*** INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH
CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED.
LICENSE AND SETTLEMENT
AGREEMENT
THIS LICENSE AND
SETTLEMENT AGREEMENT (this “ Agreement ”) dated
as of April 8, 2009 (the “ Effective Date
”) is entered into between Medicis Pharmaceutical
Corporation, a Delaware corporation with offices located at 7720
North Dobson Road, Scottsdale, Arizona 85256 (“
Medicis ”), and Perrigo Israel Pharmaceuticals Ltd.,
an Israeli Company with offices located at 29 Lehi Street,
B’nai Brak 51200, Israel and Perrigo Company, a Michigan
corporation with offices located at 515 Eastern Avenue, Allegan, MI
49010 (“collectively Perrigo ”).
WHEREAS, Medicis
and Perrigo are parties to patent infringement litigation in the
Action (as defined below);
WHEREAS, Medicis
and Perrigo seek to resolve the Action without further
litigation;
WHEREAS, Medicis
is the owner of the Patent Rights (as defined below);
and
WHEREAS, Perrigo
desires to receive a license under the Patent Rights and Medicis
desires to grant to Perrigo a license under the Patent Rights, all
on the terms and conditions of this Agreement.
NOW, THEREFORE, in
consideration of the foregoing premises and the mutual covenants
herein contained, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1.1
“ Action ” means Medicis Pharmaceutical
Corporation v. Perrigo Israel Pharmaceuticals, Ltd. and Perrigo
Company , Civil Action No. 1:08-cv-0539-PLM in the United
States District Court for the Western Division of Michigan
(Southern Division).
1.2
“ Affiliate ” means, with respect to any entity,
any other entity that directly or indirectly controls, is
controlled by, or is under common control with, such entity. An
entity shall be regarded as in control of another entity if it
owns, or directly or indirectly controls, at least fifty percent
(50%) of the voting stock or other ownership interest of the other
entity, or if it directly or indirectly possesses the power to
direct or cause the direction of the management and policies of the
other entity by any means whatsoever.
1.3
“ ANDA ” means an Abbreviated New Drug
Application and any supplements thereto.
1.4
“Business Day” means any day other than a
Saturday, Sunday or a day on which banks in Arizona are authorized
or required by law to close.
1.5
“ Confidential Information ” means all
non-public materials, information and data concerning the
disclosing party and its operations that is disclosed by the
disclosing party to the receiving party pursuant to this Agreement,
orally or in written, electronic or tangible form, or otherwise
obtained by the receiving party through observation or examination
of the disclosing party’s operations. Confidential
Information includes, but is not limited to, information about the
disclosing party’s financial condition and projections;
business, marketing or strategic plans; sales information, customer
lists; price lists; databases; trade secrets; product prototypes
and designs; techniques, formulae, algorithms and other non-public
process information. Notwithstanding the foregoing, Confidential
Information of a party shall not include that portion of such
materials, information and data that, and only to the extent, the
recipient can establish by written documentation: (a) is known
to the recipient as evidenced by its written records before receipt
thereof from the disclosing party, (b) is disclosed to the
recipient free of confidentiality obligations by a Third Party who
has the right to make such disclosure without obligations of
confidentiality, (c) is or becomes part of the public domain
through no fault of the recipient, or (d) the recipient can
reasonably establish is independently developed by persons on
behalf of recipient without the use of the information disclosed by
the disclosing party.
1.6
“Control” means with respect to any material,
information, or intellectual property right, that a party
(a) owns such material, information, or intellectual property
right, or (b) has a license or right to use such material,
information, or intellectual property right, in each case with the
ability to grant to the other party access, a right to use, a
license, or a sublicense (as applicable) to such material,
information, or intellectual property right on the terms and
conditions set forth herein, without violating the terms of any
agreement or other arrangement with any Third Party.
1.7
“ FDA ” means the United States Food and Drug
Administration or any successor entity thereto.
1.8
“Generic Equivalent” means, ***
1.9
“ Generic Product ” means ***
1.10
“ Grantback Patents ” means (a) *** (b) all
divisions, continuations, continuations-in-part, that claim
priority to, or common priority with, the patent applications
described in clause (a) above or the patent applications that
resulted in the patents described in clause (a) above, and
(c) all patents that have issued or in the future issue from
any of the foregoing patent applications, including utility, model
and design patents and certificates of invention, together with any
reissues, renewals, extensions or additions thereto. As of the
Effective Date, Perrigo represents that there are no Grantback
Patents in existence.
1.11
“ Gross Profit ” means, with respect to all
Generic Products sold in a calendar quarter, the positive
remainder, if any, that results from Net Sales of such Generic
Products in the Territory minus the Manufacturing Costs of such
Generic Products.
1.12
“ License Trigger ” means the earliest of the
following dates:
2
1.13
“ Manufacturing Costs ” means (each of the
following to be determined in accordance with GAAP applied in a
manner consistent with past practices of Perrigo) (a) the
delivered cost to Perrigo of a Generic Product for use or sale in
the Territory provided that such Generic Product is provided
pursuant to an arms-length and commercially reasonable agreement,
or (b) where Perrigo is itself the manufacturer, the sum of
Materials Costs *** incurred by Perrigo to produce such Generic
Product for use or sale in the Territory. As used herein, “
Materials Cost” means Perrigo’s procurement
costs for (i) raw materials (both active and inactive
ingredients), and (ii) packaging, labeling and storing
materials, incurred in connection with the manufacture, testing,
labeling, purchasing and distribution of such Generic Product; ***
all as determined in accordance with the U.S. GAAP.
1.14
“ Net Sales ” means, with respect to the Generic
Product, the aggregate gross price of such Generic Products
received by Perrigo, its Affiliates or sublicensees from
unaffiliated retailers, distributors or other customers, less the
sum of the following items (to the extent actually incurred or
accrued and to the extent not already deducted in computing the
total amount invoiced by Perrigo), all of which must directly
relate to the sale and distribution of such Generic Products and be
determined in accordance with GAAP applied in a manner consistent
with past practices of Perrigo: (a) returns, credits, rebates,
discounts, allowances, promotional payments, free goods,
chargebacks and other price reduction programs customary to the
trade or required by law, (b) sales, valued-added and other
taxes imposed upon and paid with respect to such sales (excluding
income or franchise taxes of any kind), (c) *** and
(d) customs duties, surcharges and other governmental charges.
Sales between or among Perrigo and its Affiliates shall not be
included in Net Sales unless Perrigo or its Affiliates are the end
user of the Generic Products.
1.15
“ Patent Rights ” means (a) the patents and
patent applications listed on Exhibit A to this Agreement,
(b) all divisions, continuations, continuations-in-part, that
claim priority to, or common priority with, the patent applications
described in clause (a) above or the patent applications that
resulted in the patents described in clause (a) above, and
(c) all patents that have issued or in the future issue from
any of the foregoing patent applications, including utility, model
and design patents and certificates of invention, together with any
reissues, renewals, extensions or additions thereto.
1.16
“ Patents-In-Suit ” means ***.
1.17
“ Product ” means any product for which the
making, using, selling or importation is covered by one or more
claims of the Patent Rights.
1.18
“ Territory ” means the United States of
America, its territories and possessions, including the
Commonwealth of Puerto Rico.
1.19
“ Third Party ” means any person or entity other
than Medicis or Perrigo or their respective Affiliates.
3
1.20
“Valid Claim” means ***
1.21
“ Vanos Products ” means the Vanos products
listed on Exhibit B, as such products are marketed and sold by
Medicis as of the Effective Date in the Territory.
1.22
“ Vanos Product Patents ” means (a) all
patents and patent applications in the Territory Controlled by
Perrigo or its Affiliates heretofore or hereafter that claim or
cover a Vanos Product or the manufacture or use of a Vanos Product,
(b) all divisions, continuations and continuations-in-part
(solely to the extent directed to subject matter disclosed in a
patent or patent application described in clause (a) above)
that (i) claim priority to, or common priority with, the
patent applications described in clause (a) above or the
patent applications that resulted in the patents described in
clause (a) above and (ii) claim or cover a Vanos Product
or the manufacture or use of a Vanos Product, and (c) all
patents that issue after the Effective Date from any of the
foregoing patent applications, including utility, model and design
patents and certificates of invention, together with any reissues,
renewals, extensions or additions thereto. ***
2.1
License Grant for Generic Product .
2.1.1
Effective only upon the occurrence of the License Trigger, Medicis
hereby grants to Perrigo a non-exclusive, non-transferable (except
as permitted in Section 8.6) license (without the right to
grant sublicenses except to have Generic Products made on behalf of
Perrigo) under the Patent Rights to make, have made, use, offer for
sale, sell and import Generic Products inside the
Territory.
2.1.2
Until the occurrence of the License Trigger, neither Perrigo nor
its Affiliates shall, and neither shall directly or indirectly
encourage or assist any Third Party to, develop, make, use and/or
commercialize any Generic Products in the Territory.
2.1.3
Nothing in this Agreement shall be construed as creating an
obligation, express or implied, on Medicis to supply any Generic
Product to Perrigo. Perrigo shall be solely responsible for
manufacturing, or having manufactured, its supply of Generic
Product.
2.3.1
Perrigo and its Affiliates hereby grant to Medicis a perpetual,
royalty-free, fully-paid up, non-transferable (except as provided
in Section 8.5), non-exclusive license (with the right to
grant sublicenses through multiple tiers) under the Grantback
Patents to make, have made, use, offer for sale, sell and import
Products in the Territory.
2.3.2
Perrigo and its Affiliates hereby grant to Medicis a perpetual,
royalty-free, fully-paid up, non-transferable (except as provided
in Section 8.5), non-exclusive license (with the right to
grant sublicenses through multiple tiers) under the Vanos Product
Patents to make, have made, use, offer for sale, sell and import
Vanos Products in the Territory.
4
2.4
Validity of Patents-In-Suit .
2.4.1
Perrigo, on behalf of itself and its Affiliates, hereby admits that
the claims of the Patents-In-Suit are valid and enforceable. The
foregoing admission regarding validity and enforceability shall be
binding on Perrigo and its Affiliates and admissible against
Perrigo and its Affiliates in any dispute or litigation between the
parties regarding the Patents-In-Suit, and neither Perrigo nor its
Affiliates will challenge any such admission.
2.4.2
Perrigo, on behalf of itself and its Affiliates, hereby also admits
that the making, using, offering to sell, selling, and/or
importation into the Territory of Perrigo’s product that is
to be sold pursuant to Perrigo’s ANDA #090256 (and any
amendments thereto) is covered by one or more claims of the Patent
Rights under 35 U.S.C. § 271. ***
2.4.3
Perrigo shall not receive any ownership rights in the Patent Rights
under this Agreement, and Medicis shall retain the sole right, to
prepare, prosecute, maintain and enforce the Patent
Rights.
2.5
No Implied Licenses . Except as explicitly set forth in this
Agreement, neither party grants to the other party under its
patents or other intellectual property any license, express or
implied. Perrigo shall not use Medicis’ name or any Medicis
trademarks (including without limitation Vanos
® ) in connection with the marketing, promotion or
sale of any products without the prior written consent of Medicis
in each instance.
2.6
Releases . In consideration of the mutual covenants herein
and in the Joint Dismissal Agreement attached hereto as
Exhibit C and incorporated herein by reference, and without
limiting any remedies a party may have against the other party for
a breach of this Agreement, Perrigo hereby releases and agrees to
release Medicis and Medicis hereby releases and agrees to release
Perrigo from all claims arising out of the Action. Upon the
Effective Date, Perrigo and Medicis shall cause to be completed,
executed and filed with the Court a stipulated dismissal with
prejudice of the Action, in the form of the Joint Dismissal
Agreement attached hereto as Exhibit C, and to seek entry of
such order by the Court.
3.
FINANCIAL CONSIDERATIONS.
3.1.1
With respect to the Generic Products, and subject to the terms and
conditions of this Agreement, commencing on the date Perrigo begins
selling a Generic Product, within sixty (60) days following
the end of each calendar quarter thereafter, Perrigo shall pay to
Medicis *** of all Gross Profit for sales up to *** and *** of all
Gross Profit for sales exceeding *** accrued during such calendar
quarter and arising from Net Sales of such Generic Products during
such quarter. If there are one or more Generic Equivalents, other
than the Generic Product, being marketed, Perrigo shall pay to
Medicis *** of all Gross Profit for sales up to *** and *** of all
Gross Profit for sales exceeding *** accrued during such calendar
quarter and arising from Net Sales of such Generic Products during
such quarter. Medicis’ right to receive a share of the Gross
Profit under this Section 3.1.1 shall expire upon
***
5
3.1.2
Perrigo shall not (a) have any obligation to pay any amounts
pursuant to Section 3.1.1, or (b) be subject to the
restrictions under Section 2.1.2, in each case if there is no
Valid Claim in the Territory at the time of sale of a Generic
Product.
3.1.3
Each payment made under this Section 3.1 shall be accompanied
by a written report stating the number and description of all
Generic Products sold in the Territory during the relevant calendar
quarter; a detailed breakdown of the Manufacturing Costs associated
therewith; the calculation of Net Sales thereon, including without
limitation the amount of any deduction provided for in the
definition of Net Sales; and the calculation of Gross Profits
therefrom.
3.2
Taxes . Perrigo shall be responsible for, and may withhold
from payments made to Medicis under this Agreement, any taxes
required to be withheld by Perrigo under applicable law.
Accordingly, if any such taxes are levied on such payments due
hereunder (“ Withholding Taxes ”), Perrigo shall
(i) deduct the Withholding Taxes from the payment amount,
(ii) pay all applicable Withholding Taxes to the proper taxing
authority, and (iii) send evidence of the obligation together
with proof of tax payment to Medicis within sixty (60) days
following that tax payment.
3.3
Audit Rights . On no less than fourteen (14) business
days notice from Medicis, Perrigo shall make all such records,
books of account, information and data concerning (a) its
sales of Generic Products pursuant to this Agreement; (b) its
manufacture of any Generic Products, and (iii) to the extent
in its possession, the manufacture of Generic Products on behalf of
Perrigo by its Third Party contract manufacturer, in each case
available for inspection during normal business hours by an
independent auditor selected by Medicis and reasonably acceptable
to Perrigo for the purpose of an audit to determine the accuracy of
the reports delivered and amounts paid by Perrigo pursuant to
Section 3.1; provided that Medicis may not request such
inspection more than once in any calendar year unless a discrepancy
has been identified by Medicis. Medicis shall be solely responsible
for its costs in making any such audit, unless Medicis identifies a
discrepancy in favor of Perrigo in the calculation of the share of
Gross Profit paid to Medicis under this Agreement in any calendar
year from those properly payable for that calendar year of five
percent (5%) or greater, in which event Perrigo shall be solely
responsible for the reasonable cost of such audit and pay Medicis
any underpayment.
4.1
Term . Subject to Section 4.2, this Agreement shall
expire on the expir
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