Exhibit 10.2


 


CONFIDENTIAL TREATMENT REQUESTED:


 


Portions of this Exhibit have been redacted
pursuant to a request for confidential treatment under Rule 24b-2 of the
General Rules and Regulations under the Securities Exchange Act of 1934,
as amended.  Such redacted portions have been replaced with “{***}” in this Exhibit.  An unredacted version of this document has
been filed separately with the Securities and Exchange Commission along with
the request for confidential treatment.


 


LICENSE AGREEMENT


 


by and between


 


GLAXOSMITHKLINE, PLC and SMITHKLINE BEECHAM

CORPORATION (d/b/a GLAXOSMITHKLINE) (collectively, “GSK”)

and


 


ANDRX PHARMACEUTICALS, LLC. (“Andrx”)


 


February 9, 2007 (the “Execution Date”)


 


WHEREAS, Andrx and GSK are currently parties to that
certain pending case in the United States District Court for the Southern
District of Florida, Miami Division, captioned Andrx
Pharmaceuticals, LLC.  v GlaxoSmithKline, PLC and
SmithKline Beecham Corporation d/b/a GlaxoSmithKline (Case No:
05-23264-CIV-Graham/O’Sullivan), (the “District Court Case”) related to
Andrx’s U.S. Patent No. 6,905,708 (the “Patent”) and GSK’s 150mg
Wellbutrin XL® product; and


 


WHEREAS, pursuant to the certain Settlement Agreement
between GSK and Andrx of even date herewith (the “Settlement Agreement”),
Andrx and GSK wish to stipulate to the dismissal of the District Court Case
with prejudice and settle all matters related to the District Court Case; and


 


WHEREAS, as part of the consideration for entering
into the Settlement Agreement, Andrx is willing to grant GSK certain licenses
under the Patent on certain terms set forth in this Agreement; and


 

















 


WHEREAS, GSK is willing to take such licenses from
Andrx, pursuant to the terms set forth in this Agreement.


 


NOW THEREFORE, in consideration of the promises,
representations, warranties, covenants, agreements, licenses and releases
contained herein and in the Settlement Agreement, the receipt and sufficiency
of which are hereby acknowledged, the Parties hereto, intending to be legally
bound hereby, agree as follows:


 


1.             All of the terms and conditions set forth in this
Agreement shall be binding on the Parties. See Appendix
A hereto for the definition of certain defined terms used in
this Agreement. Capitalized terms used herein, but not otherwise defined
herein, shall have the meaning given to them in the Settlement Agreement.


 


2.             The Parties enter into this Agreement and the
Settlement Agreement in an effort to avoid the risks of, and uncertainty
associated with, further litigation and to limit associated fees, costs and
expenses related to or arising from the District Court Case.


 


3.             (a)           Wellbutrin
XL Product License. As of the Execution Date Andrx hereby grants
to GSK: (i) an exclusive license, with the right to grant sublicenses
(including, but not limited to, the right to grant sublicenses to GSK’s
Affiliates and the GSK Suppliers), under the Patent to make, have made, use,
sell, have sold, offer for sale, and import the forms of Wellbutrin XL Products
currently sold or marketed in the United States by GSK (or its Affiliates) as
of the Execution Date; and (ii) a non-exclusive license, with the right to
grant sublicenses (including, but not limited to, the right to grant
sublicenses to GSK’s Affiliates and the GSK Suppliers), under the Patent to
make, have made, use, sell, have sold, offer for sale, and import forms of
Wellbutrin XL Products in the United States not yet sold or marketed in the
United States by GSK (or its Affiliates) as of the Execution Date. Andrx and
GSK hereby agree and acknowledge the foregoing license grants to GSK are
retroactive to the date the Patent was granted in the United States. GSK
further agrees that it may only grant sublicenses hereunder to the extent it
remains liable for payment of royalties on Net Sales of Wellbutrin XL Products
by its sublicensees, such payment to be made by GSK to Andrx when due
irrespective of whether GSK receives payment, if any, it is due from such
sublicensee.


 


2

















 


(b)           Generic Equivalent Product License. As of the
Execution Date, Andrx hereby grants to GSK a non-exclusive license (without the
right to sublicense except that sublicenses are permitted as to GSK’s
Affiliates, the GSK Suppliers and, if applicable, GSK’s Third Party
distributors of Generic Equivalent Products and as permitted pursuant to Section 3(f))
under the Patent to make, have made, use, sell, have sold, offer for sale and
import any Generic Equivalent Products in the United States. Except as is
otherwise set forth in Section 3(f), GSK further agrees that it may only
grant sublicenses hereunder to the extent it remains liable for payment of
royalties on Net Sales of Generic Equivalent Products by its sublicensees, such
payment to be made by GSK to Andrx when due irrespective of whether GSK
receives payment, if any, it is due from such sublicensee.


 


(c)           Generic Bupropion Product License. As of the
Execution Date, Andrx hereby grants to GSK a non-exclusive license (without the
right to sublicense, except that sublicenses are permitted, if applicable, to a
GSK Affiliate, by a Biovail Third Party Licensee to its Affiliates and the
Biovail Third Party Licensee’s Suppliers, and as permitted pursuant to Section 3(f))
under the Patent to make, have made, use, sell, have sold, offer for sale and
import a Biovail Third Party Licensee Bupropion Product in the United States.


 


(d)           No Implied Rights. Nothing in this
Agreement shall be deemed or implied to be, and the Parties disclaim all
implied rights to, the grant by any of the Parties to the other Party of any
right, title or interest in any product, intellectual property rights, any
formulation technology or know-how, manufacturing technology or know-how,
operating procedures, marketing materials or strategies, intangibles, material
or proprietary rights of the other in all countries of the world, except as
expressly set forth in this Agreement.


 


(e)           No Rights to Enforce. No party
hereunder other than Andrx shall have rights to enforce the Patent or to defend
against a claim of invalidity or unenforceability of the Patent or defend
against a claim of non-infringement of the Patent, even within the field under
which it has exclusive rights (if applicable).


 


(f)            Assignment to Biovail Assignee and Sublicense to
Biovail Third Party Licensees. GSK shall have the right, in
GSK’s sole discretion and without Andrx’s consent, to 


 


3

















 


assign to Biovail Laboratories SRL (“Biovail”) (or an Affiliate
of Biovail) (the “Biovail Assignee”), whether on a permanent or on a
temporary basis, all or a part of the rights granted to GSK pursuant to Section 3(b) as
to Generic Equivalent Products and/or the rights granted to GSK pursuant to Section 3(c) as
to Biovail Third Party Licensee Bupropion Products (as applicable, the “Assigned
License Rights”).


 


(i)            Assignment to Biovail Assignee. Any such
assignment to a Biovail Assignee shall be documented in a written agreement
wherein the Biovail Assignee agrees to assume such Assigned License Rights
pursuant to the applicable provisions of this Agreement as if it were a party
hereto in GSK’s place and to abide by such applicable provisions and
obligations of this agreement (including, without limitation, Andrx’s right to
seek recourse directly against the Biovail Assignee under Section 3(f)(v),
the applicable Royalty provisions under Sections 4(b) and 4(d),
termination provisions of Section 5(c), indemnification provisions of
6(c), and confidentiality provisions of Section 9). For clarity, the
Biovail Assignee shall not have the right to further assign such rights to a
third party other than to its Affiliates, to GSK (or its Affiliates), or
pursuant to Section 7;


 


(ii)           Sublicense to Biovail Third Party Licensee. The Biovail
Assignee shall have the right, in the Biovail Assignee’s sole discretion
without Andrx’s and GSK’s consent, whether on a permanent or on a temporary
basis, to sublicense pursuant to a written sublicense agreement all or part of
such Assigned License Rights to a Third Party (a “Biovail Third Party
Licensees”). In order to be effective, any such sublicense to a Biovail
Third Party Licensee shall be documented in a written agreement either (a) wherein
the Biovail Third Party Licensee agrees to accept such sublicense of the
Assigned License Rights pursuant to the applicable provisions of this Agreement
as if it were a party hereto in GSK’s place and to abide by such applicable
provisions and obligations of this agreement (including, without limitation,
Andrx’s right to seek recourse directly against the Biovail Third Party
Licensees under Section 3(f)(v), the applicable Royalty provisions of
Sections 4(c) and 4(d), termination provisions of Section 5(c),
indemnification provisions of 6(c), and confidentiality provisions of Section 9)
or (b) that is otherwise reasonably acceptable to both the Biovail Third
Party Licensee and to Andrx in order to accomplish the foregoing intent. For
clarity, the Biovail Third Party Sublicensees 


 


4

















 


shall not have the right to further sublicense such rights, other than
to its Affiliates and to Biovail Third Party Licensee Suppliers;


 


(iii)          The Biovail Assignee may, without Andrx’s consent, at
any time re-assign the Assigned License Rights back to GSK and, upon GSK’s
acceptance thereof, GSK shall re-assume the rights and obligations hereunder as
a licensee of Andrx, provided the Biovail Assignee shall remain liable to Andrx
for any breach of the provisions of this Agreement that it, directly or
indirectly, caused while it was the assignee of the Assigned License Rights;


 


(iv)          Andrx shall receive a written notice of any such
assignment to a Biovail Assignee, any sublicense from a Biovail Assignee to a
Biovail Third Party Licensee, or any re-assignment to GSK (as may be
applicable) within ten (10) business days after the date of the effective
date of such assignment, re-assignment or sublicense; and


 


(v)           To the extent any rights are assigned to a Biovail
Assignee or sublicensed to a Biovail Third Party Sublicensee, as provided
herein, Andrx shall have the standing, right, and privity as a third-party
beneficiary to enforce such applicable provisions of this Agreement against
such Biovail Assignee or Biovail Third Party Licensee as if it were a party
hereto. Notwithstanding anything to the contrary: (A) (1) GSK (and
its Affiliates) shall have no obligations or liability to Andrx (or it
Affiliates) or any Biovail Assignee with respect to the performance or
nonperformance by a Biovail Assignee or a Biovail Third Party Licensee (as the
case may be) of the applicable provisions of this Agreement (including, without
limitation, the payment of any Royalties due to Andrx from a Biovail Assignee
or a Biovail Third Party Licensee (as the case may be)), nor (2) shall any
Biovail Assignee shall have any obligations or liability to Andrx (or it
Affiliates) with respect to the performance or nonperformance by a Biovail
Third Party Licensee of the applicable provisions of this Agreement (including,
without limitation, the payment of any Royalties due to Andrx from a Biovail
Third Party Licensee), nor (3) shall any Biovail Third Party Licensee have
any obligations or liability to Andrx (or it Affiliates) with respect to the
performance or nonperformance by GSK or a Biovail Assignee or any other Biovail
Third Party Licensee (as the case may be) of the applicable provisions of this
Agreement (including, without limitation, the payment of any Royalties due to
Andrx from such 


 


5

















 


parties (as the case may be)); and (B) (1) any breach of the
applicable provisions of this Agreement by a Biovail Assignee or a Biovail
Third Party Licensee (as the case may be) shall not be deemed to be a breach of
this Agreement by GSK and any resulting termination of the rights of such
Biovail Assignee or a Biovail Third Party Licensee (as the case may be) under
this Agreement shall have no effect whatsoever on the licenses and covenant
not-to-sue that GSK has obtained from Andrx under this Agreement, and (2) any
breach of the applicable provisions of this Agreement by a Biovail Third Party
Licensee shall not be deemed to be a breach of this Agreement by a Biovail
Assignee and any resulting termination of the rights of such Biovail Third
Party Licensee under this Agreement shall have no effect whatsoever on the
licenses and covenant not-to-sue that a Biovail Assignee have obtained from
Andrx under this Agreement, and (3) any breach of the applicable
provisions of this Agreement by GSK or a Biovail Assignee or a Biovail Third
Party Licensee shall not be deemed to be a breach of this Agreement by another
Biovail Third Party Licensee and any resulting termination of the rights of any
such other parties under this Agreement shall have no effect whatsoever on the
licenses and covenant not-to-sue that such Biovail Third Party Licensee have
obtained from Andrx under this Agreement, provided that (x) each such
Biovail Third Party Licensee seeking to maintain such rights following such
termination does not materially breach its obligations to Andrx under such sublicense,
and (y) Andrx shall have no obligations to such Biovail Third Party
Licensee arising out of such sublicense over and above the obligations
expressly set forth in this Agreement that flow to such Biovail Third Party
Licensee as a result of such sublicense.


 


4.             (a)           Wellbutrin
XL Product Royalty. As consideration for the license rights under
the Patent granted to GSK by Andrx in Paragraph 3(a), GSK (or its Affiliate)
shall remit to Andrx (or its Affiliate) the following:


 


(i)            within five (5) business days following the
Execution Date, the non-refundable, non-creditable license fee equal to Thirty-Five
Million U.S. Dollars ($35,000,000.00); and


 


6

















 


(ii)           a royalty equal to {***}† of GSK’s Net
Sales of Wellbutrin XL Products in the United States (the “Wellbutrin XL
Product Royalty”) which occur on or after February 1, 2007. The
Wellbutrin XL Product Royalty shall automatically terminate on the date the
last claim covering Wellbutrin XL Products in the Patent expires, or is held to
be invalid or otherwise unenforceable or is found not to cover Wellbutrin XL
Products for whatever reason, by a court or other legal or administrative
tribunal from which no appeal is or can be taken (other than a petition for a writ
of certiorari to the Supreme Court). For the avoidance of doubt, an arbitration
panel shall not be considered a legal or administrative tribunal.


 


(b)           Generic Equivalent Product Royally. As
consideration for the license rights under the Patent granted to GSK by Andrx
in Paragraph 3(b), GSK (or its Affiliate) shall remit to Andrx (or its
Affiliate) a royalty equal to {***}† of GSK’s Net Sales of Generic
Equivalent Products in the United States (the “Generic Equivalent Product
Royalty”). The Generic Equivalent Product Royalty shall automatically
become effective as of the Execution Date, and shall automatically terminate on
the date the last claim covering Generic Equivalent Products in the Patent
expires or is held to be invalid or otherwise unenforceable or is found not to
cover Generic Equivalent Products for whatever reason by a court or other legal
or administrative tribunal from which no appeal is or can be taken (other than
a petition for a writ of certiorari to the Supreme Court). For the avoidance of
doubt, an arbitration panel shall not be considered a legal or administrative
tribunal. To the extent GSK assigns its rights to the Biovail Assignees (or any
sublicense to a Biovail Third Party Sublicensee) pursuant to Section 3(f),
the Biovail Assignees (or such Biovail Third Party Sublicensee) shall be
responsible for paying such royalty directly to Andrx based on the Net Sales of
the Biovail Assignees (or such Biovail Third Party Sublicensee), and GSK shall
have no liability in connection therewith.


 


(c)           Biovail Third Party Licensee Bupropion Product
Royalty. As consideration for the license rights under the
Patent granted by Andrx in Paragraph 3(c), the Biovail Third Party Licensee
shall remit to Andrx (or its Affiliate) a royalty equal to {***}† of Net Sales of Biovail Third
Party Licensee Bupropion Product in the United States (the “Biovail 


 






† Represents
material which has been redacted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment pursuant
to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.


 


7

















 


Third Party Licensee Bupropion Product Royalty”). The Biovail
Third Party Licensee Bupropion Product Royalty shall automatically become
effective as of the effective date of the sublicense to the Assigned License
Rights hereunder to the Biovail Third Party Licensee, shall be solely owed and
payable by the Biovail Third Party Licensee (and not GSK), and shall
automatically terminate on the date the last claim covering Biovail Third Party
Licensee Bupropion Products in the Patent expires or is held to be invalid or
otherwise unenforceable or is found not to cover Biovail Third Party Licensee
Bupropion Products for whatever reason by a court or other legal or
administrative tribunal from which no appeal is or can be taken (other than a
petition for a writ of certiorari to the Supreme Court). For the avoidance of
doubt, an arbitration panel shall not be considered a legal or administrative
tribunal.


 


(d)           General Payment Provisions.


 


(i)            Any payment due Andrx (or its Affiliate) from GSK (or
its Affiliate) that is past due under this Agreement shall bear interest at a
rate equal to the lesser of (i) {***}†, or (ii) the maximum
rate permitted by applicable law, calculated based on the number of days that
the payment is delinquent. GSK (or its Affiliate) shall make all payments to
Andrx (or its Affiliate) in United States dollars by electronic transfer to an
account designated by Andrx, or by such other means as may be agreed in advance
by both Parties.


 


(ii)           Andrx (or its Affiliates) shall be responsible for and
shall pay all taxes payable on any Royalties or other payments made by GSK (or
its Affiliate) to Andrx (or its Affiliate) hereunder. GSK (or its Affiliate)
shall have the right to withhold taxes in the event that the United States
Internal Revenue Service or another revenue authority of a State or Territory
of the United States requires the withholding of taxes on amounts paid hereunder
to Andrx (or its Affiliate), provided that GSK shall pay over any amounts so
withheld to such authority promptly when due. Any tax paid or required to be
withheld by GSK (or its Affiliate) on account of Royalty or other payments
payable to Andrx (or its Affiliate) under this Agreement shall be deducted from
the amount of the Royalties or other payments due Andrx (or its Affiliate). GSK



 






† Represents
material which has been redacted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment pursuant
to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.


 


8

















 


(or its Affiliate) shall secure and promptly send to Andrx (or its
Affiliate) proof of such taxes withheld and paid by GSK (or its Affiliate) for
the benefit of Andrx (or its Affiliate). Each Party agrees to cooperate with
the other Party in claiming exemptions from such deductions or withholdings
under any agreement or treaty from time to time in effect.


 


(iii)          GSK shall keep reasonable written records and shall
cause its Affiliates and sublicensees, as applicable, to keep reasonable
written records, of all Net Sales of Wellbutrin XL Products and Generic
Equivalent Products to the extent commercially reasonably possible. All such
applicable records shall be maintained by GSK, and GSK, shall cause its
Affiliates and sublicensees, as applicable, to maintain, for the period
required by applicable law or a period of five (5) years from the date of
the record’s creation, whichever is longer.


 


(iv)          Within thirty (30) days after the end of each Calendar
Quarter in which a sale of Wellbutrin XL Products or Generic Equivalent
Products has been made in the United States, GSK shall submit to Andrx a
written report (the “Royalty Report”) containing the following information
regarding such preceding Calendar Quarter: an itemized accounting and
calculation of the total Net Sales of Wellbutrin XL Products or Generic
Equivalent Products sold during such preceding Calendar Quarter in the United
States pursuant to this Agreement and the amount of any Royalty due Andrx on
such Net Sales, such report to include information in sufficient detail as is
reasonably necessary for Andrx to confirm the accuracy of the amount of the
Royalty due Andrx, if any, during such preceding Calendar Quarter. Concurrent
with the submission of a Royalty Report to Andrx, GSK (or its Affiliate) shall
remit payment to Andrx (or its Affiliate) of all Royalties due to Andrx for
such preceding Calendar Quarter in the United States. The content of all
Royalty Reports shall be GSK confidential information.


 


(v)           Upon the written request of Andrx (but not more
frequently than once per calendar year), Andrx shall have the right, within
sixty (60) days after receipt of written confirmation that the Auditor is
satisfactory to GSK (as set forth below), during the term of this Agreement and
for six months (6) months thereafter, to have an independent certified
public accountant, satisfactory to GSK in GSK’s reasonable discretion, (the “Auditor”)
inspect GSK’s records and the records of GSK’s Affiliates and sublicensees, as
applicable, with respect to the 


 


9

















 


transactions contemplated by this Agreement for the preceding year (or,
if Andrx did not exercise its audit rights the prior year, for the preceding
two years) during the term (but not more than one time for any period) for the
sole purpose of determining the accuracy of the Royalty payments made to Andrx
(or its Affiliate) under this Agreement. GSK shall permit, and shall cause its
Affiliates and sublicensees, as applicable, to permit, the Auditor to have
reasonable confidential access, during normal business hours and upon having
given reasonable prior notice, to such records of GSK and its Affiliates and
sublicensees as may be necessary to verify GSK’s compliance with the Royalty
payments due hereunder for the preceding year. The Auditor shall reach its
conclusion as quickly as possible but in no event more than a period of thirty
(30) days following the inspection, and notify the Parties only of its
conclusions as to whether GSK is in compliance with its Royalty obligations and
the amount of any underpayment or overpayment, and such report and the
conclusions contained therein shall be final and binding on the Parties and
shall be GSK Confidential Information. Under no circumstances shall the Auditor
report to Andrx the wholesale prices at which GSK sold the Wellbutrin XL
Products and Generic Equivalent Products. In the event the Auditor concludes
that there was an underpayment of the Royalties to Andrx, the underpayment
shall be paid by GSK within thirty (30) days after the date GSK receives such
Auditor’s written report. In the event the Auditor concludes that there was an
overpayment of the Royalties to Andrx, the overpayment shall be credited toward
future Royalty payments to be paid by GSK to Andrx under this Agreement;
provided, however, that in the event no further Royalty payments shall become
due under this Agreement, said overpayment shall be paid by Andrx to GSK within
thirty (30) days after the date Andrx receives such Auditor’s written report.
If the underpayment of the Royalties is greater than five percent (5%) of the
Royalties determined by the Auditor to be payable to Andrx, the reasonable fees
and expenses charged by the Auditor shall be paid by GSK, otherwise Andrx shall
pay the reasonable fees and expenses charged by such Auditor. The Auditor shall
report to Andrx only its conclusions as to whether GSK is in compliance with
the Royalty obligations and the amount of any underpayment or overpayment. The
Auditor inspecting records of GSK shall execute a written confidentiality
agreement reasonably satisfactory to GSK.


 


5.             (a)           This Agreement
shall become effective as of the Execution Date and the term hereof shall
(unless terminated earlier pursuant to Section 5(c)) expire on the date
the last of 


 


10

















 


the Royalty obligations hereunder terminates. The following provisions
of this Agreement shall survive the termination or expiration of this
Agreement:


 


(i)            Section 4(a)(i);


 


(ii)           Sections 4(d)(i)-(iv) (to
the extent sales were made during the term), and Section 4(d)(v) (for
the six month period set forth therein);


 


(iii)          Section 6(c) (except
if this Agreement is terminated by Andrx for OSK’s material breach pursuant to Section 5(c));


 


(iv)          Section 9 (for the
applicable period set forth therein); and


 


(v)           Section 15.


 


Any assigned rights or sublicenses pursuant to Section 3(f) also
shall survive termination of this Agreement until such assigned rights or
sublicenses are terminated or expire as between Andrx and the Biovail Assignees
and/or the Biovail Third Party Licensee, as may be applicable. Similarly, this
Agreement shall survive and shall not be affected by any termination of any
such assigned rights or sublicenses.


 


(b)           All license rights and licenses granted under or
pursuant to this Agreement by Andrx to GSK are, and shall otherwise be deemed
to be, for purposes of Section 365(n) of the U.S. Bankruptcy Code,
licenses of rights to “intellectual property” as defined under Section 101(52)
of the U.S. Bankruptcy Code. Andrx agrees that GSK as a licensee of such rights
under this Agreement, shall retain and may fully exercise all of its rights and
elections under Section 365(n) of the U.S. Bankruptcy Code.


 


(c)           This Agreement may be terminated by Andrx: if (i) GSK
is in breach of any material provision of this Agreement that is not cured
within thirty (30) days after notice by Andrx to GSK of such breach, provided
the notice of termination is given within six (6) months of the discovery
by Andrx of the breach and prior to correction of the breach; or (ii) immediately
if GSK, or an Affiliate of GSK, or a GSK sublicensee under the rights in this
Agreement, voluntarily challenges the validity or enforceability of any claim
of the Patent other than in 


 


11

















 


connection with a claim brought by Andrx or asserts that the
manufacture, use, sale, offer for sale, or importation of a Wellbutrin XL
Product or Generic Equivalent Product in the United States does not infringe
any claim of the Patent. In the event a Biovail Assignee or a Biovail Third
Party Licensee (as applicable) voluntarily challenges the validity or
enforceability of any claim of the Patent other than in connection with a claim
brought by Andrx or asserts that the manufacture, use, sale, offer for sale, or
importation of a Generic Equivalent Product or Biovail Third Party Licensee
Bupropion Product (as applicable) in the United States does not infringe any
claim of the Patent, Andrx shall have the right to immediately terminate such
Biovail Assignee’s or Biovail Third Party Licensee’s (as applicable) rights to
the Assigned License Rights and such Assigned License Right shall automatically
revert to GSK. This Agreement may be terminated by GSK if Andrx is in breach of
any material provision of this Agreement that is not cured within thirty (30)
days after notice by GSK to Andrx of such breach, provided the notice of
termination is given within six (6) months of the discovery by GSK of the
breach and prior to correction of the breach.


 


6.             (a)           Each Party
represents and warrants to the other that (i) it has the requisite
corporate authority to enter into this Agreement, (ii) this Agreement does
not and will not conflict with any other agreements to which it or any of its
Affiliates is or may be a party or that would impede the diligent and complete
fulfillment of its obligations hereunder, (iii) except as expressly set
forth in the Settlement Agreement, to the extent that any approval or
authorization is necessary for its valid and lawful execution, delivery and
performance of this Agreement, such approval or authorization has been
obtained, and (iv) this Agreement is a binding obligation of it and its
Affiliates, enforceable in accordance with its terms, subject, as to
enforcement of remedies, to applicable bankruptcy, insolvency, moratorium,
reorganization and similar laws affecting creditors’ rights generally, and to
general equitable principles. This Agreement may be amended or supplemented at
any time by mutual agreement of the Parties, provided that any such amendment
or supplement must be in a writing explicitly referring hereto, signed by both
Parties hereto, and approved by all necessary corporate action.


 


(b)           Andrx warrants and represents that it owns the entire
right, title and interest in the Patent, or otherwise has the right to grant
the license rights outlined in Section 3.


 


12














 


(c)           Andrx (and on behalf of Andrx’s Affiliates, licensees,
successors and assigns) hereby grants GSK (and its Affiliates, assigns,
suppliers, distributors, and sublicensees) a covenant not-to-sue and freedom
from suit, and Andrx (and its Affiliates) shall not support or encourage any
Third Party in suing GSK (and its Affiliates, assigns, suppliers, distributors,
sublicensees), (i) that any patents (or patents resulting from patent
applications) owned or controlled by Andrx (or its Affiliates) throughout the
world, now or in the future, is infringed by any non-generic prescription
once-daily product containing bupropion hydrochloride (including the sale,
offer for sale, manufacture, use or importation thereof), but only as to such
products sold or marketed as of the Execution Date, (ii) that the Patent
is infringed by any non-generic prescription once-daily product containing
bupropion hydrochloride (including the sale, offer for sale, manufacture, use
or importation thereof), (iii) effective as of or after the Execution
Date, that any patents (or patents resulting from patent applications) owned or
controlled by Andrx (or its Affiliates) throughout the world, now or in the
future, is infringed by any generic prescription once-daily product containing
bupropion hydrochloride (including the sale, offer for sale, manufacture, use
or importation thereof), but only as to such products that are generic
equivalents of products sold or marketed as of the Execution Date (including,
without limitation, Generic Equivalent Products), and (iv) effective as of
or after the Execution Date, that the Patent is infringed by any generic
prescription once-daily product containing bupropion hydrochloride, including,
without limitation, Biovail Third Party Licensee Bupropion Products, (including
the sale, offer for sale, manufacture, use or importation thereof). Andrx (and
its Affiliates) shall not threaten nor bring any claims under any such patents
in contravention of the foregoing. Andrx shall impose the foregoing covenant
not-to-sue on any Third Party to which Andrx or any of its Affiliates may
assign, license, sublicense or otherwise transfer any rights to such patents.


 


(d)           Limitation of Warranty. EXCEPT AS EXPRESSLY STATED
IN THIS SECTION NEITHER PARTY MAKES ANY OTHER REPRESENTATION OR WARRANTY,
AND EACH PARTY EXPRESSLY DISCLAIMS ALL IMPLIED WARRANTIES, INCLUDING WARRANTIES
OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NON-INFRINGEMENT, WITH
RESPECT TO ANY PRODUCT, MATERIALS, INFORMATION, SERVICES OR LICENSES PROVIDED TO
THE OTHER 


 


13

















 


PARTY PURSUANT TO THIS AGREEMENT. WITHOUT LIMITATION TO THE FOREGOING,
NOTHING IN THIS AGREEMENT IS OR SHALL BE CONSTRUED AS:


 


(i)            a warranty or representation by Andrx as to the validity,
enforceability or scope of any claim of the Patent;


 


(ii)           a warranty or representation by Andrx that anything
made used or sold, or otherwise disposed of under any license or other right
granted in this Agreement is or will be free from infringement of any rights or
other intellectual property right of any Third Party;


 


(iii)          an obligation to bring or prosecute actions or suits
against Third Parties for infringement of the Patent; or


 


(iv)          granting by implication, estoppel, or otherwise any
licenses or rights under patents or other rights of Andrx or Third Parties,
regardless of whether such patents or other rights are dominant or subordinate
to the Patent, except as expressly set forth herein (including, but not limited
to, Sections 3 and 6(c) hereof).


 


(e)           GSK, on behalf of itself, its Affiliates and
sublicensees, agrees to defend, indemnify, protect, and hold harmless Andrx and
Andrx’s customers, Affiliates, employees, agents, servants, and representatives
(each an “Andrx Party”) from and against any and all claims, damages, losses,
liabilities, and expenses, including reasonable attorney’s fees and costs, of
whatever nature, to the extent that such result from or arise in connection
with a claim, suit or other proceeding made or brought by a Third Party against
Andrx or an Andrx Party based on, resulting from, or arising in connection with
arising out of or relating to: (i) any product liability claim resulting
from GSK’s (or its Affiliate’s or its sublicensees’) sale of Wellbutrin XL
Products or Generic Equivalent Products sold by or on behalf of GSK in the
United States, or (ii) any claim that GSK’s Wellbutrin XL Products or
Generic Equivalent Products sold by or on behalf of GSK infringes intellectual
property rights owned or controlled by such Third Party in the United States.
The foregoing right of indemnity is premised upon Andrx not breaching any
representation, warranty, covenant or other obligation of Andrx contained in
this Agreement or 


 


14

















 


the Settlement Agreement that form the basis or proximate cause of the
indemnity claim or otherwise materially affect GSK’s potential defense or
liability relating thereto, and providing GSK any reasonable, sufficient and
timely notice available of such Third Party claim such that GSK’s ability to
defend such claim is not prejudiced. GSK shall have the right to assume and
control the defense of any claim for indemnification under this Section and
Andrx shall cooperate in connection therewith. GSK shall maintain adequate
insurance (or self-insurance) to cover such potential claims against Andrx and
in accordance with industry standards.


 


7.             Except as expressly set forth herein (including,
without limitation, Section 3(f), this Agreement and the rights herein
shall not be assigned or otherwise transferred without the written consent of
both Parties, such written consent not to be unreasonably withheld or delayed;
provided, however, that the prior written consent of the other Party shall not
be required for a Party to assign any of its rights (including the licenses and
covenant not-to-sue granted hereunder), or delegate or subcontract the
performance of any of its obligations hereunder to an Affiliate or pursuant to
a sale of all or substantially all of the assets of the portion of the Party’s
business to which this Agreement relates, merger, consolidation, reorganization
or other similar transaction. Each Party represents and warrants that it has
not sold or conveyed or otherwise transferred or granted any right, claim,
demand or cause of action related to the District Court Case that it has or had
against the other Party. Each Party hereto agrees to execute, acknowledge and
deliver such further instruments and do all such further acts as may be
necessary or appropriate to carry out the purposes and intent of this
Agreement.


 


8.             This Agreement is the product of negotiation and
preparation by the Parties and their respective attorneys, and the Parties,
therefore, expressly acknowledge and agree that this Agreement shall be deemed
jointly prepared and drafted by all of the Parties and their attorneys, and
shall be construed accordingly. The Parties further represent and warrant that
each was represented by competent outside counsel in the course of negotiating
and preparing this Agreement. Mistakes of fact or law shall not constitute
grounds for modification, avoidance or rescission of this Agreement.


 


15

















 


9.             The confidentiality provisions of Paragraph 11 of the
Settlement Agreement shall govern this Agreement.


 


10.          GSK and Andrx shall each bear their own costs and
legal fees associated with the negotiation and preparation of this Agreement.


 


11.          This Agreement shall be governed by and construed in
accordance with the laws of the State of New York (without regard to its choice
of law principles). Nothing in this Agreement shall prevent the Parties from
asserting or pursuing any claim to enforce the terms of this Agreement. All
Parties consent to the exclusive personal jurisdiction and venue in The United
States District Court For The Southern District of New York, (or, should there
be no subject matter jurisdiction, then another Federal court of competent
jurisdiction in New York), which shall be deemed the appropriate forum to hear
the dispute for purposes of enforcing this Agreement.


 


12.          This Agreement may be signed by the Parties in
separate counterparts, each of which when so executed shall be deemed an
original, and all of which when taken together shall constitute the original
Agreement. The Parties agree to accept facsimile copies of the executed
Agreement from one another as an original of same.


 


13.          None of the provisions of this Agreement shall be for
the benefit of or enforceable by any Third Party.


 


14.          The waiver by either Party of a breach or a default of
any provision of this Agreement by the other Party shall not be construed as a
waiver of any succeeding breach of the same or any other provision, nor shall
any delay or omission on the part of the other Party to exercise or avail
itself of any right, power or privilege that it has or may have hereunder
operate as a waiver of any right, power or privilege by such Party.


 


15.          Publicity. Any announcements or
publicity regarding the existence of this Agreement or any terms or subject
matter of this Agreement by either Andrx and/or GSK will be agreed to by Andrx
and GSK in writing in advance of any such announcement or publicity. The Party
preparing any such announcement, publicity or press release will provide the
other Party 


 


16

















 


with a draft thereof reasonably in advance of disclosure so as to permit
the other Party to review and comment on such announcement, publicity or press
release, unless Applicable Law otherwise requires immediate public disclosure.
The foregoing notwithstanding, the Parties will agree on a press release to
announce the execution of this Agreement, together with a corresponding
question/answer outline for use in responding to inquiries about this Agreement.
Thereafter, Andrx and GSK may each disclose to Third Parties the information
contained in such press release and question/answer outline without the need
for further approval by the other Party. Each of the Parties may, if required
by applicable law or governmental regulation, disclose the existence and such
terms as are required of this Agreement pursuant to the provisions of Paragraph
11 of the Settlement Agreement. Each Party agrees that it will co-operate fully
with the other with respect to all disclosures regarding this Agreement to the
Securities Exchange Commission and any other governmental or regulatory
agencies, including requests for confidential treatment of proprietary
information of either Party included in any such disclosure.


 


16.          Further Documents. Each Party hereto agrees to
execute such further documents or agreements, and do all such other
commercially reasonable acts, as may be reasonably necessary or desirable to
effect the purpose of this Agreement and carry out its provisions.


 


17.          Severability. If any provision of this
Agreement is or becomes invalid or is ruled invalid by any court of competent
jurisdiction or is deemed unenforceable, such provision shall be considered
severed from this Agreement, and it is the intention of the Parties that the
remainder of the Agreement will not be affected. The Parties shall make a good
faith effort to replace any such invalid or unenforceable provision with a
valid and enforceable one such that the objectives contemplated by the Parties
when entering this Agreement may be realized.


 


18.          Captions/Headings. The article and section
captions or headings in this Agreement have been inserted as a matter of
convenience and are not part of this Agreement.


 


19.          Independent Relationship. Nothing herein
contained shall be deemed to create an employment, agency, joint venture or
partnership relationship between the Parties hereto or any of their agents or
employees, or any other legal arrangement that would impose liability upon one
Party for the act or failure to act of the other Party. Neither Party shall
have any power to 


 


17

















 


enter into any contracts or commitments or to incur any liabilities in
the name of, or on behalf of, the other or to bind the other Party in any
respect whatsoever. All activities undertaken by and hereunder shall be those
of an independent contractor.


 


20.          Entire Agreement. This Agreement, together
with the Settlement Agreement, contains the entire agreement between the
Parties related to the subject matter hereof, and this Agreement cannot be
amended, varied or abridged in any manner except by amendment in writing duly
signed by the Parties. This Agreement supersedes and replaces any existing
agreement, arrangements or discussions between the Parties relating to the
subject matter hereof, whether oral or written.


 


21.          Notices required or permitted under this Agreement
shall be in writing and sent by prepaid registered or certified air mail or by
overnight express mail (e.g., FedEx), or by telefacsimile confirmed by prepaid
registered or certified air mail letter or by overnight express mail (e.g.,
FedEx) (failure of such confirmation shall not affect the validity of such
notice by telefacsimile to the extent the receipt of such notice is confirmed
by the act of the receiving Party (e.g., a telefacsimile of the receiving Party
submitting its receipt of such notice)), and shall be deemed to have been
properly served to the addressee upon receipt of such written communication, to
the following addresses of the Parties:


 


If to Andrx:


 


Andrx Pharmaceuticals LLC

c/o Watson Pharmaceuticals, Inc.

Attention: Legal Department

311 Bonnie Circle

Corona, CA 92880

Facsimile: (951) 493-5821


 


If to GSK:


 


SmithKline Beecham Corporation (d/b/a GlaxoSmithKline)

One Franklin Plaza (Mail Code FP 2230)

P.O. Box 7929

Philadelphia, Pennsylvania 19101, USA


Attention:              President, U.S.
Pharmaceuticals


Fax:                        +1-215-751-3729


 


18

















 


and:


 


SmithKline Beecham Corporation (d/b/a
GlaxoSmithKline)


One Franklin Plaza (Mail Code FP 2230)


P.O. Box 7929


Philadelphia, Pennsylvania 19101, USA


Attention:              Corporate Law — U.S.


Vice President and Associate General Counsel,


Worldwide Business Development Transactions Team


 


Facsimile:              (215) 751-3935


 


[Signatures Appear on the Following Page]


 


19

















 


IN WITNESS WHEREOF, the Parties hereto have caused
this Agreement to be executed as of the Execution Date.


 


SMITHKLINE BEECHAM CORPORATION


 


 


	
   

  	
  By:

  	
  /s/ Donald F. Parman

  	
   

  
	
   

  	
  Name:

  	
  Donald F. Parman

  	
   

  
	
   

  	
  Title:

  	
  Vice President & Secretary

  	
   

  



 


GLAXOSMITHKLINE, PLC


 


 


	
   

  	
  By:

  	
  /s/ Simon Bicknell

  	
   

  
	
   

  	
  Name:

  	
  Simon Bicknell

  	
   

  
	
   

  	
  Title:

  	
  Company Secretary

  	
   

  



 


ANDRX PHARMACEUTICALS, LLC.


 


 


	
   

  	
  By:

  	
  /s/ Allen Chao

  	
   

  
	
   

  	
  Name:

  	
  Allen Chao

  	
   

  
	
   

  	
  Title:

  	
  Chairman, Chief Executive Officer &
  President

  	
   

  



 

















 


APPENDIX A

Certain Definitions


 


As used in this Agreement, the following terms,
whether used in the singular or plural, shall have the following meanings:


 


“A Rated” shall mean the product in question
has been assigned an “A” rating signifying that the FDA has classified the
product as “therapeutically equivalent” to the particular product in question,
applying the definition of “therapeutically equivalent” set forth in the
preface to the current edition of the then current FDA publication “Approved
Drug Products With Therapeutic Equivalence Evaluations” (the “Orange Book”).


 


“Affiliate” shall mean any Person which
controls, is controlled by, or is under common control with the applicable
Person. For purposes of this definition, “control” shall mean: (a) in the
case of corporate entities, direct or indirect ownership of greater than fifty
percent (50%) of the stock or shares entitled to vote for the election of
directors, or otherwise having the power to control or direct the affairs of
such Person; and (b) in the case of non-corporate entities, direct or
indirect ownership of greater than 50% of the equity interest or the power to
direct the management and policies of such noncorporate entities.


 


“Agreement” shall mean this License Agreement.


 


“Biovail Third Party Licensee Bupropion Product”
shall mean (1) any prescription once-daily bupropion hydrochloride product
in the 150mg strength for human use that has received Final Approval from the
FDA pursuant to an ANDA and is A Rated to the applicable 150mg strength of GSK’s
Wellbutrin XL® (bupropion hydrochloride) product approved under GSK’s NDA No. 02-1515
and that is distributed by the Biovail Third Party Licensee in the United
States; or (2) any unbranded prescription once-daily product containing
bupropion hydrochloride in the 150mg strength for human use that is supplied
to, and distributed by, Biovail Third Party Licensee under a GSK owned or
controlled NDA for sale in the United States by the Biovail Third Party
Licensee as a generic equivalent to the 150mg strength of GSK’s Wellbutrin XL®
(bupropion hydrochloride) product approved under GSK’s NDA No. 02-1515.


 

















 


“Biovail Third Party Licensee’s Suppliers”
shall mean, collectively any Third Party that manufactures for, or supplies to,
the Biovail Third Party Licensee the Biovail Third Party Licensee Bupropion
Product.


 


“Calendar Quarter” shall mean each of the three
(3) month periods during a calendar year starting on each of the first of
January, April, July and October.


 


“FDA” shall mean the U.S. Food and Drug
Administration, or any successor agency thereto.


 


“Final Approval” shall mean final approval (not
including any tentative approval) required from the FDA to enable the marketing
and sale of a pharmaceutical product in the United States.


 


“Generic Equivalent Product” shall mean any
unbranded prescription 150mg once-daily product containing bupropion
hydrochloride for human use that is supplied or manufactured by or for GSK or
its Affiliates under a GSK owned or controlled NDA for sale in the United
States by or on behalf of GSK (or a Biovail Assignee, if applicable) as a
generic equivalent to the 150mg strength of GSK’s Wellbutrin XL® Product. For
the avoidance of doubt, Generic Equivalent shall not include (i) any
product marketed and sold under GSK’s Wellbutrin XL® trademark (or any other
trademark owned or controlled by GSK), or (ii) any Biovail Third Party
Licensee Bupropion Product.


 


“GSK Suppliers” shall mean, collectively any
Third Party that manufactures for, or supplies to, GSK (or its Affiliates) the
Wellbutrin XL Product, or the Generic Equivalent Product (as applicable) for
sale by GSK (or its Affiliates).


 


“NDA” shall mean a New Drug Application (or
supplement thereto) as defined in the U.S. Federal Food, Drug, and Cosmetic Act
and all applicable regulations promulgated thereunder.


 


“Net Sales” shall mean the aggregate gross
sales amount invoiced by GSK (or its Affiliates) and its or their sublicensees
for Wellbutrin XL Products, Biovail Third Party Licensee 


 


2

















 


Bupropion Product or Generic Equivalent
Products (as may be applicable, “Product”) to wholesalers and customers (for
purposes of this definition, collectively, “customer”) in the United States
less the following deductions:


 


(a)           transportation charges, including insurance, for transporting Product;


 


(b)           sales and excise taxes and duties paid or allowed by the GSK and any
other governmental charges imposed upon production, importation, use or sale of
Product;


 


(c)           trade, quantity and cash discounts allowed on Product;


 


(d)           allowances or credits to customers on account of rejection or return of
Product or on account of retroactive price reductions affecting Product; and


 


(e)           Product rebates, including those granted to Medicaid, and Product charge
backs including those granted to managed care entities and pharmaceutical
benefit management service entities;


 


all of the above without duplication and determined in
accordance with GSK’s, its Affiliates’ and their permitted sublicensees’ books
and records, which books and records will be maintain in accordance with GAAP.
GSK, its Affiliates and their permitted sublicensees will not deduct any
marketing, promotional, advertising or distribution expenses of any kind to
determine Net Sales. Any sales between GSK, its Affiliates and its or their
sublicensees shall be excluded from the computation of Net Sales and no amounts
shall be payable on such sales.


 


“Person” shall mean any natural person,
corporation, unincorporated organization, partnership, association, joint stock
company, joint venture, limited liability company, trust or government, or any
agency or political subdivision of any government, or any other entity.


 


“Prime Rate” shall mean the rate of interest
that Citibank N.A. lists as its prime lending rate on the last day of the
applicable Calendar Quarter, or if such rate is not available, the prime 


 


3

















 


lending rate listed in the New York City, USA
version of The Wall Street Journal on the last day of the applicable Calendar
Quarter.


 


“Royalty” shall mean individually or
collectively, as applicable, the Wellbutrin XL Product Royalty, the Biovail
Third Party Licensee Bupropion Product Royalty and the Generic Equivalent
Product Royalty.


 


“Third Party” shall mean any Person other than
Andrx or GSK, or an Affiliate of any of them.


 


“United States” shall mean the United States of
America (including the Commonwealth of Puerto Rico) its possessions and
territories, and U.S. military or U.S. government installations that are under
the purview of the FDA.


 


“Wellbutrin XL Product” shall mean any
prescription 150 mg once-daily product containing bupropion hydrochloride for
human use that is supplied or manufactured by or for GSK (or its Affiliates)
for sale by GSK (or its Affiliates) in the United States under the Wellbutrin
XL® trademark or any other trademark owned or controlled by GSK (or its
Affiliates). For the avoidance of doubt, “Wellbutrin XL Product” does not
include Generic Equivalent Products or Biovail Third Party Licensee Bupropion
Products.


 


Andrx and GSK are sometimes collectively referred to
in this Agreement as the “Parties” and separately as a “Party.”


 


The word “including” or any variation thereof
means “including without limitation” or any variation thereof and shall not be
construed to limit any general statement which it follows to the specific or
similar items or matters immediately following it.


 


4