Exhibit 10.7
LICENSE AGREEMENT
This License Agreement ("Agreement"), entered into as of this 22nd day of
March, 1999 by and between NexMed International Limited, a British Virgin
Islands corporation, with a principal place of business at ▇▇▇▇▇ ▇▇▇▇, ▇▇/▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ("NexMed") and Vergemont
International Limited, a company organized under the laws of Turks & Caicos
Islands with a principal place of business at Suite 2401-2408, ▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ("Vergemont").
WHEREAS, NexMed is a medical and pharmaceutical technology company with a
focus on the development and commercialization of, among other things, topical
treatment products based on a penetration enhancement technology; and
WHEREAS, NexMed has developed and is the proprietary owner of the NexMed
Know-How (as defined below) relating to the use of Penetration Enhancement
Ingredients in conjunction with Compounds A, B,C,D (as defined below); and
WHEREAS, Vergemont desires to secure certain rights with respect to
making, using and selling certain products incorporating such Know-How.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, Vergemont and NexMed agree as follows:
I. DEFINITIONS
1.01 "Affiliate" shall mean, with respect to either party, any individual
or any legally-distinct corporation, firm or other form of business
organization, which directly or indirectly owns, controls, is controlled by, or
is under common control with, a party hereto. An entity shall be regarded as
being in control of another entity if the former entity has the direct or
indirect power to order or cause the direction of the policies of the other
entity, whether through ownership of fifty percent (50%) or more in the United
States or thirty percent (30%) or more outside the United States of the
outstanding voting securities of that entity, through other dominant equity
ownership, or by contract, statute, regulation, or otherwise.
1.02 "Agreement Year" shall mean the twelve month period ending on an
anniversary of the Approval Date.
1.03 "Application for Approval" shall mean all submissions related to
investigational use of the Licensed Products (such as an IND for the Licensed
Products filed with the FDA or the equivalent filing with a Regulatory Authority
in the Territory) and all submissions related to marketing approval (such as an
NDA or equivalent filing).
1.04 "Clinical Trials Program" shall have the meaning set forth in Section
3.02 hereof.
1.05 "Combination Product" shall have the meaning set forth in Section
4.03 hereof.
1.06 "Compound A" shall mean alprostadil, "Compound B" shall mean
acyclovir, "Compound C" shall mean ketoprofen, and Compound D shall mean
vitamins A/C/E.
1.07 "Dollars" means lawful currency of the United States of America.
1.08 "Exclusive" shall mean, when used in connection with a specific grant
of a license hereunder, that (except to the extent such rights are specifically
retained herein) the granting party shall have no further right in the
Territory, for so long as such grant remains effective, to manufacture, sell or
use the Licensed Products or to grant to third parties any license in connection
with the manufacture, use or sale of the Licensed Products in the Territory.
1.09 "FDA" shall mean the United States Food and Drug Administration or
any successor Regulatory Authority in the United States.
1.10 "Field" shall mean the development and commercialization of
therapeutic products based on proprietary delivery systems including topical
treatment products based on a penetration enhancement technology which may
enable the active drug/ingredient to be better absorbed through the skin.
1.11 "Indication for Use" shall be for use as NexMed and Vergemont may
agree.
1.12 "IND" (Investigational New Drug Application) means an application for
an "Investigational Exemption for a New Drug" filed with a Regulatory Authority
(as defined below).
1.13 "Know-How" shall mean any and all technical data, drawings,
documentation, and other information, including information disclosed in an
issued patent or patent application. Know-How relating to the Field, which is
owned by NexMed as of the date hereof or is independently generated, acquired or
licensed, with the right to sublicense, by NexMed during the term of this
Agreement is referred to herein as "NexMed Know-How."
1.14 "NDA" (New Drug Application) shall mean an application submitted to a
Regulatory Authority, which contains all necessary details of the manufacture
and testing of a new drug, for purposes of obtaining regulatory approval to
market such new drug in such country or region, for a particular indication.
1.15 "Net Sales" shall mean the gross amount invoiced by Vergemont or any
sublicensee of Vergemont for arm's-length sales of Licensed Products to a third
party or parties which are not Affiliates of Vergemont, after deducting, if not
already deducted in the actual amount invoiced, normal and customary trade
discounts actually allowed, returns and credits. No deduction from the invoice
price shall be taken for any other costs, including taxes, transportation,
insurance and postage charges, in computing Net Sales except that separately
billed or invoiced transportation costs, sales taxes and value added taxes shall
not be included in the computation of Net Sales.
1.16 "Licensed Products" shall mean five (5) pharmaceutical formulations
which include an alprostadil cream for male erectile dysfunction, an alprostadil
cream for female sexual dysfunction,
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an acyclovir anti-viral cream for herpes simplex, a ketoprofen or non-steroid
anti-inflammatory drug, (NSAID) containing cream, and a vitamins A/C/E
equivalent cream, either now known or hereafter developed which utilizes or
incorporates NexMed Know-How and which is/are intended and promoted for
treatment of the Indication for Use in humans.
1.17 "Licensed Period" shall mean the ten- (10) years following the
approval of each of the Licensed Products in each country of the Territory.
1.18 "Other Item" shall mean a physiologically constituent or product sold
together with a Licensed Product in the same preparation.
1.19 "Person" shall mean any individual, estate, trust, partnership, joint
venture, association, firm, corporation, company, or other legal entity.
1.20 "Pre-Clinical Development Program" shall have the meaning set forth
in Article II hereof.
1.21 "Penetration Enhancement Ingredient" shall mean all ingredients
either now known or hereafter developed by NexMed or using NexMed Know-How that
enhances the performance and absorption of ▇▇▇▇▇▇▇▇▇ ▇,▇,▇ and D.
1.22 "Proprietary Information" shall have the meaning set forth in Section
3.04(a) hereof.
1.23 "Reimbursement Price" shall mean the price for the Licensed Products
as approved by the local governments in the Territory.
1.24 "Regulatory Authority" shall mean the agency, if any, of the national
government within the Territory with which the Licensed Products must be
registered or by which the Licensed Products must be approved prior to
manufacture, use or sale in the Territory.
1.25 "Sale" or "Sold" shall mean the transfer for value (cash and/or
otherwise) in an arm's-length transaction of a Licensed Products in the
Territory by Vergemont, Vergemont Affiliate, or Vergemont sublicensee to a
nonaffiliated third-party distributor, agent or end user after obtaining all
necessary government approvals applicable to such sale. Sales shall be accounted
for when shipped, and credits and refunds shall be accounted for when booked by
Vergemont in accordance with Vergemont's standard accounting practices.
1.26 "Territory" shall mean countries in Asia, (i.e., Bangladesh, Burma,
Cambodia, China, India, Japan, Korea, Indonesia, Kazakhstan, Kyrgyzstan, Laos,
Malaysia, Mongolia, Pakistan, the Philippines, Singapore, Taiwan, Tajikistan,
Thailand, Turkmenistan, Uzbakistan, and Vietnam), as well as Australia and New
Zealand.
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II. PRE-CLINICAL DEVELOPMENT PROGRAM
2.01 Funding of Pre-Clinical Studies. Pursuant to the terms and conditions
contained herein, Vergemont shall pay for the total costs of pre-clinical and
other development programs in the Territory for the Licensed Products (such
programs hereinafter collectively referred to as the "Pre-Clinical Development
Program", even though they may continue during the period of clinical trials).
Such costs shall include all costs incurred by NexMed upon the demand of service
requested by Vergemont, including but not limited to all costs of developing the
drug master file included in the Pre-Clinical Development Program, costs of
developing good manufacturing practices for the Licensed Products, costs of
manufacturing initial quantities of the Licensed Products for clinical trials,
the costs of all necessary animal studies and trials and the costs of any other
development work.
2.02 Transfer of Pre-Clinical Data. NexMed shall provide Vergemont the
results of studies and data generated that are currently available and later
available from prior, ongoing or future studies undertaken by NexMed.
III. CLINICAL TRIALS AND REGULATORY APPROVALS
3.01 Funding of Regulatory Approvals.
(a) Vergemont shall be responsible for obtaining regulatory
approvals for investigational use and marketing of the Licensed Products from
the Regulatory Authorities in the Territory and shall use its best efforts to
conduct all pre-clinical and clinical trials as rapidly as possible and to seek
all necessary regulatory approvals for Compound A, and for Compounds B,C, and D
when available. Vergemont shall pay or cause the payment of all costs and
expenses necessary to obtain each such approval, including all costs of human
clinical trials and all costs of filing each Application for Approval.
(b) Upon determination by NexMed that sufficient data has been
compiled to permit filing of an Application for Approval for the Licensed
Products in the Territory, Vergemont shall promptly prepare and file such
Application for Approval with the Regulatory Authority in the Territory. Each
Application for Approval filed by Vergemont shall be filed in the name of
Vergemont. Vergemont shall supply to NexMed for approval, not less than 30 days
prior to filing, copies of every Application for Approval to be filed and each
document submitted in connection therewith. Vergemont shall also provide
evidence of filing within 30 days thereafter, and Vergemont will keep NexMed
informed regarding the status of each such application. NexMed shall wherever
practical be given notice of, and a right to participate in, all meetings and
discussions with Regulatory Authorities.
3.02 Clinical Trials. Unless otherwise specifically agreed by the parties,
Vergemont shall conduct, manage and pay for all clinical trials. Such clinical
trials shall hereinafter be referred to as the "Clinical Trials Program".
3.03 Grant and Term of Licenses.
(a) NexMed hereby grants to Vergemont the Exclusive right and
license (including
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the right to grant sublicenses) to make, have made, use and sell the Licensed
Products solely for human therapeutic uses throughout the Territory, as and to
the extent such activities are permitted to be conducted in the Territory.
(b) Subject to the provisions of Section 4.05 hereof and Article VII
(Term and Termination), the grant of rights by NexMed to Vergemont hereunder
with respect to the Licensed Products shall continue in the Territory for the
entire term of the Agreement. At the end of the term and upon full payment of
its royalty payments, Vergemont shall then own the respective Licensed Products.
(c) Vergemont shall be entitled to grant sublicenses during the
Licensing Period.
3.04 Availability of Information. Subject always to the obligations set
forth in Article V herein to maintain such information confidential, so long as
this Agreement remains in effect,
(a) all Know-How and all other information and materials related to
the development, manufacture, sale or use of a Licensed Products ("Proprietary
Information") shall be furnished by each party to the other, and significant
technical and other data and submissions shall furnished in the English
language; and
(b) all Proprietary Information shall be owned by NexMed and where
developed by Vergemont and its Affiliates, shall be assigned by Vergemont to
NexMed. All Proprietary Information shall be made equally available to each of
the parties, subject to any obligation by which a party is contractually bound
at the time of acquiring Proprietary Information from a third party, not to
disclose such Proprietary Information.
3.05 Diligent Efforts. Upon filing of any Application for Approval with
any Regulatory Authority to make, use or sell the Licensed Products in the
Territory, Vergemont shall use diligent, good faith, commercially reasonable
efforts (including, where appropriate, conducting, or causing to be conducted,
clinical trials) to obtain regulatory approvals and, once obtained, to
commercially exploit the Licensed Products.
IV. LICENSE FEE AND ROYALTY PAYMENTS
4.01 Royalty Payments; Rate. [*] percent royalties on Net Sales shall be
paid by Vergemont to NexMed within thirty (30) business days after the end of
each calendar quarter in which such Net Sales are made. All payments shall be
accompanied by a statement, certified to be accurate by Vergemont, of Net Sales
of the Licensed Products by Vergemont and each of its Affiliates and permitted
sublicensees during the preceding calendar quarter on a country by country
[*] WE HAVE REQUESTED CONFIDENTIAL TREATMENT FOR THIS PORTION OF THE AGREEMENT,
WHICH PORTION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED.
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basis. Such statements shall show all royalties paid since the commencement of
the current Agreement Year, the quantity, description and gross sales price,
itemized deductions from gross sales price and net sales price of each Licensed
Products that was distributed and/or sold by Vergemont and each of its
Affiliates and sublicensees during the preceding calendar quarter and the amount
of royalty due. Such statements shall be furnished to NexMed by Vergemont
whether or not any Licensed Products has been sold during the calendar quarter
in which such statements are due on a country by country basis.
4.02 Combination Products. Licensed Products may be sold in combination
with any Other Item. Vergemont must notify NexMed within thirty (30) days of the
launch of Combination Products. The invoice price of such Combination Product
shall be set by Vergemont in good faith, and Net Sales of the Licensed Products
included in the Combination Product shall be determined using the following
formulae:
(a) If the Licensed Products and Other Items contained in the
combination are available separately, the Net Sales for purposes of calculating
royalty payments will be the result obtained by multiplying the Net Sales of the
Combination Product by the fraction A/A+B, where A is the invoiced price of the
Licensed Products in the Combination Product, and B is the invoiced price of all
Other Items in the Combination Product.
(b) If the Combination Product includes Other Items which are not
sold separately (but the Licensed Products contained in the Combination Product
is available separately), the Net Sales for purposes of calculating royalty
payments will be the result of multiplying the Net Sales of the Combination
Product by the fraction A/C, where A is as defined above and C is the invoiced
price of the Combination Product.
(c) If neither the Licensed Products nor the Other Items contained
in the Combination Product are sold separately, or if only the Licensed Products
is not sold separately, Vergemont shall, in good faith, propose the percentage
of the revenue from such Combination Product that is attributable to the
Licensed Products. Unless Vergemont receives written objection from NexMed to
such proposal within 45 days following NexMed's receipt of such proposal, then
the revenue so attributed to the Licensed Products shall be the Net Sales for
the purposes of Section 4.02 hereof. In the event NexMed objects to Vergemont's
proposal, Vergemont and NexMed agree to negotiate in good faith to reach a
mutually acceptable determination of the percentage and Vergemont shall not
market such Combination Product unless and until such a determination is
reached.
4.03 Withholdings. All amounts of royalties payable by Vergemont pursuant
to this Section 4.03 shall be paid in Dollars without deducting therefrom any
tax, duty, charge, conversion or remittance fee, commission, discount or other
fee payable in respect of such royalty payment, other than taxes specified in
the next following sentence. Any and all taxes levied by a proper taxing
authority required to be withheld by Vergemont or its sublicensees on account of
royalties accruing to NexMed under this Agreement may be deducted from such
royalty payment provided that (i) such amount is promptly paid for and on behalf
of NexMed to the appropriate tax authorities, and (ii) Vergemont furnishes
NexMed with official tax receipts or other appropriate evidence of payment
issued by the appropriate tax authorities. If any tax, however denominated
(other than a withholding tax on Vergemont or sublicensee royalties), is levied
against NexMed solely because of the presence of a Vergemont facility or because
Vergemont is doing business in the Territory, then Vergemont shall pay such tax
without deduction from such royalty payment. Receipt or acceptance by NexMed of
any statement furnished pursuant to this Agreement or of any sum paid hereunder
(or the cashing of any royalty checks paid hereunder) shall not preclude NexMed
from questioning the correctness thereof at
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any time, and in the event that any inconsistency or mistake (including the
improper withholding of tax) is discovered in such statements or payments, it
shall immediately be rectified and the appropriate payment made by Vergemont.
4.04 Exploitation of the Licensed Products. Vergemont agrees to promote,
exploit and market the Licensed Products (where appropriate regulatory approval
has been obtained) through its manufacturing, marketing and sales activities,
using good faith, diligent, commercially reasonable efforts, as more
specifically set forth herein.
4.05 Non-Dollar Sales. For purposes of determining the amount of royalties
due on Net Sales pursuant to Section 4.01 hereof, where Vergemont or any
sublicensee receives payment in a currency other than Dollars, the amount of Net
Sales in such currency shall be converted into Dollars at the prevailing
commercial rate of exchange for purchasing Dollars with such foreign currency as
quoted by Citibank, N.A. in New York on the last business day of the calendar
quarter for which the relevant royalty payment is to be made by Vergemont.
4.06 Records. Vergemont shall (and shall cause, its Affiliates and
sublicensees to keep complete and accurate books and records relating to their
respective sales of the Licensed Products, in sufficient detail to allow the
royalties accruing hereunder to be accurately determined. Each of such persons
shall preserve such books and records for a period of six years following the
date of any statement delivered hereunder. NexMed (or its duly authorized
representatives) shall have the right at its own expense from time to time
during the term of this Agreement until the expiration of said six-year period
to inspect the relevant records of Vergemont or such Affiliate or sublicensee in
order to verify such report or statement. Vergemont and such Affiliate or
sublicensee shall make its records available for such inspection during regular
business hours at such place or places where such records are customarily kept,
upon reasonable notice from NexMed to the extent reasonably necessary to verify
the accuracy of the reports and payments required hereunder. NexMed agrees to
hold strictly confidential all such records and information, other than the
total amounts of royalties paid, and all information learned in the course of
any audit or inspection hereunder, except to the extent that it is necessary for
NexMed to reveal such information order to enforce any rights it may have under
this Agreement or if disclosure is required by law (subject to the restrictions
on publicity without consent set forth under the provisions of Section 5.02
hereof). The failure of NexMed to request verification of any report or
statement during said six-year period shall be considered acceptance of the
accuracy of such report. If the audit reveals an error in NexMed's favor which
is greater than five percent (5%) of the amount of royalties due to NexMed
specified on a particular report or statement, the reasonable cost of such
examination shall be borne by Vergemont or such Affiliate or sublicensee.
4.07 Late Payments. Except as otherwise determined under Section 4.02
hereof, any amount which is not paid when due hereunder shall bear interest in
Dollars at the published prime rate of Citibank, N.A., New York, New York as in
effect from time to time plus three percent.
V. CONFIDENTIALITY
5.01 Information Sharing; Confidentiality.
(a) During the term of this Agreement, each party shall promptly
furnish (and shall
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cause its Affiliates and/or sublicensees, if any, promptly to furnish) to the
other any information concerning safety or utility of the Licensed Products,
including adverse or unexpected side effects, injury or other events associated
with uses, studies, investigations or tests of the Licensed Products, whether or
not such party is required to report such events to regulatory authorities and
whether or not such event is determined to be attributable to the Licensed
Products.
(b) Vergemont recognizes that the Proprietary Information
constitutes highly valuable, proprietary, confidential information. Vergemont
agrees that during the term of this Agreement and thereafter it will keep
confidential, and will cause its Affiliates, officers, employees, consultants,
agents and sublicensees to keep confidential, all Proprietary Information.
Vergemont shall not disclose, or permit any of its Affiliates, officers,
employees, consultants, agents and sublicensees to disclose, Proprietary
Information to any other Person nor use the same for any purpose except as set
forth in this Section 5.01 or as otherwise expressly permitted in this Agreement
or in a separate written agreement with the other party or as reasonably
required in good faith for the registration and commercialization of the
Licensed Products.
(c) Vergemont agrees that any dissemination of Proprietary
Information to any of its Affiliates or sublicensees or to any officer,
employee, consultant or agent of it or any of its Affiliates or sublicensees
shall be made only if necessary to carry out the purposes set forth herein and
shall be limited to the maximum extent possible consistent with such purposes.
Vergemont shall take such action, and will cause its Affiliates, sublicensees,
and their respective officers, employees, consultants and agents to take such
action, to preserve the confidentiality of the Proprietary Information as it
would customarily take in order to preserve the confidentiality of other
valuable proprietary information owned by it, including advising all such
Persons of the confidentiality obligations set forth herein.
(d) The restrictions contained in paragraphs (b) and (c) of this
Section 5.01 shall not apply to any Proprietary Information that:
(i) is, at the time of its disclosure to Vergemont, generally
available to the public or otherwise part of the public domain or, as evidenced
by written records of Vergemont, is otherwise previously known to Vergemont;
(ii) becomes generally available to the public or otherwise
part of the public domain after its disclosure to Vergemont through no act or
omission of Vergemont or any other person owing an obligation of confidentiality
to either party hereto; or
(iii) is required to be disclosed by any court or governmental
agency having proper jurisdiction, provided that NexMed is first given an
adequate opportunity to seek a protective order or similar limits on further
disclosure.
5.02 Publicity. Neither party shall make any disclosure regarding the
existence of this Agreement nor the research hereunder except with the prior
consent of the other party to the text of the proposed disclosure, which consent
shall not be unreasonably withheld, unless the failure to make such disclosure
would (in the opinion of counsel to the disclosing party) place such party in
violation of applicable law, in which case prior notice of such disclosure shall
be given to the other party to the extent reasonably possible.
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5.03 Publication. The parties recognize the traditional right of all
scientists to publish and present promptly the results of their research.
Notwithstanding anything to the contrary contained in this Article V, the
results obtained in the course of the Pre-Clinical Development Program or the
Clinical Trials Program may be submitted for publication by Vergemont, but only
following notice to and approval by NexMed in its sole discretion. Vergemont
shall not publish information without first providing NexMed with at least
thirty (30) days prior notice of all results and information intended to be
published. NexMed shall act as expeditiously as practicable following such
notice, and shall notify Vergemont promptly of its determination. If NexMed does
not approve such publication, such results and information shall continue to be
subject to the other provisions of this Article V.
VI. MANUFACTURE AND SUPPLY
6.01 Right to Manufacture. Subject to the limitations contained in
Sections 3.03 and 6.02 hereof, Vergemont shall have the Exclusive right (with
the right to grant sublicenses) to manufacture in finished form the Licensed
Products in the Territory. Vergemont shall comply with the requirements, good
manufacturing practices and specifications for the manufacture and use of such
Licensed Products promulgated by the Regulatory Agency in the Territory where
such Licensed Products is to be manufactured or sold.
6.02 Component Supply. Notwithstanding the rights granted in Section 6.01,
NexMed shall have the exclusive right to manufacture and sell to Vergemont in
the Territory certain ingredients of the Licensed Products. NexMed shall sell to
Vergemont and Vergemont shall purchase exclusively from NexMed the Penetration
Enhancement Ingredients for the manufacture of the Licensed Products as
identified in Appendix A at a price equal to NexMed's full costs associated with
production of the Penetration Enhancement Ingredient plus [*]% thereof.
6.03 Changes in Regulations. Each party shall promptly and fully advise
the other of any new regulations, instructions or specifications required by any
Regulatory Authority in the Territory of which such party becomes aware.
Vergemont agrees that the Licensed Products will, upon delivery to the carrier
designated by customers, be in conformity with said product regulations,
instructions and specifications and will not be adulterated or misbranded.
[*] WE HAVE REQUESTED CONFIDENTIAL TREATMENT FOR THIS PORTION OF THE AGREEMENT,
WHICH PORTION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED.
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6.04 Quality Disputes. NexMed shall have the right to inspect the
manufacturing facilities of Vergemont and review Vergemont's procedures and to
take samples of the Licensed Products manufactured by Vergemont. If Vergemont
becomes aware that any quantity of a Licensed Products does not comply with
Sections 6.01 or 6.03 hereof, Vergemont shall promptly notify NexMed thereof.
NexMed shall be provided a sample of the suspect Licensed Products upon request.
Within sixty (60) days of receipt thereof, NexMed shall report to Vergemont in
writing of the fact and extent of the non-compliance. Vergemont shall have sixty
(60) days from the receipt of said report to replace the non-complying Licensed
Products by shipping replacement products which are in compliance with Sections
6.01 and 6.03, or to report that it considers that the original Licensed
Products did comply with Sections 6.01 and 6.03, in which case the parties shall
use their best efforts to resolve any dispute.
VII. TERM AND TERMINATION
7.01 Term.
(a) The term of this Agreement shall commence on the date hereof and
shall continue, unless terminated in accordance with the subsequent paragraphs
of this Article VII, for a period of ten (10) years following the Approval Date
of each Licensed Product in each country of the Territory.
(b) Vergemont may relinquish any or all of the rights granted to it
hereunder to make, sell or use a Licensed Products in the Territory at any time,
by giving to NexMed written notice of its desire to do so at least 180 days
prior to the date on which Vergemont desires such right to be terminated. Such
relinquishment will not release Vergemont from any obligation to make payments
that have accrued prior to the effective date of relinquishment of such rights
and Vergemont shall have no right to seek reimbursement of any amounts paid
prior to such relinquishment. All rights relinquished with respect to the
Territory will return exclusively to NexMed.
7.02 Events of Termination. If any of the following events shall occur and
be continuing, such event shall constitute an event of termination ("Event of
Termination"):
(a) If any representation or warranty by a party hereto contained in
this Agreement shall prove to have been incorrect in any material respect when
made or deemed made.
(b) If a party shall fail to pay any amount when due for a
particular Licensed Product hereunder or shall otherwise default in any material
respect in the performance or observance of any term, covenant or provision
contained in this Agreement or any of the other documents or instruments
delivered pursuant to, or concurrently with, this Agreement, and any such other
default shall remain unremedied for 60 days after written notice thereof to the
defaulting party from any other party with a copy to the other party. The
foregoing notwithstanding, no such other default shall constitute an Event of
Termination until 90 days after such notice, if the defaulting party shall
undertake throughout such 90-day period a reasonably diligent effort to remedy
such failure, provided, however that if by its nature such failure cannot be
cured, such failure shall constitute an Event of Termination immediately upon
occurrence.
(c) If this Agreement shall, at any time hereafter and for any
reason, cease to be in full force and effect, or shall be declared null and
void, or the validity or enforceability of this Agreement shall be successfully
contested by a party hereto or successfully contested by any other Person.
(d) Because each party acknowledges that the services to be rendered
by the other are personal in nature, inasmuch as the respective capabilities of
the parties hereto are uniquely valuable, and that the determination to enter
into this Agreement was based upon the unique ability of the other party to
fulfill its respective obligations hereunder, if
(i) such party shall make an assignment for the benefit of
creditors, file a petition in bankruptcy, petition or apply to any tribunal for
the appointment of a custodian, receiver or
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any trustee for it or a substantial part of its assets, or shall commence any
proceeding under any bankruptcy, reorganization in bankruptcy or the equivalent,
dissolution or liquidation law or statute of any jurisdiction, whether now or
hereafter in effect;
(ii) there shall have been filed any such petition or
application against such party, or any such proceeding shall have been commenced
against it, in which an order for relief is entered or which remains undismissed
for a period of 30 days or more; or
(iii) such party by any act or knowing failure to act shall
indicate its consent to, approval of or acquiescence in, any such petition,
application or proceeding or order for relief or the appointment of a custodian,
receiver or any trustee for it or any substantial part of any of its properties,
or shall suffer any such custodianship, receivership or trusteeship to continue
undischarged for a period of 30 days or more.
(e) Breach of the Stock Purchase Agreement of 3/22/99 (Appendix C
hereto).
7.03 Termination.
(a) Upon the occurrence of any Event of Termination set forth in
Section 7.02, the party not responsible for such Event of Termination shall have
the following rights, (i) if the responsible party is NexMed, Vergemont may, by
written notice to NexMed, relinquish its rights and terminate its future
obligations under this Agreement; (ii) if the responsible party is Vergemont,
NexMed may, by written notice to Vergemont terminate Vergemont's rights under
this Agreement.
(b) No termination or expiration of this Agreement shall affect any
obligation of any party which arose prior to the effective date of such
termination with respect to monies owed or to confidential information. The
right of any party to terminate this Agreement as herein above provided shall
not be affected in any way by its waiver of or failure to take action with
respect to any previous default.
7.04 Effects of Termination or Expiration.
(a) Upon termination of this Agreement by NexMed for breach by
Vergemont,
(i) Vergemont shall immediately cease to have any right to
sell, exploit or in any way deal with or in the Licensed Products or to use any
NexMed Know-How or Proprietary Information or to use any trademarks or names
associated with the Licensed Products and all royalties and other payments
theretofore accrued shall become due and payable immediately to NexMed and such
termination shall be without prejudice to any rights which NexMed may otherwise
have against Vergemont.
(ii) Vergemont shall deliver to NexMed, as soon as practicable
and within thirty days after receipt of notice of termination or the happening
of the event which terminates this Agreement where no notice is required, a
report indicating the quantity and description of Licensed Products on hand, on
order, or in the course of manufacture as of the date of expiration or
termination. NexMed shall have the right to conduct a physical inventory of
Vergemont's premises (and those of its sublicensees) to ascertain or verify such
final report. In the event Vergemont or such sublicensee
11
refuses to permit NexMed to conduct such physical inventory, NexMed shall retain
all legal and equitable rights that it may have in the premises.
(iii) All rights granted to Vergemont hereunder shall
forthwith revert to NexMed, and all rights granted by Vergemont under any
sublicense shall forthwith terminate. NexMed shall be free to license others in
connection with the manufacture, sale and distribution of the Licensed Products
licensed hereunder, and Vergemont and each sublicensee shall refrain from
further use, manufacture, sale or distribution of the Licensed Products or any
product derived from the Licensed Products. Vergemont acknowledges that its (or
its Affiliate's or sublicensee's) failure (except as otherwise provided herein)
to cease the use, manufacture, sale or distribution of the articles covered by
this Agreement or any class or category thereof at the termination of this
Agreement will result in immediate and irremediable damage to NexMed and to the
rights of any subsequent licensee. Vergemont acknowledges and admits that there
is no adequate remedy at law for such failure to cease, use, manufacture, sale
or distribution, and Vergemont agrees that in the event of such failure NexMed
shall be entitled to equitable relief by way of temporary and permanent
injunctions and such other further relief as any court with jurisdiction may
deem just and proper. Each sublicense hereunder shall contain termination
provisions substantially identical to this Article VII.
(iv) Vergemont shall forthwith deliver to NexMed (and shall
cause each sublicensee to deliver) all reports, memoranda, drawings, data, flow
sheets and other documents and all copies thereof theretofore furnished by
NexMed to Vergemont or which contain or describe any Proprietary Information and
shall take all actions necessary to assign or cause to be assigned to NexMed all
of Vergemont's rights with respect to all contracts for work, results, filings,
Applications for Approval made by it or on its behalf with and approvals granted
by any Regulatory Authority.
(b) In the event of a wrongful termination by NexMed or breach by
NexMed of a material obligation to Vergemont under this Agreement, Vergemont
shall have the right to recover damages directly and proximately caused by such
wrongful termination or breach.
(c) The confidentiality provisions of Section 5.01 shall survive any
termination of this Agreement.
VIII. INDEMNIFICATION AND INSURANCE
8.01 Indemnification. For purposes of this Section 8.01, "Indemnified
Parties" refers to NexMed, its officers, directors, employees and agents.
(a) Vergemont, as indemnitor, on behalf of itself and its officers,
directors, employees, agents and representatives (including its sublicensees and
distributors, and contractors undertaking work in the Pre-Clinical Development
Program or the Clinical Trials Program) shall indemnify and hold harmless the
NexMed Indemnified Parties and each of them from any and all liability arising
out of any suit, action, legal procedures, claim or demand of whatever kind or
character based upon (i) a claim or occurrence arising from the Clinical Trials
Program, or any aspect of the Pre-Clinical Development Program undertaken by
Vergemont, or the manufacture or sale of the Licensed Products; or (ii) any
breach of any representation, warranty or agreement made by Vergemont hereunder.
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(b) Anything to the contrary in this Article VIII notwithstanding,
Vergemont shall not be obligated to indemnify an Indemnified Party for acts of
negligence or willful misconduct or for any violation of any warranty,
representation or agreement made by such Indemnified Party, hereunder.
8.02 Scope of Indemnification.
(a) The agreement to indemnify and hold harmless from liability set
forth herein shall include, without limitation, all damages of every kind,
reasonable attorney fees, all costs and expenses which may be levied against and
out-of-pocket costs incurred by the Indemnified Parties in connection with any
suit, action, legal proceeding, claim or demand.
(b) Compliance by Vergemont with the insurance provision of this
Agreement shall not relieve Vergemont from liability under this indemnity
provision.
(c) Vergemont acknowledges and hereby agrees that the obligations
set forth in this Section 8.02 shall survive the termination or expiration of
this Agreement for a period of eight years.
(d) The Indemnified Parties will cooperate with Vergemont at
Vergemont's expense in the defense of any suit. Vergemont shall be liable for
any costs resulting from any settlement made without its consent.
8.03 Insurance. Vergemont hereby agrees to name NexMed as an additional
insured with respect to the Licensed Products to the same extent that it
maintains product liability insurance with respect to any product or compound it
sells in countries where product liability insurance is available, but in no
event less than one (1) million U.S. dollars per product. If such insurance is
obtained, such insurance policy shall provide that it may not be canceled or
amended by the insurer in a manner which restricts coverage applicable to this
Section 8.03 without at least 30 days written notice to NexMed. Vergemont shall
furnish NexMed a Certificate of Insurance including a specimen copy of the
additional insured endorsement within 30 days after the first marketing approval
date of any given Licensed Product in any country within the Territory.
IX. IMPROVEMENTS
If NexMed, on the one hand, or Vergemont and/or its Affiliates and
sublicensee(s), on the other hand, develop or acquire Know-How relating to the
manufacture, use or sale of the Licensed Products, or make Licensed Products
improvements or process improvements, all such additional Know-How and
improvements shall be assigned to and be the property of NexMed. Such additional
Know-How and improvements shall be promptly transferred and/or communicated to
NexMed and shall become part of the NexMed Know-How, and by the provisions
hereof shall be licensed to Vergemont for use in the Territory in connection
with the Licensed Products hereunder without further or additional royalty.
X. TRADEMARKS
The parties hereto shall mutually select the name(s) or trademarks to be
used by Vergemont in
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connection with sales of the Licensed Products in the Territory. Any such
trademarks shall be registered in the name of NexMed as the owner thereof,
NexMed shall hereby license the trademarks set forth in Appendix B hereto to
Vergemont, for so long as this Agreement is in effect, solely for use in
connection with the Licensed Products in the Territory without further or
additional royalty. NexMed shall approve in advance the quality of the Licensed
Products, and all uses of the marks in association therewith, including
packaging, advertising and marketing materials using the marks. Vergemont hereby
agrees to maintain such trademarks in force and to take any and all actions
necessary to protect NexMed's rights in these trademarks.
XI. WARRANTIES AND LIMITATIONS ON RIGHTS
11.01 Warranties. Each of the parties hereto hereby represents and
warrants to the other party that, as of the date hereof: (a) such party has all
the requisite resources, power and authority to execute, deliver and perform
this Agreement; (b) the terms of this Agreement are not inconsistent with any
other contractual and/or legal obligations such party may have, or with such
party's policies or the policies of any entity with which such party is
associated; (c) such party has not engaged and shall not engage in any act
inconsistent with this Agreement, particularly that would allow any third party,
including any government or government agency, to acquire, own or possess any
right or interest inconsistent with the other party's rights under this
Agreement; and (d) this Agreement has been duly authorized and, when executed
and delivered by such party, shall constitute a legal, binding obligation,
enforceable against such party, according to its terms.
11.02 Limitation on Warranties. NexMed has not received any notice that
Compounds A, B, C, and D, the Penetration Enhancement Ingredients, or the
Licensed Products (a) are not novel entities or (b) infringe the patent rights
of others.
11.03 Disclaimer. Vergemont and NexMed each understands that neither party
can guarantee the reliability of its research findings and conclusions, and
therefore, except as expressly set forth in this Agreement, NEITHER PARTY HAS
MADE OR MAKES ANY GUARANTEES AND EXTENDS ANY WARRANTIES OF ANY KIND, EITHER
EXPRESS OR IMPLIED, EXCEPT AS EXPRESSLY PROVIDED HEREIN. there ARE NO EXPRESS OR
IMPLIED WARRANTIES OF DESIGN, MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE, OR THAT ANY LICENSED PRODUCTS IDENTIFIED WILL NOT INFRINGE ANY PATENT,
COPYRIGHT, TRADEMARK, OR OTHER INTELLECTUAL PROPERTY RIGHTS OF ANY INDEPENDENT
THIRD PARTY. FURTHER, THERE ARE NO OTHER EXPRESS OR IMPLIED WARRANTIES ARISING
FROM COURSE OF DEALING, USAGE OR TRADE PRACTICES OR OF ANY OTHER KIND.
11.04 Limitations on Rights. Nothing in this Agreement shall be construed
as:
(a) conferring rights to use in advertising, publicity, promotional
or sales literature the name of the other party without the prior written
consent of the other party in each instance; or
(b) granting, by implication, estoppel, or otherwise as a result of
either this Agreement, any activities hereunder or the relationship of the
parties, any license, title, ownership or other rights to the other party's
Confidential Information or under patents or know-how of the other
14
party except as necessary to accomplish the purposes of this Agreement or except
as explicitly provided herein.
Each party acknowledges that by virtue of this Agreement it acquires only
such rights as set forth under the terms and conditions of this Agreement.
XII. MISCELLANEOUS
12.01 Notices. All notices required or permitted hereunder shall be
transmitted, or at least immediately affirmed, in writing by facsimile, followed
by confirmation of that facsimile either by registered or certified mail,
postage prepaid, return receipt requested, or by overnight courier, addressed as
follows, or to such other address as may be designated from time to time by
notice given by the respective party:
If to Vergemont: Vergemont International Limited
Suite 2401-2408
▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇
If to NexMed: NexMed International Limited
▇▇▇▇▇ ▇▇▇▇, ▇▇/▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇
12.02 Independence of Parties. The status of each party under this
Agreement is that of an independent contractor, and neither party has the right
or authority to assume or create any obligation, accept legal process, make
commitments, incur any charges or otherwise bind or act on behalf of the other
or limit the other in any manner whatsoever, except as expressly stated herein.
Neither this Agreement nor any act hereunder shall be construed as constituting
the foundation of a partnership, association, agency, joint venture or any other
entity.
12.03 No Third-Party Beneficiaries. No person or entity not a party to
this Agreement, including any employee of any party to this Agreement, shall
have or acquire any rights by reason of this Agreement, nor shall any party have
any obligations or liabilities to such person or entity by reason of this
Agreement.
12.04 No Waiver. Failure by either party to enforce, or delay in
exercising, or partial exercise of any covenants or rights or remedies under
this Agreement shall not be deemed or construed as a waiver of such rights nor
shall a waiver by either party in one or more instances be construed as
constituting a continuing waiver or as a waiver in other or subsequent
instances.
12.05 Entire Agreement. This Agreement constitutes the complete and entire
understanding between the parties with licenses conveyed hereunder, superseding
and replacing all prior oral or written agreements, communications,
representations, proposals, or negotiations specifically relating to the
activities hereunder and subject matter hereof. No change or addition to or
15
variation or amendment of this Agreement, nor any cancellation or waiver of any
of the terms or provisions hereof, nor any alteration or modification of any of
the terms and conditions hereof, shall be effective or valid and binding on
either party unless in writing and signed by a duly-authorized representative of
the party against which the provision is applied.
12.06 Arbitration. (a) Solely for the purposes of determining governing
law and jurisdiction, the parties acknowledge and agree that this Agreement
constitutes a contract pertaining to a transaction covering in the aggregate not
less than $1,000,000. This Agreement is made and delivered in New York and shall
be governed by and construed in accordance with the laws of the State of New
York applicable to agreements made and to be performed entirely within the State
of New York.
(b) In the event of any dispute under this Agreement, whether as to
the validity, construction, enforce-ability or performance of this Agreement or
any of its provisions or otherwise, both parties shall endeavor to settle such
dispute amicably between themselves. In the event that the parties fail to
agree, such dispute shall be settled by arbitration. Said arbitration shall be
conducted in the New York County, New York, in accordance with the rules then
obtaining of the American Arbitration Association with one arbitrator. The award
of the arbitrator shall be final and binding upon the parties and enforcement
thereof may be obtained in any court of competent jurisdiction. The unsuccessful
party to such arbitration shall pay to the successful party all costs and
expenses, including reasonable attorney's fees incurred therein by such
successful party.
12.07 Headings. Article and Section headings are inserted in this
Agreement for convenience of reference only and no construction, meaning,
interpretation or inference shall be derived from them.
12.08 Governmental Compliance and Effect of Invalidity. This Agreement and
performance hereunder is subject to the restrictions, limitations, terms and
conditions of all applicable governmental regulations, approvals and clearances.
If any term or provision of this Agreement is held invalid, illegal or
unenforceable in any respect, for any reason, that invalidity, illegality or
unenforceability shall not affect any other term or provision hereof, and this
Agreement shall be interpreted as if such term or provision, to the extent the
same shall have been held to be invalid, illegal or unenforceable, had never
been contained herein, with the other provisions of this Agreement remaining in
force.
12.09 Assignability. This Agreement and the rights, obligations,
privileges, and interests hereof may not be assigned by either party, except
that either party may assign this Agreement and rights and interests, in whole
or in part, (i) to any of its Affiliates or (ii) with the consent of the other
party, which consent shall not be unreasonably withheld, to any purchaser of all
or substantially all of its stock or assets of such party or to any acquirer or
successor corporation resulting from any merger or consolidation with or into
such successor corporation.
12.10 Succession. This Agreement and the rights and obligations granted
and undertaken hereunder shall be binding upon and inure to the benefit of the
parties hereto, and their permitted assign(s), successor(s), trustee(s) or
receiver(s) in bankruptcy.
12.11 Government Compliance. NexMed and Vergemont shall comply with all
16
supranational, federal, state, and local laws, ordinances and regulations
applicable to the shipment, handling, storage, testing, use, development, sale
and/or disposal of any compound hereunder.
12.12 Force Majeure. If either party shall be delayed, interrupted in or
prevented from the performance of any obligation hereunder by reason of Force
Majeure including fire, flood, other natural disasters, war (declared or
undeclared), public disaster, strike or labor differences, governmental
enactment, rule or regulation, or any other cause beyond such party's control,
such party shall not be liable to the other therefor; and the time for
performance of such obligation shall be extended for a period equal to the
duration of the contingency which occasioned the delay, interruption or
prevention. The party invoking such Force Majeure rights of this paragraph must
notify the other party within a period of 15 days after the first and the last
day of the Force Majeure unless the Force Majeure renders such notification
impossible, in which case notification will be made as soon as possible. If the
delay resulting from the Force Majeure exceeds six months, the party not
invoking the Force Majeure rights may terminate the contract in accordance with
the conditions stipulated in this Agreement.
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IN WITNESS WHEREOF, authorized representatives of the parties have duly
executed this Agreement in duplicate.
NEXMED INTERNATIONAL LIMITED
By:
-----------------------
▇. ▇▇▇▇▇▇ Mo
Managing Director
VERGEMONT INTERNATIONAL LIMITED
By:
-----------------------
▇▇▇-▇▇▇▇▇ Wu
Managing Director
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APPENDIX A
Penetration Enhancement Ingredients:
Alkyl (N, N-Disubstituted Amino)- Acetate and Salts thereof.
▇▇
▇▇▇▇▇▇▇▇ ▇
Trademarks Covered Under License Agreement:
BEFAR
GOLDEN RHINO
NEXMED
20
APPENDIX C
The Stock Purchase Agreement of March 22, 1999.
21