Agreements, or any governing documents of any of the Companies,
provided that no claim may be made for indemnification under this
Section 8.5.3 for breaches of representations or warranties until
the aggregate dollar amount of all such claims exceeds $2 million;
(b) the gross negligence or willful misconduct by S-P or any of its
Affiliates in the performance of any of their obligations under this
Agreement or the Related Agreements (other than manufacturing
agreements or packaging agreements);
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(c) the development, testing, use, marketing, distribution,
promotion, supply or sale by S-P or its Affiliates of the
Cholesterol Products outside the Field; or
(d) the development, testing, use, marketing, distribution,
promotion, supply or sale by S-P or its Affiliates of the
Cholesterol Products in Japan to the extent such Cholesterol
Products are developed, tested, used, marketed, distributed,
promoted, supplied or sold either (i) under a Product Marketing
Authorization that includes, directly or by reference, data
comprising "Merck Clinical IP", "Schering Clinical IP" or "Merck
Formulation IP" (each as defined in the Development Agreement), or
(ii) under a trademark, tradename or other form of brand protection
owned or used by the Singapore Partnership.
Notwithstanding the foregoing, neither any M Indemnified Party nor the
Singapore Partnership shall be entitled to any indemnification pursuant
to this Section 8.5.3 to the extent the Loss for which indemnification
is being sought is caused by the gross negligence, willful misconduct
or willful violation of law of the party seeking indemnification.
Section 8.5.4. Indemnification Principles. For purposes of this Section
8.5, "Losses" shall mean each and all of the following items: claims,
losses, liabilities, obligations, payments, damages, charges,
judgments, fines, penalties, amounts paid in settlement, costs and
expenses (including, without limitation, interest which may be imposed
in connection therewith, costs and expenses of investigation, actions,
suits, proceedings, demands, assessments and reasonable fees, expenses
and disbursements of counsel, consultants and other experts). Losses
shall not include, and indemnification shall not be available under
this Section 8.5 for, (i) lost profits, punitive, special, indirect,
consequential, incidental, exemplary or other similar damages
(collectively, "Special Damages"), other than Special Damages payable
to Third Parties. Notwithstanding any provision in this Agreement or
any Related Agreement, no Party hereto or thereto shall seek or be
entitled to receive any Special Damages from any other Party, or its
Affiliates, in connection with such Agreements.
Section 8.5.5. Claim Notice. A Party seeking indemnification under this
Section 8.5 shall, promptly upon becoming aware of the facts indicating
that a claim for indemnification may be warranted, give to the Party
from whom indemnification is being sought a claim notice relating to
such Loss (a "Claim Notice"). Each Claim Notice shall specify the
nature of the claim, the applicable provisions of this Agreement under
which the claim for indemnity arises, and, if possible, the amount or
the estimated amount thereof. No failure or delay in giving a Claim
Notice and no failure to include any specific information relating to
the claim (such as the amount or estimated amount thereof) or any
reference to any provision of this Agreement or other instrument under
which the claim arises shall affect the obligation of the Party from
whom indemnity is sought except to the extent such Party is materially
prejudiced by such failure or delay."
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1.13. Section 9.17 of the Governance Agreement is hereby amended by adding
the following sentence to the end thereof:
"In addition, Section 7.1(b) (and any other provisions
necessary to make the provisions of Section 7.1(b) operative)
shall survive any termination of this Agreement for as long as
the Master Agreement remains in effect."
2. Effect. The Governance Agreement shall remain unchanged and in full
force and effect except as specifically amended by this First Amendment.
3. Governing Law. This First Amendment and the rights of the Parties
hereunder shall be interpreted in accordance with the laws of the State
of Delaware, and all rights and remedies shall be governed by such laws
without regard to principles of conflict of laws.
4. Counterparts. This First Amendment may be executed in any number of
counterparts with the same effect as if all parties hereto had signed
the same document. All counterparts shall be construed together and
shall constitute one instrument.
5. Termination. Without limiting the provisions of Section 7.3(g) of the
Governance Agreement, upon termination of the Governance Agreement, the
provisions added, amended or modified by this First Amendment shall
survive with respect to ECLAFE until termination of the Master Agreement
in accordance with its terms.
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IN WITNESS WHEREOF, the parties hereto have executed this First Amendment
to the Cholesterol Governance Agreement as of the date first above stated.
[Signatures Omitted]
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