Exhibit 10.78

Portions of this exhibit marked [*] are requested to be treated confidentially.

Execution Version

Dated September 29, 2010

 

 

CDC III, LLC

- and -

A general partnership

of

Craig Aronchick

William H. Lipshutz

and

Scott H. Wright

- and -

Salix Pharmaceuticals, Inc.

 

 

SECOND AMENDMENT TO LICENSE AGREEMENT

 

 

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THIS SECOND AMENDMENT TO LICENSE AGREEMENT is made the 29th day of September,
2010.

BETWEEN:

(1) CDC III, LLC, a limited liability company organized under the laws of the
State of Delaware, with its principal offices at 47 Hulfish, Suite 310,
Princeton, New Jersey 08540 (“Assignee Licensor”);

(2) a general partnership of CRAIG ARONCHICK, WILLIAM H. LIPSHUTZ, and SCOTT H.
WRIGHT, having an office at 8th and Spruce Streets, Philadelphia, Pennsylvania
19107 (“Assignor Licensor”); and

(3) SALIX PHARMACEUTICALS, INC., a company incorporated in the State of
California whose principal place of business is 1700 Perimeter Park Drive,
Morrisville, North Carolina 27560-8404 (“Licensee”).

WHEREAS:

(a) Assignor Licensor and Licensee, as successor in interest to InKine
Pharmaceutical Company, Inc. f/k/a Panax Pharmaceutical Company, Ltd., are
parties to that certain License Agreement, dated February 14, 1997, as amended
by an amendment dated April 30, 2001 (as so amended, the “Original Agreement”);

(b) Assignor Licensor has assigned certain rights under the Original Agreement
to Assignee Licensor for a certain period of time;

(c) Assignee Licensor and Licensee are parties to litigation, Civil Action
No. 3:08-04628 (FLW) (LGH) (D.N.J.) with Novel Laboratories, Inc. relating to
the Product (as such term is defined in the Original Agreement) (the
“Litigation”); and

(d) Assignor Licensor, Assignee Licensor and Licensee desire to settle the
aforesaid litigation and in connection therewith to effect pursuant hereto
certain modifications to the arrangements set forth in the Original Agreement.

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

 

1. DEFINITIONS

 

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

“Actavis” means Actavis Inc., a company incorporated in the State of Delaware.

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

“Assignee Licensor” has the meaning set forth in the preamble hereto.

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“Assignor Licensor” has the meaning set forth in the preamble hereto.

“Licensee” has the meaning set forth in the preamble hereto.

“Litigation” has the meaning set forth in the preamble hereto.

“Novel Supply Agreement” means that certain Supply Agreement, dated the
Amendment Date, between Licensee and Novel, in the form attached hereto as
Schedule A (subject to redaction by Licensee of the financial terms from such
form prior to its delivery to Assignor Licensor and Assignee Licensor).

“Original Agreement” has the meaning set forth in the preamble hereto.

“Settlement Agreement” means that certain Settlement Agreement, dated the
Amendment Date, among Novel, Actavis, Assignor Licensor, Assignee Licensor, as
assignee of certain rights of Assignor Licensor under the Original Agreement,
and Licensee, as successor in interest to InKine Pharmaceutical Company, Inc.
f/k/a Panax Pharmaceutical Company, Ltd.

 

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

 

2. AMENDMENTS TO DEFINITIONS IN ORIGINAL AGREEMENT

 

  2.1. The definition of “Agreement” contained in the first paragraph of the
Original Agreement is hereby amended to read as follows: “(as amended from time
to time, this ‘Agreement’)”.

 

  2.2. The fourth “Whereas” clause appearing on page 1 of the Original Agreement
is hereby amended to read in its entirety as follows:

“WHEREAS, ALW PARTNERSHIP has acquired and possesses a body of proprietary
technical information, including trade secret information and other know-how
relating to and including the PATENTS (as hereinafter defined) and the
Inventions (“TECHNOLOGY”);”

 

  2.3. The sixth “Whereas” clause appearing on pages 1 and 2 of the Original
Agreement is hereby amended to read in its entirety as follows:

“WHEREAS, ALW PARTNERSHIP desires to grant to PANAX, and PANAX desires to obtain
from ALW PARTNERSHIP, a license in the Field of Use to develop, use, market
and/or manufacture Products utilizing the TECHNOLOGY and Improvements and also
to sublicense the TECHNOLOGY and Improvements as set forth in Section 2.B
(collectively, the ‘LICENSED RIGHTS’).”

 

  2.4. Section 1 of the Original Agreement is hereby amended by adding at the
end thereof the following definitions:

 

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  2.4.1. “Amendment. The term ‘Amendment’ means that certain Second Amendment to
License Agreement, dated the Amendment Date, between ALW PARTNERSHIP, CDC III,
LLC, as assignee of certain rights of ALW PARTNERSHIP hereunder, and Salix
Pharmaceuticals, Inc., as successor in interest to PANAX, as the same may be
amended from time to time in accordance with the provisions of the said
document.”

 

  2.4.2. “Amendment Date.” The term ‘Amendment Date’ means September 29, 2010.”

 

  2.4.3. “Initial NDA.” The term ‘Initial NDA’ means New Drug Application
No. 021-892 as filed with the United States Food and Drug Administration.

 

  2.4.4. “Novel. The term ‘Novel’ means Novel Laboratories, Inc., a Delaware
corporation.”

 

  2.4.5. “Novel Sublicense Agreement. The term ‘Novel Sublicense Agreement’
means that certain Sublicense Agreement, dated the Amendment Date, between ALW
PARTNERSHIP, CDC III, LLC, Salix Pharmaceuticals, Inc., as successor in interest
to PANAX, and Novel.”

 

  2.4.6. “Third Party. The term ‘Third Party’ means any person other than a
party to this Agreement or the Amendment or its affiliates.”

 

  2.4.7. “U.S. Territory. The term ‘U.S. Territory’ means the United States of
America, its territories and possessions (including Puerto Rico).”

 

  2.5. The definition of “Net Sales” contained in Section 1.G. of the Original
Agreement is hereby amended by adding at the end thereof a new paragraph, such
paragraph to read as follows:

“Notwithstanding any other provision contained in this definition of Net Sales,
sales of Product [*] in Net Sales.”

 

  2.6. Section 1 of the Original Agreement is hereby amended to reorder the
definitions set forth therein, including by virtue of the provisions of this
Section 2, into alphabetical order.

 

3. INTELLECTUAL PROPERTY - LICENSES

 

  3.1. Section 2.B. of the Original Agreement is hereby amended by adding two
(2) new paragraphs at the end thereof, such paragraphs to read as follows:

“ALW PARTNERSHIP consents for all purposes of this Agreement, including, without
limitation, Section 7.B. hereof, to the settlement

 

[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

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of the litigation that is the subject of the Settlement Agreement in accordance
with the terms of the Settlement Agreement and the Ancillary Agreements (as
defined in the Settlement Agreement). Without limiting the provisions of the
preceding sentence, ALW PARTNERSHIP further consents to the sublicense by Salix
Pharmaceuticals, Inc., as successor in interest to PANAX, of Licensed Rights
effected pursuant to the Novel Sublicense Agreement.

Licensee shall not at any time prior to the Start Date (as such term is defined
in the Novel Sublicense Agreement), (a) sublicense or otherwise authorize a
Third Party to sell Product in the U.S. Territory under the Initial NDA but
using a trademark on the Product other than the Osmoprep® trademark or
(b) itself or through its Affiliates sell Product in the U.S. Territory under
the Initial NDA but using a trademark on the Product other than the Osmoprep®
trademark, in either case ((a) or (b)) without the prior written consent of ALW
PARTNERSHIP, such consent not to be unreasonably withheld or delayed.”

 

  3.2. Section 4.A. of the Original Agreement is hereby amended by deleting the
parenthetical that appears in the fourth line thereof and replacing it with the
parenthetical “(pursuant to Section 1.G.)”.

 

4. INDEMNIFICATION

Section 16.B. of the Original Agreement is hereby amended by adding a new
sentence at the end thereof, such sentence to read as follows:

“The provisions of this Section 16.B. shall not apply in respect of any
liability that may arise from the exercise by Novel of its rights under the
Novel Sublicense Agreement or the making, having made, importation, use, sale or
offer for sale by Novel of Product pursuant thereto.”

 

5. FILINGS; CONFIDENTIALITY AND NON-DISCLOSURE

 

  5.1. Assignee Licensor, Assignor Licensor and Licensee each agrees to make
such filings in respect of this Amendment and the other agreements being
executed by Assignor Licensor, Assignee Licensor and Licensee and other persons
in connection herewith as may be required by Applicable Laws, including those
filings with the United State Federal Trade Commission and the United States
Department of Justice required by Section 1112 of Subtitle B of Title XI of the
United States Medicare Prescription Drug, Improvement, and Modernization Act of
2003. Each of the Assignee Licensor, Assignor Licensor and Licensee agrees that
filings contemplated by the preceding sentence shall be permitted to be made by
the others notwithstanding any provision contained in Section 20.M. of the
Original Agreement to the contrary.

 

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  5.2. Subject to Section 5.1, disclosure of this Amendment and its terms shall
be governed by the provisions of Section 20.M. of the Original Agreement mutatis
mutandis.

 

6. ASSIGNMENT

This Amendment shall be binding upon and inure to the benefit of the successors
in interest of the respective party hereto. Neither this Amendment nor any
interest hereunder shall be assignable (a) by any party hereto separately from
the Original Agreement or (b) otherwise except as permitted by Section 20.D. of
the Original Agreement. Assignee Licensor and Assignor Licensor hereby
acknowledge and accept that for purposes of this Amendment and the Original
Agreement, Licensee is the successor in interest to InKine Pharmaceutical
Company, Inc. f/k/a Panax Pharmaceutical Company, Ltd.

 

7. GOVERNING LAW AND JURISDICTION

The interpretation and construction of this Amendment shall be governed by the
laws of the State of New York excluding any conflict or choice of law rule or
principle that might otherwise refer construction or interpretation of this
Amendment to the substantive law of another jurisdiction. Any dispute arising
out of or relating to the existence, negotiation, validity, formation,
interpretation, breach, performance or application of this Amendment shall be
subject to resolution exclusively in accordance with the provisions of
Section 20.K. of the Original Agreement.

 

8. ENTIRE AGREEMENT AND SEVERABILITY

 

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

 

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

 

  8.3.

If any provision of this Amendment is held to be invalid, illegal or
unenforceable, in any respect, then, to the fullest extent permitted by
Applicable Laws and if the rights or obligations of the parties hereto will not
be materially and adversely affected: (a) such provision will be given no effect
by the parties hereto and shall not form part of this Amendment, (b) all other
provisions of this Amendment shall remain in full force and effect, and (c) the
parties hereto shall use their best efforts to negotiate a provision in
replacement of the provision held invalid, illegal or unenforceable that is
consistent with Applicable Laws and achieves, as nearly as possible, the
original intention of the parties hereto. To the fullest extent permitted by
Applicable Laws, the parties hereto waive any provision of law that would

 

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render any provision of this Amendment invalid, illegal or unenforceable in any
respect.

 

9. AMENDMENT

Any amendment or modification of this Amendment must be in writing and signed by
authorized representatives of all parties hereto.

 

10. NO BENEFIT TO THIRD PARTIES

The provisions of this Amendment are for the sole benefit of the parties hereto
and their successors and permitted assigns, and they shall not be construed as
conferring any rights in any other person.

 

11. FURTHER ASSURANCE

Each party hereto shall perform all further acts and things and execute and
deliver such further documents as may be necessary or as any other party hereto
may reasonably require to implement or give effect to this Amendment. Without
limiting the foregoing, each party hereto shall take any and all such further
steps, perform all further acts and things and execute and deliver such further
agreements and other documents as may be required or necessary to conform the
agreements between the parties set forth in the Original Agreement as amended by
this Amendment to the conditions and requirements of the Novel Sublicense
Agreement, the Novel Supply Agreement, and the Settlement Agreement and the
obligations of the parties hereto thereunder.

 

12. EXPENSES

Subject to

(a) pre-existing agreements between Licensee and Assignee Licensor in respect of
Salix’s reimbursement of attorneys’ fees and other costs and expenses incurred
by Assignee Licensor in respect of the Litigation and

(b) ongoing obligations of Licensee to indemnify Assignor Licensor and Assignee
Licensor pursuant to Section 16.B of the Original Agreement as amended hereby,

each party hereto shall pay the fees and expenses of its respective lawyers and
other experts and all other expenses and costs incurred by such party incidental
to the negotiation, preparation, execution and delivery of this Amendment.

 

13. OTHER AGREEMENTS

 

  13.1. Simultaneously herewith, Assignor Licensor, Assignee Licensor and
Licensee are entering into the Novel Sublicense Agreement with Novel, Licensee
is entering into the Novel Supply Agreement with Novel, and Assignor Licensor,
Assignee Licensor and Licensee are entering into the Settlement Agreement with
Novel and Actavis. The effectiveness of this Amendment is explicitly conditioned
on the simultaneous execution and delivery by each of the parties thereto of
each and every one of the aforesaid agreements.

 

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  13.2. Sections 2 through 4 of this Amendment shall become effective only upon
the occurrence of the Consent Judgment Entry Date, as such term is defined in
the Settlement Agreement. For the avoidance of ambiguity, in the event there is
no Consent Judgment Entry Date, the provisions of Sections 2 through 4 of this
Amendment shall never become effective.

 

  13.3. Notwithstanding any provisions of this Amendment, the Settlement
Agreement or the Novel Sublicense Agreement, neither the Assignor Licensor’s
execution and delivery of this Amendment, the Settlement Agreement and the Novel
Sublicense Agreement nor the Assignor Licensor’s execution and delivery of any
other instrument delivered in connection therewith shall (a) be deemed a waiver
by the Assignor Licensor of any of its rights or Licensee’s obligations under
the Original Agreement or (b) in any way be used by Licensee against Assignor
Licensor to avoid any of Licensee’s obligations to Assignor Licensor under the
Original Agreement or to contend that Assignor Licensor has waived any of its
rights under the Original Agreement except (in the case of both clause (a) and
clause (b)) as specifically set forth in this Amendment, the Settlement
Agreement or the Novel Sublicense Agreement.

 

  13.4. Notwithstanding any provisions of this Amendment, the Settlement
Agreement or the Novel Sublicense Agreement, neither the Assignee Licensor’s
execution and delivery of this Amendment, the Settlement Agreement and the Novel
Sublicense Agreement nor the Assignee Licensor’s execution and delivery of any
other instrument delivered in connection therewith shall (a) be deemed a waiver
by the Assignee Licensor of any of its rights or Licensee’s obligations under
the Original Agreement or (b) in any way be used by Licensee against Assignee
Licensor to avoid any of Licensee’s obligations to Assignee Licensor under the
Original Agreement or to contend that Assignee Licensor has waived any of its
rights under the Original Agreement except (in the case of both clause (a) and
clause (b)) as specifically set forth in this Amendment, the Settlement
Agreement or the Novel Sublicense Agreement.

 

  13.5. Licensee hereby represents and warrants to Assignor Licensor and
Assignee Licensor that, (a) except as set forth in the Novel Supply Agreement,
neither Licensee nor any of its Affiliates has made or otherwise agreed to make
any payments to any person in connection with the execution, delivery and
performance of the Settlement Agreement, the Novel Sublicense Agreement, the
Novel Supply Agreement, or this Amendment; (b) that the Settlement Agreement,
the Novel Sublicense Agreement, the Novel Supply Agreement and this Amendment
set forth the entire agreement of the parties to the said agreements in respect
of the settlement of the Litigation and there are not any side letters or other
understandings between Licensee and any of the other parties to the said
agreements relating to the settlement of the Litigation or otherwise to the
subject matter of such agreements or amending, waiving or otherwise modifying
the said agreements.

 

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14. ADDITIONAL UNDERTAKING

Licensee shall not at any time prior to the earlier of July 1, 2013, and the
Start Date (as such term is defined in the Novel Sublicense Agreement),
(a) sublicense or otherwise authorize a Third Party to sell Product in the U.S.
Territory under the Initial NDA but using a trademark on the Product other than
the Osmoprep® trademark or (b) itself or through its Affiliates sell Product in
the U.S. Territory under the Initial NDA but using a trademark on the Product
other than the Osmoprep® trademark, in either case ((a) or (b)) without the
prior written consent of Assignee Licensor, such consent not to be unreasonably
withheld or delayed.

 

15. COUNTERPARTS

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

[Signatures appear on the next page.]

 

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IN WITNESS WHEREOF the Assignee Licensor, Assignor Licensor and Licensee have
executed this Amendment the day and year first above written.

 

CDC III, LLC By:  

/s/ David Ramsay

Name:  

David Ramsay

Title  

 

As partners in a general partnership:

/s/ Craig Aronchick

Craig Aronchick, M.D.

/s/ William H. Lipshutz

William H. Lipshutz, M.D.

/s/ Scott H. Wright

Scott H. Wright, M.D. SALIX PHARMACEUTICALS, INC. By:  

/s/ Carolyn J. Logan

Name:  

Carolyn J. Logan

Title:  

President and CEO

[Signature page for Second Amendment to License Agreement]

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Schedule A

Form of Novel Supply Agreement (Redacted)