On April 14, 2011, Schering-Plough (Ireland) Company, a wholly owned subsidiary of Merck & Co., Inc. (“Schering-Plough”), Centocor Ortho Biotech, Inc., a wholly owned subsidiary of Johnson & Johnson (“Centocor”), CAN Development Canada LLC, and certain other affiliates of Centocor entered into a Second Amendment Agreement (the “Second Amendment Agreement”) pursuant to which those parties agreed, among other things, to amend certain terms of the Distribution Agreement that had initially been entered into by Schering-Plough and Centocor on April 3, 1998 (the “Initial Distribution Agreement”) and subsequently amended and supplemented, including by the Amendment Agreement, dated as of December 20, 2007, among Schering-Plough, Centocor and CAN Development Canada LLC (the “Amendment Agreement”, and collectively with the Initial Distribution Agreement and all other related amendments and supplements, are referred to as the “Distribution Agreement”). Under the terms of the Distribution Agreement, Schering-Plough and Centocor have been developing, commercializing and distributing the Remicade and Simponi products throughout the world (except in the United States, Japan, Taiwan, Indonesia and the People’s Republic of China, including Hong Kong). A copy of the Initial Distribution Agreement is attached as Exhibit 10(u) to the amended Form 10-K of Merck & Co., Inc. for the year ended December 31, 2003, which was filed with the Securities and Exchange Commission on May 3, 2004; and the Amendment Agreement is attached as Exhibit 10.1 to the Current Report on Form 8-K of Merck & Co., Inc., which was filed with the Securities and Exchange Commission on December 21, 2007.
The Second Amendment Agreement provides, among other things, that, upon the terms and subject to the conditions set forth in the Second Amendment Agreement, effective as of July 1, 2011, (i) Schering-Plough will relinquish its exclusive distribution rights to the Remicade and Simponi products in certain territories, including Canada, Central and South America, the Middle East, Africa and Asia Pacific, to Centocor and its affiliates, (ii) Schering-Plough will retain exclusive distribution rights to the Remicade and Simponi products throughout Europe, Russia and Turkey, and (iii) the profits derived from Schering-Plough’s exclusive distribution of the Remicade and Simponi products throughout the retained territories will be shared equally between Schering-Plough and Centocor. In addition, under the terms of the Second Amendment Agreement, Schering-Plough will make a one-time payment in the amount of US$500 million to Centocor. In connection with the execution of the Second Amendment Agreement, Schering-Plough and Centocor also agreed to fully and finally resolve and settle all claims and counterclaims brought as part of the arbitration proceeding that had been initiated by Centocor with respect to the 2009 merger between the entity formerly known as Merck & Co., Inc. and Schering-Plough Corporation. The foregoing description of the Second Amendment Agreement does not purport to be complete and is qualified in its entirety by reference to the Second Amendment Agreement, which is filed as Exhibit 10.1 to this report and incorporated herein by reference.