1.3 **“Japan License Agreement”** shall have the meaning set forth in Section 3 of thisAgreement.1.4 **“Japan Option”** shall have the meaning set forth in Section 3 of this Agreement.1.5 **“Japan Option Term”** shall mean the period beginning on the Effective Date and ending onthe earlier of: (i) thirty (30) calendar days after [**]; or (ii) the date on which Scheringnotifies Valeant that SP is exercising the Japan Option.1.6 **“Taribavirin”** shall mean the compound known as taribavirin, any solvates (includingwithout limitation hydrates), acids, bases, esters, salts, isomers, stereoisomers,racemates, enantiomers, tautomers, polymorphs and crystalline forms of any of the forgoing.For the avoidance of doubt, [**] are excluded from the definition of Taribavirin.1.7 **“Territory”** shall mean all of the countries and territories in the world except forJapan.2. **Waiver and Release of Rights**. SP (acting on behalf of itself, its Affiliates and its and theirsuccessors in interest) hereby expressly and irrevocably waives and releases all rights, optionsand other interests held by SP and/or its Affiliates under the November 2000 Agreement with respectto Taribavirin, including without limitation the F&LR Rights as applied to Taribavirin. TheParties acknowledge and agree that on and after the Effective Date, and subject to Sections 3, 4and 5 of this Agreement, Valeant and its Affiliates shall be free to license or otherwise disposeof any and all rights, title and interest with respect to Taribavirin in the Territory without anyfurther obligations to SP and/or its Affiliates.3. **Japan Option Rights**. Valeant hereby grants to Schering the irrevocable exclusive option duringthe Japan Option Term to obtain an exclusive license to develop and commercialize Taribavirinproducts in Japan (the **“Japan Option”**).4. **Exercise of Japan Option**. Schering shall have the right, exercisable in its sole discretion, toexercise the Japan Option rights at any time during the Japan Option Term by providing Valeant withwritten notice to that effect. Upon receipt of such notice, Valeant and Schering (or itsdesignated Affiliate) shall promptly negotiate and enter into an exclusive license agreement forTaribavirin in Japan (the **“Japan License Agreement”**). The Japan License Agreement shall expresslyinclude the terms and conditions set forth in Appendix 1 (attached to this Agreement) andsuch other reasonable and customary terms and conditions (consistent with Appendix 1) that aretypical for such a license agreement. ****** **CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND WILL BE FILED SEPARATELY WITH THESECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT REQUEST.**
2

 
5. **Access to Information**. During the Japan Option Term, Valeant shall keep Schering reasonablyinformed as to the status of development of Taribavirin in the Territory by or on behalf of Valeantor its third party licensees. Schering shall have the right, exercisable at any time after [**]but prior to the expiration of the Japan Option Term, to conduct a full due diligence review of anyand all data and information generated by or on behalf of Valeant and/or any of its Affiliates,licensees or partners, in connection with the development of Taribavirin products in the Territory.Upon request by Schering, Valeant shall provide, and shall ensure that its Affiliates, licenseesand/or partners provide, Schering’s employees, consultants and/or representatives with reasonableaccess to such data and information as is necessary to enable Schering to complete such duediligence review. Following completion of such due diligence review, Valeant shall, upon requestduring the remainder of the Japan Option Term, provide Schering with (1) an update of anyadditional material information related to the safety or efficacy of Taribavirin that is generated,and (2) copies of any substantive communications with the FDA or EMEA regarding an NDA or otherapplication for marketing authorization approval for Taribavirin in the Territory.6. **Confidentiality.**Schering acknowledges and agrees that all information and data received orotherwise made available to it under Section 5 is confidential and proprietary information ofValeant and/or its licensees or partners. Schering hereby represents, warrants and covenants thatSchering and its Affiliates will use such information and data for the sole purpose of evaluatingits rights to exercise the Japan Option. Upon expiration of the Japan Option Term, Schering shallupon request promptly return to Valeant or, at the request of Valeant, destroy all information anddata received under Section 5. This section 6 shall survive the termination or expiration of theJapan Option Term and the Term of this Agreement for any reason.7. **Exclusivity Covenant**. Valeant hereby represents, warrants and covenants that during the JapanOption Term it shall not, and shall ensure that its Affiliates do not, license, sell, transfer,assign or convey to any third party or to otherwise encumber any rights or interests in or toTaribavirin in Japan (including without limitation (i) any related Japanese patents, patentapplications or trademarks, and (ii) any rights in Japan to use trade secrets, data, know-how,information or other intellectual property rights to Taribavirin and/or the manufacture or use ofTaribavirin) that are owned or controlled by Valeant and/or its Affiliates. Valeant shall ensurethat any licenses or other rights or interests with respect to Taribavirin that it or itsAffiliates grants or conveys to any third party during the Japan Option Term are consistent withthe foregoing exclusivity covenants, the rights granted to Schering under Sections 3, 4 and 5 ofthis Agreement, and the terms and conditions for the Japan License Agreement that are set forth inAppendix 1.8. **Publicity**. Schering and Valeant shall agree on the form, content and timing of any initialpress releases concerning this Agreement which the Parties intend to issue as soon as practicableafter the Effective Date. In the event that either Party intends to issue any subsequent pressrelease,public announcements or other further public disclosures relating to this Agreement, the terms andconditions hereof, and/or the performance by the Parties hereunder, it shall provide the otherParty with a copy of its proposed release or public disclosure for review and comment at least two(2) business days prior to the planned disclosure, and shall give due consideration to any comments ****** **CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND WILL BE FILED SEPARATELY WITH THESECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT REQUEST.**
3

 
received from such Party. Nothing in the foregoing, however, shall prohibit a Party from makingdisclosures to the extent necessary under applicable federal or state securities laws or any ruleor regulation of any nationally recognized securities exchange, provided that (i) thedisclosure is accurate and complete, (ii) the disclosing Party shall where applicable, requestconfidential treatment to the extent available, and (iii) the disclosing Party shall provide copiesof the proposed disclosure reasonably in advance of such filing or other disclosure for the otherParty’s prior review and comment and shall give due consideration to any comments by such otherParty relating to such filing, including without limitation the provisions of this Agreement forwhich confidential treatment should be sought. In addition, Valeant shall have the right todisclose in strict confidence the terms and conditions of this Agreement as necessary to itsprospective licensees of rights to Taribavirin in the Territory.9. **Termination.**Except as otherwise expressly set forth in this Section 9, this Agreement and allof the Parties’ respective rights and obligations set forth herein shall terminate as follows: (i) Solely in the event that Schering exercises the Japan Option prior toexpiration of the Japan Option Term, effective as of the effective date of the JapanLicense Agreement as contemplated herein; or  (ii) in the event that Schering fails to exercise the Japan Option prior to theexpiration of the Japan Option Term, effective upon the expiration of the Japan OptionTerm, and Schering and its Affiliates shall thereafter have no further rights orinterests of any kind whatsoever with respect to Taribavirin.This Agreement shall not be otherwise terminable except by mutual written agreement of the Parties.For the avoidance of doubt, the waiver and release granted by Schering under Section 2 shall notbe terminable under any circumstances and shall survive the termination or expiration of thisAgreement for any reason.10. **Miscellaneous Provisions.**10.1 **Relationship of the Parties**. Each Party is an independent contractor, and nothingherein shall be construed as creating an employee/employer, agency, partnership or jointventurer relationship between any of the Parties. None of the Parties shall have theauthority to speak for, represent, bind or obligate another Party in any way without theprior express written authority of such other Party.10.2 **Force Majeure**. If any Party shall be delayed, interrupted in or prevented from theperformance of any obligation hereunder by reason of force majeure including an act of God,fire, flood, earthquake, war (declared or undeclared), public disaster, act of terrorism,strike or labor differences, governmental enactment, rule or regulation, or any other cause ****** **CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND WILL BE FILED SEPARATELY WITH THESECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT REQUEST.**
4

 
beyond such Party’s control, such Party shall not be liable to the other Parties therefor;and the time for performance of such obligation shall be extended for a period equal to theduration of the force majeure which occasioned the delay, interruption or prevention. TheParty invoking such force majeure rights shall use commercially reasonable efforts toovercome such force majeure event and resume performance as soon as possible;provided that nothing herein shall be construed as obligating a Party to settle onterms unsatisfactory to such Party any strike, lock-out or other labor difficulty, anyinvestigation or proceeding by any public authority, or any litigation by any third party.10.3 **Notice.**All notices, consents, requests, waivers and other communications required orpermitted under this Agreement shall be in writing and sent by personal delivery, fax (withconfirmation copy), internationally recognized courier, or certified or registered mail,postage prepaid (airmail where applicable) to the receiving Party at the address or faxnumber, as applicable, set forth below, or any replacement address or fax number notified tothe sender by notice actually received by such Party:If to Valeant:     Valeant Pharmaceuticals International  One Enterprise  Aliso Viejo, CA 92656     Attention: CEO  Fax: 949-461-6661     with a copy to:     Attention: General Counsel  Fax: 949-315-3818If to Schering:     Schering Corporation  2000 Galloping Hill Road  Kenilworth, NJ 07033  Attention: Vice President, Business Development  Fax:     with a copy to:       Attention: Sr. Legal Director,    Business Development & Strategic Alliances  Fax:   ****** **CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND WILL BE FILED SEPARATELY WITH THESECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT REQUEST.**
5

 
10.4 **Further Assurances**. Except as expressly provided elsewhere in this Agreement, eachParty will at its expense promptly execute and deliver any further instruments and documentsand take any further action as the other Party may reasonably request in order to giveeffect to the terms and conditions of this Agreement.10.5 **Waiver**. A Party may, by written instrument executed by such Party, extend the time forthe performance of any obligations of the other Party, waive any inaccuracies andrepresentations by the other Party in this Agreement or in any document delivered pursuantto this Agreement or waive compliance by the other Party with any of the covenants,conditions or performance of any of its obligations under this Agreement. Any such waiveror failure to insist upon strict compliance with such covenant, condition or obligation willnot operate as a waiver of, or estoppel with respect to, any subsequent or other failure.10.6 **Entire Agreement/Amendments**. This Agreement, together with the attached Appendix 1 andthe November 2000 Agreement, constitutes the entire understanding and agreement between theParties with respect to its subject matter and, upon the Effective Date, supersedes allprior discussions, negotiations, correspondence, agreements, and understandings, both oraland written, between the Parties with respect thereto. This Agreement may not be altered orotherwise amended except by an instrument in writing signed by each of the Parties.10.7 **Construction**. The Parties have participated jointly in the negotiation and drafting ofthis Agreement. If a question of intent or interpretation arises, this Agreement will beconstrued as if drafted jointly by the Parties and no presumption or burden of proof willarise favoring or disfavoring a Party because of the authorship of any provision of thisAgreement.10.8 **Counterparts**. This Agreement may be executed in any number of counterparts and byfacsimile, each of which will be deemed to be an original and all of which together willconstitute one and the same agreement.10.9 **Severability**. If any provision of this Agreement is finally determined to be invalid,unlawful or incapable of being enforced in a jurisdiction, (i) it will be deemed to besevered from this Agreement in such jurisdiction, (ii) every other provision of thisAgreement will remain in full force and effect in such jurisdiction, (iii) the Parties willnegotiate in good faith to modify this Agreement so as to achieve the original intent of theParties as closely as possible in an acceptable manner with respect to such jurisdiction and(iv) such invalidity, unlawfulness or unenforceability will not affect the interpretation orenforcement of this Agreement in any other jurisdiction.10.10 **Governing Law**. This Agreement will be governed by and construed in accordance withthe laws of the State of New York, USA, without regard to its principles regarding conflictsof law. ****** **CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND WILL BE FILED SEPARATELY WITH THESECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT REQUEST.**
6

 
IN WITNESS WHEREOF, the Parties have executed this Agreement by their duly authorizedrepresentatives as of the dates set forth below.             SCHERING CORPORATION   VALEANT PHARMACEUTICALS          INTERNATIONAL               By:       By:                            Name: David A Piacquad   Name:                 Title: Vice President,   Title:        Business Development                     Date:       Date:                            SCHERING-PLOUGH LTD.                     By:                                    Name: David A. Piacquad                     Title: Managing Officer                     Date:                        ****** **CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND WILL BE FILED SEPARATELY WITH THESECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT REQUEST.**
7

 
**Appendix 1****Terms and Conditions for the Japan License Agreement**Any Japan License Agreement entered into by the Parties or their respective Affiliates shallinclude and be otherwise consistent with the following terms and conditions: 1 Valeant will grant to Schering (or its designated Affiliate) an exclusive (even as toValeant) license in Japan to develop, import, market, promote, distribute, offer for saleand sell pharmaceutical products containing Taribavirin. In furtherance of that license,Valeant will also grant Schering (or its designated Affiliate) a non-exclusive worldwidelicense to (i) make, have made, import or export Taribavirin and pharmaceutical productscontaining Taribavirin solely for the purpose of developing and commercializing suchproducts in Japan, and (ii) conduct pre-clinical and/or clinical studies and/or otherdevelopment activities using Taribavirin solely for purposes of obtaining and maintaininghealth registrations and/or supporting commercialization of Taribavirin products in Japan.These licenses will encompass all relevant patents, patent applications, data, informationand know-how owned or controlled by Valeant and/or its Affiliates related to Taribavirin orthe manufacture and/or use thereof.  2 Valeant will also grant to Schering (or its designated Affiliates) the rights tocross-reference, access and utilize any US NDAs and EU marketing authorizations for [**]that are held by Valeant, its Affiliates, licensees or partners. Such rights shall besolely for the purpose of developing and commercializing Taribavirin products (includingmonotherapy and combination products) in Japan, including without limitation to obtain andmaintain regulatory approvals in Japan, and to manufacture Taribavirin anywhere in theworld solely for use and/or sale in Japan.  3 Schering will grant to Valeant (or its designated Affiliates) the rights tocross-reference, access and utilize any marketing authorizations for [**] that are held bySchering, its Affiliates, licensees or partners. Such rights shall be solely for thepurpose of developing and commercializing Taribavirin products (including monotherapy andcombination products) in the Territory, including without limitation to obtain and maintainregulatory approvals in any and all countries in the Territory, and to manufactureTaribavirin anywhere in the world solely for use and/or sale in the Territory.  4 Schering will control, be responsible for, and bear the full cost and expense of, thedevelopment and commercialization of Taribavirin in Japan.  5 The Japan License Agreement shall provide for Schering (or its designated Affiliate) topay to Valeant the following compensation in consideration for the licenses and otherrights granted under that agreement: ****** **CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND WILL BE FILED SEPARATELY WITH THESECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT REQUEST.**
8

 
 (i) a one time, up-front, license fee in the amount of two million USdollars ($2,000,000); and  (ii) a royalty of [**] on net sales of pharmaceutical productscontaining Taribavirin in Japan by or on behalf of Schering (or its designatedAffiliate). Royalties will be paid quarterly and the term of the royaltyobligation (not to exceed the longer of the life of relevant Valeant patents inJapan and a term of [**]) will be agreed to by the Parties and set forth in theJapan License Agreement.The Japan License Agreement will not include any other up-front payments, license fees,milestone payments or other compensation. ****** **CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND WILL BE FILED SEPARATELY WITH THESECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT REQUEST.**
9