EXHIBIT 10.72

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

EXECUTION VERSION

Dated August 27 2010

 

 

Salix Pharmaceuticals, Inc.

- and -

Norgine B.V.

Norgine Europe B.V.

- and -

Novel Laboratories, Inc.

 

 

SUBLICENSE AGREEMENT

(Moviprep®)

 

 

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THIS SUBLICENSE AGREEMENT (this “Agreement”) is made the 27th day of August,
2010 (the “Execution Date”), between SALIX PHARMACEUTICALS, INC., a California
corporation (“Sublicensor”); NORGINE B.V. and NORGINE EUROPE B.V., both Dutch
companies (together, “Norgine”); and NOVEL LABORATORIES, INC., a Delaware
corporation (“Sublicensee”). In this Agreement, Sublicensor, Norgine and
Sublicensee are referred to together as the “Parties” and each is referred to as
a “Party.”

RECITALS

WHEREAS, Sublicensor holds a license from Norgine in respect of the Norgine
Patents (as defined herein);

WHEREAS, Sublicensor desires to sublicense to Sublicensee, and Sublicensee
desires to take a sublicense under, Sublicensor’s rights in respect of the
Norgine Patents, all on the terms and conditions set forth below; and

WHEREAS, Norgine desires to license to Sublicensee, and Sublicensee desires to
take a license under, Norgine’s rights in respect of the Norgine Patents, all on
the terms and conditions set forth below;

NOW, THEREFORE, in consideration of the mutual covenants contained in this
Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties, intending to be
legally bound, hereby agree as follows:

 

1. Definitions

Unless otherwise specifically provided herein, the following terms, when used
with a capital letter at the beginning, shall have the following meanings:

1.1. “Actavis” means Actavis Inc., a Delaware corporation.

1.2. “Affiliate” means, with respect to a Person, any Person that Controls, is
Controlled by or is under common Control with such first Person. For purposes of
this definition only, “Control” means (a) to possess, directly or indirectly,
the power to direct the

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management or policies of a Person, whether through ownership of voting
securities, by contract relating to voting rights or corporate governance, or
otherwise or (b) to own, directly or indirectly, more than fifty percent
(50%) of the outstanding voting securities, or other voting ownership interest,
of such Person.

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

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

1.5. “Approved Product” means the PEG product that is approved for distribution
under New Drug Application No. 021-881 as the same exists on the date hereof or
may in the future be amended solely for the purpose of effecting non-material
modifications to the product that is the subject thereof as of the date hereof
so as to permit such product to be marketed and sold in the Territory in
compliance with Applicable Law and the requirements of Regulatory Authorities.

1.6. “Authorized Generic Product” means (a) any drug product containing PEG
distributed under New Drug Application No. 021-881 but not under the trade name
Moviprep® or (b) any Generic PEG Product that is sold in the Territory by a
Third Party (other than Actavis or its Affiliates) pursuant to a license or
other authorization from Sublicensor or Norgine.

1.7. “Business Day” means a day other than a Saturday or a Sunday on which banks
in general in New York, New York are open for the conduct of normal commercial
banking business at their counters.

1.8. “Commercialize” means, in respect of a product, all activities relating to
the importation, advertising, promotion and other marketing of the product;
pricing and reimbursement, Detailing, distribution, storage, and handling of the
product; offering the product for sale and selling the product; and customer
service and support in respect of the product; in all cases, post-Marketing
Authorization for the product.

 

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1.9. “Confidential Information” means (a) the existence and terms of this
Agreement and (b) any and all information or material that, at any time before,
on or after the Execution Date, has been or is provided or communicated to the
Receiving Party by or on behalf of the Disclosing Party pursuant to this
Agreement or in connection with the transactions contemplated hereby or any
discussions or negotiations with respect thereto, including any data, ideas,
concepts or techniques contained therein and any modifications thereof or
derivations therefrom. Confidential Information may be disclosed either orally,
visually, electronically, in writing, by delivery of materials containing
Confidential Information or in any other form now known or hereafter invented.

1.10. “Consent Judgment Entry Date” has the meaning set forth in the Settlement
Agreement.

1.11. “Courts” has the meaning set forth in Section 7.3.

1.12. “Detailing” means face to fact contact between a field sales force
representative and a medical professional with prescribing authority for the
purpose of discussing scientific or medical information about a pharmaceuticals
product(s).

1.13. “Disclosing Party” shall mean the Party disclosing Confidential
Information.

1.14. “Execution Date” has the meaning set forth in the first paragraph of this
Agreement.

1.15. “Expiration Date” means the earlier of (a) the date of expiration of the
later to expire of the Norgine Patents and (b) the date on which a court enters
a final decision from which no appeal has been or can be taken holding that all
claims of the Norgine Patents that would otherwise be infringed by the making,
having made, using, selling, offering for sale or importation of any Generic PEG
Product are unenforceable or invalid.

1.16. “FDA” means the United States Food and Drug Administration.

 

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1.17. “Generic PEG Product” means a drug product containing PEG that refers to
the Approved Product as the reference-listed drug in an Abbreviated New Drug
Application or pursuant to an application under 21 U.S.C. § 355(b)(2).

1.18. “Head License” means the License and Supply Agreement, dated December 7,
2005, as amended, between Norgine and Sublicensor pursuant to which Sublicensor
obtains its rights under the Norgine Patents.

1.19. “Indemnification Claim Notice” has the meaning set forth in
Section 4.2(a).

1.20. “Indemnified Party” has the meaning set forth in Section 4.1.

1.21. “Injunction Failure Date” means, in the event that (a) any Third Party
other than Actavis or its Affiliates sells commercial-scale quantities of an
Unlicensed Generic Product in the Territory prior to September 24, 2018, and
(b) Sublicensor fails to obtain a temporary restraining order or other
preliminary injunctive relief enjoining the sale of such Unlicensed Generic
Product in the Territory within [*] ([*]) Business Days following the date that
Sublicensor learns or is notified that such Third Party has sold such Unlicensed
Generic Product (the “Knowledge Date”), then the date that is [*] ([*]) Business
Days after the Knowledge Date, provided that notwithstanding the foregoing the
Injunction Failure Date shall be the date [*] ([*]) Business Days after the
Knowledge Date if Sublicensor fails to pursue any such temporary restraining
order or other preliminary injunctive relief in the applicable court within such
[*] ([*]) Business Day period.

1.22. “Knowledge Date” has the meaning set forth in Section 1.21.

1.23. “Losses” means any and all direct or indirect liabilities, damages, losses
or expenses, including interest, penalties, and reasonable lawyers’ fees and
disbursements.

 

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

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1.24. “Majority-Controlled Affiliate” (a) means, with respect to a Person, any
Person that owns, directly or indirectly, more than fifty percent (50%) of the
outstanding voting securities, or other voting ownership interest, of such
Person; any Person of which the first Person owns, directly or indirectly, more
than fifty percent (50%) of the outstanding voting securities, or other voting
ownership interest, of such Person; or any Person of which a Person owning,
directly or indirectly, more than fifty percent (50%) of the outstanding voting
securities, or other voting ownership interest, of the first Person owns ,
directly or indirectly, more than fifty percent (50%) of the outstanding voting
securities, or other voting ownership interest, of such Person; and, (b) with
respect to Sublicensee, includes GAVIS Pharmaceuticals, LLC.

1.25. “Marketing Authorization” means any approval required from a Regulatory
Authority to market and sell a pharmaceutical product in any relevant territory
including any form of pricing or reimbursement approval.

1.26. “Norgine” has the meaning set forth in the first paragraph of this
Agreement.

1.27. “Norgine Patents” means United States patent number 7,169,381 and United
States patent number 7,658,914 and any divisions, continuations,
continuations-in-part, re-examinations and reissues thereof.

1.28. “Party” and “Parties” have the meanings set forth in the first paragraph
of this Agreement.

1.29. “PEG” means polyethylene glycol.

1.30. “Person” means an individual, sole proprietorship, partnership, limited
partnership, limited liability partnership, corporation, limited liability
company, business trust, joint stock company, trust, incorporated association,
joint venture or similar entity or

 

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organization, including a government or political subdivision, department or
agency of a government.

1.31. “Product” means the Generic PEG Product approved for distribution under
the Sublicensee ANDA, provided that the formulation used to make such Generic
PEG Product is substantially similar to the formulation disclosed in the
Sublicensee ANDA that was produced to Sublicensor and Norgine in discovery in
the action that is the subject of the Settlement Agreement prior to the
Execution Date and the Generic PEG Product is sold under the Sublicensee ANDA.

1.32. “Receiving Party” shall mean the Party receiving Confidential Information.

1.33. “Recipients” shall have the meaning set forth in Section 6.1.

1.34. “Regulatory Authority” means any national, supranational, regional, state
or local regulatory agency, department, bureau, commission, council or other
governmental entity, including the FDA, in any country.

1.35. “Settlement Agreement” means that certain Settlement Agreement, dated the
Execution Date, by and among the Parties and Actavis.

1.36. “Start Date” means the earliest of (a) September 24, 2018, (b) the date on
which any commercial scale quantities of an Authorized Generic Product are sold
in the Territory, (c) the Injunction Failure Date, (d) the date on which a court
enters a final decision from which no appeal has been or can be taken (other
than a petition to the United States Supreme Court for a writ of certiorari)
holding that all claims of the Norgine Patents that would otherwise be infringed
by the making, having made, using, selling, offering for sale or importation of
Product in the Territory are unenforceable or invalid, and (e) the date on which
the Supply Agreement is terminated either by Sublicensor pursuant to
Section 6.2(a)(i) or (c)(i) thereof or by Sublicensee and Actavis pursuant to
Section 6.2(b) or by Sublicensee or Actavis pursuant to Section 6.2(c)(i)
thereof if, as of such date or within five (5) Business

 

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Days thereafter, Sublicensor has not (i) purchased and paid for at least the
aggregate minimum quantities required to be purchased by it under
Section 2.2(b)(i) and (ii) of the Supply Agreement (or paid the aggregate
applicable Per-Unit Supply Price (as such term is defined in the Supply
Agreement) in respect of any Units (as such term is defined in the Supply
Agreement) by which Salix’s purchases under the said Section 2.2(b)(i) and
(ii) have fallen short of the minimum quantities specified in the said sections)
and (ii) made the payments required to be made by it pursuant to Section 2.9 of
the Supply Agreement.

1.37. “Sublicensee” has the meaning set forth in the first paragraph of this
Agreement.

1.38. “Sublicensee ANDA” means Sublicensee’s Abbreviated New Drug Application
No. 90-145.

1.39. “Sublicensor” has the meaning set forth in the first paragraph of this
Agreement.

1.40. “Supply Agreement” means that certain Supply Agreement, dated the
Execution Date, between Sublicensor, Actavis and Sublicensee.

1.41. “Term” has the meaning set forth in Section 5.1.

1.42. “Territory” means the United States of America, its territories and
possessions.

1.43. “Third Party” means any Person other than the Parties and their respective
Affiliates.

1.44. “Third Party Claim” has the meaning set forth in Section 4.1.

1.45. “Unlicensed Generic Product” means a Generic PEG Product that is sold in
the Territory, other than the Product or an Authorized Generic Product.

 

2. Grant of Rights

2.1. Sublicense. Subject to the terms and conditions of this Agreement,
Sublicensor hereby grants to Sublicensee, effective as of the Start Date, a
non-exclusive, non-

 

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sublicensable (except to the extent contemplated by Section 2.3), fully paid up
sublicense under Sublicensor’s rights in and to the Norgine Patents solely to
make, have made, import, use, sell, and offer for sale the Product in the
Territory from and after the Start Date.

2.2. License. Subject to the terms and conditions of this Agreement, Norgine
hereby grants to Sublicensee, effective as of the Start Date, a non-exclusive,
non-sublicensable (except to the extent contemplated by Section 2.3), fully paid
up license under the Norgine Patents solely to make, have made, import, use,
sell, and offer for sale the Product in the Territory from and after the Start
Date.

2.3. Sublicenses; Distributor.

(a) Sublicensee shall have the right to sublicense its rights under Section 2.1
and 2.2 to its Majority-Controlled Affiliates, but any such sublicense may
continue only for such period as the Majority-Controlled Affiliate receiving the
sublicense shall continue as a Majority-Controlled Affiliate.

(b) Sublicensor and Norgine each acknowledges and agrees that appointment by
Sublicensee of Actavis as a distributor of the Product in the Territory shall
not constitute a sublicense of any rights sublicensed or licensed to Sublicensee
pursuant to Sections 2.1 and 2.2.

2.4. Waiver and Cooperation.

(a) Waiver.

(i) Sublicensor hereby agrees to waive and hereby waives, for itself and its
Affiliates, any and all regulatory exclusivities that may prevent marketing or
sale of the Product within the scope of the sublicense granted in Section 2.1.

(ii) Norgine hereby agrees to waive and hereby waives, for itself and its
Affiliates, any and all regulatory exclusivities that may prevent marketing or
sale of the Product within the scope of the license granted in Section 2.2.

 

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(b) Start of Sublicense and License. The sublicense and license set forth in
Sections 2.1 and 2.2, respectively, shall commence reasonably in advance of the
Start Date solely for the purpose of permitting, and only to the extent
necessary to permit, Sublicensee and its Affiliates to make commercially
reasonable preparations to sell Product as of the Start Date by (i) initiating
manufacture of Product not more than [*] ([*]) days before the date on which the
Start Date can be reasonably anticipated by Sublicensee to occur and
(ii) initiating offers for sale of Product not more than [*] ([*]) days before
the date on which the Start Date can be reasonably anticipated by Sublicensee to
occur.

(c) Confirmation.

(i) As Sublicensee may reasonably request, Sublicensor shall confirm to the FDA
the sublicenses and waivers granted by Sublicensor hereunder.

(ii) As Sublicensee may reasonably request, Norgine shall confirm to the FDA the
licenses and waivers granted by Sublicensor hereunder.

(d) Notification. Sublicensor shall provide Sublicensee with notice as soon as
practicable of both the expected, and also of the actual, occurrence of the
Start Date if other than September 24, 2018. Without limiting the foregoing,
Sublicensor shall provide Sublicensee with not less than [*] ([*]) days’ prior
notice of the date on which any commercial scale quantities of an Authorized
Generic Product are anticipated to be sold in the Territory. Notwithstanding
anything in this Agreement to the contrary, Sublicensee may provide a copy of
any notice received by it from Sublicensor pursuant to this Section 2.4(d) to
Actavis.

 

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

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(e) No Challenges.

(i) Sublicensor shall not, and shall cause its Affiliates not to, challenge or
cause any Third Party to challenge Sublicensee’s application to the FDA for
approval of Product.

(ii) Norgine shall not, and shall cause its Affiliates not to, challenge or
cause any Third Party to challenge Sublicensee’s application to the FDA for
approval of Product.

 

3. Representations, Warranties and Covenants

3.1. Representations and Warranties of Each Party. Each Party hereby represents
and warrants to the other Party as of the Execution Date as follows:

(a) Such Party (i) is duly formed and in good standing under the laws of the
jurisdiction of its formation, (ii) has the power and authority and the legal
right to enter into this Agreement and perform its obligations hereunder, and
(iii) has taken all necessary action on its part required to authorize the
execution and delivery of this Agreement and the performance of its obligations
hereunder.

(b) This Agreement has been duly executed and delivered on behalf of such Party
and constitutes a legal, valid and binding obligation of such Party and is
enforceable against it in accordance with its terms, subject to the effects of
bankruptcy, insolvency or other similar laws of general application affecting
the enforcement of creditor rights and judicial principles affecting the
availability of specific performance and general principles of equity, whether
enforceability is considered in a proceeding at law or equity.

(c) All necessary consents, approvals and authorizations of all regulatory and
governmental authorities and other Persons required to be obtained by such Party
in connection with the execution and delivery of this Agreement and the
performance of its obligations hereunder have been obtained.

 

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(d) The execution and delivery of this Agreement and the performance of such
Party’s obligations hereunder, (i) to the knowledge of such Party, do not and
will not conflict with or violate any requirement of Applicable Law, (ii) do not
and will not conflict with or violate any provision of the articles of
incorporation or bylaws of such Party, and (iii) do not and will not conflict
with, violate, or breach, or constitute a default or require any consent under,
any contractual obligation or court or administrative order by which such Party
is bound.

3.2. Representations and Warranties of Sublicensor. Sublicensor hereby
represents and warrants to Sublicensee as of the Execution Date that it is the
exclusive licensee under the Norgine Patents to make, have made, use, have used,
Commercialize and have Commercialized Product in the Territory and, insofar as
an agreements or other arrangements between Norgine and Sublicensor are
concerned, has the right to grant the sublicenses set forth in Section 2.1.

3.3. Representations and Warranties of Norgine. Norgine hereby represents and
warrants to Sublicensee as of the Execution Date that Sublicensor is the
exclusive licensee under the Norgine Patents to make, have made, use, have used,
Commercialize and have Commercialized Product in the Territory and, insofar as
any agreements between Salix and Norgine are concerned, has the right to grant
the sublicenses set forth in Section 2.1.

3.4. DISCLAIMER OF WARRANTY. EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES SET
FORTH HEREIN, NO PARTY MAKES ANY REPRESENTATIONS OR EXTENDS ANY WARRANTIES,
EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF QUALITY, MERCHANTABILITY OR
FITNESS FOR A PARTICULAR USE OR PURPOSE OR ANY WARRANTY AS TO THE VALIDITY OF
ANY PATENTS OR THE NON-INFRINGEMENT OF ANY INTELLECTUAL PROPERTY RIGHTS OF THIRD
PARTIES.

 

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3.5. Covenant Not to Sue.

(a) Covenant.

(i) Sublicensor hereby covenants to Sublicensee that Sublicensor (and its
Affiliates) shall not sue, and shall not aid, abet or enable any Third Party in
suing, the Sublicensee or, in its capacity as Sublicensee’s distributor, Actavis
claiming that the manufacture, having manufactured, use, sale, offer for sale or
importation of Product from and after the Start Date or the commercially
reasonable preparations to sell Product as of the Start Date as set forth in
Section 2.4(b), in each case in or for the Territory, infringes any Norgine
Patent. Sublicensor shall impose the foregoing covenant not to sue on any Third
Party to which it or any of its Affiliates may assign or otherwise transfer, or
license or sublicense, any such patent rights.

(ii) Norgine hereby covenants to Sublicensee that Norgine (and its Affiliates)
shall not sue, and shall not aid, abet or enable any Third Party in suing, the
Sublicensee or, in its capacity as Sublicensee’s distributor, Actavis claiming
that the manufacture, having manufactured, use, sale, offer for sale or
importation of Product from and after the Start Date or the commercially
reasonable preparations to sell Product as of the Start Date as set forth in
Section 2.4(b), in each case in or for the Territory, infringes any Norgine
Patent. Sublicensor shall impose the foregoing covenant not to sue on any Third
Party to which it or any of its Affiliates may assign or otherwise transfer, or
license or sublicense, any such patent rights.

(b) Non-Exclusive License. For any Norgine Patent listed now or in the future in
the Orange Book for the Approved Product, the covenants not to sue set forth in
Section 3.5(a) shall hereby be treated to also be in the form of a non-exclusive
license so that Sublicensee and its Affiliates may continue to maintain or file
for such patents a

 

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“Paragraph IV Certification” under 21 U.S.C. § 355(j)(2)(A)(vii)(IV) (as amended
or replaced).

 

4. Indemnity; Limitation on Damages

4.1. Indemnification. In addition to any other remedy available to Sublicensor
or Norgine, Sublicensee shall indemnify, defend and hold harmless each of
Sublicensor, its Affiliates and its and their respective officers, directors,
partners, shareholders, employees and agents and Norgine, its Affiliates and its
and their respective officers, directors, partners, shareholders, employees and
agents (each, an “Indemnified Party”) from and against any and all Losses
incurred by them to the extent resulting from or arising out of or in connection
with any claims made or suits brought by a Third Party (a “Third Party Claim”)
that arise out of or result from the manufacture, distribution, sales, marketing
or use of Product pursuant to the sublicense and license granted hereunder.

4.2. Indemnification Procedure.

(a) An Indemnified Party shall give Sublicensee prompt written notice (an
“Indemnification Claim Notice”) of any Third Party Claim upon which such
Indemnified Party intends to base a request for indemnification under
Section 4.1, but in no event shall Sublicensee be liable for any Losses that
result from any delay in providing such notice. Each Indemnification Claim
Notice must contain a description of the Third Party Claim and the nature and
amount of the related Loss (to the extent that the nature and amount of such
Loss are known at such time). The Indemnified Party shall furnish promptly to
Sublicensee copies of all papers and official documents received in respect of
any Third Party Claim.

(b) At its option, Sublicensee may assume the defense of any Third Party Claim
by giving written notice to the Indemnified Party seeking indemnification within
thirty (30) days after Sublicensee’s receipt of an Indemnification Claim Notice
for such

 

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Indemnified Party. The assumption of the defense of a Third Party Claim by
Sublicensee shall constitute an acknowledgment that Sublicensee is liable to
indemnify the Indemnified Party in respect of the Third Party Claim. Upon
assuming the defense of a Third Party Claim, Sublicensee may appoint as lead
counsel in the defense of the Third Party Claim any legal counsel selected by
Sublicensee that is reasonably acceptable to the Indemnified Party. In the event
Sublicensee assumes the defense of a Third Party Claim, the Indemnified Party
shall promptly deliver to Sublicensee all original notices and documents
(including court papers) received by the Indemnified Party in connection with
the Third Party Claim. Subject to Section 4.2(c), if Sublicensee assumes the
defense of a Third Party Claim, Sublicensee shall not be liable to the
Indemnified Party for any legal expenses subsequently incurred by such
Indemnified Party in connection with the analysis, defense or settlement of the
Third Party Claim.

(c) Without limiting Section 4.2(b), the Indemnified Party seeking
indemnification shall be entitled to participate in, but not control, the
defense of such Third Party Claim and to employ counsel of its choice for such
purpose; provided, however, that such employment shall be at the Indemnified
Party’s own expense unless (i) the employment thereof at Sublicensee’s expense
has been specifically authorized by Sublicensee in writing, (ii) Sublicensee has
failed to assume the defense and employ counsel in accordance with
Section 4.2(b) (in which case the Indemnified Party shall control the defense),
or (iii) the interests of the Indemnified Party and Sublicensee or any other
Indemnified Party with respect to such Third Party Claim are sufficiently
adverse to prohibit the representation by a single counsel of Sublicensee and
all relevant Indemnified Parties under Applicable Law, ethical rules or
equitable principles.

(d) With respect to any Losses relating solely to the payment of money damages
in connection with a Third Party Claim and that will not result in the
Indemnified Party seeking indemnification becoming subject to injunctive or
other relief or

 

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otherwise adversely affect the business of the Indemnified Party in any manner,
and as to which Sublicensee shall have acknowledged in writing the obligation to
indemnify the Indemnified Party hereunder, Sublicensee shall have the sole right
to consent to the entry of any judgment, enter into any settlement or otherwise
dispose of such Losses, on such terms as Sublicensee, in its sole discretion,
shall deem appropriate. With respect to all other Losses in connection with
Third Party Claims, where Sublicensee has assumed the defense of the Third Party
Claim in accordance with Section 4.2(b), Sublicensee shall have authority to
consent to the entry of any judgment, enter into any settlement or otherwise
dispose of such Loss; provided that it obtains the prior written consent of the
Indemnified Party (which consent shall not be unreasonably withheld or delayed).
If Sublicensee chooses to defend a Third Party Claim, Sublicensee shall not be
liable for any settlement or other disposition of any Losses by the Indemnified
Party with respect to such Third Party Claim that is reached without the written
consent of Sublicensee (which consent shall not be unreasonably withheld or
delayed).

(e) If Sublicensee chooses to defend any Third Party Claim, the Indemnified
Party seeking indemnification shall cooperate in the defense thereof and shall
furnish such records, information and testimony, provide such witnesses and
attend such conferences, discovery proceedings, hearings, trials and appeals as
may be reasonably requested in connection therewith. Such cooperation shall
include access during normal business hours afforded to Sublicensee to, and
reasonable retention by the Indemnified Party of, records and information that
are reasonably relevant to such Third Party Claim, and making employees and
agents available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder. Sublicensee
shall reimburse the Indemnified Party for all its reasonable out-of-pocket
expenses in connection with activities contemplated by this Section 4.2(e).

 

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(f) Except as provided above, the reasonable and verifiable costs and expenses,
including fees and disbursements of counsel, incurred by an Indemnified Party in
connection with any Third Party Claim shall be reimbursed on a monthly basis in
arrears by Sublicensee.

4.3. LIMITATION ON DAMAGES. EXCEPT WITH RESPECT TO

(a) A BREACH OF A PARTY’S OBLIGATIONS IN SECTION 6; and

(b) ANY SALE OR OFFER FOR SALE OF THE PRODUCT IN THE TERRITORY PRIOR TO THE
START DATE (OTHER THAN AS PERMITTED BY THIS AGREEMENT) NO PARTY SHALL BE LIABLE
FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL, EXEMPLARY OR PUNITIVE DAMAGES
ARISING OUT OF THIS AGREEMENT OR THE EXERCISE OF ITS RIGHTS HEREUNDER OR FOR ANY
LOSS OR INJURY TO A PARTY’S PROFITS OR GOODWILL ARISING FROM OR RELATING TO ANY
BREACH OF THIS AGREEMENT, REGARDLESS OF ANY NOTICE OF SUCH DAMAGES. NOTHING IN
THIS SECTION 4.3 IS INTENDED TO LIMIT OR RESTRICT THE INDEMNIFICATION RIGHTS OF
ANY INDEMNIFIED PARTY OR THE OBLIGATIONS OF SUBLICENSEE PURSUANT TO SECTIONS 4.1
AND 4.2 WITH RESPECT TO THIRD PARTY CLAIMS.

 

5. Term and Termination

5.1. Term. The term of this Agreement shall commence on the Execution Date and,
unless earlier terminated in accordance with this Section 5, shall expire on the
Expiration Date (the “Term”).

5.2. Termination for Breach. This Agreement may be terminated by Sublicensor if
Sublicensee shall be in breach of any material obligation hereunder and shall
not have cured such breach within (a) [*] ([*]) days for breaches involving
non-payment

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

 

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of amounts payable hereunder that are not the subject of a good faith dispute or
(b) [*] ([*]) days for all other breaches, in either case ((a) or (b)), after
receipt of a written notice from Sublicensor requesting the cure of such breach.
Such termination shall be effective upon failure of Sublicensee to cure such
breach within such period.

5.3. Termination for Bankruptcy. This Agreement may be terminated by Sublicensor
upon the filing or institution of any bankruptcy, reorganization, liquidation or
receivership proceedings by Sublicensee, or upon the failure by Sublicensee for
more than ninety (90) days to discharge any such involuntary actions against it.
Such termination shall be effective upon receipt of notice from Sublicensor.

5.4. Certain Events. Upon the occurrence of a Settlement Termination Event (as
such term is defined in the Settlement Agreement), this Agreement shall
terminate.

5.5. Bankruptcy. All rights and licenses granted under or pursuant to this
Agreement by Sublicensor and Norgine are, and shall otherwise be deemed to be,
for purposes of Section 365(n) of the U.S. Bankruptcy Code, licenses of right to
“intellectual property” as defined under Section 101 of the U.S. Bankruptcy
Code. The Parties agree that Sublicensee, as licensee of such rights under this
Agreement, shall retain and may fully exercise all of its rights and elections
under the U.S. Bankruptcy Code.

5.6. Effect of Expiration or Termination. Upon the expiration or earlier
termination of this Agreement, (a) the licenses and rights granted by
Sublicensor and Norgine under Section 2 shall terminate, (b) the covenants
contained in, and the licenses and rights granted by Sublicensor and Norgine
under, Section 3.5 shall terminate, and (c) each Party, at the request of the
other, shall return all data, files, records and other materials in its
possession or control containing or comprising another Party’s Confidential
Information to the Disclosing Party, except the legal department of the
Receiving Party may retain one copy solely for archival purposes.

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

 

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5.7. Assignment to Norgine.

(a) If the Head License is terminated in circumstances under which Sublicensor’s
rights thereunder are terminated, then this Agreement, and all of Sublicensor’s
rights and remedies hereunder, shall automatically be assigned to Norgine, and
hereby are assigned to Norgine, effective as of the date of such termination of
the Head License. Upon any assignment of this Agreement to Norgine pursuant to
the preceding sentence, Norgine shall succeed to, and shall thereafter be bound
by, Sublicensor’s duties and obligations hereunder (but not, for the avoidance
of doubt, any liabilities of Sublicensor arising before such time).

(b) In connection with any assignment effected pursuant to Section 5.7(a),
Sublicensor shall, upon Norgine’s written request, exercise its rights under
Section 8.11(b) of the Supply Agreement to effect the assignment of its rights
and remedies under the Supply Agreement to Norgine as contemplated by, and
subject to the conditions set forth in, Section 8.11(b) of the Supply Agreement.

5.8. Survival. The expiration or earlier termination of this Agreement shall be
without prejudice to any rights or obligations of the Parties that may have
accrued prior to such expiration or termination, and the provisions of Sections
4, 5, 6 and 7 shall survive the expiration or termination of this Agreement.

 

6. Confidentiality

6.1. Confidential Information. Subject to the provisions of Sections 6.2 and
6.3, at all times during the Term and for five (5) years following the
expiration or termination of this Agreement, the Receiving Party (a) shall keep
completely confidential and shall not publish or otherwise disclose any
Confidential Information furnished to it by the Disclosing Party, except to
those of the Receiving Party’s employees, Affiliates, or consultants who have a
need to know such information to perform such Party’s obligations or exercise
such Party’s rights hereunder (and who shall be advised of the Receiving Party’s
obligations hereunder and

 

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who are bound by confidentiality obligations with respect to such Confidential
Information no less onerous than those set forth in this Agreement)
(collectively, “Recipients”) or, in respect of Confidential Information received
by Sublicensee from Sublicensor, as otherwise permitted by Section 5.3(d) of the
Supply Agreement and (b) shall not use Confidential Information of the
Disclosing Party directly or indirectly for any purpose other than performing
its obligations or exercising its rights hereunder.

6.2. Exceptions to Confidentiality. The Receiving Party’s obligations set forth
in this Agreement shall not extend to any Confidential Information of the
Disclosing Party:

(a) that is or hereafter becomes part of the public domain by public use,
publication, general knowledge or the like through no wrongful act, fault or
negligence on the part of a Receiving Party or its Recipients;

(b) that is received from a Third Party without restriction and without breach
of any agreement between such Third Party and the Disclosing Party;

(c) that the Receiving Party can demonstrate by competent evidence was already
in its possession without any limitation on use or disclosure prior to its
receipt from the Disclosing Party;

(d) that is generally made available to Third Parties by the Disclosing Party
without restriction on disclosure; or

(e) that the Receiving Party can demonstrate by competent evidence was
independently developed by the Receiving Party.

6.3. Disclosure. A Party may disclose Confidential Information of another Party
to the extent that such disclosure is:

(a) made in response to a valid order of a court of competent jurisdiction or
other governmental body of a country or any political subdivision thereof of
competent jurisdiction; provided, however, that the Receiving Party shall first
have given

 

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notice to the Disclosing Party and given the Disclosing Party a reasonable
opportunity to quash such order or to obtain a protective order requiring that
the Confidential Information or documents that are the subject of such order be
held in confidence by such court or governmental body or, if disclosed, be used
only for the purposes for which the order was issued; and provided further that
if a disclosure order is not quashed or a protective order is not obtained, the
Confidential Information disclosed in response to such court or governmental
order shall be limited to that information that is legally required to be
disclosed in such response to such court or governmental order;

(b) required or contemplated by Section 2.4(c) and (e); or

(c) otherwise required by Applicable Law, in the opinion of counsel to the
Receiving Party.

6.4. Notification. The Receiving Party shall notify the Disclosing Party
immediately, and cooperate with the Disclosing Party as the Disclosing Party may
reasonably request, upon the Receiving Party’s discovery of any loss or
compromise of the Disclosing Party’s Confidential Information.

6.5. Remedies. Each Party agrees that the unauthorized use or disclosure of any
information by the Receiving Party in violation of this Agreement will cause
severe and irreparable damage to the Disclosing Party. In the event of any
violation of this Section 6, the Receiving Party agrees that the Disclosing
Party shall be authorized and entitled to obtain from any court of competent
jurisdiction injunctive relief, whether preliminary or permanent, without the
necessity of proving irreparable harm or monetary damages, as well as any other
relief permitted by applicable law. The Receiving Party agrees to waive any
requirement that the Disclosing Party post bond as a condition for obtaining any
such relief.

6.6. Use of Names. Except as otherwise expressly permitted under the Settlement
Agreement or the Supply Agreement, no Party shall mention or otherwise use the
name, insignia, symbol, trademark, trade name or logotype of another Party (or
any

 

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abbreviation or adaptation thereof) in any publication, press release,
promotional material or other form of publicity without the prior written
approval of such other Party in each instance. In no event may Sublicensee use,
register or seek to register any trademarks, trade dress or other indicia of
origin that are owned or controlled by Sublicensor or its Affiliates or Norgine
or its Affiliates. The restrictions imposed by this Section 6.6 shall not
prohibit any Party from making any disclosure identifying another Party that is
required by Applicable Law; provided, however, that reasonable measures shall be
taken to assure confidential treatment of such information.

6.7. Press Releases. Except as expressly provided in Section 6.3, no Party shall
make a press release or other public announcement regarding this Agreement, the
terms hereof or the transactions contemplated hereby without the prior written
approval of the other Party.

 

7. Miscellaneous

7.1. Assignment. This Agreement shall be binding upon and shall inure to the
benefit of each Party hereto, and each of its successors and permitted assigns.
Except as otherwise provided herein, no Party shall have the power to assign or
otherwise transfer this Agreement or any interest herein or right hereunder
without the prior written consent of the other Parties, and any such purported
assignment, transfer or attempt to assign or transfer any interest herein or
right hereunder shall be void and of no effect. Notwithstanding the foregoing,
any Party may, upon written notice to the other Parties but without obtaining
the other Parties’ consent, assign its rights and obligations under this
Agreement to any of its Majority-Controlled Affiliates, to any lender providing
financing to that Party or its Affiliates for collateral security purposes, or
to any successor in interest to that Party’s entire business or, in the case of
Sublicensor and Sublicensee, to its Approved Product or Product business,
respectively, provided that (a) notwithstanding any such assignment, such Party
shall remain liable for its and its assignee’s performance under this Agreement;
(b) no such assignment

 

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shall in any manner limit or impair the obligations of that Party hereunder; and
(c) following a transfer by a Party to its Majority-Controlled Affiliate, any
subsequent transaction (other than one that would result in the transfer of this
Agreement back to the assigning Party) that would cause such Majority-Controlled
Affiliate to cease to be a Majority-Controlled Affiliate of such Party shall be
deemed to be an assignment of this Agreement requiring consent hereunder.

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

7.3. Governing Law.

(a) This Agreement shall be governed and interpreted in accordance with the law
of the State of New York, excluding any conflicts or choice of law rule or
principle that might otherwise refer construction or interpretation of this
Agreement to the substantive law of another jurisdiction.

(b) Each Party irrevocably and unconditionally consents to the exclusive
jurisdiction of the courts of general jurisdiction of the State of New York and
the United States District Court for the Southern District of New York sitting
in the Borough of Manhattan (collectively, the “Courts”) for any action, suit or
proceeding (other than appeals therefrom) concerning any matter arising out of
or relating to this Agreement, and agrees not

 

23

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to commence any action, suit or proceeding (other than appeals therefrom)
related thereto except in such Courts.

(c) Each Party hereto further hereby irrevocably and unconditionally waives any
objection to the laying of venue of any action, suit or proceeding (other than
appeals therefrom) arising out of or relating to this Agreement in the Courts
and hereby further irrevocably and unconditionally agrees not to raise any
objection at any time to the laying or maintaining of the venue of any such
action, suit or proceeding in any of such Courts, irrevocably waives any claim
that such action, suit or other proceeding has been brought in an inconvenient
forum and further irrevocably waives the right to object, with respect to such
action, suit or other proceeding, that such Court does not have any jurisdiction
over such Party.

(d) Each Party hereto further agrees that, to the maximum extent permitted by
Applicable Law, service of any process, summons, notice or document by United
States registered mail to its address and contact person for notices provided
for in Section 7.4 shall be effective service of process for any action, suit or
proceeding brought against it under this Agreement in any of the Courts.

7.4. Notices. All notices, requests and other communications hereunder must be
in writing, specifically reference this Agreement in a prominent manner, and be
delivered personally or by recognized international courier to the Parties at
the following addresses:

If to Sublicensor to:

Salix Pharmaceuticals, Inc.

1700 Perimeter Park Drive

Morrisville, North Carolina 27560

Attention: Senior Vice President Business Development

 

23

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with copies (which shall not constitute notice) to:

Salix Pharmaceuticals, Inc.

1700 Perimeter Park Drive

Morrisville, North Carolina 27560

Attention: General Counsel

and

Covington & Burling LLP

1201 Pennsylvania Avenue, N.W.

Washington, D. C. 20004

Attention: Edward C. Britton, Esq.

If to Norgine to:

If to Norgine B.V.:

Norgine B.V.

Hogehilweg 7

1101 CA Amsterdam ZO

The Netherlands

Attention: Managing Director

If to Norgine Europe B.V.

Norgine Europe B.V.

Hogehilweg 7

1101 CA Amsterdam ZO

The Netherlands

Attention: Managing Director

In both cases with a copy to:

Norgine Limited

Norgine House

Widewater Place

Moorhall Road

Harefield, Middlesex UB9 6NS

United Kingdom

Attention: General Counsel

If to Sublicensee to:

Novel Laboratories, Inc.

400 Campus Drive

Somerset, New Jersey 08873

Attention: President

 

24

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with copies (which shall not constitute notice) to:

Actavis Inc.

60 Columbia Road, Bldg. B

Morristown, New Jersey 07960

Attention: Legal Department

and

Leydig, Voit & Mayer

Two Prudential Plaza

180 N. Stetson Avenue, Suite 4900

Chicago, IL 60601-6731

Attention: Steven H. Sklar, Esq.

All such notices, requests and other communications will (a) if delivered
personally to the address as provided in this Section 7.4, be deemed given upon
receipt, and (b) if delivered by courier to the address as provided in this
Section 7.4, be deemed given upon receipt. Any Party from time to time may
change its address or other information for the purpose of notices to that Party
by giving notice specifying such change to the other Party hereto.

7.5. Relationship of the Parties. The status of a Party under this Agreement
shall be that of an independent contractor. Nothing contained in this Agreement
shall be construed as creating a partnership, joint venture or agency
relationship between the Parties or as granting any Party the authority to bind
or contract any obligation in the name of or on the account of the other Party
or to make any statements, representations, warranties or commitments on behalf
of the other Party.

7.6. Entire Agreement; Amendment. This Agreement constitutes the entire
agreement between the Parties with respect to the subject matter hereof and
supersedes all prior agreements, whether written or oral, with respect to the
subject matter hereof. Each Party confirms that it is not relying on any
representations or warranties of the other Party except as specifically set
forth herein. Any amendment or modification of this Agreement must be in writing
and signed by authorized representatives of both Parties.

 

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7.7. No Benefit to Third Parties. The representations, warranties, covenants and
agreements set forth in this Agreement 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 on any other Persons except as otherwise
expressly provided in Sections 4.1 and 4.2.

7.8. Waiver and Non-Exclusion of Remedies. Any term or condition of this
Agreement may be waived at any time by the Party that is entitled to the benefit
thereof, but no such waiver shall be effective unless set forth in a written
instrument duly executed by or on behalf of the Party waiving such term or
condition. No waiver by any Party of any term or condition of this Agreement, in
any one or more instances, shall be deemed to be or construed as a waiver of the
same or any other term or condition of this Agreement on any future occasion.
The rights and remedies provided herein are cumulative and do not exclude any
other right or remedy provided by Applicable Law or otherwise available except
as expressly set forth herein.

7.9. Further Assurance. Each Party shall duly execute and deliver, or cause to
be duly executed and delivered, such further instruments and do and cause to be
done such further acts and things, including the filing of such assignments,
agreements, documents and instruments, as may be necessary or as the other Party
may reasonably request in connection with this Agreement or to carry out more
effectively the provisions and purposes hereof, or to better assure and confirm
unto such other Party its rights and remedies under this Agreement.

7.10. Construction. Except where the context requires otherwise, whenever used
the singular includes the plural, the plural includes the singular, the use of
any gender is applicable to all genders and the word “or” has the inclusive
meaning represented by the phrase “and/or”. Whenever this Agreement refers to a
number of days, unless otherwise specified, such number refers to calendar days.
The headings of this Agreement are for convenience of reference only and do not
define, describe, extend or limit the scope or intent

 

26

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of this Agreement or the scope or intent of any provision contained in this
Agreement. The term “including” or “includes” as used in this Agreement means
including, without limiting the generality of any description preceding such
term. The wording of this Agreement shall be deemed to be the wording mutually
chosen by the Parties and no rule of strict construction shall be applied
against any Party.

7.11. Other Agreements.

(a) Simultaneously herewith, the Sublicensor and Sublicensee are entering into
the Supply Agreement with Actavis and the Parties are entering into the
Settlement Agreement with Actavis. The effectiveness of this Agreement is
explicitly conditioned on the simultaneous execution and delivery of the
aforesaid Supply Agreement and Settlement Agreement by each of the parties
thereto.

(b) Sections 2 and 3.5 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 and 3.5 shall never become
effective.

7.12. Counterparts. This Agreement may be executed in any number of
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 Agreement delivered by facsimile transmission or by
electronic mail in “portable document format” (“.pdf”) shall be as effective as
an original executed signature page.

[Signature page follows.]

 

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IN WITNESS WHEREOF, the Parties have executed this Agreement on the Execution
Date.

 

Salix Pharmaceuticals, Inc.       Novel Laboratories, Inc.    By:  

/s/ Carolyn J. Logan

      By:  

/s/ Veerappan S. Subramanian

   Name:  

Carolyn J. Logan

      Name:  

Veerappan S. Subramanian

   Title:  

President and CEO

      Title:  

President and CEO

   Date:  

August 27, 2010

      Date:  

August 27, 2010

   Norgine B.V.            By:  

/s/ Frank P. Nooteboom

           Name:  

Frank P. Nooteboom

           Title:  

Director

           Date:  

August 27, 2010

           Norgine Europe B.V.            By:  

/s/ Peter Stein

           Name:  

Peter Stein

           Title:  

Director

           Date:  

August 27, 2010

          

Signature Page to Sublicense Agreement