Document:

Exhibit 10.7

 

*** [Portions of this exhibit have been omitted pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. The omissions have been indicated with asterisks (“***”), and the omitted text has been filed separately with the Commission.]

 

DATED 29 JUNE 2011

 

 

 

MEDA PHARMA SARL

 

 

- and -

 

 

VALEANT INTERNATIONAL (BARBADOS) SRL

 

 

	
 
    	
 
    	
 
    
	
 
    	
 

LICENCE   AGREEMENT

 
    	
 
    
	
 
    	
 
    	
 
    

 

 

THIS LICENSE AGREEMENT is dated as of June 29, 2011 (the “Effective Date”)

 

BETWEEN:

 

(1)                                           MEDA PHARMA SARL a company incorporated in Luxembourg, with a principal place of business at 46 Avenue John Fitzgerald Kennedy, L-1855 Luxembourg, Grand-Duchy of Luxembourg (“Meda”); and

 

(2)                                           VALEANT INTERNATIONAL (BARBADOS) SRL an international society with restricted liability established under the laws of Barbados and having its principal place of business at Welches, Christ Church, Barbados, West Indies BB17154 (“Valeant”).

 

Meda and Valeant are referred to from time to time in this Agreement individually as a “Party” or collectively as the “Parties”.

 

RECITALS

 

(A)                               Meda owns or is the licensee of certain proprietary rights, titles and interests in certain patents and patents applications know-how, trade marks and clinical data relating to: (i) topical formulations for the prevention and/or treatment of any herpes indication consisting of a combination of acyclovir and hydrocortisone as active ingredients (“Xerese”) and (ii) topical formulations of pimecrolimus  and any metabolite, prodrug, hydrate, solvate, conjugate, salt, crystal form, ester, enantiomer, stereoisomer or polymorph of pimecrolimus (“Elidel”).

 

(B)                               Valeant wishes to commercialise products using Meda’s Xerese and Elidel proprietary rights.

 

(C)                               Meda wishes to grant, and Valeant wishes to receive, a licence to commercialise products using Meda’s Xerese and Elidel proprietary rights pursuant to the terms of this licence, including to the Licensed Know How, Licensed Clinical Data and Licensed Trade Marks, which the Parties acknowledge were developed at great expense and have significant value.

 

(D)                               ***

 

NOW THEREFORE, in consideration of the following mutual promises and obligations, and for other good and valuable consideration the adequacy and sufficiency of which are hereby acknowledged, the Parties agree as follows:

 

1.                                      DEFINITIONS

 

In this Agreement and in the Schedules to this Agreement the following capitalised terms, whether used in the singular or plural, shall have the meanings set forth below:

 

1.1                                ***

 

 

1.2                                 ***

 

1.3                                 ***

 

1.4                                 ***

 

1.5                                 ***

 

1.6                                 “Adverse Event” means any untoward medical occurrence in a patient to whom a medicinal product has been administered and which does not necessarily have to have a causal relationship with the administration of such medicinal product and includes without limitation any unfavourable and unintended sign (for example, an abnormal laboratory finding), symptom, or disease temporally associated with the use of a medicinal product, whether or not considered related to this medicinal product together, in relation to pharmacovigilance standards, policies, and procedures, with all medical device events, (including incidents, near-incidents, serious injuries, malfunctions and failures) or untoward medical events and events such as suicide or aggressive behaviour threats, overdose, abuse, misuse, medication errors and other events that may reasonably be related to biomedical research.

 

1.7                                 “Affected Party” shall have the meaning set out in Clause 23.1.

 

1.8                                 “Affiliate” means, with respect to a given entity, any person, corporation, partnership or other entity, that Controls, is Controlled by, or is under common Control with such entity.

 

1.9                                 “Agreed Ratio” shall have the meaning set out in Clause 4.4.2.

 

1.10                           “Agreement” means this agreement and all schedules as amended in accordance with the provisions of this Agreement.

 

1.11                           “Business Day” means a day other than a Saturday, Sunday or a day on which banks are not open for business in Sweden or Barbados.

 

1.12                           “Calendar Year” means a calendar year commencing on the 1st of January and ending on the 31st of December.

 

1.13                           “Commercialise” shall have the meaning set out in Clause 21.1.

 

1.14                           “Commercially Reasonable Efforts” means the degree of effort and resources used by international pharmaceutical businesses with respect to pharmaceutical products of similar commercial potential, maturity, market size and profitability, taking into account product safety and efficacy, development and Commercialisation costs and risks, market competition, the proprietary position of the product and other technical, legal, scientific, medical or commercial factors that have direct relevance to Licensed Products.

 

1.15                           ***

 

1.16                          “Confidential Information” shall have the meaning set out in Clause 17.1.

 

3

 

1.17                           “Consent” shall have the meaning set out in Clause 5.6.

 

1.18                           “Control,” “Controls,” “Controlled” or “Controlling” shall mean;

 

1.1.1                         in respect of any partnership, corporation or other entity, the direct or indirect ownership of more than fifty percent (50%) of the outstanding shares or other voting rights of the subject entity having the power to vote on or direct the affairs of the entity, (or such lesser percentage which is the maximum allowed to be owned by a foreign corporation in a particular jurisdiction).  Any other relationship which in fact results in actual control over the management, business and affairs of an entity shall also be deemed to constitute Control; and

 

1.1.2                         in respect of any Patent Rights, Know How or other Intellectual Property Rights whether owned by or licensed to an entity, the possession of the legal right and ability to grant the respective licenses or sublicenses as provided in this Agreement without violating the terms of any agreement or other arrangement with any Third Party;

 

and the expressions Controlling and Controlled by shall be interpreted accordingly.

 

1.19                           ***

 

1.20                           “Defaulting Party” shall have the meaning set out in Clause 15.3.

 

1.21                           “Development Plan” shall have the meaning set out in Clause 4.1.

 

1.22                           “Disclosing Party” shall have the meaning set out in Clause 17.1.

 

1.23                            “Effective Date” shall have the meaning set out at the top of this Agreement.

 

1.24                           “Elidel” shall have the meaning set out in the recitals to this Agreement.

 

1.24.1                  “Elidel Drug Substance” means the active ingredient pimecrolimus having the chemical  structure set forth on Schedule 10  and any metabolite, prodrug, hydrate,  solvate, conjugate, salt, crystal form, ester, enantiomer, stereoisomer or polymorph of the  same.

 

1.25                           “Elidel Field” means all dermatological applications.

 

1.26                           “Elidel Licensed Clinical Data” means clinical data that is Controlled by Meda or its Affiliates at the Effective Date and/or during the Term that relates to Elidel Licensed Products.

 

1.27                           “Elidel Licensed Know How” means Know How Controlled by Meda at the Effective Date and/or that is Controlled by Meda during the Term that is necessary or useful for the importation, exportation, research, development, distribution, marketing, offer for sale, use, sale or Commercialisation of an Elidel Licensed Product in the Elidel Territory.

 

1.28                           “Elidel Licensed Patents” means those Patent Rights set out in Schedule 1 Part A and

 

4

 

any other Patent Rights acquired or Controlled by Meda during the Term that would be infringed by the research, development, marketing, or sale of Elidel Licensed Product in the Elidel Territory.

 

1.29                           “Elidel Licensed Products” means a topical formulation of pimecrolimus  and any metabolite, prodrug, hydrate, solvate, conjugate, salt, crystal form, ester, enantiomer, stereoisomer or polymorph of pimecrolimus including Elidel Products.

 

1.30                           “Elidel Products” mean those products as set out in Schedule 2 Part A.

 

1.31                           “Elidel Supply Agreement” means the Supply Agreement entered into between Meda AB and Valeant of even date herewith for the supply of Elidel Licensed Products by Meda AB to Valeant.

 

1.32                           “Elidel Territory” means the United States (including Puerto Rico), Canada and Mexico.

 

1.33                           “Elidel Trade Marks” means those trade marks listed in  Schedule 3 Part A.

 

1.34                           “Encumbrance” means any encumbrance, claim, charge, hypothecation, lien, mortgage, pledge, option, license, right of first refusal or security interest of any kind.

 

1.35                           “FDA” means the United States Food and Drug Administration, or any successor agency.

 

1.36                           “First Commercial Sale” shall mean, with respect to any Licensed Product, the first sale for end use or consumption of such Licensed Product in the Xerese Territory or Elidel Territory, as the case may be, excluding, however, any sale or other distribution for use in a clinical trial or prior to grant of a Marketing Authorization in the applicable country in the Xerese Territory or Elidel Territory, as the case may be.

 

1.37                           “Force Majeure Event” shall have the meaning set out in Clause 23.1.

 

1.38                            “Good Manufacturing Practice” means the current and applicable laws and guidelines on Good Manufacturing Practice for the manufacture of pharmaceutical products for human use in force applicable to the Parties or the manufacture of the Licensed Products, including, without limitation, the International Conference on Harmonisation of Technical Requirements for Registration of Pharmaceuticals For Human Use (ICH) Guideline Q7A Good Manufacturing Practice for Active Pharmaceutical Ingredients, European Directive 2003/94/EC (and any legislation implementing such Directive) and any further guidance as published by the European Commission in Volume IV of “The rules governing medicinal products in the European Community” (each as may be amended from time to time), the current and applicable directives and guidelines on current good manufacturing practices and standards promulgated or endorsed by the FDA, including the U.S. Current Good Manufacturing Practices, 21 C.F.R. Parts 210 and 211, Part C, Division 2 of the Food and Drug Regulations, and the principles detailed in and the Good Manufacturing Guidelines published by Health Canada, in each case as they may be updated from time to time.

 

5

 

1.39                           “Governmental Entity” means any court, agency, authority, department, legislative or regulatory body or other instrumentality of any government or country or of any national, federal, state, provincial, regional, county, city or other political subdivision of any such government or any supranational organization of which any such country is a member or quasi-governmental authority or self-regulatory organization of competent authority.

 

1.40                           “Health Canada” shall mean Health Canada or any successor agency.

 

1.41                           “Improvements” means all Know-How, inventions, improvements or discoveries (whether patentable or not) which are generated by either or both Parties and/or their Affiliates in respect of Licensed Products during the Term of this Agreement.

 

1.42                           “IND” means an investigational new drug application filed with a Regulatory Authority in the Elidel Territory or Xerese Territory as a requirement for the initiation of human clinical trials for a Licensed Product in the Elidel Territory or Xerese Territory, as applicable, including all supplements and amendments that may be filed therewith.

 

1.43                           “Indemnified Party” shall have the meaning set out in Clause 19.4.

 

1.44                           “Indemnifying Party” shall have the meaning set out in Clause 19.4.

 

1.45                           “Insolvent Party” shall have the meaning set out in Clause 15.4.

 

1.46                           “Intellectual Property Rights” means Patent Rights, utility models, and other like forms of protection, copyrights, database rights, rights in databases, trade names, trade or service marks, domain names, design rights, including any applications registration for the foregoing and all other similar proprietary rights as may exist anywhere in the world whether registered or unregistered.

 

1.47                           “Interim Distribution Agreement” means the Interim Distribution Agreement previously entered into between the Parties on May 11, 2011, as amended.

 

1.48                           “JSC” shall have the meaning set out in Clause 3.1.

 

1.49                           “Know How” means unpatented technical and other information, including clinical data, of a Party that is not in the public domain, and concerning Licensed Products, including, ideas, concepts, inventions, discoveries, data, formulae, specifications, information relating to materials, models, assays, analytical processes and SOPs, materials relating to assays, analytical systems or processes, procedures for experiments and tests and results of experimentation and testing, results of research and development including laboratory records, data relating to the pharmacology of products (including data relating to toxicology, bioavailability, metabolism, metabolites and pharmacokinetics), clinical trial data, case report forms, data analyses, reports or summaries and information contained in submissions to and information from ethical committees and Regulatory Authorities.  The fact that a part of a compilation of data is in the public domain shall not prevent the compilation of data as such, or any one or more of the other elements of the compilation from being Know How.

 

6

 

1.50                           “Knowledge” means, with respect to Meda, the actual knowledge of any of the employees of Meda or its Affiliates set out in Schedule 6.

 

1.51                           “Licensed Clinical Data” means the Elidel Licensed Clinical Data and the Xerese Licensed Clinical Data.

 

1.52                           “Licensed Intellectual Property” means the Licensed Patents and Licensed Trade Marks.

 

1.53                           “Licensed Know How” means the Elidel Licensed Know How and the Xerese Licensed Know How.

 

1.54                           “Licensed Patents” means Elidel Licensed Patents and the Xerese Licensed Patents.

 

1.55                           “Licensed Products” means Elidel Licensed Products and Xerese Licensed Products.

 

1.56                           “Licensed Trade Marks” means Elidel Trade Marks and Xerese Trade Marks.

 

1.57                           “Loss” shall have the meaning set out in Clause 19.2.

 

1.58                           “Marketing Authorisation” means any approval required from the relevant Regulatory Authority or Authorities to distribute, promote, market and sell Licensed Products in the Elidel Territory or Xerese Territory, as applicable.

 

1.59                           “Marketing Services” means the marketing services as further described in Schedule 4 that the Parties have agreed Meda shall provide in respect of Xerese Licensed Products.

 

1.60                           “Meda” shall have the meaning set out at the top of this Agreement.

 

1.61                           “Meda Indemnified Party” shall have the meaning set out in Clause 19.2.

 

1.62                           ***

 

1.63                           ***

 

1.64                           “Members” shall have the meaning set out in Clause 3.2.

 

1.65                           ***

 

 

1.66                           “Non-Assignable Agreement” shall have the meaning set out in Clause 5.6.

 

1.67                           ***

 

1.68                           ***

 

1.69                          ***

 

7

 

1.70                           ***

 

1.71                           ***

 

1.72                           ***

 

1.73                           “Party” and “Parties” shall have the meanings set out at the top of this Agreement.

 

1.74                           “Patent Rights”  means any patent applications, patents and any foreign counterparts thereof, including, without limitation, all provisional applications, divisions, renewals, continuations, continuations-in-part, extensions, reissues, re-examinations, substitutions, confirmations, registrations, revalidations and additions of or to them, as well as any supplementary protection certificates or patent term extension, or like form of protection, whether on file with the appropriate governmental agencies  as of the Effective Date or at any time during the Term of this Agreement.

 

1.75                           “Permitted Encumbrance” shall have the meaning set forth in the ***.

 

1.76                           “Pharmacovigilance Agreement” means the pharmacovigilance agreement(s) for the Licensed Products to be entered into pursuant to Clause 8.

 

1.77                           “Quarter” means each period of three consecutive calendar months commencing on 1 January, 1 April, 1 July and 1 October of the relevant calendar year.

 

1.78                           “Receiving Party” shall have the meaning set out in Clause 17.1.

 

1.79                           “Regulatory Approval” means an approval, including, without limitation, a Marketing Authorisation, granted by a Regulatory Authority.

 

1.80                           “Regulatory Authority” means any national (e.g., FDA), supranational (e.g., the European Commission, the Council of the European Union, the European Medicines Agency), regional, state or local regulatory agency, department, bureau, commission, council or other governmental entity in a given country or region responsible for granting and administering any governmental approvals (including as to price) necessary or desirable to distribute, promote, market and sell pharmaceutical products, or for pharmacovigilance of such products, in such country.

 

1.81                           ***

 

1.82                           ***

 

1.83                           “Saleable Condition” means fit for sale and, based on sale in the normal course, shall have at least *** of remaining shelf life at the time of commercial sale by or on behalf of Valeant (in the case of Clause 9.4) and Meda (in the case of Clause 16.1.7) to a Third Party.

 

8

 

1.84                           “Sales and Marketing Plan” means the sales and marketing plan to be created pursuant to Clause 6.2.

 

1.85                           “Term” shall have the meaning set out in Clause 15.1.

 

1.86                           ***

 

1.87                           “Terminating Party” shall have the meaning set out in Clause 15.3.

 

1.88                           “Territory” means the Elidel Territory or the Xerese Territory, as applicable.

 

1.89                           “Third Party” means any entity or person other than the Parties or their respective Affiliates.

 

1.90                           “Third Party Agreements” means those contracts, licenses and other agreements between Meda or any of its Affiliates, on the one hand, and Third Parties, on the other hand, that are listed on Schedule 7.

 

1.91                           “Termination Date” means the effective date of termination of this Agreement pursuant to Clause 15.

 

1.92                           “Trial Assigned Agreements” shall mean the agreements as set out in Schedule 9 Part B.

 

1.93                           ***

 

1.94                           “United States” means the United States of America, including the District of Columbia.

 

1.95                           “US GAAP” means generally accepted accounting principles in the United States, as in effect from time to time.

 

1.96                           “Valeant” shall have the meaning set out at the top of this Agreement.

 

1.97                           “Valeant Indemnified Party” shall have the meaning set out in Clause 19.3.

 

1.98                           ***

 

1.99                           “Xerese” shall have the meaning set out in the recitals to this Agreement.

 

1.100                     “Xerese Licensed Clinical Data” means clinical data that is Controlled by Meda or its Affiliates at the Effective Date and/or during the Term that relates to Xerese Licensed Products.

 

1.101                     “Xerese Field” means all applications for the prevention and treatment of a herpes indication.

 

1.102                     ***

 

1.103                     “Xerese Interim Distribution Period” shall have the meaning set out in Clause 6.5.2.

 

9

 

1.104                     “Xerese Licensed Know How” means Know How Controlled by Meda at the Effective Date and/or that is Controlled by Meda during the Term that is necessary or useful for the importation, exportation, research, development, distribution, marketing, offer for sale, use, sale or Commercialisation of a Xerese Licensed Product in the Xerese Territory.

 

1.105                     “Xerese Licensed Products” means topical formulations for the prevention and/or treatment of any herpes indication consisting of a combination of acyclovir and hydrocortisone as active ingredients including Xerese Products.

 

1.106                     “Xerese Licensed Patents” means those Patent Rights set out in Schedule 1 Part B and any other Patent Rights acquired or Controlled by Meda during the Term that would be infringed by the research, development, marketing, or sale of Xerese Licensed Product in the Xerese Territory.

 

1.107                     “Xerese Products” means those products as set out in Schedule 2 Part B.

 

1.108                     “Xerese Supply Agreement” shall have the meaning set out in Clause 9.1.

 

1.109                     “Xerese Territory” means the United States, Canada and Mexico.

 

1.110                     “Xerese Trade Marks” means those trade marks listed in  Schedule 3 Part B.

 

1.111                     This Agreement shall be interpreted and construed pursuant to the following rules of interpretation and construction:

 

1.111.1                                    all references to a particular clause or schedule shall be a reference to that clause or schedule in or to this Agreement as it may be amended from time to time pursuant to this Agreement;

 

1.111.2                                    the headings are inserted for convenience only and shall be ignored in construing this Agreement;

 

1.111.3                                    words importing the masculine gender shall include the feminine;

 

1.111.4                                    words denoting persons shall include any individual, partnership, company, corporation, joint venture, trust association, organisation or other entity, in each case whether or not having separate legal personality;

 

1.111.5                                    the words “include”, “included”, “including” and “in particular” or any similar expression are to be construed as illustrative and without limitation to the generality of the preceding words; and

 

1.111.6                                    reference to any statute or regulation includes any modification or re-enactment of that statute or regulation.

 

10

 

 

 

2.          GRANT OF RIGHTS

 

2.1.       Xerese Licence.  Subject to the terms of this Agreement, Meda hereby grants to Valeant:

 

2.1.1.           an exclusive license, or as applicable, sub-license under the Xerese Licensed Patents; and

 

2.1.2.           an exclusive license (and as applicable sub-license) under the Xerese Licensed Know-how and Xerese Licensed Clinical Data;

 

in both instances solely for the purpose of the research, development, use, import, export, distribution, sale, offer for sale, marketing, and Commercialisation of Xerese Licensed Products in the Xerese Field in the Xerese Territory; and

 

2.1.3.           an exclusive licence to use the Xerese Trade Marks in relation to the Xerese Licensed Products in the Xerese Territory.

 

2.2.       Elidel United States Licences.  Subject to the terms of this Agreement, Meda hereby grants to Valeant:

 

2.2.1.           an exclusive license, or as applicable, sub-license under the Elidel Licensed Patents; and

 

2.2.2.           an exclusive license (and as applicable sub-license) under the Elidel Licensed Know-how and Elidel Licensed Clinical Data;

 

in both instances solely for the purpose of the research, development, use, import, export, distribution, sale, offer for sale, marketing, and Commercialisation of Elidel Licensed Products in the Elidel Field in the United States; and

 

2.2.3.           an exclusive licence to use the Elidel Trade Marks in relation to the Elidel Licensed Products in the United States.

 

2.3.       Elidel Canadian and Mexican Licenses.  Subject to the terms of this Agreement, without the need for further action by either Party, upon the respective commencement of the Phase 2 Period, as such term is defined and operative in the Elidel Supply Agreement, in the countries of Canada and Mexico, Meda shall and hereby does grant to Valeant in each such country:

 

2.3.1.           an exclusive license or, as applicable, sub-license under the Elidel Licensed Patents; and

 

2.3.2.           an exclusive license (and as applicable sub-license) under the Elidel Licensed Know-how and Elidel Licensed Clinical Data;

 

in both instances solely for the purpose of the research, development, use, import, export, distribution, sale, offer for sale, marketing, and Commercialisation of Elidel Licensed Products in the Elidel Field in such country; and

 

11

 

2.3.3.           an exclusive licence to use the Elidel Trade Marks in relation to the Elidel Licensed Products in such country.

 

2.4.       No right to manufacture.  The Parties agree that the licences granted in this Agreement do not include the right to manufacture any Licensed Product; provided however that, in the event the Xerese Supply Agreement is assigned to Valeant, Meda shall grant to *** a non-exclusive license (or, as applicable, a non-exclusive sub-license) under the Xerese Licensed Patents, the Xerese Licensed Know-How and the Xerese Licensed Clinical Data solely for the purposes of *** manufacturing Xerese Licensed Product for Valeant in accordance with the terms of the Xerese Supply Agreement; provided further that, at any time after assignment of the Xerese Supply Agreement, if Valeant receives notice from *** or otherwise learns of the termination or non-renewal of the Xerese Supply Agreement, the Parties shall use Commercially Reasonable Efforts to promptly identify another Third Party manufacturer, mutually acceptable to both Parties, to be engaged by Valeant for the manufacture and supply of Xerese Licensed Product and Meda shall grant to such Third Party a non-exclusive license (or, as applicable, a non-exclusive sub-license) under the Xerese Licensed Patents, the Xerese Licensed Know-How and the Xerese Licensed Clinical Data solely for the purposes of manufacturing Xerese Licensed Product for Valeant. If the Parties are unable to identify a mutually acceptable Third Party manufacturer within sixty (60) days, then Meda shall grant to Valeant a sublicensable, non-exclusive license (or, as applicable, a non-exclusive sub-license) under the Xerese Licensed Patents, the Xerese Licensed Know-How and the Xerese Licensed Clinical Data solely for the purposes of manufacturing Xerese Licensed Product for Valeant. Meda shall transfer to Valeant or to its designee any necessary or useful know-how and technology used by *** or Meda to the extent that the same is in the possession of and Controlled by Meda and shall use its Commercially Reasonable Efforts to transfer such Know-How and technology it Controls if it is not in Meda’s possession, as applicable and the Parties shall use their Commercially Reasonable Efforts to ensure that such transfer shall be accomplished in time to enable Valeant to obtain a continued and uninterrupted supply of the Xerese Licensed Products in the event of such termination.

 

2.5.       No Sublicense Rights. Valeant shall have no right to sublicense any of the licences and other rights granted under Clauses 2.1, 2.2 or 2.3 to a Third Party, except with Meda’s prior written consent (such consent to be in Meda’s absolute discretion); provided however that Valeant shall be entitled, in its sole discretion and without the consent of Meda, to:

 

2.5.1.           grant sub-licences to an Affiliate provided that the sub-license shall terminate immediately upon the Affiliate ceasing to be an Affiliate; or

 

2.5.2.           grant sub-licences to Third Party contract sales organizations and Third Party contract research organisations in relation to the promotion and development of Licensed Products.

 

3.          MANAGEMENT OF THE RELATIONSHIP

 

3.1.       The Joint Steering Committee.  On or within thirty (30) days after the Effective Date, the

 

12

 

Parties shall establish the Joint Steering Committee (“JSC”) to oversee and manage the relationship between the Parties.  In particular, the JSC shall be responsible for:

 

***

 

3.2.       Membership and Governance of the JSC.  The JSC shall comprise four (4) members (the “Members”), with Meda appointing two (2) Members and Valeant appointing two (2) Members as their respective representatives on the JSC.  The initial Members of the JSC shall be notified by each Party to the other Party in writing on the Effective Date or as soon as reasonably possible thereafter.

 

3.2.1.           Each Party shall be entitled to remove any Member appointed by it and to appoint any person to fill the vacancy arising from the removal or retirement of such Member.  Each Party shall give the other Party prior written notice of any changes in the identity of its Members.  The Parties shall ensure that all of their appointed Members are of a suitable level of expertise, seniority and decision-making authority to deal with the issues that may arise in connection with matters to be considered by the JSC.

 

3.2.2.           The JSC shall exercise this authority in good faith and in accordance with the terms of this Agreement.  The JSC shall have no authority to bind the Parties unless the Parties expressly delegate matters to the JSC or ratify the decision of the JSC.

 

3.2.3.           From time to time, the JSC may establish one or more subcommittees to oversee particular projects or activities related to this Agreement, and such subcommittees will be constituted as the JSC agrees.  The Parties may replace their respective subcommittee representatives at any time, with prior written notice to the other Party.  Any such sub-committee shall be run on the same basis as the JSC except that any issue within the purview of such a subcommittee that is not settled or determined by the applicable subcommittee shall be submitted to the JSC for resolution.  The chairperson of each subcommittee shall report on subcommittee efforts at each JSC meeting, and either Party may invite its own representatives on such subcommittee to also report on such efforts.

 

3.3.       JSC Meetings.

 

3.3.1.           At least twenty-one (21) days prior to each regularly scheduled meeting of the JSC, written notice shall be given to each Member by the Party convening the meeting and at least fourteen (14) days prior to each such meeting, each Party shall provide to the other all written information expected to be disclosed at such meeting.  In addition, special meetings of the JSC may be called on such shorter notice period as may be agreed between the Parties.

 

3.3.2.           Meda shall designate a Meda Member as the chairperson of the JSC.  The chairperson of the JSC shall set meeting agendas for the JSC provided that the agenda shall include any matter that either Party requests to be included.  Such

 

13

 

agendas shall be circulated to all Members at least seven (7) Business Days prior to the date of the relevant meeting.  The JSC chairperson shall be responsible for recording, preparing and (within ten (10) Business Days) issuing draft minutes of the JSC meetings, which draft minutes shall be reviewed, modified and approved in writing by the Members.

 

3.3.3.           The JSC shall have its first meeting within forty-five (45) days after the Effective Date, and thereafter shall hold Quarterly meetings by telephone or video conference.  In the event that the Parties agree to hold face-to-face meetings, the venue for the meeting of the JSC shall alternate between Barbados and Luxembourg, unless the Parties mutually agree otherwise. Each Party shall bear its own costs for its Members to attend JSC meetings and, as applicable, for its obligations to host such meetings.

 

3.4.       JSC Decision Making.  All decisions by the JSC shall be made by unanimous vote of the Members present.  The presence of at least one (1) Member of the JSC representing each of Meda and Valeant (i.e. a total of two Members) shall constitute a quorum.  The Members shall use their reasonable efforts to reach agreement on any and all matters to be determined or resolved by the JSC.

 

3.5.       Dispute Resolution. In the event that unanimous agreement on a matter cannot be reached:

 

***

 

4.         DEVELOPMENT OF LICENSED PRODUCTS

 

4.1.       Development Generally. Both Valeant and Meda have the right to undertake development work (whether alone or together) in respect of products that fall within the scope of the Licensed Patents, Licensed Know-How or Licensed Clinical Data, in particular on any new formulations of such products. In the event that a Party intends to undertake development work, prior to commencing such development work, the Party undertaking such development work shall notify the other Party and provide it with details of the proposed development work. ***, the JSC shall meet to agree, in accordance with the terms of Clauses 3.4 and 3.5, to the terms of a development plan in respect of the development work to be undertaken (“Development Plan”). Such development work shall be conducted in accordance with the Development Plan.

 

4.2.       ***. Notwithstanding Clause 4.1, neither Party shall be required ***. Prior to the commencement of any development work, ***

 

4.3.       ***

 

4.4.       Research and Development Costs.  If ***, where any development work is to be conducted pursuant to Clause 4 hereto, the costs of such development work as agreed pursuant to any agreed Development Plan shall be shared as follows:

 

14

 

4.4.1.           Valeant and Meda shall each pay *** for (i) the development of Elidel Licensed Products agreed to by the Parties (including agreement as to which Party shall be responsible for conducting such development work), and (ii) ***.

 

4.4.2.           Valeant shall pay *** and Meda shall pay *** for the development costs for the development of Xerese Licensed Products agreed to by the Parties (the “Agreed Ratio”) and Valeant shall be responsible for conducting such development work, provided that the work is conducted in accordance with an agreed Development Plan.

 

4.5.       Development Work Required by a Regulatory Authority. Valeant shall be responsible for and bear the cost of all development work required by a Regulatory Authority in the Elidel Territory in respect of an Elidel Licensed Product or the Xerese Territory in respect of a Xerese Licensed Product as the case may be.

 

4.6.       ***

 

4.7.       Rights in Developed Licensed Products.  ***, in the event that the development work results in the creation of a new product or new formulation of a product that falls within the scope of the Licensed Patents or uses the Licensed Know-How or Licensed Clinical Data, then the resulting product or new formulation shall be deemed to be a Licensed Product and, subject to Valeant making the payment in accordance with Clause 4.3, shall be the subject of this Agreement within the Elidel Territory or Xerese Territory, as applicable, and Meda shall have exclusive rights outside the Elidel Territory or Xerese Territory, as applicable and each Party shall within its respective territories (being the Territory for Valeant and outside the Territory for Meda) have full rights to use and reference the data, reports, dossiers and any other useful clinical or regulatory information resulting from the development work conducted by the other Party ***.

 

4.8.       Royalties Payable ***. If Meda ***, then Meda shall have the following payment obligations to Valeant:

 

4.8.1.           with respect to Xerese Licensed Products, Meda shall pay to Valeant *** and

 

4.8.2.           with respect to the Elidel Licensed Products, if the new product or new formulation requires a separate Regulatory Approval in a country outside the Elidel Territory from an Elidel Licensed Product approved at the relevant time in such country, then (i) if Meda itself or an Affiliate Commercialises such new Elidel Licensed Product or new formulation in such country outside the Elidel Territory, then Meda shall pay to Valeant *** and (ii) if a Third Party Commercialises such new Elidel Licensed Product or new formulation in such country outside the Elidel Territory, *** in connection with any license granted to such Third Party for the Commercialisation of any such Elidel Licensed Product in such country outside the Elidel Territory.

 

***

 

15

 

4.9.       Development Costs.  Where, in accordance with the terms of this Agreement, the Parties agree or have agreed to share or split (in any proportion) the development costs incurred in connection with development of a Licensed Product in accordance with this Clause 4, such development costs shall be limited to a Party’s reasonable external costs incurred in conducting such development.

 

5.          REGULATORY AND CLINICAL DEVELOPMENT

 

5.1.       The Marketing Authorisations for the Licensed Products shall be held by Valeant, in the name of Valeant or its designated Affiliate.  Meda has, prior to the Effective Date, transferred the Marketing Authorisation in the United States for the Elidel Licensed Product to Valeant or its designated Affiliate and submitted all required documentation and correspondence to effect such transfer, including the required letters to the FDA. Meda shall use Commercially Reasonable Efforts to transfer to Valeant, as promptly as practicable, the ownership of the other Marketing Authorisations or applications therefor (including the Marketing Authorizations and applications therefor described in Schedule 11 hereto); provided however that (i) in the case of the Elidel Licensed Products, the Marketing Authorizations for Canada and Mexico shall be transferred to Valeant no later than the last day of the Phase 1 Period as such term is defined in the Elidel Supply Agreement, and (ii) the Marketing Authorization for the United States for the Xerese Licensed Product shall be transferred to Valeant, at Valeant’s request, at the end of the Xerese Interim Distribution Period. Notwithstanding the provisions of this Clause 5.1, Meda shall not be liable for any delay in the transfer of any Marketing Authorisation to the extent caused by a Third Party, Regulatory Authority or Government Entity.  Meda shall also transfer to Valeant or its designated Affiliate any applications for Marketing Authorizations of Licensed Products existing as of the Effective Date, including all existing INDs *** and other similar regulatory filings in the Elidel Territory or Xerese Territory, as applicable, including for the Xerese Licensed Product in Canada and Mexico. Valeant shall provide Meda with such assistance as may reasonably be requested by Meda in order to effect such transfers, including by submitting all required documentation and correspondence to effect such transfer, including the required letters and documentation to the FDA, Health Canada and applicable Regulatory Authority in Mexico, as the case may be. Valeant shall act reasonably in respect of any correspondence with Regulatory Authorities pursuant to this Agreement and in any event in accordance with the standards of care and diligence it would exercise in respect of its own products. Valeant shall and shall procure that its Affiliates, sub-licensees or nominees shall assign the Marketing Authorisations so transferred to it by Meda back to Meda upon the termination of this Agreement or the expiration of the Term, unless the Parties agree otherwise or as otherwise set forth herein.  Valeant may not transfer any such Marketing Authorisations to any Third Party without the prior written consent of Meda. To the extent not already provided prior to the Effective Date, Meda shall provide Valeant with full copies of the Marketing Authorizations promptly following the transfer of such Marketing Authorizations.

 

5.2.       During the Term of this Agreement: (a) Valeant shall be responsible, at its own cost, for filing and maintaining all applications necessary to obtain and maintain the Marketing Authorisations for Licensed Products; (b) Meda shall provide Valeant with such

 

16

 

assistance as may reasonably be requested in order to file and maintain all Marketing Authorisations for Licensed Products; (c) Valeant shall provide Meda with copies of such applications and shall allow Meda to review and comment on material regulatory applications for Licensed Products prior to submission to any Regulatory Authority in such country; (d) Valeant shall confer with Meda regarding the preparation of such filings and communications and the registration process and any revisions to any filings or communications with the Regulatory Authorities in such country; and (e) Valeant shall keep Meda reasonably informed as to the status of its draft regulatory applications for Licensed Products in such country and shall provide copies of material communications regarding the Licensed Products with Regulatory Authorities in such country to Meda. Meda shall reasonably cooperate with Valeant, including by filing with applicable Regulatory Authorities all documents reasonably requested by Valeant and necessary to enable Valeant, prior to or after the transfer of Regulatory Approvals, to carry out Valeant’s regulatory responsibilities set forth in this Agreement.

 

5.3.       Except as may be prohibited by law or by a Regulatory Authority, Valeant shall notify Meda of any meetings between Valeant and a Regulatory Authority relating to the Licensed Products, and allow a representative of Meda to attend any such meetings as an observer.  Valeant shall provide Meda with copies of material correspondence received by Valeant from Regulatory Authorities in the Elidel Territory or Xerese Territory, as applicable, that relate to Licensed Products, and Valeant shall provide Meda an opportunity to review and comment on material correspondence with Regulatory Authorities in the Elidel Territory or Xerese Territory, as applicable, prior to submission, and shall consider in good faith the comments of Meda to such correspondence.

 

5.4.       Valeant shall be responsible for and shall have control over all changes to the packaging of the Licensed Products in the Xerese Territory or Elidel Territory, as the case may be. Repackaging or changes to the packaging of the Licensed Products locally in the Elidel Territory or Xerese Territory, as applicable, shall meet the requirements of locally applicable Good Manufacturing Practices for pharmaceutical products. Valeant shall notify Meda of such repackaging or changes to the packaging of the Licensed Products not later than forty-five (45) days after such repackaging or changes are implemented. Valeant shall be responsible for the costs of such changes in packaging, unless requested by Meda.

 

5.5.       ***

 

5.6.       Assignment of Third Party Agreements.  All Third Party Agreements that can be assigned to Valeant without the consent of the respective Third Parties, or for which consent has been obtained prior to the Effective Date, shall be so assigned, to the extent they relate to the Licensed Products in the Elidel Field, pursuant to the terms of this Agreement on the Effective Date. To the extent the assignment of any Third Party Agreement is prohibited by applicable law or would require any authorization, approval, consent or waiver (collectively, “Consent”) of any governmental entity or other Third Party and such Consent shall not have been obtained prior to the Effective Date (each, a “Non-Assignable Agreement”), neither this Agreement nor the agreement contemplated in Clause 5.7 shall constitute an assignment thereof if any of the foregoing would constitute

 

17

 

a breach of applicable law or the rights of any Third Party under such Non-Assignable Agreement. Following the Effective Date, the Parties shall, and shall cause their respective Affiliates to, use Commercially Reasonable Efforts in obtaining such Consents, however, Meda cannot guarantee that such Consents will be received. In the event that any such Consent is not obtained, Meda shall, upon Valeant’s request, terminate, subject to the terms and conditions set forth therein, such Third Party Agreement to the extent it relates to the Licensed Product in the Elidel Field as soon as practicable. Valeant shall, as Meda’s agent, perform and discharge all outstanding obligations and liabilities and enjoy all rights, income and benefit of Meda’s (or as applicable, Meda’s Affiliates) under the Third Party Agreement with respect to the Licensed Products in the Elidel Field from and after the Effective Date.

 

5.7.       Assignment and Assumption Agreement.  Simultaneously with the execution and delivery of this Agreement, the Parties will enter into an agreement providing for the assignment and assumption of the Third Party Agreements as contemplated in Clause 5.6, a copy of which is attached hereto as Schedule 8. In the event a Consent to any Third Party Agreement is obtained following the Effective Date pursuant to Clause 5.6, the Parties will promptly enter into an agreement substantially in the form of the agreement attached hereto as Schedule 8 providing for the assignment and assumption of such Third Party Agreement.

 

6.           MARKETING AND DISTRIBUTION OF LICENSED PRODUCTS

 

6.1.      Commercial Strategy; Pricing. Subject to Clause 3 and without prejudice to Valeant’s diligence obligations under this Agreement (including those set out in Clause 7), Valeant shall have the exclusive right to establish the strategy, including the price and sales strategy, for the Commercialization of the Licensed Products in the Xerese Territory and Elidel Territory. Valeant shall be solely responsible for the pricing of the Licensed Products.

 

6.2.      Sales and Marketing Plan.  Valeant shall notify Meda and shall provide the JSC, in accordance with Clause 3, with a proposed Sales and Marketing Plan(s) for the Licensed Products on or within sixty (60) days of the Effective Date.  The Sales and Marketing Plan shall include, among other topics the marketing and promotional investment and promotional activities to be undertaken by Valeant in respect of the Licensed Products in the Xerese Territory or the Elidel Territory, as the case may be. Valeant shall be solely responsible for the generation of all promotional materials to be used by Valeant or its Affiliates in connection with the marketing, promotion and sale of the Licensed Products in the Xerese Territory and the Elidel Territory, provided that such promotional materials are consistent with the relevant Sales and Marketing Plan.  Valeant shall provide an updated Sales and Marketing Plan for Licensed Products on each one year anniversary following the provision of the first proposed Sales and Marketing Plan.

 

6.3.      Marketing Services by Meda. Notwithstanding Clause 6.1, Meda shall provide the Marketing Services in connection with the Xerese Licensed Products in the Xerese Territory for the period commencing on the Effective Date and ending on ***.

 

18

 

6.4.      Promotional Materials.  All promotional materials used by Valeant for Licensed Products shall comply with applicable laws, rules and regulations in the Elidel Territory or the Xerese Territory, as applicable, and shall be consistent with the Sales and Marketing Plan.  A physical sample of each item of promotional material together with, where applicable, an English translation shall be provided to Meda within thirty (30) days of approval by Valeant. Meda shall provide Valeant with copies of or access to the promotional materials used by Meda in the United States in connection with the Xerese Licensed Product.

 

6.5.      Interim Distribution Arrangements.

 

6.5.1.           Elidel Licensed Products. The Parties acknowledge that, with respect to the Elidel Licensed Product, during the Phase 1 Period (as defined in the Elidel Supply Agreement) with respect to Canada and Mexico, Valeant is not authorized to distribute, sell or invoice the Elidel Licensed Product in such countries and *** or its Affiliates shall continue to distribute such Elidel Licensed Product in such countries during such period, in accordance with the terms of the Elidel Supply Agreement.

 

6.5.2.           Xerese Licensed Products.  For a period of up to *** from the Effective Date (the “Xerese Interim Distribution Period”), at the request of Valeant, Meda shall continue to distribute the Xerese Licensed Products in the United States on Valeant’s behalf. Meda shall continue to invoice Third Party customers for the Xerese Licensed Product in the United States in its own name and shall pay Valeant the following amount:

 

***

 

Within twenty (20) days of the end of the Xerese Interim Distribution Period, Meda shall provide Valeant with a report of Net Sales of the Xerese Licensed Product in the United States for such period, together with the amount owed by Valeant to Meda pursuant to this Clause 6.5.2.

 

6.6.        Transition Agreement. Prior to the end of the Xerese Interim Distribution Period, the Parties shall enter into a transition agreement with respect to the Xerese Licensed Products in the United States, on terms to be agreed but substantially in accordance with the terms of the agreement which is attached hereto as Schedule 12.

 

7.           DILIGENCE

 

7.1.      General.  The Parties shall use their Commercially Reasonable Efforts to perform their responsibilities and obligations under this Agreement. In addition, Meda agrees that it will not breach the ***Agreement or the *** Agreement or the ancillary agreements thereto applicable to the Elidel Licensed Products, so as to render it unable to fulfil its obligations under this Agreement or any agreements related hereto. Valeant agrees that it will not do anything that puts Meda in breach of the agreement between *** and Meda (to the extent that Valeant is aware of the relevant provision) or the *** Agreement and the ancillary agreements thereto applicable to the Elidel Licensed Products.

 

19

 

7.2.      Commercialisation Diligence.  Subject to Clauses 6.2 and 6.4, Valeant shall use Commercially Reasonable Efforts to market and sell Licensed Products in the countries in the Elidel Territory or Xerese Territory, as applicable, for which Marketing Authorisations have been granted to or transferred to Valeant and to comply with the terms of all Sales and Marketing Plan, as Valeant may amend such Sales and Marketing Plan from time to time.  Prior to the 30 January of each calendar year, Valeant shall inform Meda of the results of its sales and marketing performance relating to Licensed Products in the Elidel Territory or Xerese Territory, as applicable, for the prior year.

 

7.3.      Sales Data. Within fifteen (15) days after the end of each quarter, Valeant shall provide to Meda a report of all sales of Licensed Products occurring in the Elidel Territory or Xerese Territory, as applicable, such report shall include recorded sales of Licensed Products by volume and value and market share percentage by volume and value.  Valeant shall use Commercially Reasonable Efforts to provide Meda with monthly reports, of gross sales, unit sales, IMS reports and its best estimate of Net Sales of Licensed Products in the Elidel Territory or Xerese Territory, as applicable, within fifteen (15) days of the end of each month.

 

7.4.      Material Terms.  Valeant’s obligations in this Clause 7 regarding diligence are material terms of this Agreement

 

8.           ADVERSE EVENTS AND PHARMACOVIGILANCE

 

8.1.       Pharmacovigilance.  Valeant and Meda shall enter into a Pharmacovigilance Agreement for each country in the Elidel Territory or Xerese Territory or, if the Parties mutually agree, one Pharmacovigilance Agreement for all countries in the Elidel Territory and Xerese Territory within *** of the Effective Date to ensure that an appropriate system for pharmacovigilance activities is in place to assume responsibility and liability for Licensed Products in accordance with all relevant laws, directives and regulatory guidance. Meda and Valeant shall observe the procedures and notification requirements as set out in the applicable Pharmacovigilance Agreement with respect to Adverse Events and to any other regulatory and reporting matters.

 

8.2.      Responsibilities of the Qualified Person.  Each Party shall designate a suitably-qualified person responsible for compliance with its pharmacovigilance obligations.  The qualified person shall be responsible for: (i) the collection of Adverse Event reports for the Licensed Product reported to Valeant and/or Meda and their respective Affiliates; (ii) notification to Meda and/or Valeant, as applicable, of such reports in accordance with the terms of the Pharmacovigilance Agreement; (iii) the timely submission of individual written reports to the relevant Regulatory Authority in compliance with applicable laws; (vi) answering pharmacovigilance related questions; and (v) all notifications and communications with any Regulatory Authority related to pharmacovigilance, as appropriate or required by Meda or Valeant, as applicable.

 

20

 

9.           SUPPLY AND MANUFACTURE

 

9.1.        Supply of Xerese Licensed Products. Subject to obtaining the consent of ***, as promptly as possible following the Xerese Interim Distribution Period, Meda shall assign the Xerese Licensed Product supply agreement (the “Xerese Supply Agreement”) it entered into with *** on *** to Valeant pursuant to the assignment agreement attached hereto as Schedule 13. Prior to the assignment of the Xerese Supply Agreement, Meda shall use Commercially Reasonable Efforts to procure the supply of the Xerese Licensed Product to meet Valeant’s requirements for sales and marketing hereunder provided always that Meda shall not be obliged to procure the supply of more Xerese Licensed Product from *** than *** is obliged to supply under the Xerese Supply Agreement, provided that Meda will exercise, at Valeant’s request, any rights to additional Xerese Licensed Product it has pursuant to the Xerese Supply Agreement. If Meda is unable to obtain the consent of *** to the assignment of the Xerese Supply Agreement to Valeant, in lieu of assigning the Xerese Supply Agreement, such supply shall be undertaken by Meda pursuant to a supply agreement to be agreed between the Parties.  ***

 

9.2.        Indemnification under Xerese Supply Agreement. In the event the Xerese Supply Agreement is assigned to Valeant, Meda shall be responsible for any amounts owing to *** for Xerese Licensed Product delivered to Meda prior to such assignment or otherwise purchased by Valeant from Meda pursuant to Clause 9.3 below ***.

 

9.3.        Initial Supply of Xerese Licensed Product. To the extent that the Xerese Supply Agreement is assigned to, and assumed by, Valeant, at the time of such assignment, Valeant shall acquire from Meda the Xerese Licensed Product then held by Meda or its Affiliates for the United States. Valeant shall deliver one or more purchase orders to Meda, for delivery on the dates and in the quantities set out in such purchase orders, for such inventory of Xerese Licensed Product. On the date of delivery, Meda shall deliver such inventory of Xerese Licensed Product, and title and risk of loss in such inventory shall transfer, FCA (as defined in INCOTERMS, 2010 edition, published by the International Chamber of Commerce, ICC Publication 560) the facilities of Meda at which such inventory is held. ***

 

9.4.        Shelf Life of Xerese Licensed Product. All inventory of Xerese Licensed Product delivered by Meda to Valeant pursuant to this Clause 9 shall be in Saleable Condition and shall have, at the time of delivery to Valeant, a remaining shelf life of ***.

 

9.5.        Supply of Elidel Licensed Products.   As of the Effective Date, *** supplies the Elidel Products to Meda pursuant to a supply agreement with Meda entered into on May 11, 2011 and Meda shall supply such Elidel Licensed Products to Valeant on the terms of the Elidel Supply Agreement.

 

10.        FINANCIAL TERMS

 

10.1.     *** Payment.  On the Effective Date Valeant shall pay to Meda the sum of *** in respect of ***;

 

10.2.     ***  On the Effective Date Valeant shall pay to Meda the sum of ***.

 

10.3.     *** Payment.  Valeant shall pay to Meda***

 

21

 

 

10.4.     *** Payment. On the Effective Date, Valeant shall pay to Meda ***

 

For greater certainty, the payment payable pursuant to this Clause 10.4 shall only be payable by Valeant once.

 

10.5.     *** Payment.  Upon Meda having ***  For greater certainty, the payment payable pursuant to this Clause 10.5 shall only be payable by Valeant once.

 

10.6.     *** Payment.  Upon the *** Valeant shall pay to Meda ***. For greater certainty, the payment payable pursuant to this Clause 10.6 shall only be payable by Valeant once.

 

10.7.      ***. Valeant shall in accordance with the provisions of Clause 11, pay to Meda *** of *** in the Elidel Territory and Xerese Territory, as applicable ***, the payment shall be made as follows:

 

10.7.1.         Subject to Clause 10.7.3, Valeant shall pay to Meda ***, no later than *** following ***

 

10.7.2.         No later than the *** following *** Valeant shall pay an amount equal to ***  in the Elidel Territory and Xerese Territory, as applicable, for ***.

 

10.7.3.         The *** payable by Valeant to Meda pursuant to Clause 10.7.1 for ***

 

10.8.      ***. Valeant shall in accordance with the provisions of Clause 11, pay to Meda *** in the Elidel Territory and Xerese Territory, as applicable, for *** .  In respect of *** the payment shall be made as follows:

 

10.8.1.         Subject to Clause 10.8.3, Valeant shall pay to Meda ***, no later than ***

 

10.8.2.         No later than *** following *** Valeant shall pay an amount equal to *** for ***

 

10.8.3.         *** payable by Valeant to Meda pursuant to Clause 10.8.1 for ***

 

10.9.      ***.  Valeant shall in accordance with the provisions of Clause 11, pay to Meda *** in the Elidel Territory and Xerese Territory, as applicable, for *** the payment shall be made as follows:

 

10.9.1.         Subject to Clause 10.9.3, Valeant shall pay to Meda ***

 

10.9.2.         No later than *** following *** Valeant shall pay an amount equal to *** in the Elidel Territory and Xerese Territory, as applicable, for ***.

 

10.9.3.         The *** payable by Valeant to Meda pursuant to Clause 10.9.1 for ***

 

10.10.    ***.  Valeant shall in accordance with the provisions of Clause 11, pay to Meda *** in the Elidel Territory and Xerese Territory, as applicable, for ***.

 

10.11.    ***

 

22

 

10.12.   Payment Prior to the Effective Date.  Any Licensed Products sold by Valeant prior the Effective Date pursuant to the Interim Distribution Agreement shall be subject to the provisions thereunder and no provisions of this Agreement shall apply to such sales.  Any Licensed Products sold by Valeant after the Effective Date (including any such Licensed Products acquired, but not sold, by Valeant prior to the Effective Date) shall be subject to the provision of this Agreement and no provision of the Interim Distribution Agreement shall apply to such sales, except those provisions which by their terms survive the termination of the Interim Distribution Agreement.

 

10.13.   ***

 

10.14.   Failure to Pay.  Any breach by Valeant of its obligation to make payments under the terms of this Clause 10 when properly due and which is not cured within the time permitted in Clause 15.3 shall be a material breach of this Agreement.

 

10.15.  ***

 

11.       PAYMENT

 

11.1.      Currency and Timing of Payments.  All payments due to Meda under this Agreement shall be made in US $ within the relevant period specified in this Agreement. In the case of Royalties payable under Clause 10, if no date is specified, the payment shall be made within *** days of the end of the Quarter to which such Royalties relate.

 

11.2.      Conversion Rate. In the event that Valeant receives a payment in respect of which it is liable to make a payment pursuant to Clause 10.6 in a currency other than US dollars, the relevant payment to be made by Valeant shall be calculated in US dollars at the mid-market exchange rate as stated in the UK Financial Times on the last Business Day of *** in which the Royalties accrued.

 

11.3.      Payment method. All payments due and payable by one Party to the other Party under this Agreement shall be made by electronic wire transfer of immediately available funds directly to the account of the receiving Party as designated in writing from time to time by such Party; provided that the Parties shall set off and net any payments due and payable hereunder or under the Elidel Supply Agreement, as applicable, prior to making any such payment.

 

11.4.      Late Payments.  Where any sums payable by one Party to the other hereunder remain unpaid after the date on which they became due, the Party in default shall pay to the other interest calculated from the date upon which the sums became due until payment thereof at *** calculated on a daily basis.

 

11.5.      Taxes. In the event that either Party is required by law to withhold or pay any taxes on behalf of the other Party, with respect to any payments to it hereunder, the withholding Party shall furnish the other Party with proper evidence of the taxes so paid. Each Party

 

23

 

shall furnish the other Party with appropriate documents to secure application of the most favourable rate of withholding tax under applicable law.

 

11.6.     Record Keeping and Audit. Valeant shall, and shall ensure that its respective Affiliates and permitted sublicensees (if any) shall, keep true and accurate records and books of account in legible form and in English accordance with US GAAP and containing all data necessary for the calculation of the amounts payable to Meda pursuant to this Agreement.  Such records and books of account shall be kept for at least ***.  Meda shall be entitled to have the books and records of Valeant generated pursuant to this Agreement and any statement it receives from Valeant relating to Royalties audited for the purpose of verifying Valeant’s calculation of Royalties under this Agreement.  Any calculation of Royalties (and the underlying components of such calculation) may be audited and certified by an internationally recognised independent accounting firm identified by Meda and reasonably acceptable to Valeant.  Meda shall provide Valeant with at least thirty (30) days prior notice of such audit, which shall be conducted during normal business hours. Valeant shall make available those books and records reasonably required for the purpose of that audit and certification, and the statements so certified shall be final and binding between the Parties.  Meda shall be responsible for the cost of such independent accounting firm’s services in connection with such audit; provided that Valeant shall reimburse Meda for such costs if the results of the audit conclude that it has understated the monies payable to Meda by more than ***.  Any outstanding under-payments or over-payments that are identified as a result of carrying out the audit and certification shall be payable within five (5) Business Days.  There shall be no more than one such audit and certification by an internationally recognised independent accounting firm during a given calendar year, and no inspection or certification shall take place more than *** after the submission of the annual statement to which it relates.

 

12.        OWNERSHIP OF INTELLECTUAL PROPERTY AND KNOW HOW

 

12.1.      Excluded IP.  Except for those rights expressly granted under this Agreement, nothing herein shall be construed as creating, granting or conveying to one Party any licence, right, title or other interest in or to any Intellectual Property Rights and Know How owned or controlled by the other Party or its Affiliates:

 

12.1.1.         existing prior to the Effective Date; or

 

12.1.2.         independently discovered and developed during the Term of this Agreement by such other Party or its Affiliates other than in performance of its obligations under this Agreement and without use of such other Party’s Intellectual Property Rights, Know How or other Confidential Information.

 

12.2.      Improvements.  Meda shall own, and Valeant hereby assigns to Meda, all Improvements arising pursuant to this Agreement that are exclusively related to a Licensed Product***.  In respect of any Improvements that are not assigned to Meda pursuant to this Clause 12.2, Valeant hereby grants to Meda an irrevocable, fully paid—up, worldwide (other than in the Xerese Territory or Elidel Territory), exclusive license with the right to grant sub-licenses solely for the research, development, manufacture, use, import, export, distribution, sale,

 

24

 

offer for sale, marketing, and Commercialisation of Licensed Products during the Term; provided however that Meda shall be subject to the payment obligations and restrictions set out in Clause 4.8.

 

12.3.      Licence to Use Improvements.  All Improvements subject to Clause 12.2 and all Improvements made by Meda shall be included within the licence granted to Valeant by Meda pursuant to Clauses 2.1, 2.2 and 2.3.

 

12.4.      Cooperation with Respect to Improvements. Each Party shall promptly inform the other Party in writing of all Improvements of which it is aware arising during the Term of this Agreement.  Meda shall have the exclusive right and at its sole cost to file for patent protection on any Improvement, including those that it owns pursuant to Clause 12.2 and Valeant agrees to undertake such acts requested by Meda and at Meda’s sole cost and expense as may be reasonably necessary to perfect Meda’s interests in and to Improvements as provided for in Clause 12.2 (including, without limitation, any patent applications or patents filed during or after the Term of this Agreement to protect such Improvements), which shall include Commercially Reasonable Efforts to provide the filing Party with reasonable and timely access to any employees or consultants of the other Party who were involved in the research leading to such Improvements to amongst other things, establish inventorship, determine the scope and patentability of the relevant Improvements and causing the execution of any assignments or other documents necessary to perfect the Parties’ interests in such Improvements.

 

12.5.      New Know-How. To the extent that Valeant acquires any significant new Know How regarding and relating to the quality, efficacy, or safety of any Licensed Product, it shall provide Meda with paper, and if available, electronic copies of such Know How.

 

13.        MANAGEMENT OF PATENT RIGHTS

 

13.1.      Prosecution, Maintenance and Defence of Meda IP.  Meda shall be responsible for, bear the cost of, and undertake (whether itself, through Affiliates or Third Parties), the filing, prosecution and maintenance of the Licensed Patents and shall so prosecute and maintain all Licensed Patents.

 

13.2.      Notification of Infringement.  Each Party shall promptly notify the other Party of any actual or potential infringement of any Licensed Patents by a Third Party which comes to that Party’s attention during the Term of this Agreement.  Each Party shall promptly notify the other Party upon receiving notification that any such Licensed Patents is subject to a judicial or administrative challenge alleging non-infringement, invalidity or unenforceability.

 

13.3.     Prosecution of Infringement.  Meda shall have the initial right, but not the obligation, using counsel of its choice at its own cost to enforce the Licensed Patents or defend any challenge with respect thereto. Meda shall have sole control of any decisions or other aspects of any such action; provided that, where Valeant requests to be joined as a Party, the Parties shall pursue damages for *** in any such action. Valeant shall, upon request, give to Meda such reasonable assistance as Meda may reasonably request, including by

 

25

 

signing or executing any necessary documents and consenting to it being named as a party to the proceedings; provided that Meda shall reimburse Valeant for any reasonable out-of-pocket expenses incurred while providing such assistance. If Meda does not institute any such action within *** of a notice from Valeant requiring such action or such shorter time as may be required to avoid loss or material prejudice to the ability to bring or sustain or prevail in such action under the circumstances, then Valeant shall have the right, but not the obligation, at its own cost, to commence proceedings regarding the infringement or challenge, Valeant shall have sole control of any decisions or other aspects of the action and Meda shall, upon request, give to Valeant such reasonable assistance as Valeant may reasonably request, including by signing or executing any necessary documents and consenting to it being named as a party to the proceedings, provided that Valeant shall reimburse Meda for any reasonable out-of-pocket expenses incurred while providing such assistance.

 

13.4.     Infringement and Other Proceedings.  In the event that any Third Party alleges infringement or other violation of its Intellectual Property Rights in the Elidel Territory or Xerese Territory, as applicable, against Valeant with respect to the Licensed Products, or that Valeant considers it desirable to seek a declaration of non-infringement with regard to Licensed Products under any Third Party patent rights, Valeant shall control the defence (or, as applicable, prosecution) of such proceeding and the cost of such proceedings shall be borne by Valeant.

 

13.5.     Interferences and Other Proceedings.  In the event that any Third Party interference or opposition proceedings are commenced against one of the Parties with respect to the Licensed Patents, or that a Party considers it desirable to contest interference proceedings with a Third Party in respect to such Licensed Patents, the Parties shall consult with each other with a view to agreeing the strategy to be adopted.

 

13.6.     To the extent that the validity, existence, inventorship or ownership of any of the Intellectual Property Rights owned by Meda is in issue in any proceeding set forth in Clause 13.5, as between the Parties, Meda shall have the sole control of decisions and proceedings directly relating to those issues and Valeant shall give Meda such reasonable assistance as Meda may reasonably request in the defence of such claims, at Meda’s cost.   In the event that Meda so assumes control of such elements of a proceeding, the costs of those elements of the proceeding which are controlled by Meda shall be borne by Meda.

 

13.7.      Consultation; Settlements.  Each Party shall consult with the other Party in respect of any action which it may take pursuant to this Clause 13.6 and shall consider in good faith any comments such other Party makes pursuant to this Clause 13.6, provided that ***.

 

13.8.     Recovery.  Any damages or award (including any award of costs) made in proceedings shall be used first to reimburse each Party for any costs or expenses that it may have incurred in connection with the infringement proceedings (including without limitation, any amounts paid by the Party bringing the action to the other Party as reimbursement for expenses related to assisting in the proceedings) and any amounts expressly awarded to Meda *** and any amounts expressly awarded in ***.

 

26

 

14.        TRADE MARKS

 

14.1.    Trade Marks.  Valeant will market and label:

 

14.1.1.         Elidel Licensed Products in the Elidel Territory under the Elidel Trade Marks; and

 

14.1.2.         Xerese Licensed Products in the Xerese Territory under the Xerese Trade Marks.

 

14.2.    Acknowledgement. Each packet containing a Licensed Product shall bear an acknowledgement that it is licensed by Meda to Valeant.

 

14.3.      Use of Licensed Trade Marks. Valeant may use the Licensed Trade Marks solely in connection with the sale, use, marketing and promotion of the respective Royalty Products in the Elidel Territory or Xerese Territory, as applicable; provided that:

 

14.3.1.         the Licensed Trade Marks may be used only on the Royalty Products and on no other products whatsoever; and

 

14.3.2.         whenever a Licensed Trade Mark is affixed to Royalty Products it shall be accompanied by wording and/or clear marking by the use of the ® symbol to show where appropriate that the Licensed Trade Mark in question has been registered as a trade mark and in other cases by the suffix TM, however, the foregoing does not apply to regulatory filings or correspondence with Regulatory Authorities.

 

14.4.      Maintaining the Licensed Trade Marks. Meda shall, at its cost, be responsible for taking all steps to prosecute and maintain the Licensed Trade Marks and Valeant shall provide all reasonable assistance with such prosecution and maintenance.

 

14.5.      Infringement of Licensed Trade Marks.  In the event that either Party becomes aware of any actual or threatened infringement or misappropriation of any Licensed Trade Mark by a Third Party in the Elidel Territory or Xerese Territory, as applicable, that Party shall promptly inform the other of such infringement, and the Parties shall consult with each other in good faith to determine jointly the best way to prevent the infringement, including, without limitation, by instituting a legal proceeding against such Third Party.  Meda shall have the right, at its own cost, to defend and enforce the Licensed Trade Mark in the Elidel Territory or Xerese Territory, as applicable, and shall take such steps as it considers appropriate in the enforcement of the Licensed Trade Mark, or in respect of any actual or threatened infringement of any Licensed Trade Mark in the Elidel Territory or Xerese Territory, as applicable; provided that, where Valeant requests to be joined as a Party, the Parties shall pursue damages for *** in any such action.  If Meda elects not to take any action which Valeant considers appropriate within *** of being requested in writing to do so by Valeant, Valeant shall have the right, at its own cost, to bring proceedings in its own and Meda’s name in respect of such infringement.  The Party bringing proceedings in accordance with the foregoing shall have sole control of any decisions or other aspects of the action, subject to Clause 14.6, and the other Party shall, upon request, give to the prosecuting Party such reasonable assurances as the prosecuting

 

27

 

Party may reasonably request, including by signing or executing any necessary documents and consenting to its name being used in the proceedings; provided that the prosecuting Party shall reimburse the other Party for any reasonable out-of-pocket expenses incurred while providing such assistance.  The prosecuting Party shall keep the other Party reasonably informed of the progress of the action and shall consider the comments and observations of the other Party in prosecuting the action.

 

14.6.      Settlements.  In the event that any action or suit shall be brought against Valeant in connection with the Licensed Trade Marks for alleged infringement or misappropriation of a Third Party’s trade mark, ***.

 

14.7.     Recovery.  Any damages or award (including any award of costs) made in proceedings shall be used first to reimburse each Party for any costs or expenses that it may have incurred in connection with the infringement proceedings (including without limitation, any amounts paid by the Party bringing the action to the other Party as reimbursement for expenses related to assisting in the proceedings) and any amounts expressly awarded to Meda *** and any amounts expressly awarded ***.

 

15.        TERMINATION

 

15.1.      Term of Agreement.  This Agreement shall come into effect on the Effective Date and shall continue until terminated in accordance with this Clause 15 (the “Term”).

 

15.2.     Termination for Patent Challenge or Trade Mark Challenge.  Meda may terminate this Agreement on *** prior written notice if:

 

15.2.1.         Valeant challenges or contests or assists a Third Party to challenge or contest the scope, validity or ownership of any of the Licensed Patents or to claim that they are not necessary for the import, keeping, use or sale of any Licensed Products;

 

15.2.2.         Valeant challenges or contests or assists a Third Party to challenge or contest the registration, validity or ownership of any of the Licensed Trade Marks.

 

provided that if Valeant so ceases such challenge, contest or assistance within ***, Meda shall have no right to terminate this Agreement on the basis of the challenge, contest or assistance set forth in such notice.

 

15.3.     Termination for Breach.  Subject to the terms of this Clause 15, either Meda on the one hand or Valeant on the other hand (the “Terminating Party”) shall have the right to terminate this Agreement in the event that Valeant or Meda, respectively, commits a material breach of this Agreement.  The non-breaching Party shall first provide written notice to the Party that committed such material breach (the “Defaulting Party”), which notice shall clearly describe the nature of the breach.  The Defaulting Party shall have *** in which to cure the breach (or such longer period as is set out in the notice).  If the Defaulting Party fails to cure the breach within *** (or such longer period as is set out in the notice) then the Terminating Party may terminate this Agreement immediately on written notice.

 

28

 

15.4.     Termination for Insolvency.  Either Party shall have the right to terminate this Agreement immediately upon giving written notice of termination to the other (the “Insolvent Party”) if the Insolvent Party suspends or threatens to suspend payment of its debts as they fall due in circumstances where the Insolvent Party is unable to pay its debts within the meaning of the relevant bankruptcy or insolvency laws, any action, or any legal proceedings are started whether by a Third Party or not, for the purpose of the winding up or dissolution of the Insolvent Party or an analogous event occurs in any jurisdiction.

 

16.        CONSEQUENCES OF TERMINATION

 

16.1.     Upon expiry or termination of this Agreement for any reason:

 

16.1.1.         Termination of Rights.  Subject to Clauses 16.2 and 16.4, all of the rights of Valeant under this Agreement shall terminate upon the Termination Date.

 

16.1.2.         Termination of ***

 

16.1.3.         Intellectual Property Infringement Proceedings.  The Parties shall continue to be obliged to continue providing the support and assistance in relation to any litigation concerning infringement of Patent Rights or infringement of Licensed Trade Marks in the Elidel Territory or Xerese Territory, as applicable, that had been initiated pursuant to Clauses 13 or 14 prior to the Termination Date and not settled as of the Termination Date.

 

16.1.4.         Return of Confidential Information After Termination.  Valeant shall, at its own cost, promptly, at Meda’s option, either return to Meda all tangible Confidential Information disclosed to Valeant by or on behalf of Meda (including all copies thereof) or destroy such Confidential Information; provided that Valeant shall have the right to retain one (1) copy of the Confidential Information in a secure location solely for purposes of identifying its confidentiality obligations under Clause 17. Valeant shall use reasonable endeavours to delete all electronic copies of such Confidential Information from its systems.  Upon termination, Meda shall, at its own cost, at Valeant’s option, either return to Valeant all tangible Confidential Information disclosed to Meda by or on behalf of Valeant (including all copies thereof) or destroy such Confidential Information; provided that Meda shall have the right to retain one (1) copy of the Confidential Information in a secure location solely for purposes of identifying its confidentiality obligations under Clause 17.  Meda shall use reasonable endeavours to delete all electronic copies of such Confidential Information from its systems.

 

16.1.5.         Transfer of Marketing Authorisations and Other Regulatory Approvals After Termination. Valeant shall promptly take action to transfer, to Meda or to its designee, all Regulatory Approvals relating to the all Licensed Product in the Elidel Territory or Xerese Territory, as applicable, together with any applications for Regulatory Approvals of Licensed Products (including Marketing Authorisation applications or other such applications, as well as all existing INDs

 

29

 

and other similar regulatory filings in the Elidel Territory or Xerese Territory, as applicable, for the conduct of clinical trials with respect to Licensed Products) together with a copy of all Elidel Clinical Data and Xerese Clinical Data. All such transfers shall be completed in accordance with applicable laws, rules and regulations. In the event that such a transfer is not possible, Valeant shall maintain the existing Regulatory Approvals and applications therefor for Licensed Products in the Elidel Territory or Xerese Territory, as applicable, including, without limitation, granting Meda and/or its designees rights to cross-refer to the data and information on file with Regulatory Authorities in the Elidel Territory or Xerese Territory, as applicable, as may be necessary to facilitate the granting of separate Regulatory Approvals to Meda. The costs of compliance with this Clause 16.1.4 shall be borne by Valeant if Meda has terminated the Agreement and by Meda if Valeant has terminated the Agreement.

 

16.1.6.         Clinical Studies. Valeant shall, upon Meda’s written request, transfer to Meda in an orderly fashion the management and sole responsibility for any clinical studies on Licensed Products that were commenced prior to the termination of this Agreement, including ***.  Commencement shall mean the point at which the first study subject has been dosed with the relevant Licensed Product.  The costs of such transfer shall be borne by Valeant if Meda has terminated the Agreement and by Meda if Valeant has terminated the Agreement. Valeant shall not commence any clinical study of Licensed Products at any time after it has given or received a notice of termination pursuant to Clause 15. Valeant shall not have an obligation to continue any clinical study of Licensed Products at any time after the effective date of termination.

 

16.1.7.         Distribution Services.  Upon termination of this Agreement, Valeant shall have the right, but not the obligation, for a period of *** following the effective date of termination, to sell any inventory of Licensed Product existing on the effective date of termination. On the effective date of the termination or the end of such period, whichever is later, Meda shall be required to purchase from Valeant any remaining inventory of Licensed Products that is in Saleable Condition and that has, at the time of delivery to Meda, a remaining shelf life of no less than *** of the shelf life authorized in the applicable Marketing Authorization, at Valeant’s actual cost to acquire such inventory.

 

16.1.8.         Provision of Promotional and Marketing Materials, Information and Records After Termination.  Valeant shall provide to Meda a copy of all promotional and marketing materials used in the promotion of Licensed Products and hereby grants a licence to Meda in the Elidel Territory or Xerese Territory, as applicable, effective as of the date of termination, to use and/or create any such materials, copies or derivative works thereof in Meda’s promotion of Licensed Products; provided that such license does not extend to use of any trade name, trademark or service mark of Valeant.  Meda shall be entitled to sublicense the rights to any Third Party it grants the right to market the Licensed Products (or the terminated Licensed Product(s), as applicable) in the Elidel Territory or Xerese Territory, as applicable. Valeant shall not be liable for any use of

 

30

 

promotional and marketing materials by Meda or its sublicensee subsequent to the date of termination.

 

16.1.9.         Third Party Agreements and ***.  Promptly following termination of this Agreement, the Parties will use their best efforts to procure the assignment of ***, and any Third Party Agreements assigned to Valeant pursuant to this Agreement, from Valeant back to Meda. With respect to the Third Party Agreements that are assigned from Valeant back to Meda pursuant to this Clause 16.1.9, the Parties agree enter into an assignment and assumption agreement substantially in the form of Schedule 8 attached hereto assigning any Third Party Agreements assigned to Valeant pursuant to this Agreement back to Meda.

 

16.1.10.       Records.  Notwithstanding anything to the contrary in this Clause 16.1, each Party may retain one archival copy of any records or other materials solely for archival purposes or additional copies as required by applicable law.

 

16.2.     Accrued Rights.  The expiration or earlier termination of this Agreement for whatever reason shall not affect any rights or obligations of the Parties arising in any way out of this Agreement which are accrued prior to the date of termination, including, without limitation, the right to recover damages against the other Party for any breach of this Agreement occurring prior to such termination.

 

16.3.     Related Agreements.  The Elidel Supply Agreement shall terminate on the same date as termination of this Agreement subject to the provisions of the Elidel Supply Agreement dealing with the consequences of termination. The Pharmacovigilance Agreement shall survive pursuant to its own terms after termination of this Agreement.

 

16.4.     Surviving Clauses.  In the event of expiry or termination of this Agreement for any reason the provisions of Clauses 16 (Consequences of Termination), 17 (Confidentiality),  19 (Liability and Indemnities) and 23 (Miscellaneous)  shall remain in full force and effect.

 

17.        CONFIDENTIALITY

 

17.1.      Confidential Information.  During the Term each Party (the “Disclosing Party”) may disclose or make available to the other Party (the “Receiving Party”) confidential and/or proprietary information related to its products, technology, research plans, business affairs and/or finances related to the Licensed Products, including, any Know-How (the “Confidential Information”).  All Confidential Information is and shall remain the property of the Disclosing Party; provided, however, that all Improvements that are generated by or on behalf of either Party in performance of activities under this Agreement shall be deemed to be the Confidential Information of Meda.

 

17.2.      Confidentiality Obligations.  Each Party undertakes that except as expressly permitted pursuant to this Agreement it shall not, and shall ensure that its Affiliates do not, disclose or permit to be disclosed to any Third Party, or use or permit the use for any purpose other than in performance of its obligations under this Agreement, any of the other Party’s Confidential Information. Each Party may disclose Confidential Information provided by

 

31

 

 

 

 

 

 

 

the other Party to the extent such disclosure is reasonably necessary in the following instances:

 

17.2.1.         disclosure to governmental or other Regulatory Authorities in order to gain or maintain approval to conduct clinical trials or to market Licensed Product, but such disclosure may be only to the extent reasonably necessary to obtain authorisations;

 

17.2.2.         complying with applicable court orders or governmental regulations, including rules or regulations of any competent authority, Regulatory Authority or regulated securities exchange provided that the Receiving Party (i) promptly gives notice to the Disclosing Party in order to allow such Disclosing Party whatever opportunity may exist to seek confidential treatment of the Confidential Information; (ii) provides to the Disclosing Party all reasonable assistance to obtain confidentiality undertakings at the Disclosing Party’s expense; and (iii) only discloses Confidential Information to the extent required by the applicable court order or governmental regulation.

 

17.2.3.         The obligations of each Party under this Clause 17 shall continue for the duration of this Agreement and shall survive for a period of *** from the date of termination.

 

If the Party required by law to disclose is unable to inform the Disclosing Party prior to disclosure, the Receiving Party shall (provided it is lawful to do so) make full disclosure as soon as possible after such disclosure.

 

17.3.      Exclusions from Confidentiality Undertaking.  The obligations of confidentiality set out in this Clause 17 shall not apply to Confidential Information which is:

 

17.3.1.         published or becomes generally available to the public other than as a result of a breach of the undertakings hereunder by the receiving Party;

 

17.3.2.         in the possession of the receiving Party prior to its receipt from the disclosing Party, as evidenced by contemporaneous written evidence, and is not subject to a duty of confidentiality;

 

17.3.3.         independently developed by the receiving Party and is not subject to a duty of confidentiality; or

 

17.3.4.         obtained by the receiving Party from a Third Party not subject to a duty of confidentiality.

 

17.4.     Press Announcements.  The Parties shall provide each other with a draft of any proposed press release concerning the entering into of this Agreement or otherwise relating to the Elidel Licensed Product or the Xerese Licensed Product and shall obtain the other Party’s agreement to its terms, such agreement not to be unreasonably withheld, delayed, or conditioned.

 

32

 

18.        WARRANTIES

 

18.1.      Warranties by Each Party.  Each Party hereby warrants to the other Party that, as of the Effective Date:

 

18.1.1.         it is duly organised and validly existing under the laws of its place of incorporation;

 

18.1.2.         it has legal power, authority and right to enter into this Agreement;

 

18.1.3.         the execution and performance by it of its obligations hereunder will not constitute a breach of, or conflict with, its organisational documents nor any other material agreement or arrangement, whether written or oral, by which it is bound;

 

18.1.4.         it has full corporate power and authority and has taken all corporate action necessary to enter into and perform this Agreement, and that this Agreement has been duly authorised, executed, and delivered by that Party; and

 

18.1.5.         that this Agreement is a valid, binding, and legally enforceable obligation of that Party.

 

18.2.    Warranties by Meda with respect to the Elidel Licensed Products.  Meda hereby warrants to Valeant that, as of the Effective Date:

 

18.2.1.         Meda has not received any written notice of or threatening any material suit, legal claim, action, proceeding (other than patent oppositions), investigation against Meda or any of its Affiliates, that relates to the Elidel Licensed Products.

 

18.2.2.         Meda has not received any written notice threatening any orders, injunctions or decrees of any Governmental Entity to undertake Measures (as defined in the Elidel Supply Agreement) in the Elidel Territory or otherwise applicable or related to the Elidel Licensed Products that in any material respect restricts the arrangements contemplated by this Agreement.

 

18.2.3.         Meda and/or its Affiliates are (i) the beneficial owners of the Elidel Licensed Patents, Elidel Licensed Know-How, Elidel Licensed Clinical Data and Elidel Licensed Trade Marks free and clear of all Encumbrances (other than Permitted Encumbrances) or (ii) otherwise have sufficient rights to grant to Valeant the licenses and sublicenses as contemplated by this Agreement.

 

18.2.4.         To the Knowledge of Meda, the rights granted to Valeant in Clause 2 constitute all the material rights necessary to Commercialise the Elidel Licensed Products in the Elidel Field in the Elidel Territory.

 

18.2.5.         Neither Meda nor any of its Affiliates is a party to any license or similar agreement under which it has granted or agreed to grant a license or other rights to any Third Party to the Elidel Licensed Patents or the Elidel Trade Marks, other

 

33

 

than any licenses or other rights which would not conflict in any material respect with the rights being conveyed or licensed to Valeant under this Agreement.

 

18.2.6.         To the Knowledge of Meda, the sale, offer for sale or importation of the Elidel Licensed Product in the Elidel Field as it is sold, offered for sale or imported in the Elidel Territory as of the date hereof does not infringe, misappropriate or otherwise violate in any material respect the Intellectual Property Rights of any Third Party.

 

18.2.7.         To the Knowledge of Meda, none of the Elidel Licensed Patents or Elidel Trade Marks has been adjudged invalid or unenforceable in whole or part other than abandoned patents.

 

18.2.8.         Meda has not received any written notice of any suit, claim, action, proceeding challenging or seeking to deny or restrict, directly or indirectly, the rights of Meda or any of its Affiliates in any Elidel Licensed Patents, Elidel Trade Marks or Elidel Licensed Know-How.

 

18.2.9.         To the Knowledge of Meda, no Third Party is infringing or misappropriating any of the Elidel Licensed Patents, Elidel Trade Marks or Elidel Licensed Know-How.

 

18.2.10.       Meda and its Affiliates are in compliance with *** and, to the knowledge of Meda, *** and its Affiliates are in compliance with ***.

 

18.3.    Warranties by Meda with respect to the Xerese Licensed Products.  Meda hereby warrants to Valeant that, as of the Effective Date:

 

18.3.1.         There is no material suit, legal claim, action, proceeding (other than patent oppositions), investigation pending, or to the Knowledge of Meda, threatening in writing against Meda or any of its Affiliates, that relates to the Xerese Licensed Products.

 

18.3.2.         To the knowledge of Meda, there are no outstanding or threatened (in writing) orders, injunctions or decrees of any Governmental Entity in the Xerese Territory or otherwise applicable or related to the Xerese Licensed Products that in any material respect restricts the arrangements contemplated by this Agreement.

 

18.3.3.         Meda and/or its Affiliates (i) are the beneficial owners of the Xerese Licensed Patents, Xerese Licensed Know-How, Xerese Licensed Clinical Data and Xerese Licensed Trade Marks free and clear of all Encumbrances (other than Permitted Encumbrances), or (ii) otherwise have sufficient rights to grant to Valeant the licenses and sublicenses as contemplated by this Agreement.

 

18.3.4.         To the Knowledge of Meda, the rights granted to Valeant in Clause 2 constitute all the material rights necessary to Commercialise the Xerese Licensed Products in the Xerese Field in the Xerese Territory.

 

34

 

18.3.5.         Neither Meda nor any of its Affiliates is a party to any license or similar agreement under which it has granted or agreed to grant a license or other rights to any Third Party to the Xerese Licensed Patents or the Xerese Trade Marks, other than any licenses or other rights which would not conflict in any material respect with the rights being conveyed or licensed to Valeant under this Agreement.

 

18.3.6.         To the Knowledge of Meda, the sale, offer for sale or importation of the Xerese Licensed Product in the Xerese Field as it is sold, offered for sale or imported in the Xerese Territory as of the date hereof does not infringe, misappropriate or otherwise violate in any material respect the Intellectual Property Rights of any Third Party.

 

18.3.7.         To the Knowledge of Meda, none of the Xerese Licensed Patents or Xerese Trade Marks has been adjudged invalid or unenforceable in whole or part other than abandoned patents.

 

18.3.8.         Meda has not received any written notice of any suit, claim, action, proceeding challenging or seeking to deny or restrict, directly or indirectly, the rights of Meda or any of its Affiliates in any Xerese Licensed Patents, Xerese Trade Marks or Xerese Licensed Know-How.

 

18.3.9.         To the Knowledge of Meda, no Third Party is infringing or misappropriating any of the Xerese Licensed Patents, Xerese Trade Marks or Xerese Licensed Know-How.

 

18.3.10.       Meda and its Affiliates are in compliance with *** and, to the Knowledge of Meda, *** and its Affiliates are in compliance with ***.

 

18.3.11.       Meda and its Affiliates are in compliance with *** and, to the Knowledge of Meda, *** is in compliance with ***.

 

18.3.12.       Meda or its Affiliate is the holder of the Marketing Authorization number NDA 22-436 in the United States for the Xerese Product marketed in the United States at the Effective Date.

 

18.4.     Meda Disclosure.  Valeant acknowledges that Meda has made the following disclosures and that Meda shall not be liable for any breach of warranty arising out of or in relation to the matters disclosed below:

 

18.4.1.         ***

 

18.4.2.         Meda has disclosed to Valeant ***.

 

35

 

18.5.     Undertaking by Valeant. Valeant undertakes to Meda that it will comply with Meda’s obligations to ***, provided however that:

 

18.5.1.         the undertaking with respect to ***;

 

18.5.2.         with respect to the undertaking regarding ***; and

 

18.5.3.         with respect to the undertaking regarding ***.

 

If required in order to *** under the *** Agreement by Meda to Valeant or if the Parties otherwise agree, Valeant shall provide ***.

 

18.6.     No Implied Warranties.  The warranties provided in this Clause 18 are in lieu of any other warranties, express or implied, and nothing herein shall be construed as a warranty by either Party of any kind, including without limitation, any implied warranty of fitness for a specific purpose or merchantable quality, all of which are expressly and specifically excluded.

 

18.7.     No Warranties of Intellectual Property Rights.  Nothing in this Agreement shall be construed as a warranty given by any Party (i) that any patent will issue after the Effective Date based upon any pending patent application included in the Licensed Intellectual Property, or (ii) that any granted patent which issues from such pending patent applications will be valid and enforceable, or (iii) that after the Effective Date the manufacture, use or sale of Licensed Products or the use of any Licensed Intellectual Property will not infringe the patent or proprietary rights of any Third Party.

 

18.8.     No Further Warranties.  No director, officer, employee or agent of any Party or its Affiliates is authorised to make any further warranty to the other Party which is not contained in this Agreement, and each Party acknowledges that it has not relied on any such oral or written warranties.

 

19.        LIABILITY AND INDEMNITIES

 

19.1.     No Consequential Damages. Subject to Clause 19.7, but otherwise notwithstanding any other provision of this Agreement, neither Party shall be liable to the other Party or to any Affiliate of the other Party for any lost profits, business opportunities, special, indirect, consequential, exemplary, or punitive damages of any nature arising under or in relation to this Agreement even if that Party was advised in advance of the possibility of such loss or damage, unless actually paid to a Third Party.

 

19.2.     Indemnification by Valeant.  Valeant shall, subject to Clause 19.1, indemnify, defend and hold harmless Meda, its Affiliates, and its and their respective directors, officers, employees and agents (collectively the “Meda Indemnified Parties”) against any and all claims, causes of action, demands, liabilities, losses, damages, costs or expenses, including reasonable attorneys’ fees, asserted by a Third Party (each a “Loss”) to the extent such Loss arose out of or was caused by: (a) the distribution, marketing, promotion or sale of Licensed Products by or on behalf of Valeant or its Affiliates or sublicensees; (b) Valeant’s breach of any of its warranties or covenants herein; (c) ***; or (d) a

 

36

 

negligent act or omission or wilful misconduct by Valeant, its Affiliates or sublicensees in the performance of its obligations under this Agreement; except, in all cases, to the extent that such Loss arises out of (i) the negligence or wilful misconduct of Meda; (ii) Meda’s breach of any of its warranties herein or (iii) any failure of Meda to perform or observe any provision, obligation, covenant or agreement to be performed by Meda pursuant to this Agreement.

 

19.3.     Indemnification by Meda.  Meda shall, subject to Clause 19.1, indemnify, defend and hold harmless Valeant, its Affiliates, and its and their respective, directors, officers, employees and agents (collectively the “Valeant Indemnified Parties”) against any and all Losses incurred or suffered by the Valeant Indemnified Parties to the extent such Loss arose out of or was caused by (a) other than by Valeant, the distribution, marketing, promotion or sale of Licensed Products by or on behalf of Meda or its Affiliates, licensees, or sublicensees or their predecessors; (b) Meda’s breach of any of its warranties or covenants herein; (c) ***; or (d) a negligent act or omission or wilful misconduct by Meda, its Affiliates or sublicensees in the performance of its obligations under this Agreement, or ***; except, in all cases, to the extent that such Loss arises out of (i) the negligence or wilful misconduct of Valeant (ii) Valeant’s breach of any of its warranties herein or (iii) any failure of Valeant to perform or observe any provision, obligation, covenant or agreement to be performed by Valeant pursuant to this Agreement.  In addition, Meda shall fully indemnify and hold the Valeant Indemnified Parties harmless from any and all Losses arising out of any use by Meda or by any Third Party to which Meda grants a license or sublicense pursuant to Clause 16.1.7, of promotional and marketing materials; the foregoing indemnification shall survive termination of this Agreement indefinitely.

 

19.4.     Notification of Liabilities/Losses.  A person or entity entitled to indemnification under this Clause 19.4 (an “Indemnified Party”) shall give prompt written notification (within twenty (20) days or less if action is required within such shorter time period) to the Party from whom indemnification is sought (the “Indemnifying Party”) of the commencement or notice of Loss for which indemnification may be sought or, if earlier, upon the assertion of any such Loss (it being understood and agreed, however, that the failure by an Indemnified Party to give notice of a Loss as provided in this Clause 19.4 shall not relieve the Indemnifying Party of its indemnification obligation under this Agreement except, and only, to the extent that such Indemnifying Party is materially prejudiced as a result of such failure to give notice).  The Indemnifying Party shall be liable for any reasonable legal fees and expenses subsequently incurred in connection with the defence of such Loss after receiving such notice.  The Parties shall thereafter keep the other Party informed of any Losses or threatened Losses (as described in Clauses 19.2 and/or 19.3).

 

19.4.1.         In the case of a Loss for which Meda seeks indemnification under Clause 19.2, Meda shall permit Valeant to direct and control the defence of the Loss and shall provide such reasonable assistance as is reasonably requested by Valeant (at Valeant’s cost) in the defence of the Loss; provided that nothing in this Clause 19.4.1 shall permit Valeant to make any admission on behalf of Meda, or to settle any claim or litigation which would impose any financial obligations on Meda or would result in any loss or diminution of the scope, validity or

 

37

 

enforceability of the Licensed Intellectual Property without the prior written consent of Meda, such consent not to be unreasonably withheld, delayed or conditioned.

 

19.4.2.         In the case of a Loss for which Valeant seeks indemnification under Clause 19.3, Valeant shall permit Meda to direct and control the defence of the Loss and shall provide such reasonable assistance as is reasonably requested by Meda (at Meda’s cost) in the defence of the Loss, provided that nothing in this Clause 19.4.2 shall permit Meda to make any admission on behalf of Valeant, to settle any claim or litigation which would impose any financial obligations on Valeant or materially affect Valeant’s rights under or the value to Valeant of the Licensed Intellectual Property without the prior written consent of Valeant, such consent not to be unreasonably withheld, delayed or conditioned.

 

19.5.     Supply.  The indemnities in this Agreement shall not apply to the manufacture and supply of Licensed Products which shall be governed by the Elidel Supply Agreement or Clause 9.1, as applicable, which will provide for the manufacturer and supplier of Licensed Products and active pharmaceutical ingredients to bear certain liabilities on terms to be agreed for Losses for product liability claims arising out of the negligent manufacture or supply of those Licensed Products and active pharmaceutical ingredients.

 

19.6.     Mitigation.  Any Party making a claim under this Clause 19 shall take all reasonable steps to mitigate and/or minimise the Losses suffered and shall not do anything which would have the effect of increasing the Losses.

 

19.7.     Restriction on Limitation of Liability.  Neither Party limits or excludes its liability for fraud, fraudulent concealment or fraudulent misrepresentation, nor for death or personal injury arising from its negligence.

 

19.8.     Insurance. Each Party shall maintain comprehensive general liability insurance, including broad form contractual liability and product liability coverage which is sufficient to meet its obligations pursuant to this Agreement.  Each Party shall maintain such insurance during the term of this Agreement and thereafter for a period of ***.  Upon request, the insured Party shall provide the other Party with a certificate of insurance as evidence of the requested coverage and shall notify the other Party within thirty (30) days of any cancellation or termination of such insurance.

 

20.        ***

 

21.        ***

 

.

 

22.        NOTICES.

 

22.1.    Address. Any notice required to be given under this agreement, shall be in writing and shall be delivered personally, or sent by pre-paid certified or registered post return receipt

 

38

 

requested or recorded delivery or by commercial courier, to each party required to receive the notice at its address as set out below:

 

Meda:

 

***

 

Valeant:

 

***

 

or as otherwise specified by the relevant Party by notice in writing to each other Party.

 

22.2.     Deemed Delivery. Any notice shall be deemed to have been duly received:

 

22.2.1.         if delivered personally, when left at the address and for the contact referred to in this Clause 22;

 

22.2.2.         if sent by pre-paid recorded delivery, at 9.00 am on the fifth Business Day after posting; or

 

22.2.3.         if delivered by commercial courier, on the date and at the time that the courier’s delivery receipt is signed.

 

23.        MISCELLANEOUS.

 

23.1.     Force Majeure. In the event any Party (the “Affected Party”) is delayed or prevented from the performance of any act required under this agreement by reasons outside its reasonable control including, war or national emergency, acts of terrorism, protests, riot, fire, explosion, flood, epidemic, but not including any labour dispute (a “Force Majeure Event”), then performance of such act will be excused for the period of such delay, provided however, that such party shall exert its reasonable efforts to overcome such Force Majeure Event and to resume performance of its obligations in a timely manner.  Notice of the commencement and termination of such Force Majeure Event will be provided by the Affected Party to the other Party. Any obligations of the Affected Party will be extended for a period of time equal to the number of days of the delay, provided however, that in the event that such Affected Party is unable to overcome such Force Majeure Event within one-hundred eighty (180) days, the other Party may terminate this Agreement on written notice.

 

23.2.     Public Statements. The Parties shall not disclose the relationship between the Parties or the existence of this Agreement to any Third Party without the consent of the other Party, except as may be required by applicable law (including without limitation, federal and local securities laws) or any listing agreement with the New York Stock Exchange, or as may be reasonably requested in connection with any proceedings before any Regulatory Authority or other governmental authority.

 

39

 

23.3.     Independent Contractors.  The Parties hereto are independent contractors and nothing contained in this Agreement shall be deemed or construed to create a partnership, joint venture, employment, franchise, agency or fiduciary relationship between the Parties.

 

23.4.     Assignment, Subcontracting.  This Agreement and each and every covenant, term and condition herein is binding upon and enures to the benefit of the Parties hereto and their respective successors. Neither Party may assign this Agreement, nor assign, sublicense, delegate or sub-contract any of its rights or obligations granted hereunder without the other Party’s prior written consent, except that a Party may (a) assign, sublicense, subcontract or delegate any or all of its rights and obligations under this Agreement to one or more of its Affiliates; and (b) assign this Agreement in its entirety to a successor to all or substantially all of its business or assets to which this Agreement relates. No permitted assignment, sublicense, subcontract or delegation shall relieve the assigning, sublicensing, subcontracting or delegating Party of its liability hereunder. Any attempted assignment in contravention of the foregoing shall be void.

 

23.5.     Severability.  If the whole or any part of this Agreement is or becomes or is declared illegal, invalid or unenforceable in any jurisdiction for any reason (including both by reason of the provisions of any legislation and also by reason of any court or competent authority which either has jurisdiction over this Agreement or has jurisdiction over any of the Parties):

 

23.5.1.         in the case of the illegality, invalidity or un-enforceability of the whole of this Agreement it shall terminate only in relation to the jurisdiction in question; or

 

23.5.2.         in the case of the illegality, invalidity or un-enforceability of part of this Agreement that part shall be severed from this Agreement in the jurisdiction in question and that illegality, invalidity or un-enforceability shall not in any way whatsoever prejudice or affect the remaining parts of this Agreement which shall continue in full force and effect.

 

If, in the reasonable opinion of any Party, any severance under this Clause 23.5 materially affects the commercial basis of this Agreement, then the Parties shall discuss, in good faith, ways to eliminate the material effect.

 

23.6.     Language.  Except where expressly provided otherwise, all reports, plans and any other form of communication between the Parties shall be in English and where necessary Valeant shall provide an English translation of any document sent to Meda and Meda shall provide an English translation of any document sent to Valeant.

 

23.7.     Entire Agreement.  This Agreement (together with the Elidel Supply Agreement and the other agreements referenced in this Agreement), constitutes the entire understanding and agreement of the Parties with respect to the subject matter hereof and cancels and supersedes all prior agreements, whether verbal or written, between the Parties with respect to the subject matter hereof, including, specifically, the Interim Distribution Agreement, provided that any Confidential Information (as such term is defined in the Interim Distribution Agreement) shall be deemed to be Confidential Information pursuant

 

40

 

to this Agreement and subject to the applicable provisions hereof.  No modification of any provision of this Agreement shall be effective unless made in writing and signed by a duly authorized officer of both of the Parties.

 

23.8.     Third Party Rights. A person who is not a Party to the Agreement shall not have any rights under or in connection with it.

 

23.9.     Waiver. No delay or failure of any Party in exercising or enforcing any of its rights or remedies under this Agreement shall operate as a waiver of those rights.

 

23.10.  Governing Law and Dispute Resolution.

 

23.10.1.     This Agreement (and any dispute, controversy, proceedings or claim of whatever nature arising out of or in any way relating to this Agreement including any question regarding its existence, validity, enforceability or termination) shall be governed by and construed in accordance with the laws of England, without regard to principles of choice of law or conflicts of laws that might lead to the application of laws other than the laws of England.

 

23.10.2.     Except as otherwise provided under Clause 13.5 of this Agreement, each party hereto irrevocably and unconditionally submits to the exclusive jurisdiction of the courts of England located in London, England over any action, suit or proceeding arising out of or relating to this Agreement.  Each of the Parties hereto irrevocably waives any right that it may have to object to an action being brought in those courts, to claim that the action has been brought in an inconvenient forum, or to claim that those courts do not have jurisdiction.

 

23.10.3.     This Clause 23.10 shall not prevent a party hereto from enforcing any judgment obtained in the courts of England in any other jurisdiction.

 

23.11.   Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

[Signature Page Follows]

 

41

 

This Agreement has been entered into on the date stated at the beginning of this Agreement.

 

 

	
Signed by
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
State   position:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By and on behalf of MEDA PHARMA SARL
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Signed by
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
State   position:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By and on behalf of VALEANT INTERNATIONAL   (BARBADOS) SRL
    	
 
    

 

42

 

 

SCHEDULE 1

 

PATENTS

 

PART A — Elidel Licensed Patents

 

	
FAMILY NUMBER
    	
 
    	
CTRY
    	
 
    	
FILING
   DATE
    	
 
    	
FILING
   NUMBER
    	
 
    	
GRANT
   NUMBER
    	
 
    	
GRANT
   DATE
    	
 
    	
STATUS
    	
 
    	
EXPIRY
    
	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
 
    	
 
    	
 
    	
 
    	
***
    	
 
    	
 
    
	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
 
    	
 
    	
 
    	
 
    	
***
    	
 
    	
***
    

 

***

 

	
FAMILY
   NUMBER
    	
 
    	
CTRY
    	
 
    	
FILING
   DATE
    	
 
    	
FILING NUMBER
    	
 
    	
GRANT
   NUMBER
    	
 
    	
GRANT
   DATE
    	
 
    	
STATUS
    	
 
    	
EXPIRY
    
	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
 
    	
 
    	
 
    	
 
    	
***
    	
 
    	
***
    
	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
 
    	
 
    	
 
    	
 
    	
***
    	
 
    	
***
    

 

***

 

	
FAMILY NUMBER
    	
 
    	
CTRY
    	
 
    	
FILING
   DATE
    	
 
    	
FILING
   NUMBER
    	
 
    	
GRANT
   NUMBER
    	
 
    	
GRANT
   DATE
    	
 
    	
STATUS
    	
 
    	
EXPIRY
    
	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    

 

***

 

	
FAMILY
   NUMBER
    	
 
    	
CTRY
    	
 
    	
FILING
   DATE
    	
 
    	
FILING
    NUMBER
    	
 
    	
GRANT
    NUMBER
    	
 
    	
GRANT
   DATE
    	
 
    	
STATUS
    	
 
    	
EXPIRY
    
	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
 
    	
 
    	
 
    	
 
    	
***
    	
 
    	
***
    
	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
 
    	
 
    	
 
    	
 
    	
***
    	
 
    	
***
    

 

***

 

 

	
FAMILY NUMBER
    	
 
    	
CTRY
    	
 
    	
FILING DATE
    	
 
    	
FILING NUMBER
    	
 
    	
GRANT
   NUMBER
    	
 
    	
GRANT
   DATE
    	
 
    	
STATUS
    	
 
    	
EXPIRY
    
	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    

 

***

 

	
FAMILY NUMBER
    	
 
    	
CTRY
    	
 
    	
FILING DATE
    	
 
    	
FILING
   NUMBER
    	
 
    	
GRANT
   NUMBER
    	
 
    	
GRANT
   DATE
    	
 
    	
STATUS
    	
 
    	
EXPIRY
    
	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    

 

***

 

	
FAMILY NUMBER
    	
 
    	
CTRY
    	
 
    	
FILING
   DATE
    	
 
    	
FILING
   NUMBER
    	
 
    	
GRANT
   NUMBER
    	
 
    	
GRANT
   DATE
    	
 
    	
STATUS
    	
 
    	
EXPIRY
    
	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    

 

 

PART B — Xerese Licensed Patents

 

	
 
    	
 
    	
 
    	
 
    	
Filing Date/
    Issue Date
    	
 
    	
Country
    	
 
    	
Title
    	
 
    	
Status and Expiration
    
	
1.
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
2.
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
3.
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
4.
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
5.
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
6.
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    

 

	
 
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
 
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    

 

 

SCHEDULE 2

 

PRODUCTS

 

PART A — Elidel Products

 

Product Description

 

Elidel Cream 1% 30g

 

Elidel Cream 1% 100g

 

Elidel Cream 1% 60g

 

Elidel Cream Sample 10mg/5g

 

PART B — Xerese Products

 

Product Description

 

Xerese 0.5 gram pouch

 

Xerese 2 gram tube

 

Xerese 5 gram tube

 

 

SCHEDULE 3

 

TRADE MARKS

 

PART A — Elidel Trade Marks

 

	
TRADEMARK
    	
 
    	
COUNTRY
    	
 
    	
FILING
   DATE
    	
 
    	
FILING
   NUMBER
    	
 
    	
REGISTRATION
   DATE
    	
 
    	
REGISTRATION
   NUMBER
    	
 
    	
NEXT
   RENEWAL
   DATE
    
	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    

 

PART B — Xerese Trade Marks

 

***

 

***

 

 

SCHEDULE 4

 

MARKETING SERVICES

 

The Parties will agree on a *** Plan covering the period *** which includes the following or a combination of the elements listed below.  The *** Services shall be provided in accordance with the *** Plan.

 

1.                                      ***

 

***

 

2.                                      ***

 

***

 

3.                                      ***

 

***

 

4.                                      ***

 

***

 

5.                                      ***

 

***

 

6.                                      ***

 

***

 

7.                                      ***

 

***

 

8.                                      ***

 

***

 

9.                                      ***

 

***

 

 

10.                               ***

 

***

 

 

SCHEDULE 5

 

***

 

SCHEDULE 6

 

MEDA’S KNOWLEDGE PERSONS

 

***

 

***

 

***

 

***

 

 

SCHEDULE 7

 

THIRD PARTY AGREEMENTS

 

	
Agreement Type
    	
 
    	
Meda Party
    	
 
    	
Counter Party
    	
 
    	
Territory /
   Country of
   Business
    	
 
    	
Effective Date of
   Agreement /
   Duration and
   Termination
   Period
    
	
***
    	
 
    	
 
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
***
    	
 
    	
 
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
***
    	
 
    	
 
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
***
    	
 
    	
 
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
***
    	
 
    	
 
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
***
    	
 
    	
 
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
***
    	
 
    	
 
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
***
    	
 
    	
 
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
***
    	
 
    	
 
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
***
    	
 
    	
 
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
***
    	
 
    	
 
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
***
    	
 
    	
 
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
***
    	
 
    	
 
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
***
    	
 
    	
 
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
***
    	
 
    	
 
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
***
    	
 
    	
 
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
***
    	
 
    	
 
    	
 
    	
***
    	
 
    	
 
    	
 
    	
***
    
	
***
    	
 
    	
 
    	
 
    	
***
    	
 
    	
 
    	
 
    	
***
    
	
***
    	
 
    	
 
    	
 
    	
***
    	
 
    	
 
    	
 
    	
***
    

 

 

	
Agreement Type
    	
 
    	
Meda Party
    	
 
    	
Counter Party
    	
 
    	
Territory /
   Country of
   Business
    	
 
    	
Effective Date of
   Agreement /
   Duration and
   Termination
   Period
    
	
***
    	
 
    	
 
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
***
    	
 
    	
 
    	
 
    	
***
    	
 
    	
 
    	
 
    	
***
    
	
***
    	
 
    	
 
    	
 
    	
***
    	
 
    	
 
    	
 
    	
***
    
	
***
    	
 
    	
 
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
***
    	
 
    	
 
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    

 

 

SCHEDULE 8

 

ASSIGNMENT AND ASSUMPTION OF THIRD PARTY AGREEMENTS

 

This ASSIGNMENT AND ASSUMPTION OF THIRD PARTY AGREEMENTS (this “Agreement”), is made as of the 29th day of June, 2011, by Meda Pharma SARL, a company incorporated in Luxembourg (“Assignor”), and Valeant International (Barbados) SRL, an international society with restricted liability established under the laws of Barbados (“Assignee”).  All capitalized words and terms used in this Agreement and not defined herein shall have the respective meanings ascribed to them in that certain License Agreement of even date herewith by and between Assignor and Assignee (the “License Agreement”).

 

WHEREAS, Assignor has entered into the License Agreement with Assignee, pursuant to which, among other things, Assignor agreed to assign its obligations under the Third Party Agreements to Assignee and Assignee is obligated to assume and accept the assignment of obligations for the Third Party Agreements.

 

NOW, THEREFORE, in order to satisfy Assignor’s and Assignee’s obligations under the License Agreement, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, it is hereby agreed as follows:

 

1.               Assignment. In accordance with and subject to the terms of the License Agreement, Assignor hereby transfers to Assignee, all of Assignor’s right, title and interest in, to and under the Third Party Agreements.

 

2.               Assumption. In accordance with and subject to the terms of the License Agreement, Assignee hereby assumes and accepts Assignor’s entire right, title and interest in, to and under the Third Party Agreements and assumes and agrees to perform and discharge, in accordance with their respective terms and subject to the respective conditions thereof, all outstanding obligations and liabilities under the Third Party Agreements arising from and after the Effective Date.

 

3.               Sub-contraction of Relevant Obligation. Notwithstanding the provisions of paragraph 2, where any obligation under any of the Third Party Agreements cannot be assigned or transferred to Assignee except by an agreement of novation, such relevant obligation shall not be assigned or transferred pursuant to paragraph 2 above but Assignee shall perform (as the sub-contractor or agent of Assignor) the relevant obligation to the extent it is to be discharged after the Effective Date unless and until such novation is effected by obtaining the consent of the counterparty to the relevant contract.

 

4.               Governing Law. This Agreement shall be governed by the laws of England, without regard to principles of choice of law or conflicts of laws that might lead to the application of laws other than the laws of England. Each party hereto irrevocably and unconditionally submits to the exclusive jurisdiction of the courts of England located in London, England over any action, suit or proceeding arising out of or relating to this Agreement.

 

 

5.               EACH OF THE PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREBY OR THE ACTIONS OF THE PARTIES IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF.

 

6.               Conflicts. Nothing in this Agreement shall be deemed to supersede, enlarge or modify any of the provisions of the License Agreement, all of which survive the execution and delivery of this Agreement as provided and subject to the limitations set forth in the License Agreement.  If any conflict exists between the terms of this Agreement and the terms of the License Agreement, the terms of the License Agreement shall govern and control.

 

7.               Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

8.               No Representation.  This Agreement is made without recourse, representation or warranty of any kind whatsoever, express or implied, except as specifically set forth in the License Agreement.

 

[No further text on this page]

 

 

EXECUTION COPY

 

IN WITNESS WHEREOF, the parties hereto have each caused this Agreement to be duly executed as of the date first above written:

 

 

	
 
    	
MEDA PHARMA SARL
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
VALEANT INTERNATIONAL   (BARBADOS) SRL
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
				

 

 

SCHEDULE 9

 

PART A — ***

 

PART B — *** AGREEMENTS

 

	
Agreement
    	
 
    	
*** Party
    	
 
    	
Counterparty
    	
 
    	
Date of Agreement
    
	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    

 

 

SCHEDULE 10

 

***

 

 

SCHEDULE 11

 

MARKETING AUTHORIZATIONS

 

Elidel

 

	
Country
    	
 
    	
Product Name
    	
 
    	
Approval
   status
    	
 
    	
Marketing Authorization
   Number/NDA Number
    
	
Canada
    	
 
    	
Elidel Cream 1 %
    	
 
    	
Approved
    	
 
    	
02247238
    
	
Mexico
    	
 
    	
Elidel Cream 1 %
    	
 
    	
Approved
    	
 
    	
149M2002 SSA IV
    
	
United States
    	
 
    	
Elidel Cream 1 %
    	
 
    	
Approved
    	
 
    	
21-302
    

 

Xerese

 

Xerese Product approved by the Food and Drug Administration of the United States Department of Health and Human Services (NDA 22-436).

 

 

SCHEDULE 12

 

TRANSITION AGREEMENT

	
 
    	
 
    

 

U.S. TRANSITION AGREEMENT

 

between

 

MEDA PHARMA SARL

 

and

 

VALEANT INTERNATIONAL (BARBADOS) SRL

	
 
    	
 
    

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
1.
    	
DEFINITIONS   AND INTERPRETATION
    	
20
    
	
 
    	
 
    	
 
    
	
2.
    	
TRANSITION
    	
23
    
	
 
    	
 
    	
 
    
	
3.
    	
PAYMENT   CLAIMS
    	
25
    
	
 
    	
 
    	
 
    
	
4.
    	
GOVERNMENTAL   ENTITY PROGRAMS
    	
25
    
	
 
    	
 
    	
 
    
	
5.
    	
HEALTH   CARE REFORM LEGISLATION
    	
29
    
	
 
    	
 
    	
 
    
	
6.
    	
PRODUCT   RETURNS AND CUSTOMER SERVICE
    	
30
    
	
 
    	
 
    	
 
    
	
7.
    	
INDEMNIFICATION;   LIMITATION ON LOSSES
    	
30
    
	
 
    	
 
    	
 
    
	
8.
    	
MISCELLANEOUS
    	
31
    
	
 
    	
 
    	
 
    

 

List of Annexes and Schedules

 

	
Annex A
    	
AMP Reporting Format
    
	
Annex B
    	
ASP Reporting Format
    
	
Annex C
    	
BP Reporting Format
    
	
Annex D
    	
NFAMP Reporting Format
    
	
Annex E
    	
Patient Transaction Data   Feed and Layout
    
	
Annex F
    	
New Mexico Price   Reporting Format
    
	
Annex G
    	
Texas Vendor Drug   Program Reporting Format
    
	
 
    	
 
    
	
Schedule 2.5 Specified Existing Discount Agreements
    

 

 

U.S. TRANSITION AGREEMENT

 

This U.S. TRANSITION AGREEMENT (“U.S. Transition Agreement”) is made as of this [X] day of [X], 2011, by and between Meda Pharma SARL, a company incorporated in Luxembourg (“Meda”), and Valeant International (Barbados) SRL, an international society with restricted liability established under the laws of Barbados (“Valeant”).  Meda and Valeant are each referred to individually as a “Party” and together as the “Parties.”

 

RECITALS

 

WHEREAS, Meda and Valeant have entered into a Licence Agreement dated as of June 29, 2011 (“Licence Agreement”) pursuant to which, among other things, Meda granted a license to Valeant to commercialize the Product (as defined below) in the Territory (as defined below); and

 

WHEREAS, the Licence Agreement provides that Meda and Valeant will enter into this U.S. Transition Agreement contemporaneously with the Closing Date (as defined below).

 

NOW, THEREFORE, the Parties hereby agree as follows:

 

1.                                      DEFINITIONS AND INTERPRETATION

 

1.1                               Definitions.  The capitalized terms used in this U.S. Transition Agreement shall have the meanings as defined below or, if not defined below, as defined in the Licence Agreement:

 

“AMP” means the average manufacturer price, as defined at 42 U.S.C. § 1396r-8(k)(1) and implementing regulations.

 

“ASP” means the manufacturer’s average selling price as defined at 42 U.S.C. § 1395w-3a and 42 C.F.R. § 414.800, et seq.

 

“Best Price” means the “best price” as defined at 42 U.S.C. § 1396r-8(c)(1)(C) and 42 C.F.R. § 447.500 et seq.

 

“Calendar Quarter” means any period of three (3) consecutive calendar months ending on March 31, June 30, September 30 or December 31.

 

“Chargeback/Rebate Termination Date” shall have the meaning set forth in Clause 3.1(a)(ii).

 

“Chargebacks” means all chargebacks and all other credits and reimbursements, other than Rebates, to Customers with respect to the Product (whether relating to the Product sold prior to, on or after Closing Date).

 

“Closing Date” means the date hereof.

 

“CMS” means Centers for Medicare and Medicaid Services within the United States Department of Health and Human Services, or any successor organization or agency.

 

 

“Customers” means Third Party wholesalers, pharmacy benefit managers, managed care organizations, government buyers, group purchasing organizations or other Third Parties that contract with Meda with respect to the Product or purchase the Product from Meda as of the Closing Date in the Territory.

 

“Distributor/End Purchaser Invoice Date” means the date that a wholesaler or distributor sells a Product to an end purchaser customer, as reflected on Chargeback claims data.

 

“Existing Discount Agreements” shall have the meaning set forth in Clause 2.4.

 

“FSS” means Federal Supply Schedule administered by the United States Department of Veterans Affairs.

 

“Health Care Reform Fees” or “HCR Fees” means the fees described in Section 9008 of the Patient Protection and Affordable Care Act, Pub. L. No. 111-148, as amended by Section 1401 of the Health Care Education Reconciliation Act of 2010, Pub. L. No. 111- 152.

 

“Licence Agreement” shall have the meaning set forth in the Recitals of this U.S. Transition Agreement.

 

“Meda NDC” shall have the meaning set forth in Clause 2.2.

 

“Medicaid Rebate Program” means the rebate program established pursuant to 42 U.S.C. §1396r-8.

 

“Medicare Program” means the program established pursuant to 42 U.S.C. Subchapter XVIII.

 

“Medicare Part D Prescription Drug Plans” means a Prescription Drug Plan as defined in 42 C.F.R.§ 423.4 or Medicare Advantage Prescription Drug plan that has been approved by CMS to offer prescription drug coverage that is integrated with health care coverage provided under Part C of the Medicare Program to enrollees, and that satisfies the definition of an “MA-PD plan” under 42 C.F.R. § 423.4.

 

“Medicare Part D Coverage Gap Rebate Program” means the rebate program pursuant to Section 3301 of the Patient Protection and Affordable Care Act, Pub. L. No. 111-148.

 

“NFAMP” means the non-federal average manufacturer price as defined in 38 U.S.C. § 8126 and the VA Master Agreement.

 

“Payment Claims” means any Rebates and/or Chargebacks, and without limiting the foregoing, includes prompt payment discounts, distribution service fees, and administrative fees charged by Customers.

 

“Pharmacy Claim Payment Date” means the date on which a pharmacy or other entity dispenses the Product as reflected on Rebate claim utilization data.

 

 

“PHS 340B Program” means the drug discount program, available to “covered entities,” that is administered by the Health Resources and Services Administration pursuant to 42 U.S.C. § 256b.

 

“Product” means the “Xerese Products” as defined in the Licence Agreement.

 

“Proportion of Product Sales” means the proportion of total sales of Meda and its Affiliates represented by sales of the Product that are used to calculate the HCR Fees associated with the Product, only if such proportion is expressly reported by the United States Department of Treasury when it invoices the HCR Fees to Meda and its Affiliates; provided, however, that if the United States Department of Treasury does not report such proportion as provided in the foregoing, then “Proportion of Product Sales” means the total dollar value of sales of the Product under the Meda NDC in the relevant calendar year to government purchasers included in the calculation of the HCR Fees divided by the total dollar value of sales of all products of Meda and its Affiliates in the relevant calendar year to government purchasers included in the calculation of the HCR Fees, based on data in Meda’s accounting system for such sales.  For purposes of this definition, the term “sales” means sales, net of applicable discounts.

 

“Rebates” means any rebates, price reductions or payments to Customers, based upon the utilization of the Product in the Territory.

 

“State Assistance Programs” means any Medicaid supplemental rebate programs, state pharmaceutical assistance programs, and other state programs to provide pharmaceutical assistance for which Meda has entered into a rebate or discount agreement with a state effective prior to the Closing Date with respect to the Product.

 

“Transfer Date” means ***.

 

“Transition Lots” means those lots of a Product, with an Meda NDC, for which Product was partially sold by Meda and partially sold by Valeant.

 

“Territory” means the United States of America, including the District of Columbia and Puerto Rico.

 

“TriCare Rebate Program” means the rebate program described in the final rule published by the Department of Defense at 74 Fed. Reg. 11,279 to implement Section 703 of the National Defense Authorization Act of 2008, and includes rebates pursuant to any voluntary rebate agreement described therein.

 

“VA” means the United States Department of Veterans Affairs.

 

“VA Master Agreement” means an agreement between a pharmaceutical manufacturer and the Department of Veterans Affairs to implement the provisions of the Veterans Health Care Act of 1992, 38 U.S.C. § 8126.

 

“Valeant NDC” shall have the meaning set forth in Clause 2.2.

 

 

“Valeant NDC Date” shall have the meaning set forth in Clause 2.2.

 

1.2                               Interpretation.  In this U.S. Transition Agreement unless otherwise specified:

 

(a)                                  “includes” and “including” shall mean respectively includes and including without limitation;

 

(b)                                 a Party includes its permitted assignees and/or the respective successors in title to substantially the whole of its undertaking;

 

(c)                                  words denoting any gender shall include all genders;

 

(d)                                 references to Clauses, Schedules and Annexes are to Clauses, Schedules and Annexes of this U.S. Transition Agreement unless otherwise specified;

 

(e)                                  the headings in this U.S. Transition Agreement are for information only and shall not be considered in the interpretation of this U.S. Transition Agreement;

 

(f)                                    the words “hereof”, “herein” and “hereunder” and words of like import used in this U.S. Transition Agreement shall refer to this U.S. Transition Agreement as a whole and not to any particular provision of this U.S. Transition Agreement;

 

(g)                                 references to any agreement or contract are to that agreement or contract as amended, modified or supplemented from time to time in accordance with the terms hereof and thereof;

 

(h)                                 references to any statute or regulation include any modification or re-enactment of that statute or regulation;

 

(i)                                     references to dollars or $ shall refer to United States Dollars; and

 

(j)                                     the Parties agree that the terms and conditions of this U.S. Transition Agreement are the result of negotiations between the Parties and that this U.S. Transition Agreement shall not be construed in favor of or against any Party by reason of the extent to which any Party participated in its preparation.

 

1.3                               Affiliates. The Parties acknowledge that Valeant may engage one or more of its Affiliates to distribute the Product in the Territory. In this respect, where appropriate, references to “Valeant” should be deemed to include Valeant and one or more of its Affiliates engaged by Valeant to distribute the Product in the Territory.

 

2.                                      TRANSITION

 

2.1                               Customer Notification; Order Transition.  Promptly following the Transfer Date, Meda shall notify all of its then current direct purchasing Customers for the Product in the Territory that orders for the Product in the Territory after the Transfer Date should be placed with Valeant.  Meda shall provide Valeant with a list of contact information for all such Customers.  Unless the Parties otherwise agree, any orders held by Meda on the

 

 

Transfer Date for the purchase of the Product in the Territory by Customers which remain unfilled as of the Transfer Date or require delivery after the Transfer Date shall not be filled by Meda and shall be cancelled by Meda.  Any orders for the purchase of the Product in the Territory that Meda receives after the Transfer Date or are unfilled after the Transfer Date shall be rejected by Meda and Meda shall inform any Customer placing an order after the Transfer Date that such Customer should place its order with Valeant.

 

2.2                               NDC and Labeling Transition.  As promptly as possible after the Transfer Date, but in any event no later than *** thereafter, Valeant shall initiate a change to the labeling of the Product to Valeant’s labeling.  Valeant may distribute the Product under Meda’s NDC numbers (the “Meda NDC”)(1) and with labeling and packaging incorporating the Xerese Trade Marks(2), in each case consistent with Meda’s past practice, and in accordance with the terms and conditions of the Xerese Supply Agreement.  Subject to the terms and conditions of the Xerese Supply Agreement, (i) until the date that the Valeant NDC is first utilized on Product labeling and packaging for Product sold after the Transfer Date (the “Valeant NDC Date”), Meda will not discontinue the use of the Meda NDC on Product labeling, and (ii) Valeant will be permitted to continue to sell any inventory of the Product that Valeant acquires from Meda that bears the Meda NDC until ***.

 

2.3                               Patient Assistance Programs.  Meda shall (i) inform its program administrator, physicians and patients receiving assistance for the Product under its patient assistance program of the discontinuance of coverage for the Product under the Meda patient assistance program (and the date thereof) and shall bear any costs associated with the termination of such program, and (ii) advise physicians and such patients that they will need to apply to Valeant’s patient assistance program to receive continuing assistance for the Product.  The Parties shall cooperate in good faith with respect to the transition of patient assistance program patients.

 

2.4                               Pricing and Sales Terms.  ***

 

2.5                               ***

 

2.6                               From and after the Transfer Date, Valeant shall assume all responsibility for responding to any medical and customer inquiries from healthcare professionals, consumers and others relating to the Product in the Territory.  As of the Transfer Date, all medical and customer inquiries from healthcare professionals, consumers and others relating to the Product received by Meda shall immediately upon receipt by Meda be transmitted to Valeant according to Clause 6.2 of this U.S. Transition Agreement.

 

(1)  ***

 

(2)  ***

 

 

3.                                      PAYMENT CLAIMS

 

3.1                               Payment Claims.

 

(a)                                  Except with respect to Payment Claims relating to programs of Governmental Entities which are addressed in Clause 4 below, the Parties shall be responsible for Payment Claims with respect to Product that bears the Meda NDC as follows:

 

***

 

(b)                                 For purposes of clarification and the avoidance of doubt, Payment Claims by Medicare Part D Prescription Drug Plans shall not be construed to be Payment Claims relating to programs of Governmental Entities and shall be handled in accordance with this Clause 3.1, but Payment Claims associated with the Medicare Part D Coverage Gap Rebate Program shall be construed to be Payment Claims relating to programs of Governmental Entities and shall be handled in accordance with Clause 4.6 below.

 

(c)                                  ***

 

(d)                                 If Meda processes, issues credits or remits payment for Payment Claims for which Valeant is financially responsible under Clause 3.1, Meda shall provide Valeant with quarterly reports within forty-five (45) calendar days after the end of the quarter in which the payment of all such Payment Claims is made for the applicable quarter setting forth in reasonable detail the amount of all such issued credits or remitted payments and any additional amounts under Clause 3.1(a)(iii), and any amounts owed by Valeant to Meda shall be paid within thirty (30) calendar days thereafter.

 

4.                                      GOVERNMENTAL ENTITY PROGRAMS

 

4.1                               Valeant Government Agreements.  Valeant shall use Commercially Reasonable Efforts to appropriately list the Product bearing the Valeant NDC on its own Medicaid Rebate Program agreement, PHS 340B Program agreement, VA Master Agreement, FSS agreement, TriCare Rebate Program agreement, and Medicare Part D Coverage Gap Rebate Program agreement as soon as practicable after the Transfer Date.  Meda shall bear no responsibility for Valeant’s failure to list the Product appropriately on its agreements.

 

4.2                               State Assistance Program Agreements and Receipt of Proposals by Meda.  After the Transfer Date, Meda may maintain Product bearing the Meda NDC on its existing State Assistance Program agreements.  After the Transfer Date, if Meda receives a request for proposal or similar Rebate agreement proposal from a State Assistance Program or Medicaid agency for a supplemental Rebate offer relating to the Product, Meda shall provide Valeant with such request or proposal.  Valeant may request that Meda propose a Rebate with respect to the Product bearing the Meda NDC on financial terms specified by Valeant; provided, however, that (i) any such proposal shall be accompanied by a statement to the State Assistance Program explaining Valeant’s interest in the Product, (ii)

 

 

Valeant shall submit a comparable proposal with respect to Product bearing the Valeant NDC, and (iii) Meda shall retain the right, in its reasonable discretion, to terminate any such agreement.

 

4.3                               Payment Claims With Respect to the Medicaid Rebate Program, Managed Medicaid, Supplemental, ADAP and Similar State Assistance Programs.

 

(a)                                  ***

 

(b)                                 ***

 

(c)                                  Meda shall provide Valeant with quarterly corresponding utilization summary and state payment reports within forty-five (45) calendar days after the end of the quarter in which payment of the requested Rebate payments is made for the applicable Calendar Quarter that describe the requested Rebate payments in reasonable detail, and Valeant shall reimburse Meda for such amounts within forty-five (45) calendar days.

 

(d)                                 ***

 

4.4                               Payment Claims With Respect to Discounted Sales Pursuant to the VA Master Agreement, FSS Sales and the TriCare Rebate Program.

 

(a)                                  Valeant shall work with Meda to coordinate the addition of the Product to the Valeant FSS and TriCare Rebate Program agreement to coincide with Meda removing the Product from the Meda FSS and TriCare Rebate Program agreement.  Meda and Valeant will coordinate the addition and removal of the Product from the FSS and TriCare Rebate Program agreement so the switch over occurs as close to Transfer Date as possible, with consideration to FSS regulations.

 

(b)                                 ***

 

(c)                                  ***

 

(d)                                 Meda shall be entitled to additional reimbursement from Valeant for Payment Claim amounts associated with FSS or TriCare Rebate Program Chargebacks or Rebates for the period described in Clauses 4.4(b) and 4.4(c) which represent the incremental increase in such amounts paid by Meda attributable to any price increase taken by Valeant during such period.

 

(e)                                  To the extent that Meda processes, issues credits or remits payment for Chargeback or Rebate claims in respect of the Product for which Valeant is financially responsible under this Clause 4.4, Meda shall provide Valeant with quarterly reports within forty-five (45) calendar days after the end of the quarter in which the payment of all such Chargeback and Rebate claims is made for the applicable Calendar Quarter setting forth in reasonable detail the amount of all such processed Chargeback and Rebate claims and such amounts shall be payable within thirty (30) calendar days.

 

 

4.5                               Payment Claims Under the PHS 340B Program.

 

(a)                                  Valeant shall work with Meda to establish a process, to be implemented as close to the Transfer Date as possible, whereby Valeant shall process Payment Claims for the Product bearing Meda’s NDC numbers associated with purchases by PHS 340B Program covered entities after the Transfer Date.  Prior to the implementation of that process, to the extent that Meda processes Payment Claims with respect to such Products, Meda shall pay Chargebacks or Rebates with respect to PHS 340B Program sales.  Valeant shall list the Product bearing Meda’s NDC on their PHS 340B price list the first full quarter after the Transfer Date, and every subsequent quarter thereafter until the Meda NDC has expired.

 

(b)                                 ***

 

(c)                                  ***

 

(d)                                 Meda shall be entitled to additional reimbursement from Valeant for Payment Claim amounts associated with PHS 340b Program Chargebacks or Rebates for the period described in Clause 4.5(c) which represent the incremental increase in such amounts paid by Meda attributable to any price increase taken by Valeant during such period.

 

(e)                                  Meda shall provide Valeant with quarterly Chargeback or Rebate information within forty-five (45) calendar days after the end of the quarter in which the payment of all such Chargebacks and Rebates is made for the applicable Calendar Quarter that describe the sales and payments in reasonable detail, and Valeant shall reimburse Meda for such amounts within thirty (30) calendar days.

 

4.6                               Payment Claims Associated With the Medicare Part D Coverage Gap Rebate Program.  The Parties acknowledge that ***. Meda shall provide Valeant with quarterly corresponding utilization summary and state payment reports within forty-five (45) calendar days after the end of the quarter in which the payment of all such Rebates is made for the applicable Calendar Quarter that described the requested Rebate payments in reasonable detail, and Valeant shall reimburse Meda for such amounts within thirty (30) calendar days.  Valeant shall process and pay all Rebates due pursuant to the Medicare Part D Coverage Gap Rebate Program for the Product sold by or on behalf of Valeant in the Territory bearing the Valeant NDC.

 

4.7                               Information and Reporting.

 

(a)                                  With respect to the Product sold by or on behalf of Valeant on or after the Closing Date that bears the Meda NDC, Meda will continue to be responsible for reporting (including, where applicable, through adjustments to wholesaler contract prices to eligible purchasers) pricing information required under the applicable statutes, rules, and regulatory guidance relating to the Medicaid Rebate Program, the Medicare Program, the PHS 340B Program, the VA Master Agreement, the FSS and applicable state laws; provided, however, that Valeant will be responsible for reporting such pricing information required under the VA Master Agreement and

 

 

the FSS as of the date of the addition of the Product to Valeant’s VA contracts.  Meda shall report information under this Clause 4.7(a) in accordance with Meda’s existing reporting methodologies.  Valeant will be responsible for reporting pricing information required under the Medicaid Rebate Program, the PHS 340B Program, the Medicare Program, the FSS and applicable state laws with respect to the Product sold on or after the Closing Date bearing the Valeant NDC.

 

(b)                                 Upon and after the Closing Date, with respect to the Parties’ reporting responsibilities designated in Clause 4.7(a) above, the Parties agree to cooperate and use Commercially Reasonable Efforts to provide on a timely basis all such documentation as may reasonably be requested by each Party of the other to report required pricing information.  Without limitation, the Parties agree as follows:

 

(i)                                     Within twenty (20) calendar days after the Closing Date, Meda shall provide Valeant with the Base Period AMP (as defined in 42 U.S.C. § 1396r-8) for each Product.  Nothing herein shall obligate Meda to provide underlying sales or pricing data or methodologies used to calculate such Base Period AMPs, or any other AMP or Best Price data regarding periods prior to the Closing Date.

 

(ii)                                  Within twenty (20) calendar days after the end of each reporting period as designated by CMS or applicable state law, with respect to sales by Valeant of the Product after the Transfer Date that bears the Meda NDC, Valeant will provide, and certify to Meda, as established by the applicable statutes, rules, and regulatory guidance relating to the Medicaid Rebate Program, the PHS 340B Program, the Federal Supply and VA Master Agreement, and applicable state laws the following information: Best Price, sales at nominal prices as defined in 42 U.S.C. § 1396r-8 and implementing regulations (reported as an aggregate dollar amount for each drug at the 9-digit NDC level as shown in Annex C), customary prompt pay discounts on a quarterly basis, the relevant components for calculating AMP as specified in Annex A on a monthly and quarterly basis, the relevant components for calculating NFAMP as specified in Annex D on a quarterly basis, the relevant components for calculating required pricing data for submission to the state of New Mexico as specified in Annex F on an annual basis, and the relevant components for calculating the required pricing data for submission to the state of Texas as specified in Appendix G within the time period required by law.  The format to be used for such reporting is set forth in Annex A, Annex B, Annex C, Annex D, Annex F and Annex G.  Meda shall report to Valeant within twenty-five (25) calendar days following its receipt of such report the applicable AMP, Best Price, PHS 340B Program price, and any adjustments to FSS prices, determined in accordance with Meda’s applicable methodologies and procedures.

 

 

(iii)                               For any Valeant patient assistance programs and patient transaction programs (e.g., coupon, savings card, or voucher programs) in effect as of the Closing Date or implemented thereafter, Valeant agrees to provide, or will arrange to provide, patient transaction data relating to the Product that bears a Meda NDC number to the extent that it is required for government pricing calculations required to be made by Meda for the Product.  Such data shall be provided under pre-established data feeds and layouts as set forth in Annex E.

 

(iv)                              As soon as practicable following the execution of this U.S. Transition Agreement, Meda shall provide Valeant with its FSS “tracking customer” for the Product sold under its FSS contract.  Within ten (10) calendar days after receipt of such information, Valeant shall identify any Product sold to any FSS tracking customer during the period beginning on the Transfer Date and ending on the date the Product that bears the Meda NDC is added to Valeant’s FSS contract.

 

(v)                                 Within twenty (20) calendar days after the end of each reporting period as designated by CMS, with respect to sales by Meda of the Product before the Transfer Date that bear the Meda NDC, Meda will provide twelve (12) month sales and pricing data required by Valeant to calculate AMP, ASP, and NFAMP under the Valeant NDC.  Meda will provide the twelve (12) month sales and pricing data for each reporting period until sales and pricing data under the Meda NDC are no longer required for such calculations under the Valeant NDC.  The format to be used for such reporting is set forth in Annex A, Annex B, Annex C and Annex D.

 

(c)                                  Subject to the limitations specified in Clause 4.7(b) above, the Parties agree to cooperate and provide any other documentation as each Party may reasonably request from time to time to assist in the matters described in this Clause 4.

 

(d)                                 Each Party may use all information provided to it pursuant to this Clause 4 in reporting to CMS and other Governmental Entity, including under state reporting requirements.  The Parties further agree that all data, including Medicaid Rebate Program pricing data, and data to be used for the programs and reporting requirements described in this Clause 4 that are included in any report to the other Party, will be calculated utilizing systems, processes, policies, practices and pricing methodologies that comply with the requirements of such programs and requirements.

 

5.                                      HEALTH CARE REFORM LEGISLATION

 

5.1                               ***  The Parties acknowledge that HCR Fees invoiced to Valeant will be based in part on sales of the Product made by Meda bearing the Meda NDC.  ***  Within thirty (30) calendar days of Meda’s receipt of such an invoice, Meda shall provide to Valeant a calculation of the total amount of Valeant’s HCR Fees associated with its control of the Product during such year, which total amount shall be equal to the product of (x) total

 

 

invoiced Meda HCR Fees, (y) the Proportion of Product Sales and (z) the number of days of the year that the Product was controlled by Valeant including the Transfer Date divided by three hundred and sixty five (365).  Within thirty (30) calendar days of its receipt of such calculation, Valeant shall pay to Meda one hundred percent (100%) of such total amount.  For purposes of this Clause 5, the term “sales” means sales, net of applicable discounts.

 

6.                                      PRODUCT RETURNS AND CUSTOMER SERVICE

 

6.1                               Returns.

 

(a)                                  Within forty-five (45) calendar days after the Transfer Date, Meda shall deliver to Valeant a schedule of all lots of Product sold prior to the Transfer Date that were unexpired as of the Transfer Date.

 

(b)                                 ***

 

(c)                                  ***

 

(d)                                 If Valeant processes, issues credits or remits payment for returns in respect of the Products for which Meda is financially responsible under this Clause 6, Valeant shall provide Meda with monthly reports within sixty (60) calendar days after the end of the applicable month setting forth in reasonable detail the amount of all such issued credits or remitted payments for returns, and any amounts owed by Meda to Valeant shall be paid within thirty (30) calendar days thereafter.  Returned Product shall be destroyed by both Parties in a manner consistent with applicable law, and the costs of such destruction shall not be reimbursed.

 

6.2                               Customer Service.  From and after the Transfer Date, Valeant shall assume all customer service responsibility and provide all customer service required by its Customers with respect to the Product.  As of the Transfer Date, all customer service requests relating to the Product coming to Meda will be referred to Valeant at the following contact information:

 

Telephone: 1.800.321.4576

 

7.                                      INDEMNIFICATION; LIMITATION ON LOSSES

 

7.1                               Indemnification.  Meda hereby indemnifies Valeant, its Affiliates and their respective successors and assignees against and agrees to hold each of them harmless from any and all Losses incurred or suffered by Valeant, its Affiliates or their respective successors and assignees arising out of any breach of covenant or agreement by Meda under this U.S. Transition Agreement; provided that Meda shall not be liable to Valeant pursuant to this Clause 7.1 in the event that any such Loss arises out of (i) the negligence or wilful misconduct of Valeant or (ii) any failure of Valeant to perform or observe any provision, obligation, covenant or agreement to be performed by Valeant pursuant to this U.S. Transition Agreement.  Valeant hereby indemnifies Meda, its Affiliates and their respective successors and assignees against and agrees to hold each of them harmless

 

 

from any and all Losses incurred or suffered by Meda, its Affiliates and their respective successors and assignees arising out of any breach of covenant or agreement by Valeant under this U.S. Transition Agreement; provided that Valeant shall not be liable to Meda pursuant to this Clause 7.1 in the event that any such Loss arises out of (i) the negligence or wilful misconduct of Meda or (ii) any failure of Meda to perform or observe any provision, obligation, covenant or agreement to be performed by Meda pursuant to this U.S. Transition Agreement.

 

7.2                               Special, Indirect and Other Losses.  TO THE EXTENT PERMITTED BY APPLICABLE LAW, NEITHER PARTY NOR ANY OF ITS AFFILIATES WILL BE LIABLE UNDER ANY LEGAL OR EQUITABLE THEORY FOR ANY SPECIAL, INCIDENTAL, PUNITIVE, CONSEQUENTIAL OR INDIRECT DAMAGES OR ANY SIMILAR DAMAGES OR DAMAGES BASED UPON DIMINUTION IN VALUE OR ANY VALUATION MULTIPLIER EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, UNLESS ACTUALLY PAID TO A THIRD PARTY.

 

8.                                      MISCELLANEOUS(3)

 

8.1                               Governing Law.  This U.S. Transition Agreement shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to the conflicts of laws provisions thereof.  The Parties agree that any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this U.S. Transition Agreement or the transactions contemplated hereby shall be brought in the United States District Court for the Southern District of New York, so long as such court has subject matter jurisdiction over such suit, action or proceeding, and that any cause of action arising out of this U.S. Transition Agreement shall be deemed to have arisen from a transaction of business in the State of New York, and each of the Parties hereby irrevocably consents to the exclusive jurisdiction of such court (and of the appropriate appellate courts therefrom) in any suit, action or proceeding and irrevocably waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.

 

8.2                               Assignment, Subcontracting.  This U.S. Transition Agreement and each and every covenant, term and condition herein is binding upon and ensures to the benefit of the Parties hereto and their respective successors. Neither Party may assign this U.S. Transition Agreement, nor assign, sublicense, delegate or sub-contract any of its rights or obligations granted hereunder without the other Party’s prior written consent, except that a Party may (a) assign, sublicense, subcontract or delegate any or all of its rights and obligations under this U.S. Transition Agreement to one or more of its Affiliates; and (b)

 

(3)  ***

 

 

assign this U.S. Transition Agreement in its entirety to a successor to all or substantially all of its business or assets to which this U.S. Transition Agreement relates. No permitted assignment, sublicense, subcontract or delegation shall relieve the assigning, sublicensing, subcontracting or delegating Party of its liability hereunder. Any attempted assignment in contravention of the foregoing shall be void.

 

8.3                               Notices.  Any notice required to be given under this U.S. Transition Agreement, shall be in writing and shall be delivered personally, or sent by pre-paid certified or registered post return receipt requested or recorded delivery or by commercial courier, to each Party required to receive the notice at its address as set out below:

 

If to Valeant:

 

Valeant International (Barbados) SRL

Welches, Christ Church

Barbados, West Indies BB17154

	
Facsimile:
    	
246-420-1532
    
	
Attention:
    	
President
    

 

If to Meda:

 

Meda Pharma SARL

 

46A Avenue John Fitzgerald Kennedy

 

L-1855 Luxembourg

 

	
Facsimile:
    	
+ 352 263 757 33
    
	
 
    	
 
    
	
Attention:
    	
 Managing Director
    

 

or as otherwise specified by the relevant Party by notice in writing to each other Party. Any notice shall be deemed to have been duly received: (i) if delivered personally, when left at the address and for the contact referred to in this Clause 8.3; (ii) if sent by pre-paid recorded delivery, at 9.00 am on the fifth Business Day after posting; or (iii) if delivered by commercial courier, on the date and at the time that the courier’s delivery receipt is signed.

 

8.4                               Waiver.  No delay or failure of any Party in exercising or enforcing any of its rights or remedies under this U.S. Transition Agreement shall operate as a waiver of those rights.

 

8.5                               Severability.  If the whole or any part of this U.S. Transition Agreement is or becomes or is declared illegal, invalid or unenforceable in any jurisdiction for any reason (including both by reason of the provisions of any legislation and also by reason of any court or competent authority which either has jurisdiction over this U.S. Transition Agreement or has jurisdiction over any of the Parties): (i) in the case of the illegality, invalidity or un-enforceability of the whole of this U.S. Transition Agreement it shall terminate only in relation to the jurisdiction in question; or (ii) in the case of the illegality, invalidity or 

 

 

un-enforceability of part of this U.S. Transition Agreement that part shall be severed from this U.S. Transition Agreement in the jurisdiction in question and that illegality, invalidity or un-enforceability shall not in any way whatsoever prejudice or affect the remaining parts of this U.S. Transition Agreement which shall continue in full force and effect. If, in the reasonable opinion of any Party, any severance under this Clause 8.5 materially affects the commercial basis of this U.S. Transition Agreement, then the Parties shall discuss, in good faith, ways to eliminate the material effect.

 

8.6                              Entire Agreement.  This U.S. Transition Agreement, constitutes the entire understanding and agreement of the Parties with respect to the subject matter hereof and cancels and supersedes all prior agreements, whether verbal or written, between the Parties with respect to the subject matter hereof, provided that any Confidential Information (as such term is defined in the Licence Agreement) shall be deemed to be Confidential Information pursuant to the Licence Agreement and subject to the applicable provisions thereof.  No modification of any provision of this U.S. Transition Agreement shall be effective unless made in writing and signed by a duly authorized officer of both of the Parties.

 

8.7                               Independent Contractors.  The Parties hereto are independent contractors and nothing contained in this U.S. Transition Agreement shall be deemed or construed to create a partnership, joint venture, employment, franchise, agency or fiduciary relationship between the Parties.

 

8.8                               Expenses.  Except as otherwise expressly provided in this U.S. Transition Agreement, each Party shall pay the fees and expenses of its respective lawyers and other advisors and all other expenses and costs incurred by such Party incidental to the negotiation, preparation, execution and delivery of this U.S. Transition Agreement.

 

8.9                               Language.  Except where expressly provided otherwise, all reports, plans and any other form of communication between the Parties shall be in English and where necessary Valeant shall provide an English translation of any document sent to Meda and Meda shall provide an English translation of any document sent to Valeant.

 

8.10                        Counterparts.  This U.S. Transition Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

8.11                        Reimbursement.  If not otherwise specified herein, any amounts due pursuant to this U.S. Transition Agreement from one Party to the other shall be paid within thirty (30) calendar days of receipt of invoice therefor.

 

[Signature Page Follows]

 

 

IN WITNESS WHEREOF, the Parties have caused this U.S. Transition Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

 

 

	
 
    	
MEDA   PHARMA SARL
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    	
 
    
	
 
    	
Title:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
VALEANT   INTERNATIONAL (BARBADOS) SRL
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

 

ANNEX A

 

AMP Reporting Format

 

35

 

ANNEX B

 

ASP Reporting Format

 

36

 

ANNEX C

 

BP Reporting Format

 

37

 

ANNEX D

 

NFAMP Reporting Format

 

38

 

ANNEX E

 

Patient Transaction Data Feed and Layout

 

39

 

ANNEX F

 

New Mexico Price Reporting Format

 

40

 

ANNEX G

 

Texas Vendor Drug Program Reporting Format

 

41

 

Schedule 2.5

 

Commercial and Medicare Part D Contracts

 

	
Contract Type
    	
 
    	
Contract Description
    	
 
    	
Removal Date
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    

 

Government Contracts

 

	
Contract Type
    	
 
    	
State
    	
 
    	
Removal Date
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    

 

42

 

SCHEDULE 13

 

***

 

43Exhibit No. 10(a)

 

This document constitutes part of a prospectus covering securities

that have been registered under the Securities Act of 1933.

 

Constellation Energy Group, Inc.
 Amended and Restated 2002 Senior Management Long-Term Incentive Plan
 (Plan)

 

1.             Purpose.  The purpose of this Plan is to increase shareholder value by providing a long-term incentive to reward certain executives, senior management level and key employees of the Company and its Subsidiaries, whose responsibilities include the continued growth, development, and financial success of the Company and its Subsidiaries, and the continued profitable performance of the Company and its Subsidiaries. The Plan is also designed to permit the Company and its Subsidiaries to attract and retain talented and motivated executive, senior management and key employees and to increase their ownership of Company common stock.

 

2.             Definitions.  All singular terms defined in this Plan will include the plural and vice versa. As used herein, the following terms will have the meaning specified below:

 

“Award” means individually or collectively, Restricted Stock, Restricted Stock Units, Options, Performance Units, Stock Appreciation Rights, Dividend Equivalents, or Equity granted under this Plan.

 

“Board” means the Board of Directors of the Company.

 

“Book Value” means the book value of a share of Stock determined in accordance with the Company’s regular accounting practices as of the last business day of the month immediately preceding the month in which a Stock Appreciation Right is exercised as provided in Section 10.

 

“Code” means the Internal Revenue Code of 1986, as amended. Reference in the Plan to any section of the Code will be deemed to include any amendments or successor provisions to such section and any regulations promulgated thereunder.

 

“Company” means Constellation Energy Group, Inc., a Maryland corporation, or its successor, including any “New Company” as provided in Section 15I.

 

“Covered Award” means any Award granted under the Plan on or after December 18, 2005.

 

“Date of Grant” means the date on which the granting of an Award is authorized by the Plan Administrator or such later date as may be specified by the Plan Administrator in such authorization.

 

“Date of Retirement” means the date of Retirement.

 

“Disability” means the determination that a Participant is “disabled” under the Company disability plan in effect at that time.

 

“Dividend Equivalent” means an Award granted under Section 11.

 

 

“Eligible Person” means any person who satisfies all of the requirements of Section 5.

 

“Equity” means an Award granted under Section 12.

 

“Excluded Transactions” has the meaning set forth in Section 13.

 

“Exercise Period” means the period or periods during which a Stock Appreciation Right is exercisable as described in Section 10.

 

“Fair Market Value” means the average of the highest and lowest price at which the Stock was sold regular way on the New York Stock Exchange-Composite Transactions on a specified date; provided, however, that notwithstanding the foregoing, solely for purposes of determining the Option price per share of Stock under Section 8C for Option grants made after October 19, 2006, “Fair Market Value” means the price at which the Stock was last sold on the New York Stock Exchange-Composite Transactions on the Date of Grant.

 

“Incentive Stock Option” means an incentive stock option within the meaning of Section 422 of the Code.

 

“1934 Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

“Option” or “Stock Option” means either a nonqualified stock option or an incentive stock option granted under Section 8.

 

“Option Period” or “Option Periods” means the period or periods during which an Option is exercisable as described in Section 8.

 

“Participant” means an individual who has been granted an Award under this Plan.

 

“Pension Plan” means the Pension Plan of Constellation Energy Group, Inc. as may be amended from time to time.

 

“Performance-Based” means that in determining the amount of a Restricted Stock or Restricted Stock Unit Award payout, the Plan Administrator will take into account the performance of the Participant, the Company, one or more Subsidiaries, or any combination thereof.

 

“Performance Period” means the taxable year of the Company or any other period designated by the Plan Administrator with respect to which an Award may be granted.

 

“Performance Unit” means a unit of measurement equivalent to such amount or measure as defined by the Plan Administrator which may include, but is not limited to, dollars, market value shares, or book value shares.

 

 

“Plan Administrator” means, as set forth in Section 4, the Chief Executive Officer of the Company.

 

“Restricted Stock” means Stock issued in the name of a Participant that bears a restrictive legend prohibiting sale, transfer, pledge or hypothecation of the Stock until the expiration of the restriction period.

 

“Restricted Stock Unit” means a right granted under Section 7 that is denominated in shares of stock, each of which represents a right to receive the value of a share of stock (or a percentage of such value, which percentage may be higher than 100%) upon the terms and conditions set forth by the Committee.

 

“Retirement” means retirement on or after the “Early Retirement Date” (as such term is defined in the Pension Plan or a Subsidiary’s retirement or pension plan).

 

“Service-Based” means that in determining the amount of a Restricted Stock or Restricted Stock Unit Award payout, the Plan Administrator will take into account only the period of time that the Participant performed services for the Company or its Subsidiaries since the Date of Grant.

 

“Stock” means the common stock, without par value, of the Company.

 

“Stock Appreciation Right” means an Award granted under Section 10.

 

“Subsidiary(ies)” means any entity that is directly or indirectly controlled by the Company or any entity, including an acquired entity, in which the Company has a significant equity interest, as determined by the Plan Administrator, in his/her discretion.

 

“Termination” means resignation or discharge from employment with the Company or any of its Subsidiaries except in the event of death, Disability, or Retirement.

 

“Year” means a fiscal year of the Company commencing on or after January 1, 2002 that constitutes all or part of the applicable Performance Period.

 

3.             Effective Date, Duration and Stockholder Approval.

 

A.            Effective Date and Stockholder Approval.  The Plan became effective as of May 24, 2002, and was most recently amended and restated effective as of May 27, 2011.

 

B.            Period for Grants of Awards.  Awards may be made as provided herein for a period of 10 years after May 24, 2002.

 

C.            Termination.  The Plan will continue in effect until all matters relating to the payment of outstanding Awards and administration of the Plan have been settled.

 

 

4.             Plan Administration.  The Chief Executive Officer is the Plan Administrator and has sole authority (except as specified otherwise herein) to determine all questions of interpretation and application of the Plan, or of the terms and conditions pursuant to which Awards are granted, exercised or forfeited under the Plan provisions, and, in general, to make all determinations advisable for the administration of the Plan to achieve its stated purpose. Without limiting the generality of the foregoing, the Plan Administrator may modify, amend, extend or renew outstanding Awards, or accept the surrender of outstanding Awards and substitute new Awards (provided, however, that, except as provided in Section 15H of the Plan, any modification that would materially adversely affect any outstanding Award shall not be made without the consent of the Participant, and provided, further, that no modification, amendment or substitution that results in repricing a Stock Option to a lower exercise price, other than to reflect an adjustment made pursuant to Section 15H, shall be made without prior stockholder approval).

 

The Plan Administrator’s determinations under the Plan (including without limitation, determinations of the persons to receive Awards, the form, amount and timing of such Awards, the terms and provisions of such Awards and any agreements evidencing such Awards) need not be uniform and may be made by the Administrator selectively among persons who receive, or are eligible to receive, Awards under the Plan, whether or not such persons are similarly situated. Such determinations shall be final and not subject to further appeal.

 

The Plan Administrator may delegate his/her authority under the Plan.

 

5.             Eligibility.  Each officer (who is not a participant under the Company’s Executive Long-Term Incentive Plan), senior management level or key employee of the Company and its Subsidiaries may be designated by the Plan Administrator as a Participant, from time to time, with respect to one or more Awards. No employee of the Company or its Subsidiaries shall have any right to be granted an Award under this Plan. The Plan Administrator may also grant Awards to individuals in connection with hiring (as an officer, senior management level or key employee), retention or otherwise, prior to the date the individual first performs services for the Company or a Subsidiary; provided, however, that such Awards shall not become vested or exercisable prior to the date the individual first commences performance of such services.

 

6.             Grant of Awards and Limitation of Number of Shares Awarded.  The Plan Administrator may, from time to time, grant Awards to one or more Eligible Persons, provided that subject to any adjustment pursuant to Section 15H, the aggregate number of shares of Stock subject to Awards that may be delivered under this Plan may not exceed four million (4,000,000) shares. Shares delivered by the Company under the Plan may be authorized and unissued Stock, Stock held in the treasury of the Company, or Stock purchased on the open market (including private purchases) in accordance with applicable securities laws.

 

Any shares of Stock covered by an Award (or portion of an Award) granted under the Plan that is forfeited or canceled, expires or is settled in cash, including the

 

 

settlement of tax withholding obligations using shares, shall be deemed not to have been delivered for purposes of determining the maximum number of shares available for delivery under the Plan. Likewise, if any Option granted under the Plan is exercised by tendering shares of Stock to the Company as full or partial payment for such exercise under the Plan, only the number of shares issued net of the shares tendered shall be deemed delivered for purposes of determining the maximum number of shares available for delivery under the Plan.

 

The Plan Administrator may permit or require a recipient of an Award to defer all or part of such individual’s receipt of the payment of cash or the delivery of Stock that would otherwise be due to such individual by virtue of the exercise of, payment of, or lapse or waiver of restrictions respecting, any Award. If any such payment deferral is required or permitted, the Plan Administrator shall, in his/her sole discretion, establish rules and procedures for such payment deferrals.

 

7.             Service-Based Restricted Stock and Restricted Stock Unit Awards.

 

A.            Grants of Service-Based Restricted Shares or Units.  One or more shares of Restricted Stock or Restricted Stock Units may be granted to any Eligible Person. The Service-Based Restricted Stock will be issued or Restricted Stock Unit granted to the Participant on the Date of Grant without the payment of consideration by the Participant. The Service-Based Restricted Stock will be issued or Restricted Stock Unit granted in the name of the Participant and will bear a restrictive legend prohibiting sale, transfer, pledge or hypothecation of the Service-Based Restricted Stock or Restricted Stock Unit until the expiration of the restriction period.

 

The Plan Administrator may also impose such other restrictions and conditions on the Service-Based Restricted Stock or Restricted Stock Unit as he/she deems appropriate.

 

Upon issuance to the Participant of the Service-Based Restricted Stock, the Participant will have the right to vote the Service-Based Restricted Stock. Upon issuance to the Participant of the Restricted Stock or grant of the Restricted Stock Unit and subject to the Plan Administrator’s discretion, the Participant will have the right to receive the cash dividends (or Dividend Equivalents as provided in Section 11) distributable with respect to such shares or units, with such dividends or Dividend Equivalents treated as compensation to the Participant. The Plan Administrator, in his/her sole discretion, may direct the accumulation and payment of distributable dividends to the Participant at such times, and in such form and manner, as determined by the Plan Administrator.

 

B.            Restriction Period.  At the time a Service-Based Restricted Stock or Restricted Stock Unit Award is granted, the Plan Administrator will establish a restriction period applicable to such Award which will be not less than one year and not more than ten years. Each Restricted Stock or Restricted Stock Unit Award may have a different restriction period, at the discretion of the Plan Administrator.

 

 

C.            Forfeiture or Payout of Award.  In the event a Participant ceases employment during a restriction period, a Service-Based Restricted Stock or Restricted Stock Unit Award is subject to forfeiture or payout (i.e., removal of restrictions) as follows: (a) Termination—the Service-Based Restricted Stock or Restricted Stock Unit Award is completely forfeited; or (b) Retirement, Disability or death—payout of the Service-Based Restricted Stock or Restricted Stock Unit Award is prorated for service during the period; provided, however, that the Plan Administrator may modify the above if he/she determines at his/her sole discretion that special circumstances warrant such modification.

 

Any shares of Service-Based Restricted Stock which are forfeited will be transferred to the Company.

 

Upon completion of the restriction period, all Award restrictions will expire and new certificates representing the Award will be issued (the payout) without the restrictive legend described in Section 7A.

 

D.            Waiver of Section 83(b) Election.  Unless otherwise directed by the Plan Administrator, as a condition of receiving an Award of Service-Based Restricted Stock, a Participant must waive in writing the right to make an election under Section 83(b) of the Code to report the value of the Service-Based Restricted Stock as income on the Date of Grant.

 

8.             Stock Options.

 

A.            Grants of Options.  One or more Options may be granted to any Eligible Person on the Date of Grant without the payment of consideration by the Participant.

 

B.            Stock Option Agreement.  Each Option granted under the Plan will be evidenced by a “Stock Option Agreement” between the Company and the Participant containing provisions determined by the Plan Administrator, including, without limitation, provisions to qualify Incentive Stock Options as such under Section 422 of the Code if directed by the Plan Administrator at the Date of Grant; provided, however, that each Incentive Stock Option Agreement must include the following terms and conditions: (i) that the Options are exercisable, either in total or in part, with a partial exercise not affecting the exercisability of the balance of the Option; (ii) every share of Stock purchased through the exercise of an Option will be paid for in full at the time of the exercise; (iii) each Option will cease to be exercisable, as to any share of Stock, at the earliest of (a) the Participant’s purchase of the Stock to which the Option relates, (b) the Participant’s exercise of a related Stock Appreciation Right, or (c) the lapse of the Option; (iv) Options will not be transferable by the Participant except by Will or the laws of descent and distribution and will be exercisable during the Participant’s lifetime only by the Participant or by the Participant’s guardian or legal representative; and (v) notwithstanding any other provision, in the event of a public tender for all or any portion of the Stock or in the event that any proposal to merge or consolidate the Company with another company is submitted to the stockholders of the Company for a vote, the Plan Administrator, in

 

 

his/her sole discretion, may declare any previously granted Options to be immediately exercisable.

 

C.            Option Price.  The Option price per share of Stock will be set by the grant, but will be not less than 100% of the Fair Market Value at the Date of Grant.

 

D.            Form of Payment.  At the time of the exercise of the Option, the Option price will be payable in cash or in other shares of Stock or in a combination of cash and other shares of Stock, in a form and manner as required by the Plan Administrator in his/her sole discretion. When Stock is used in full or partial payment of the Option price, it will be valued at the Fair Market Value on the applicable date.

 

E.             Other Terms and Conditions.  The Option will become exercisable in such manner and within such Option Period or Periods, not to exceed 10 years from its Date of Grant, as set forth in the Stock Option Agreement upon payment in full. Except as otherwise provided in this Plan or in the Stock Option Agreement, any Option may be exercised in whole or in part at any time.

 

F.             Lapse of Option.  An Option will lapse upon the earlier of: (i) 10 years from the Date of Grant, or (ii) at the expiration of the Option Period set by the grant. If the Participant ceases employment within the Option Period and prior to the lapse of the Option, the Option will lapse as follows: (a) Termination—any unvested Option will lapse on the effective date of the Termination and any vested Option will lapse 90 days after the effective date of the Termination; or (b) Retirement, Disability or death—any unvested Option will lapse on the effective date of the Retirement, Disability or death and any vested Option will lapse on the earlier of 60 months after the effective date of the Retirement, Disability or death or at the expiration of the Option Period set by the Grant; provided, however, that the Plan Administrator may modify the above if he/she determines in his/her sole discretion that special circumstances warrant such modification.

 

G.            Individual Limitation.  In the case of an Incentive Stock Option, the aggregate Fair Market Value of the Stock for which Incentive Stock Options (whether under this Plan or another arrangement) in any calendar year are first exercisable will not exceed $100,000 with respect to such calendar year (or such other individual limit as may be in effect under the Code on the Date of Grant) plus any unused portion of such limit as the Code may permit to be carried over.

 

9.             Performance-Based Restricted Stock or Restricted Stock Units/Performance Units.

 

A.            Provision for Awards.  The Plan Administrator will determine a Performance Period and will determine the performance objectives for each Participant’s target performance award and the number of shares of Performance-Based Restricted Stock, Performance-Based Restricted Stock Units or Performance Units subject to each target performance award. Performance objectives may vary from Participant to Participant and will be based upon such performance criteria or combination of factors as the Plan Administrator deems appropriate, which may

 

 

include, but not be limited to, the performance of the Participant, the Company, one or more Subsidiaries, or any combination thereof. Performance Periods may overlap and Participants may participate simultaneously with respect to Performance Units or Performance-Based Restricted Stock or Performance-Based Restricted Stock Units for which different Performance Periods are prescribed.

 

If during the course of a Performance Period significant events occur as determined in the sole discretion of the Plan Administrator which the Plan Administrator expects to have a substantial effect on a performance objective during such period, the Plan Administrator may revise such objective.

 

B.            Performance-Based Restricted Stock Awards or Restricted Stock Unit Awards.

 

(i)            Grants of Performance-Based Restricted Stock or Restricted Stock Units.  Subject to Section 9A, one or more shares of Performance-Based Restricted Stock or Restricted Stock Unit may be granted to any Eligible Person. The Performance-Based Restricted Stock or Restricted Stock Unit will be issued to the Participant on the Date of Grant without the payment of consideration by the Participant. The Performance-Based Restricted Stock or Restricted Stock Unit will be issued in the name of the Participant and will bear a restrictive legend prohibiting sale, transfer, pledge or hypothecation of the Performance-Based Restricted Stock or Restricted Stock Unit until the expiration of the restriction period.

 

The Plan Administrator may also impose such other restrictions and conditions on the Performance-Based Restricted Stock or Restricted Stock Unit as he/she deems appropriate.

 

Upon issuance to the Participant of the Performance-Based Restricted Stock, the Participant will have the right to vote the Performance-Based Restricted Stock. Upon issuance to the Participant of the Performance-Based Restricted Stock or grant of the Restricted Stock Unit and subject to the Plan Administrator’s discretion, the Participant will have the right to receive the cash dividends (or Dividend Equivalents as provided in Section 11) distributable with respect to such shares or units, with such dividends or Dividend Equivalents treated as compensation to the Participant. The Plan Administrator, in his/her sole discretion, may direct the accumulation and payment of distributable dividends to the Participant at such times, and in such form and manner, as determined by the Plan Administrator.

 

(ii)           Restriction Period.  At the time a Performance-Based Restricted Stock or Restricted Stock Unit Award is granted, the Plan Administrator will establish a restriction period applicable to such Award which will be not less than one year and not more than ten years. Each Performance-Based Restricted Stock or Restricted Stock

 

 

Unit Award may have a different restriction period, at the discretion of the Plan Administrator.

 

(iii)          Waiver of Section 83(b) Election.  Unless otherwise directed by the Plan Administrator, as a condition of receiving an Award of Performance-Based Restricted Stock, a Participant must waive in writing the right to make an election under Section 83(b) of the Code to report the value of the Performance-Based Restricted Stock as income on the Date of Grant.

 

C.            Performance Units.  Subject to Section 9A, one or more Performance Units may be earned by an Eligible Person based on the achievement of preestablished performance objectives during a Performance Period.

 

D.            Forfeiture or Payout of Award.  As soon as practicable after the end of each Performance Period, the Plan Administrator will determine whether the performance objectives and other material terms of the Award were satisfied. The Plan Administrator’s determination of all such matters will be final and conclusive.

 

As soon as practicable after the date the Plan Administrator makes the above determination, the Plan Administrator will determine the Award payment for each Participant.

 

In the event a Participant ceases employment during a Performance Period, the Performance-Based Restricted Stock, Performance-Based Restricted Stock Unit or Performance Unit Award is subject to forfeiture or payout as follows: (a) Termination—the Performance-Based Restricted Stock, Performance-Based Restricted Stock Unit or Performance Unit Award is completely forfeited; or (b) Retirement, Disability or death—payout of the Performance-Based Restricted Stock, Performance-Based Restricted Stock Unit or Performance Unit Award is prorated taking into account factors including, but not limited to, service and the performance of the Participant during the portion of the Performance Period before employment ceased; provided, however, that the Plan Administrator may modify the above if he/she determines in his/her sole discretion that special circumstances warrant such modification.

 

Any shares of Performance-Based Restricted Stock which are forfeited will be transferred to the Company.

 

E.             Form and Timing of Payment.  With respect to shares of Performance-Based Restricted Stock or Restricted Stock Units for which restrictions lapse, new certificates will be issued (the payout) without the restrictive legend described in Section 9B(i). Each Performance Unit is payable in cash or shares of Stock or in a combination of cash and Stock, as determined by the Plan Administrator in his/her sole discretion. Such payment will be made as soon as practicable after the Award payment is determined.

 

 

10.           Stock Appreciation Rights.

 

A.            Grants of Stock Appreciation Rights.  Stock Appreciation Rights may be granted under the Plan in conjunction with an Option either at the Date of Grant or by amendment or may be separately granted. Stock Appreciation Rights will be subject to such terms and conditions not inconsistent with the Plan as the Plan Administrator may impose.

 

B.            Right to Exercise; Exercise Period.  A Stock Appreciation Right issued pursuant to an Option will be exercisable to the extent the Option is exercisable; both such Stock Appreciation Right and the Option to which it relates will not be exercisable during the six months following their respective Dates of Grant except in the event of the Participant’s Disability or death. A Stock Appreciation Right issued independent of an Option will be exercisable pursuant to such terms and conditions established in the grant. Notwithstanding such terms and conditions, in the event of a public tender for all or any portion of the Stock or in the event that any proposal to merge or consolidate the Company with another company is submitted to the stockholders of the Company for a vote, the Plan Administrator, in his/her sole discretion, may declare any previously granted Stock Appreciation Right immediately exercisable.

 

C.            Failure to Exercise.  If on the last day of the Option Period, in the case of a Stock Appreciation Right granted pursuant to an Option, or the specified Exercise Period, in the case of a Stock Appreciation Right issued independent of an Option, the Participant has not exercised a Stock Appreciation Right, then such Stock Appreciation Right will be deemed to have been exercised by the Participant on the last day of the Option Period or Exercise Period.

 

D.            Payment.  An exercisable Stock Appreciation Right granted pursuant to an Option will entitle the Participant to surrender unexercised the Option or any portion thereof to which the Stock Appreciation Right is attached, and to receive in exchange for the Stock Appreciation Right payment (in cash or Stock or a combination thereof as described below) equal to either of the following amounts, determined in the sole discretion of the Plan Administrator at the Date of Grant: (1) the excess of the Fair Market Value of one share of Stock at the date of exercise over the Option price, times the number of shares called for by the Stock Appreciation Right (or portion thereof) which is so surrendered, or (2) the excess of the Book Value of one share of Stock at the date of exercise over the Book Value of one share of Stock at the Date of Grant of the related Option, times the number of shares called for by the Stock Appreciation Right. Upon exercise of a Stock Appreciation Right not granted pursuant to an Option, the Participant will receive for each Stock Appreciation Right payment (in cash or Stock or a combination thereof as described below) equal to either of the following amounts, determined in the sole discretion of the Plan Administrator at the Date of Grant: (1) the excess of the Fair Market Value of one share of Stock at the date of exercise over the Fair Market Value of one share of Stock at the Date of Grant of the Stock Appreciation Right, times the number of shares called for by the Stock Appreciation Right, or (2) the excess of the Book Value of one share of Stock at the date of exercise of the Stock Appreciation Right over the Book Value of one share

 

 

of Stock at the Date of Grant of the Stock Appreciation Right, times the number of shares called for by the Stock Appreciation Right.

 

The Plan Administrator may direct the payment in settlement of the Stock Appreciation Right to be in cash or Stock or a combination thereof. Alternatively, the Plan Administrator may permit the Participant to elect to receive cash in full or partial settlement of the Stock Appreciation Right, provided that (i) the Plan Administrator must consent to or disapprove such election and (ii) unless the Plan Administrator directs otherwise, the election and the exercise must be made during the period beginning on the 3rd business day following the date of public release of quarterly or year-end earnings and ending on the 12th business day following the date of public release of quarterly or year-end earnings. The value of the Stock to be received upon exercise of a Stock Appreciation Right shall be the Fair Market Value of the Stock on the trading day preceding the date on which the Stock Appreciation Right is exercised. To the extent that a Stock Appreciation Right issued pursuant to an Option is exercised, such Option shall be deemed to have been exercised, and shall not be deemed to have lapsed.

 

E.             Nontransferable.  A Stock Appreciation Right will not be transferable by the Participant except by Will or the laws of descent and distribution and will be exercisable during the Participant’s lifetime only by the Participant or by the Participant’s guardian or legal representative.

 

F.             Lapse of a Stock Appreciation Right.  A Stock Appreciation Right will lapse upon the earlier of: (i) 10 years from the Date of Grant; or (ii) at the expiration of the Exercise Period as set by the grant. If the Participant ceases employment within the Exercise Period and prior to the lapse of the Stock Appreciation Right, the Stock Appreciation Right will lapse as follows: (a) Termination—any unvested Stock Appreciation Right will lapse on the effective date of the Termination and any vested Stock Appreciation Right will lapse 90 days after the effective date of the Termination; or (b) Retirement, Disability or death—any unvested Stock Appreciation Right will lapse on the effective date of the Retirement, Disability or death and any vested Stock Appreciation Right will lapse on the earlier of 60 months after the effective date of the Retirement, Disability or death or at the expiration of the Exercise Period set by the grant; provided, however, that the Plan Administrator may modify the above if he/she determines in his/her sole discretion that special circumstances warrant such modification.

 

11.           Dividend Equivalents.

 

A.            Grants of Dividend Equivalents.  Dividend Equivalents may be granted under the Plan in conjunction with an Option or a separately awarded Stock Appreciation Right, at the Date of Grant or by amendment, without consideration by the Participant. Dividend Equivalents may also be granted under the Plan in conjunction with Performance-Based Restricted Stock, Performance-Based Restricted Stock Units or Performance Units, at any time during the Performance Period, without consideration by the Participant.

 

 

B.            Payment.  Each Dividend Equivalent will entitle the Participant to receive an amount equal to the dividend actually paid with respect to a share of Stock on each dividend payment date from the Date of Grant to the date the Dividend Equivalent lapses as set forth in Section 11D. The Plan Administrator, in his/her sole discretion, may direct the payment of such amount at such times and in such form and manner as determined by the Plan Administrator.

 

C.            Nontransferable.  A Dividend Equivalent will not be transferable by the Participant.

 

D.            Lapse of a Dividend Equivalent.  Each Dividend Equivalent will lapse on the earlier of (i) the date of the lapse of the related Option or Stock Appreciation Right; (ii) the date of the exercise of the related Option or Stock Appreciation Right; (iii) the end of the Performance Period (or if earlier, the date the Participant ceases employment) of the related Performance Units or Performance-Based Restricted Stock or Restricted Stock Unit Award; or (iv) the lapse date established by the Plan Administrator on the Date of Grant of the Dividend Equivalent.

 

12.           Equity.  One or more shares of Stock may be granted to any Eligible Person, in such amounts, on such terms and conditions, and for such consideration, including no consideration or such minimum consideration as may be required by law, as the Plan Administrator shall determine. An Equity Award may be denominated in Stock or other securities, stock-equivalent units, securities or debentures convertible into Stock, or any combination of the foregoing and may be paid in Stock or other securities, in cash, or in a combination of Stock or other securities and cash, all as determined in the sole discretion of the Plan Administrator. Unless the Plan Administrator determines otherwise, the vesting period for Equity Awards shall be at least three years.

 

13.           Accelerated Award Payout/Exercise.

 

A.            Change in Control.  Notwithstanding anything in this Plan document to the contrary, a Participant is entitled to an accelerated payout (as set forth in Section 13B) with respect to any previously granted Award upon the happening of a change in control; provided, that, except as otherwise expressly provided to the contrary in the applicable grant agreement, a Participant will not be entitled to an accelerated vesting or payout of any Covered Awards in connection with the consummation of the transactions contemplated by the Agreement and Plan of Merger dated as of December 18, 2005 by and among FPL Group, Inc., CF Merger Corporation and the Company (the “Excluded Transactions”), and such Covered Awards shall remain outstanding in accordance with their terms following the consummation of the Excluded Transactions, subject to any adjustments made by the Plan Administrator in accordance with the provisions of Section 15.

 

A change in control for purposes of this Section 13 means the occurrence of any one of the following events:

 

(i)            individuals who, on January 24, 2003, constitute the Board (the “Incumbent Directors”) cease for any reason to constitute at least a majority of the Board, provided that any person becoming a

 

 

director subsequent to January 24, 2003, whose election or nomination for election was approved by a vote of at least two-thirds of the Incumbent Directors then on the Board (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without written objection to such nomination) shall be an Incumbent Director; provided, however, that no individual initially elected or nominated as a director of the Company as a result of an actual or threatened election contest with respect to directors or as a result of any other actual or threatened solicitation of proxies by or on behalf of any person other than the Board shall be deemed to be an Incumbent Director;

 

(ii)           any “person” (as such term is defined in Section 3(a)(9) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the Company’s then outstanding securities eligible to vote for the election of the Board (the “Company Voting Securities”); provided, however, that the event described in this paragraph (ii) shall not be deemed to be a change in control by virtue of any of the following acquisitions: (A) by the Company or any corporation with respect to which the Company owns a majority of the outstanding shares of common stock or has the power to vote or direct the voting of sufficient securities to elect a majority of the directors (a “Subsidiary Company”), (B) by any employee benefit plan (or related trust) sponsored or maintained by the Company or any Subsidiary Company, (C) by any underwriter temporarily holding securities pursuant to an offering of such securities, (D) pursuant to a Non-Qualifying Transaction (as defined in paragraph (iii)), or (E) pursuant to any acquisition by Participant or any group of persons including Participant (or any entity controlled by Participant or any group of persons including Participant);

 

(iii)          consummation of a merger, consolidation, statutory share exchange or similar form of corporate transaction involving the Company or any of its Subsidiary Companies, (a “Business Combination”), unless immediately following such Business Combination: (A) more than 60% of the total voting power of (x) the corporation resulting from such Business Combination (the “Surviving Corporation”), or (y) if applicable, the ultimate parent corporation that directly or indirectly has beneficial ownership of at least 95% of the voting securities eligible to elect directors of the Surviving Corporation (the “Parent Corporation”), is represented by Company Voting Securities that were outstanding immediately prior to such Business Combination (or, if applicable, is represented by shares into which such Company Voting Securities were converted pursuant to such Business

 

 

Combination), and such voting power among the holders thereof is in substantially the same proportion as the voting power of such Company Voting Securities among the holders thereof immediately prior to the Business Combination, (B) no person (other than any employee benefit plan (or related trust) sponsored or maintained by the Surviving Corporation or the Parent Corporation), is or becomes the beneficial owner, directly or indirectly, of 20% or more of the total voting power of the outstanding voting securities eligible to elect directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) and (C) at least a majority of the members of the board of directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) following the consummation of the Business Combination were Incumbent Directors at the time of the Board’s approval of the execution of the initial agreement providing for such Business Combination (any Business Combination which satisfies all of the criteria specified in (A), (B), and (C) above shall be deemed to be a “Non-Qualifying Transaction”); or

 

(iv)          the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company, or the consummation of a sale of all or substantially all of the Company’s assets.

 

Notwithstanding the foregoing, a change in control of the Company shall not be deemed to occur solely because any person acquires beneficial ownership of more than 20% of the Company Voting Securities as a result of the acquisition of Company Voting Securities by the Company which reduces the number of Company Voting Securities outstanding; provided, that if after such acquisition by the Company such person becomes the beneficial owner of additional Company Voting Securities that increases the percentage of outstanding Company Voting Securities beneficially owned by such person, a change in control of the Company shall then occur.

 

B.            Amount of Award Subject to Accelerated Payout.    The amount of a Participant’s previously granted Award that will be paid or exercisable upon the happening of a change in control will be determined as follows, provided, that, except as otherwise expressly provided to the contrary in the applicable grant agreement, a Participant will not be entitled to an accelerated vesting or payout of any Covered Awards under this Section 13B in connection with the consummation of the Excluded Transactions:

 

Service-Based Restricted Stock or Restricted Stock Unit Awards.    The Participant will be entitled to an accelerated Award payout, and the amount of the payout will be based on the number of shares of Service-Based Restricted Stock or Restricted Stock Units that were issued on the Date of Grant.

 

Stock Option Awards and Stock Appreciation Rights.    Any previously granted Stock Option Awards or Stock Appreciation Rights will be immediately and fully vested and will become fully exercisable.

 

 

Performance-Based Restricted Stock or Restricted Stock Units/Performance Units.    The Participant will be entitled to an accelerated Award payout, and the amount of the payout will be based on the number of shares of Performance-Based Restricted Stock or Restricted Stock Units/Performance Units subject to the Award as established on the Date of Grant, prorated based on the number of months of the Performance Period that have elapsed as of the payout date, and assuming that maximum performance was achieved.

 

Equity Awards.    Any previously granted Equity Award will be immediately vested.

 

Covered Awards.  Except as may be expressly provided to the contrary in the applicable grant agreement, Covered Awards shall not vest or be subject to immediate payout as a result of the consummation of the Excluded Transactions, but will remain outstanding in accordance with their terms following the consummation of the Excluded Transactions, subject to any adjustments made by the Plan Administrator in accordance with the provisions of Section 15.

 

C.            Timing of Accelerated Payout/Option Period/Exercise Period.    The accelerated payout set forth in Section 13B will be made in cash within 30 days after the date of the change in control. When Stock is related to the Award, the amount of cash will be determined based on the Fair Market Value of Stock on the payout date.

 

14.           Amendment of Plan.

 

The Plan Administrator may at any time and from time to time alter, amend, suspend or terminate the Plan in whole or in part, except no such action may be taken without the consent of the Participant to whom any Award was previously granted, which adversely affects the rights of such Participant concerning such Award, except as such termination or amendment of the Plan is required by statute, or rules and regulations promulgated thereunder.

 

15.           Miscellaneous Provisions.

 

A.            Nontransferability.    No benefit provided under this Plan shall be subject to alienation or assignment by a Participant (or by any person entitled to such benefit pursuant to the terms of this Plan), nor shall it be subject to attachment or other legal process except (i) to the extent specifically mandated and directed by applicable state or federal statute; (ii) as requested by the Participant (or by any person entitled to such benefit pursuant to the terms of this Plan), and approved by the Plan Administrator, to satisfy income tax withholding; and (iii) as requested by the Participant and approved by the Plan Administrator, to members of the Participant’s family, or a trust established by the Participant for the benefit of family members.

 

B.            No Employment Right.    Participation in this Plan shall not constitute a contract of employment between the Company or any Subsidiary and any person and

 

 

shall not be deemed to be consideration for, or a condition of, continued employment of any person.

 

C.            Tax Withholding.    The Company or a Subsidiary may withhold any applicable federal, state or local taxes at such time and upon such terms and conditions as required by law or determined by the Company or a Subsidiary. Subject to compliance with any requirements of applicable law, the Plan Administrator may permit or require a Participant to have any portion of any withholding or other taxes payable in respect to a distribution of Stock satisfied through the payment of cash by the Participant to the Company or a Subsidiary, the retention by the Company or a Subsidiary of shares of Stock, or delivery of previously owned shares of the Participant’s Stock, having a Fair Market Value equal to the withholding amount.

 

D.            Fractional Shares.    Any fractional shares concerning Awards shall be eliminated at the time of payment or payout by rounding down for fractions of less than one-half and rounding up for fractions of equal to or more than one-half. No cash settlements shall be made with respect to fractional shares eliminated by rounding.

 

E.             Government and Other Regulations.    The obligation of the Company to make payment of Awards in Stock or otherwise shall be subject to all applicable laws, rules, and regulations, and to such approvals by any government agencies as may be required. The Company shall be under no obligation to register under the Securities Act of 1933, as amended (“Act”), any of the shares of Stock issued, delivered or paid in settlement under the Plan. If Stock awarded under the Plan may in certain circumstances be exempt from registration under the Act, the Company may restrict its transfer in such manner as it deems advisable to ensure such exempt status.

 

F.             Indemnification.    The Plan Administrator (and his/her designees) shall be indemnified and held harmless by the Company against and from (i) any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by such person in connection with or resulting from any claim, action, suit, or proceeding to which such person may be a party or in which such person may be involved by reason of any action or failure to act under the Plan; and (ii) any and all amounts paid by such person in satisfaction of judgment in any such action, suit, or proceeding relating to the Plan. Each person covered by this indemnification shall give the Company an opportunity, at its own expense, to handle and defend the same before such person undertakes to handle and defend it on such person’s own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Charter or By-Laws of the Company or any of its Subsidiaries, as a matter of law, or otherwise, or any power that the Company may have to indemnify such person or hold such person harmless.

 

G.            Reliance on Reports.    The Plan Administrator (and each person to whom the Plan Administrator has delegated any of his/her authority or power under this Plan) shall be fully justified in relying or acting in good faith upon any report made by the independent public accountants of the Company and its Subsidiaries and upon any other information furnished in connection with the Plan. In no event shall the Plan Administrator (or each person to whom the Plan Administrator has delegated any

 

 

of his/her authority or power under this Plan) be liable for any determination made or other action taken or any omission to act in reliance upon any such report or information or for any action taken, including the furnishing of information, or failure to act, if in good faith.

 

H.            Changes in Capital Structure.    In the event of any change in the outstanding shares of Stock by reason of any stock dividend or split, recapitalization, combination or exchange of shares or other similar changes in the Stock, then appropriate adjustments shall be made in the shares of Stock theretofore awarded to the Participants and in the aggregate number of shares of Stock which may be awarded pursuant to the Plan. Such adjustments shall be conclusive and binding for all purposes. Additional shares of Stock issued to a Participant as the result of any such change shall bear the same restrictions as the shares of Stock to which they relate.

 

I.              Company Successors.    In the event the Company becomes a party to a merger, consolidation, sale of substantially all of its assets or any other corporate reorganization in which the Company will not be the surviving corporation or in which the holders of the Stock will receive securities of another corporation (in any such case, the “New Company”), then the New Company shall assume the rights and obligations of the Company under this Plan.

 

J.             Governing Law.    All matters relating to the Plan or to Awards granted hereunder shall be governed by the laws of the State of Maryland, without regard to the principles of conflict of laws.

 

K.            Relationship to Other Benefits.    Any Awards under this Plan are not considered compensation for purposes of determining benefits under any pension, profit sharing, or other retirement or welfare plan, or for any other general employee benefit program.

 

L.             Expenses.    The expenses of administering the Plan shall be borne by the Company and its Subsidiaries.

 

M.           Titles and Headings.    The titles and headings of the sections in the Plan are for convenience of reference only, and in the event of any conflict, the text of the Plan, rather than such titles or headings, shall control.

 

 

This document constitutes part of a prospectus covering securities that have been registered under the Securities Act of 1933.

 

You may obtain without charge, upon written or oral request, a copy of documents incorporated by reference in the Registration Statement on file with the Securities and Exchange Commission pertaining to the securities offered under the 2002 Senior Management Long-Term Incentive Plan. In addition you may obtain, without charge, upon written or oral request, a copy of documents that are required to be delivered under Rule 428(b) of the Securities Act including our annual report to shareholders or annual report on Form 10-K and a copy of the documents that comprise the prospectus.

 

To make a request for any of these documents, you may telephone or write:

 

Corporate Secretary
 100 Constellation Way
 Suite 1800P
 Baltimore, Maryland 21202
 (410) 470-2800

 

 

2002 Senior Management Long-Term Incentive Plan

Appendix

 

Additional Information

 

The Plan is not subject to any provisions of the Employee Retirement Income Security Act of 1974, and the Plan is not qualified under Section 401(a) of the Internal Revenue Code.

 

Participants may obtain additional information about the Plan by contacting:

 

Manager — Executive Compensation

Constellation Energy Group, Inc.

100 Constellation Way

Suite 500P

Baltimore, MD 21202

 

After each grant is made, participants will be furnished with information about the amount of the grant.  Participants have access to information about their outstanding grants.

 

In general, grants subject to restrictions are taxable to participants when the restrictions lapse, and deductible by Constellation Energy at such time, based on the fair market value of the awards when the restrictions lapse.  Grants not subject to restrictions are taxable/deductible at fair market value on the grant date.  Additionally, options are subject to other special tax provisions.

 

 

FORM OF SERVICE-BASED RESTRICTED STOCK AWARD AGREEMENT

 

[DATE]

 

Recipient Name

Recipient Title

Company

Company Address

City, State Zip Code

 

RE:  Service-Based Restricted Stock Award

 

Dear Recipient:

 

Effective date, The Board of Directors Compensation Committee, (The Committee), granted you [#] service-based restricted shares of CEG Common Stock (the “Award”) pursuant to Section 7 of the Constellation Energy Group, Inc. 2002 Senior Management Long—Term Incentive Plan (the “Plan”).  In addition to other provisions of the Plan (a copy of which is provided to you with this letter), your Award is subject to the following conditions:

 

1.                    The Plan restriction period for these shares expires as show on the restriction lapse dates in the table below:

 

	
# Shares
   Granted
    	
 
    	
Share
   Grant
   Date
    	
 
    	
Restriction
   Period
    	
 
    	
Restriction
   Lapse
   Date
    	
 
    	
Aggregate
   Shares
   Lapsed
    
	
[#]
    	
 
    	
mm/dd/yy
    	
 
    	
[one to five   years]
    	
 
    	
[one to five   years after Share Grant Date]
    	
 
    	
[#]
    

 

2.                    The Plan requires that as a condition to receiving your Award, you waive in writing the right to make an election under Section 83(b) of the Internal Revenue Code of 1986 with respect to your Award (see Section 7D of the Plan).  Your execution of this letter will constitute your waiver to make such election under Section 83(b).  This waiver means that you will not have the option of electing to be taxed on the restricted shares at the time of the grant.  Instead, you will be taxed on the restricted shares at the time the Plan restrictions are removed (see Attachment A).  This waiver allows the Company to treat dividends paid to you during the period of the Plan restrictions as compensation, thereby giving the Company a tax deduction for such amounts.

 

3.                    As provided in the Plan, until the Plan restriction period expires, you may not sell, transfer, pledge or hypothecate the Award shares.  CEG will hold the shares for safekeeping until the restriction lapse, unless you let us know that you want a stock certificate for the Award.  If you prefer a certificate, it will be issued in your name with a legend to the effect that you may not sell, transfer, pledge, or hypothecate the Award shares and that the shares are subject to certain conditions under the Plan.

 

 

4.                    If you contemplate the sale or transfer (for example to a family member) of any shares after the restriction period expires, you should contact the SEC-related persons specified below for advice on the timing of any sale or transfer and any reporting obligations you may have.

 

Please read the Plan carefully as it contains many other provisions relating to your Award.  If you have any questions, please do not hesitate to call:

 

	
General
    	
 
    	
SEC-related
    	
 
    	
Tax-related
    
	
[NAME]
    	
 
    	
[NAME]
    	
 
    	
[NAME]
    
	
[PHONE   NUMBER]
    	
 
    	
[PHONE   NUMBER]
    	
 
    	
[PHONE   NUMBER]
    

 

Please sign the enclosed copy of this letter and return it in the envelope provided.

 

Sincerely,

 

 

[NAME]

[TITLE, DEPARTMENT]

 

I have read the Plan and this letter and agree to the terms and conditions contained in each regarding my Award.

 

 

	
 
    	
 
    	
 
    
	
Signature of Recipient
    	
 
    	
Date
    	
 
    

 

 

This document constitutes part of a prospectus covering securities

that have been registered under the Securities Act of 1933.

 

ATTACHMENT A

 

CONSTELLATION ENERGY GROUP, INC.

 

INCOME TAX CONSEQUENCES TO PARTICIPANTS

FOR SERVICE-BASED RESTRICTED STOCK AWARDS

 

Set forth is a brief overview of certain income tax consequences associated with your Service-Based Restricted Stock Award (“the Award”).

 

Stock

 

Because the Plan places certain restrictions on the Award which could lead to forfeiture of the shares prior to lifting the Plan restrictions and because you have agreed to waive the Section 83(b) election(1), the value of the restricted stock is not taxed to you when the initial grant is made.  Rather, the stock is taxable to you at the time the restrictions are removed.  The amount subject to income tax is the fair market value of the stock on the day that the Plan restrictions are removed.  This amount is treated as compensation subject to withholding of income taxes, Medicare taxes and, if applicable, Social Security taxes.  You are not taxed on the value of any stock forfeited.

 

For purposes of determining the gain or loss on any sale of the stock received pursuant to this Award, your basis in the stock is the amount that you included in taxable income when the Plan restrictions were removed.  Your tax holding period, for purposes of determining whether a gain or loss on a sale is long-term or short-term, begins on the day after the day that the Plan restrictions were removed.

 

Dividends

 

The dividends during the restriction period will be automatically reinvested in additional shares of company common stock.  These shares will be subject to the same restrictions as the originally awarded shares and will vest accordingly.  For tax purposes, the dividends on the restricted stock will not be taxable as dividend income.  Rather, the accumulated shares of stock will be taxable to you in the same manner as stated above.

 

After the Plan restrictions on the stock are removed, the dividends are treated as regular dividend income (generally not subject to tax withholding).

 

Tax Planning

 

You may wish to consult your tax advisor in the year the restrictions are lifted from the Award if you have questions regarding the impact of the Award on your tax withholding or if you have questions about the applicable capital gains holding period and rates for this Award.

 

(1) The Plan requires that as a condition to receiving a Restricted Stock Award, you must waive in writing the right to make an election under Section 83(b) of the Internal Revenue Code of 1986 with respect to your Award (see Section 7 D of the Plan).  This waiver means that you will not have the option of electing to be taxed on the restricted shares at the time of grant.  Instead, you will be taxed on the restricted shares at the time the Plan restrictions are removed.  This allows the Company to treat dividends paid during the period of Plan restrictions as compensation, thereby giving the Company a tax deduction for such amounts.

 

 

This document constitutes part of a prospectus covering securities

that have been registered under the Securities Act of 1933.

 

FORM OF PERFORMANCE UNIT AGREEMENT

 

[date]

 

TO: «First» «MI» «Last»

 

Effective [Date], as part of the [3 CALENDAR YEAR PERFORMANCE PERIOD] Long-Term Incentive Program, you were granted [#]  performance units (the “Units”) under the Constellation Energy Group, Inc. 2002 Senior Management Long—Term Incentive Plan (the “Plan”).  In addition to other provisions of the Plan, your award is subject to the conditions set forth in this document.

 

	
Target
   Grant
   (# Units)
    	
 
    	
Grant
   Date
    	
 
    	
Performance
   Period
    	
 
    	
Vesting Date
    
	
[#]
    	
 
    	
[MM/DD/YY]
    	
 
    	
[3-Year Period]
    	
 
    	
[End of 3-Year Period]
    

 

Under current tax law, you are not subject to tax on your Units until the Vesting Date.

 

1.               Each Unit is worth $1. The final award payout on the Vesting Date will be based on Constellation Energy Group’s relative Total Shareholder Return (“TSR”) performance over the Performance Period as set forth below. TSR is defined as the stock price change from [BEGINNING TO END OF 3 CALENDAR YEAR PERFORMANCE PERIOD] and dividends during that period that are reinvested on the ex-dividend date (date stock trades without its dividend) at the closing price on that date.

 

The Plan Administrator will determine the award payout soon after the conclusion of the Performance Period. The performance measures used to determine the award payout are as follows:

 

·                  Primary Measure: Constellation Energy TSR for the Performance Period is compared to the TSR performance results of large and mid-size investment grade companies within the Dow Jones Electric Utilities Index (DJEUI) on [END OF PERFORMANCE PERIOD].  In the DJEUI, companies that are rated ‘non-investment grade’ by both Moody’s and S&P rating agencies on [END OF PERFORMANCE PERIOD] are excluded.

 

·                  Secondary Measure: If Constellation Energy’s percentile rank for the Primary Measure is below the [   ] percentile, then a comparison will be made to the TSR performance results of investment grade companies in the S&P 500 Index on [END OF PERFORMANCE PERIOD].

 

	
 
    	
 
    	
 
    	
 
    	
Primary
   Measure
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
TSR v. DJEUI
   Large & Mid-
   Cap
   Investment
   Grade
   Companies
    	
 
    	
Secondary
   Measure
   TSR v. S&P
   500 Index
   Comparison
   Group
    	
 
    
	
Performance
   Level
    	
 
    	
Total Shareholder
   Return
    	
 
    	
Payout vs.
   Target
    	
 
    	
Payout vs.
   Target
    	
 
    
	
<Threshold
    	
 
    	
<[  ] Percentile
    	
 
    	
[  ]
    	
%
    	
[  ]
    	
%
    
	
Threshold
    	
 
    	
[  ] Percentile
    	
 
    	
[  ]
    	
%
    	
[  ]
    	
%
    
	
Target
    	
 
    	
[  ] Percentile
    	
 
    	
[  ]
    	
%
    	
[  ]
    	
%
    
	
Stretch
    	
 
    	
[  ] Percentile
    	
 
    	
[  ]
    	
%
    	
[  ]
    	
%
    

 

Payout levels interpolated between points.

Secondary measure applies only if performance vs. primary measure is below threshold.

 

 

2.                                       The award payout amount is determined by multiplying the “Payout vs. Target” percentage by the number of Units (worth $1  each) that you were granted.  This award payout amount may be settled, in the sole discretion of the Plan Administrator, in either restricted or unrestricted stock or stock units, or cash (or any combination thereof).

 

3.                                       Under current tax law, you will be subject to tax on the Vesting Date on the award payout amount.  The Company will be required to withhold applicable taxes at such time.  If the award payout is settled in stock or stock units, the Company will withhold the required number of shares or units to pay these taxes.

 

4.                                       As provided in the Plan, until the Vesting Date, you may not sell, transfer, or pledge the Units.

 

Please read the Plan carefully as it contains many other provisions relating to your award.  If you have any questions, please do not hesitate to call:

 

	
General
    	
 
    	
SEC-related
    	
 
    	
Tax-related
    
	
[NAME]
    	
 
    	
[NAME]
    	
 
    	
[NAME]
    
	
[PHONE   NUMBER]
    	
 
    	
[PHONE   NUMBER]
    	
 
    	
[PHONE   NUMBER]
    

 

Please sign this letter and return it in the envelope provided, and keep a copy for your records.

 

Sincerely,

 

 

[NAME]

[TITLE, DEPARTMENT]

 

I have read the Plan and this letter and agree to the terms and conditions contained in each regarding my Award.

 

 

	
 
    	
 
    	
 
    
	
Signature   of «First» «MI» «Last»
    	
 
    	
DATE
    

 

 

FORM OF STOCK UNIT AWARD WITH SALE RESTRICTION AGREEMENT

 

[DATE]

 

Recipient Name

Recipient Title

Company

Company Address

City, State Zip Code

 

RE:  Stock Unit Award with Sale Restriction

 

Dear Recipient:

 

Effective date, as part of your [PERFORMANCE YEAR] annual incentive and in recognition of your performance during [PERFORMANCE YEAR], you were granted [#] restricted Constellation Energy Group, Inc. (the “Company”) common stock units with sale restrictions (“Deferred Shares”) under the Constellation Energy Group, Inc. 2002 Senior Management Long-Term Incentive Plan (the “Plan”).  In addition to other provisions of the Plan, your award is subject to the following conditions:

 

1.                    Each Deferred Share entitles you to receive on the Restriction Lapse Date (set forth below) one share of Constellation Energy Group common stock (“Common Stock”).  Under current tax law, you are not subject to tax on your Deferred Shares until the Restriction Lapse Date (see paragraph 4 below).

 

2.                    During the Restriction Period (set forth below), on any date that Constellation Energy Group pays dividends with respect to the Common Stock, the Company shall credit you with a number of Deferred Shares equal to (i) the number of your Deferred Shares on the dividend record date times (ii) the dividend rate per share, divided by (iii) the per share reinvestment price.  These dividend-based additional Deferred Shares shall be subject to the same rules and restrictions as Deferred Shares originally granted to you.

 

3.                    The Restriction Period for your Deferred Shares expires on the Restriction Lapse Date as shown in the table below:

 

	
# Deferred
   Shares
   Granted
    	
 
    	
Deferred
   Share
   Grant
   Date
    	
 
    	
Restriction
   Period
    	
 
    	
Restriction
   Lapse
   Date
    
	
[#]
    	
 
    	
[MM/DD/YY]
    	
 
    	
[5 years]
    	
 
    	
[5 years after Grant Date]
    

 

Your Deferred Shares are fully and immediately vested, however, during the Restriction Period, you may not sell, transfer, or pledge the Deferred Shares.  During the Restriction Period, you will have no voting rights with respect to the Deferred Shares.  The Restriction Period remains in effect irrespective of your employment status.

 

 

4.                    Following the Restriction Lapse Date, the Company shall cause to be issued to you a certificate for shares of Common Stock equal to the number of your Deferred Shares (including dividend-based additional Deferred Shares).  Under current tax law, you will be subject to tax on the Restriction Lapse Date based on an amount equal to the number of shares of Common Stock issued to you times the Fair Market Value per share (i.e., the average of the high and low price of the Common Stock on the Restriction Lapse Date).  The Company will be required to withhold applicable taxes at such time, and will withhold the required number of shares to pay these taxes.  The total shares you receive will be rounded to the nearest whole share.  You should consult your tax advisor regarding any tax issues.

 

Please read the Plan carefully as it contains many other provisions relating to your award.  If you have any questions, please do not hesitate to call:

 

	
General
    	
 
    	
SEC-related
    	
 
    	
Tax-related
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
[NAME]
    	
 
    	
[NAME]
    	
 
    	
[NAME]
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
[PHONE   NUMBER]
    	
 
    	
[PHONE   NUMBER]
    	
 
    	
[PHONE   NUMBER]
    

 

Please sign the enclosed copy of this letter and return it in the envelope provided.

 

Sincerely,

 

 

[NAME]

[TITLE, DEPARTMENT]

 

I have read the Plan and this letter and agree to the terms and conditions contained in each regarding my Award.

 

 

	
 
    	
 
    	
 
    
	
Signature   of Recipient
    	
 
    	
Date
    

 

 

This document constitutes part of a prospectus covering securities

that have been registered under the Securities Act of 1933.

 

FORM OF

STOCK OPTION AGREEMENT

 

This Stock Option Agreement (“Agreement”) is subject to the terms and conditions of the Constellation Energy Group, Inc. 2002 Senior Management Long-Term Incentive Plan (the “Plan”).  The «Administrator» Constellation Energy Group, Inc. (the “Plan Administrator”) has authorized the option grant under this Agreement by and between Participant (designated below) and Constellation Energy Group, Inc. (“Constellation Energy”).

 

1. Grant of Option.

 

(a) The “Participant” is «First» «Middle» «Last».

 

(b) The date of the grant is «GrantDate» (“Grant Date”).

 

(c) The number of shares subject to the option (“Option Shares”) are «Grant» shares of Constellation Energy common stock (“Stock”).

 

(d) The exercise price is [OptionPrice = fair market value of stock on grant date] per share of Stock (“Exercise Price”).

 

This Agreement specifies the terms of the option (“Option”) granted to Participant to purchase the Option Shares at the Exercise Price set forth above. The Option is not intended to constitute an “incentive stock option” as that term is used in Internal Revenue Code section 422.  The “Option Period” is the period during which the Option is exercisable as provided in this Agreement.

 

2. Installment Exercise.

 

Subject to the terms of this Agreement, the Option will be exercisable in installments according to the following schedule (each a “Vesting Date”):

 

	
INSTALLMENT
    	
 
    	
VESTING DATE
   APPLICABLE TO
   INSTALLMENT
    
	
[1/3 of Option   Shares] Options
    	
 
    	
[One year after   Grant Date]
    
	
[1/3 of Option   Shares] Options
    	
 
    	
[Two years after   Grant Date]
    
	
[1/3 of Option   Shares] Options
    	
 
    	
[Three years   after Grant Date]
    

 

3. Termination of Option.

 

(a)           Except as provided in paragraph 3(b) below, the Option will terminate upon the earlier to occur of: (1) when all Option Shares have been exercised; or (2) ten (10) years from the Grant Date (“Expiration Date”).

 

(b)           If Participant ceases employment, the Option will terminate as to any unvested Option Shares on the effective date of Participant’s employment Termination (as defined in the Plan) and as to

 

 

vested Option Shares 90 days after such effective date; provided that if Participant ceases employment because of Participant’s Retirement, Disability (each as defined in the Plan), or death, the Option will terminate as to any unvested Option Shares on the effective date of the Retirement, Disability or death, and as to vested Option Shares, the Option will remain exercisable until the earlier of 60 months after such effective date or the Expiration Date.

 

(c)           In the event of Participant’s death during the Option Period, vested Option Shares may be exercised by Participant’s legal representative(s), or by other person(s) authorized under Participant’s will.  Alternatively, if Participant fails to make testamentary disposition of the Option or dies intestate, such vested Option Shares may be exercised by persons(s) entitled to receive the Option Shares under the applicable laws of descent and distribution.

 

(d)           A transfer of Participant’s employment between Constellation Energy and any Subsidiary of Constellation Energy, or between Subsidiaries of Constellation Energy, will not be considered an employment Termination.

 

4. Exercise of Option.

 

(a)           Subject to this Agreement and the Plan, the Option may be exercised in whole or in part by the method specified by the Plan Administrator from time to time or by contacting [NAME] at [PHONE NUMBER(S)].

 

(b)           On or before the exercise date specified pursuant to paragraph 4(a), Participant must fully pay the Exercise Price and the tax withholding obligation for the Option Shares exercised in U.S. dollars by cash or by check payable to Constellation Energy Group, Inc.  All or a portion of the Exercise Price and tax withholding obligation may also be paid by Participant: (i) subject to the terms of paragraph 4(c) below, by delivery of shares of Stock owned by Participant and acceptable to the Plan Administrator having an aggregate Fair Market Value (as defined in paragraph 6 below) on the date of exercise that is equal to the amount of cash that would otherwise be required; or (ii) by authorizing a third party to sell the Option Shares (or a sufficient portion of the Option Shares), and immediately remit to Constellation Energy the Exercise Price and any tax withholding resulting from such exercise.  Further, tax withholding up to the minimum required withholding rate (but not in excess of that rate) may also be satisfied through a holdback by Constellation Energy of some of the Option Shares that would otherwise be deliverable to Participant by reason of the Option exercise.  The Option will cease to be exercisable, as to the portion exercised, when Participant purchases the Stock to which the exercised portion of the Option relates.

 

(c)           Other shares of Stock owned by Participant may be delivered to satisfy the Exercise Price, or to satisfy Participant’s tax withholding obligation above the minimum withholding rate, only if the shares have been held by Participant for at least six months before delivery, except that there shall be no holding period imposed for shares purchased by Participant for cash on the open market.  Use of previously-owned shares shall be effected by actual delivery of the Stock certificates to Constellation Energy, and by completing an affidavit available from Constellation Energy affirming that Participant owns the necessary shares and that any applicable holding period has been satisfied.

 

(d)           Participant is required to comply with Constellation Energy’s Insider Trading Policy at all times, including in connection with exercise of the Option. The Option may not be exercised by Participant during any blackout or prohibited trading period established by Constellation Energy or applicable to Participant, nor shall the Option be exercisable if and to the extent Constellation Energy determines that such exercise would violate applicable state or Federal securities laws or the rules and regulations of any securities exchange on which the Stock is traded.  If Constellation Energy makes such a determination, it will use all reasonable efforts to comply with such laws, rules or regulations.  In

 

 

making any such determinations, Constellation Energy may rely on the opinion of counsel for Constellation Energy.

 

(e)           As soon as practicable after the exercise date, Constellation Energy will deliver to Participant a Stock certificate or certificates (or other evidence of ownership) for the purchased Option Shares.

 

5.  Tax Withholding.

 

Constellation Energy will have the right to withhold any applicable federal, state or local taxes, deductions or withholdings due with respect to the Option or its exercise in such form and manner as provided in the Plan.

 

6. Fair Market Value.

 

The “Fair Market Value” of a share of Stock is the average of the highest and lowest sale price per share of Stock on the New York Stock Exchange-Composite Transactions on the applicable date of reference, or if there are no sales on such date, then the average of such highest and lowest sale price on the last previous day on which sales are reported.

 

7. No Rights of Stockholders.

 

Participant does not have any of the rights and privileges of a stockholder of Constellation Energy with respect to any shares of Stock purchasable or issuable upon the exercise of the Option, in whole or in part, before the date of exercise and purchase of the Option Shares.

 

8. Non-Transferability of Option.

 

The Option is not transferable, except for a transfer to Participant’s family member or to a trust established for the benefit of Participant’s family members which has been approved by the Plan Administrator as provided in the Plan, or in case of Participant’s death, by will or the laws of descent and distribution, nor shall the Option be subject to attachment, execution or other similar process.  During Participant’s lifetime, the Option is exercisable only by Participant, any guardian or legal representative of Participant, or a family member or trustee of a trust established for the benefit of Participant’s family members to whom the Option has been transferred in accordance with the Plan.  In the event of (a) any attempt by Participant to alienate, assign, pledge, hypothecate or otherwise dispose of the Option, except as provided in this Agreement, or (b) the levy of any attachment, execution or similar process upon the rights or interest conferred under this Agreement, Constellation Energy may terminate the Option by notice to Participant and it will become null and void.

 

 

9. Employment Not Affected.

 

Neither this Agreement nor the grant of the Option constitutes a contract of employment between Constellation Energy or any Subsidiary and Participant, and neither will be deemed to be consideration for, or a condition of, continued employment of Participant.

 

10. Incorporation of Plan by Reference.

 

The Option is granted pursuant to the terms of the Plan, the terms of which are incorporated in this Agreement by reference.  The Option will in all respects be interpreted in accordance with the Plan.  All capitalized terms, which are not otherwise defined in this Agreement, will have the meaning specified in the Plan.  The Plan Administrator will interpret and construe the Plan and this Agreement, and its interpretations and determinations will be conclusive and binding on the parties and any other person claiming an interest with respect to any issue arising under this Agreement.

 

11.  Severability.

 

The provisions of this Agreement are severable.  If any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions will nevertheless be binding and enforceable.

 

IN WITNESS WHEREOF, Constellation Energy Group, Inc. and Participant have executed this Stock Option Agreement effective as of the Grant Date.

 

	
Constellation   Energy Group, Inc
    	
 
    	
ACCEPTED   AND AGREED TO:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:   
    	
 
    
	
[NAME] 
    	
 
    	
 
    	
«First» «Middle» «Last»
    
	
 
    	
 
    	
 
    
	
[TITLE, DEPARTMENT]

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00192-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00192-of-00352.parquet"}]]