LICENSE AGREEMENT

 

<PAGE>

                                                                   Exhibit 10.52

 

                                BOTOX(R) -- JAPAN

 

                                LICENSE AGREEMENT

 

                                 BY AND BETWEEN

 

                                  ALLERGAN, INC.

 

                               ALLERGAN SALES, LLC

 

                                       AND

 

                               GLAXO GROUP LIMITED

 

<PAGE>

 

                       BOTOX(R) -- JAPAN LICENSE AGREEMENT

 

     THIS BOTOX(R) -- JAPAN LICENSE AGREEMENT including the exhibits and

schedules referred to herein and attached hereto, (collectively, the

"Agreement"), dated September 30, 2005 (the "Effective Date"), is made and

entered into by and between ALLERGAN, INC., a Delaware corporation having a

place of business at 2525 Dupont Drive, Irvine, California 92612, and ALLERGAN

SALES, LLC, a Delaware Limited Liability Company having a place of business at

2525 Dupont Drive, Irvine, California 92612, (ALLERGAN, INC. and ALLERGAN SALES,

LLC are collectively referred to herein as "ALLERGAN") and GLAXO GROUP LIMITED,

a private limited company incorporated in England and Wales, having its

registered office at Glaxo Wellcome House, Berkeley Avenue, Greenford,

Middlesex, England UB6 0NN ("GSK").

 

                                    RECITALS

 

     A. ALLERGAN Controls (as defined in Article 1 below) the ALLERGAN Patent

Rights (as defined in Article 1 below), ALLERGAN Know-How (as defined in Article

1 below) and ALLERGAN Trademarks;

 

     B. GSK desires to obtain from ALLERGAN, and ALLERGAN is willing to grant to

GSK, certain licenses under the ALLERGAN Patent Rights, ALLERGAN Know-How and

ALLERGAN Trademarks under the terms and conditions herein; and

 

     C. ALLERGAN will have Product manufactured and supplied to GSK under the

terms of the Supply Agreement (as defined in Article 1 below).

 

     NOW, THEREFORE, in consideration of the mutual covenants and obligations

set forth herein, and for other good and valuable consideration, the receipt and

sufficiency of which is hereby acknowledged, ALLERGAN and GSK hereby agree as

follows:

 

1.    DEFINITIONS

 

     As used in this Agreement, the following terms will have the meanings

indicated:

 

     1.1 An "Affiliate" of a Party or Person means any Person, whether de jure

or de facto, that directly or indirectly, controls, is controlled by, or is

under common control with such Party or Person, as applicable. Solely as used in

this definition, "control" means (a) direct or indirect ownership of more than

fifty percent (50%) of the equity (or such lesser percentage which is the

maximum allowed to be owned by a foreign corporation in a particular

jurisdiction)

 

***   Certain confidential information contained in this document, marked with 3

     asterisks, has been omitted and filed separately with the Securities and

     Exchange Commission pursuant to Rule 24b-2 of the Securities Act of 1934,

     as amended.

 

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having the power to vote on or direct the affairs of such Party or Person, as

applicable, or (b) the possession, directly or indirectly, of the power to

direct or cause the direction of the policies and management of such Party or

Person, as applicable, whether by the ownership of stock, by contract, or

otherwise.

 

     1.2 "Agreement" will have the meaning set forth in the preamble.

 

     1.3 "ALLERGAN" will have the meaning set forth in the preamble.

 

     1.4 "ALLERGAN Corporate Trademarks" will have the meaning set forth in

Section 1.9.

 

     1.5 "ALLERGAN Know-How" means any and all know how, information, data

(including, without limitation, pre-clinical data, toxicology information and

clinical trial data), documents, materials, and software (including, but not

limited to, marketing information, technical information, regulatory

information, clinical information, processes, procedures, methods, formulae,

protocols, and techniques) relating to Product (including, without limitation,

Product Improvements and Enhancements) but not including ALLERGAN Manufacturing

Information, which exists as of the Effective Date or during the Term and is

Controlled by ALLERGAN or its Affiliates.

 

     1.6 "ALLERGAN Manufacturing Information" means any and all confidential

documents and information Controlled by ALLERGAN and/or its Affiliates and

relating to the manufacture of Product.

 

     1.7 "ALLERGAN Patent Rights" means any and all patent applications and

patents generically or specifically claiming or covering the use, sale, offer

for sale and/or import of Product (including without limitation the active

pharmaceutical ingredient in Product and its dosage forms and formulations),

that are Controlled by ALLERGAN or its Affiliates as of the Effective Date or

during the Term in the Territory, including without limitation the following:

(a) patent applications and patents set forth on Exhibits A and A-1, such

Exhibits to be updated by ALLERGAN at least one (1) time in each Calendar Year

during the Term and also within thirty (30) calendar days after GSK's written

request, which request will not be made by GSK more than one (1) time in any

Calendar Year during the Term; (b) divisions, continuations,

continuations-in-part, renewals, and substitute applications of any patent

applications described in (a); (c) patents that may issue from any patent

applications described in (a) or (b); (d) reissues, reexaminations, and

extensions or restorations of patents described in (a) or (c) by existing or

future extension or restoration mechanisms, including without limitation, patent

restoration and supplementary protection certificates or the equivalent thereof;

and (e) any other form of government-issued right in the Territory substantially

similar to any of the foregoing. Notwithstanding anything to the contrary,

ALLERGAN Patent Rights will not include any patent applications or patents

claiming or covering any processes for manufacture of Product. For clarity,

ALLERGAN Patent Rights includes those patents and patent applications which are

Controlled by ALLERGAN or any of its Affiliates in the Territory, which

generically or specifically cover the use, sale, offer for sale and/or import of

any Product Improvements and

 

***   Certain confidential information contained in this document, marked with 3

     asterisks, has been omitted and filed separately with the Securities and

     Exchange Commission pursuant to Rule 24b-2 of the Securities Act of 1934,

     as amended.

 

 

                                       2

<PAGE>

 

Enhancements made by or on behalf of ALLERGAN. For further clarity, ALLERGAN

Patent Rights do not include any GSK Patent Rights.

 

     1.8 "ALLERGAN Product Trademarks" will have the meaning set forth in

Section 1.9.

 

     1.9 "ALLERGAN Trademarks" means any trademarks, applications to register

trademarks, intent-to-use applications, or other registrations or applications

related to trademarks, common-law trademarks and rights, service marks, trade

dress, logos, trade names, corporate names, all rights arising from the use of

or existing in connection with domain names, and all goodwill associated with

the foregoing and all registrations and applications for registration of any of

the foregoing, all to the extent Controlled by ALLERGAN or its Affiliates in the

Territory as of the Effective Date or during the Term that are (a) specific to

and only used with Product, as set forth in Exhibit B (the "ALLERGAN Product

Trademarks") or (b) used in connection with, but are not specific to or used

exclusively with, Product (including without limitation Housemarks of ALLERGAN),

as set forth in Exhibit C (the "ALLERGAN Corporate Trademarks").

 

     1.10 "Allowable Standard Cost" means an increase in the Standard Cost of no

greater than, (a) during each Calendar Year commencing with the first (1st)

Calendar Year and continuing through the end of *** and (b) from and after ***,

***. When calculating the Allowable Standard Cost for each Calendar Year after

the first (1st) Calendar Year, the 'Standard Cost' referred to in this Section

1.10 will be the lower of the Allowable Standard Cost for the immediately

preceding Calendar Year or the Standard Cost, as recalculated by ALLERGAN in the

immediately preceding Calendar Year as provided in Section 1.55.

 

     1.11 "Applicable Law" means all applicable provisions of any and all

federal, national, state, provincial, and local statutes, laws, rules,

regulations, administrative codes, ordinances, decrees, orders, decisions,

injunctions, awards, judgments, permits and licenses of or from any governmental

authorities relating to or governing the use or regulation of the subject item

or action.

 

     1.12 "Calendar Quarter" means each of the three (3) month periods ending

March 31, June 30, September 30, and December 31; provided, however, that the

first (1st) Calendar Quarter under this Agreement will be the period beginning

on the Effective Date and ending on the end of the Calendar Quarter in which the

Effective Date is encompassed.

 

     1.13 "Calendar Year" means, for the first Calendar Year, the period

beginning on the Effective Date and ending December 31, 2005, and for each

Calendar Year thereafter, each successive period beginning on January 1 and

ending twelve (12) consecutive calendar months later on December 31; provided,

however, that the last Calendar Year of the Term will be the period beginning on

January 1 and ending on the effective date of expiration or termination of the

Term.

 

***   Certain confidential information contained in this document, marked with 3

     asterisks, has been omitted and filed separately with the Securities and

     Exchange Commission pursuant to Rule 24b-2 of the Securities Act of 1934,

     as amended.

 

 

                                       3

 

<PAGE>

 

     1.14 "Closing Date" means the earlier of (a) the date on which the

applicable waiting period under Article 16 of the Anti-Monopoly Law of Japan

expires or terminates early; or (b) the date on which the Parties agree in

writing that all requests to the Parties by the JFTC with regard to the

transaction contemplated by this Agreement have been satisfactorily met and no

objection on the part of the JFTC remains.

 

     1.15 "Co-Development Agreement" will have the meaning set forth in Section

4.1.2(b).

 

     1.16 "Commercially Reasonable Efforts" means efforts and resources normally

used by a Party in the Territory in the exercise of its reasonable business

discretion relating to a prescription pharmaceutical product owned by it or to

which it has co-exclusive rights, which is of similar market potential at a

similar stage in its development or product life, taking into account issues of

patent coverage, safety and efficacy, product profile, the competitiveness of

the marketplace, the proprietary position of the compound or product, the

regulatory structure involved, the profitability of the applicable products, and

other relevant factors, including without limitation technical, legal,

scientific, and/or medical factors.

 

     1.17 "Competing Product" will have the meaning set forth in Section 7.5.2.

 

     1.18 "Confidential Information" will have the meaning set forth in Section

10.1.

 

     1.19 "Control" means, with respect to the subject item, the ability and

authority of a Party or its Affiliate, whether arising by ownership, possession

or pursuant to a license or sublicense, to grant licenses or sublicenses to the

other Party under or to the subject item as specified in this Agreement, without

breaching the terms of any agreement with any Third Party and/or its Affiliates.

 

     1.20 "Co-Promotion Option" will have the meaning set forth in Section 2.5.

 

     1.21 "Co-Promotion Term" will have the meaning set forth in Section 2.5.

 

     1.22 "Cosmetic Indication" means the treatment, minimization, and/or

eradication of, or the appearance of, glabellar lines, crow's feet, or any lines

or wrinkles on the face.

 

     1.23 "Current Indications" means those Indications for which ALLERGAN or

any of its Affiliates, as of the Effective Date, has received Regulatory

Approval in the Territory to use Product for the treatment, prevention or

palliation of such Indications, which Indications include blepharospasm (benign

essential blepharospasm and essential blepharospasm), hemifacial spasm, and

cervical dystonia (spasmodic torticollis).

 

     1.24 "Distribution Agreement" will have the meaning set forth in Section

4.1.1(b).

 

***   Certain confidential information contained in this document, marked with 3

     asterisks, has been omitted and filed separately with the Securities and

     Exchange Commission pursuant to Rule 24b-2 of the Securities Act of 1934,

     as amended.

 

 

                                       4

 

<PAGE>

 

     1.25 "Effective Date" means the date on which this Agreement is mutually

executed by authorized representatives of each Party, which date will be that

which is set forth in the preamble.

 

     1.26 "Extended Term" will have the meaning set forth in Section 9.2.1.

 

     1.27 "Field of Use" means any and all uses of Product for the Current

Indications, Cosmetic Indication, and Future Indications.

 

     1.28 "Force Majeure Event" will have the meaning set forth in Section

11.13.

 

     1.29 "Future Indications" means all treatment, prevention or palliation of

Indications other than the Cosmetic Indication and Current Indications.

 

     1.30 "Good Clinical Practice" means the ministerial ordinance number 28

issued by the MHLW on March 27, 1997, as amended by the ministerial ordinance

number 106 issued on June 12, 2003, by the MHLW relating to the standard for

performance of clinical trials and its amendments related rules and regulations.

 

     1.31 "Good Post-Marketing Study Practice" means the ministerial ordinance

number 171 issued by the MHLW on December 20, 2004, relating to the standard of

post-marketing investigation and study and its amendments related rules and

regulations.

 

     1.32 "Good Vigilance Practice" means the ministerial ordinance number 135

issued by the MHLW on September 22, 2004, relating to the standard of

post-marketing safety management of drugs and its amendments related rules and

regulations.

 

     1.33 "GSK" will have the meaning set forth in the preamble.

 

     1.34 "GSK Distribution Commencement Date" means the effective date of the

Distribution Agreement, which date will not be more than fourteen (14) calendar

days after the Effective Date.

 

     1.35 "GSK Patent Rights" means any and all patents and patent applications

Controlled by GSK or its Affiliates, which generically or specifically claim or

cover the making, having made, use, sale, offer for sale, and/or import of

Product (including, for example, any Product Improvements and Enhancements

inside and outside of the Territory, which are made by or on behalf of GSK

pursuant to this Agreement and relate to Product in the Field of Use), which

includes, without limitation, the following: (a) divisions, continuations,

continuations-in-part, renewals, and substitute applications of any such patent

applications; (b) patents that may issue from any such patent applications; (c)

reissues, reexaminations, and extensions or restorations of patents described in

(b) by existing or future extension or restoration mechanisms, including without

limitation, patent restoration and supplementary protection certificates or the

equivalent thereof; and (d) any other form of government-issued right inside or

outside of the Territory

 

***   Certain confidential information contained in this document, marked with 3

     asterisks, has been omitted and filed separately with the Securities and

     Exchange Commission pursuant to Rule 24b-2 of the Securities Act of 1934,

     as amended.

 

 

                                       5

 

<PAGE>

 

substantially similar to any of the foregoing. For clarity, GSK Patent Rights do

not include any ALLERGAN Patent Rights.

 

     1.36 "GSK Sales Commencement Date" means the date of invoice of the first

commercial sale of Product in the Field of Use in the Territory by GSK (or its

Affiliates or sublicensee) to a Third Party once GSK or its Affiliate in the

Territory has become the MAH for Product in the Territory.

 

     1.37 "Housemarks" means the names of a Party or its Affiliates, or

variations of the names, and all related trade dress, logotypes, symbols, and

other trademarks used by a Party or its Affiliates in connection with its

products in the Territory.

 

     1.38 "Indication" means any distinct disease or medical condition. For the

purpose of clarification, any label expansion or other extension into a

different segment of any Current Indication will not be considered a different

Indication.

 

     1.39 "Initial Term" will have the meaning set forth in Section 9.1.

 

     1.40 "JFTC" means the Japan Fair Trade Commission, or any successor entity

thereto.

 

     1.41 "MAH" or "Marketing Authorization Holder" means a Person who possesses

all Regulatory Approvals in the Territory in such Person's name and who will

manage all interactions with Regulatory Authorities regarding such Regulatory

Approvals.

 

     1.42 "Manufacturer" means Allergan Pharmaceuticals Ireland, a Cayman

Islands corporation doing business at Carrowberg, Castlebar Road, Westport,

County Mayo, Ireland, a wholly owned Affiliate of ALLERGAN, or such other Person

as may be appointed to supply Product to GSK pursuant to the Supply Agreement.

 

     1.43 "Material Regulatory Interruption" means any action or omission of any

Regulatory Authority, including, without limitation, any mandatory recall of

Product, which prevents GSK or its Affiliates or sublicensees from being able to

use, sell, offer for sale and/or import Product in the Field of Use in the

Territory, which is not caused by GSK or its Affiliates or sublicensees being in

breach of their respective obligations to such Regulatory Authority.

 

     1.44 "Material Supply Interruption" means a breach by the Manufacturer of

its obligation to Manufacture (as defined in the Supply Agreement) Product in

accordance with the terms and conditions of the Supply Agreement.

 

     1.45 "MHLW" means the Japanese Ministry of Health, Labour and Welfare or

any successor agency thereto.

 

     1.46 "Net Sales" means, as to GSK or ALLERGAN and with respect to a given

period of time, gross invoiced sales of Product to Third Parties by either Party

or its Affiliates or

 

***   Certain confidential information contained in this document, marked with 3

     asterisks, has been omitted and filed separately with the Securities and

     Exchange Commission pursuant to Rule 24b-2 of the Securities Act of 1934,

     as amended.

 

 

                                       6

 

<PAGE>

 

sublicensees in such period, less the following deductions from such gross

amounts which are actually incurred, allowed, paid, accrued or specifically

allocated: (a) credits or allowances actually granted for damaged Product,

returns or rejections of Product, price adjustments, and billing errors; (b)

governmental and other rebates (or equivalents thereof) granted to managed

health care organizations, pharmacy benefit managers (or equivalents thereof),

national, state/provincial, local, and other governments, their agencies and

purchasers, and reimbursers, or to trade customers; (c) such Party's normal and

customary trade, cash and quantity discounts, allowances, and credits actually

allowed or paid; (d) commissions allowed or paid to Third Party distributors,

brokers, or agents other than sales personnel, sales representatives, and sales

agents employed by such Party; (e) transportation costs, including insurance,

for outbound freight related to delivery of Product to the extent included in

the gross amount invoiced; (f) sales taxes, value added taxes (VAT), and other

taxes directly linked to the sales of Product to the extent included in the

gross amount invoiced; (g) the actual amount of any write offs for bad debt

directly relating to sales of Product in the period; and (h) any other items

actually deducted from gross invoiced sales amounts as reported by such Party in

its financial statements in accordance with, in the case of GSK's Net Sales, the

International Financial Reporting Standards, applied on a consistent basis, and,

in the case of ALLERGAN's Net Sales, the U.S. generally accepted accounting

principles applied on a consistent basis. Sales between or among either Party

and its Affiliates or sublicensees will be excluded from the computation of such

Party's Net Sales, but the subsequent final sales to a Third Party by such

Affiliates or sublicensees will be included in the computation of such Party's

Net Sales.

 

     1.47 "Other Territories" means those countries in the world other than

those in the Territory, where ALLERGAN has granted, as of or after the Effective

Date, certain licenses to GSK and its Affiliates to use, sell, offer for sale

and import Product in such countries.

 

     1.48 "Party" means either GSK or ALLERGAN, and "Parties" means both of

them.

 

     1.49 "Person" means an individual, corporation, partnership, association,

trust, or any other entity or organization, including without limitation any

government or political subdivision or any agency or instrumentality thereof.

 

     1.50 "Product" means any pharmaceutical composition intended for

administration to humans containing botulinum toxin type A, regardless of

formulation, dosage, or form, and manufactured and supplied by the Manufacturer

in accordance with the Supply Agreement. For clarity, Product includes any

Product Improvements and Enhancements.

 

     1.51 "Product Improvements and Enhancements" means any and all improvements

and enhancements of Product, including, for example, research leading to

formulations, assays, and preclinical models in support of Indications,

invented, developed, or acquired by or on behalf of ALLERGAN and/or GSK, as

applicable, during the Term.

 

     1.52 "Regulatory Approval" means an approval, license, registration, and/or

authorization necessary for the use, sale, offering for sale, or importation of

a prescription

 

***   Certain confidential information contained in this document, marked with 3

     asterisks, has been omitted and filed separately with the Securities and

     Exchange Commission pursuant to Rule 24b-2 of the Securities Act of 1934,

     as amended.

 

 

                                       7

 

<PAGE>

 

pharmaceutical product in the Territory, including, without limitation, the

Shonin and the New Drug Application.

 

     1.53 "Regulatory Approval Applications" means an application for obtaining

a Regulatory Approval, together with all documents, data, and information

included with such application.

 

     1.54 "Regulatory Authority" means any or all national, supranational,

regional, state, or local regulatory agency, department bureau, commission,

council, or other government entity involved in the granting of Regulatory

Approval for a pharmaceutical product in the Territory.

 

     1.55 "Standard Cost" means the Manufacturer's internal standard cost,

comprising direct and indirect fully allocated costs to Manufacture (as such

term is defined in the Supply Agreement) botulinum toxin type A at the

Manufacturing Facility (as such term is defined in the Supply Agreement), for

supply to GSK or any of the Manufacturer's other customers (be they Third

Parties or Affiliates), including without limitation the net standard cost of

raw materials, active pharmaceutical ingredients, components, labor, and

overhead attributed to the production, processing, quality control, labeling,

and packaging of Product, determined in accordance with Applicable Law and U.S.

generally accepted accounting principles using methodology consistently applied

by the Manufacturer.

 

     1.56 "Stock Product" will have the meaning set forth in Paragraph 5(a) of

Exhibit G.

 

     1.57 "Supply Agreement" means the agreement for the manufacture and supply

of Product by the Manufacturer to GSK for the purposes of this Agreement, which

will be executed by GSK and the Manufacturer contemporaneously with this

Agreement.

 

     1.58 "Tail Period" means the *** period following (a) the expiration of

this Agreement as provided in Section 9.1 or Section 9.2.3; or (b) the

termination of this Agreement by GSK solely as provided in Section 9.3.1.

 

     1.59 "Tail Period Payments" will have the meaning set forth in Section 3.4.

 

     1.60 "Term" means the Initial Term; however, if GSK exercises its option to

extend the Initial Term as provided in Section 9.2, the "Term" will mean the

Initial Term and the Extended Term.

 

     1.61 "Territory" means Japan and its territories and possessions.

 

     1.62 "Third Party" means any Person other than ALLERGAN or GSK or either of

their respective Affiliates.

 

     1.63 "Third Party Payments" will have the meaning set forth in Section

3.2.2(b).

 

     1.64 "Transition Period" will have the meaning set forth in Section 4.1.

 

***   Certain confidential information contained in this document, marked with 3

     asterisks, has been omitted and filed separately with the Securities and

     Exchange Commission pursuant to Rule 24b-2 of the Securities Act of 1934,

     as amended.

 

 

                                       8

 

<PAGE>

 

     1.65 "Unit" means each separate stock keeping unit of a product with a

distinct product number or item code.

 

2.    LICENSES

 

     2.1 Product Rights.

 

          2.1.1 Subject to the terms and conditions of this Agreement, ALLERGAN

hereby grants to GSK a co-exclusive (with ALLERGAN and its Affiliates) license,

including a right to grant sublicense rights, as further described in Section

2.4, but not to assign except as provided in Section 11.3, under the ALLERGAN

Patent Rights, other than those that are identified on Exhibit A-1, and ALLERGAN

Know-How, to use, sell, offer for sale, and import Product in the Field of Use

in the Territory. For purposes of clarification, the license granted by ALLERGAN

to GSK pursuant to this Section 2.1.1 includes, without limitation, the right to

develop, as further described in Section 2.1.4, promote, commercialize, market,

and distribute Product in the Field of Use in the Territory, but will not

include any right to make or have made any Product.

 

          2.1.2 Subject to the terms and conditions of this Agreement, ALLERGAN

hereby grants to GSK an exclusive option to obtain a co-exclusive (with ALLERGAN

and its Affiliates) license, including a right to grant sublicense rights, as

further described in Section 2.4, but not to assign except as provided in

Section 11.3, under the ALLERGAN Patent Rights that are set forth on Exhibit A-1

to use, sell, offer for sale, and import Product for any Future Indications in

the Territory. This option may be exercised by GSK as to any of the patents and

patent applications at any time after the *** of the Term, upon providing prior

written notice to ALLERGAN and, subject to Section 3.8, payment to ALLERGAN of

***. Upon GSK's exercise of the option as provided in this Section 2.1.2 as to

any patent and/or patent application, such patent and/or patent application will

be moved from Exhibit A-1 and placed on Exhibit A.

 

          2.1.3 Subject to the terms and conditions of this Agreement, GSK

hereby grants to ALLERGAN and its Affiliates a royalty-free, worldwide,

non-exclusive, perpetual (subject to Section 9.4.2) license, including a right

to grant sublicense rights, but not to assign except as provided in Section

11.3, under the GSK Patent Rights, to make, have made, use, sell, offer for

sale, and import Product in the Field of Use. For purposes of clarification, the

license granted by GSK to ALLERGAN pursuant to this Section 2.1.3 will include

the right to develop, promote, commercialize, market, and distribute Product in

the Field of Use.

 

          2.1.4 ALLERGAN acknowledges and agrees that the licenses granted to

GSK under Section 2.1.1 include without limitation:

 

               (a) The right of GSK to conduct human clinical trials and submit

clinical data packages to Regulatory Authorities for Product in the Field of Use

in the Territory;

 

               (b) The right of GSK to manage all communications with Regulatory

Authorities relating to Product,***; and provided, further that any

communications

 

***   Certain confidential information contained in this document, marked with 3

     asterisks, has been omitted and filed separately with the Securities and

     Exchange Commission pursuant to Rule 24b-2 of the Securities Act of 1934,

     as amended.

 

 

                                        9

 

<PAGE>

 

with Regulatory Authorities relating to the drug master file (DMF) will be

managed by ALLERGAN after good faith consultation with GSK unless the Parties

agree in writing that any such communications will be managed by GSK;

 

                (c) Access by GSK to any data developed by ALLERGAN that is

useful for GSK to develop Product in the Field of Use for use, sale, offering

for sale and import in the Territory; and

 

               (d) Rights to other ancillary clinical development information

Controlled by ALLERGAN or its Affiliates that is useful to GSK in using,

selling, offering for sale and importing Product in the Field of Use in the

Territory.

 

     2.2 Trademark Rights.

 

          2.2.1 ALLERGAN Product Trademarks. ALLERGAN hereby grants to GSK a

co-exclusive (with ALLERGAN and its Affiliates) license, including a right to

grant sublicense rights as further described in Section 2.4, but not to assign

except as provided in Section 11.3, to use ALLERGAN Product Trademarks solely in

connection with the use, sale, offering for sale, and import of Product in the

Field of Use in the Territory. All representations of ALLERGAN Product

Trademarks that GSK intends to use if not previously approved by ALLERGAN as

provided in this Section 2.2.1, will first be submitted to ALLERGAN for

approval, such approval not to be unreasonably withheld. ALLERGAN will have

thirty (30) calendar days to review the representation of the ALLERGAN Product

Trademarks. If ALLERGAN does not provide written notice of its approval or

disapproval (together with its reasons for such disapproval) within such thirty

(30) calendar day period, ALLERGAN will be deemed to have approved such

representation. For the avoidance of doubt, ALLERGAN will retain no right to use

ALLERGAN Product Trademarks in the Territory for any purpose other than

co-promotion pursuant to the terms of this Agreement without GSK's prior written

consent.

 

          2.2.2 ALLERGAN Corporate Trademarks. ALLERGAN hereby grants to GSK a

co-exclusive license (with ALLERGAN and its Affiliates) including a right to

grant sublicense rights as further described in Section 2.4, but not to assign

except as provided in Section 11.3, to use ALLERGAN Corporate Trademarks as

trademarks solely in connection with the use, sale, offering for sale, and

import of Product in the Field of Use in the Territory. All representations of

ALLERGAN Corporate Trademarks that GSK intends to use, if not previously

approved by ALLERGAN as provided in this Section 2.2.2, will first be submitted

to ALLERGAN for approval, such approval not to be unreasonably withheld.

ALLERGAN will have thirty (30) calendar days to review the representation of the

ALLERGAN Corporate Trademarks. If ALLERGAN does not provide written notice of

its approval or disapproval (together with its reasons for such disapproval)

within such thirty (30) calendar day period, ALLERGAN will be deemed to have

approved such representation.

 

          2.2.3 Except for any Housemarks of GSK, ALLERGAN will own all

trademarks used in connection with Product in the Field of Use in the Territory.

Except for any Housemarks of GSK, GSK will not own any of the trademarks that it

may use in connection with the use, sale,

 

***   Certain confidential information contained in this document, marked with 3

     asterisks, has been omitted and filed separately with the Securities and

     Exchange Commission pursuant to Rule 24b-2 of the Securities Act of 1934,

     as amended.

 

 

                                       10

 

<PAGE>

 

offering for sale and importing of Product in the Field of Use in the Territory

and except for its use of the Housemarks of GSK, GSK will only use ALLERGAN

Trademarks as trademarks in connection with any and all Product in the

Territory.

 

          2.2.4 ALLERGAN and its Affiliates will have no right to use in any way

whatsoever any representation of a Housemark of GSK, whether in connection with

Product or otherwise, without obtaining the prior written consent of GSK.

 

     2.3 Ownership; Reservation of Rights.

 

          2.3.1 Except as expressly provided in this Agreement, ALLERGAN and its

Affiliates have and will retain sole and exclusive Control of the ALLERGAN

Patent Rights, ALLERGAN Know-How, and ALLERGAN Trademarks. Except as expressly

provided herein, no right, title, or interest is granted by ALLERGAN to GSK in,

to, or under the ALLERGAN Patent Rights, ALLERGAN Know-How, and/or ALLERGAN

Trademarks, and, except as expressly provided herein, GSK will have no right to

assign to any Third Party any right or interest received under the ALLERGAN

Patent Rights, ALLERGAN Know-How, or ALLERGAN Trademarks under the terms of this

Agreement.

 

          2.3.2 Except as expressly provided in this Agreement, GSK and its

Affiliates have and will retain sole and exclusive Control of the GSK Patent

Rights and GSK Housemarks. Except as expressly provided in this Agreement, no

right, title, or interest is granted by GSK to ALLERGAN in, to, or under the GSK

Patent Rights and/or GSK Housemarks, and, except as expressly provided herein,

ALLERGAN will have no right to assign to any Third Party any right or interest

received under the GSK Patent Rights or GSK Housemarks under the terms of this

Agreement.

 

     2.4 Conditions Precedent to Sublicense. GSK will have the right to grant

sublicenses to Third Parties and Affiliates to its license and option rights

under the ALLERGAN Patent Rights, ALLERGAN Know-How, and/or ALLERGAN Trademarks,

provided that (a) GSK has obtained the prior written consent of ALLERGAN, not to

be unreasonably withheld, as provided below in this Section 2.4, (b) each

sublicensee has agreed to be bound by all applicable terms and obligations of

the rights and licenses granted by ALLERGAN to GSK under this Agreement

(including without limitation GSK's confidentiality and royalty obligations),

(c) the terms and conditions of each such sublicense are consistent with, and no

less restrictive than, the terms and conditions of this Agreement, (d) ALLERGAN

is designated as a third party beneficiary of such sublicense and, consistent

with the terms and conditions of this Agreement, entitled to enforce the terms

and conditions of such sublicense with respect to such sublicensee in the event

that GSK elects not to enforce such terms and conditions of this Agreement, and

(e) GSK provides to ALLERGAN a copy of those terms and conditions contained in

each such sublicense which demonstrate compliance with the requirements in (b),

(c), and (d) of this Section 2.4. Notwithstanding anything to the contrary, GSK

agrees that GSK will not grant to any sublicensee a right to grant sublicense

rights under ALLERGAN Patent Rights, ALLERGAN Know-How, or ALLERGAN Trademarks.

ALLERGAN will have *** within which to consent

 

***   Certain confidential information contained in this document, marked with 3

      asterisks, has been omitted and filed separately with the Securities and

     Exchange Commission pursuant to Rule 24b-2 of the Securities Act of 1934,

     as amended.

 

 

                                       11

 

<PAGE>

 

to any requests from GSK or its Affiliates to sublicense any of its and their

rights under this Agreement to the ALLERGAN Patent Rights, ALLERGAN Know-How,

and/or ALLERGAN Trademarks, as provided above. If ALLERGAN does not provide its

written consent or refusal to consent (together with its reasons for such

disapproval) to any such sublicense within such *** period, ALLERGAN will be

deemed to have consented to such request to sublicense from GSK or its

Affiliate. ALLERGAN's consent pursuant to (a) of this Section 2.4 will not be

required for grants of sublicenses by GSK to Affiliates of GSK, but the

requirement in (b), (c), and (d) of this Section 2.4 will apply to any such

grants of sublicenses by GSK to Affiliates of GSK. Notwithstanding the

foregoing, the Parties acknowledge and agree that this Section 2.4 will in no

way apply to GSK's sublicense of any of its rights under Section 2.1.1 to any

Affiliate or Third Party that is providing services to GSK relating to this

Agreement (e.g., a Clinical Research Organization (CRO) or distributor) and that

GSK will have the right at any time during the Term, without complying with any

of the requirements set forth in (a) through (e) of this Section 2.4, to

sublicense any of its rights under Section 2.1.1, with the right to grant

further sublicenses in accordance with this Section 2.4, to any Affiliate or

Third Party that is providing services to GSK or its Affiliates relating to this

Agreement; provided, however, that any such Third Party or Affiliate (or

sub-contractor thereof) shall use those rights solely for the purpose of

providing such services to GSK; and further provided, however, that GSK will

remain fully and unconditionally obligated and responsible for the full and

complete performance of all of its obligations under the terms and conditions of

this Agreement whether or not such performance is carried out by GSK or its

Affiliates or Third Parties.

 

     2.5 Co-Promotion Option. At any time during such period of the Term that is

after thirty (30) months after the GSK Sales Commencement Date, ALLERGAN will

have the non-sublicenseable, non-assignable right, but not an obligation,

exercisable by giving not less than ninety (90) calendar days' prior written

notice to GSK, to co-promote Product in the Field of Use in the Territory,

directly or through its Affiliates, in accordance with the key terms set out in

Exhibit D (the "Co-Promotion Option"). Upon exercise of such Co-Promotion

Option, ALLERGAN will actively detail and promote Product in the Field of Use in

the Territory during the Co-Promotion Term as directed by the Territory Joint

Commercial Committee and in accordance with the key terms set out in Exhibit D.

The "Co-Promotion Term" will be the period beginning on the date of ALLERGAN's

exercise of the Co-Promotion Option as provided in this Section 2.5 and ending

on the earlier of (a) the expiration of this Agreement, (b) the termination of

this Agreement for any reason, (c) the termination of ALLERGAN's co-promotion

rights relating to Product as provided in this Agreement by ALLERGAN for any

reason, or (d) the termination of ALLERGAN's co-promotion rights relating to

Product as provided in this Agreement by GSK as a result of a material breach by

ALLERGAN of its co-promotion obligations as provided in this Agreement

(including, without limitation, Exhibit D), which breach is not cured by

ALLERGAN within sixty (60) calendar days after written notice thereof from GSK.

 

***   Certain confidential information contained in this document, marked with 3

     asterisks, has been omitted and filed separately with the Securities and

     Exchange Commission pursuant to Rule 24b-2 of the Securities Act of 1934,

     as amended.

 

 

                                       12

 

<PAGE>

 

3.    PAYMENTS

 

     3.1 Upfront Payment. In consideration for the licenses granted by ALLERGAN

to GSK pursuant to Article 2 and subject to Sections 3.6.4, 3.7, and 3.8, GSK

will pay to ALLERGAN a nonrefundable payment of *** within fifteen (15) calendar

days after the Closing Date.

 

     3.2 Royalty Payments.

 

          3.2.1 In further consideration for the licenses granted by ALLERGAN to

GSK pursuant to Article 2 and subject to Sections 3.2.2, 3.3, 3.6.1. 3.6.3(a),

3.6.4(a), 3.7, and 3.8, during each Calendar Year after the GSK Sales

Commencement Date, GSK will pay to ALLERGAN the following percentages of GSK's

Net Sales for each such Calendar Year, or portion thereof if applicable, as

provided below:

 

               (a) ***

 

               (b) ***

 

               (c) ***

 

GSK acknowledges and agrees that GSK will be solely responsible for paying all

royalties owed to ALLERGAN on account of Net Sales by any and all of GSK's

Affiliates and sublicensees. ALLERGAN acknowledges and agrees that GSK will not

be obligated in any way to pay any royalties as provided in this Section 3.2.1

or any other payments of any kind whatsoever to ALLERGAN on GSK's or its

Affiliates' sales to any Person of Stock Product, including, without limitation,

if such sales of Stock Product occur on or after the GSK Sales Commencement

Date.

 

          3.2.2 Royalty Adjustments.

 

               (a) During each Calendar Year of the Co-Promotion Term in which

ALLERGAN employs a sales force of at least *** fully-trained (as directed by the

Territory Joint Commercial Committee), full-time sales representatives who

actively detail and promote Product in the Field of Use in the Territory in at

least a secondary detail position, which will be defined by the TJCC, and in

accordance with all of the terms set forth in Exhibit D, and subject to Sections

3.6.1, 3.6.3(a), 3.6.4(a), 3.7, and 3.8, GSK will pay ALLERGAN an additional ***

royalty on GSK's Net Sales in each such Calendar Year, or portion thereof if

applicable.

 

               (b) The Parties acknowledge that, during the Term, one (1) or

more royalty-bearing licenses may be necessary from one (1) or more Third

Parties in order for GSK and its Affiliates to use, sell, offer for sale, and

import Product in the Field of Use in the Territory, without infringing the

intellectual property rights of one or more patent rights of such Third Parties

in the Territory. In such an event, GSK will have the right but not the

obligation, and only after prior consultation with ALLERGAN, to use Commercially

Reasonable Efforts to

 

***   Certain confidential information contained in this document, marked with 3

     asterisks, has been omitted and filed separately with the Securities and

     Exchange Commission pursuant to Rule 24b-2 of the Securities Act of 1934,

     as amended.

 

 

                                       13

 

<PAGE>

 

obtain and maintain such Third Party licenses solely with respect to the

Territory. If, as a result of GSK obtaining and maintaining such Third Party

licenses, it is necessary for GSK to make royalty payments and/or license fee

payments to such Third Party (collectively, the "Third Party Payments") in order

for GSK to practice the rights granted hereunder to the ALLERGAN Patent Rights

and ALLERGAN Know-How without infringing such Third Party's rights, GSK will be

entitled to offset *** of all such Third Party Payments against any royalties

owed to ALLERGAN under this Agreement during the Term.

 

               (c) If, in any Calendar Year, the Standard Cost exceeds the

Allowable Standard Cost, ALLERGAN will credit against the royalty payable under

Section 3.2.1 of this Agreement in such Calendar Year, an amount equal to the

difference between (i) the Standard Cost plus *** and (ii) the Allowable

Standard Cost plus ***, multiplied by the number of Units of Product purchased

by GSK during such Calendar Year; provided such difference was actually incurred

by GSK.

 

     3.3 GSK Royalty Term. Subject to Section 9.5.1(a), the obligation of GSK to

pay royalties owed to ALLERGAN under Section 3.2.1 will commence on the GSK

Sales Commencement Date and continue until the expiration, pursuant to Section

9.1 or Section 9.2.3, or earlier termination, pursuant to Section 9.3, of the

Term. The obligation of GSK to pay the additional royalty owed to ALLERGAN under

Section 3.2.2(a) will, if all conditions are satisfied by ALLERGAN as provided

in Section 3.2.2(a), commence at the beginning of the Co-Promotion Term and

continue until the expiration or earlier termination thereof as provided in

Section 2.5.

 

     3.4 Tail Period Payments. Commencing on first (1st) day of the Tail Period

and continuing until the expiration thereof, subject to Sections 3.6.2,

3.6.3(b), 3.6.4(b), 3.7, and 3.8, ALLERGAN will pay the following payments (the

"Tail Period Payments") to GSK:***. For purposes of this Section 3.3, "year"

will mean each 365-calendar day period beginning on the first (1st) day of the

Tail Period or the relevant anniversary thereof.

 

     3.5 Product Improvement and Enhancement Reimbursement Payments.

 

          3.5.1 During the Term, ALLERGAN will conduct the Product Improvement

and Enhancement activities described in Exhibit E. ALLERGAN will have no

obligation to engage in any activities related to Product Improvements and

Enhancements other than as set forth on Exhibit E or existing or planned

activities in which ALLERGAN and its Affiliates engage outside the Territory for

ALLERGAN's own purposes.

 

          3.5.2 In consideration for ALLERGAN's conduct of the Product

Improvement and Enhancement activities as provided in Section 3.5.1 and subject

to Sections 3.6.4(a), 3.7, and 3.8, GSK will make research support payments to

ALLERGAN to reimburse ALLERGAN for a portion of its costs and expenses of

conducting such activities, which research support payments will not exceed the

amounts set forth on the schedule in Exhibit F for the applicable Calendar Year.

At the end of each six (6) month period beginning on January 1 or July 1 after

the Effective Date, continuing until December 31, 2009, ALLERGAN, within thirty

(30) days after

 

***   Certain confidential information contained in this document, marked with 3

     asterisks, has been omitted and filed separately with the Securities and

     Exchange Commission pursuant to Rule 24b-2 of the Securities Act of 1934,

     as amended.

 

 

                                       14

 

<PAGE>

 

the end of such six (6) month period, will provide to GSK a written report

detailing the Product Improvement and Enhancement activities showing progress on

delivering some or all of such Product Improvement and Enhancement activities

outlined in Exhibit E conducted by ALLERGAN during the just-ended six (6) month

period and an invoice for GSK's share of the costs and expenses of conducting

such activities during such six (6) month period. Within thirty (30) days after

receipt by GSK of (i) such report and such invoice and (ii) a letter from a

manager of ALLERGAN confirming that ALLERGAN's total global expenditures in

conducting such Product Improvement and Enhancement activities in the just-ended

six (6) month period ***, GSK will pay to ALLERGAN the amount corresponding to

such invoice. ALLERGAN covenants and agrees that it will use such payments

solely to cover a portion of the costs and expenses incurred by ALLERGAN and its

Affiliates in conducting the Product Improvements and Enhancements activities

set forth on Exhibit E. In the event that ALLERGAN does not incur any costs and

expenses in conducting Product Improvement and Enhancement activities in a six

(6) month period, no payments will be due for such six (6) month period to

ALLERGAN from GSK pursuant to this Section 3.5.2.

 

          3.5.3 If ALLERGAN and GSK mutually agree in writing that ALLERGAN will

engage in Product Improvement and Enhancement activities in addition to the

activities set forth in Exhibit E for the benefit of GSK in the Territory, GSK

will provide compensation to ALLERGAN in addition to that set forth in Exhibit F

for such additional activities under terms and conditions to be negotiated in

good faith by the Parties.

 

     3.6 Payment Terms.

 

          3.6.1 Quarterly Payments of Royalties. Within sixty (60) days after

the last day of each Calendar Quarter, GSK will pay to ALLERGAN all royalties

due and payable on GSK's Net Sales in the immediately preceding Calendar

Quarter, or portion thereof if applicable, in accordance with Section 3.2.

 

          3.6.2 Quarterly Payments of the Tail Period Payment. Within sixty (60)

calendar days after the last day of each Calendar Quarter during the Tail

Period, ALLERGAN will pay to GSK all payments due and payable on ALLERGAN Net

Sales as provided under Section 3.4 in the immediately preceding Calendar

Quarter, or portion thereof if applicable.

 

          3.6.3 Annual Reconciliations.

 

               (a) Subject to Section 9.5.1(a), within sixty (60) calendar days

after the last day of each Calendar Year during the Term, or portion thereof if

applicable, GSK will calculate the royalty payments due to ALLERGAN pursuant to

Sections 3.2.1 and, if applicable, 3.2.2(a) for such Calendar Year. In the event

the total payment due pursuant to Section 3.2.1 and, if applicable, 3.2.2(a) in

any Calendar Year is greater than the total for each such amount that GSK has

paid under Section 3.6.1 in such Calendar Year, the difference will be paid by

GSK to ALLERGAN within sixty (60) days after the last day of such Calendar Year,

or portion thereof if applicable. In the event the total payment due pursuant to

Section 3.2.1 and, if applicable, 3.2.2(a) in any Calendar Year is less than the

total for each such amount that GSK

 

***   Certain confidential information contained in this document, marked with 3

     asterisks, has been omitted and filed separately with the Securities and

     Exchange Commission pursuant to Rule 24b-2 of the Securities Act of 1934,

     as amended.

 

 

                                       15

 

<PAGE>

 

has paid under Section 3.6.1 in such Calendar Year, the difference will be paid

by ALLERGAN to GSK within sixty (60) days after the last day of such Calendar

Year, or portion thereof if applicable.

 

               (b) Within sixty (60) calendar days after the last day of each

Calendar Year during the Tail Period, or portion thereof if applicable, ALLERGAN

will calculate the Tail Period Payments due to GSK pursuant to Section 3.4 for

such Calendar Year. In the event the total payment due pursuant to Section 3.4

in any Calendar Year is greater than the total amount that ALLERGAN has paid

under Section 3.6.2 in such Calendar Year, the difference will be paid by

ALLERGAN to GSK within sixty (60) days after the last day of such Calendar Year,

or portion thereof if applicable. In the event the total payment due pursuant to

Section 3.4 in any Calendar Year is less than the total amount that ALLERGAN has

paid under Section 3.6.2 in such Calendar Year, the difference will be paid by

GSK to ALLERGAN within sixty (60) days after the last day of such Calendar Year,

or portion thereof if applicable.

 

          3.6.4 All payments made under this Agreement will be made in U.S.

dollars. All payments will be made by check or wire transfer in immediately

available funds to the following bank account or to such other bank account

designated in writing by ALLERGAN:

 

               ***

 

For sales of Product in Japanese Yen or in any currency other than U.S. dollars:

 

               (a) With respect to payments made by GSK to ALLERGAN under this

Agreement, GSK's Net Sales, as defined in Section 1.46, will be calculated in

accordance with the International Financial Reporting Standards consistently

applied. GSK Net Sales will be converted into U.S. dollars using the average

exchange rates as calculated and utilized by GSK's group reporting system and

published accounts. The current method uses spot exchange rates sourced from

Reuters/Bloomberg and if changed, GSK will notify ALLERGAN of the revised method

in advance of it being applied.

 

               (b) With respect to payments made by ALLERGAN to GSK pursuant to

Section 3.4, ALLERGAN's Net Sales, as defined in Section 1.46, will be

calculated in accordance with U.S. generally accepted accounting principles

consistently applied. Net Sales will be converted into U.S. dollars using the

average exchange rates as calculated and utilized by ALLERGAN's reporting

systems and published accounts. The current method uses the monthly average of

daily exchange rates obtained from Bloomberg to convert sales in local currency

into U.S. dollars. If this methodology is changed ALLERGAN will notify GSK of

the revised methodology in advance of it being applied.

 

     3.7 Late Payment Interest. Any payment due and payable under the terms and

conditions of this Agreement, including without limitation any royalty payment

and any Tail Period Payments, made by GSK or ALLERGAN after the date such

payment is due and payable, will bear interest as of the day after the date such

payment was due and payable, and will continue to accrue such interest until

such payment is made, at rate equal to *** per month. The

 

***   Certain confidential information contained in this document, marked with 3

     asterisks, has been omitted and filed separately with the Securities and

     Exchange Commission pursuant to Rule 24b-2 of the Securities Act of 1934,

     as amended.

 

 

                                       16

 

<PAGE>

 

payment of such interest will not limit either Party from exercising any other

rights it may have as a consequence of the lateness of any payment.

 

     3.8 Taxes. To the extent a statutory tax withholding obligation is imposed

by a governmental authority upon any payment made by a Party (the "Payor") to

the other Party (the "Payee") under this Agreement, including, for example,

royalty payments, due and payable by the Payor to the Payee under the terms and

conditions of this Agreement, the Payor will be entitled to withhold from such

payment the amount, if any, of any tax assessed against the Payee and actually

withheld, provided that such tax is only for the account of the Payee and

evidence of the payment of such tax is promptly provided to the Payee. The Payor

will pay the amount of such tax to the proper taxing authority and will be

entitled to deduct the amount of such tax from the payment to be made by the

Payor to the Payee. The Payor will advise the Payee of any tax payment made for

the benefit of the Payee pursuant to this Section 3.8 and provide the Payee with

copies of tax receipts for all taxes paid and deducted from the payment due and

payable to the Payee, together with copies of all pertinent communications from

or with governmental authorities with respect thereto. At a Party's reasonable

request and subject to the requesting Party reimbursing any costs and expenses,

each Party will reasonably assist the requesting Party in any effort by a Party

in claiming any exemption from such deductions or withholdings under any double

taxation or similar agreement or treaty from time to time in force, and in

minimizing the amount required to be so withheld or deducted. ALLERGAN warrants

that ALLERGAN is resident for tax purposes in United States and that ALLERGAN is

entitled to relief from United Kingdom income tax under the terms of the double

tax agreement between the United Kingdom and the United States. ALLERGAN will

notify GSK immediately in writing in the event that ALLERGAN ceases to be

entitled to such relief. Pending receipt of formal certification from the United

Kingdom Inland Revenue, GSK may pay royalty income and any other payments under

this Agreement to ALLERGAN by deducting tax at a rate specified in the double

tax treaty between the United Kingdom and the United States. ALLERGAN agrees to

indemnify and hold harmless GSK against any loss, damage, expense, or liability

arising in any way from a breach by ALLERGAN of the warranties in this Section

3.8 or any future claim by a United Kingdom tax authority or other similar body

alleging that GSK was not entitled to deduct such withholding tax on such

payments at source at the treaty rate.

 

     3.9 Records and Reports. Any and all payments made by either Party to the

other pursuant to this Agreement will be accompanied by a written statement

setting forth in reasonable detail the calculation of such Party's Net Sales,

and, if applicable, the calculation of the average exchange rate utilized by

such Party to convert a local currency payment to U.S. dollars. Each Party will

maintain, and will require its Affiliates, and sublicensees, to maintain

complete and accurate records sufficient to enable accurate calculation of any

payments due by a Party to the other Party hereunder, including, without

limitation payment of any royalties and the Tail Period Payment. Such records

and books of account will be preserved by each Party and its respective

Affiliates and sublicensees, as applicable, for a period of three (3) years

after the end of the period covered by such records and books of account, which

obligation will survive the expiration or earlier termination of this Agreement.

 

***   Certain confidential information contained in this document, marked with 3

     asterisks, has been omitted and filed separately with the Securities and

     Exchange Commission pursuant to Rule 24b-2 of the Securities Act of 1934,

     as amended.

 

 

                                       17

 

<PAGE>

 

     3.10 Audit Rights.

 

          3.10.1 GSK will permit an ALLERGAN auditor, or an independent public

accountant designated by ALLERGAN and reasonably acceptable to GSK, to have

access, no more than once in each Calendar Year, during regular business hours

and upon at least sixty (60) calendar days' prior written notice, to GSK's

records and books, and GSK's Affiliates' and sublicensees' records and books, to

the extent necessary to determine the accuracy of GSK's Net Sales reported, and

payments made, by GSK to ALLERGAN pursuant to this Article 3 within the two (2)

year period immediately preceding such an audit. If such examination results in

a determination that GSK's Net Sales or payments owed to ALLERGAN by GSK have

been understated, unpaid amounts due will be paid by GSK to ALLERGAN promptly.

If such examination results in a determination that GSK's Net Sales or payments

owed to ALLERGAN by GSK have been overstated, overpaid amounts due will be

re-paid by ALLERGAN to GSK promptly. The fees and expenses of such auditor or

accountant will be paid by ALLERGAN unless GSK's Net Sales have been

understated, or that payments owed to ALLERGAN by GSK have been underpaid, by

more than *** for the period examined, in which case GSK will pay all reasonable

costs and expenses of the auditor or accountant incurred by ALLERGAN in the

course of making such determination.

 

          3.10.2 ALLERGAN will permit a GSK auditor, or an independent public

accountant designated by GSK and reasonably acceptable to ALLERGAN, to have

access, no more than once in each Calendar Year, during regular business hours

and upon at least sixty (60) calendar days' prior written notice, to ALLERGAN's

records and books, and ALLERGAN's Affiliates' and sublicensees' records and

books, to the extent necessary to determine the accuracy of ALLERGAN's Net Sales

reported, and payments made, by ALLERGAN to GSK pursuant to this Article 3

within the two (2) year period immediately preceding such an audit. If such

examination results in a determination that ALLERGAN's Net Sales or payments

owed to GSK by ALLERGAN have been understated, unpaid amounts due will be paid

by ALLERGAN to GSK promptly. If such examination results in a determination that

ALLERGAN's Net Sales or payments owed to GSK by ALLERGAN have been overstated,

overpaid amounts due will be re-paid by GSK to ALLERGAN promptly. The fees and

expenses of such auditor or accountant will be paid by GSK unless ALLERGAN's Net

Sales have been understated, or that payments owed to GSK by ALLERGAN have been

underpaid, by more than *** for the period examined, in which case ALLERGAN will

pay all reasonable costs and expenses of the auditor or accountant incurred by

GSK in the course of making such determination.

 

4.    TRANSITION ACTIVITIES

 

     4.1 Transition Period. The Parties acknowledge that due to Applicable Law,

during the period from the Effective Date and continuing until the date on which

Regulatory Authorities approve GSK or its Affiliate in the Territory becoming

the MAH for Product in the Territory (the "Transition Period"), ALLERGAN will

continue to be the MAH for Product in the Territory. Accordingly, the Parties

agree that the principles set forth in this Section 4.1 will guide the

 

***   Certain confidential information contained in this document, marked with 3

     asterisks, has been omitted and filed separately with the Securities and

     Exchange Commission pursuant to Rule 24b-2 of the Securities Act of 1934,

      as amended.

 

 

                                       18

 

<PAGE>

 

clinical development and commercialization activities for the Product in the

Territory during the Transition Period and thereafter with respect to study 909.

 

          4.1.1 Commercialization of Product.

 

               (a) During the period commencing on the Effective Date and

continuing until the GSK Distribution Commencement Date, ALLERGAN will use

Commercially Reasonable Efforts to promote, sell, offer for sale and distribute

Product in the Field of Use in the Territory and ALLERGAN will be entitled to

book all Net Sales of ALLERGAN during such time.

 

               (b) Promptly after the Effective Date, the Parties or their

respective Affiliates will enter into good faith negotiations for an agreement

(the "Distribution Agreement"), which will set forth the roles and

responsibilities of GSK relating to the commercialization of Product in the

Field of Use during the Transition Period. Such Distribution Agreement will be

executed not later than fourteen (14) calendar days after the Effective Date and

will include the principles set forth on Exhibit G.

 

               (c) The Parties acknowledge and agree that the TJCC will oversee

all activities of ALLERGAN pursuant to Section 4.1.1(a) and all activities of

the Parties pursuant to the Distribution Agreement.

 

               (d) Upon expiration of the Distribution Agreement, ALLERGAN will,

if so requested by GSK, use Commercially Reasonable Efforts to transfer and

assign to GSK all contracts relating to the Product, including, without

limitation, post-marketing surveillance contracts, excluding, however, any

contracts relating to study 909 as provided in Exhibit H.

 

          4.1.2 Co-Development Activities.

 

               (a) During the period commencing on the Effective Date and

continuing until such time as set forth in Exhibit H, the Parties will

co-develop the Product in the Territory in accordance with the terms set forth

on Exhibit H.

 

               (b) The Parties or their respective Affiliates in the Territory

may, within a reasonable period of time after the Effective Date, mutually

determine to enter into a separate agreement setting forth their respective

obligations with respect to the co-development of Product in the Territory,

which agreement must include the terms set forth on Exhibit H (the

"Co-Development Agreement"). In the event of a conflict between the terms of any

such agreement and this Agreement, this Agreement will control.

 

     4.2 Regulatory Approval Transfer. During the Transition Period, ALLERGAN or

its Affiliate in the Territory will work diligently with GSK to enable GSK to

become the MAH for the Product in the Territory and in addition become

responsible for all Regulatory Approval Applications in the Territory for

Product, including, without limitation, those Regulatory

 

***   Certain confidential information contained in this document, marked with 3

     asterisks, has been omitted and filed separately with the Securities and

     Exchange Commission pursuant to Rule 24b-2 of the Securities Act of 1934,

     as amended.

 

 

                                       19

 

<PAGE>

 

Approval Applications in the Territory for Product for the Cosmetic Indication.

Notwithstanding the foregoing, the Parties acknowledge and agree that prior to

the Closing Date, they will not, and will cause their respective Affiliates not

to, communicate in any way with the Regulatory Authorities (whether orally or in

writing) regarding the transfer of Regulatory Approvals for Product in the

Territory from ALLERGAN to GSK so as to enable GSK to become the MAH. As soon as

possible but in no event later than thirty (30) calendar days after the date of

notification by the MHLW that GSK is the MAH for Product in the Territory,

ALLERGAN will at its own cost and expense (a) deliver, or cause its Affiliates

to deliver, to GSK copies of each Regulatory Approval and Regulatory Approval

Application held by ALLERGAN its Affiliates or agents relating specifically to

Product in the Field of Use in the Territory, (b) certify in writing that the

copies of such Regulatory Approval Applications and filings are true and

complete copies thereof, and (c) do all other things that are required pursuant

to any Applicable Law in the Territory to ensure that the Regulatory Approvals

and Regulatory Approval Applications are duly transferred into the name of GSK

or its nominee in a timely manner

 

     4.3 Notification by the MHLW. Once the Regulatory Approvals and Regulatory

Approval Applications for Current Indications are transferred to GSK and GSK

receives notification by the MHLW that GSK is the MAH, the Transition Period

will immediately terminate, the Distribution Agreement will immediately

terminate, and GSK will become legally responsible for all communications with

MHLW relating to Product in the Territory. Further, all legal responsibility for

releasing Product in Japan, quality assurance/quality control, post-marketing

surveillance, and pharmacovigilance relating to Product in the Territory will

transfer to GSK at such time. Notwithstanding the foregoing, the Co-Development

Agreement will immediately terminate upon the later to occur of (a) the date on

which the Regulatory Approvals and Regulatory Approval Applications for Current

Indications are transferred to GSK and GSK receives notification by the MHLW

that GSK is the MAH or (b) the date on which the study 909 database is locked,

as described in Exhibit H.

 

     4.4 Disclosure of ALLERGAN Know-How; Transfer of Materials.

 

          4.4.1 Within thirty (30) calendar days after the Effective Date,

ALLERGAN or its Affiliate, will at its or their sole cost and expense disclose

the ALLERGAN Know-How to GSK and will provide to GSK all documents that recite,

are directed to, or concern ALLERGAN Know-How. Notwithstanding anything to the

contrary contained in this Article 4, ALLERGAN will thereafter during the Term

promptly disclose to GSK any ALLERGAN Know-How that comes into ALLERGAN's

possession and will provide to GSK all documents that are directed to such

ALLERGAN Know-How.

 

          4.4.2 ***.

 

     4.5 Maintenance of Documentation. Except as provided herein or as otherwise

required or appropriate under Applicable Law, the documents and materials

provided by ALLERGAN to GSK under this Section 4.5 may be copies of original

documents and materials, provided that such copies will be of the highest

quality possible and, if such quality is inadequate

 

***   Certain confidential information contained in this document, marked with 3

     asterisks, has been omitted and filed separately with the Securities and

     Exchange Commission pursuant to Rule 24b-2 of the Securities Act of 1934,

     as amended.

 

 

                                       20

 

<PAGE>

 

for GSK's needs, ALLERGAN will permit GSK to have access to the original

documents and materials. In the event that ALLERGAN elects to provide original

documents and materials, GSK will permit ALLERGAN to have access to such

original documents and materials for use by ALLERGAN for purposes consistent

with the terms and conditions of this Agreement. Such original documents and

materials will be provided to GSK in accordance with the following:

 

          4.5.1 GSK will maintain original documents and materials under safe

and secure conditions typically used by GSK to maintain its own similar

documents and materials. Specifically, GSK will maintain such original documents

and materials in files located in a GSK facility or at another secure facility

used to store GSK's own original documents. If GSK chooses to transfer such

original documents and materials to any other secure facility, GSK will notify

ALLERGAN in writing sixty (60) calendar days in advance of such transfer.

 

          4.5.2 If a Regulatory Authority requires ALLERGAN, or an Affiliate of

ALLERGAN, to provide the Regulatory Authority with access to any of the original

documents or materials transferred by ALLERGAN or its Affiliate to GSK as

provided in this Article 4, GSK will permit ALLERGAN, its employees, agents, or

independent contractors, and/or officials or representatives of the Regulatory

Authority, as appropriate, access to the original documents and materials. Such

access will be provided at the site where the original documents and materials

are maintained by GSK, during normal business hours (Monday through Friday

between 9 a.m. and 5 p.m.) after receipt of reasonable written notice (being at

least five (5) calendar days where practicable but in any case not less than

twenty-four (24) hours advance written notice from ALLERGAN (seventy-two (72)

hours if such notice arrives on a Friday, Saturday, or Sunday), or at such other

facility and during such hours as agreed upon by GSK, ALLERGAN, and/or the

Regulatory Authority. The term "access" will mean, for the purposes of this

Section 4.5.2, that ALLERGAN and/or the Regulatory Authority, as appropriate,

will have possession of the original documents and materials at the GSK facility

where the original documents and materials are maintained, or at such other

facility as agreed upon by ALLERGAN and GSK and/or the Regulatory Authority, for

sufficient time to allow ALLERGAN to review the original documents in detail

and/or to allow the Regulatory Authority to complete its review. Prior to the

grant of access, ALLERGAN will provide GSK with a copy of the relevant written

Regulatory Authority communication or a copy of ALLERGAN's written contact

report of an oral request by the Regulatory Authority for such access, if such

letter or contact report exists.

 

          4.5.3 Upon expiration or termination of this Agreement, GSK will

return to ALLERGAN all documents and materials provided by ALLERGAN to GSK as

provided in this Article 4 in accordance with Section 9.4.3.

 

     4.6 Further Assistance by ALLERGAN. ALLERGAN, on GSK's or GSK's Affiliate's

request, will provide consulting services regarding specific issues in

connection with pre-clinical and clinical development and commercialization of

Product in the Field of Use ("Consultations") as set forth in this Section 4.6.

For clarity, Consultations will not include any efforts or activities conducted

by employees and/or agents of ALLERGAN in connection with

 

***   Certain confidential information contained in this document, marked with 3

     asterisks, has been omitted and filed separately with the Securities and

     Exchange Commission pursuant to Rule 24b-2 of the Securities Act of 1934,

     as amended.

 

 

                                       21

 

<PAGE>

 

the activities and obligations involved under the Distribution Agreement, in the

transfer of Regulatory Approvals and ALLERGAN Know-How and materials pursuant to

this Article 4, in connection with ALLERGAN's participation in the TJDC and TJCC

as provided in Article 5, and in connection with global Product strategic

marketing support.

 

          4.6.1 During the period commencing on the Effective Date and

continuing for a period of ***, Consultations will occur at mutually agreeable

times and places, and will not exceed *** hours of total employee time,

excluding travel, per month.

 

          4.6.2 As of and after the date of the expiration of the *** period

referenced in Section 4.6.1 and continuing for *** thereafter, Consultations

will occur at mutually agreeable times and places, and will not exceed *** hours

of total employee time, excluding travel, per month.

 

          4.6.3 In the event that GSK or an Affiliate of GSK requests

Consultations in excess of the total employee time per month set forth in

Section 4.6.1 or 4.6.2, respectively, ALLERGAN will use Commercially Reasonable

Efforts, but will have no obligation, to provide such Consultations. In the

event that ALLERGAN and GSK agree that Consultations in excess of the total

employee time per month set forth in Section 4.6.1 or 4.6.2 will be provided,

GSK will pay ALLERGAN a full time equivalent (FTE) rate of *** per person per

day on which Consultations are actually provided and will reimburse ALLERGAN for

any documented reasonable and properly incurred out-of-pocket costs or expenses

that ALLERGAN incurs in connection with such Consultations, including without

limitation all reasonable and properly incurred travel and hotel accommodation

costs and expenses (which will be pre-agreed with GSK).

 

          4.6.4 Notwithstanding anything to the contrary, there will be no time

limit on communications to ALLERGAN from GSK pertaining to the acquisition of

development or regulatory documents or data identified as missing after the

transfer of Regulatory Approvals and ALLERGAN Know-How was, in the opinion of

ALLERGAN, complete, nor will there be a charge for ALLERGAN supplying such

documents or data; provided that such documents or data are in ALLERGAN's

possession or are in the possession of an ALLERGAN contractor or investigator

and are retrievable upon exercise by ALLERGAN of Commercially Reasonable

Efforts.

 

5.    PRODUCT DEVELOPMENT AND COMMERCIALIZATION

 

     5.1 In General. GSK, at GSK's sole expense (subject to ALLERGAN's

performance of its obligations as set forth in Article 4 and Exhibits G and H),

will use Commercially Reasonable Efforts to commercialize Product in the

Territory, as provided in Section 5.5. Additionally, as provided in Section 5.3,

GSK will develop Product for at least one (1) Future Indication. Notwithstanding

the above, ALLERGAN covenants and agrees that it will cause the Manufacturer to

supply Product for such development and commercialization activities (under the

terms of the Supply Agreement) and, at GSK's request and at GSK's expense,

subject to ALLERGAN's obligations as set forth in Article 4 and Exhibits G and

H, cooperate with GSK

 

***   Certain confidential information contained in this document, marked with 3

     asterisks, has been omitted and filed separately with the Securities and

     Exchange Commission pursuant to Rule 24b-2 of the Securities Act of 1934,

     as amended.

 

 

                                        22

 

<PAGE>

 

and to provide assistance as reasonably necessary in connection with any such

development and commercialization activities in the Field of Use in the

Territory.

 

     5.2 Territory Joint Development Committee.

 

          5.2.1 Within thirty (30) calendar days after the Effective Date, the

Parties will form a Territory Joint Development Committee ("TJDC") to manage and

review the development process and Regulatory Approval Application submissions

for Product in Territory. The responsibilities of the TJDC will include, without

limitation:

 

               (a) Reviewing co-development activities for Product during the

Transition Period as set forth in Article 4 and Exhibit H;

 

               (b) Reviewing the ongoing development activities for Product in

the Field of Use during the Term in accordance with the clinical development

plan in the Territory as described in Section 5.9.1;

 

               (c) Reviewing the progress of GSK's development of Product in the

Territory after the expiration of the Transition Period, including, without

limitation, Product Improvement and Enhancement activities, as provided in

Section 3.5;

 

               (d) Reviewing the progress of ALLERGAN's Product Improvement and

Enhancement activities as set forth in Section 3.5;

 

               (e) Acting as a forum for the Parties to exchange information

concerning the development and routine regulatory maintenance of Product in the

Field of Use in the Territory after the Transition Period, including

communications and correspondence to and from Regulatory Authorities;

 

               (f) Reviewing and discussing pharmacovigilance activities,

post-marketing surveillance activities, and manufacturing/CMC topics; and

 

               (g) Performing such other responsibilities as agreed to by the

Parties.

 

          5.2.2 The TJDC will meet periodically every Calendar Year as agreed to

by the Parties, but in no event less than once during each Calendar Quarter of

each Calendar Year during the Term, in person in the Territory not more than

twice per Calendar Year, or by video teleconference or teleconference as

mutually agreed, to discuss matters within its purview.

 

          5.2.3 ALLERGAN will designate two (2) members and GSK will designate

three (3) members to comprise the TJDC. Such individuals will be executives with

responsibility for the clinical development of and/or regulatory matters

relating to the Product in the Territory. In addition, the TJDC may from time to

time include additional non-voting, ad-hoc representatives from either Party on

specific issues as the need arises. Each Party will identify its members on

 

***   Certain confidential information contained in this document, marked with 3

     asterisks, has been omitted and filed separately with the Securities and

     Exchange Commission pursuant to Rule 24b-2 of the Securities Act of 1934,

     as amended.

 

 

                                       23

 

<PAGE>

 

the TJDC within thirty (30) days after the Effective Date. Chairmanship of the

TJDC will reside with a GSK member. The chairman will be responsible for

preparing minutes of each TJDC meeting and distributing such minutes to members

of the TJDC within thirty (30) days after each meeting for review and comment.

Such minutes will be approved as the first order of business at the immediately

succeeding TJDC meeting.

 

          5.2.4 Each Party will bear all expenses it incurs in regard to

participating in such TJDC meetings, including, without limitation, all travel

and living expenses.

 

           5.2.5 At least one (1) representative from each Party must be present

at any meeting of the TJDC to represent a quorum for voting purposes, with each

member on the TJDC having one (1) vote.

 

          5.2.6 All decisions related to Product portfolio management and

routine regulatory maintenance of Product in the Territory, initiation, conduct

and termination of clinical trials for Product, subject to Section 5.2.8,

budgeting for all such development and regulatory activities, and selection of

Indications for which Product may be developed, will be made by majority vote of

the TJDC, which decision will be final and binding on the Parties.

 

          5.2.7 All decisions related to other aspects of clinical development

or Regulatory Approval not specified in Section 5.2.6 will be made by unanimous

vote of the TJDC, which decision will be final and binding on the Parties. If

the TJDC cannot reach unanimous agreement, any disputes will be submitted for

resolution to a senior clinical development executive of each Party, or his/her

designee, for the Territory. If the senior clinical development executives of

each Party, or their respective designees, for the Territory cannot resolve such

any disputes within thirty (30) calendar days after the first (1st) interaction

(whether in writing, via telephone or in person) between the senior clinical

development executives of each Party or their respective designees, such dispute

will be decided by GSK, which decision of GSK will be final and binding on the

Parties.

 

           5.2.8 Notwithstanding the foregoing, any development plan or clinical

trial ***. GSK or its Affiliate will provide ALLERGAN with written notice prior

to proceeding with any matter set forth in this Section 5.2.8, and within thirty

(30) calendar days of receipt of such written notice from GSK or its Affiliate,

ALLERGAN will provide written notice to GSK or its Affiliate of whether ALLERGAN

consents to GSK or its Affiliate progressing with such matter. If ALLERGAN does

not refuse consent, or does not provide any response to GSK or its Affiliate, in

each case within such thirty (30) calendar day period, ALLERGAN will be deemed

to have consented to GSK or its Affiliate proceeding with the matter as

presented in GSK's or its Affiliate's written notice to ALLERGAN.

 

          5.2.9 For the avoidance of doubt, the TJDC's role will only be with

respect to development and regulatory activities of the Parties relating to

Product in the Territory as provided herein and, unless provided otherwise by

this Agreement, the TJDC will have no authority to (a) modify any term or

condition of this Agreement, including without limitation

 

***   Certain confidential information contained in this document, marked with 3

     asterisks, has been omitted and filed separately with the Securities and

     Exchange Commission pursuant to Rule 24b-2 of the Securities Act of 1934,

     as amended.

 

 

                                       24