1.6 “**Confidential Information**” means all non-public materials, information and data concerningthe disclosing party and its operations that is disclosed by the disclosing party to the receivingparty pursuant to the Confidentiality Agreement, this Agreement, the Joint Development Agreement orthe Distribution Agreement, orally or in written, electronic or tangible form, or otherwiseobtained by the receiving party through observation or examination of the disclosing party’soperations. Confidential Information includes, but is not limited to, information about thedisclosing party’s financial condition and projections; business, marketing or strategic plans;sales information, customer lists; price lists; databases; trade secrets; product prototypes anddesigns; techniques, formulae, algorithms and other non-public process information.Notwithstanding the foregoing, Confidential Information of a party shall not include that portionof such materials, information and data that, and only to the extent, the recipient can establishby written documentation: (a) is known to the recipient as evidenced by its written records beforereceipt thereof from the disclosing party, (b) is disclosed to the recipient free ofconfidentiality obligations by a Third Party who has the right to make such disclosure withoutobligations of confidentiality, (c) is or becomes part of the public domain through no fault of therecipient, or (d) the recipient can reasonably establish is independently developed by persons onbehalf of recipient without the use of the information disclosed by the disclosing party.          1.7 **“Confidentiality Agreement”**means *******          1.8 **“Control”**means with respect to any material, information, or intellectual property right,that a party (a) owns such material, information, or intellectual property right, or (b) has alicense or right to use such material, information, or intellectual property right, in each casewith the ability to grant to the other party access, a right to use, a license, or a sublicense (asapplicable) to such material, information, or intellectual property right on the terms andconditions set forth herein, without violating the terms of any agreement or other arrangement withany Third Party.          1.9 “**Cost of Sales**” means, on a per Existing Product or per Generic Subsequent Product basisand for a given calendar quarter, the sum of the Manufacturing Costs and Distribution and SalesCosts for such Existing Product or Generic Subsequent Product sold during such calendar quarter.          1.10 “**Distribution Agreement**” shall have the meaning set forth in Section 2.2.1.          1.11 “**Distribution and Sales Costs**” means, on a per Existing Product or per Generic SubsequentProduct basis and for a given calendar quarter, (a) an amount equal to *******and (b) an amount equal*******; provided, however, that any of the foregoing costs that are included within the definition of“Distribution and Sales Costs” may not be deducted again when calculating Net Sales.          1.12 “**Existing Product**” means any product (a) that is a Generic Equivalent of the SolodynProducts, (b) that is sold pursuant to ANDA #90-024 under Impax’s control, and (c) the making,using, selling or importation is covered by one or more Valid Claims.
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          1.13 “**FDA**” means the United States Food and Drug Administration or any successor entitythereto.          1.14 **“Generic Equivalent”**means *******.          1.15 **“Generic Subsequent Product”**means the Medicis-authorized generically labeled version ofthe Subsequent Product.          1.16 “**Grantback Patents**” means (a) *******, (b) all divisions, continuations,continuations-in-part, that claim priority to, or common priority with, the patent applicationsdescribed in clause (a) above or the patent applications that resulted in the patents described inclause (a) above, and (c) all patents that have issued or in the future issue from any of theforegoing patent applications, including utility, model and design patents and certificates ofinvention, together with any reissues, renewals, extensions or additions thereto.          1.17 “**Gross Profit**” means, with respect to all Existing Products or all Generic SubsequentProducts in a calendar quarter, the remainder, if any, that results from Net Sales of ExistingProducts or Generic Subsequent Products, as applicable, in the Territory minus the Cost of Sales ofExisting Products or Generic Subsequent Products, as applicable. With respect to a product, to theextent such remainder is a negative number, such loss shall not be due and owing by Medicis, butImpax shall have the right to offset such loss against any positive remainder for such product onlyin the immediately succeeding calendar quarter.          1.18 “**License Trigger**” means the first to occur of any of the following:               1.18.1 *******; or               1.18.2 *******; or               1.18.3 *******; or               1.18.4 the third (3rd) anniversary of the Effective Date.*******          1.19 “**Manufacturing Costs**” means (each of the following to be determined in accordance withGAAP applied in a manner consistent with past practices of Impax) (a) the delivered cost to Impaxof a Existing Product or Generic Subsequent Product for use or sale in the Territory if a Third Party(or Medicis) is the manufacturer of such Existing Product orGeneric Subsequent Product provided that such Existing Product or Generic Subsequent Product isprovided pursuant to an arms-length and commercially reasonable agreement, or (b) where Impax isitself the manufacturer, the sum of Materials Costs, labor costs, Overhead and Freight And Taxesincurred by Impax to produce such Existing Product for use or sale in the Territory, including thecosts of rejected or failed batches of such Existing Product. As used herein, “**Materials Cost”**means Impax’s procurement costs for (i) raw materials (both active and inactive ingredients), and(ii) packaging, labeling and storing materials, incurred in connection with the manufacture,testing, labeling, purchasing and distribution of such Existing Product; “**Overhead”**means allindirect costs of manufacturing such Existing Product including, without
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limitation, insurance, inspection, testing, quality control and quality assurance, depreciation, maintenance and repaircosts, all as determined in accordance with the U.S. GAAP, and “**Freight And Taxes”**means allinsurance, freight and shipping charges, import taxes and duties and similar taxes and dutieslevied by the United States or other government entity with jurisdiction, and port and loadingcharges, all to the extent not already deducted under Distribution and Sales Costs.          1.20 “**Net Sales**” means, with respect to a given Existing Product or Generic SubsequentProduct, the aggregate gross price of such Existing Products or Generic Subsequent Productsreceived by Impax or its sublicensees from unaffiliated retailers, distributors or other customers,less the sum of the following items, all of which must directly relate to the sale and distributionof such Existing Products or Generic Subsequent Products and be determined in accordance with GAAPapplied in a manner consistent with past practices of Impax: (a) returns, credits, rebates,discounts, allowances, promotional payments, free goods, chargebacks and other price reductionprograms customary to the trade or required by law, (b) sales, valued-added and other taxes, (c)*******, (d) customs duties, surcharges and other governmental charges, (e) *******, and (f) *******. Salesbetween or among Impax and its Affiliates shall not be included in Net Sales unless Impax or itsAffiliates are the end user of the Existing Products or Generic Subsequent Products.          1.21 “**Patent Rights**” means (a) the patents and patent applications listed on Exhibit A to thisAgreement, (b) *******; (c) all divisions, continuations, continuations-in-part, that claim priorityto, or common priority with, the patent applications described in clauses (a) and (b) above or thepatent applications that resulted in the patents described in clauses (a) and (b) above, and (d)all patents that have issued or in the future issue from any of the foregoing patent applications,including utility, model and design patents and certificates of invention, together with anyreissues, renewals, extensions or additions thereto.          1.22 “**Product**” means any product for which the making, using, selling or importation iscovered by one or more claims of the Patent Rights.          1.23 “**Solodyn Products**” means the Solodyn products listed on Exhibit B, as such products aremarketed and sold by Medicis as of the Effective Date in the Territory.          1.24 “**Solodyn Product Patents**” means (a) all patents and patent applications in the TerritoryControlled by Impax as of the Effective Date that claim or cover a Solodyn Product or themanufacture or use of a Solodyn Product, (b) all divisions, continuations and continuations-in-part (solely to the extent directed to subject matter disclosed in a patentor patent application described in clause (a) above) that (i) claim priority to, or common prioritywith, the patent applications described in clause (a) above or the patent applications thatresulted in the patents described in clause (a) above and (ii) claim or cover a Solodyn Product orthe manufacture or use of a Solodyn Product, and (c) all patents that issue after the EffectiveDate from any of the foregoing patent applications, including utility, model and design patents andcertificates of invention, together with any reissues, renewals, extensions or additions thereto,*******.          1.25 “**Subsequent Product**” means *******.
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          1.26 “**Territory**” means the United States of America including its territories and possessions.          1.27 “**Third Party**” means any person or entity other than Medicis or Impax.          1.28 **“Trade”**shall have the meaning set forth in Section 2.2.1.          1.29 **“Valid Claim”**means *******.     2. LICENSES; RELEASES.          2.1 License Grant for Existing Product.               2.1.1 Effective only upon the occurrence of the License Trigger, Medicis hereby grants toImpax a non-exclusive, non-transferable (except as permitted in Section 8.6) license (without theright to grant sublicenses except to have made Existing Products on behalf of Impax) under thePatent Rights to make, have made, use, offer for sale, sell and import inside the TerritoryExisting Products.               2.1.2 Until the occurrence of the License Trigger, Impax shall not, and shall not directly orindirectly encourage or assist any Third Party to, develop and/or commercialize any ExistingProducts in the Territory; provided, however, that Impax shall not be subject to the foregoingrestriction at any time when there is no Valid Claim in the Territory claiming the Existing Productor its manufacture or use.               2.1.3 Nothing in this Agreement shall be construed as creating an obligation, express orimplied, on Medicis to supply any Existing Product to Impax. Impax shall be solely responsible formanufacturing, or having manufactured, its supply of Existing Product.               2.1.4 *******.               2.1.5 Each party shall promptly notify the other in writing of the occurrence of the LicenseTrigger. In addition, Medicis shall keep Impax apprised of the status of material developmentsthat affect when the License Trigger occurs, that Impax would not otherwise be aware of ***. Impaxshall notify Medicis in writing at least five (5) days before Impax initiates commercialization ofthe Existing Product if the date of such initiation is anticipated to be before the LicenseTrigger.          2.2 Subsequent Products; Distribution Agreement.               2.2.1 With respect to the Subsequent Product, and effective only upon the occurrence of the AGTrigger, Medicis hereby appoints Impax as its exclusive distributor of the Generic SubsequentProduct in the Territory and authorizes Impax, under the Patent Rights, to market the GenericSubsequent Product solely to wholesalers, distributors, retailers, mail order, managed care, andgroup purchasing organizations (collectively, the “**Trade**”) in the Territory, pursuant to a separatedistribution and supply agreement (the **“Distribution Agreement”**) to be entered into between Impaxand Medicis.
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               2.2.2 Commencing on the Effective Date, the parties shall negotiate in good faith the terms ofand enter into the Distribution Agreement, which will contain the following provisions: **•** Unless earlier terminated for cause or by Impax for convenience, the term of any suchappointment of Impax as the exclusive distributor of the Generic Subsequent Product shall extendfrom the AG Trigger and remain in effect until *******(the **“AG Term”**).  **•** Medicis will supply (either itself or through its Third Party manufacturer) Impax itsrequirements in the Territory for the Generic Subsequent Product in finished form; on suchforecasting, invoicing, shipment, delivery, inspection and payment terms as are agreed upon by theparties and set forth in the Distribution Agreement; including, without limitation *******;  **•** Medicis will manufacture the Generic Subsequent Product in accordance with cGMPs andthe specifications, at a transfer price equal to *******;  **•** In exchange for such appointment, Impax agrees that during the term of theDistribution Agreement, and in the case of termination of the Distribution Agreement for any reasonfor a period of *******after such termination, not to market or launch a Generic Equivalent of theSubsequent Product in the Territory, or sell to any Third Party any Generic Subsequent Product ifit has reason to believe that such person intends to sell such product inside the Territory; theDistribution Agreement will not include any other limitations on development, submission ofregulatory filings or commercialization by Impax;  **•** Impax shall pay to Medicis *******of all Gross Profit resulting from sales of the GenericSubsequent Product, on a quarterly basis, on such terms as are agreed by the parties;  **•** To the extent that Medicis is required to pay a royalty or other payment to a ThirdParty with respect to a license to such Third Party’s intellectual property to distribute theGeneric Subsequent Product in the Territory, the parties will deduct such payment from thecalculation of Gross Profit *******;  **•** Medicis and Impax will each indemnify the other for third party claims arising fromtheir actions under the Distribution Agreement and breaches of representations and warranties; and  **•** such other terms as the parties may agree and as are commercially reasonable and usualand customary for agreements of such type.               2.2.3 If the parties do not agree upon the terms of the Distribution Agreement within sixty(60) days of the Effective Date, then either party may, by written notification to the other party,submit the matter to binding “baseball” arbitration to determine the terms of the DistributionAgreement as follows. Promptly following receipt of such notice, the parties shall meet anddiscuss in good faith and agree on an arbitrator to resolve the issue, which
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arbitrator shall be neutral and independent of both parties, shall have significant experience and expertise indistribution and supply agreements in the generic pharmaceutical industry, and shall have someexperience in mediating or arbitrating issues relating to such agreements. If the parties cannotagree on such arbitrator within thirty (30) days of request by a party for arbitration, then sucharbitrator shall be appointed by the American Arbitration Association, which arbitrator must meetthe foregoing criteria. Within fifteen (15) days after an arbitrator is selected (or appointed, asthe case may be), each party will deliver to both the arbitrator and the other party a detailedwritten proposal setting forth its proposed terms for the Distribution Agreement, which terms shallnot conflict with the terms set forth in Section 2.2.2 (the **“Proposed Terms”**of the party) and amemorandum (the **“Support Memorandum”**) in support thereof, not exceeding ten (10) pages in length.The parties will also provide the arbitrator a copy of this Agreement, as may be amended at suchtime. Within fifteen (15) days after receipt of the other party’s Proposed Terms and SupportMemorandum, each party may submit to the arbitrator (with a copy to the other party) a response tothe other party’s Support Memorandum, such response not exceeding five (5) pages in length.Neither party may have any other communications (either written or oral) with the arbitrator otherthan for the sole purpose of engaging the arbitrator or as expressly permitted in this Section2.2.3; provided that, the arbitrator may convene a hearing if the arbitrator so chooses to askquestions of the parties and hear oral argument and discussion regarding each party’s ProposedTerms. Within sixty (60) days after the arbitrator’s appointment, the arbitrator will select oneof the two Proposed Terms (without modification) provided by the parties that he or she believes ismost consistent with the intention underlying and agreed principles set forth in this Agreement andmost accurately reflects industry norms for a transaction of this type. The decision of thearbitrator shall be final, binding, and unappealable and the parties shall promptly enter into aDistribution Agreement having the terms set forth in the Proposed Terms selected by the arbitrator.For clarity, the arbitrator must select as the only method to determine the terms of theDistribution Agreement one of the two sets of Proposed Terms, and may not combine elements of bothProposed Terms or take any other action.          2.3 Grantbacks.               2.3.1 Impax hereby grants to Medicis a perpetual, royalty-free, fully-paid up,non-transferable (except as provided in Section 8.6), non-exclusive license (with the right togrant sublicenses through multiple tiers) under the Grantback Patents to make, have made, use,offer for sale, sell and import Products in the Territory.               2.3.2 Impax hereby grants to Medicis a perpetual, royalty-free, fully-paid up,non-transferable (except as provided in Section 8.6), non-exclusive license (with the right togrant sublicenses through multiple tiers) under the Solodyn Product Patents to make, have made,use, offer for sale, sell and import Solodyn Products in the Territory.          2.4 Validity of Patent Rights. Impax hereby admits that the following Patent Rightsclaims are valid and enforceable: (a) all claims that are in the patents listed on Exhibit A thatissued prior to the Effective Date (not taking into account any claim amendments filed, before, onor after the Effective Date, pursuant to a reexamination or reissuance proceeding) and (b) allclaims listed on Exhibit C from pending patent applications, as such claims were worded as of theEffective Date and as they may be modified during prosecution of the underlying applicationfollowing the Effective Date, but only to the extent they remain substantially similar.
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Impax hereby admits that the making, using, offering to sell, selling, and/or importation into the UnitedStates of Impax’s product that is to be sold pursuant to Impax’s ANDA #90-024 is covered by one ormore claims of United States Patent No. 5,908,838 (not taking into account any claim amendmentsfiled, before, on or after the Effective Date, pursuant to a reexamination or reissuanceproceeding) under 35 U.S.C. § 271. The foregoing admission shall be binding on Impax andadmissible against Impax in any dispute or litigation between the parties regarding the PatentRights, and Impax will not challenge any such admission. Impax shall not receive any rights underthis Agreement, and Medicis shall retain the sole right, to prepare, prosecute, maintain andenforce the Patent Rights.          2.5 No Implied Licenses. Except as explicitly set forth in this Agreement, neitherparty grants to the other party under its patents or other intellectual property any license,express or implied. Impax shall not use Medicis’ name or any Medicis trademarks (including withoutlimitation Solodyn®) in connection with the marketing, promotion or sale of any products withoutthe prior written consent of Medicis in each instance.          2.6 Releases. Impax has appealed the holding of the United States District Court forthe Northern District of California, Civil Action No. 3:2008cv00253 to the United States Court ofAppeals for the Federal Circuit, Appeal No. 2008-1373 (collectively, the “**Action**”), in which Impaxchallenges the district court’s dismissal of Impax’s declaratory judgment action regarding theinvalidity and noninfringement of certain of the Patent Rights. In consideration of the mutualcovenants herein and in the Joint Dismissal Agreement attached hereto as Exhibit D and incorporatedherein by reference Impax hereby releases and agrees to release Medicis from all claims arising outof the Action. Upon the Effective Date, Impax and Medicis shall cause to be completed, executedand filed with the Federal Circuit a stipulated dismissal with prejudice of the Action, in the formof the Joint Dismissal Agreement attached hereto as Exhibit D, and to seek entry of such order andjudgment by such Court.     3. FINANCIAL CONSIDERATIONS.          3.1 Profit Sharing.               3.1.1 With respect to the Existing Products, and subject to the terms and conditions of thisAgreement, commencing on the date Impax begins selling an Existing Product, within sixty (60) daysfollowing the end of each calendar quarter thereafter, Impax shall pay to Medicis *******of all GrossProfit accrued during such calendar quarter and arising from Net Sales of such Existing Productsduring such quarter. Medicis’ right to receive a share of the Gross Profit under this Section3.1.1 shall expire upon *******.               3.1.2 Impax shall not (a) have any obligation to pay any amounts pursuant to Section 3.1.1, or(b) be subject to the restrictions under Section 2.1.2, in each case if there is no Valid Claim inthe Territory at the time of sale of an Existing Product; provided, however, that if there is atthe time of such sale a pending patent application in the Patent Rights in the Territory with apublished claim which covers such Existing Product or its manufacture or use and a patentsubsequently issues in the Territory from such patent application that contains such claim or aclaim that is substantially similar to such claim, then Impax shall pay Medicis within thirty (30)days of receipt from Medicis of written notice of the issuance of such patent,
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an amount equal to *******. If there is no Valid Claim in the Territory and a patent subsequently issues in the Territoryfrom a patent application within the Patent Rights and there is a dispute between the partiesregarding whether at least one such subsequently issued claim covers the Existing Product or itsmanufacture or use then upon the submission of a written request of either party to the otherparty, such dispute shall be resolved exclusively by binding arbitration before a singlearbitrator, conducted in accordance with the rules of arbitration of the American ArbitrationAssociation for commercial disputes (the “Rules”), except to the extent that such Rules areinconsistent with this Agreement. Each party shall select one independent, neutral representative,and shall notify the other party of its selection of such representative within ten (10) businessdays after the written request for binding arbitration. The two (2) representatives selected bythe parties shall then mutually select, within twenty (20) business days, in accordance with theRules, an independent, neutral arbitrator who is admitted to practice before the United StatesPatent and Trademark office and has at least ten (10) years of experience as a patent attorney inthe biotechnology or pharmaceuticals field. The arbitrator shall resolve such dispute inaccordance with this Agreement and the substantive rules of law (but not the rules of procedure orconflicts of laws) that would be applied by a federal court sitting in Arizona, provided that Impaxshall have to demonstrate to the arbitrator by clear and convincing evidence that the ExistingProduct or its manufacture or use is not covered by at least one Valid Claim. The arbitrator shalluse best efforts to issue a final decision within ninety (90) days after being selected. The finaldecision of the arbitrator shall be final and binding upon the parties, solely for purposes ofdetermining Impax’s obligations under Section 2.1.2 and/or Impax’s obligations to pay royaltiesunder Section 3.1.1, but such decision shall have no force or effect on any other person inaccordance with 35 U.S.C. 294 or with respect to any products other than the Existing Products. IfImpax breaches its obligations under this Section or Section 2.1.2, Impax hereby agrees that in anysubsequent litigation between the parties Impax shall be subject to a rebuttable presumption ofwillful infringement. All negotiations pursuant to this Section 3.1.2 and the arbitrationproceeding and decision of the arbitrator shall be confidential, treated as a compromise andsettlement negotiation for purposes of applicable rules of evidence, including without limitation Rule 408 of the Federal Rules of Evidence. The parties agree that theyshall share equally the cost of the arbitration filing and hearing fees, and the cost of therepresentative and the arbitrator. Each party shall bear its own attorneys’ and expert fees andall associated costs and expenses. ***.               3.1.3 Each payment made under this Section 3.1 shall be accompanied by a written reportstating the number and description of all Existing Products sold in the Territory during therelevant calendar quarter; a detailed breakdown of the Cost of Sales associated therewith; thegross sales associated therewith; the calculation of Net Sales thereon, including withoutlimitation the amount of any deduction provided for in the definition of Net Sales; and thecalculation of Gross Profits therefrom.          3.2 Taxes. Impax shall be responsible for and may withhold from payments made toMedicis under this Agreement any taxes required to be withheld by Impax under applicable law.Accordingly, if any such taxes are levied on such payments due hereunder (“**Withholding Taxes**”),Impax shall (i) deduct the Withholding Taxes from the payment amount, (ii) pay all applicableWithholding Taxes to the proper taxing authority, and (iii) send evidence of the obligationtogether with proof of tax payment to Medicis within sixty (60) days following that tax payment.
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          3.3 Audit Rights. On no less than five (5) business days notice from Medicis, Impaxshall make all such records, books of account, information and data concerning (i) its sales ofExisting Products pursuant to this Agreement; and (ii) its manufacture of any Existing Products, or(iii) to the extent in its possession, the manufacture of Existing Products on behalf of Impax byits Third Party contract manufacturer, in each case available for inspection during normal businesshours by an independent auditor selected by Medicis and reasonably acceptable to Impax for thepurpose of an audit to determine the accuracy of the reports delivered and amounts paid by Impaxpursuant to Section 3.1; provided that Medicis may not request such inspection more than once inany calendar year unless a discrepancy has been identified by Medicis and such audit shall belimited to records, books of account, information and data pertaining to payments made pursuant toSection 3.1 during the preceding three years. Upon reasonable belief of discrepancy or dispute,Medicis’ external auditors shall be entitled to take copies or extracts from such records, books ofaccount, information and data (but only to the extent related to the contractual obligations setout in this Agreement) during any review or audit. Prior to the initiation of any audit pursuantto this Section 3.3, the external auditor shall sign a confidentiality agreement with Impaxproviding that, as between the external auditor and Impax, such records, books of account,information and data shall be treated as Confidential Information of Impax but may be disclosed toMedicis solely to the extent necessary to document a discrepancy in any reports delivered andamounts paid by Impax pursuant to Section 3.1. Medicis shall be solely responsible for its costsin making any such audit, unless Medicis identifies a discrepancy in favor of Impax in thecalculation of the share of Gross Profit paid to Medicis under this Agreement in any calendar yearfrom those properly payable for that calendar year of five percent (5%) or greater, in which eventImpax shall be solely responsible for the reasonable cost of such audit and pay Medicis anyunderpayment. All information disclosed by Impax pursuant to this Section shall be deemedConfidential Information of Impax.     4. TERM AND TERMINATION.          4.1 Term. Subject to Section 4.2, this Agreement shall expire on the expiration ofthe later to occur of (a) the last to expire of the Patent Rights and (b) the expiration of allpayment obligations of Impax to Medicis hereunder; provided, however, that if there are no ValidClaims existing in the Territory, but there are at such time pending patent applications in thePatent Rights in the Territory, then subject to the terms and conditions of this Agreement, theterm of this Agreement shall continue for the pendency of such pending applications. Theexpiration of this Agreement shall not cause the expiration of the Distribution Agreement and viceversa.          4.2 Termination for Cause. Either party may terminate this Agreement upon or afterthe material breach of any material provision of this Agreement by the other party if the otherparty has not cured such breach within thirty (30) days after receipt of express written noticethereof by the non-breaching party. Any termination of this Agreement by Medicis for materialuncured breach by Impax shall give rise to a right of Medicis also to terminate the DistributionAgreement; however, any breach of the Distribution Agreement will not be automatically deemed abreach of this Agreement.          4.3 Effect of Expiration or Termination. Expiration or termination of this Agreementshall not relieve the parties of any obligation accruing prior to such expiration or
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termination, and the provisions of Sections 2.3, 2.4, 2.6, 3.3 (until expiration of the three (3) year periodset forth therein), 4.3, 5, 7 and 8 shall survive the expiration or termination of this Agreement.     5. CONFIDENTIALITY.           5.1 Confidentiality. Until the last to expire of this Agreement, the JointDevelopment Agreement or the Distribution Agreement, and for a period of five (5) years followingthe expiration or earlier termination hereof or thereof, except with respect to any ConfidentialInformation constituting a trade secret in which case the receiving party’s obligation continues inperpetuity, provided such receiving party has been informed as to the status of such ConfidentialInformation as a trade secret, each party shall maintain in confidence all Confidential Informationdisclosed by the other party (including all Confidential Information disclosed under theConfidentiality Agreement), and shall not use, grant the use of or disclose to any Third Party theConfidential Information of the other party other than as expressly permitted hereby. Each partyshall notify the other promptly upon discovery of any unauthorized use or disclosure of the otherparty’s Confidential Information.          5.2 Permitted Disclosures. Either party may disclose Confidential Information of thedisclosing party (a) on a need-to-know basis, to such party’s directors, officers and employees tothe extent such disclosure is reasonably necessary in connection with such party’s activities asexpressly authorized by this Agreement, and (b) to those agents and consultants, and contractmanufacturers who need to know such information to accomplish the purposes of this Agreement(collectively, “**Permitted Recipients**”); provided such Permitted Recipients are bound to maintainsuch Confidential Information in confidence at least to the same extent as set forth in Section5.1.          5.3 Litigation and Governmental Disclosure. Each party may disclose ConfidentialInformation of the other party to the extent such disclosure is reasonably necessary forprosecuting or defending litigation, complying with a court order or applicable law, governmentalregulations or investigation, provided that if a party is required by law or regulation to make anysuch disclosure of the other party’s Confidential Information it will give reasonable advancenotice to the other party of such disclosure requirement and will use good faith efforts to assistsuch other party to secure a protective order or confidential treatment of such ConfidentialInformation required to be disclosed.          5.4 Limitation of Disclosure. The parties agree that, except as otherwise may berequired by applicable laws, regulations, rules or orders, including without limitation the rulesand regulations promulgated by the United States Securities and Exchange Commission, or anyregulations of any national securities exchange, and except as may be authorized in Section 5.5, noinformation concerning this Agreement and the transactions contemplated herein shall be made publicby either party without the prior written consent of the other.          5.5 Publicity. Neither party shall make any publicity releases, interviews or othernon-confidential dissemination of information concerning this Agreement or its terms, or eitherparty’s performance hereunder, to communication media, financial analysts or others without theprior written approval of the other party, which approval shall not be unreasonably
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withheld, delayed or conditioned. Notwithstanding anything to the contrary in this Agreement, the partiesunderstand and agree that either party, may, if so required, disclose some or all of theinformation included in this Agreement or other Confidential Information of the other party (a) inorder to comply with its obligations under the law, including the United States Securities Act of1933 and the United States Securities Exchange Act of 1934; (b) in order to comply with the listingstandards or agreements of any national or international securities exchange or The NASDAQ StockMarket or New York Stock Exchange or other similar laws of a governmental authority; (c) to respondto an inquiry of a governmental authority or regulatory authority as required by law; or (d) in ajudicial, administrative or arbitration proceeding. In any such event the party making suchdisclosure shall (i) provide the other party with as much advance notice as reasonably practicableof the required disclosure, (ii) cooperate with the other party in any attempt to prevent or limitthe disclosure, and (iii) limit any disclosure to the specific purpose at issue. In connectionwith any filing of a copy of this Agreement with the Securities and Exchange Commission, the filingparty shall endeavor to obtain confidential treatment of economic and trade secret information, andshall keep the other party informed as the planned filing (including, but not limited to providingthe other party with the proposed filing reasonably in advance of making the planned filing) andconsider the requests of the other party regarding such confidential treatment.     6. REPRESENTATIONS AND WARRANTIES.          6.1 Representations.               6.1.1 Each party hereby represents and warrants to the other party that (a) the personexecuting this Agreement is authorized to execute this Agreement; (b) this Agreement is legal andvalid and the obligations binding upon such party are enforceable by their terms; and (c) theexecution, delivery and performance of this Agreement does not conflict with any agreement, instrument or understanding, oral or written, to which such party may bebound, nor violate any law or regulation of any court, governmental body or administrative or otheragency having jurisdiction over it.               6.1.2 Medicis hereby represents and warrants to Impax that, as of the Effective Date, *******.          6.2 Compliance with Law. Impax shall comply with all applicable laws and regulationswith respect to obtaining regulatory approval for the sale of Existing Products and itsmanufacture, sale and commercialization of Existing Products.          6.3 Disclaimer of Warranties. Except for those warranties set forth in Section 6.1,neither party makes any warranty, written, oral, express or implied, with respect to thisAgreement. ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, THE IMPLIEDWARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE AND NONINFRINGEMENT HEREBY AREDISCLAIMED BY BOTH PARTIES.          6.4 Limitation of Liability. WITH THE EXCEPTION OF DAMAGES RESULTING FROM A PARTY’SBREACH OF ITS CONFIDENTIALITY OBLIGATIONS
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UNDER THIS AGREEMENT OR ITS OBLIGATIONS UNDER SECTION 7 (INDEMNIFICATION), OR A BREACH BY IMPAX OF SECTION 2.1.2 OR SECTION 2.4, UNDER NO CIRCUMSTANCESSHALL EITHER PARTY BE LIABLE FOR LOSS OF USE OR PROFITS OR OTHER COLLATERAL, SPECIAL,CONSEQUENTIAL, INCIDENTAL OR PUNITIVE DAMAGES IN CONNECTION WITH THIS AGREEMENT, WHETHER SUCHCLAIMS ARE FOUNDED IN TORT OR CONTRACT.          6.5 Equitable Relief. Impax acknowledges and agrees that the obligations andundertakings of Impax pursuant to Sections 2.1.2 and 2.4 of this Agreement are reasonable andnecessary to protect the legitimate interests of Medicis, that Medicis would not have entered intothis Agreement in the absence of such provisions, and that Impax’s breach or threatened breach orfailure to comply with such Sections 2.1.2 or 2.4 shall cause Medicis significant and irreparableharm, the amount of which shall be extremely difficult to estimate and ascertain, and for whichmoney damages shall not be adequate. Impax further acknowledges and agrees that Medicis shall havethe right to apply to any court of competent jurisdiction for an injunction order restraining anybreach or threatened breach of Sections 2.1.2 or 2.4 of this Agreement and specifically enforcingthe terms and provisions of such Sections of this Agreement, without the necessity of posting anybond or security or giving Impax an opportunity to cure, in addition to seeking any other remedyavailable to Medicis in law or equity. Impax agrees that it shall not challenge any of theforegoing acknowledgements and agreements concerning injunctive relief in any proceeding brought byMedicis.     7. INDEMNIFICATION.          7.1 Impax Indemnification. Impax shall indemnify, defend and hold harmless Medicis,its directors, managers, members, officers, employees, authorized subcontractors and agents(collectively the “**Medicis Indemnified Parties**”) from and against any and all liabilities, obligations, penalties, judgments, disbursements of any kind and nature, losses, damages,costs and expenses (including, without limitation, reasonable attorney’s fees and costs)(collectively, **“Losses”**) incurred as a result of any claims, demands, actions or other proceedingsby a Third Party against an Indemnified Party to the extent arising out of (a) Impax’s manufactureor sale of any Existing Product pursuant to this Agreement; or (b) Impax’s breach of anyrepresentation, warranty or covenant under this Agreement, except to the extent that such Lossesarise out of Medicis’ breach of any representation, warranty or covenant under this Agreement.          7.2 Medicis Indemnification. Medicis shall indemnify, defend and hold harmless Impax,its directors, managers, members, officers, employees, authorized subcontractors and agents(collectively the “**Impax Indemnified Parties**”) from and against any and all Losses incurred as aresult of any claims, demands, actions or other proceedings by a Third Party against an IndemnifiedParty to the extent arising out of Medicis’ breach of any representation, warranty or covenantunder this Agreement, except to the extent that such Losses arise out of Impax’s breach of anyrepresentation, warranty or covenant under this Agreement.          7.3 Obligations. A party which intends to claim indemnification under this Section 7(the **“Indemnified Party”**) shall promptly notify the other party (the **“Indemnifying Party”**) inwriting of any claim, demand, action, or other proceeding in respect of which the Indemnified Partyintends to claim such indemnification; provided, however, that failure to
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provide such notice within a reasonable period of time shall not relieve the Indemnifying Party of any of itsobligations hereunder except to the extent the Indemnifying Party is prejudiced by such failure.The Indemnified Party shall permit the Indemnifying Party, at its discretion, to settle any suchaction, claim or other matter. Notwithstanding the foregoing, the Indemnifying Party shall notenter into any settlement that would adversely affect the Indemnified Party’s rights hereunder, orimpose any obligations on the Indemnified Party in addition to those set forth herein, in order forit to exercise such rights, without the Indemnified Party’s prior written consent, which shall notbe unreasonably withheld or delayed. No such action, claim or other matter shall be settledwithout the prior written consent of the Indemnifying Party, which shall not be unreasonablywithheld or delayed. The Indemnified Party shall reasonably cooperate with the Indemnifying Partyand its legal representatives in the investigation and defense of any claim, demand, action, orother proceeding covered by the indemnification obligations of this Section 7. The IndemnifiedParty shall have the right, but not the obligation, to be represented in such defense by counsel ofits own selection and at its own expense.     8. GENERAL PROVISIONS.          8.1 Notices. All notices hereunder shall be delivered by facsimile (confirmed byovernight delivery), or by overnight delivery with a reputable overnight delivery service, to thefollowing address of the respective parties:             If to Medicis: Medicis Pharmaceutical Corporation7720 North Dobson RoadScottsdale, Arizona 85256Attn: Chief Executive OfficerFacsimile: 480-291-5163             with a copy to: Medicis Pharmaceutical Corporation7720 North Dobson RoadScottsdale, Arizona 85256Attn: General CounselFacsimile: 480-291-5163             If to Impax: Impax Laboratories, Inc.30831 Huntwood AvenueHayward, California 94544Attn: President, Generics DivisionFacsimile: 510-471-1595             With a copy to: Impax Laboratories, Inc.30831 Huntwood AvenueHayward, California 94544Attn: Legal DepartmentFacsimile: 510-476-2092     Notices shall be effective on the day of receipt. A party may change its address listed aboveby notice to the other party given in accordance with this Section 8.1.
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          8.2 Entire Agreement. The parties hereto acknowledge that this Agreement sets forththe entire agreement and understanding of the parties and supersedes all prior written or oralagreements or understandings with respect to the subject matter hereof. No modification of any ofthe terms of this Agreement, or any amendments thereto, shall be deemed to be valid unless inwriting and signed by an authorized agent or representative of both parties hereto. No course ofdealing or usage of trade shall be used to modify the terms and conditions herein. This Agreementshall be binding on each of Impax and Medicis and their respective permitted successors andassigns.          8.3 Bankruptcy. All rights granted under this Agreement by Medicis to Impax are andshall be deemed to be, for purposes of Section 365(n) of the U.S. Bankruptcy Code, licenses ofrights to “intellectual property” as defined under Section 101(52) of the US. Bankruptcy Code. Theparties agree that Impax, as a licensee of such rights under this Agreement, shall retain and mayfully exercise all of its rights and elections under the U.S. Bankruptcy Code, subject toperformance by Impax of its pre-existing obligations under this Agreement.          8.4 Waiver. None of the provisions of this Agreement (including the Exhibits hereto)shall be considered waived by any party hereto unless such waiver is agreed to, in writing, byauthorized agents of such party. The failure of a party to insist upon strict conformance to anyof the terms and conditions hereof, or failure or delay to exercise any rights provided herein orby law shall not be deemed a waiver of any rights of any party hereto.          8.5 Obligations to Third Parties. Each party warrants and represents that thisAgreement does not conflict with any contractual obligations, expressed or implied, undertaken withany Third Party.          8.6 Assignment. Neither party shall assign this Agreement or any part hereof or anyinterest herein (whether by operation of law or otherwise) to any Third Party (or use anysubcontractor) without the written approval of the other party; provided, however, that eitherparty may assign this Agreement without such consent (i) to any Affiliate; and (ii) in the case ofa merger, consolidation, change in control or sale of all or substantially all of the assets of theRelevant Business Unit of the party seeking such assignment or transfer and such transactionrelates to the business or assets covered by this Agreement and the resulting entity assumes all ofthe obligations under this Agreement. For the purposes of this Section 8.6, the **“Relevant BusinessUnit”**shall mean, with respect to Impax, the generics division of Impax, and with respect toMedicis, the medical dermatology division of Medicis. No assignment shall be valid unless thepermitted assignee(s) assumes all obligations of its assignor under this Agreement. No assignmentshall relieve any party of responsibility for the performance of its obligations hereunder. Anypurported assignment in violation of this Section 8.6 shall be void.          8.7 Independent Contractor. Impax and Medicis are acting under this Agreement asindependent contractors and neither shall be considered an agent of, or joint venturer with, theother. Unless otherwise provided herein to the contrary, each party shall furnish all expertise,labor, supervision, machining and equipment necessary for the performance of its obligationshereunder and shall obtain and maintain all building and other permits and licenses required bypublic authorities.
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          8.8 Governing Law. In any action brought regarding the validity, construction andenforcement of this Agreement, it shall be governed in all respects by the laws of the State ofArizona, without regard to the principles of conflicts of laws. The federal and state courts inthe State of Arizona shall have jurisdiction over the parties hereto in all matters arisinghereunder (except for a matter addressed in Section 2.2.3 or 3.1.2) and the parties hereto agreethat the venue with respect to such matters will be a state or federal court in the State ofArizona.          8.9 Severability. If any term or provision of this Agreement shall for any reason beheld invalid, illegal or unenforceable in any respect, such invalidity, illegality orunenforceability shall not affect any other term or provision hereof, and this Agreement shall beinterpreted and construed as if such term or provision, to the extent the same shall have been heldto be invalid, illegal or unenforceable, had never been contained herein.          8.10 Headings, Interpretation. The headings used in this Agreement are forconvenience only and are not part of this Agreement.          8.11 Counterparts. The Agreement may be executed in two or more counterparts, each ofwhich shall be deemed an original, but all of which together shall constitute one and the sameinstrument.*[Remainder of this page intentionally blank]*
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IN WITNESS WHEREOF, the parties hereto have each caused this Agreement to be executed by theirduly-authorized representatives effective as of the Effective Date.               IMPAX LABORATORIES, INC.   MEDICIS PHARMACEUTICAL CORPORATION                 By:     By:                    Name:      Name:                     Title:      Title:                   
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CONFIDENTIAL