Exhibit 10.7

 

*** [Portions of this exhibit have been omitted pursuant to a request for
confidential treatment filed with the Securities and Exchange Commission. The
omissions have been indicated with asterisks (“***”), and the omitted text has
been filed separately with the Commission.]

 

DATED 29 JUNE 2011

 

 

 

MEDA PHARMA SARL

 

 

- and -

 

 

VALEANT INTERNATIONAL (BARBADOS) SRL

 

 

 

 

 

 

 

LICENCE AGREEMENT

 

 

 

 

 

 

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THIS LICENSE AGREEMENT is dated as of June 29, 2011 (the “Effective Date”)

 

BETWEEN:

 

(1)                                           MEDA PHARMA SARL a company
incorporated in Luxembourg, with a principal place of business at 46 Avenue John
Fitzgerald Kennedy, L-1855 Luxembourg, Grand-Duchy of Luxembourg (“Meda”); and

 

(2)                                           VALEANT INTERNATIONAL (BARBADOS)
SRL an international society with restricted liability established under the
laws of Barbados and having its principal place of business at Welches, Christ
Church, Barbados, West Indies BB17154 (“Valeant”).

 

Meda and Valeant are referred to from time to time in this Agreement
individually as a “Party” or collectively as the “Parties”.

 

RECITALS

 

(A)                               Meda owns or is the licensee of certain
proprietary rights, titles and interests in certain patents and patents
applications know-how, trade marks and clinical data relating to: (i) topical
formulations for the prevention and/or treatment of any herpes indication
consisting of a combination of acyclovir and hydrocortisone as active
ingredients (“Xerese”) and (ii) topical formulations of pimecrolimus and any
metabolite, prodrug, hydrate, solvate, conjugate, salt, crystal form, ester,
enantiomer, stereoisomer or polymorph of pimecrolimus (“Elidel”).

 

(B)                               Valeant wishes to commercialise products using
Meda’s Xerese and Elidel proprietary rights.

 

(C)                               Meda wishes to grant, and Valeant wishes to
receive, a licence to commercialise products using Meda’s Xerese and Elidel
proprietary rights pursuant to the terms of this licence, including to the
Licensed Know How, Licensed Clinical Data and Licensed Trade Marks, which the
Parties acknowledge were developed at great expense and have significant value.

 

(D)                               ***

 

NOW THEREFORE, in consideration of the following mutual promises and
obligations, and for other good and valuable consideration the adequacy and
sufficiency of which are hereby acknowledged, the Parties agree as follows:

 

1.                                      DEFINITIONS

 

In this Agreement and in the Schedules to this Agreement the following
capitalised terms, whether used in the singular or plural, shall have the
meanings set forth below:

 

1.1                                ***

 

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1.2                                 ***

 

1.3                                 ***

 

1.4                                 ***

 

1.5                                 ***

 

1.6                                 “Adverse Event” means any untoward medical
occurrence in a patient to whom a medicinal product has been administered and
which does not necessarily have to have a causal relationship with the
administration of such medicinal product and includes without limitation any
unfavourable and unintended sign (for example, an abnormal laboratory finding),
symptom, or disease temporally associated with the use of a medicinal product,
whether or not considered related to this medicinal product together, in
relation to pharmacovigilance standards, policies, and procedures, with all
medical device events, (including incidents, near-incidents, serious injuries,
malfunctions and failures) or untoward medical events and events such as suicide
or aggressive behaviour threats, overdose, abuse, misuse, medication errors and
other events that may reasonably be related to biomedical research.

 

1.7                                 “Affected Party” shall have the meaning set
out in Clause 23.1.

 

1.8                                 “Affiliate” means, with respect to a given
entity, any person, corporation, partnership or other entity, that Controls, is
Controlled by, or is under common Control with such entity.

 

1.9                                 “Agreed Ratio” shall have the meaning set
out in Clause 4.4.2.

 

1.10                           “Agreement” means this agreement and all
schedules as amended in accordance with the provisions of this Agreement.

 

1.11                           “Business Day” means a day other than a Saturday,
Sunday or a day on which banks are not open for business in Sweden or Barbados.

 

1.12                           “Calendar Year” means a calendar year commencing
on the 1st of January and ending on the 31st of December.

 

1.13                           “Commercialise” shall have the meaning set out in
Clause 21.1.

 

1.14                           “Commercially Reasonable Efforts” means the
degree of effort and resources used by international pharmaceutical businesses
with respect to pharmaceutical products of similar commercial potential,
maturity, market size and profitability, taking into account product safety and
efficacy, development and Commercialisation costs and risks, market competition,
the proprietary position of the product and other technical, legal, scientific,
medical or commercial factors that have direct relevance to Licensed Products.

 

1.15                           ***

 

1.16                          “Confidential Information” shall have the meaning
set out in Clause 17.1.

 

3

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1.17                           “Consent” shall have the meaning set out in
Clause 5.6.

 

1.18                           “Control,” “Controls,” “Controlled” or
“Controlling” shall mean;

 

1.1.1                         in respect of any partnership, corporation or
other entity, the direct or indirect ownership of more than fifty percent (50%)
of the outstanding shares or other voting rights of the subject entity having
the power to vote on or direct the affairs of the entity, (or such lesser
percentage which is the maximum allowed to be owned by a foreign corporation in
a particular jurisdiction).  Any other relationship which in fact results in
actual control over the management, business and affairs of an entity shall also
be deemed to constitute Control; and

 

1.1.2                         in respect of any Patent Rights, Know How or other
Intellectual Property Rights whether owned by or licensed to an entity, the
possession of the legal right and ability to grant the respective licenses or
sublicenses as provided in this Agreement without violating the terms of any
agreement or other arrangement with any Third Party;

 

and the expressions Controlling and Controlled by shall be interpreted
accordingly.

 

1.19                           ***

 

1.20                           “Defaulting Party” shall have the meaning set out
in Clause 15.3.

 

1.21                           “Development Plan” shall have the meaning set out
in Clause 4.1.

 

1.22                           “Disclosing Party” shall have the meaning set out
in Clause 17.1.

 

1.23                           “Effective Date” shall have the meaning set out
at the top of this Agreement.

 

1.24                           “Elidel” shall have the meaning set out in the
recitals to this Agreement.

 

1.24.1                  “Elidel Drug Substance” means the active ingredient
pimecrolimus having the chemical structure set forth on Schedule 10 and any
metabolite, prodrug, hydrate, solvate, conjugate, salt, crystal form, ester,
enantiomer, stereoisomer or polymorph of the same.

 

1.25                           “Elidel Field” means all dermatological
applications.

 

1.26                           “Elidel Licensed Clinical Data” means clinical
data that is Controlled by Meda or its Affiliates at the Effective Date and/or
during the Term that relates to Elidel Licensed Products.

 

1.27                           “Elidel Licensed Know How” means Know How
Controlled by Meda at the Effective Date and/or that is Controlled by Meda
during the Term that is necessary or useful for the importation, exportation,
research, development, distribution, marketing, offer for sale, use, sale or
Commercialisation of an Elidel Licensed Product in the Elidel Territory.

 

1.28                           “Elidel Licensed Patents” means those Patent
Rights set out in Schedule 1 Part A and

 

4

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any other Patent Rights acquired or Controlled by Meda during the Term that
would be infringed by the research, development, marketing, or sale of Elidel
Licensed Product in the Elidel Territory.

 

1.29                           “Elidel Licensed Products” means a topical
formulation of pimecrolimus and any metabolite, prodrug, hydrate, solvate,
conjugate, salt, crystal form, ester, enantiomer, stereoisomer or polymorph of
pimecrolimus including Elidel Products.

 

1.30                           “Elidel Products” mean those products as set out
in Schedule 2 Part A.

 

1.31                           “Elidel Supply Agreement” means the Supply
Agreement entered into between Meda AB and Valeant of even date herewith for the
supply of Elidel Licensed Products by Meda AB to Valeant.

 

1.32                           “Elidel Territory” means the United States
(including Puerto Rico), Canada and Mexico.

 

1.33                           “Elidel Trade Marks” means those trade marks
listed in Schedule 3 Part A.

 

1.34                           “Encumbrance” means any encumbrance, claim,
charge, hypothecation, lien, mortgage, pledge, option, license, right of first
refusal or security interest of any kind.

 

1.35                           “FDA” means the United States Food and Drug
Administration, or any successor agency.

 

1.36                           “First Commercial Sale” shall mean, with respect
to any Licensed Product, the first sale for end use or consumption of such
Licensed Product in the Xerese Territory or Elidel Territory, as the case may
be, excluding, however, any sale or other distribution for use in a clinical
trial or prior to grant of a Marketing Authorization in the applicable country
in the Xerese Territory or Elidel Territory, as the case may be.

 

1.37                           “Force Majeure Event” shall have the meaning set
out in Clause 23.1.

 

1.38                           “Good Manufacturing Practice” means the current
and applicable laws and guidelines on Good Manufacturing Practice for the
manufacture of pharmaceutical products for human use in force applicable to the
Parties or the manufacture of the Licensed Products, including, without
limitation, the International Conference on Harmonisation of Technical
Requirements for Registration of Pharmaceuticals For Human Use (ICH) Guideline
Q7A Good Manufacturing Practice for Active Pharmaceutical Ingredients, European
Directive 2003/94/EC (and any legislation implementing such Directive) and any
further guidance as published by the European Commission in Volume IV of “The
rules governing medicinal products in the European Community” (each as may be
amended from time to time), the current and applicable directives and guidelines
on current good manufacturing practices and standards promulgated or endorsed by
the FDA, including the U.S. Current Good Manufacturing Practices, 21 C.F.R.
Parts 210 and 211, Part C, Division 2 of the Food and Drug Regulations, and the
principles detailed in and the Good Manufacturing Guidelines published by Health
Canada, in each case as they may be updated from time to time.

 

5

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1.39                           “Governmental Entity” means any court, agency,
authority, department, legislative or regulatory body or other instrumentality
of any government or country or of any national, federal, state, provincial,
regional, county, city or other political subdivision of any such government or
any supranational organization of which any such country is a member or
quasi-governmental authority or self-regulatory organization of competent
authority.

 

1.40                           “Health Canada” shall mean Health Canada or any
successor agency.

 

1.41                           “Improvements” means all Know-How, inventions,
improvements or discoveries (whether patentable or not) which are generated by
either or both Parties and/or their Affiliates in respect of Licensed Products
during the Term of this Agreement.

 

1.42                           “IND” means an investigational new drug
application filed with a Regulatory Authority in the Elidel Territory or Xerese
Territory as a requirement for the initiation of human clinical trials for a
Licensed Product in the Elidel Territory or Xerese Territory, as applicable,
including all supplements and amendments that may be filed therewith.

 

1.43                           “Indemnified Party” shall have the meaning set
out in Clause 19.4.

 

1.44                           “Indemnifying Party” shall have the meaning set
out in Clause 19.4.

 

1.45                           “Insolvent Party” shall have the meaning set out
in Clause 15.4.

 

1.46                           “Intellectual Property Rights” means Patent
Rights, utility models, and other like forms of protection, copyrights, database
rights, rights in databases, trade names, trade or service marks, domain names,
design rights, including any applications registration for the foregoing and all
other similar proprietary rights as may exist anywhere in the world whether
registered or unregistered.

 

1.47                           “Interim Distribution Agreement” means the
Interim Distribution Agreement previously entered into between the Parties on
May 11, 2011, as amended.

 

1.48                           “JSC” shall have the meaning set out in Clause
3.1.

 

1.49                           “Know How” means unpatented technical and other
information, including clinical data, of a Party that is not in the public
domain, and concerning Licensed Products, including, ideas, concepts,
inventions, discoveries, data, formulae, specifications, information relating to
materials, models, assays, analytical processes and SOPs, materials relating to
assays, analytical systems or processes, procedures for experiments and tests
and results of experimentation and testing, results of research and development
including laboratory records, data relating to the pharmacology of products
(including data relating to toxicology, bioavailability, metabolism, metabolites
and pharmacokinetics), clinical trial data, case report forms, data analyses,
reports or summaries and information contained in submissions to and information
from ethical committees and Regulatory Authorities.  The fact that a part of a
compilation of data is in the public domain shall not prevent the compilation of
data as such, or any one or more of the other elements of the compilation from
being Know How.

 

6

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1.50                           “Knowledge” means, with respect to Meda, the
actual knowledge of any of the employees of Meda or its Affiliates set out in
Schedule 6.

 

1.51                           “Licensed Clinical Data” means the Elidel
Licensed Clinical Data and the Xerese Licensed Clinical Data.

 

1.52                           “Licensed Intellectual Property” means the
Licensed Patents and Licensed Trade Marks.

 

1.53                           “Licensed Know How” means the Elidel Licensed
Know How and the Xerese Licensed Know How.

 

1.54                           “Licensed Patents” means Elidel Licensed Patents
and the Xerese Licensed Patents.

 

1.55                           “Licensed Products” means Elidel Licensed
Products and Xerese Licensed Products.

 

1.56                           “Licensed Trade Marks” means Elidel Trade Marks
and Xerese Trade Marks.

 

1.57                           “Loss” shall have the meaning set out in Clause
19.2.

 

1.58                           “Marketing Authorisation” means any approval
required from the relevant Regulatory Authority or Authorities to distribute,
promote, market and sell Licensed Products in the Elidel Territory or Xerese
Territory, as applicable.

 

1.59                           “Marketing Services” means the marketing services
as further described in Schedule 4 that the Parties have agreed Meda shall
provide in respect of Xerese Licensed Products.

 

1.60                           “Meda” shall have the meaning set out at the top
of this Agreement.

 

1.61                           “Meda Indemnified Party” shall have the meaning
set out in Clause 19.2.

 

1.62                           ***

 

1.63                           ***

 

1.64                           “Members” shall have the meaning set out in
Clause 3.2.

 

1.65                           ***

 

 

1.66                           “Non-Assignable Agreement” shall have the meaning
set out in Clause 5.6.

 

1.67                           ***

 

1.68                           ***

 

1.69                          ***

 

7

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1.70                           ***

 

1.71                           ***

 

1.72                           ***

 

1.73                           “Party” and “Parties” shall have the meanings set
out at the top of this Agreement.

 

1.74                           “Patent Rights”  means any patent applications,
patents and any foreign counterparts thereof, including, without limitation, all
provisional applications, divisions, renewals, continuations,
continuations-in-part, extensions, reissues, re-examinations, substitutions,
confirmations, registrations, revalidations and additions of or to them, as well
as any supplementary protection certificates or patent term extension, or like
form of protection, whether on file with the appropriate governmental agencies
as of the Effective Date or at any time during the Term of this Agreement.

 

1.75                           “Permitted Encumbrance” shall have the meaning
set forth in the ***.

 

1.76                           “Pharmacovigilance Agreement” means the
pharmacovigilance agreement(s) for the Licensed Products to be entered into
pursuant to Clause 8.

 

1.77                           “Quarter” means each period of three consecutive
calendar months commencing on 1 January, 1 April, 1 July and 1 October of the
relevant calendar year.

 

1.78                           “Receiving Party” shall have the meaning set out
in Clause 17.1.

 

1.79                           “Regulatory Approval” means an approval,
including, without limitation, a Marketing Authorisation, granted by a
Regulatory Authority.

 

1.80                           “Regulatory Authority” means any national (e.g.,
FDA), supranational (e.g., the European Commission, the Council of the European
Union, the European Medicines Agency), regional, state or local regulatory
agency, department, bureau, commission, council or other governmental entity in
a given country or region responsible for granting and administering any
governmental approvals (including as to price) necessary or desirable to
distribute, promote, market and sell pharmaceutical products, or for
pharmacovigilance of such products, in such country.

 

1.81                           ***

 

1.82                           ***

 

1.83                           “Saleable Condition” means fit for sale and,
based on sale in the normal course, shall have at least *** of remaining shelf
life at the time of commercial sale by or on behalf of Valeant (in the case of
Clause 9.4) and Meda (in the case of Clause 16.1.7) to a Third Party.

 

8

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1.84                           “Sales and Marketing Plan” means the sales and
marketing plan to be created pursuant to Clause 6.2.

 

1.85                           “Term” shall have the meaning set out in Clause
15.1.

 

1.86                           ***

 

1.87                           “Terminating Party” shall have the meaning set
out in Clause 15.3.

 

1.88                           “Territory” means the Elidel Territory or the
Xerese Territory, as applicable.

 

1.89                           “Third Party” means any entity or person other
than the Parties or their respective Affiliates.

 

1.90                           “Third Party Agreements” means those contracts,
licenses and other agreements between Meda or any of its Affiliates, on the one
hand, and Third Parties, on the other hand, that are listed on Schedule 7.

 

1.91                           “Termination Date” means the effective date of
termination of this Agreement pursuant to Clause 15.

 

1.92                           “Trial Assigned Agreements” shall mean the
agreements as set out in Schedule 9 Part B.

 

1.93                           ***

 

1.94                           “United States” means the United States of
America, including the District of Columbia.

 

1.95                           “US GAAP” means generally accepted accounting
principles in the United States, as in effect from time to time.

 

1.96                           “Valeant” shall have the meaning set out at the
top of this Agreement.

 

1.97                           “Valeant Indemnified Party” shall have the
meaning set out in Clause 19.3.

 

1.98                           ***

 

1.99                           “Xerese” shall have the meaning set out in the
recitals to this Agreement.

 

1.100                     “Xerese Licensed Clinical Data” means clinical data
that is Controlled by Meda or its Affiliates at the Effective Date and/or during
the Term that relates to Xerese Licensed Products.

 

1.101                     “Xerese Field” means all applications for the
prevention and treatment of a herpes indication.

 

1.102                     ***

 

1.103                     “Xerese Interim Distribution Period” shall have the
meaning set out in Clause 6.5.2.

 

9

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1.104                     “Xerese Licensed Know How” means Know How Controlled
by Meda at the Effective Date and/or that is Controlled by Meda during the Term
that is necessary or useful for the importation, exportation, research,
development, distribution, marketing, offer for sale, use, sale or
Commercialisation of a Xerese Licensed Product in the Xerese Territory.

 

1.105                     “Xerese Licensed Products” means topical formulations
for the prevention and/or treatment of any herpes indication consisting of a
combination of acyclovir and hydrocortisone as active ingredients including
Xerese Products.

 

1.106                     “Xerese Licensed Patents” means those Patent Rights
set out in Schedule 1 Part B and any other Patent Rights acquired or Controlled
by Meda during the Term that would be infringed by the research, development,
marketing, or sale of Xerese Licensed Product in the Xerese Territory.

 

1.107                     “Xerese Products” means those products as set out in
Schedule 2 Part B.

 

1.108                     “Xerese Supply Agreement” shall have the meaning set
out in Clause 9.1.

 

1.109                     “Xerese Territory” means the United States, Canada and
Mexico.

 

1.110                     “Xerese Trade Marks” means those trade marks listed in
Schedule 3 Part B.

 

1.111                     This Agreement shall be interpreted and construed
pursuant to the following rules of interpretation and construction:

 

1.111.1                                    all references to a particular clause
or schedule shall be a reference to that clause or schedule in or to this
Agreement as it may be amended from time to time pursuant to this Agreement;

 

1.111.2                                    the headings are inserted for
convenience only and shall be ignored in construing this Agreement;

 

1.111.3                                    words importing the masculine gender
shall include the feminine;

 

1.111.4                                    words denoting persons shall include
any individual, partnership, company, corporation, joint venture, trust
association, organisation or other entity, in each case whether or not having
separate legal personality;

 

1.111.5                                    the words “include”, “included”,
“including” and “in particular” or any similar expression are to be construed as
illustrative and without limitation to the generality of the preceding words;
and

 

1.111.6                                    reference to any statute or
regulation includes any modification or re-enactment of that statute or
regulation.

 

10

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2.          GRANT OF RIGHTS

 

2.1.       Xerese Licence.  Subject to the terms of this Agreement, Meda hereby
grants to Valeant:

 

2.1.1.           an exclusive license, or as applicable, sub-license under the
Xerese Licensed Patents; and

 

2.1.2.           an exclusive license (and as applicable sub-license) under the
Xerese Licensed Know-how and Xerese Licensed Clinical Data;

 

in both instances solely for the purpose of the research, development, use,
import, export, distribution, sale, offer for sale, marketing, and
Commercialisation of Xerese Licensed Products in the Xerese Field in the Xerese
Territory; and

 

2.1.3.           an exclusive licence to use the Xerese Trade Marks in relation
to the Xerese Licensed Products in the Xerese Territory.

 

2.2.       Elidel United States Licences.  Subject to the terms of this
Agreement, Meda hereby grants to Valeant:

 

2.2.1.           an exclusive license, or as applicable, sub-license under the
Elidel Licensed Patents; and

 

2.2.2.           an exclusive license (and as applicable sub-license) under the
Elidel Licensed Know-how and Elidel Licensed Clinical Data;

 

in both instances solely for the purpose of the research, development, use,
import, export, distribution, sale, offer for sale, marketing, and
Commercialisation of Elidel Licensed Products in the Elidel Field in the United
States; and

 

2.2.3.           an exclusive licence to use the Elidel Trade Marks in relation
to the Elidel Licensed Products in the United States.

 

2.3.       Elidel Canadian and Mexican Licenses.  Subject to the terms of this
Agreement, without the need for further action by either Party, upon the
respective commencement of the Phase 2 Period, as such term is defined and
operative in the Elidel Supply Agreement, in the countries of Canada and Mexico,
Meda shall and hereby does grant to Valeant in each such country:

 

2.3.1.           an exclusive license or, as applicable, sub-license under the
Elidel Licensed Patents; and

 

2.3.2.           an exclusive license (and as applicable sub-license) under the
Elidel Licensed Know-how and Elidel Licensed Clinical Data;

 

in both instances solely for the purpose of the research, development, use,
import, export, distribution, sale, offer for sale, marketing, and
Commercialisation of Elidel Licensed Products in the Elidel Field in such
country; and

 

11

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2.3.3.           an exclusive licence to use the Elidel Trade Marks in relation
to the Elidel Licensed Products in such country.

 

2.4.       No right to manufacture.  The Parties agree that the licences granted
in this Agreement do not include the right to manufacture any Licensed Product;
provided however that, in the event the Xerese Supply Agreement is assigned to
Valeant, Meda shall grant to *** a non-exclusive license (or, as applicable, a
non-exclusive sub-license) under the Xerese Licensed Patents, the Xerese
Licensed Know-How and the Xerese Licensed Clinical Data solely for the purposes
of *** manufacturing Xerese Licensed Product for Valeant in accordance with the
terms of the Xerese Supply Agreement; provided further that, at any time after
assignment of the Xerese Supply Agreement, if Valeant receives notice from ***
or otherwise learns of the termination or non-renewal of the Xerese Supply
Agreement, the Parties shall use Commercially Reasonable Efforts to promptly
identify another Third Party manufacturer, mutually acceptable to both Parties,
to be engaged by Valeant for the manufacture and supply of Xerese Licensed
Product and Meda shall grant to such Third Party a non-exclusive license (or, as
applicable, a non-exclusive sub-license) under the Xerese Licensed Patents, the
Xerese Licensed Know-How and the Xerese Licensed Clinical Data solely for the
purposes of manufacturing Xerese Licensed Product for Valeant. If the Parties
are unable to identify a mutually acceptable Third Party manufacturer within
sixty (60) days, then Meda shall grant to Valeant a sublicensable, non-exclusive
license (or, as applicable, a non-exclusive sub-license) under the Xerese
Licensed Patents, the Xerese Licensed Know-How and the Xerese Licensed Clinical
Data solely for the purposes of manufacturing Xerese Licensed Product for
Valeant. Meda shall transfer to Valeant or to its designee any necessary or
useful know-how and technology used by *** or Meda to the extent that the same
is in the possession of and Controlled by Meda and shall use its Commercially
Reasonable Efforts to transfer such Know-How and technology it Controls if it is
not in Meda’s possession, as applicable and the Parties shall use their
Commercially Reasonable Efforts to ensure that such transfer shall be
accomplished in time to enable Valeant to obtain a continued and uninterrupted
supply of the Xerese Licensed Products in the event of such termination.

 

2.5.       No Sublicense Rights. Valeant shall have no right to sublicense any
of the licences and other rights granted under Clauses 2.1, 2.2 or 2.3 to a
Third Party, except with Meda’s prior written consent (such consent to be in
Meda’s absolute discretion); provided however that Valeant shall be entitled, in
its sole discretion and without the consent of Meda, to:

 

2.5.1.           grant sub-licences to an Affiliate provided that the
sub-license shall terminate immediately upon the Affiliate ceasing to be an
Affiliate; or

 

2.5.2.           grant sub-licences to Third Party contract sales organizations
and Third Party contract research organisations in relation to the promotion and
development of Licensed Products.

 

3.          MANAGEMENT OF THE RELATIONSHIP

 

3.1.       The Joint Steering Committee.  On or within thirty (30) days after
the Effective Date, the

 

12

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Parties shall establish the Joint Steering Committee (“JSC”) to oversee and
manage the relationship between the Parties.  In particular, the JSC shall be
responsible for:

 

***

 

3.2.       Membership and Governance of the JSC.  The JSC shall comprise four
(4) members (the “Members”), with Meda appointing two (2) Members and Valeant
appointing two (2) Members as their respective representatives on the JSC.  The
initial Members of the JSC shall be notified by each Party to the other Party in
writing on the Effective Date or as soon as reasonably possible thereafter.

 

3.2.1.           Each Party shall be entitled to remove any Member appointed by
it and to appoint any person to fill the vacancy arising from the removal or
retirement of such Member.  Each Party shall give the other Party prior written
notice of any changes in the identity of its Members.  The Parties shall ensure
that all of their appointed Members are of a suitable level of expertise,
seniority and decision-making authority to deal with the issues that may arise
in connection with matters to be considered by the JSC.

 

3.2.2.           The JSC shall exercise this authority in good faith and in
accordance with the terms of this Agreement.  The JSC shall have no authority to
bind the Parties unless the Parties expressly delegate matters to the JSC or
ratify the decision of the JSC.

 

3.2.3.           From time to time, the JSC may establish one or more
subcommittees to oversee particular projects or activities related to this
Agreement, and such subcommittees will be constituted as the JSC agrees.  The
Parties may replace their respective subcommittee representatives at any time,
with prior written notice to the other Party.  Any such sub-committee shall be
run on the same basis as the JSC except that any issue within the purview of
such a subcommittee that is not settled or determined by the applicable
subcommittee shall be submitted to the JSC for resolution.  The chairperson of
each subcommittee shall report on subcommittee efforts at each JSC meeting, and
either Party may invite its own representatives on such subcommittee to also
report on such efforts.

 

3.3.       JSC Meetings.

 

3.3.1.           At least twenty-one (21) days prior to each regularly scheduled
meeting of the JSC, written notice shall be given to each Member by the Party
convening the meeting and at least fourteen (14) days prior to each such
meeting, each Party shall provide to the other all written information expected
to be disclosed at such meeting.  In addition, special meetings of the JSC may
be called on such shorter notice period as may be agreed between the Parties.

 

3.3.2.           Meda shall designate a Meda Member as the chairperson of the
JSC.  The chairperson of the JSC shall set meeting agendas for the JSC provided
that the agenda shall include any matter that either Party requests to be
included.  Such

 

13

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agendas shall be circulated to all Members at least seven (7) Business Days
prior to the date of the relevant meeting.  The JSC chairperson shall be
responsible for recording, preparing and (within ten (10) Business Days) issuing
draft minutes of the JSC meetings, which draft minutes shall be reviewed,
modified and approved in writing by the Members.

 

3.3.3.           The JSC shall have its first meeting within forty-five (45)
days after the Effective Date, and thereafter shall hold Quarterly meetings by
telephone or video conference.  In the event that the Parties agree to hold
face-to-face meetings, the venue for the meeting of the JSC shall alternate
between Barbados and Luxembourg, unless the Parties mutually agree otherwise.
Each Party shall bear its own costs for its Members to attend JSC meetings and,
as applicable, for its obligations to host such meetings.

 

3.4.       JSC Decision Making.  All decisions by the JSC shall be made by
unanimous vote of the Members present.  The presence of at least one (1) Member
of the JSC representing each of Meda and Valeant (i.e. a total of two Members)
shall constitute a quorum.  The Members shall use their reasonable efforts to
reach agreement on any and all matters to be determined or resolved by the JSC.

 

3.5.       Dispute Resolution. In the event that unanimous agreement on a matter
cannot be reached:

 

***

 

4.         DEVELOPMENT OF LICENSED PRODUCTS

 

4.1.       Development Generally. Both Valeant and Meda have the right to
undertake development work (whether alone or together) in respect of products
that fall within the scope of the Licensed Patents, Licensed Know-How or
Licensed Clinical Data, in particular on any new formulations of such products.
In the event that a Party intends to undertake development work, prior to
commencing such development work, the Party undertaking such development work
shall notify the other Party and provide it with details of the proposed
development work. ***, the JSC shall meet to agree, in accordance with the terms
of Clauses 3.4 and 3.5, to the terms of a development plan in respect of the
development work to be undertaken (“Development Plan”). Such development work
shall be conducted in accordance with the Development Plan.

 

4.2.       ***. Notwithstanding Clause 4.1, neither Party shall be required ***.
Prior to the commencement of any development work, ***

 

4.3.       ***

 

4.4.       Research and Development Costs. If ***, where any development work is
to be conducted pursuant to Clause 4 hereto, the costs of such development work
as agreed pursuant to any agreed Development Plan shall be shared as follows:

 

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4.4.1.           Valeant and Meda shall each pay *** for (i) the development of
Elidel Licensed Products agreed to by the Parties (including agreement as to
which Party shall be responsible for conducting such development work), and
(ii) ***.

 

4.4.2.           Valeant shall pay *** and Meda shall pay *** for the
development costs for the development of Xerese Licensed Products agreed to by
the Parties (the “Agreed Ratio”) and Valeant shall be responsible for conducting
such development work, provided that the work is conducted in accordance with an
agreed Development Plan.

 

4.5.       Development Work Required by a Regulatory Authority. Valeant shall be
responsible for and bear the cost of all development work required by a
Regulatory Authority in the Elidel Territory in respect of an Elidel Licensed
Product or the Xerese Territory in respect of a Xerese Licensed Product as the
case may be.

 

4.6.       ***

 

4.7.       Rights in Developed Licensed Products.  ***, in the event that the
development work results in the creation of a new product or new formulation of
a product that falls within the scope of the Licensed Patents or uses the
Licensed Know-How or Licensed Clinical Data, then the resulting product or new
formulation shall be deemed to be a Licensed Product and, subject to Valeant
making the payment in accordance with Clause 4.3, shall be the subject of this
Agreement within the Elidel Territory or Xerese Territory, as applicable, and
Meda shall have exclusive rights outside the Elidel Territory or Xerese
Territory, as applicable and each Party shall within its respective territories
(being the Territory for Valeant and outside the Territory for Meda) have full
rights to use and reference the data, reports, dossiers and any other useful
clinical or regulatory information resulting from the development work conducted
by the other Party ***.

 

4.8.       Royalties Payable ***. If Meda ***, then Meda shall have the
following payment obligations to Valeant:

 

4.8.1.           with respect to Xerese Licensed Products, Meda shall pay to
Valeant *** and

 

4.8.2.           with respect to the Elidel Licensed Products, if the new
product or new formulation requires a separate Regulatory Approval in a country
outside the Elidel Territory from an Elidel Licensed Product approved at the
relevant time in such country, then (i) if Meda itself or an Affiliate
Commercialises such new Elidel Licensed Product or new formulation in such
country outside the Elidel Territory, then Meda shall pay to Valeant *** and
(ii) if a Third Party Commercialises such new Elidel Licensed Product or new
formulation in such country outside the Elidel Territory, *** in connection with
any license granted to such Third Party for the Commercialisation of any such
Elidel Licensed Product in such country outside the Elidel Territory.

 

***

 

15

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4.9.       Development Costs. Where, in accordance with the terms of this
Agreement, the Parties agree or have agreed to share or split (in any
proportion) the development costs incurred in connection with development of a
Licensed Product in accordance with this Clause 4, such development costs shall
be limited to a Party’s reasonable external costs incurred in conducting such
development.

 

5.          REGULATORY AND CLINICAL DEVELOPMENT

 

5.1.       The Marketing Authorisations for the Licensed Products shall be held
by Valeant, in the name of Valeant or its designated Affiliate.  Meda has, prior
to the Effective Date, transferred the Marketing Authorisation in the United
States for the Elidel Licensed Product to Valeant or its designated Affiliate
and submitted all required documentation and correspondence to effect such
transfer, including the required letters to the FDA. Meda shall use Commercially
Reasonable Efforts to transfer to Valeant, as promptly as practicable, the
ownership of the other Marketing Authorisations or applications therefor
(including the Marketing Authorizations and applications therefor described in
Schedule 11 hereto); provided however that (i) in the case of the Elidel
Licensed Products, the Marketing Authorizations for Canada and Mexico shall be
transferred to Valeant no later than the last day of the Phase 1 Period as such
term is defined in the Elidel Supply Agreement, and (ii) the Marketing
Authorization for the United States for the Xerese Licensed Product shall be
transferred to Valeant, at Valeant’s request, at the end of the Xerese Interim
Distribution Period. Notwithstanding the provisions of this Clause 5.1, Meda
shall not be liable for any delay in the transfer of any Marketing Authorisation
to the extent caused by a Third Party, Regulatory Authority or Government
Entity.  Meda shall also transfer to Valeant or its designated Affiliate any
applications for Marketing Authorizations of Licensed Products existing as of
the Effective Date, including all existing INDs *** and other similar regulatory
filings in the Elidel Territory or Xerese Territory, as applicable, including
for the Xerese Licensed Product in Canada and Mexico. Valeant shall provide Meda
with such assistance as may reasonably be requested by Meda in order to effect
such transfers, including by submitting all required documentation and
correspondence to effect such transfer, including the required letters and
documentation to the FDA, Health Canada and applicable Regulatory Authority in
Mexico, as the case may be. Valeant shall act reasonably in respect of any
correspondence with Regulatory Authorities pursuant to this Agreement and in any
event in accordance with the standards of care and diligence it would exercise
in respect of its own products. Valeant shall and shall procure that its
Affiliates, sub-licensees or nominees shall assign the Marketing Authorisations
so transferred to it by Meda back to Meda upon the termination of this Agreement
or the expiration of the Term, unless the Parties agree otherwise or as
otherwise set forth herein.  Valeant may not transfer any such Marketing
Authorisations to any Third Party without the prior written consent of Meda. To
the extent not already provided prior to the Effective Date, Meda shall provide
Valeant with full copies of the Marketing Authorizations promptly following the
transfer of such Marketing Authorizations.

 

5.2.       During the Term of this Agreement: (a) Valeant shall be responsible,
at its own cost, for filing and maintaining all applications necessary to obtain
and maintain the Marketing Authorisations for Licensed Products; (b) Meda shall
provide Valeant with such

 

16

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assistance as may reasonably be requested in order to file and maintain all
Marketing Authorisations for Licensed Products; (c) Valeant shall provide Meda
with copies of such applications and shall allow Meda to review and comment on
material regulatory applications for Licensed Products prior to submission to
any Regulatory Authority in such country; (d) Valeant shall confer with Meda
regarding the preparation of such filings and communications and the
registration process and any revisions to any filings or communications with the
Regulatory Authorities in such country; and (e) Valeant shall keep Meda
reasonably informed as to the status of its draft regulatory applications for
Licensed Products in such country and shall provide copies of material
communications regarding the Licensed Products with Regulatory Authorities in
such country to Meda. Meda shall reasonably cooperate with Valeant, including by
filing with applicable Regulatory Authorities all documents reasonably requested
by Valeant and necessary to enable Valeant, prior to or after the transfer of
Regulatory Approvals, to carry out Valeant’s regulatory responsibilities set
forth in this Agreement.

 

5.3.       Except as may be prohibited by law or by a Regulatory Authority,
Valeant shall notify Meda of any meetings between Valeant and a Regulatory
Authority relating to the Licensed Products, and allow a representative of Meda
to attend any such meetings as an observer.  Valeant shall provide Meda with
copies of material correspondence received by Valeant from Regulatory
Authorities in the Elidel Territory or Xerese Territory, as applicable, that
relate to Licensed Products, and Valeant shall provide Meda an opportunity to
review and comment on material correspondence with Regulatory Authorities in the
Elidel Territory or Xerese Territory, as applicable, prior to submission, and
shall consider in good faith the comments of Meda to such correspondence.

 

5.4.       Valeant shall be responsible for and shall have control over all
changes to the packaging of the Licensed Products in the Xerese Territory or
Elidel Territory, as the case may be. Repackaging or changes to the packaging of
the Licensed Products locally in the Elidel Territory or Xerese Territory, as
applicable, shall meet the requirements of locally applicable Good Manufacturing
Practices for pharmaceutical products. Valeant shall notify Meda of such
repackaging or changes to the packaging of the Licensed Products not later than
forty-five (45) days after such repackaging or changes are implemented. Valeant
shall be responsible for the costs of such changes in packaging, unless
requested by Meda.

 

5.5.       ***

 

5.6.       Assignment of Third Party Agreements.  All Third Party Agreements
that can be assigned to Valeant without the consent of the respective Third
Parties, or for which consent has been obtained prior to the Effective Date,
shall be so assigned, to the extent they relate to the Licensed Products in the
Elidel Field, pursuant to the terms of this Agreement on the Effective Date. To
the extent the assignment of any Third Party Agreement is prohibited by
applicable law or would require any authorization, approval, consent or waiver
(collectively, “Consent”) of any governmental entity or other Third Party and
such Consent shall not have been obtained prior to the Effective Date (each, a
“Non-Assignable Agreement”), neither this Agreement nor the agreement
contemplated in Clause 5.7 shall constitute an assignment thereof if any of the
foregoing would constitute

 

17

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a breach of applicable law or the rights of any Third Party under such
Non-Assignable Agreement. Following the Effective Date, the Parties shall, and
shall cause their respective Affiliates to, use Commercially Reasonable Efforts
in obtaining such Consents, however, Meda cannot guarantee that such Consents
will be received. In the event that any such Consent is not obtained, Meda
shall, upon Valeant’s request, terminate, subject to the terms and conditions
set forth therein, such Third Party Agreement to the extent it relates to the
Licensed Product in the Elidel Field as soon as practicable. Valeant shall, as
Meda’s agent, perform and discharge all outstanding obligations and liabilities
and enjoy all rights, income and benefit of Meda’s (or as applicable, Meda’s
Affiliates) under the Third Party Agreement with respect to the Licensed
Products in the Elidel Field from and after the Effective Date.

 

5.7.       Assignment and Assumption Agreement.  Simultaneously with the
execution and delivery of this Agreement, the Parties will enter into an
agreement providing for the assignment and assumption of the Third Party
Agreements as contemplated in Clause 5.6, a copy of which is attached hereto as
Schedule 8. In the event a Consent to any Third Party Agreement is obtained
following the Effective Date pursuant to Clause 5.6, the Parties will promptly
enter into an agreement substantially in the form of the agreement attached
hereto as Schedule 8 providing for the assignment and assumption of such Third
Party Agreement.

 

6.           MARKETING AND DISTRIBUTION OF LICENSED PRODUCTS

 

6.1.      Commercial Strategy; Pricing. Subject to Clause 3 and without
prejudice to Valeant’s diligence obligations under this Agreement (including
those set out in Clause 7), Valeant shall have the exclusive right to establish
the strategy, including the price and sales strategy, for the Commercialization
of the Licensed Products in the Xerese Territory and Elidel Territory. Valeant
shall be solely responsible for the pricing of the Licensed Products.

 

6.2.      Sales and Marketing Plan.  Valeant shall notify Meda and shall provide
the JSC, in accordance with Clause 3, with a proposed Sales and Marketing
Plan(s) for the Licensed Products on or within sixty (60) days of the Effective
Date.  The Sales and Marketing Plan shall include, among other topics the
marketing and promotional investment and promotional activities to be undertaken
by Valeant in respect of the Licensed Products in the Xerese Territory or the
Elidel Territory, as the case may be. Valeant shall be solely responsible for
the generation of all promotional materials to be used by Valeant or its
Affiliates in connection with the marketing, promotion and sale of the Licensed
Products in the Xerese Territory and the Elidel Territory, provided that such
promotional materials are consistent with the relevant Sales and Marketing
Plan.  Valeant shall provide an updated Sales and Marketing Plan for Licensed
Products on each one year anniversary following the provision of the first
proposed Sales and Marketing Plan.

 

6.3.      Marketing Services by Meda. Notwithstanding Clause 6.1, Meda shall
provide the Marketing Services in connection with the Xerese Licensed Products
in the Xerese Territory for the period commencing on the Effective Date and
ending on ***.

 

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6.4.      Promotional Materials.  All promotional materials used by Valeant for
Licensed Products shall comply with applicable laws, rules and regulations in
the Elidel Territory or the Xerese Territory, as applicable, and shall be
consistent with the Sales and Marketing Plan.  A physical sample of each item of
promotional material together with, where applicable, an English translation
shall be provided to Meda within thirty (30) days of approval by Valeant. Meda
shall provide Valeant with copies of or access to the promotional materials used
by Meda in the United States in connection with the Xerese Licensed Product.

 

6.5.      Interim Distribution Arrangements.

 

6.5.1.           Elidel Licensed Products. The Parties acknowledge that, with
respect to the Elidel Licensed Product, during the Phase 1 Period (as defined in
the Elidel Supply Agreement) with respect to Canada and Mexico, Valeant is not
authorized to distribute, sell or invoice the Elidel Licensed Product in such
countries and *** or its Affiliates shall continue to distribute such Elidel
Licensed Product in such countries during such period, in accordance with the
terms of the Elidel Supply Agreement.

 

6.5.2.           Xerese Licensed Products.  For a period of up to *** from the
Effective Date (the “Xerese Interim Distribution Period”), at the request of
Valeant, Meda shall continue to distribute the Xerese Licensed Products in the
United States on Valeant’s behalf. Meda shall continue to invoice Third Party
customers for the Xerese Licensed Product in the United States in its own name
and shall pay Valeant the following amount:

 

***

 

Within twenty (20) days of the end of the Xerese Interim Distribution Period,
Meda shall provide Valeant with a report of Net Sales of the Xerese Licensed
Product in the United States for such period, together with the amount owed by
Valeant to Meda pursuant to this Clause 6.5.2.

 

6.6.        Transition Agreement. Prior to the end of the Xerese Interim
Distribution Period, the Parties shall enter into a transition agreement with
respect to the Xerese Licensed Products in the United States, on terms to be
agreed but substantially in accordance with the terms of the agreement which is
attached hereto as Schedule 12.

 

7.           DILIGENCE

 

7.1.      General.  The Parties shall use their Commercially Reasonable Efforts
to perform their responsibilities and obligations under this Agreement. In
addition, Meda agrees that it will not breach the ***Agreement or the ***
Agreement or the ancillary agreements thereto applicable to the Elidel Licensed
Products, so as to render it unable to fulfil its obligations under this
Agreement or any agreements related hereto. Valeant agrees that it will not do
anything that puts Meda in breach of the agreement between *** and Meda (to the
extent that Valeant is aware of the relevant provision) or the *** Agreement and
the ancillary agreements thereto applicable to the Elidel Licensed Products.

 

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7.2.      Commercialisation Diligence.  Subject to Clauses 6.2 and 6.4, Valeant
shall use Commercially Reasonable Efforts to market and sell Licensed Products
in the countries in the Elidel Territory or Xerese Territory, as applicable, for
which Marketing Authorisations have been granted to or transferred to Valeant
and to comply with the terms of all Sales and Marketing Plan, as Valeant may
amend such Sales and Marketing Plan from time to time.  Prior to the 30
January of each calendar year, Valeant shall inform Meda of the results of its
sales and marketing performance relating to Licensed Products in the Elidel
Territory or Xerese Territory, as applicable, for the prior year.

 

7.3.      Sales Data. Within fifteen (15) days after the end of each quarter,
Valeant shall provide to Meda a report of all sales of Licensed Products
occurring in the Elidel Territory or Xerese Territory, as applicable, such
report shall include recorded sales of Licensed Products by volume and value and
market share percentage by volume and value.  Valeant shall use Commercially
Reasonable Efforts to provide Meda with monthly reports, of gross sales, unit
sales, IMS reports and its best estimate of Net Sales of Licensed Products in
the Elidel Territory or Xerese Territory, as applicable, within fifteen (15)
days of the end of each month.

 

7.4.      Material Terms.  Valeant’s obligations in this Clause 7 regarding
diligence are material terms of this Agreement

 

8.           ADVERSE EVENTS AND PHARMACOVIGILANCE

 

8.1.       Pharmacovigilance.  Valeant and Meda shall enter into a
Pharmacovigilance Agreement for each country in the Elidel Territory or Xerese
Territory or, if the Parties mutually agree, one Pharmacovigilance Agreement for
all countries in the Elidel Territory and Xerese Territory within *** of the
Effective Date to ensure that an appropriate system for pharmacovigilance
activities is in place to assume responsibility and liability for Licensed
Products in accordance with all relevant laws, directives and regulatory
guidance. Meda and Valeant shall observe the procedures and notification
requirements as set out in the applicable Pharmacovigilance Agreement with
respect to Adverse Events and to any other regulatory and reporting matters.

 

8.2.      Responsibilities of the Qualified Person.  Each Party shall designate
a suitably-qualified person responsible for compliance with its
pharmacovigilance obligations.  The qualified person shall be responsible for:
(i) the collection of Adverse Event reports for the Licensed Product reported to
Valeant and/or Meda and their respective Affiliates; (ii) notification to Meda
and/or Valeant, as applicable, of such reports in accordance with the terms of
the Pharmacovigilance Agreement; (iii) the timely submission of individual
written reports to the relevant Regulatory Authority in compliance with
applicable laws; (vi) answering pharmacovigilance related questions; and (v) all
notifications and communications with any Regulatory Authority related to
pharmacovigilance, as appropriate or required by Meda or Valeant, as applicable.

 

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9.           SUPPLY AND MANUFACTURE

 

9.1.        Supply of Xerese Licensed Products. Subject to obtaining the consent
of ***, as promptly as possible following the Xerese Interim Distribution
Period, Meda shall assign the Xerese Licensed Product supply agreement (the
“Xerese Supply Agreement”) it entered into with *** on *** to Valeant pursuant
to the assignment agreement attached hereto as Schedule 13. Prior to the
assignment of the Xerese Supply Agreement, Meda shall use Commercially
Reasonable Efforts to procure the supply of the Xerese Licensed Product to meet
Valeant’s requirements for sales and marketing hereunder provided always that
Meda shall not be obliged to procure the supply of more Xerese Licensed Product
from *** than *** is obliged to supply under the Xerese Supply Agreement,
provided that Meda will exercise, at Valeant’s request, any rights to additional
Xerese Licensed Product it has pursuant to the Xerese Supply Agreement. If Meda
is unable to obtain the consent of *** to the assignment of the Xerese Supply
Agreement to Valeant, in lieu of assigning the Xerese Supply Agreement, such
supply shall be undertaken by Meda pursuant to a supply agreement to be agreed
between the Parties.  ***

 

9.2.        Indemnification under Xerese Supply Agreement. In the event the
Xerese Supply Agreement is assigned to Valeant, Meda shall be responsible for
any amounts owing to *** for Xerese Licensed Product delivered to Meda prior to
such assignment or otherwise purchased by Valeant from Meda pursuant to Clause
9.3 below ***.

 

9.3.        Initial Supply of Xerese Licensed Product. To the extent that the
Xerese Supply Agreement is assigned to, and assumed by, Valeant, at the time of
such assignment, Valeant shall acquire from Meda the Xerese Licensed Product
then held by Meda or its Affiliates for the United States. Valeant shall deliver
one or more purchase orders to Meda, for delivery on the dates and in the
quantities set out in such purchase orders, for such inventory of Xerese
Licensed Product. On the date of delivery, Meda shall deliver such inventory of
Xerese Licensed Product, and title and risk of loss in such inventory shall
transfer, FCA (as defined in INCOTERMS, 2010 edition, published by the
International Chamber of Commerce, ICC Publication 560) the facilities of Meda
at which such inventory is held. ***

 

9.4.        Shelf Life of Xerese Licensed Product. All inventory of Xerese
Licensed Product delivered by Meda to Valeant pursuant to this Clause 9 shall be
in Saleable Condition and shall have, at the time of delivery to Valeant, a
remaining shelf life of ***.

 

9.5.        Supply of Elidel Licensed Products.  As of the Effective Date, ***
supplies the Elidel Products to Meda pursuant to a supply agreement with Meda
entered into on May 11, 2011 and Meda shall supply such Elidel Licensed Products
to Valeant on the terms of the Elidel Supply Agreement.

 

10.        FINANCIAL TERMS

 

10.1.     *** Payment.  On the Effective Date Valeant shall pay to Meda the sum
of *** in respect of ***;

 

10.2.     ***  On the Effective Date Valeant shall pay to Meda the sum of ***.

 

10.3.     *** Payment.  Valeant shall pay to Meda***

 

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10.4.     *** Payment. On the Effective Date, Valeant shall pay to Meda ***

 

For greater certainty, the payment payable pursuant to this Clause 10.4 shall
only be payable by Valeant once.

 

10.5.     *** Payment.  Upon Meda having ***  For greater certainty, the payment
payable pursuant to this Clause 10.5 shall only be payable by Valeant once.

 

10.6.     *** Payment.  Upon the *** Valeant shall pay to Meda ***. For greater
certainty, the payment payable pursuant to this Clause 10.6 shall only be
payable by Valeant once.

 

10.7.      ***. Valeant shall in accordance with the provisions of Clause 11,
pay to Meda *** of *** in the Elidel Territory and Xerese Territory, as
applicable ***, the payment shall be made as follows:

 

10.7.1.         Subject to Clause 10.7.3, Valeant shall pay to Meda ***, no
later than *** following ***

 

10.7.2.         No later than the *** following *** Valeant shall pay an amount
equal to ***  in the Elidel Territory and Xerese Territory, as applicable, for
***.

 

10.7.3.         The *** payable by Valeant to Meda pursuant to Clause 10.7.1 for
***

 

10.8.      ***. Valeant shall in accordance with the provisions of Clause 11,
pay to Meda *** in the Elidel Territory and Xerese Territory, as applicable, for
*** .  In respect of *** the payment shall be made as follows:

 

10.8.1.         Subject to Clause 10.8.3, Valeant shall pay to Meda ***, no
later than ***

 

10.8.2.         No later than *** following *** Valeant shall pay an amount
equal to *** for ***

 

10.8.3.         *** payable by Valeant to Meda pursuant to Clause 10.8.1 for ***

 

10.9.      ***.  Valeant shall in accordance with the provisions of Clause 11,
pay to Meda *** in the Elidel Territory and Xerese Territory, as applicable, for
*** the payment shall be made as follows:

 

10.9.1.         Subject to Clause 10.9.3, Valeant shall pay to Meda ***

 

10.9.2.         No later than *** following *** Valeant shall pay an amount
equal to *** in the Elidel Territory and Xerese Territory, as applicable, for
***.

 

10.9.3.         The *** payable by Valeant to Meda pursuant to Clause 10.9.1 for
***

 

10.10.    ***.  Valeant shall in accordance with the provisions of Clause 11,
pay to Meda *** in the Elidel Territory and Xerese Territory, as applicable, for
***.

 

10.11.   ***

 

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10.12.   Payment Prior to the Effective Date.  Any Licensed Products sold by
Valeant prior the Effective Date pursuant to the Interim Distribution Agreement
shall be subject to the provisions thereunder and no provisions of this
Agreement shall apply to such sales.  Any Licensed Products sold by Valeant
after the Effective Date (including any such Licensed Products acquired, but not
sold, by Valeant prior to the Effective Date) shall be subject to the provision
of this Agreement and no provision of the Interim Distribution Agreement shall
apply to such sales, except those provisions which by their terms survive the
termination of the Interim Distribution Agreement.

 

10.13.   ***

 

10.14.   Failure to Pay.  Any breach by Valeant of its obligation to make
payments under the terms of this Clause 10 when properly due and which is not
cured within the time permitted in Clause 15.3 shall be a material breach of
this Agreement.

 

10.15. ***

 

11.       PAYMENT

 

11.1.      Currency and Timing of Payments.  All payments due to Meda under this
Agreement shall be made in US $ within the relevant period specified in this
Agreement. In the case of Royalties payable under Clause 10, if no date is
specified, the payment shall be made within *** days of the end of the Quarter
to which such Royalties relate.

 

11.2.      Conversion Rate. In the event that Valeant receives a payment in
respect of which it is liable to make a payment pursuant to Clause 10.6 in a
currency other than US dollars, the relevant payment to be made by Valeant shall
be calculated in US dollars at the mid-market exchange rate as stated in the UK
Financial Times on the last Business Day of *** in which the Royalties accrued.

 

11.3.      Payment method. All payments due and payable by one Party to the
other Party under this Agreement shall be made by electronic wire transfer of
immediately available funds directly to the account of the receiving Party as
designated in writing from time to time by such Party; provided that the Parties
shall set off and net any payments due and payable hereunder or under the Elidel
Supply Agreement, as applicable, prior to making any such payment.

 

11.4.      Late Payments.  Where any sums payable by one Party to the other
hereunder remain unpaid after the date on which they became due, the Party in
default shall pay to the other interest calculated from the date upon which the
sums became due until payment thereof at *** calculated on a daily basis.

 

11.5.      Taxes. In the event that either Party is required by law to withhold
or pay any taxes on behalf of the other Party, with respect to any payments to
it hereunder, the withholding Party shall furnish the other Party with proper
evidence of the taxes so paid. Each Party

 

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shall furnish the other Party with appropriate documents to secure application
of the most favourable rate of withholding tax under applicable law.

 

11.6.     Record Keeping and Audit. Valeant shall, and shall ensure that its
respective Affiliates and permitted sublicensees (if any) shall, keep true and
accurate records and books of account in legible form and in English accordance
with US GAAP and containing all data necessary for the calculation of the
amounts payable to Meda pursuant to this Agreement.  Such records and books of
account shall be kept for at least ***.  Meda shall be entitled to have the
books and records of Valeant generated pursuant to this Agreement and any
statement it receives from Valeant relating to Royalties audited for the purpose
of verifying Valeant’s calculation of Royalties under this Agreement.  Any
calculation of Royalties (and the underlying components of such calculation) may
be audited and certified by an internationally recognised independent accounting
firm identified by Meda and reasonably acceptable to Valeant.  Meda shall
provide Valeant with at least thirty (30) days prior notice of such audit, which
shall be conducted during normal business hours. Valeant shall make available
those books and records reasonably required for the purpose of that audit and
certification, and the statements so certified shall be final and binding
between the Parties.  Meda shall be responsible for the cost of such independent
accounting firm’s services in connection with such audit; provided that Valeant
shall reimburse Meda for such costs if the results of the audit conclude that it
has understated the monies payable to Meda by more than ***.  Any outstanding
under-payments or over-payments that are identified as a result of carrying out
the audit and certification shall be payable within five (5) Business Days. 
There shall be no more than one such audit and certification by an
internationally recognised independent accounting firm during a given calendar
year, and no inspection or certification shall take place more than *** after
the submission of the annual statement to which it relates.

 

12.        OWNERSHIP OF INTELLECTUAL PROPERTY AND KNOW HOW

 

12.1.      Excluded IP.  Except for those rights expressly granted under this
Agreement, nothing herein shall be construed as creating, granting or conveying
to one Party any licence, right, title or other interest in or to any
Intellectual Property Rights and Know How owned or controlled by the other Party
or its Affiliates:

 

12.1.1.         existing prior to the Effective Date; or

 

12.1.2.         independently discovered and developed during the Term of this
Agreement by such other Party or its Affiliates other than in performance of its
obligations under this Agreement and without use of such other Party’s
Intellectual Property Rights, Know How or other Confidential Information.

 

12.2.      Improvements.  Meda shall own, and Valeant hereby assigns to Meda,
all Improvements arising pursuant to this Agreement that are exclusively related
to a Licensed Product***.  In respect of any Improvements that are not assigned
to Meda pursuant to this Clause 12.2, Valeant hereby grants to Meda an
irrevocable, fully paid—up, worldwide (other than in the Xerese Territory or
Elidel Territory), exclusive license with the right to grant sub-licenses solely
for the research, development, manufacture, use, import, export, distribution,
sale,

 

24

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offer for sale, marketing, and Commercialisation of Licensed Products during the
Term; provided however that Meda shall be subject to the payment obligations and
restrictions set out in Clause 4.8.

 

12.3.      Licence to Use Improvements.  All Improvements subject to Clause 12.2
and all Improvements made by Meda shall be included within the licence granted
to Valeant by Meda pursuant to Clauses 2.1, 2.2 and 2.3.

 

12.4.      Cooperation with Respect to Improvements. Each Party shall promptly
inform the other Party in writing of all Improvements of which it is aware
arising during the Term of this Agreement.  Meda shall have the exclusive right
and at its sole cost to file for patent protection on any Improvement, including
those that it owns pursuant to Clause 12.2 and Valeant agrees to undertake such
acts requested by Meda and at Meda’s sole cost and expense as may be reasonably
necessary to perfect Meda’s interests in and to Improvements as provided for in
Clause 12.2 (including, without limitation, any patent applications or patents
filed during or after the Term of this Agreement to protect such Improvements),
which shall include Commercially Reasonable Efforts to provide the filing Party
with reasonable and timely access to any employees or consultants of the other
Party who were involved in the research leading to such Improvements to amongst
other things, establish inventorship, determine the scope and patentability of
the relevant Improvements and causing the execution of any assignments or other
documents necessary to perfect the Parties’ interests in such Improvements.

 

12.5.      New Know-How. To the extent that Valeant acquires any significant new
Know How regarding and relating to the quality, efficacy, or safety of any
Licensed Product, it shall provide Meda with paper, and if available, electronic
copies of such Know How.

 

13.        MANAGEMENT OF PATENT RIGHTS

 

13.1.      Prosecution, Maintenance and Defence of Meda IP.  Meda shall be
responsible for, bear the cost of, and undertake (whether itself, through
Affiliates or Third Parties), the filing, prosecution and maintenance of the
Licensed Patents and shall so prosecute and maintain all Licensed Patents.

 

13.2.      Notification of Infringement.  Each Party shall promptly notify the
other Party of any actual or potential infringement of any Licensed Patents by a
Third Party which comes to that Party’s attention during the Term of this
Agreement.  Each Party shall promptly notify the other Party upon receiving
notification that any such Licensed Patents is subject to a judicial or
administrative challenge alleging non-infringement, invalidity or
unenforceability.

 

13.3.     Prosecution of Infringement.  Meda shall have the initial right, but
not the obligation, using counsel of its choice at its own cost to enforce the
Licensed Patents or defend any challenge with respect thereto. Meda shall have
sole control of any decisions or other aspects of any such action; provided
that, where Valeant requests to be joined as a Party, the Parties shall pursue
damages for *** in any such action. Valeant shall, upon request, give to Meda
such reasonable assistance as Meda may reasonably request, including by

 

25

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signing or executing any necessary documents and consenting to it being named as
a party to the proceedings; provided that Meda shall reimburse Valeant for any
reasonable out-of-pocket expenses incurred while providing such assistance. If
Meda does not institute any such action within *** of a notice from Valeant
requiring such action or such shorter time as may be required to avoid loss or
material prejudice to the ability to bring or sustain or prevail in such action
under the circumstances, then Valeant shall have the right, but not the
obligation, at its own cost, to commence proceedings regarding the infringement
or challenge, Valeant shall have sole control of any decisions or other aspects
of the action and Meda shall, upon request, give to Valeant such reasonable
assistance as Valeant may reasonably request, including by signing or executing
any necessary documents and consenting to it being named as a party to the
proceedings, provided that Valeant shall reimburse Meda for any reasonable
out-of-pocket expenses incurred while providing such assistance.

 

13.4.     Infringement and Other Proceedings.  In the event that any Third Party
alleges infringement or other violation of its Intellectual Property Rights in
the Elidel Territory or Xerese Territory, as applicable, against Valeant with
respect to the Licensed Products, or that Valeant considers it desirable to seek
a declaration of non-infringement with regard to Licensed Products under any
Third Party patent rights, Valeant shall control the defence (or, as applicable,
prosecution) of such proceeding and the cost of such proceedings shall be borne
by Valeant.

 

13.5.     Interferences and Other Proceedings.  In the event that any Third
Party interference or opposition proceedings are commenced against one of the
Parties with respect to the Licensed Patents, or that a Party considers it
desirable to contest interference proceedings with a Third Party in respect to
such Licensed Patents, the Parties shall consult with each other with a view to
agreeing the strategy to be adopted.

 

13.6.     To the extent that the validity, existence, inventorship or ownership
of any of the Intellectual Property Rights owned by Meda is in issue in any
proceeding set forth in Clause 13.5, as between the Parties, Meda shall have the
sole control of decisions and proceedings directly relating to those issues and
Valeant shall give Meda such reasonable assistance as Meda may reasonably
request in the defence of such claims, at Meda’s cost.   In the event that Meda
so assumes control of such elements of a proceeding, the costs of those elements
of the proceeding which are controlled by Meda shall be borne by Meda.

 

13.7.      Consultation; Settlements.  Each Party shall consult with the other
Party in respect of any action which it may take pursuant to this Clause 13.6
and shall consider in good faith any comments such other Party makes pursuant to
this Clause 13.6, provided that ***.

 

13.8.     Recovery.  Any damages or award (including any award of costs) made in
proceedings shall be used first to reimburse each Party for any costs or
expenses that it may have incurred in connection with the infringement
proceedings (including without limitation, any amounts paid by the Party
bringing the action to the other Party as reimbursement for expenses related to
assisting in the proceedings) and any amounts expressly awarded to Meda *** and
any amounts expressly awarded in ***.

 

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14.        TRADE MARKS

 

14.1.    Trade Marks.  Valeant will market and label:

 

14.1.1.         Elidel Licensed Products in the Elidel Territory under the
Elidel Trade Marks; and

 

14.1.2.         Xerese Licensed Products in the Xerese Territory under the
Xerese Trade Marks.

 

14.2.    Acknowledgement. Each packet containing a Licensed Product shall bear
an acknowledgement that it is licensed by Meda to Valeant.

 

14.3.      Use of Licensed Trade Marks. Valeant may use the Licensed Trade Marks
solely in connection with the sale, use, marketing and promotion of the
respective Royalty Products in the Elidel Territory or Xerese Territory, as
applicable; provided that:

 

14.3.1.         the Licensed Trade Marks may be used only on the Royalty
Products and on no other products whatsoever; and

 

14.3.2.         whenever a Licensed Trade Mark is affixed to Royalty Products it
shall be accompanied by wording and/or clear marking by the use of the ® symbol
to show where appropriate that the Licensed Trade Mark in question has been
registered as a trade mark and in other cases by the suffix TM, however, the
foregoing does not apply to regulatory filings or correspondence with Regulatory
Authorities.

 

14.4.      Maintaining the Licensed Trade Marks. Meda shall, at its cost, be
responsible for taking all steps to prosecute and maintain the Licensed Trade
Marks and Valeant shall provide all reasonable assistance with such prosecution
and maintenance.

 

14.5.      Infringement of Licensed Trade Marks.  In the event that either Party
becomes aware of any actual or threatened infringement or misappropriation of
any Licensed Trade Mark by a Third Party in the Elidel Territory or Xerese
Territory, as applicable, that Party shall promptly inform the other of such
infringement, and the Parties shall consult with each other in good faith to
determine jointly the best way to prevent the infringement, including, without
limitation, by instituting a legal proceeding against such Third Party.  Meda
shall have the right, at its own cost, to defend and enforce the Licensed Trade
Mark in the Elidel Territory or Xerese Territory, as applicable, and shall take
such steps as it considers appropriate in the enforcement of the Licensed Trade
Mark, or in respect of any actual or threatened infringement of any Licensed
Trade Mark in the Elidel Territory or Xerese Territory, as applicable; provided
that, where Valeant requests to be joined as a Party, the Parties shall pursue
damages for *** in any such action.  If Meda elects not to take any action which
Valeant considers appropriate within *** of being requested in writing to do so
by Valeant, Valeant shall have the right, at its own cost, to bring proceedings
in its own and Meda’s name in respect of such infringement.  The Party bringing
proceedings in accordance with the foregoing shall have sole control of any
decisions or other aspects of the action, subject to Clause 14.6, and the other
Party shall, upon request, give to the prosecuting Party such reasonable
assurances as the prosecuting

 

27

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Party may reasonably request, including by signing or executing any necessary
documents and consenting to its name being used in the proceedings; provided
that the prosecuting Party shall reimburse the other Party for any reasonable
out-of-pocket expenses incurred while providing such assistance.  The
prosecuting Party shall keep the other Party reasonably informed of the progress
of the action and shall consider the comments and observations of the other
Party in prosecuting the action.

 

14.6.      Settlements.  In the event that any action or suit shall be brought
against Valeant in connection with the Licensed Trade Marks for alleged
infringement or misappropriation of a Third Party’s trade mark, ***.

 

14.7.     Recovery.  Any damages or award (including any award of costs) made in
proceedings shall be used first to reimburse each Party for any costs or
expenses that it may have incurred in connection with the infringement
proceedings (including without limitation, any amounts paid by the Party
bringing the action to the other Party as reimbursement for expenses related to
assisting in the proceedings) and any amounts expressly awarded to Meda *** and
any amounts expressly awarded ***.

 

15.        TERMINATION

 

15.1.      Term of Agreement.  This Agreement shall come into effect on the
Effective Date and shall continue until terminated in accordance with this
Clause 15 (the “Term”).

 

15.2.     Termination for Patent Challenge or Trade Mark Challenge.  Meda may
terminate this Agreement on *** prior written notice if:

 

15.2.1.         Valeant challenges or contests or assists a Third Party to
challenge or contest the scope, validity or ownership of any of the Licensed
Patents or to claim that they are not necessary for the import, keeping, use or
sale of any Licensed Products;

 

15.2.2.         Valeant challenges or contests or assists a Third Party to
challenge or contest the registration, validity or ownership of any of the
Licensed Trade Marks.

 

provided that if Valeant so ceases such challenge, contest or assistance within
***, Meda shall have no right to terminate this Agreement on the basis of the
challenge, contest or assistance set forth in such notice.

 

15.3.     Termination for Breach.  Subject to the terms of this Clause 15,
either Meda on the one hand or Valeant on the other hand (the “Terminating
Party”) shall have the right to terminate this Agreement in the event that
Valeant or Meda, respectively, commits a material breach of this Agreement.  The
non-breaching Party shall first provide written notice to the Party that
committed such material breach (the “Defaulting Party”), which notice shall
clearly describe the nature of the breach.  The Defaulting Party shall have ***
in which to cure the breach (or such longer period as is set out in the
notice).  If the Defaulting Party fails to cure the breach within *** (or such
longer period as is set out in the notice) then the Terminating Party may
terminate this Agreement immediately on written notice.

 

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15.4.     Termination for Insolvency.  Either Party shall have the right to
terminate this Agreement immediately upon giving written notice of termination
to the other (the “Insolvent Party”) if the Insolvent Party suspends or
threatens to suspend payment of its debts as they fall due in circumstances
where the Insolvent Party is unable to pay its debts within the meaning of the
relevant bankruptcy or insolvency laws, any action, or any legal proceedings are
started whether by a Third Party or not, for the purpose of the winding up or
dissolution of the Insolvent Party or an analogous event occurs in any
jurisdiction.

 

16.        CONSEQUENCES OF TERMINATION

 

16.1.     Upon expiry or termination of this Agreement for any reason:

 

16.1.1.         Termination of Rights.  Subject to Clauses 16.2 and 16.4, all of
the rights of Valeant under this Agreement shall terminate upon the Termination
Date.

 

16.1.2.         Termination of ***

 

16.1.3.         Intellectual Property Infringement Proceedings.  The Parties
shall continue to be obliged to continue providing the support and assistance in
relation to any litigation concerning infringement of Patent Rights or
infringement of Licensed Trade Marks in the Elidel Territory or Xerese
Territory, as applicable, that had been initiated pursuant to Clauses 13 or 14
prior to the Termination Date and not settled as of the Termination Date.

 

16.1.4.         Return of Confidential Information After Termination.  Valeant
shall, at its own cost, promptly, at Meda’s option, either return to Meda all
tangible Confidential Information disclosed to Valeant by or on behalf of Meda
(including all copies thereof) or destroy such Confidential Information;
provided that Valeant shall have the right to retain one (1) copy of the
Confidential Information in a secure location solely for purposes of identifying
its confidentiality obligations under Clause 17. Valeant shall use reasonable
endeavours to delete all electronic copies of such Confidential Information from
its systems.  Upon termination, Meda shall, at its own cost, at Valeant’s
option, either return to Valeant all tangible Confidential Information disclosed
to Meda by or on behalf of Valeant (including all copies thereof) or destroy
such Confidential Information; provided that Meda shall have the right to retain
one (1) copy of the Confidential Information in a secure location solely for
purposes of identifying its confidentiality obligations under Clause 17.  Meda
shall use reasonable endeavours to delete all electronic copies of such
Confidential Information from its systems.

 

16.1.5.         Transfer of Marketing Authorisations and Other Regulatory
Approvals After Termination. Valeant shall promptly take action to transfer, to
Meda or to its designee, all Regulatory Approvals relating to the all Licensed
Product in the Elidel Territory or Xerese Territory, as applicable, together
with any applications for Regulatory Approvals of Licensed Products (including
Marketing Authorisation applications or other such applications, as well as all
existing INDs

 

29

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and other similar regulatory filings in the Elidel Territory or Xerese
Territory, as applicable, for the conduct of clinical trials with respect to
Licensed Products) together with a copy of all Elidel Clinical Data and Xerese
Clinical Data. All such transfers shall be completed in accordance with
applicable laws, rules and regulations. In the event that such a transfer is not
possible, Valeant shall maintain the existing Regulatory Approvals and
applications therefor for Licensed Products in the Elidel Territory or Xerese
Territory, as applicable, including, without limitation, granting Meda and/or
its designees rights to cross-refer to the data and information on file with
Regulatory Authorities in the Elidel Territory or Xerese Territory, as
applicable, as may be necessary to facilitate the granting of separate
Regulatory Approvals to Meda. The costs of compliance with this Clause 16.1.4
shall be borne by Valeant if Meda has terminated the Agreement and by Meda if
Valeant has terminated the Agreement.

 

16.1.6.         Clinical Studies. Valeant shall, upon Meda’s written request,
transfer to Meda in an orderly fashion the management and sole responsibility
for any clinical studies on Licensed Products that were commenced prior to the
termination of this Agreement, including ***.  Commencement shall mean the point
at which the first study subject has been dosed with the relevant Licensed
Product.  The costs of such transfer shall be borne by Valeant if Meda has
terminated the Agreement and by Meda if Valeant has terminated the Agreement.
Valeant shall not commence any clinical study of Licensed Products at any time
after it has given or received a notice of termination pursuant to Clause 15.
Valeant shall not have an obligation to continue any clinical study of Licensed
Products at any time after the effective date of termination.

 

16.1.7.         Distribution Services.  Upon termination of this Agreement,
Valeant shall have the right, but not the obligation, for a period of ***
following the effective date of termination, to sell any inventory of Licensed
Product existing on the effective date of termination. On the effective date of
the termination or the end of such period, whichever is later, Meda shall be
required to purchase from Valeant any remaining inventory of Licensed Products
that is in Saleable Condition and that has, at the time of delivery to Meda, a
remaining shelf life of no less than *** of the shelf life authorized in the
applicable Marketing Authorization, at Valeant’s actual cost to acquire such
inventory.

 

16.1.8.         Provision of Promotional and Marketing Materials, Information
and Records After Termination.  Valeant shall provide to Meda a copy of all
promotional and marketing materials used in the promotion of Licensed Products
and hereby grants a licence to Meda in the Elidel Territory or Xerese Territory,
as applicable, effective as of the date of termination, to use and/or create any
such materials, copies or derivative works thereof in Meda’s promotion of
Licensed Products; provided that such license does not extend to use of any
trade name, trademark or service mark of Valeant.  Meda shall be entitled to
sublicense the rights to any Third Party it grants the right to market the
Licensed Products (or the terminated Licensed Product(s), as applicable) in the
Elidel Territory or Xerese Territory, as applicable. Valeant shall not be liable
for any use of

 

30

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promotional and marketing materials by Meda or its sublicensee subsequent to the
date of termination.

 

16.1.9.         Third Party Agreements and ***.  Promptly following termination
of this Agreement, the Parties will use their best efforts to procure the
assignment of ***, and any Third Party Agreements assigned to Valeant pursuant
to this Agreement, from Valeant back to Meda. With respect to the Third Party
Agreements that are assigned from Valeant back to Meda pursuant to this Clause
16.1.9, the Parties agree enter into an assignment and assumption agreement
substantially in the form of Schedule 8 attached hereto assigning any Third
Party Agreements assigned to Valeant pursuant to this Agreement back to Meda.

 

16.1.10.       Records.  Notwithstanding anything to the contrary in this Clause
16.1, each Party may retain one archival copy of any records or other materials
solely for archival purposes or additional copies as required by applicable law.

 

16.2.     Accrued Rights.  The expiration or earlier termination of this
Agreement for whatever reason shall not affect any rights or obligations of the
Parties arising in any way out of this Agreement which are accrued prior to the
date of termination, including, without limitation, the right to recover damages
against the other Party for any breach of this Agreement occurring prior to such
termination.

 

16.3.     Related Agreements.  The Elidel Supply Agreement shall terminate on
the same date as termination of this Agreement subject to the provisions of the
Elidel Supply Agreement dealing with the consequences of termination. The
Pharmacovigilance Agreement shall survive pursuant to its own terms after
termination of this Agreement.

 

16.4.     Surviving Clauses.  In the event of expiry or termination of this
Agreement for any reason the provisions of Clauses 16 (Consequences of
Termination), 17 (Confidentiality),  19 (Liability and Indemnities) and 23
(Miscellaneous) shall remain in full force and effect.

 

17.        CONFIDENTIALITY

 

17.1.      Confidential Information.  During the Term each Party (the
“Disclosing Party”) may disclose or make available to the other Party (the
“Receiving Party”) confidential and/or proprietary information related to its
products, technology, research plans, business affairs and/or finances related
to the Licensed Products, including, any Know-How (the “Confidential
Information”).  All Confidential Information is and shall remain the property of
the Disclosing Party; provided, however, that all Improvements that are
generated by or on behalf of either Party in performance of activities under
this Agreement shall be deemed to be the Confidential Information of Meda.

 

17.2.      Confidentiality Obligations.  Each Party undertakes that except as
expressly permitted pursuant to this Agreement it shall not, and shall ensure
that its Affiliates do not, disclose or permit to be disclosed to any Third
Party, or use or permit the use for any purpose other than in performance of its
obligations under this Agreement, any of the other Party’s Confidential
Information. Each Party may disclose Confidential Information provided by

 

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the other Party to the extent such disclosure is reasonably necessary in the
following instances:

 

17.2.1.         disclosure to governmental or other Regulatory Authorities in
order to gain or maintain approval to conduct clinical trials or to market
Licensed Product, but such disclosure may be only to the extent reasonably
necessary to obtain authorisations;

 

17.2.2.         complying with applicable court orders or governmental
regulations, including rules or regulations of any competent authority,
Regulatory Authority or regulated securities exchange provided that the
Receiving Party (i) promptly gives notice to the Disclosing Party in order to
allow such Disclosing Party whatever opportunity may exist to seek confidential
treatment of the Confidential Information; (ii) provides to the Disclosing Party
all reasonable assistance to obtain confidentiality undertakings at the
Disclosing Party’s expense; and (iii) only discloses Confidential Information to
the extent required by the applicable court order or governmental regulation.

 

17.2.3.         The obligations of each Party under this Clause 17 shall
continue for the duration of this Agreement and shall survive for a period of
*** from the date of termination.

 

If the Party required by law to disclose is unable to inform the Disclosing
Party prior to disclosure, the Receiving Party shall (provided it is lawful to
do so) make full disclosure as soon as possible after such disclosure.

 

17.3.      Exclusions from Confidentiality Undertaking.  The obligations of
confidentiality set out in this Clause 17 shall not apply to Confidential
Information which is:

 

17.3.1.         published or becomes generally available to the public other
than as a result of a breach of the undertakings hereunder by the receiving
Party;

 

17.3.2.         in the possession of the receiving Party prior to its receipt
from the disclosing Party, as evidenced by contemporaneous written evidence, and
is not subject to a duty of confidentiality;

 

17.3.3.         independently developed by the receiving Party and is not
subject to a duty of confidentiality; or

 

17.3.4.         obtained by the receiving Party from a Third Party not subject
to a duty of confidentiality.

 

17.4.     Press Announcements.  The Parties shall provide each other with a
draft of any proposed press release concerning the entering into of this
Agreement or otherwise relating to the Elidel Licensed Product or the Xerese
Licensed Product and shall obtain the other Party’s agreement to its terms, such
agreement not to be unreasonably withheld, delayed, or conditioned.

 

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18.        WARRANTIES

 

18.1.      Warranties by Each Party.  Each Party hereby warrants to the other
Party that, as of the Effective Date:

 

18.1.1.         it is duly organised and validly existing under the laws of its
place of incorporation;

 

18.1.2.         it has legal power, authority and right to enter into this
Agreement;

 

18.1.3.         the execution and performance by it of its obligations hereunder
will not constitute a breach of, or conflict with, its organisational documents
nor any other material agreement or arrangement, whether written or oral, by
which it is bound;

 

18.1.4.         it has full corporate power and authority and has taken all
corporate action necessary to enter into and perform this Agreement, and that
this Agreement has been duly authorised, executed, and delivered by that Party;
and

 

18.1.5.         that this Agreement is a valid, binding, and legally enforceable
obligation of that Party.

 

18.2.    Warranties by Meda with respect to the Elidel Licensed Products.  Meda
hereby warrants to Valeant that, as of the Effective Date:

 

18.2.1.         Meda has not received any written notice of or threatening any
material suit, legal claim, action, proceeding (other than patent oppositions),
investigation against Meda or any of its Affiliates, that relates to the Elidel
Licensed Products.

 

18.2.2.         Meda has not received any written notice threatening any orders,
injunctions or decrees of any Governmental Entity to undertake Measures (as
defined in the Elidel Supply Agreement) in the Elidel Territory or otherwise
applicable or related to the Elidel Licensed Products that in any material
respect restricts the arrangements contemplated by this Agreement.

 

18.2.3.         Meda and/or its Affiliates are (i) the beneficial owners of the
Elidel Licensed Patents, Elidel Licensed Know-How, Elidel Licensed Clinical Data
and Elidel Licensed Trade Marks free and clear of all Encumbrances (other than
Permitted Encumbrances) or (ii) otherwise have sufficient rights to grant to
Valeant the licenses and sublicenses as contemplated by this Agreement.

 

18.2.4.         To the Knowledge of Meda, the rights granted to Valeant in
Clause 2 constitute all the material rights necessary to Commercialise the
Elidel Licensed Products in the Elidel Field in the Elidel Territory.

 

18.2.5.         Neither Meda nor any of its Affiliates is a party to any license
or similar agreement under which it has granted or agreed to grant a license or
other rights to any Third Party to the Elidel Licensed Patents or the Elidel
Trade Marks, other

 

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than any licenses or other rights which would not conflict in any material
respect with the rights being conveyed or licensed to Valeant under this
Agreement.

 

18.2.6.         To the Knowledge of Meda, the sale, offer for sale or
importation of the Elidel Licensed Product in the Elidel Field as it is sold,
offered for sale or imported in the Elidel Territory as of the date hereof does
not infringe, misappropriate or otherwise violate in any material respect the
Intellectual Property Rights of any Third Party.

 

18.2.7.         To the Knowledge of Meda, none of the Elidel Licensed Patents or
Elidel Trade Marks has been adjudged invalid or unenforceable in whole or part
other than abandoned patents.

 

18.2.8.         Meda has not received any written notice of any suit, claim,
action, proceeding challenging or seeking to deny or restrict, directly or
indirectly, the rights of Meda or any of its Affiliates in any Elidel Licensed
Patents, Elidel Trade Marks or Elidel Licensed Know-How.

 

18.2.9.         To the Knowledge of Meda, no Third Party is infringing or
misappropriating any of the Elidel Licensed Patents, Elidel Trade Marks or
Elidel Licensed Know-How.

 

18.2.10.       Meda and its Affiliates are in compliance with *** and, to the
knowledge of Meda, *** and its Affiliates are in compliance with ***.

 

18.3.    Warranties by Meda with respect to the Xerese Licensed Products.  Meda
hereby warrants to Valeant that, as of the Effective Date:

 

18.3.1.         There is no material suit, legal claim, action, proceeding
(other than patent oppositions), investigation pending, or to the Knowledge of
Meda, threatening in writing against Meda or any of its Affiliates, that relates
to the Xerese Licensed Products.

 

18.3.2.         To the knowledge of Meda, there are no outstanding or threatened
(in writing) orders, injunctions or decrees of any Governmental Entity in the
Xerese Territory or otherwise applicable or related to the Xerese Licensed
Products that in any material respect restricts the arrangements contemplated by
this Agreement.

 

18.3.3.         Meda and/or its Affiliates (i) are the beneficial owners of the
Xerese Licensed Patents, Xerese Licensed Know-How, Xerese Licensed Clinical Data
and Xerese Licensed Trade Marks free and clear of all Encumbrances (other than
Permitted Encumbrances), or (ii) otherwise have sufficient rights to grant to
Valeant the licenses and sublicenses as contemplated by this Agreement.

 

18.3.4.         To the Knowledge of Meda, the rights granted to Valeant in
Clause 2 constitute all the material rights necessary to Commercialise the
Xerese Licensed Products in the Xerese Field in the Xerese Territory.

 

34

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

 

18.3.5.         Neither Meda nor any of its Affiliates is a party to any license
or similar agreement under which it has granted or agreed to grant a license or
other rights to any Third Party to the Xerese Licensed Patents or the Xerese
Trade Marks, other than any licenses or other rights which would not conflict in
any material respect with the rights being conveyed or licensed to Valeant under
this Agreement.

 

18.3.6.         To the Knowledge of Meda, the sale, offer for sale or
importation of the Xerese Licensed Product in the Xerese Field as it is sold,
offered for sale or imported in the Xerese Territory as of the date hereof does
not infringe, misappropriate or otherwise violate in any material respect the
Intellectual Property Rights of any Third Party.

 

18.3.7.         To the Knowledge of Meda, none of the Xerese Licensed Patents or
Xerese Trade Marks has been adjudged invalid or unenforceable in whole or part
other than abandoned patents.

 

18.3.8.         Meda has not received any written notice of any suit, claim,
action, proceeding challenging or seeking to deny or restrict, directly or
indirectly, the rights of Meda or any of its Affiliates in any Xerese Licensed
Patents, Xerese Trade Marks or Xerese Licensed Know-How.

 

18.3.9.         To the Knowledge of Meda, no Third Party is infringing or
misappropriating any of the Xerese Licensed Patents, Xerese Trade Marks or
Xerese Licensed Know-How.

 

18.3.10.       Meda and its Affiliates are in compliance with *** and, to the
Knowledge of Meda, *** and its Affiliates are in compliance with ***.

 

18.3.11.       Meda and its Affiliates are in compliance with *** and, to the
Knowledge of Meda, *** is in compliance with ***.

 

18.3.12.       Meda or its Affiliate is the holder of the Marketing
Authorization number NDA 22-436 in the United States for the Xerese Product
marketed in the United States at the Effective Date.

 

18.4.     Meda Disclosure.  Valeant acknowledges that Meda has made the
following disclosures and that Meda shall not be liable for any breach of
warranty arising out of or in relation to the matters disclosed below:

 

18.4.1.         ***

 

18.4.2.         Meda has disclosed to Valeant ***.

 

35

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

 

18.5.     Undertaking by Valeant. Valeant undertakes to Meda that it will comply
with Meda’s obligations to ***, provided however that:

 

18.5.1.         the undertaking with respect to ***;

 

18.5.2.         with respect to the undertaking regarding ***; and

 

18.5.3.         with respect to the undertaking regarding ***.

 

If required in order to *** under the *** Agreement by Meda to Valeant or if the
Parties otherwise agree, Valeant shall provide ***.

 

18.6.     No Implied Warranties.  The warranties provided in this Clause 18 are
in lieu of any other warranties, express or implied, and nothing herein shall be
construed as a warranty by either Party of any kind, including without
limitation, any implied warranty of fitness for a specific purpose or
merchantable quality, all of which are expressly and specifically excluded.

 

18.7.     No Warranties of Intellectual Property Rights.  Nothing in this
Agreement shall be construed as a warranty given by any Party (i) that any
patent will issue after the Effective Date based upon any pending patent
application included in the Licensed Intellectual Property, or (ii) that any
granted patent which issues from such pending patent applications will be valid
and enforceable, or (iii) that after the Effective Date the manufacture, use or
sale of Licensed Products or the use of any Licensed Intellectual Property will
not infringe the patent or proprietary rights of any Third Party.

 

18.8.     No Further Warranties.  No director, officer, employee or agent of any
Party or its Affiliates is authorised to make any further warranty to the other
Party which is not contained in this Agreement, and each Party acknowledges that
it has not relied on any such oral or written warranties.

 

19.        LIABILITY AND INDEMNITIES

 

19.1.     No Consequential Damages. Subject to Clause 19.7, but otherwise
notwithstanding any other provision of this Agreement, neither Party shall be
liable to the other Party or to any Affiliate of the other Party for any lost
profits, business opportunities, special, indirect, consequential, exemplary, or
punitive damages of any nature arising under or in relation to this Agreement
even if that Party was advised in advance of the possibility of such loss or
damage, unless actually paid to a Third Party.

 

19.2.     Indemnification by Valeant.  Valeant shall, subject to Clause 19.1,
indemnify, defend and hold harmless Meda, its Affiliates, and its and their
respective directors, officers, employees and agents (collectively the “Meda
Indemnified Parties”) against any and all claims, causes of action, demands,
liabilities, losses, damages, costs or expenses, including reasonable attorneys’
fees, asserted by a Third Party (each a “Loss”) to the extent such Loss arose
out of or was caused by: (a) the distribution, marketing, promotion or sale of
Licensed Products by or on behalf of Valeant or its Affiliates or sublicensees;
(b) Valeant’s breach of any of its warranties or covenants herein; (c) ***; or
(d) a

 

36

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

 

negligent act or omission or wilful misconduct by Valeant, its Affiliates or
sublicensees in the performance of its obligations under this Agreement; except,
in all cases, to the extent that such Loss arises out of (i) the negligence or
wilful misconduct of Meda; (ii) Meda’s breach of any of its warranties herein or
(iii) any failure of Meda to perform or observe any provision, obligation,
covenant or agreement to be performed by Meda pursuant to this Agreement.

 

19.3.     Indemnification by Meda.  Meda shall, subject to Clause 19.1,
indemnify, defend and hold harmless Valeant, its Affiliates, and its and their
respective, directors, officers, employees and agents (collectively the “Valeant
Indemnified Parties”) against any and all Losses incurred or suffered by the
Valeant Indemnified Parties to the extent such Loss arose out of or was caused
by (a) other than by Valeant, the distribution, marketing, promotion or sale of
Licensed Products by or on behalf of Meda or its Affiliates, licensees, or
sublicensees or their predecessors; (b) Meda’s breach of any of its warranties
or covenants herein; (c) ***; or (d) a negligent act or omission or wilful
misconduct by Meda, its Affiliates or sublicensees in the performance of its
obligations under this Agreement, or ***; except, in all cases, to the extent
that such Loss arises out of (i) the negligence or wilful misconduct of Valeant
(ii) Valeant’s breach of any of its warranties herein or (iii) any failure of
Valeant to perform or observe any provision, obligation, covenant or agreement
to be performed by Valeant pursuant to this Agreement.  In addition, Meda shall
fully indemnify and hold the Valeant Indemnified Parties harmless from any and
all Losses arising out of any use by Meda or by any Third Party to which Meda
grants a license or sublicense pursuant to Clause 16.1.7, of promotional and
marketing materials; the foregoing indemnification shall survive termination of
this Agreement indefinitely.

 

19.4.     Notification of Liabilities/Losses.  A person or entity entitled to
indemnification under this Clause 19.4 (an “Indemnified Party”) shall give
prompt written notification (within twenty (20) days or less if action is
required within such shorter time period) to the Party from whom indemnification
is sought (the “Indemnifying Party”) of the commencement or notice of Loss for
which indemnification may be sought or, if earlier, upon the assertion of any
such Loss (it being understood and agreed, however, that the failure by an
Indemnified Party to give notice of a Loss as provided in this Clause 19.4 shall
not relieve the Indemnifying Party of its indemnification obligation under this
Agreement except, and only, to the extent that such Indemnifying Party is
materially prejudiced as a result of such failure to give notice).  The
Indemnifying Party shall be liable for any reasonable legal fees and expenses
subsequently incurred in connection with the defence of such Loss after
receiving such notice.  The Parties shall thereafter keep the other Party
informed of any Losses or threatened Losses (as described in Clauses 19.2 and/or
19.3).

 

19.4.1.         In the case of a Loss for which Meda seeks indemnification under
Clause 19.2, Meda shall permit Valeant to direct and control the defence of the
Loss and shall provide such reasonable assistance as is reasonably requested by
Valeant (at Valeant’s cost) in the defence of the Loss; provided that nothing in
this Clause 19.4.1 shall permit Valeant to make any admission on behalf of Meda,
or to settle any claim or litigation which would impose any financial
obligations on Meda or would result in any loss or diminution of the scope,
validity or

 

37

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

 

enforceability of the Licensed Intellectual Property without the prior written
consent of Meda, such consent not to be unreasonably withheld, delayed or
conditioned.

 

19.4.2.         In the case of a Loss for which Valeant seeks indemnification
under Clause 19.3, Valeant shall permit Meda to direct and control the defence
of the Loss and shall provide such reasonable assistance as is reasonably
requested by Meda (at Meda’s cost) in the defence of the Loss, provided that
nothing in this Clause 19.4.2 shall permit Meda to make any admission on behalf
of Valeant, to settle any claim or litigation which would impose any financial
obligations on Valeant or materially affect Valeant’s rights under or the value
to Valeant of the Licensed Intellectual Property without the prior written
consent of Valeant, such consent not to be unreasonably withheld, delayed or
conditioned.

 

19.5.     Supply.  The indemnities in this Agreement shall not apply to the
manufacture and supply of Licensed Products which shall be governed by the
Elidel Supply Agreement or Clause 9.1, as applicable, which will provide for the
manufacturer and supplier of Licensed Products and active pharmaceutical
ingredients to bear certain liabilities on terms to be agreed for Losses for
product liability claims arising out of the negligent manufacture or supply of
those Licensed Products and active pharmaceutical ingredients.

 

19.6.     Mitigation.  Any Party making a claim under this Clause 19 shall take
all reasonable steps to mitigate and/or minimise the Losses suffered and shall
not do anything which would have the effect of increasing the Losses.

 

19.7.     Restriction on Limitation of Liability.  Neither Party limits or
excludes its liability for fraud, fraudulent concealment or fraudulent
misrepresentation, nor for death or personal injury arising from its negligence.

 

19.8.     Insurance. Each Party shall maintain comprehensive general liability
insurance, including broad form contractual liability and product liability
coverage which is sufficient to meet its obligations pursuant to this
Agreement.  Each Party shall maintain such insurance during the term of this
Agreement and thereafter for a period of ***.  Upon request, the insured Party
shall provide the other Party with a certificate of insurance as evidence of the
requested coverage and shall notify the other Party within thirty (30) days of
any cancellation or termination of such insurance.

 

20.        ***

 

21.        ***

 

.

 

22.        NOTICES.

 

22.1.    Address. Any notice required to be given under this agreement, shall be
in writing and shall be delivered personally, or sent by pre-paid certified or
registered post return receipt

 

38

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

 

requested or recorded delivery or by commercial courier, to each party required
to receive the notice at its address as set out below:

 

Meda:

 

***

 

Valeant:

 

***

 

or as otherwise specified by the relevant Party by notice in writing to each
other Party.

 

22.2.     Deemed Delivery. Any notice shall be deemed to have been duly
received:

 

22.2.1.         if delivered personally, when left at the address and for the
contact referred to in this Clause 22;

 

22.2.2.         if sent by pre-paid recorded delivery, at 9.00 am on the fifth
Business Day after posting; or

 

22.2.3.         if delivered by commercial courier, on the date and at the time
that the courier’s delivery receipt is signed.

 

23.        MISCELLANEOUS.

 

23.1.     Force Majeure. In the event any Party (the “Affected Party”) is
delayed or prevented from the performance of any act required under this
agreement by reasons outside its reasonable control including, war or national
emergency, acts of terrorism, protests, riot, fire, explosion, flood, epidemic,
but not including any labour dispute (a “Force Majeure Event”), then performance
of such act will be excused for the period of such delay, provided however, that
such party shall exert its reasonable efforts to overcome such Force Majeure
Event and to resume performance of its obligations in a timely manner.  Notice
of the commencement and termination of such Force Majeure Event will be provided
by the Affected Party to the other Party. Any obligations of the Affected Party
will be extended for a period of time equal to the number of days of the delay,
provided however, that in the event that such Affected Party is unable to
overcome such Force Majeure Event within one-hundred eighty (180) days, the
other Party may terminate this Agreement on written notice.

 

23.2.     Public Statements. The Parties shall not disclose the relationship
between the Parties or the existence of this Agreement to any Third Party
without the consent of the other Party, except as may be required by applicable
law (including without limitation, federal and local securities laws) or any
listing agreement with the New York Stock Exchange, or as may be reasonably
requested in connection with any proceedings before any Regulatory Authority or
other governmental authority.

 

39

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

 

23.3.     Independent Contractors.  The Parties hereto are independent
contractors and nothing contained in this Agreement shall be deemed or construed
to create a partnership, joint venture, employment, franchise, agency or
fiduciary relationship between the Parties.

 

23.4.     Assignment, Subcontracting.  This Agreement and each and every
covenant, term and condition herein is binding upon and enures to the benefit of
the Parties hereto and their respective successors. Neither Party may assign
this Agreement, nor assign, sublicense, delegate or sub-contract any of its
rights or obligations granted hereunder without the other Party’s prior written
consent, except that a Party may (a) assign, sublicense, subcontract or delegate
any or all of its rights and obligations under this Agreement to one or more of
its Affiliates; and (b) assign this Agreement in its entirety to a successor to
all or substantially all of its business or assets to which this Agreement
relates. No permitted assignment, sublicense, subcontract or delegation shall
relieve the assigning, sublicensing, subcontracting or delegating Party of its
liability hereunder. Any attempted assignment in contravention of the foregoing
shall be void.

 

23.5.     Severability.  If the whole or any part of this Agreement is or
becomes or is declared illegal, invalid or unenforceable in any jurisdiction for
any reason (including both by reason of the provisions of any legislation and
also by reason of any court or competent authority which either has jurisdiction
over this Agreement or has jurisdiction over any of the Parties):

 

23.5.1.         in the case of the illegality, invalidity or un-enforceability
of the whole of this Agreement it shall terminate only in relation to the
jurisdiction in question; or

 

23.5.2.         in the case of the illegality, invalidity or un-enforceability
of part of this Agreement that part shall be severed from this Agreement in the
jurisdiction in question and that illegality, invalidity or un-enforceability
shall not in any way whatsoever prejudice or affect the remaining parts of this
Agreement which shall continue in full force and effect.

 

If, in the reasonable opinion of any Party, any severance under this Clause 23.5
materially affects the commercial basis of this Agreement, then the Parties
shall discuss, in good faith, ways to eliminate the material effect.

 

23.6.     Language.  Except where expressly provided otherwise, all reports,
plans and any other form of communication between the Parties shall be in
English and where necessary Valeant shall provide an English translation of any
document sent to Meda and Meda shall provide an English translation of any
document sent to Valeant.

 

23.7.     Entire Agreement.  This Agreement (together with the Elidel Supply
Agreement and the other agreements referenced in this Agreement), constitutes
the entire understanding and agreement of the Parties with respect to the
subject matter hereof and cancels and supersedes all prior agreements, whether
verbal or written, between the Parties with respect to the subject matter
hereof, including, specifically, the Interim Distribution Agreement, provided
that any Confidential Information (as such term is defined in the Interim
Distribution Agreement) shall be deemed to be Confidential Information pursuant

 

40

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

 

to this Agreement and subject to the applicable provisions hereof.  No
modification of any provision of this Agreement shall be effective unless made
in writing and signed by a duly authorized officer of both of the Parties.

 

23.8.     Third Party Rights. A person who is not a Party to the Agreement shall
not have any rights under or in connection with it.

 

23.9.     Waiver. No delay or failure of any Party in exercising or enforcing
any of its rights or remedies under this Agreement shall operate as a waiver of
those rights.

 

23.10.  Governing Law and Dispute Resolution.

 

23.10.1.     This Agreement (and any dispute, controversy, proceedings or claim
of whatever nature arising out of or in any way relating to this Agreement
including any question regarding its existence, validity, enforceability or
termination) shall be governed by and construed in accordance with the laws of
England, without regard to principles of choice of law or conflicts of laws that
might lead to the application of laws other than the laws of England.

 

23.10.2.     Except as otherwise provided under Clause 13.5 of this Agreement,
each party hereto irrevocably and unconditionally submits to the exclusive
jurisdiction of the courts of England located in London, England over any
action, suit or proceeding arising out of or relating to this Agreement.  Each
of the Parties hereto irrevocably waives any right that it may have to object to
an action being brought in those courts, to claim that the action has been
brought in an inconvenient forum, or to claim that those courts do not have
jurisdiction.

 

23.10.3.     This Clause 23.10 shall not prevent a party hereto from enforcing
any judgment obtained in the courts of England in any other jurisdiction.

 

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

 

[Signature Page Follows]

 

41

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

 

This Agreement has been entered into on the date stated at the beginning of this
Agreement.

 

 

Signed by

 

 

 

 

 

State position:

 

 

 

 

 

By and on behalf of MEDA PHARMA SARL

 

 

 

 

 

 

 

Signed by

 

 

 

 

 

State position:

 

 

 

 

 

By and on behalf of VALEANT INTERNATIONAL (BARBADOS) SRL

 

 

42

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

 

 

SCHEDULE 1

 

PATENTS

 

PART A — Elidel Licensed Patents

 

FAMILY NUMBER

 

CTRY

 

FILING
DATE

 

FILING
NUMBER

 

GRANT
NUMBER

 

GRANT
DATE

 

STATUS

 

EXPIRY

***

 

***

 

***

 

***

 

***

 

***

 

***

 

***

***

 

***

 

***

 

***

 

***

 

***

 

***

 

***

***

 

***

 

***

 

***

 

 

 

 

 

***

 

 

***

 

***

 

***

 

***

 

 

 

 

 

***

 

***

 

***

 

FAMILY
NUMBER

 

CTRY

 

FILING
DATE

 

FILING NUMBER

 

GRANT
NUMBER

 

GRANT
DATE

 

STATUS

 

EXPIRY

***

 

***

 

***

 

***

 

 

 

 

 

***

 

***

***

 

***

 

***

 

***

 

***

 

***

 

***

 

***

***

 

***

 

***

 

***

 

 

 

 

 

***

 

***

 

***

 

FAMILY NUMBER

 

CTRY

 

FILING
DATE

 

FILING
NUMBER

 

GRANT
NUMBER

 

GRANT
DATE

 

STATUS

 

EXPIRY

***

 

***

 

***

 

***

 

***

 

***

 

***

 

***

 

***

 

FAMILY
NUMBER

 

CTRY

 

FILING
DATE

 

FILING
NUMBER

 

GRANT
NUMBER

 

GRANT
DATE

 

STATUS

 

EXPIRY

***

 

***

 

***

 

***

 

***

 

***

 

***

 

***

***

 

***

 

***

 

***

 

***

 

***

 

***

 

***

***

 

***

 

***

 

***

 

 

 

 

 

***

 

***

***

 

***

 

***

 

***

 

 

 

 

 

***

 

***

 

***

 

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

 

FAMILY NUMBER

 

CTRY

 

FILING DATE

 

FILING NUMBER

 

GRANT
NUMBER

 

GRANT
DATE

 

STATUS

 

EXPIRY

***

 

***

 

***

 

***

 

***

 

***

 

***

 

***

***

 

***

 

***

 

***

 

***

 

***

 

***

 

***

***

 

***

 

***

 

***

 

***

 

***

 

***

 

***

***

 

***

 

***

 

***

 

***

 

***

 

***

 

***

 

***

 

FAMILY NUMBER

 

CTRY

 

FILING DATE

 

FILING
NUMBER

 

GRANT
NUMBER

 

GRANT
DATE

 

STATUS

 

EXPIRY

***

 

***

 

***

 

***

 

***

 

***

 

***

 

***

***

 

***

 

***

 

***

 

***

 

***

 

***

 

***

***

 

***

 

***

 

***

 

***

 

***

 

***

 

***

 

***

 

FAMILY NUMBER

 

CTRY

 

FILING
DATE

 

FILING
NUMBER

 

GRANT
NUMBER

 

GRANT
DATE

 

STATUS

 

EXPIRY

***

 

***

 

***

 

***

 

***

 

***

 

***

 

***

***

 

***

 

***

 

***

 

***

 

***

 

***

 

***

***

 

***

 

***

 

***

 

***

 

***

 

***

 

***

***

 

***

 

***

 

***

 

***

 

***

 

***

 

***

***

 

***

 

***

 

***

 

***

 

***

 

***

 

***

***

 

***

 

***

 

***

 

***

 

***

 

***

 

***

 

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

 

PART B — Xerese Licensed Patents

 

 

 

 

 

Filing Date/
Issue Date

 

Country

 

Title

 

Status and Expiration

1.

 

***

 

***

 

***

 

***

 

***

2.

 

***

 

***

 

***

 

***

 

***

3.

 

***

 

***

 

***

 

***

 

***

4.

 

***

 

***

 

***

 

***

 

***

5.

 

***

 

***

 

***

 

***

 

***

6.

 

***

 

***

 

***

 

***

 

***

 

 

 

***

 

***

 

***

 

***

 

***

 

 

***

 

***

 

***

 

***

 

***

 

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

 

SCHEDULE 2

 

PRODUCTS

 

PART A — Elidel Products

 

Product Description

 

Elidel Cream 1% 30g

 

Elidel Cream 1% 100g

 

Elidel Cream 1% 60g

 

Elidel Cream Sample 10mg/5g

 

PART B — Xerese Products

 

Product Description

 

Xerese 0.5 gram pouch

 

Xerese 2 gram tube

 

Xerese 5 gram tube

 

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

 

SCHEDULE 3

 

TRADE MARKS

 

PART A — Elidel Trade Marks

 

TRADEMARK

 

COUNTRY

 

FILING
DATE

 

FILING
NUMBER

 

REGISTRATION
DATE

 

REGISTRATION
NUMBER

 

NEXT
RENEWAL
DATE

***

 

***

 

***

 

***

 

***

 

***

 

***

***

 

***

 

***

 

***

 

***

 

***

 

***

***

 

***

 

***

 

***

 

***

 

***

 

***

***

 

***

 

***

 

***

 

***

 

***

 

***

***

 

***

 

***

 

***

 

***

 

***

 

***

***

 

***

 

***

 

***

 

***

 

***

 

***

***

 

***

 

***

 

***

 

***

 

***

 

***

***

 

***

 

***

 

***

 

***

 

***

 

***

***

 

***

 

***

 

***

 

***

 

***

 

***

 

PART B — Xerese Trade Marks

 

***

 

***

 

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

 

SCHEDULE 4

 

MARKETING SERVICES

 

The Parties will agree on a *** Plan covering the period *** which includes the
following or a combination of the elements listed below.  The *** Services shall
be provided in accordance with the *** Plan.

 

1.                                      ***

 

***

 

2.                                      ***

 

***

 

3.                                      ***

 

***

 

4.                                      ***

 

***

 

5.                                      ***

 

***

 

6.                                      ***

 

***

 

7.                                      ***

 

***

 

8.                                      ***

 

***

 

9.                                      ***

 

***

 

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

 

10.                               ***

 

***

 

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

 

SCHEDULE 5

 

***

 

SCHEDULE 6

 

MEDA’S KNOWLEDGE PERSONS

 

***

 

***

 

***

 

***

 

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

 

SCHEDULE 7

 

THIRD PARTY AGREEMENTS

 

Agreement Type

 

Meda Party

 

Counter Party

 

Territory /
Country of
Business

 

Effective Date of
Agreement /
Duration and
Termination
Period

***

 

 

 

***

 

***

 

***

***

 

 

 

***

 

***

 

***

***

 

 

 

***

 

***

 

***

***

 

 

 

***

 

***

 

***

***

 

 

 

***

 

***

 

***

***

 

 

 

***

 

***

 

***

***

 

 

 

***

 

***

 

***

***

 

 

 

***

 

***

 

***

***

 

 

 

***

 

***

 

***

***

 

 

 

***

 

***

 

***

***

 

 

 

***

 

***

 

***

***

 

 

 

***

 

***

 

***

***

 

 

 

***

 

***

 

***

***

 

 

 

***

 

***

 

***

***

 

 

 

***

 

***

 

***

***

 

 

 

***

 

***

 

***

***

 

 

 

***

 

 

 

***

***

 

 

 

***

 

 

 

***

***

 

 

 

***

 

 

 

***

 

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

 

Agreement Type

 

Meda Party

 

Counter Party

 

Territory /
Country of
Business

 

Effective Date of
Agreement /
Duration and
Termination
Period

***

 

 

 

***

 

***

 

***

***

 

 

 

***

 

 

 

***

***

 

 

 

***

 

 

 

***

***

 

 

 

***

 

***

 

***

***

 

 

 

***

 

***

 

***

 

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

 

SCHEDULE 8

 

ASSIGNMENT AND ASSUMPTION OF THIRD PARTY AGREEMENTS

 

This ASSIGNMENT AND ASSUMPTION OF THIRD PARTY AGREEMENTS (this “Agreement”), is
made as of the 29th day of June, 2011, by Meda Pharma SARL, a company
incorporated in Luxembourg (“Assignor”), and Valeant International (Barbados)
SRL, an international society with restricted liability established under the
laws of Barbados (“Assignee”).  All capitalized words and terms used in this
Agreement and not defined herein shall have the respective meanings ascribed to
them in that certain License Agreement of even date herewith by and between
Assignor and Assignee (the “License Agreement”).

 

WHEREAS, Assignor has entered into the License Agreement with Assignee, pursuant
to which, among other things, Assignor agreed to assign its obligations under
the Third Party Agreements to Assignee and Assignee is obligated to assume and
accept the assignment of obligations for the Third Party Agreements.

 

NOW, THEREFORE, in order to satisfy Assignor’s and Assignee’s obligations under
the License Agreement, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, it is hereby agreed as follows:

 

1.               Assignment. In accordance with and subject to the terms of the
License Agreement, Assignor hereby transfers to Assignee, all of Assignor’s
right, title and interest in, to and under the Third Party Agreements.

 

2.               Assumption. In accordance with and subject to the terms of the
License Agreement, Assignee hereby assumes and accepts Assignor’s entire right,
title and interest in, to and under the Third Party Agreements and assumes and
agrees to perform and discharge, in accordance with their respective terms and
subject to the respective conditions thereof, all outstanding obligations and
liabilities under the Third Party Agreements arising from and after the
Effective Date.

 

3.               Sub-contraction of Relevant Obligation. Notwithstanding the
provisions of paragraph 2, where any obligation under any of the Third Party
Agreements cannot be assigned or transferred to Assignee except by an agreement
of novation, such relevant obligation shall not be assigned or transferred
pursuant to paragraph 2 above but Assignee shall perform (as the sub-contractor
or agent of Assignor) the relevant obligation to the extent it is to be
discharged after the Effective Date unless and until such novation is effected
by obtaining the consent of the counterparty to the relevant contract.

 

4.               Governing Law. This Agreement shall be governed by the laws of
England, without regard to principles of choice of law or conflicts of laws that
might lead to the application of laws other than the laws of England. Each party
hereto irrevocably and unconditionally submits to the exclusive jurisdiction of
the courts of England located in London, England over any action, suit or
proceeding arising out of or relating to this Agreement.

 

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

 

5.               EACH OF THE PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT
OF OR RELATING TO THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREBY OR THE
ACTIONS OF THE PARTIES IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR
ENFORCEMENT HEREOF.

 

6.               Conflicts. Nothing in this Agreement shall be deemed to
supersede, enlarge or modify any of the provisions of the License Agreement, all
of which survive the execution and delivery of this Agreement as provided and
subject to the limitations set forth in the License Agreement.  If any conflict
exists between the terms of this Agreement and the terms of the License
Agreement, the terms of the License Agreement shall govern and control.

 

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

 

8.               No Representation.  This Agreement is made without recourse,
representation or warranty of any kind whatsoever, express or implied, except as
specifically set forth in the License Agreement.

 

[No further text on this page]

 

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

 

EXECUTION COPY

 

IN WITNESS WHEREOF, the parties hereto have each caused this Agreement to be
duly executed as of the date first above written:

 

 

 

MEDA PHARMA SARL

 

 

 

 

 

By:

 

 

Name:

 

Title:

 

 

 

 

 

VALEANT INTERNATIONAL (BARBADOS) SRL

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

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

 

SCHEDULE 9

 

PART A — ***

 

PART B — *** AGREEMENTS

 

Agreement

 

*** Party

 

Counterparty

 

Date of Agreement

***

 

***

 

***

 

***

***

 

***

 

***

 

***

***

 

***

 

***

 

***

 

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

 

SCHEDULE 10

 

***

 

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

 

SCHEDULE 11

 

MARKETING AUTHORIZATIONS

 

Elidel

 

Country

 

Product Name

 

Approval
status

 

Marketing Authorization
Number/NDA Number

Canada

 

Elidel Cream 1 %

 

Approved

 

02247238

Mexico

 

Elidel Cream 1 %

 

Approved

 

149M2002 SSA IV

United States

 

Elidel Cream 1 %

 

Approved

 

21-302

 

Xerese

 

Xerese Product approved by the Food and Drug Administration of the United States
Department of Health and Human Services (NDA 22-436).

 

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

 

SCHEDULE 12

 

TRANSITION AGREEMENT

 

 

 

U.S. TRANSITION AGREEMENT

 

between

 

MEDA PHARMA SARL

 

and

 

VALEANT INTERNATIONAL (BARBADOS) SRL

 

 

 

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

 

TABLE OF CONTENTS

 

 

 

Page

 

 

 

1.

DEFINITIONS AND INTERPRETATION

20

 

 

 

2.

TRANSITION

23

 

 

 

3.

PAYMENT CLAIMS

25

 

 

 

4.

GOVERNMENTAL ENTITY PROGRAMS

25

 

 

 

5.

HEALTH CARE REFORM LEGISLATION

29

 

 

 

6.

PRODUCT RETURNS AND CUSTOMER SERVICE

30

 

 

 

7.

INDEMNIFICATION; LIMITATION ON LOSSES

30

 

 

 

8.

MISCELLANEOUS

31

 

 

 

 

List of Annexes and Schedules

 

Annex A

AMP Reporting Format

Annex B

ASP Reporting Format

Annex C

BP Reporting Format

Annex D

NFAMP Reporting Format

Annex E

Patient Transaction Data Feed and Layout

Annex F

New Mexico Price Reporting Format

Annex G

Texas Vendor Drug Program Reporting Format

 

 

Schedule 2.5 Specified Existing Discount Agreements

 

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

 

U.S. TRANSITION AGREEMENT

 

This U.S. TRANSITION AGREEMENT (“U.S. Transition Agreement”) is made as of this
[X] day of [X], 2011, by and between Meda Pharma SARL, a company incorporated in
Luxembourg (“Meda”), and Valeant International (Barbados) SRL, an international
society with restricted liability established under the laws of Barbados
(“Valeant”).  Meda and Valeant are each referred to individually as a “Party”
and together as the “Parties.”

 

RECITALS

 

WHEREAS, Meda and Valeant have entered into a Licence Agreement dated as of
June 29, 2011 (“Licence Agreement”) pursuant to which, among other things, Meda
granted a license to Valeant to commercialize the Product (as defined below) in
the Territory (as defined below); and

 

WHEREAS, the Licence Agreement provides that Meda and Valeant will enter into
this U.S. Transition Agreement contemporaneously with the Closing Date (as
defined below).

 

NOW, THEREFORE, the Parties hereby agree as follows:

 

1.                                      DEFINITIONS AND INTERPRETATION

 

1.1                               Definitions.  The capitalized terms used in
this U.S. Transition Agreement shall have the meanings as defined below or, if
not defined below, as defined in the Licence Agreement:

 

“AMP” means the average manufacturer price, as defined at 42 U.S.C. §
1396r-8(k)(1) and implementing regulations.

 

“ASP” means the manufacturer’s average selling price as defined at 42 U.S.C. §
1395w-3a and 42 C.F.R. § 414.800, et seq.

 

“Best Price” means the “best price” as defined at 42 U.S.C. §
1396r-8(c)(1)(C) and 42 C.F.R. § 447.500 et seq.

 

“Calendar Quarter” means any period of three (3) consecutive calendar months
ending on March 31, June 30, September 30 or December 31.

 

“Chargeback/Rebate Termination Date” shall have the meaning set forth in Clause
3.1(a)(ii).

 

“Chargebacks” means all chargebacks and all other credits and reimbursements,
other than Rebates, to Customers with respect to the Product (whether relating
to the Product sold prior to, on or after Closing Date).

 

“Closing Date” means the date hereof.

 

“CMS” means Centers for Medicare and Medicaid Services within the United States
Department of Health and Human Services, or any successor organization or
agency.

 

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

 

“Customers” means Third Party wholesalers, pharmacy benefit managers, managed
care organizations, government buyers, group purchasing organizations or other
Third Parties that contract with Meda with respect to the Product or purchase
the Product from Meda as of the Closing Date in the Territory.

 

“Distributor/End Purchaser Invoice Date” means the date that a wholesaler or
distributor sells a Product to an end purchaser customer, as reflected on
Chargeback claims data.

 

“Existing Discount Agreements” shall have the meaning set forth in Clause 2.4.

 

“FSS” means Federal Supply Schedule administered by the United States Department
of Veterans Affairs.

 

“Health Care Reform Fees” or “HCR Fees” means the fees described in Section 9008
of the Patient Protection and Affordable Care Act, Pub. L. No. 111-148, as
amended by Section 1401 of the Health Care Education Reconciliation Act of 2010,
Pub. L. No. 111- 152.

 

“Licence Agreement” shall have the meaning set forth in the Recitals of this
U.S. Transition Agreement.

 

“Meda NDC” shall have the meaning set forth in Clause 2.2.

 

“Medicaid Rebate Program” means the rebate program established pursuant to 42
U.S.C. §1396r-8.

 

“Medicare Program” means the program established pursuant to 42 U.S.C.
Subchapter XVIII.

 

“Medicare Part D Prescription Drug Plans” means a Prescription Drug Plan as
defined in 42 C.F.R.§ 423.4 or Medicare Advantage Prescription Drug plan that
has been approved by CMS to offer prescription drug coverage that is integrated
with health care coverage provided under Part C of the Medicare Program to
enrollees, and that satisfies the definition of an “MA-PD plan” under 42 C.F.R.
§ 423.4.

 

“Medicare Part D Coverage Gap Rebate Program” means the rebate program pursuant
to Section 3301 of the Patient Protection and Affordable Care Act, Pub. L.
No. 111-148.

 

“NFAMP” means the non-federal average manufacturer price as defined in 38 U.S.C.
§ 8126 and the VA Master Agreement.

 

“Payment Claims” means any Rebates and/or Chargebacks, and without limiting the
foregoing, includes prompt payment discounts, distribution service fees, and
administrative fees charged by Customers.

 

“Pharmacy Claim Payment Date” means the date on which a pharmacy or other entity
dispenses the Product as reflected on Rebate claim utilization data.

 

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

 

“PHS 340B Program” means the drug discount program, available to “covered
entities,” that is administered by the Health Resources and Services
Administration pursuant to 42 U.S.C. § 256b.

 

“Product” means the “Xerese Products” as defined in the Licence Agreement.

 

“Proportion of Product Sales” means the proportion of total sales of Meda and
its Affiliates represented by sales of the Product that are used to calculate
the HCR Fees associated with the Product, only if such proportion is expressly
reported by the United States Department of Treasury when it invoices the HCR
Fees to Meda and its Affiliates; provided, however, that if the United States
Department of Treasury does not report such proportion as provided in the
foregoing, then “Proportion of Product Sales” means the total dollar value of
sales of the Product under the Meda NDC in the relevant calendar year to
government purchasers included in the calculation of the HCR Fees divided by the
total dollar value of sales of all products of Meda and its Affiliates in the
relevant calendar year to government purchasers included in the calculation of
the HCR Fees, based on data in Meda’s accounting system for such sales.  For
purposes of this definition, the term “sales” means sales, net of applicable
discounts.

 

“Rebates” means any rebates, price reductions or payments to Customers, based
upon the utilization of the Product in the Territory.

 

“State Assistance Programs” means any Medicaid supplemental rebate programs,
state pharmaceutical assistance programs, and other state programs to provide
pharmaceutical assistance for which Meda has entered into a rebate or discount
agreement with a state effective prior to the Closing Date with respect to the
Product.

 

“Transfer Date” means ***.

 

“Transition Lots” means those lots of a Product, with an Meda NDC, for which
Product was partially sold by Meda and partially sold by Valeant.

 

“Territory” means the United States of America, including the District of
Columbia and Puerto Rico.

 

“TriCare Rebate Program” means the rebate program described in the final
rule published by the Department of Defense at 74 Fed. Reg. 11,279 to implement
Section 703 of the National Defense Authorization Act of 2008, and includes
rebates pursuant to any voluntary rebate agreement described therein.

 

“VA” means the United States Department of Veterans Affairs.

 

“VA Master Agreement” means an agreement between a pharmaceutical manufacturer
and the Department of Veterans Affairs to implement the provisions of the
Veterans Health Care Act of 1992, 38 U.S.C. § 8126.

 

“Valeant NDC” shall have the meaning set forth in Clause 2.2.

 

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

 

“Valeant NDC Date” shall have the meaning set forth in Clause 2.2.

 

1.2                               Interpretation.  In this U.S. Transition
Agreement unless otherwise specified:

 

(a)                                  “includes” and “including” shall mean
respectively includes and including without limitation;

 

(b)                                 a Party includes its permitted assignees
and/or the respective successors in title to substantially the whole of its
undertaking;

 

(c)                                  words denoting any gender shall include all
genders;

 

(d)                                 references to Clauses, Schedules and Annexes
are to Clauses, Schedules and Annexes of this U.S. Transition Agreement unless
otherwise specified;

 

(e)                                  the headings in this U.S. Transition
Agreement are for information only and shall not be considered in the
interpretation of this U.S. Transition Agreement;

 

(f)                                    the words “hereof”, “herein” and
“hereunder” and words of like import used in this U.S. Transition Agreement
shall refer to this U.S. Transition Agreement as a whole and not to any
particular provision of this U.S. Transition Agreement;

 

(g)                                 references to any agreement or contract are
to that agreement or contract as amended, modified or supplemented from time to
time in accordance with the terms hereof and thereof;

 

(h)                                 references to any statute or regulation
include any modification or re-enactment of that statute or regulation;

 

(i)                                     references to dollars or $ shall refer
to United States Dollars; and

 

(j)                                     the Parties agree that the terms and
conditions of this U.S. Transition Agreement are the result of negotiations
between the Parties and that this U.S. Transition Agreement shall not be
construed in favor of or against any Party by reason of the extent to which any
Party participated in its preparation.

 

1.3                               Affiliates. The Parties acknowledge that
Valeant may engage one or more of its Affiliates to distribute the Product in
the Territory. In this respect, where appropriate, references to “Valeant”
should be deemed to include Valeant and one or more of its Affiliates engaged by
Valeant to distribute the Product in the Territory.

 

2.                                      TRANSITION

 

2.1                               Customer Notification; Order Transition. 
Promptly following the Transfer Date, Meda shall notify all of its then current
direct purchasing Customers for the Product in the Territory that orders for the
Product in the Territory after the Transfer Date should be placed with Valeant. 
Meda shall provide Valeant with a list of contact information for all such
Customers.  Unless the Parties otherwise agree, any orders held by Meda on the

 

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

 

Transfer Date for the purchase of the Product in the Territory by Customers
which remain unfilled as of the Transfer Date or require delivery after the
Transfer Date shall not be filled by Meda and shall be cancelled by Meda.  Any
orders for the purchase of the Product in the Territory that Meda receives after
the Transfer Date or are unfilled after the Transfer Date shall be rejected by
Meda and Meda shall inform any Customer placing an order after the Transfer Date
that such Customer should place its order with Valeant.

 

2.2                               NDC and Labeling Transition.  As promptly as
possible after the Transfer Date, but in any event no later than *** thereafter,
Valeant shall initiate a change to the labeling of the Product to Valeant’s
labeling.  Valeant may distribute the Product under Meda’s NDC numbers (the
“Meda NDC”)(1) and with labeling and packaging incorporating the Xerese Trade
Marks(2), in each case consistent with Meda’s past practice, and in accordance
with the terms and conditions of the Xerese Supply Agreement.  Subject to the
terms and conditions of the Xerese Supply Agreement, (i) until the date that the
Valeant NDC is first utilized on Product labeling and packaging for Product sold
after the Transfer Date (the “Valeant NDC Date”), Meda will not discontinue the
use of the Meda NDC on Product labeling, and (ii) Valeant will be permitted to
continue to sell any inventory of the Product that Valeant acquires from Meda
that bears the Meda NDC until ***.

 

2.3                               Patient Assistance Programs.  Meda shall
(i) inform its program administrator, physicians and patients receiving
assistance for the Product under its patient assistance program of the
discontinuance of coverage for the Product under the Meda patient assistance
program (and the date thereof) and shall bear any costs associated with the
termination of such program, and (ii) advise physicians and such patients that
they will need to apply to Valeant’s patient assistance program to receive
continuing assistance for the Product.  The Parties shall cooperate in good
faith with respect to the transition of patient assistance program patients.

 

2.4                               Pricing and Sales Terms.  ***

 

2.5                               ***

 

2.6                               From and after the Transfer Date, Valeant
shall assume all responsibility for responding to any medical and customer
inquiries from healthcare professionals, consumers and others relating to the
Product in the Territory.  As of the Transfer Date, all medical and customer
inquiries from healthcare professionals, consumers and others relating to the
Product received by Meda shall immediately upon receipt by Meda be transmitted
to Valeant according to Clause 6.2 of this U.S. Transition Agreement.

 

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

(1)  ***

 

(2)  ***

 

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

 

3.                                      PAYMENT CLAIMS

 

3.1                               Payment Claims.

 

(a)                                  Except with respect to Payment Claims
relating to programs of Governmental Entities which are addressed in Clause 4
below, the Parties shall be responsible for Payment Claims with respect to
Product that bears the Meda NDC as follows:

 

***

 

(b)                                 For purposes of clarification and the
avoidance of doubt, Payment Claims by Medicare Part D Prescription Drug Plans
shall not be construed to be Payment Claims relating to programs of Governmental
Entities and shall be handled in accordance with this Clause 3.1, but Payment
Claims associated with the Medicare Part D Coverage Gap Rebate Program shall be
construed to be Payment Claims relating to programs of Governmental Entities and
shall be handled in accordance with Clause 4.6 below.

 

(c)                                  ***

 

(d)                                 If Meda processes, issues credits or remits
payment for Payment Claims for which Valeant is financially responsible under
Clause 3.1, Meda shall provide Valeant with quarterly reports within forty-five
(45) calendar days after the end of the quarter in which the payment of all such
Payment Claims is made for the applicable quarter setting forth in reasonable
detail the amount of all such issued credits or remitted payments and any
additional amounts under Clause 3.1(a)(iii), and any amounts owed by Valeant to
Meda shall be paid within thirty (30) calendar days thereafter.

 

4.                                      GOVERNMENTAL ENTITY PROGRAMS

 

4.1                               Valeant Government Agreements.  Valeant shall
use Commercially Reasonable Efforts to appropriately list the Product bearing
the Valeant NDC on its own Medicaid Rebate Program agreement, PHS 340B Program
agreement, VA Master Agreement, FSS agreement, TriCare Rebate Program agreement,
and Medicare Part D Coverage Gap Rebate Program agreement as soon as practicable
after the Transfer Date.  Meda shall bear no responsibility for Valeant’s
failure to list the Product appropriately on its agreements.

 

4.2                               State Assistance Program Agreements and
Receipt of Proposals by Meda.  After the Transfer Date, Meda may maintain
Product bearing the Meda NDC on its existing State Assistance Program
agreements.  After the Transfer Date, if Meda receives a request for proposal or
similar Rebate agreement proposal from a State Assistance Program or Medicaid
agency for a supplemental Rebate offer relating to the Product, Meda shall
provide Valeant with such request or proposal.  Valeant may request that Meda
propose a Rebate with respect to the Product bearing the Meda NDC on financial
terms specified by Valeant; provided, however, that (i) any such proposal shall
be accompanied by a statement to the State Assistance Program explaining
Valeant’s interest in the Product, (ii)

 

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

 

Valeant shall submit a comparable proposal with respect to Product bearing the
Valeant NDC, and (iii) Meda shall retain the right, in its reasonable
discretion, to terminate any such agreement.

 

4.3                               Payment Claims With Respect to the Medicaid
Rebate Program, Managed Medicaid, Supplemental, ADAP and Similar State
Assistance Programs.

 

(a)                                  ***

 

(b)                                 ***

 

(c)                                  Meda shall provide Valeant with quarterly
corresponding utilization summary and state payment reports within forty-five
(45) calendar days after the end of the quarter in which payment of the
requested Rebate payments is made for the applicable Calendar Quarter that
describe the requested Rebate payments in reasonable detail, and Valeant shall
reimburse Meda for such amounts within forty-five (45) calendar days.

 

(d)                                 ***

 

4.4                               Payment Claims With Respect to Discounted
Sales Pursuant to the VA Master Agreement, FSS Sales and the TriCare Rebate
Program.

 

(a)                                  Valeant shall work with Meda to coordinate
the addition of the Product to the Valeant FSS and TriCare Rebate Program
agreement to coincide with Meda removing the Product from the Meda FSS and
TriCare Rebate Program agreement.  Meda and Valeant will coordinate the addition
and removal of the Product from the FSS and TriCare Rebate Program agreement so
the switch over occurs as close to Transfer Date as possible, with consideration
to FSS regulations.

 

(b)                                 ***

 

(c)                                  ***

 

(d)                                 Meda shall be entitled to additional
reimbursement from Valeant for Payment Claim amounts associated with FSS or
TriCare Rebate Program Chargebacks or Rebates for the period described in
Clauses 4.4(b) and 4.4(c) which represent the incremental increase in such
amounts paid by Meda attributable to any price increase taken by Valeant during
such period.

 

(e)                                  To the extent that Meda processes, issues
credits or remits payment for Chargeback or Rebate claims in respect of the
Product for which Valeant is financially responsible under this Clause 4.4, Meda
shall provide Valeant with quarterly reports within forty-five (45) calendar
days after the end of the quarter in which the payment of all such Chargeback
and Rebate claims is made for the applicable Calendar Quarter setting forth in
reasonable detail the amount of all such processed Chargeback and Rebate claims
and such amounts shall be payable within thirty (30) calendar days.

 

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

 

4.5                               Payment Claims Under the PHS 340B Program.

 

(a)                                  Valeant shall work with Meda to establish a
process, to be implemented as close to the Transfer Date as possible, whereby
Valeant shall process Payment Claims for the Product bearing Meda’s NDC numbers
associated with purchases by PHS 340B Program covered entities after the
Transfer Date.  Prior to the implementation of that process, to the extent that
Meda processes Payment Claims with respect to such Products, Meda shall pay
Chargebacks or Rebates with respect to PHS 340B Program sales.  Valeant shall
list the Product bearing Meda’s NDC on their PHS 340B price list the first full
quarter after the Transfer Date, and every subsequent quarter thereafter until
the Meda NDC has expired.

 

(b)                                 ***

 

(c)                                  ***

 

(d)                                 Meda shall be entitled to additional
reimbursement from Valeant for Payment Claim amounts associated with PHS 340b
Program Chargebacks or Rebates for the period described in Clause 4.5(c) which
represent the incremental increase in such amounts paid by Meda attributable to
any price increase taken by Valeant during such period.

 

(e)                                  Meda shall provide Valeant with quarterly
Chargeback or Rebate information within forty-five (45) calendar days after the
end of the quarter in which the payment of all such Chargebacks and Rebates is
made for the applicable Calendar Quarter that describe the sales and payments in
reasonable detail, and Valeant shall reimburse Meda for such amounts within
thirty (30) calendar days.

 

4.6                               Payment Claims Associated With the Medicare
Part D Coverage Gap Rebate Program.  The Parties acknowledge that ***. Meda
shall provide Valeant with quarterly corresponding utilization summary and state
payment reports within forty-five (45) calendar days after the end of the
quarter in which the payment of all such Rebates is made for the applicable
Calendar Quarter that described the requested Rebate payments in reasonable
detail, and Valeant shall reimburse Meda for such amounts within thirty (30)
calendar days.  Valeant shall process and pay all Rebates due pursuant to the
Medicare Part D Coverage Gap Rebate Program for the Product sold by or on behalf
of Valeant in the Territory bearing the Valeant NDC.

 

4.7                               Information and Reporting.

 

(a)                                  With respect to the Product sold by or on
behalf of Valeant on or after the Closing Date that bears the Meda NDC, Meda
will continue to be responsible for reporting (including, where applicable,
through adjustments to wholesaler contract prices to eligible purchasers)
pricing information required under the applicable statutes, rules, and
regulatory guidance relating to the Medicaid Rebate Program, the Medicare
Program, the PHS 340B Program, the VA Master Agreement, the FSS and applicable
state laws; provided, however, that Valeant will be responsible for reporting
such pricing information required under the VA Master Agreement and

 

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

 

the FSS as of the date of the addition of the Product to Valeant’s VA
contracts.  Meda shall report information under this Clause 4.7(a) in accordance
with Meda’s existing reporting methodologies.  Valeant will be responsible for
reporting pricing information required under the Medicaid Rebate Program, the
PHS 340B Program, the Medicare Program, the FSS and applicable state laws with
respect to the Product sold on or after the Closing Date bearing the Valeant
NDC.

 

(b)                                 Upon and after the Closing Date, with
respect to the Parties’ reporting responsibilities designated in Clause
4.7(a) above, the Parties agree to cooperate and use Commercially Reasonable
Efforts to provide on a timely basis all such documentation as may reasonably be
requested by each Party of the other to report required pricing information. 
Without limitation, the Parties agree as follows:

 

(i)                                     Within twenty (20) calendar days after
the Closing Date, Meda shall provide Valeant with the Base Period AMP (as
defined in 42 U.S.C. § 1396r-8) for each Product.  Nothing herein shall obligate
Meda to provide underlying sales or pricing data or methodologies used to
calculate such Base Period AMPs, or any other AMP or Best Price data regarding
periods prior to the Closing Date.

 

(ii)                                  Within twenty (20) calendar days after the
end of each reporting period as designated by CMS or applicable state law, with
respect to sales by Valeant of the Product after the Transfer Date that bears
the Meda NDC, Valeant will provide, and certify to Meda, as established by the
applicable statutes, rules, and regulatory guidance relating to the Medicaid
Rebate Program, the PHS 340B Program, the Federal Supply and VA Master
Agreement, and applicable state laws the following information: Best Price,
sales at nominal prices as defined in 42 U.S.C. § 1396r-8 and implementing
regulations (reported as an aggregate dollar amount for each drug at the 9-digit
NDC level as shown in Annex C), customary prompt pay discounts on a quarterly
basis, the relevant components for calculating AMP as specified in Annex A on a
monthly and quarterly basis, the relevant components for calculating NFAMP as
specified in Annex D on a quarterly basis, the relevant components for
calculating required pricing data for submission to the state of New Mexico as
specified in Annex F on an annual basis, and the relevant components for
calculating the required pricing data for submission to the state of Texas as
specified in Appendix G within the time period required by law.  The format to
be used for such reporting is set forth in Annex A, Annex B, Annex C, Annex D,
Annex F and Annex G.  Meda shall report to Valeant within twenty-five (25)
calendar days following its receipt of such report the applicable AMP, Best
Price, PHS 340B Program price, and any adjustments to FSS prices, determined in
accordance with Meda’s applicable methodologies and procedures.

 

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(iii)                               For any Valeant patient assistance programs
and patient transaction programs (e.g., coupon, savings card, or voucher
programs) in effect as of the Closing Date or implemented thereafter, Valeant
agrees to provide, or will arrange to provide, patient transaction data relating
to the Product that bears a Meda NDC number to the extent that it is required
for government pricing calculations required to be made by Meda for the
Product.  Such data shall be provided under pre-established data feeds and
layouts as set forth in Annex E.

 

(iv)                              As soon as practicable following the execution
of this U.S. Transition Agreement, Meda shall provide Valeant with its FSS
“tracking customer” for the Product sold under its FSS contract.  Within ten
(10) calendar days after receipt of such information, Valeant shall identify any
Product sold to any FSS tracking customer during the period beginning on the
Transfer Date and ending on the date the Product that bears the Meda NDC is
added to Valeant’s FSS contract.

 

(v)                                 Within twenty (20) calendar days after the
end of each reporting period as designated by CMS, with respect to sales by Meda
of the Product before the Transfer Date that bear the Meda NDC, Meda will
provide twelve (12) month sales and pricing data required by Valeant to
calculate AMP, ASP, and NFAMP under the Valeant NDC.  Meda will provide the
twelve (12) month sales and pricing data for each reporting period until sales
and pricing data under the Meda NDC are no longer required for such calculations
under the Valeant NDC.  The format to be used for such reporting is set forth in
Annex A, Annex B, Annex C and Annex D.

 

(c)                                  Subject to the limitations specified in
Clause 4.7(b) above, the Parties agree to cooperate and provide any other
documentation as each Party may reasonably request from time to time to assist
in the matters described in this Clause 4.

 

(d)                                 Each Party may use all information provided
to it pursuant to this Clause 4 in reporting to CMS and other Governmental
Entity, including under state reporting requirements.  The Parties further agree
that all data, including Medicaid Rebate Program pricing data, and data to be
used for the programs and reporting requirements described in this Clause 4 that
are included in any report to the other Party, will be calculated utilizing
systems, processes, policies, practices and pricing methodologies that comply
with the requirements of such programs and requirements.

 

5.                                      HEALTH CARE REFORM LEGISLATION

 

5.1                               ***  The Parties acknowledge that HCR Fees
invoiced to Valeant will be based in part on sales of the Product made by Meda
bearing the Meda NDC.  ***  Within thirty (30) calendar days of Meda’s receipt
of such an invoice, Meda shall provide to Valeant a calculation of the total
amount of Valeant’s HCR Fees associated with its control of the Product during
such year, which total amount shall be equal to the product of (x) total

 

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invoiced Meda HCR Fees, (y) the Proportion of Product Sales and (z) the number
of days of the year that the Product was controlled by Valeant including the
Transfer Date divided by three hundred and sixty five (365).  Within thirty (30)
calendar days of its receipt of such calculation, Valeant shall pay to Meda one
hundred percent (100%) of such total amount.  For purposes of this Clause 5, the
term “sales” means sales, net of applicable discounts.

 

6.                                      PRODUCT RETURNS AND CUSTOMER SERVICE

 

6.1                               Returns.

 

(a)                                  Within forty-five (45) calendar days after
the Transfer Date, Meda shall deliver to Valeant a schedule of all lots of
Product sold prior to the Transfer Date that were unexpired as of the Transfer
Date.

 

(b)                                 ***

 

(c)                                  ***

 

(d)                                 If Valeant processes, issues credits or
remits payment for returns in respect of the Products for which Meda is
financially responsible under this Clause 6, Valeant shall provide Meda with
monthly reports within sixty (60) calendar days after the end of the applicable
month setting forth in reasonable detail the amount of all such issued credits
or remitted payments for returns, and any amounts owed by Meda to Valeant shall
be paid within thirty (30) calendar days thereafter.  Returned Product shall be
destroyed by both Parties in a manner consistent with applicable law, and the
costs of such destruction shall not be reimbursed.

 

6.2                               Customer Service.  From and after the Transfer
Date, Valeant shall assume all customer service responsibility and provide all
customer service required by its Customers with respect to the Product.  As of
the Transfer Date, all customer service requests relating to the Product coming
to Meda will be referred to Valeant at the following contact information:

 

Telephone: 1.800.321.4576

 

7.                                      INDEMNIFICATION; LIMITATION ON LOSSES

 

7.1                               Indemnification.  Meda hereby indemnifies
Valeant, its Affiliates and their respective successors and assignees against
and agrees to hold each of them harmless from any and all Losses incurred or
suffered by Valeant, its Affiliates or their respective successors and assignees
arising out of any breach of covenant or agreement by Meda under this U.S.
Transition Agreement; provided that Meda shall not be liable to Valeant pursuant
to this Clause 7.1 in the event that any such Loss arises out of (i) the
negligence or wilful misconduct of Valeant or (ii) any failure of Valeant to
perform or observe any provision, obligation, covenant or agreement to be
performed by Valeant pursuant to this U.S. Transition Agreement.  Valeant hereby
indemnifies Meda, its Affiliates and their respective successors and assignees
against and agrees to hold each of them harmless

 

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from any and all Losses incurred or suffered by Meda, its Affiliates and their
respective successors and assignees arising out of any breach of covenant or
agreement by Valeant under this U.S. Transition Agreement; provided that Valeant
shall not be liable to Meda pursuant to this Clause 7.1 in the event that any
such Loss arises out of (i) the negligence or wilful misconduct of Meda or
(ii) any failure of Meda to perform or observe any provision, obligation,
covenant or agreement to be performed by Meda pursuant to this U.S. Transition
Agreement.

 

7.2                               Special, Indirect and Other Losses.  TO THE
EXTENT PERMITTED BY APPLICABLE LAW, NEITHER PARTY NOR ANY OF ITS AFFILIATES WILL
BE LIABLE UNDER ANY LEGAL OR EQUITABLE THEORY FOR ANY SPECIAL, INCIDENTAL,
PUNITIVE, CONSEQUENTIAL OR INDIRECT DAMAGES OR ANY SIMILAR DAMAGES OR DAMAGES
BASED UPON DIMINUTION IN VALUE OR ANY VALUATION MULTIPLIER EVEN IF SUCH PARTY
HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, UNLESS ACTUALLY PAID TO A
THIRD PARTY.

 

8.                                      MISCELLANEOUS(3)

 

8.1                               Governing Law.  This U.S. Transition Agreement
shall be governed by and construed in accordance with the laws of the State of
New York, without giving effect to the conflicts of laws provisions thereof. 
The Parties agree that any suit, action or proceeding seeking to enforce any
provision of, or based on any matter arising out of or in connection with, this
U.S. Transition Agreement or the transactions contemplated hereby shall be
brought in the United States District Court for the Southern District of New
York, so long as such court has subject matter jurisdiction over such suit,
action or proceeding, and that any cause of action arising out of this U.S.
Transition Agreement shall be deemed to have arisen from a transaction of
business in the State of New York, and each of the Parties hereby irrevocably
consents to the exclusive jurisdiction of such court (and of the appropriate
appellate courts therefrom) in any suit, action or proceeding and irrevocably
waives, to the fullest extent permitted by law, any objection that it may now or
hereafter have to the laying of the venue of any such suit, action or proceeding
in any such court or that any such suit, action or proceeding brought in any
such court has been brought in an inconvenient forum.

 

8.2                               Assignment, Subcontracting.  This U.S.
Transition Agreement and each and every covenant, term and condition herein is
binding upon and ensures to the benefit of the Parties hereto and their
respective successors. Neither Party may assign this U.S. Transition Agreement,
nor assign, sublicense, delegate or sub-contract any of its rights or
obligations granted hereunder without the other Party’s prior written consent,
except that a Party may (a) assign, sublicense, subcontract or delegate any or
all of its rights and obligations under this U.S. Transition Agreement to one or
more of its Affiliates; and (b)

 

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(3)  ***

 

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assign this U.S. Transition Agreement in its entirety to a successor to all or
substantially all of its business or assets to which this U.S. Transition
Agreement relates. No permitted assignment, sublicense, subcontract or
delegation shall relieve the assigning, sublicensing, subcontracting or
delegating Party of its liability hereunder. Any attempted assignment in
contravention of the foregoing shall be void.

 

8.3                               Notices.  Any notice required to be given
under this U.S. Transition Agreement, shall be in writing and shall be delivered
personally, or sent by pre-paid certified or registered post return receipt
requested or recorded delivery or by commercial courier, to each Party required
to receive the notice at its address as set out below:

 

If to Valeant:

 

Valeant International (Barbados) SRL

Welches, Christ Church

Barbados, West Indies BB17154

Facsimile:

246-420-1532

Attention:

President

 

If to Meda:

 

Meda Pharma SARL

 

46A Avenue John Fitzgerald Kennedy

 

L-1855 Luxembourg

 

Facsimile:

+ 352 263 757 33

 

 

Attention:

 Managing Director

 

or as otherwise specified by the relevant Party by notice in writing to each
other Party. Any notice shall be deemed to have been duly received: (i) if
delivered personally, when left at the address and for the contact referred to
in this Clause 8.3; (ii) if sent by pre-paid recorded delivery, at 9.00 am on
the fifth Business Day after posting; or (iii) if delivered by commercial
courier, on the date and at the time that the courier’s delivery receipt is
signed.

 

8.4                               Waiver.  No delay or failure of any Party in
exercising or enforcing any of its rights or remedies under this U.S. Transition
Agreement shall operate as a waiver of those rights.

 

8.5                               Severability.  If the whole or any part of
this U.S. Transition Agreement is or becomes or is declared illegal, invalid or
unenforceable in any jurisdiction for any reason (including both by reason of
the provisions of any legislation and also by reason of any court or competent
authority which either has jurisdiction over this U.S. Transition Agreement or
has jurisdiction over any of the Parties): (i) in the case of the illegality,
invalidity or un-enforceability of the whole of this U.S. Transition Agreement
it shall terminate only in relation to the jurisdiction in question; or (ii) in
the case of the illegality, invalidity or

 

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un-enforceability of part of this U.S. Transition Agreement that part shall be
severed from this U.S. Transition Agreement in the jurisdiction in question and
that illegality, invalidity or un-enforceability shall not in any way whatsoever
prejudice or affect the remaining parts of this U.S. Transition Agreement which
shall continue in full force and effect. If, in the reasonable opinion of any
Party, any severance under this Clause 8.5 materially affects the commercial
basis of this U.S. Transition Agreement, then the Parties shall discuss, in good
faith, ways to eliminate the material effect.

 

8.6                              Entire Agreement.  This U.S. Transition
Agreement, constitutes the entire understanding and agreement of the Parties
with respect to the subject matter hereof and cancels and supersedes all prior
agreements, whether verbal or written, between the Parties with respect to the
subject matter hereof, provided that any Confidential Information (as such term
is defined in the Licence Agreement) shall be deemed to be Confidential
Information pursuant to the Licence Agreement and subject to the applicable
provisions thereof.  No modification of any provision of this U.S. Transition
Agreement shall be effective unless made in writing and signed by a duly
authorized officer of both of the Parties.

 

8.7                               Independent Contractors.  The Parties hereto
are independent contractors and nothing contained in this U.S. Transition
Agreement shall be deemed or construed to create a partnership, joint venture,
employment, franchise, agency or fiduciary relationship between the Parties.

 

8.8                               Expenses.  Except as otherwise expressly
provided in this U.S. Transition Agreement, each Party shall pay the fees and
expenses of its respective lawyers and other advisors and all other expenses and
costs incurred by such Party incidental to the negotiation, preparation,
execution and delivery of this U.S. Transition Agreement.

 

8.9                               Language.  Except where expressly provided
otherwise, all reports, plans and any other form of communication between the
Parties shall be in English and where necessary Valeant shall provide an English
translation of any document sent to Meda and Meda shall provide an English
translation of any document sent to Valeant.

 

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

 

8.11                        Reimbursement.  If not otherwise specified herein,
any amounts due pursuant to this U.S. Transition Agreement from one Party to the
other shall be paid within thirty (30) calendar days of receipt of invoice
therefor.

 

[Signature Page Follows]

 

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

 

 

 

MEDA PHARMA SARL

 

 

 

 

 

By:

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

 

 

VALEANT INTERNATIONAL (BARBADOS) SRL

 

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

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ANNEX A

 

AMP Reporting Format

 

35

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ANNEX B

 

ASP Reporting Format

 

36

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ANNEX C

 

BP Reporting Format

 

37

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ANNEX D

 

NFAMP Reporting Format

 

38

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ANNEX E

 

Patient Transaction Data Feed and Layout

 

39

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ANNEX F

 

New Mexico Price Reporting Format

 

40

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ANNEX G

 

Texas Vendor Drug Program Reporting Format

 

41

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Schedule 2.5

 

Commercial and Medicare Part D Contracts

 

Contract Type

 

Contract Description

 

Removal Date

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Government Contracts

 

Contract Type

 

State

 

Removal Date

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

42

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SCHEDULE 13

 

***

 

43

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