EXHIBIT 10.50
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DATE: FEBRUARY 7, 2004
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FEMPHARM PTY LTD
and
VIVUS INC.
and
ACRUX DDS PTY LTD
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TESTOSTERONE
DEVELOPMENT AND
COMMERCIALIZATION AGREEMENT
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TABLE OF CONTENTS
PAGE
----
1. DEFINITIONS AND INTERPRETATION............................................2
1.1 DEFINITIONS......................................................2
1.2 INTERPRETATION...................................................9
2. LICENSE RIGHTS...........................................................11
2.1 LICENSE GRANT...................................................11
2.2 RESERVATION OF RIGHTS...........................................12
2.3 VIVUS GRANT-BACK LICENSE AND OPTION TO LICENSE..................12
2.4 EXPANSION OF FIELD..............................................13
2.5 EXCLUSIVITY COVENANTS...........................................13
2.6 UNAUTHORIZED SALES..............................................15
2.7 RIGHT OF NEGOTIATION............................................16
3. LICENSE AND MILESTONE PAYMENTS...........................................17
3.1 LICENSE FEE.....................................................17
3.2 MILESTONE PAYMENTS..............................................17
3.3 ONE PAYMENT; LIMITATION.........................................19
4. ROYALTIES................................................................19
4.1 ROYALTY PAYMENTS................................................19
4.2 ROYALTY REDUCTION...............................................20
4.3 THIRD PARTY ROYALTIES...........................................20
4.4 ONE ROYALTY; SAMPLES AND DONATIONS..............................21
4.5 ACCRUAL AND PAYMENT OF ROYALTIES; ROYALTY TERM..................21
4.6 LATE PAYMENT OF ROYALTIES.......................................22
4.7 ROYALTY REPORT..................................................22
4.8 VERIFICATION OF ROYALTY STATEMENT...............................22
4.9 NON-DISCLOSURE BY ACCOUNTANT....................................23
4.10 STATEMENT ERRORS................................................23
4.11 CURRENCY CONVERSION.............................................24
4.12 WITHHOLDING TAXES...............................................24
5. CLINICAL DEVELOPMENT.....................................................24
5.1 OVERVIEW OF DEVELOPMENT.........................................24
5.2 TRANSFER OF TECHNICAL INFORMATION...............................25
5.3 CONDUCT OF PHASE IIB STUDY......................................26
5.4 TRANSFER OF DEVELOPMENT RESPONSIBILITY..........................27
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5.5 DEVELOPMENT RESPONSIBILITIES....................................27
5.6 DEVELOPMENT COMMITTEE...........................................28
5.7 DEVELOPMENT PLANS...............................................29
5.8 BUDGETS.........................................................30
5.9 STEERING COMMITTEE..............................................30
5.10 FINAL DECISION..................................................31
5.11 PROCEDURES OF COMMITTEES........................................31
5.12 DECISIONS OF COMMITTEES.........................................32
5.13 CHAIRPERSONS - DEVELOPMENT COMMITTEE............................32
5.14 CHAIRPERSONS - STEERING COMMITTEE...............................32
5.15 MINUTES AND REPORTS.............................................33
5.16 GLOBAL DEVELOPMENT COMMITTEE....................................33
5.17 NO OBLIGATION TO TRANSLATE......................................34
5.18 INFORMATION AND RESULTS.........................................34
5.19 PRODUCT FAILURE.................................................35
5.20 SUBCONTRACTS....................................................36
5.21 CLINICAL PRODUCT SUPPLY.........................................37
6. DILIGENCE OBLIGATIONS....................................................37
6.1 PRODUCT DEVELOPMENT DILIGENCE OBLIGATIONS.......................37
6.2 DILIGENCE PAYMENT FOR DEVELOPMENT DELAYS........................38
6.3 REVERSION FOR FAILURE OF DILIGENCE..............................39
7. REGULATORY MATTERS.......................................................39
7.1 REGULATORY MATERIALS............................................39
7.2 RELATIONSHIP WITH REGULATORY AUTHORITIES........................41
7.3 ADVERSE EVENTS AND COMPLAINTS REPORTING.........................41
8. PRODUCT COMMERCIALIZATION................................................42
8.1 OVERVIEW........................................................42
8.2 COMMERCIALIZATION OBLIGATIONS...................................43
8.3 COMMERCIALIZATION PLANS.........................................44
8.4 LAUNCH DILIGENCE................................................44
8.5 MANUFACTURE IN TERRITORY........................................45
8.6 SUPPLY OF PRODUCT TO FEMPHARM...................................45
9. SUB-LICENSING AND ASSIGNMENT.............................................45
9.1 SUB-LICENSE.....................................................45
9.2 VIVUS BOUND.....................................................46
9.3 ASSIGNMENT......................................................46
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10. CONFIDENTIALITY..........................................................46
10.1 RESTRICTIONS ON USE.............................................46
10.2 USE OF OWN INFORMATION..........................................47
10.3 EXCEPTIONS TO CONFIDENTIALITY...................................47
10.4 EXCEPTIONS TO NON-DISCLOSURE....................................48
10.5 DISCLOSURE BY LAW...............................................48
10.6 SCOPE OF CONFIDENTIALITY........................................49
10.7 SECURITY OF INFORMATION.........................................49
10.8 PERSONNEL CONFIDENTIALITY.......................................49
10.9 RETURN OF CONFIDENTIAL INFORMATION..............................50
10.10 PUBLICATIONS....................................................50
10.11 OTHER RIGHTS....................................................50
10.12 USE OF OTHER PARTY'S NAME.......................................50
10.13 PRESS RELEASES AND OTHER DISCLOSURES............................50
11. INVENTIONS...............................................................52
11.1 DISCLOSURE OF INVENTIONS........................................52
11.2 OWNERSHIP OF INVENTIONS AND INTELLECTUAL PROPERTY RIGHTS........52
11.3 JOINT INVENTIONS AND JOINT PATENTS..............................52
11.4 COOPERATION OF EMPLOYEES........................................53
12. PATENTS AND INTELLECTUAL PROPERTY........................................53
12.1 PATENT RIGHTS...................................................53
12.2 JOINT PATENT RIGHTS.............................................54
12.3 FEMPHARM PATENT PROCEEDINGS.....................................55
12.4 INFRINGEMENT PROCEEDINGS IN THE FIELD...........................55
12.5 OTHER INFRINGEMENT PROCEEDINGS..................................57
13. REPRESENTATIONS AND WARRANTIES; DISCLAIMERS..............................57
13.1 WARRANTY........................................................58
13.2 ADDITIONAL WARRANTIES OF FEMPHARM AND THE ACRUX
CONTROLLED AFFILIATES..........................................58
13.3 ADDITIONAL WARRANTIES OF VIVUS..................................62
13.4 DISCLAIMER OF WARRANTIES........................................62
13.5 DISCLAIMER OF LIABILITY.........................................63
14. TERM AND TERMINATION.....................................................63
14.1 TERM............................................................63
14.2 TERMINATION BY FEMPHARM.........................................63
14.3 TERMINATION BY VIVUS............................................64
14.4 NO RELEASE......................................................66
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14.5 CONSEQUENCES OF AGREEMENT TERMINATION...........................66
14.6 VIVUS TERMINATION OF SPECIFIC PROVISIONS FOR UNCURED BREACH.....70
14.7 LIMITATION OF TERMINATION FOR BREACH AFTER COMMERCIAL LAUNCH....72
14.8 TERMINATION FOR FAILURE TO ACHIEVE MONASH AMENDMENT.............73
14.9 REMEDIES........................................................74
15. GENERAL..................................................................74
15.1 NOTICES.........................................................74
15.2 INDEMNIFICATION.................................................75
15.3 DAMAGES FOR BREACH OF REPRESENTATIONS AND WARRANTIES............77
15.4 WAIVER..........................................................78
15.5 SEVERANCE.......................................................78
15.6 SUCCESSORS AND ASSIGNS..........................................78
15.7 CONTINUING OBLIGATIONS..........................................78
15.8 VARIATION.......................................................78
15.9 APPLICABLE LAW..................................................78
15.10 DISPUTE RESOLUTION..............................................79
15.11 DISPUTE REGARDING LICENSE NECESSITY.............................80
15.12 COUNTERPARTS....................................................81
15.13 COSTS...........................................................81
15.14 PAYMENT.........................................................81
15.15 ENTIRE AGREEMENT................................................81
15.16 INJUNCTIVE RELIEF...............................................81
15.17 INDEPENDENT CONTRACTORS.........................................82
15.18 FORCE MAJEURE...................................................82
15.19 BANKRUPTCY......................................................82
15.20 ACRUX DDS AS A PARTY............................................82
15.21 SURVIVAL OF SUBLICENSES.........................................83
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THIS DEVELOPMENT AND COMMERCIALIZATION AGREEMENT (the "Agreement") is dated and
effective as of February 7, 2004 (the "Effective Date").
PARTIES:
FEMPHARM PTY LTD (ABN 35 088 778 018) of ▇▇▇-▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ("FemPharm")
and
VIVUS INC. of ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ of
America ("Vivus")
and
ACRUX DDS PTY LTD
RECITALS
A. FemPharm, formerly known as Female HRT Pty Ltd., Australian Company
Number 088 778 018, is a wholly owned subsidiary of Acrux Limited of
▇▇▇-▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ("Acrux
Limited"). Acrux DDS Pty Limited ("Acrux DDS Pty Limited"), formerly
known as Drug Delivery Solutions Pty Ltd., Australian company number
088 778 009, is also a wholly owned subsidiary of Acrux Limited.
B. Acrux DDS Pty Limited holds an exclusive global license from Monash
University of Wellington Road, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, Australia ("Monash")
in respect of certain patents and patent applications owned by Monash
University covering the metered dose transdermal system described
therein.
C. FemPharm holds an exclusive sublicense from Acrux DDS Pty Limited in
respect of the intellectual property described in the license referred
to in recital B for the fields of female hormone replacement therapy
and human female contraception.
D. FemPharm and Vivus wish to enter into this agreement pursuant to which
FemPharm will exclusively license metered dose transdermal systems to
Vivus for the delivery of testosterone to human females on the terms
set out in this Agreement.
AGREEMENT
1. DEFINITIONS AND INTERPRETATION
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1.1 DEFINITIONS
In this Agreement, the following capitalized terms have the following
meanings:
"Acrux DDS License" shall mean the "Licence Agreement" between Female
HRT Party Limited (now known as FemPharm) and Drug Delivery Solutions
Party Limited (now known as Acrux DDS Pty Limited), dated November 30,
1999, as amended by the Deed of Amendment between Female HRT Party
Limited and and Drug Delivery Solutions Party Limited dated June 30,
2000, and as such agreement may be subsequently amended by the parties
thereto.
"Acrux Penetration Enhancer" shall mean one of the following, whichever
is used in the Product being developed or commercialized by or under
authority of Vivus under this Agreement, as used in such Product (i)
(**), (ii) a different dermal penetration enhancer which is disclosed
in the FemPharm Patents, or (iii) the combination of (**) with another
dermal penetration enhancer(s) disclosed in the FemPharm Patents.
"Additional Partner" shall mean each third party who is granted by
FemPharm or an Acrux Controlled Affiliate, directly or indirectly, a
right to market or commercialize a Product in the Field in any part of
the world, other than the Territory.
"Affiliate" means, with respect to any Party, any corporation or other
legal entity that controls, is controlled by or is in common control
with such Party. For purposes of this definition, the term "controls"
means (with correlative meanings for the terms "controlled by" and "in
common control with"):
(a) ownership, directly or indirectly, of more than 50% of the voting
securities of the applicable party; or
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(b) possession of actual power to direct unilaterally the business
and affairs of the applicable party, whether through contract,
ownership rights or otherwise.
"Androgen" means (a) any of the naturally occurring androgens, or any
derivative thereof, including the substances identified in annexure E,
or (b) any SARM. Notwithstanding sub-paragraph (b) of this paragraph
above, if Vivus or any Controlled Affiliate of Vivus, or a sublicensee
of Vivus that has rights under the Licensed Intellectual Property to
market, sell, offer to sell, and import the Products in the Field in
the Territory, commences Clinical Trials, or marketing or sales, in the
Territory of any product that orally delivers a SARM to treat female
sexual dysfunction, then except for SARM's that have been added to the
Field, no SARM shall be considered to be an Androgen for purposes of
Section 2.5.
"Business Day" means a day upon which banks are open for general
banking business in the United States other than a Saturday or Sunday.
"Clinical Trial" shall mean a clinical trial involving the
administration of a therapeutic to a human subject after filing an IND,
or the equivalent (if necessary) outside the United States, for the
purpose of evaluating the safety, efficacy, performance or other
characteristic of such therapeutic, including a phase I, phase II
and/or phase III trial.
"Committee" means the Development Committee and/or the Steering
Committee.
"Confidential Information" of a Party means all information disclosed
by such Party to the other pursuant to this Agreement, which may
include any of the following to the extent disclosed by such Party:
(a) Intellectual Property, technical information, specifications,
data, software, marketing procedures, pricing information,
customer and client records, business and corporate or trade
information of a Party relating to or arising out of the Licensed
Intellectual Property or its use or application;
(b) information relating directly or indirectly to the Product
including, without limitation, the identity and composition of
compounds for producing or manufacturing the Product, formulae
for the Product, methods of producing or manufacturing the
Product, costs of manufacturing the Product, information relating
to the packaging, selling and marketing of the Product including
the cost thereof and pricing information; and
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(c) communications between the Parties or information of whatever
kind whether recorded or not and, if recorded, in whatever
medium, relating to the Licensed Intellectual Property, the
Product, this Agreement, or otherwise, whether disclosed prior to
or after the Effective Date.
"Commercial Launch Plan" means the plan for launching and initial
marketing and promotion of the Product in the Territory as provided in
Section 8.3.
"Controlled" means, with respect to any Intellectual Property, that the
applicable Party owns or has a license to such Intellectual Property,
and has the authority to grant to the other Party access, a license, or
a sublicense to such Intellectual Property as provided for in this
Agreement without violating an agreement with a non-Affiliate third
party in effect at the time such Intellectual Property was first
acquired or created by the Party granting or authorizing the license or
sublicense herein.
"Controlled Affiliate" means (i) in the case of Vivus; an Affiliate
that is controlled by Vivus; and (ii) in the case of FemPharm; Acrux
Limited, Acrux DDS Pty Limited or an Affiliate that is controlled by
FemPharm, controlled by Acrux DDS Pty Limited, or controlled by Acrux
Limited (each of such Affiliates, Acrux DDS Pty Limited and Acrux
Limited, an "Acrux Controlled Affiliate"); in each case as "control" is
defined in the Affiliate definition in this Section 1.1 above.
"Development Committee" means the committee referred to in Section 5.6.
"Development Plan" means the plan appended to this Agreement as
annexure A in accordance with Section 5.7, as such plan may be amended
pursuant to Section 5.
"Effective Date" means the date of this Agreement, as set forth on page
one.
"Estradiol Agreement" means the agreement titled "Estradiol Development
and Commercialization Agreement" entered into by and between the
Parties on even date herewith.
"Excluded Applications" shall have the meaning set forth in annexure F.
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"FemPharm Patents" means: (a) the Patents set out in annexure B, which
shall include all existing Patents licensed under the Monash License or
the Acrux DDS License, (b) all continuing patent applications in the
Territory based on any Patent in clause (a) above (including any
divisionals, continuations, and continuations-in-part); (c) all Patents
that issue based on any Patent in clause (a) or (b) above, and
including all re-issues, extensions, substitutions, confirmations,
re-registrations, re-validations, patents of addition, and
supplementary certificates (or equivalents thereof) of any such Patent;
and (d) all additional Patents in the Territory that are Controlled by
FemPharm, Acrux DDS Pty Limited, an Acrux Controlled Affiliate, or any
other Affiliate of FemPharm at any time during the term of this
Agreement and that claim or cover an MDTS product, or any portion
thereof, or the manufacture or use of an MDTS product or portion
thereof, in the Field. For purposes of this definition, Patents that
meet, at some time during the term of the Agreement, the requirement of
subclause (d) above shall not be excluded from this definition simply
because a particular Acrux Controlled Affiliate (that Controlled such
Patent) no longer is an Affiliate of Acrux Ltd., and including
continuing patent applications in the Territory based on such Patents
in clause (d) above (including any divisionals, continuations, and
continuations-in-part).
"Field" means delivery of testosterone (and/or any other Androgen that
is added to the Field pursuant to Section 2.4 or included pursuant to
Section 5.19) to human females using an MDTS, excluding only the
Excluded Applications.
"First Commercial Sale" means the first commercial sale or transfer of
the Product for use in the Territory (other than for evaluation,
research, testing or clinical trial purposes), that occurs after the
Product has been approved for marketing in the Territory, by Vivus or
Vivus' Affiliate or sublicensee to an independent non-Affiliate third
party in exchange for cash or some equivalent to which value can be
assigned.
"FDA" means the United States Food & Drug Administration.
"Intellectual Property" means all industrial and intellectual property
rights, whether protectable by statute, at common law or in equity,
including, without limitation, any rights of copyright, trade secrets,
confidential information, know-how, trade ▇▇▇▇,
5
invention, Patent, circuit layout and any rights to registration of
such rights, irrespective of whether such rights are created before, on
or after the Effective Date.
"Improvement" means an Invention to the extent made by Vivus or its
Affiliate in the course of developing or commercializing the Product
under this Agreement, which Invention is an improvement of or
modification to the Product itself, in the form provided by FemPharm,
and is not substantially based upon or derived from other technology or
Know-How of Vivus, its Affiliate, or their third party licensor or
contractor.
"Improvement Blocking Patent Rights" means any Patent to the extent
that it: (i) claims and is specifically directed to an Improvement,
(ii) is Controlled by Vivus or its Affiliate at any time during the
term of this Agreement, and (iii) is reasonably necessary to make, use,
sell, or offer to sell an MDTS product. As used in this paragraph,
"reasonably necessary" means there is no commercially reasonable
alternative to practicing the subject matter in the applicable claim in
such Patent, in order for FemPharm, or its Controlled Affiliate or
licensee, to make, use or sell the MDTS products.
"Invention" means any information, idea, invention, know-how, data or
results made pursuant to work conducted under this Agreement.
"Joint Patent" means a Patent claiming an Invention invented jointly by
the Parties, as provided in Section 11.3.
"Know-How" shall mean all data, inventions (whether or not patentable),
discoveries, methods, information (including Confidential Information),
reports, analyses, documents, descriptions, procedures, formulae,
formulations, expert opinions, knowledge, know-how, experience,
marketing, and other information and materials (including physical
samples), and the trade secret rights to the foregoing. As used herein,
Know-How shall not include Patents.
"Licensed Intellectual Property" means the (i) FemPharm Patents, and
(ii) the Licensed Know-How.
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"Licensed Know-How" means the Know-How that is Controlled by FemPharm
or any Acrux Controlled Affiliate and relates to or is useful for MDTS
products in the Field.
"MDTS" means the Acrux metered dose transdermal spray system as
described in Annexure C, and including all improvements, derivatives
and modifications of such system developed by or under authority of
FemPharm or its Affiliate. For clarity, it is understood that
"improvements," as used under this paragraph, would include modified or
improved versions of the Acrux metered dose transdermal spray system,
and novel enhancers, formulations, methods, and mechanical components
relating to or useful for the MDTS system, that are not used in the
MDTS as of the Effective Date, but that would improve the safety,
effectiveness, or other qualities of such a spray system for use in
delivery of testosterone, or any other Androgen added to the Field
pursuant to Section 2.4 or 5.19.
"Monash License" means the "Technology Agreement" between Monash and
Acrux Limited, dated June 7, 1999, and transferred by Acrux Limited to
Acrux DDS Pty Limited in the "Deed of Assignment" dated November 22,
1999, as amended by the Deed of Variation between Monash and Acrux
Limited dated November 22, 1999 and the Deed of Variation between
Monash and Acrux DDS Pty Limited., executed October, 2002.
"Net Sales" means any amounts invoiced by Vivus, or an Affiliate or
sublicensee of Vivus, for the sale or other commercial disposition of
the Product, less the following amounts to the extent actually accrued,
taken or allowed with respect to such sale or disposition:
(d) trade, cash or quantity discounts or rebates from the invoiced
price;
(e) refunds, credits, charge backs or allowances actually granted
upon recalls, rejections, returns, or the like;
(f) freight charges, insurance and packing charges paid for delivery;
and
(g) amounts actually written off for uncollectable accounts
determined in accordance with GAAP, PROVIDED THAT if any such
amounts are subsequently
7
collected, such amounts would be included in Net Sales for the
quarter collected;
(h) taxes (other than income tax, but including value added and sales
taxes), duties, or other governmental charges levied on or
measured by the disposition or the invoiced amount, whether
absorbed by the billing or the billed party.
Notwithstanding the foregoing, if Vivus sells Product for use outside
the Field or outside the Territory pursuant to an authorization by
FemPharm or an Acrux Controlled Affiliate (such as sales to FemPharm
for use in Australia or New Zealand) Net Sales shall not include any
amounts invoiced on such sales, whether the sale is to FemPharm, an
Acrux Controlled Affiliate, or any other Person (e.g. another licensee
of FemPharm).
"Patents" means all rights under all patents (including all re-issues,
extensions, substitutions, confirmations, re-registrations,
re-validations, patents of addition, supplementary certificates, other
governmental grants for the protection of inventions or industrial
designs, or equivalents thereof) and under all patent applications
(including any divisionals, continuations, continuations-in-part,
continued prosecution applications, and divisionals).
"Party" means either of FemPharm or Vivus, and "Parties" means both of
them.
"Person" includes a natural person, company, corporation, partnership,
trust, estate, joint venture, sole proprietorship, government
(including any branch or subdivision thereof), governmental or
municipal agency, association, co-operative and any other entity or
person whatsoever.
"Phase IIb Study" means the current clinical trial FHRT 11 using a
Product conducted in Australia under a US IND application number (**).
"Product" means any MDTS product containing testosterone, or any other
Androgen included in the Field pursuant to Section 2.4 or as a result
of Section 5.19, and intended for use in the Field.
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"Regulatory Materials" means regulatory applications, submissions,
notifications, registrations, regulatory approvals and/or other filings
made and correspondence to or with the FDA or other regulatory
authority that are necessary or reasonably desirable in order to, or in
connection with efforts to, develop, manufacture, market, sell or
otherwise commercialize a Product in a particular country, territory or
possession. Regulatory Materials include INDs, ▇▇▇▇, and NDAs.
"Restricted Androgen" means any of: (**)
"Royalty Period" means a period of three consecutive months ending on
31 March, 30 June, 30 September or 31 December, provided that the first
Royalty Period will be the period from the date of First Commercial
Sale until the first to occur of 31 March, 30 June, 30 September or 31
December thereafter.
"SARM" means a generic compound (i.e., the composition of the compound
is not covered by a patent in the Territory) that is a selective
androgen receptor modulator.
"Steering Committee" means the committee referred to in Section 5.9.
"Territory" means the United States of America, and its territories and
protectorates.
"Valid Claim" means: a claim in an issued Patent within the FemPharm
Patents, which has not (i) expired or been cancelled, (ii) been
declared invalid by an unreversed and unappealable decision of a court
or other appropriate body of competent jurisdiction, (iii) been
admitted to be invalid or unenforceable through reissue, disclaimer or
otherwise, and/or (iv) been abandoned.
1.2 INTERPRETATION
In this Agreement:
(a) words denoting the singular number include the plural and vice
versa;
(b) words denoting any gender include all genders;
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(c) words importing natural persons include corporations, firms,
unincorporated associations, partnerships, trusts and any other
entities or groups recognised by law;
(d) reference to any legislation or to any provision of any
legislation includes any amendment, modification, consolidation
or re-enactment of, or any legislative provision substituted for,
and all legislative and statutory instruments issued under, such
legislation or such provision;
(e) the words "written" and "in writing" include any means of visible
reproduction of words in a tangible and permanently visible form;
(f) reference to Articles, Sections, clauses and schedules and
annexures are references to the Articles, Sections, clauses and
schedules and annexures of this Agreement, unless expressly
stated to the contrary;
(g) reference to any party to this Agreement or any other agreement
or document includes the party's successors and permitted
assigns;
(h) where a word or phrase is defined, other grammatical forms of
that word or phrase have corresponding meanings;
(i) no rule of construction applies to the disadvantage of a party
because that party was responsible for the preparation of this
Agreement or any part of it;
(j) the headings to Articles, Sections, annexures or schedules are
for ease of reference only and do not form part of this Agreement
or affect its interpretation;
(k) if any day appointed or specified by this Agreement for the
payment of any money or the doing of any act falls on a day which
is not a Business Day, the day appointed or specified will be the
next Business Day;
(l) a reference to a time or date in connection with the performance
of an obligation by a party is a reference to the time and date
in San Francisco, California, USA even if the obligation is to be
performed elsewhere;
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(m) the terms "including" and "includes" will be interpreted
non-restrictively to mean "including without limitation ...".
2. LICENSE RIGHTS
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2.1 LICENSE GRANT
(a) Subject to the terms of this Agreement, FemPharm and Acrux DDS
Pty Limited grant to Vivus the sole and exclusive (including with
respect to FemPharm, except as otherwise provided in subsection
(c) below) license, under the Licensed Intellectual Property,
solely to exploit, import, export, make, have made, develop, use,
market, offer for sale and sell Products for use in the Field in
the Territory.
(b) Subject to the terms of this Agreement, FemPharm and Acrux DDS
Pty Limited grant to Vivus a non-exclusive license under the
Intellectual Property that relates to or is useful for a Product,
or its manufacture or use, and is Controlled by any of FemPharm,
an Acrux Controlled Affiliate, or another Affiliate of FemPharm,
to export, make, and have made Products outside the Territory
solely for importation, sale, use and other exploitation in the
Field in the Territory pursuant to Section 2.1(a). In addition,
to the extent permitted by FemPharm on request by Vivus, such
permission not to be unreasonably withheld, Vivus may include in
the foregoing license the right to conduct specific development
activities in particular countries outside the Territory, solely
to develop data to be used in the Regulatory Materials in the
Territory for the Product in the Field, and marketing of the
Product in the Field in the Territory.
(c) For clarity, FemPharm and Acrux DDS Pty Limited retains the
non-exclusive rights under the Licensed Intellectual Property in
the Territory, for it and/or the Acrux Controlled Affiliates or
any of their respective licensees to export, make, and have made
Products in the Territory solely for importation, sale, use and
other exploitation in the Field in a country or jurisdiction
outside the Territory. In addition, only to the extent permitted
by Vivus on request by FemPharm, such permission not to be
unreasonably withheld, FemPharm may
11
conduct specific development activities in the Territory, solely
to develop data to be used in the Regulatory Materials outside
the Territory for the Product in the Field, and marketing of the
Product in the Field outside the Territory.
(d) For clarity, the license rights granted to Vivus in Section
2.1(a) and (b) do not grant to Vivus the rights under the
Licensed Intellectual Property, to export, make, have made, and
develop Products for importation, sale, use and other
exploitation in the Field in any country or jurisdiction outside
the Territory, or for any use outside the Field anywhere in the
world.
2.2 RESERVATION OF RIGHTS
Each Party hereby reserves all rights with respect to its Intellectual
Property and technology not expressly granted herein. Vivus shall have
no right or license under the FemPharm Patents or Licensed Know-How
other than the rights expressly set forth in this Agreement.
Notwithstanding anything to the contrary, it is acknowledged and agreed
that the limitation of FemPharm's rights under the Acrux DDS License,
such as the limitation of the field of FemPharm's rights to female
hormone replacement therapy or otherwise, shall not limit the rights
granted to Vivus under this Agreement.
2.3 VIVUS GRANT-BACK LICENSE AND OPTION TO LICENSE
(a) Subject to the terms of this Agreement, Vivus grants to FemPharm
a non-exclusive, royalty-free, worldwide license (with full
rights to grant sublicenses) under any Improvement Blocking
Patent Rights solely to develop, exploit, import, make, have
made, use, offer for sale and sell MDTS products, excluding only
MDTS products intended for use, sale, offer for sale, import, or
marketing in the Field in the Territory.
(b) Vivus grants to FemPharm the option, exercisable in writing by
FemPharm at any time after Vivus makes an Improvement, to obtain
in accordance with this Section 2.3(b) below a non-exclusive,
worldwide license (with such rights to sublicense as are mutually
agreed), on commercially reasonable terms, under trade secrets
Controlled by Vivus or its Affiliate during the term of this
Agreement to the extent embodied in such Improvement and under
Patents Controlled by Vivus or its Affiliate during the term of
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this Agreement that claim and are specifically directed to such
Improvement, (but excluding all Improvement Blocking Patent
Rights), solely to develop, exploit, import, make, have made,
use, offer for sale and sell MDTS products, excluding only MDTS
products intended for use, sale, offer for sale, import, or
marketing in the Field in the Territory. If FemPharm exercises
such option as to a particular Improvement, then the Parties
shall negotiate in good faith in an effort to agree upon the
financial and other terms for, and scope of, such a license,
within a reasonable time thereafter and will enter into such a
license upon reaching agreement, which terms shall be
commercially reasonable and shall include the mutually agreed
license grant for such Improvement (under the Patents and trade
secrets identified above) and other reasonable terms appropriate
for such a license grant. Such license shall be royalty free for
Products used in the Field in Australia or New Zealand.
2.4 EXPANSION OF FIELD
The Development Committee shall discuss and consider from time to time
the possibility of including in the Field one or more additional
Androgens, alone or in combination with other active ingredients, and
if it determines that such an expansion to the Field is appropriate, it
shall make such recommendation to both Parties. If the Parties agree
with such recommendation, and solely to the extent such expansion is
approved in writing by the Parties, such additional Androgen(s) shall
be added to the Field by written amendment of the Agreement on mutually
acceptable terms, including financial terms.
2.5 EXCLUSIVITY COVENANTS
(a) Except as otherwise agreed by the Parties in writing, until (*)
years after First Commercial Sale by or under authority of Vivus
of a Product for use in the Field and Territory, Vivus and its
Controlled Affiliates shall not, directly or indirectly, market,
promote, sell, or import any Competitive Products (as defined
below) for use in the Territory. As used herein, "Competitive
Product" means any product (which is not a Product of Vivus, its
Affiliate, or
13
sublicensee under this Agreement) that is approved for marketing
for any human indication and is marketed, promoted, or sold (i)
for the transdermal or mucosal delivery of testosterone or any
other Restricted Androgen to human females, or (ii) for the
transdermal or mucosal delivery of any other Androgen to human
females for treatment of female sexual dysfunction; except
excluding from the foregoing only products of any of Vivus, its
Affiliates, and sublicensees involving application of an Androgen
to the genitalia of a human female on an on demand basis as
claimed or described in (*). For clarity, no license is granted
under this Section 2.5(a) to Vivus by FemPharm or any Acrux
Controlled Affiliate under the Licensed Intellectual Property
with respect to any Vivus product involving such application of
an Androgen to the genitalia of a human female. Vivus and its
Controlled Affiliates shall not provide funding prior to such
time to third parties for the specific purpose of, or grant a
license or other authorization to any third party to, market,
sell, promote, or import any Competitive Product for use in the
Territory. Vivus shall include, and cause its Controlled
Affiliates to include, in any grant or authorization by Vivus or
the Controlled Affiliate in accordance with this Agreement of an
exclusive sublicense (including with respect to Vivus) to a third
party under the Licensed Intellectual Property to market, sell,
promote, and import the Products in the Territory, an express
covenant by such third party not to market, promote, sell or
import, directly or indirectly, any Competitive Product for use
in the Territory. If a particular Vivus Controlled Affiliate is
no longer controlled by Vivus, then the above shall apply to such
entity only if such entity continues to have rights under the
Licensed Technology that it could exercise to make, use or sell a
Product or a Competitive Product.
(b) Except as otherwise agreed by the Parties in writing, until (*)
after First Commercial Sale by or under authority of Vivus of a
Product for use in the Field and Territory, FemPharm and Acrux
DDS Pty Limited agree that FemPharm and the Acrux Controlled
Affiliates shall not, directly or indirectly, market, promote,
sell, or import in the Territory any Competitive Product. For
14
clarity, FemPharm and the Acrux Controlled Affiliates shall not
provide funding prior to such time to third parties for the
specific purpose of, or grant a license or other authorization to
any third party to, market, sell, promote, or import for use in
the Territory any Competitive Product. FemPharm and Acrux DDS Pty
Limited shall include, and cause the Acrux Controlled Affiliates
to include, in each grant or authorization of any of their
Intellectual Property rights to a third party, if the license or
authorization could be exercised in a manner that involves the
delivery of testosterone (or any other Androgen) to females, an
express covenant by such third party not to market, promote, sell
or import, directly or indirectly, any Competitive Product for
use in the Territory. If a particular Acrux Controlled Affiliate
is no longer controlled by Acrux Limited, then the above shall
apply to such entity only if such entity continues to have rights
under the Licensed Technology that it could exercise to make, use
or sell a Competitive Product
(c) Nothing in this Section 2.5 shall limit the exclusivity of the
license rights granted to Vivus in Section 2.1, it being agreed
that the exclusivity under Section 2.1 shall not be limited to
the periods described in this Section 2.5 above.
(d) If FemPharm is acquired by, and thus becomes an Affiliate of, a
third party other than an Acrux Controlled Affiliate, such third
party Affiliate shall be deemed a third party for purposes of the
licensing restrictions applied to FemPharm under Section 2.5(b).
Similarly, if Vivus is acquired by, and thus becomes an Affiliate
of, a third party other than a Vivus Controlled Affiliate, such
third party Affiliate shall be deemed a third party for purposes
of the licensing restrictions applied to Vivus under Section
2.5(a).
2.6 UNAUTHORIZED SALES
(a) FemPharm and the Acrux Controlled Affiliates shall not directly
or indirectly market, sell, or distribute any MDTS products
intended for use in the Field anywhere in the world to a
particular third party, including its Affiliates, if FemPharm or
an Acrux Controlled Affiliate knows, or has been provided
reasonable evidence, that such MDTS products provided directly or
indirectly
15
by FemPharm or an Acrux Controlled Affiliate to such third party
are being marketed, distributed or sold in the Territory. If
FemPharm or an Acrux Controlled Affiliate grants rights to a
third party, directly or indirectly, that could be exercised in a
manner that involves the delivery of testosterone (or any other
Androgen) to human females, then FemPharm shall make, or cause
the Acrux Controlled Affiliate to make, the terms and conditions
in this Section 2.6(a) applicable to the third party in the same
manner as applicable to FemPharm.
(b) Vivus and its Controlled Affiliates shall not directly or
indirectly market, sell, or distribute any Product in the
Territory to a particular third party, including its Affiliates,
if Vivus knows, or has been provided reasonable evidence, that
such Product provided directly or indirectly by Vivus or its
Controlled Affiliates to such third party are being marketed,
distributed or sold for use outside the Territory, provided that
the sale of such Product in the Territory infringes a Valid Claim
in the FemPharm Patents or embodies information that is at the
then current time a trade secret of FemPharm, other than as
permitted by Section 10.11. If Vivus or its Controlled Affiliate
grants a sublicense to a third party under the Licensed
Intellectual Property in accordance with this Agreement to
market, sell, promote, and import the Products in the Territory,
then Vivus shall make, or cause its Controlled Affiliate to make,
the terms and conditions in this Section 2.6(b) applicable to the
third party in the same manner as applicable to Vivus.
2.7 RIGHT OF NEGOTIATION
If FemPharm or an Acrux Controlled Affiliate desires to enter into a
license or other collaboration that involves the research, development,
or commercialization in the Territory of a product for delivery of an
Androgen, other than testosterone, to females for treatment of female
sexual dysfunction, FemPharm shall propose to Vivus the terms and
conditions for such a license or collaboration with Vivus prior to
entering into the license or collaboration with any third party. If
Vivus fails to notify FemPharm in writing, within one hundred twenty
(120) days after receiving such proposed terms and conditions from
FemPharm, that Vivus desires to negotiate
16
the terms and conditions for the license or collaboration, or if the
Parties do not agree in principle on the terms for such an arrangement
notwithstanding good faith, diligent negotiations throughout the
remainder of such one hundred twenty (120) day period after Vivus'
request, then FemPharm or the Acrux Controlled Affiliate shall have the
right to enter into the license or collaboration with a third party. In
addition, FemPharm shall notify Vivus in writing upon any of FemPharm
or the Acrux Controlled Affiliates commencing, whether directly or
indirectly, any clinical development or commercialization of any
product involving the transdermal or mucosal deliver to human females
of an Androgen or other selective androgen receptor modulator for the
treatment of sexual dysfunction in human females, including through
licensees and work funded by FemPharm, but subject to any
confidentiality obligations that would prevent such disclosure.
3. LICENSE AND MILESTONE PAYMENTS
--------------------------------------------------------------------------------
3.1 LICENSE FEE
Vivus will pay to FemPharm a license fee of:
(a) US$ 1,750,000 (One Million Seven Hundred and Fifty Thousand
United States Dollars) within five (5) Business Days of the
Effective Date;
(b) US$ 250,000 (Two Hundred and Fifty Thousand United States
Dollars) by September 1, 2004.
3.2 MILESTONE PAYMENTS
Upon achieving the specified milestone, Vivus will pay to FemPharm the
following milestone payments (subject to Section 3.3 and 6.2):
(a) US$ (*) (*) United States Dollars) within thirty (30) days after
the Phase IIb Study is completed, provided that the Phase IIb is
completed prior to (*) (where completed means the last patient
has completed the "Exit Visit," as defined in the protocol, and
at least * (*) eligible patients per study protocol in each
treatment group have been enrolled in the study, and provided
that FemPharm does not terminate the study early);
17
(b) US$ (*) (**United States Dollars) within thirty (30) days of data
analysis of the completed Phase IIb Study which demonstrates a
statistically significant improvement over placebo sufficient to
meet the primary efficacy endpoint (*) for at least (*) as set
out in the current protocol in the Phase IIb Study;
(c) US$(*) (**United States Dollars) within thirty (30) days of
Vivus' data analysis of the completed Phase IIb Study showing a
skin irritation rate being achieved in each treatment group in
the Phase IIb Study at the application site, regardless of
severity, of (*)% or less of the total number of patients in the
particular treatment group;
(d) US$ * (**United States Dollars) within thirty (30) days of a
Product Patent (as defined below) issuing in the United States of
America, where a "Product Patent" means any Patent that is
entitled to the effective filing date of US Patent Application
Number (*) and that includes (i) one or more apparatus claims
that claim the spray apparatus used in the Product being
developed (or sold) by Vivus (or its Affiliate or sublicensee) at
the time of issuance, and (ii) one or more composition of matter
claims that claim the formulation of the Acrux Penetration
Enhancer together with one or more hormones, which include at
least the active ingredient in the Product being developed (or
sold) by Vivus (or its Affiliate or sublicensee) at the time of
issuance. It is understood that no claims of a Patent issued as
of the Effective Date satisfy this milestone;
(e) US$ (*) (** United States Dollars) within thirty (30) days of
Vivus (or its Affiliate or sub-licensee) commencing in the United
States the first Phase III study in respect of the Product (such
commencement being defined as the date when the first patient has
been dosed in accordance with the Phase III protocol); and
(f) US$ (*) ( ** United States Dollars) within thirty (30) days of
submission by or under authority of Vivus or its Affiliate or
sublicensee in the United States of the first new drug
application to the FDA (as new drug application is defined in 21
C.F.R. ss. 314.50 et. Seq, as updated or amended from time to
time), or
18
such other equivalent regulatory application in the United States
for approval of marketing of the Product, (the "NDA") in respect
of the Product; and
(g) US$ (*) (* United States Dollars) within thirty (30) days of the
first FDA marketing approval in the United States in respect of
the Product (the marketing approval being defined as approval by
the FDA of Vivus' or its Affiliate's or sublicensee's NDA for the
Product, permitting the Product to be marketed in the United
States).
3.3 ONE PAYMENT; LIMITATION
It is understood that once a particular milestone payment under Section
3.2 has been paid (including as a result of the operation of Section
6.2 below), then no payment for such milestone shall be due again with
respect to the same Product or any other Product except to the extent
otherwise agreed by the Parties in writing in connection with the
addition of an Androgen to the Field pursuant to Section 2.4.
4. ROYALTIES
--------------------------------------------------------------------------------
4.1 ROYALTY PAYMENTS
Except as otherwise provided in this Article 4, Vivus will pay to
FemPharm royalties as a percentage of Net Sales, where the royalty rate
is determined based on the Net Sales during the applicable calendar
year in the Territory, according to the following schedule:
(a) the royalty rate is (*)per cent (*%) on the first US$ (*)( **
U.S. Dollars) of Net Sales in the calendar year;
(b) the royalty rate is (*)per cent (*%) of the Net Sales in excess
of the first US$ (*) (** U.S. Dollars) of Net Sales in the
calendar year, up to Net Sales in the calendar year of US$ (*) (
** U.S. Dollars);
(c) the royalty rate is (*) per cent (*%) of the Net Sales in excess
of US$ (*)(**U.S. Dollars) in the calendar year.
19
4.2 ROYALTY REDUCTION
The royalty rate applicable under Section 4.1 to Net Sales from the
sale of a Product will be reduced by (*) per cent (* %) upon the
expiration, cancellation, invalidation, abandonment, termination,
disclaimer, or unenforceability of the last Valid Claim in the FemPharm
Patents that would, absent a license, be infringed by the sale or use
of such Product in the Territory in the Field. Further, with respect to
a particular Product, if there otherwise is no Valid Claim in the
FemPharm Patents that would, absent a license, be infringed by the sale
or use of such Product in the Territory in the Field, then the royalty
rate applicable under Section 4.1 to the Net Sales from the sale of
such Product shall be (*) percent (* %) of the royalties set forth in
Section 4.1, unless and until such a Valid Claim issues, after which
point the rate shall be as set forth in Section 4.1 until the preceding
sentence applies.
4.3 THIRD PARTY ROYALTIES
If Vivus or its Affiliate or sublicensee pays royalties to a third
party under a patent license that is necessary in order to make, use,
import, or sell a Product in the Territory, which royalties are based
on net sales of such product, then Vivus shall have the right to credit
(*) percent ( * %) of such payments against the amounts payable by
Vivus under this Section 3 and Section 4, provided that the royalty
payable to FemPharm under this Section 4 shall not be so reduced by
more than (*) percent (* %). As used in this Section, a license is
"necessary" if it is reasonable to obtain the license in light of the
risk of infringement. If FemPharm disagrees with Vivus' assertion,
under this Section, that a particular license is so necessary, then the
Parties will proceed under Section 15.11 to resolve the issue.
Notwithstanding the foregoing, if Vivus or its sublicensee adds to the
Product a component or feature comprising such technology, and Vivus or
its sublicensee must pay royalties for third party patent rights
covering such component or feature, such royalties shall not be offset
under this Section 4.3 against royalties owed to FemPharm, unless the
component or feature is, at the time added, necessary to make the
Product approvable or commercially viable. As to any license that Vivus
may believe is desirable to enter into with respect to a Product, other
than those for which royalties may be offset in accordance with the
foregoing, if Vivus so requests the Parties will discuss such license
and the possibility of FemPharm sharing some part of the costs of such
license.
20
4.4 ONE ROYALTY; SAMPLES AND DONATIONS
One royalty shall be payable for each Product sold under this
Agreement. No royalties shall be due upon the sale or other transfer of
Product among Vivus, its Affiliates and sublicensees, but in such cases
the royalty shall be due and calculated upon Vivus', its Affiliate's or
sublicensee's Net Sales to the first independent third party, or
commercial use of such Product by Vivus, the Affiliate, or the
sublicensee for profit to treat patients in the ordinary course of its
business (in which case "Net Sales" for such use shall be deemed to be
the average Net Sales for such Product when sold to third parties in
the same royalty period in the Territory). No royalties shall accrue on
the disposition of Product by Vivus or its Affiliates or sublicensees
in reasonable quantities which are (i) used in clinical trials, (ii)
distributed as samples (promotion or otherwise), or (iii) distributed
as donations solely for charitable purpose (I.E., without charge).
4.5 ACCRUAL AND PAYMENT OF ROYALTIES; ROYALTY TERM
The royalties owed under this Section 4 accrue on the sale or transfer
of the Product, and all royalties that accrue in respect of the Net
Sales in a particular Royalty Period:
(a) if the Territory includes any country outside the United States
of America, will be calculated, on a country by country basis,
after conversion (based on exchange rate as set forth in Section
4.10 below) into U.S. dollars; and
(b) will be paid in U.S. dollars no later than the date that the
royalty report for that Royalty Period is to be provided pursuant
to Section 4.7.
Royalties shall accrue on sales of Products commencing on the date of
First Commercial Sale of the first Product hereunder and continuing
only until the latest to occur of the following: (i) expiration,
cancellation, invalidation, abandonment, termination, disclaimer, or
unenforceability of the last Valid Claim in the FemPharm Patents that
covers the sale of the Product, or its use, in the Territory; or (ii)
twelve (12) years from the date of such First Commercial Sale, or (iii)
on a Product by
21
Product basis, the date there no longer is any substantial trade secret
of FemPharm or its Affiliate embodied in the applicable Product which
is a trade secret of FemPharm or its Affiliate at the time of the sale.
4.6 LATE PAYMENT OF ROYALTIES
If Vivus fails to pay royalties within the time specified in Section
4.5, Vivus will pay to FemPharm interest on the amount of royalties
which were not timely paid from the date upon which they became owing
until the date of payment at (*)percent (* %) above the Prime Rate as
quoted in the Wall Street Journal, calculated on a daily basis and
payable on demand.
4.7 ROYALTY REPORT
Vivus will submit to FemPharm no later than forty five (45) days after
the end of each Royalty Period during the term of this Agreement a
report stating:
(a) the total amount of invoiced sales of the Product, (on a country
by country basis if the Territory includes any country outside
the United States of America);
(b) the calculation of Net Sales (in each country if the Territory
includes any country outside the United States of America), based
on such sales, including a description of the deductions used to
calculate such Net Sales; and
(c) if the Territory includes any country outside the United States
of America, the calculation of royalties owed based on such Net
Sales, on a country by country basis during that Royalty Period,
after conversion of such Net Sales into U.S. Dollars as per
Section 4.11.
4.8 VERIFICATION OF ROYALTY STATEMENT
FemPharm may at its cost have any report referred to in Section 4.7
verified as set forth below by a reputable firm of chartered
accountants or certified public accountants nominated by FemPharm, and
reasonably acceptable to Vivus, provided FemPharm completes such
verification within thirty-six (36) months of the end of the Royalty
Period to which the verification is to relate. Upon not less than ten
(10)
22
Business Days' prior written notice given by FemPharm to Vivus, Vivus
will provide the accountants with access during Vivus' (or its
Affiliates' or, to the extent Vivus has the right to do so,
sublicensee's, as applicable) normal business hours to the revenue and
sales records of Vivus, its Affiliates and (to the extent Vivus has the
right to do so) sublicensees sufficient for the purposes of verifying
the reports referred to in Section 4.7 and for the purpose of verifying
the amount of royalties paid to FemPharm. To the extent that Vivus does
not have the right to grant to FemPharm the right to audit the books
and records of its sublicensees, Vivus will use reasonable, diligent
efforts to obtain for itself such rights and, at the request of
FemPharm, agree to exercise its audit rights with respect to such
sublicensees and provide the results of such audit to FemPharm pursuant
to this Section 4.8. Vivus, the Affiliate or sublicensee, as the case
may be, may request that, at its expense, a representative or agent
familiar with its record keeping systems be present at the audit to
assist in the audit. Such audits will be at the expense of FemPharm,
except that if such audit establishes that the amount owed by Vivus for
the audited period exceeds the amount actually paid by more than (*)
percent (* %), then Vivus will pay FemPharm's actual out of pocket
costs of such audit.
4.9 NON-DISCLOSURE BY ACCOUNTANT
The accountants appointed under Section 4.8 are not authorised to, and
will not, disclose to FemPharm any information other than the accuracy
or inaccuracy of the amounts to be verified and will be required to
execute a reasonable confidentiality agreement with Vivus and/or the
sublicensee or Affiliate, as applicable.
4.10 STATEMENT ERRORS
Should it be established from any report and verification referred to
in Sections 4.7 and 4.8 that the royalties which should have been paid
in respect of any Royalty Period to which the report and verification
relates are more or less than the royalties actually paid then the
difference will be remitted within ten (10) Business Days:
(a) to FemPharm (in the case of the royalty paid being less than that
which should have been paid);
23
(b) to Vivus (in the case of the royalty paid being more than that
which should have been paid).
4.11 CURRENCY CONVERSION
If the Territory includes any country outside the United States of
America, all Net Sales resulting from sales of the Product in countries
other than the United States of America will be converted into United
States dollars for purposes of calculating royalties owed under this
Article 4, by using the arithmetic average of the currency exchange
rates quoted on each of the last ten (10) Business Days during the
applicable Royalty Period in the Wall Street Journal (East Coast
Edition). All payments by Vivus hereunder shall be made in US dollars.
4.12 WITHHOLDING TAXES
If any taxes, withholding or otherwise, are levied by any taxing
authority in connection with the accrual or payment of royalties or
other amounts payable under this Agreement and are obliged to be paid
or deducted by Vivus then:
(a) Vivus will pay such taxes to such taxing authority on behalf of
FemPharm; and
(b) Vivus will remit to FemPharm in full satisfaction of its royalty
obligations under this Agreement the net amount after reduction
by the amount of such taxes; and
(c) Vivus will deliver to FemPharm promptly following payment written
evidence of such payment and such other related documentation
that FemPharm may reasonably require.
5. CLINICAL DEVELOPMENT
--------------------------------------------------------------------------------
5.1 OVERVIEW OF DEVELOPMENT
The Parties intend to work cooperatively to pursue development of the
Product in order to obtain regulatory approval for the use of the
Product in the Field in the
24
Territory, using commercially reasonable, diligent efforts in
accordance with and subject to the terms of this Agreement.
5.2 TRANSFER OF TECHNICAL INFORMATION
Within sixty (60) days after the Effective Date, FemPharm shall
transfer to Vivus without charge copies of all existing Licensed
Know-How, including (to the extent existing) (i) copies of all
Regulatory Materials and other Know-How developed or acquired in
connection with the Phase IIb Study, any preceding phase I or II study
on the Product, or any other clinical or pre-clinical development in
connection with, or directly applicable to, a Product in the Field,
whether developed or acquired by FemPharm, any Acrux Controlled
Affiliate, or others working under authority of such entities; and (ii)
copies of all material Know-How relating to or used in connection with,
or relevant to, the manufacturing of Products by FemPharm, any Acrux
Controlled Affiliate, or others, including, such Know-How as generated
or used during process development, stability studies, formulation
development, scale up of manufacturing, production of preclinical and
clinical product batches, validation studies, development of quality
assurance/quality control testing, process controls for Products in the
Field, and related regulatory affairs (all to the extent relating to
Products in the Field); and all Know-How contained in the DMF or in the
CMC section of any IND or NDA (or their counterparts in other
countries) with respect to Products in the Field. Thereafter during the
term of this Agreement, upon request of Vivus, FemPharm shall transfer
to Vivus without charge copies of all such previously undisclosed
Licensed Know-How, if any, including that developed or acquired after
the Effective Date, and shall use all reasonable efforts to enable and
assist Vivus in understanding and implementing the Licensed Know-How.
FemPharm and the Acrux Controlled Affiliates shall use good faith,
diligent efforts to obtain from each of their other licensees the right
to disclose to Vivus, its Affiliates and their sublicensees, Know-How
and Regulatory Materials that are relevant to, or useful for, Products.
In addition, if requested by Vivus and at Vivus' expense for actual
reasonable internal time of FemPharm or its Affiliate's time (billed at
(*)% the applicable employee's salary and benefits), FemPharm shall
generate and provide to Vivus reasonably promptly a report describing
in reasonable detail (according to an agreed format) all research and
development conducted or completed by or under authority of any of
FemPharm and the Acrux Controlled Affiliates, and the results thereof,
with respect to MDTS products involving the delivery of testosterone.
25
5.3 CONDUCT OF PHASE IIB STUDY
As from the Effective Date until the time of transfer of the Phase IIb
Study to Vivus pursuant to Section 5.4, FemPharm will, at its expense
(except as otherwise provided below), conduct the development of the
Product in such trial, in cooperation with and as reasonably directed
by Vivus. FemPharm shall consult with Vivus and keep Vivus fully
apprised of the status of, and plans and schedule for, all activities
related to the Phase IIb Study, including providing reasonable advance
notice, before proceeding with any filings, meetings, or telephone or
other discussions with the FDA or similar regulatory authority,
scheduled or unscheduled, that pertain to the Phase IIb Study, and
shall give Vivus control of such matters. Vivus will provide FemPharm
reasonable assistance and cooperation in conducting such trial, through
the time of transfer to Vivus, and such development work will be
managed and supervised by the Development Committee. If Vivus decides
to modify the Phase IIb Study, then Vivus will be responsible to pay
FemPharm, quarterly in advance, any extra costs that Vivus requires
FemPharm incur as a result of such modifications, including fully
burdened full time equivalent (FTE) labour costs of scientific,
clinical and management personnel at FemPharm and the Acrux Controlled
Affiliates that Vivus requires be added due to such modification, but
only for that portion of the FTE that is additional and required by
Vivus to be dedicated to performance of the Phase IIb Study. For
purposes of this Agreement, FemPharm's fully burdened FTE rates shall
be (*)% of the employee's salary and benefits (or in the case of a
contractor, (*)% of the cash compensation paid to the contractor),
calculated in accordance with reasonable accounting principles,
consistently applied and in accordance with a budget approved by the
Development Committee. Except to the extent otherwise expressly set
forth in this Agreement, however, FemPharm shall be solely responsible
for, and Vivus shall have no obligation to reimburse, the costs and
expenses (i) associated with completing the Phase IIb Study (as
currently planned), including for preparation of the final report and
analysis, and the report to be delivered to Vivus under Section 5.2,
(ii) for any adverse event reporting that FemPharm or an Acrux
Controlled Affiliate is required to perform, or (iii) associated
26
with FemPharm otherwise fulfilling its obligations under this
Agreement, or conducting or completing any other research, development,
or other work by or on behalf of any of FemPharm and the Acrux
Controlled Affiliates.
5.4 TRANSFER OF DEVELOPMENT RESPONSIBILITY
FemPharm will transfer and assign full regulatory and clinical
responsibility for the Product in the Field in the Territory, including
the IND, to Vivus, provided that the transition of the Phase IIb Study
shall be made promptly upon request by Vivus, according to a schedule
reasonably specified by Vivus. After full transfer of responsibility to
Vivus, FemPharm's involvement will be as set forth below.
5.5 DEVELOPMENT RESPONSIBILITIES
Other than FemPharm's conduct of the ongoing Phase IIb Study in
accordance with Section 5.3 and except as otherwise determined by the
Parties, Vivus will be solely responsible for conducting, at its own
expense, all activities relating to the clinical development,
regulatory approval and commercialization of the Product in the
Territory, using diligent, commercially reasonable efforts, provided
that both Parties will use such efforts to perform their
responsibilities to achieve the targets set forth in the Development
Plan. Vivus will pay to Fempharm, prior to the beginning of a calendar
quarter, an amount equal to the FemPharm expenses in the approved
budget in the Development Plan for such quarter, including payments to
third parties and fully burdened FTE costs of labour associated with
work at FemPharm and its Affiliates pursuant to this Agreement ((*)% of
salary and benefits, plus any out of pocket expenses provided for in
the Development Plan). FemPharm will maintain reasonably detailed
records of the time expended and work performed in the development and
will provide copies and a summery of such records, and a reconciliation
of expenditures, for each such quarter to Vivus within fifteen (15)
Business Days of the end of the quarter. The actual expenditure versus
budget for the previous quarter will be reconciled in the payment from
Vivus to Acrux for the following quarter or refunded to Vivus, as Vivus
requests. Vivus shall not be required to reimburse any cost or
expenses, other than those set forth in the Development Plan, except to
the extent approved by Vivus in advance in writing. Vivus shall not be
required to develop more than one Product at a time, and shall have no
obligation to develop another Product in the Territory after a
marketing approval of a Product in the Field has been obtained in the
Territory.
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5.6 DEVELOPMENT COMMITTEE
Within thirty (30) days of the Effective Date, the Parties will
establish a committee to review and discuss the development of the
Product (the "Development Committee"), comprising two (2) members of
FemPharm's (or the Acrux Controlled Affiliate's) staff nominated by
FemPharm and two (2) members of Vivus' staff nominated by Vivus. At
least one member appointed by each Party shall have appropriate
technical credentials, experience and knowledge and ongoing familiarity
with, in the case of Vivus, the development under this Agreement and,
in the case of FemPharm, any pre-clinical and clinical development of
Product by FemPharm or the Acrux Controlled Affiliate, as well as the
Licensed Intellectual Property and the development and use thereof. If
relevant Product development is being performed by an Acrux Controlled
Affiliate, then Vivus shall have the right to require that at least one
of FemPharm's members be an employee of the Acrux Controlled Affiliate
who is involved in such development or, in the alternative, to require
that such an employee otherwise attend the Development Committee
meetings. Each Party will give the other written notification
concerning its staff members who are nominated to serve on the
Development Committee. Subject to the foregoing, either Party may
replace any of its members on the Development Committee by written
notice. Additionally, Vivus shall be entitled to have representatives
of its sublicensees attend the meetings as it considers appropriate.
The Development Committee is responsible for review and approval of the
Development Planand is additionally intended to provide a forum to:
(a) Enable Vivus to obtain scientific, clinical and regulatory input
and data from FemPharm relating to development of the Product in
the Territory, including with respect to work that each Party has
performed in accordance with the Development Plan, and to keep
Vivus informed regarding the work of FemPharm and the Acrux
Controlled Affiliates related to Product;
(b) keep FemPharm reasonably apprised of the progress and results of,
and planned activities related to, development of Products in the
Field in the Territory under the Development Plan, sufficient for
FemPharm to understand
28
the general status of the development under the Development Plan
and nature of any significant issues that Vivus has encountered
that have caused Vivus to fail to meet the schedule targeted in
the Development Plan, and to review and approve, as appropriate,
the Development Plans proposed by Vivus;
(c) evaluate the markets of the Product for use in the Field in
relation to the development strategy for the Product, and adjust
the Development Plan appropriately based thereon; and
(d) ▇▇▇▇▇▇ a cooperative relationship between the Parties regarding
activities under this Agreement and the other activities of
FemPharm and the Acrux Controlled Affiliates with respect to
Product.
To the extent requested by the Steering Committee, the Development
Committee will keep the Steering Committee informed about the status of
the activities conducted by the Development Committee pursuant to this
Agreement. The Development Committee will refer all matters that are to
be decided by the Development Committee, but for which agreement cannot
be reached by the Development Committee, to the Steering Committee for
the Steering Committee's review and final decision on such matters. The
Development Committee will establish rules for its operation. After
marketing approval of a Product is obtained, the Development Committee
shall not be required to meet if there is no significant Product
development by Vivus to discuss at the applicable time.
5.7 DEVELOPMENT PLANS
The development of the Product will be conducted by the Parties, each
using diligent, commercially reasonable efforts to perform its
responsibilities set forth in the Development Plan. The Parties expect
that an initial Development Plan will be appended to the Agreement as
annexure A within one hundred eighty (180) days after the Effective
Date, reflecting the Parties' understanding and intent at such time of
the planned Product development activities in the Territory for the
remainder of then current calendar year (and if mutually desired at the
time, the following calendar year). The Development Plans proposed by
Vivus will be reviewed and approved by the Development Committee from
time to time as appropriate. On an annual basis
29
commencing in the final calendar year covered by the initial
Development Plan (no later than October 15 of each year), Vivus will
prepare and submit to the Development Committee for approval a
reasonably detailed Development Plan outlining development
responsibilities for the Product for the upcoming calendar year, it
being agreed that Vivus may propose updates and revisions to the
Development Plan more often as Vivus considers appropriate. After
reviewing the proposal and discussing the development efforts to date,
the Development Committee will consider changes to and amend the
Development Plan to reflect revised regulatory and development
activities designed to meet the goal of obtaining regulatory approval
for the Product in the Territory in a commercially reasonable time
frame based on the use of diligent, commercially reasonable efforts by
Vivus to perform the development. Notwithstanding the foregoing, no
Development Plan shall be required after marketing approval of a
Product is obtained except to the extent required by the Development
Committee.
5.8 BUDGETS
The Development Committee will prepare and include in the Development
Plans, a budget that sets forth the estimated costs and expenses
(including fully-burdened internal labor costs, as described in Section
5.5 above) that are budgeted to be incurred by FemPharm in conducting
its responsibilities, if any, for Product development under the
Development Plan. Each updated Development Plan will include an updated
budget for FemPharm's responsibilities, if any, to be approved by the
Development Committee. Vivus shall not be required to reimburse any
costs or expenses other than those budgeted, unless agreed in advance
in writing. Each Party shall bear its own costs and expenses associated
with Committee meetings.
5.9 STEERING COMMITTEE
Within thirty (30) days of the Effective Date, the Parties will
establish a steering committee (the "Steering Committee"), comprising
of one (1) member selected by FemPharm from its senior executives and
one (1) member selected by Vivus from its senior executives; each
having responsibility at the respective Party for development of
Product. Each Party will give the other written notification concerning
its executive nominated to serve on the Steering Committee. Either
Party may replace its
30
member on the Steering Committee with an equivalent senior executive by
providing written notice of the change to the other Party. A member of
the Steering Committee cannot simultaneously serve as a member of the
Development Committee. The Steering Committee will be responsible for
resolving issues upon which the Development Committee has been unable
to reach agreement and for serving as the initial means for discussing
and seeking to resolve any issues or disputes between the Parties
arising under this Agreement. Members of the Steering Committee will
consult with members of the Development Committee, as they consider
necessary, when resolving such issues and disputes and the decision of
the Steering Committee binds the Development Committee.
5.10 FINAL DECISION
If the Steering Committee has been unable to reach agreement on any
issue or matter after diligent discussions, or if such discussions have
not occurred due to unreasonable delay by FemPharm's representative,
then the issue will be referred to Vivus to determine the issue, except
as otherwise provided below. Vivus must consider the issue, having
considered the views put forward by the Development Committee and the
Steering Committee. Vivus' decision is final and binding on the Parties
and the Committees in respect of each such issue and matter, provided
that the foregoing does not permit Vivus to amend the terms of this
Agreement, or change the Outside Dates, or otherwise impose an
obligation on FemPharm, without FemPharm's written consent.
5.11 PROCEDURES OF COMMITTEES
Each Party will provide the other Party in writing with the name,
title, e-mail address, telephone number and facsimile number of its
nominees to each Committee. The Development Committee will meet
semi-annually during the term of the Development Plan, and more often
as mutually agreed. The Steering Committee will meet as needed to
resolve disputes and issues, promptly on the good faith request of
either Party. All Committee meetings will be at such times agreed to by
FemPharm and Vivus and will be in person or by telephone or video
conference.
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5.12 DECISIONS OF COMMITTEES
A quorum of the Development Committee at a meeting is two (2)
representatives of each Party present at such meeting in person or by
telephone or videoconference. A quorum of the Steering Committee at a
meeting is one (1) representative of each Party present at such meeting
in person or by telephone or videoconference. A unanimous vote of the
members of the Committee present (in person, by telephone or
videoconference) at such meeting is required to take any action on
behalf of the Committee. In particular, neither Committee may make a
binding decision unless a quorum is present. Each Party shall use best
efforts to cause a quorum to be present at each meeting. No decision of
a Committee shall be considered binding upon either Party, except to
the extent set forth in writing and signed by both Parties.
Notwithstanding anything to the contrary, no approval of the
Development Committee shall be required for the day to day development
activities, which shall be controlled by Vivus or its designee.
5.13 CHAIRPERSONS - DEVELOPMENT COMMITTEE
The chair of the Development Committee will be a Vivus member of the
Development Committee. Except to the extent otherwise approved by the
Development Committee, the chair will be responsible for preparing the
timetable for the meetings, and for preparing the agendas, minutes and
resolutions, communications with the Steering Committee and other
communications regarding tasks assigned by the Development Committee.
All drafts of minutes and resolutions must be approved by the members
of the Development Committee at the next meeting. The chair does not
have a second or deciding vote.
5.14 CHAIRPERSONS - STEERING COMMITTEE
The chair of the Steering Committee will be Vivus' member of the
Steering Committee. Except to the extent otherwise approved by the
Steering Committee, the chair will be responsible for preparing the
timetable for the meetings, and for preparing the agendas, minutes and
resolutions, communications with the Development Committee and other
communications regarding tasks assigned by the Steering Committee. All
drafts of minutes and resolutions must be approved by the members of
the Steering Committee at the next meeting. The chair does not have a
second or deciding vote.
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5.15 MINUTES AND REPORTS
Each Committee will be responsible for keeping accurate minutes of its
deliberations or discussions that record all proposed decisions and all
actions recommended or taken. The chair will provide the Parties with
the approved minutes of each meeting promptly after approval and, in
the case of the Development Committee, a written accompanying report
summarizing, in reasonable detail, the discussions of the Development
Committee concerning: the status of the Development Plan, of the work
and progress to date, any issues requiring resolution, and any
decisions by the Development Committee. All records made by each
Committee will be available to both Parties.
5.16 GLOBAL DEVELOPMENT COMMITTEE
At such time as any pre-clinical or clinical development is undertaken
by or under authority of FemPharm or any Acrux Controlled Affiliates
anywhere in the world (outside of the Territory) for a Product within
the Field, the Parties shall establish a joint committee among Vivus,
FemPharm (and/or the Acrux Controlled Affiliate, as the case may be)
and any Additional Partner(s) to discuss and coordinate such
development of such Product (the "Global Development Committee"). To
the extent there are no Additional Partners, and meetings of the
Development Committee are ongoing at the time, the function of the
Global Development Committee set forth in this Section 5.16 shall be
handled by the members of the Development Committee. The primary role
of such Global Development Committee shall be to provide a forum for
communication between Vivus, FemPharm (and/or an Acrux Controlled
Affiliate(s), as the case may be) and any Additional Partner(s) with
respect to activities related to the ongoing preclinical and clinical
development of Products in the Field, other than the work under the
Development Plan under this Agreement. FemPharm, the Acrux Controlled
Affiliates, Vivus, and each Additional Partner having rights to Product
in the Field shall each have at least two (2) representatives on such
Global Development Committee. Each member of the Global Development
Committee shall keep the other members fully informed in English
(subject to Section 5.17) as to the ongoing preclinical and clinical
development of, and regulatory activities with respect to, such
Products in the Field. It is understood and agreed, however, that
formal approval of such Global Development Committee shall not be
required for any such activities. The Global Development Committee
shall meet no less frequently than twice each calendar year, or as
otherwise agreed by the Parties, until the termination or expiration of
this Agreement and each of Vivus, FemPharm, Acrux Controlled
Affiliates, and any Additional Parties shall give a full report in
English (subject to
33
Section 5.17) at each such meeting of activities relating to the
particular Products to which such Party, the Controlled Affiliate,
Acrux Controlled Affiliate or Additional Partner has rights and that is
undergoing preclinical or clinical development in the Field. Additional
Partners will participate in such meeting only with respect to Products
for which they have rights in the Field.
5.17 NO OBLIGATION TO TRANSLATE
It is understood and agreed that any documents to be provided by
FemPharm, an Acrux Controlled Affiliate, Vivus, or Additional Partner
under Section 5.16 may be provided in the language in which such
documents exist, and FemPharm, the Acrux Controlled Affiliate, Vivus,
and the Additional Partners shall not be obligated to provide
translations of such documents (except to the extent such translation
has already been prepared).
5.18 INFORMATION AND RESULTS
Except as otherwise agreed by FemPharm in writing, Vivus shall make
available and disclose to FemPharm, no less often than once every six
(6) months, in the form selected by Vivus and reasonably acceptable to
Vivus, and to the extent not previously disclosed, all patient results
from Clinical Trials by Vivus or its Affiliate on Products under this
Agreement and all Regulatory Materials prepared by Vivus or its
Affiliate, including any NDA filed by Vivus or its Affiliate with the
FDA for a Product under this Agreement. It is understood that
inadvertent failure to disclose any of the foregoing information will
not be deemed a breach, provided that Vivus makes the disclosure of
such information promptly after becoming aware that such information
has not been disclosed. To the extent Vivus has the right to provide
such patient results from the Clinical Trials by its sublicensees on
Products under this
34
Agreement, Vivus will also make such results available in the manner
described above. Vivus agrees to use good faith, diligent efforts to
obtain such rights from its sublicensee. If the NDA is filed by a
sublicensee Vivus, Vivus will use good faith, diligent efforts to
obtain the right to disclose the NDA to FemPharm. As between Vivus and
FemPharm, each Party will own all results and data that it generates,
subject to any licenses granted under this Agreement to the other
Party. In particular, as between Vivus and FemPharm, Vivus will own all
clinical data and results of testing Product generated by Vivus under
this Agreement (the "Data"). FemPharm and its Affiliates have the right
to use all Data required to be delivered by Vivus solely in developing
and seeking regulatory approval of a Product in the Field in Australia
and New Zealand, and no Data, Regulatory Materials, or other Know-How
provided by Vivus shall be used for any other purpose, such as without
limitation for purposes of development or marketing approval for a
country other than New Zealand and Australia, except as otherwise
agreed by the Parties in a separate writing. Such Know-How will be
disclosed to licensees of FemPharm and the Acrux Controlled Affiliates
for Australia or New Zealand only to the extent the licensee provides
equivalent disclosure to Vivus and Vivus' sublicensees.
5.19 PRODUCT FAILURE
(a) Technology Failures. In the event the Product experiences
significant technical issues that arise out of or relate to the
MDTS system, including failure of the MDTS system to deliver
testosterone, or another Androgen added to the Field in
accordance with this Agreement, in a manner suitable for
development or commercialization of a Product in the Field and
Territory, inadequate physical or chemical stability of any
portion of the MDTS system, issues arising out of any Acrux
Penetration Enhancer or any other formulation developed by
FemPharm and used in an MDTS system, or other issues that
significantly impact the efficacy, toxicity, safety, or ability
to obtain approval, then, to the extent that Vivus reasonably
concludes that the issue would likely prevent the approval of the
Product in the Field and Territory by the FDA or other
appropriate regulatory authority or cause the Product to not be
commercially viable, Vivus shall have the right, subject to the
terms of Section 5.19(b) below, to select for addition to the
Field, and development and
36
commercialization in the Territory under this Agreement as an
alternate Product, an alternate Androgen (excluding any Androgen
(other than a Restricted Androgen) for which FemPharm or its
Affiliate has commenced Clinical Trials, or which FemPharm or its
Affiliate has licensed to a non-Affiliate third party in a fully
arms length transaction, in conformance with Section 2.5(b)) or
alternate configuration of the MDTS technology.
(b) Upon selection by Vivus of an alternate Product pursuant to
Section 5.19(a) above, development and commercialization of the
selected Product shall be in accordance with the terms of this
Agreement, including the same milestone payments and, if the
alternate Product is based upon another Androgen, no greater
royalties than those set forth in Article 4, except that (i)
Vivus shall not be required to pay under Section 3.2 any
milestone payments for achieving a milestone for which a
milestone payment previously was made for a Product, and (ii) the
Parties shall discuss in good faith and agree on new, appropriate
diligence milestones dates in Section 6.2 for such alternate
Product. If Vivus does not select such alternate Product within
90 days of Vivus concluding that the issue will prevent the
original Product from being approved or commercially viable, then
the Agreement shall terminate under Article 14, with the effects
of such termination being the same as if terminated by Vivus
under Section 14.3(d).
5.20 SUBCONTRACTS
Subject to the provisions of this Agreement, Vivus may subcontract to
third parties portions of the Development Plan to be performed by
Vivus, provided Vivus agrees to keep the Development Committee
reasonably informed of any contract research organizations or other
contractors hired by Vivus, and provided further that such
subcontractors are subject to confidentiality provisions consistent
with the terms of this Agreement, and that Vivus remains responsible
for all work performed by such subcontractors.
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5.21 CLINICAL PRODUCT SUPPLY
Except as otherwise provided in this Agreement, as between the Parties,
Vivus is solely responsible for all manufacturing of its requirements
of the Product for use in development throughout the Territory. Vivus
will use diligent, reasonable efforts to manufacture, or to have its
designee manufacture, sufficient quantities of the Product meeting all
applicable specifications and legal requirements in a timely manner for
use in conducting the development of the Product in the Territory
pursuant to the Development Plan.
6. DILIGENCE OBLIGATIONS
--------------------------------------------------------------------------------
6.1 PRODUCT DEVELOPMENT DILIGENCE OBLIGATIONS
Each Party will use diligent, commercially reasonable efforts to
perform all the tasks and responsibilities assigned to it in the
Development Plan in accordance with the development schedule set forth
in the Development Plan, in an effort to obtain all necessary
regulatory approvals in the Territory. If Vivus knows that it will be
unable to meet any timeline or milestone date set out in the
Development Plan, then it will bring the matter to the attention of
FemPharm at the next Development Committee meeting or, if Vivus
reasonably concludes that the delay is caused by a significant issue
that is likely, unless it can be addressed by additional work, to
prevent the Product from being approved by the FDA, as soon as
reasonably practicable. The Development Committee will discuss in good
faith the causes of any such delays and Vivus' suggested courses of
action to complete the subject tasks and determine whether to return
the Product development program to the schedule in the Development Plan
or to reasonably adjust the schedule. In such process, the Development
Committee shall extend reasonably the timeline or milestone dates in
the Development Plan unless the delay was a result of a material breach
by Vivus of its obligation to use diligent, commercially reasonable
efforts in the development of the Product.
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6.2 DILIGENCE PAYMENT FOR DEVELOPMENT DELAYS
If Vivus (including its Affiliates and sub-licensees) does not achieve
the milestone event listed in Section 3.2(e) by its Outside Date (as
defined below), or the milestone event listed in Section 3.2(f) by its
Outside Date, then within ten (10) Business Days after the end of each
full month of delay after the applicable Outside Date, Vivus will pay
to FemPharm (*) percent (* %) of the milestone payment associated with
the delayed event, until the corresponding milestone payment is paid in
full, either as a result of meeting the milestone or as a result of
such diligence payments. As used herein, "Outside Date" means (i) with
respect to the Section 3.2(e) milestone (*); and (ii) with respect to
the Section 3.2(f) milestone, (*). To the extent any diligence payments
are made under this Section 6.2, and the milestone is achieved before
the corresponding milestone payment has been paid in full, then upon
achieving the milestone Vivus shall pay the amount of the milestone
payment, reduced by the amount of payments for that milestone made
under this Section 6.2. If the Section 3.2(e) or 3.2(f) milestone
payment is paid in full as a result of this Section 6.2, then such
payment will be deemed to satisfy the payment obligation under Section
3.2(e) or 3.2(f), as the case may be, and no further payment shall be
due or payable as a result of completion of the particular milestone by
any Product. However, if Vivus' inability to meet a milestone event by
the applicable Outside Date is caused by delays outside of Vivus'
reasonable control, that are circumstances described in subsection
(a)-(d) below, then the Parties will meet and agree on reasonable
adjustment to the applicable Outside Dates to accommodate such delays,
provided that Vivus has used diligent, commercially reasonable efforts
to meet the milestone events. The fact that payments become due or
payable under this Section 6.2 shall not, itself, necessarily mean or
suggest that there has been a lack of diligence by Vivus. For purposes
of this Section 6.2, delays due to the following matters will be
considered outside of Vivus' control:
(a) a change in the specifications of the Product, or in the planned
development of the Product, required by the FDA or other
regulatory authority due to the medical, regulatory or scientific
attributes of the Product, that necessitates additional
development effort beyond that set forth in the Development Plan
or contemplated when establishing the schedule in the Development
Plan;
38
(b) other delays in development caused by the FDA, or other
regulatory authority, that were reasonably unanticipated by
Vivus; or
(c) delays caused by FemPharm not conducting its responsibilities as
set out in the Development Plan in a timely manner.
(d) Additional clinical development work required to be conducted due
to failure of the studies conducted under the Development Plan to
show sufficient levels of efficacy or safety, or the data is
otherwise equivocal.
6.3 REVERSION FOR FAILURE OF DILIGENCE.
If at any time prior to achieving regulatory approval of the Product
Vivus fails to use, and/or to continue using, diligent, commercially
reasonable efforts to develop the Product in the Territory during the
term of the Agreement, then FemPharm may give Vivus written notice of
such failure of diligence. If Vivus does not commence within ninety
(90) days of such notice using diligent, commercially reasonable
efforts to develop Product in the Territory, then FemPharm may no later
than ninety (90) days after such failure provide the notice of
termination of this Agreement, including the license and other rights
granted to Vivus, under Section 14.2(a), but only if such failure
constitutes a material breach of this Agreement by Vivus, and subject
to Section 15.10.
7. REGULATORY MATTERS
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7.1 REGULATORY MATERIALS
(a) Vivus is solely responsible for preparing and filing all
Regulatory Materials for the development of the Product in the
Territory except as otherwise set forth in this Agreement,
including carrying out all registration and approval procedures
necessary to comply with all appropriate laws and regulations
relating to the manufacture, packaging, import, promotion,
advertising and sale of the Product in the Territory. All costs
incurred by Vivus with respect to such registrations and
approvals will be borne by Vivus. FemPharm has the right to
review and comment on all such Regulatory Materials prepared by
Vivus, including application for registration and regulatory
approval, (to the
39
extent disclosure of same does not violate confidentiality
obligations) and to the extent reasonably practicable Vivus will
consider all such comments provided to Vivus in advance of
filing. Vivus will use good faith efforts to obtain for FemPharm
the right to so comment on Regulatory Materials from Product of
Vivus' sublicensees under the Licensed Intellectual Property.
Similarly, Vivus has the right to review and comment on all
Regulatory Materials for Product developed by or under authority
of FemPharm or an Acrux Controlled Affiliate in the Field outside
the Territory (to the extent disclosure of same does not violate
confidentiality obligations, subject to the following), and
FemPharm, the Acrux Controlled Affiliate, or licensee, as the
case may be, shall provide Vivus with a reasonable opportunity to
provide comments and consider all of Vivus' comments provided to
FemPharm in advance of filing to the extent reasonably
practicable.
(b) FemPharm and its Affiliates and licensees (subject to the last
sentence of Section 5.18) have a right of reference (at no cost
to them) to the NDA and other Regulatory Materials filed by Vivus
for the Product in the Field and Territory, which right of
reference shall be solely for Australia and New Zealand as part
of the development, approval and commercialisation of the Product
in the Field for such countries, and such Regulatory Materials
shall not be referenced by or under authority of FemPharm or any
Acrux Controlled Affiliate for any other country or Product.
FemPharm is solely responsible for carrying out all of its
registration and approval procedures necessary to comply with all
appropriate laws and regulations relating to the manufacture,
packaging, import, promotion, advertising and sale of such
Product in the Field in Australia and New Zealand. Without
limiting the other terms of this Agreement, each Party will
provide the other Party (at no cost to such other Party) with
reasonable telephone support to respond to such other Party's
questions regarding the Regulatory Materials and supporting
materials that it is required to disclose under this Agreement.
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7.2 RELATIONSHIP WITH REGULATORY AUTHORITIES
Vivus, as the sponsor of the Regulatory Materials for the Product in
the Territory, has sole responsibility for interacting with all
regulatory authorities in the Territory with respect to the Product in
the Field, including meetings with such regulatory authorities, and
responding to inquiries of and conducting other communications with
such regulatory authorities, with regard to such Regulatory Materials
or the Product. Vivus has sole authority and responsibility for all
regulatory obligations regarding the Product in the Field in the
Territory, including, but not limited to, the regulatory approval
applications and registrations and related materials, all promotional
materials, Product labeling, responding to medical inquiries, and
Product complaints relating to the Territory, except as otherwise
provided in this Agreement or the Development Plan, or determined by
the Development Committee. Similarly, FemPharm, as the sponsor of its
Regulatory Materials for the Product in the Field in Australia and New
Zealand, has sole responsibility for interacting with all regulatory
authorities in Australia and New Zealand with respect to its
development of such Product in the Field for such countries, and for
all such other regulatory obligations in its development of the Product
in Australia and New Zealand. Each Party will provide the other Party
with reasonable advance notice of, and any preparatory material for,
any hearing before, or meeting with, any regulatory authority regarding
the Product in such Party's territory (I.E., the Territory in the case
of Vivus, and Australia and New Zealand in the case of FemPharm), and
such other Party has the right to have two (2) of its employees attend
such hearings or meetings at its own cost, to the extent the Party
responsible for the meeting has the right to include them and is
reasonably practicable under the circumstances. All such materials, and
information learned in connection with such meeting or hearings, shall
be treated as the Confidential Information of the Party disclosing the
materials or conducting the meeting.
7.3 ADVERSE EVENTS AND COMPLAINTS REPORTING
The Parties agree that appropriate reporting of adverse events and
other safety data relating to the Product is critical. Specific details
regarding the management of information of adverse events, medical
inquiries and Product complaints related to the
41
use of the Product in the Territory and outside will be delineated in a
separate document, to be agreed to by the Parties within ninety (90)
days after the Effective Date. The pharmacovigilance and product
labeling representatives of each Party will work in good faith together
to develop a document that identifies:
(a) which safety information will be exchanged;
(b) when such information will be exchanged;
(c) how the global safety database will be established;
(d) which Party will be obligated to obtain follow-up information on
incomplete safety reports;
(e) which Party will review the literature for safety report
information;
(f) which Party will prepare required periodic safety updates; and
(g) the identification of any other details required to appropriately
manage safety information for the Product.
Subject to any specific details of the above document, it is expected
that Vivus will be responsible for pharmacovigilance, adverse reaction
reporting and related matters for Products inside the Field in the
Territory, and that FemPharm shall be responsible for
pharmacovigilance, adverse reaction reporting and related matters for
Products in the Field in all countries outside of the Territory. The
Parties also agree to use good faith, reasonable efforts to reach
agreement with any of their respective licensees (or sublicensees, as
applicable) of Products in the Field to include such entities in the
pharmacoviligance and related safety and adverse event reporting
document discussed above.
8. PRODUCT COMMERCIALIZATION
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8.1 OVERVIEW
42
Vivus has the exclusive rights, subject to the terms of this Agreement,
to promote, market, distribute and sell Product for use in the Field
throughout the Territory, itself and/or through its Affiliates and
sub-licensees.
8.2 COMMERCIALIZATION OBLIGATIONS
Vivus hereby covenants and agrees with FemPharm, during the term of
this Agreement commencing with regulatory approval of the NDA for the
Product by the FDA in the Field and Territory (permitting marketing of
the Product in the Territory), to:
(a) actively and diligently promote the sale of the Product using
commercially reasonable efforts in the Territory;
(b) not, and to require that its Controlled Affiliates and
sub-licensees do not, sell the Product licensed hereunder outside
the Territory nor sell such Product to any person which it knows,
or for which it has been provided reasonable documentation, is
selling such Product outside the Territory, each to the extent
set forth in Section 2.6; and
(c) provide for and maintain, or cause to be provided for and
maintained, a sales organisation and a marketing program
reasonably adequate and competent to promote, stimulate interest
in, and sell the Product effectively in the Territory, for a
commercially reasonable period of time after commercial launch.
Additionally, each Party hereby covenants and agrees, during the term of this
Agreement, to:
(1) use reasonable efforts to comply with all governmental and
municipal laws, regulations and requirements relating to the
manufacture, packaging, promotion, advertising, distribution and
sale of the Product;
(2) take out and maintain at its cost during the term of this
Agreement and for a reasonable period of time thereafter whilst
any liability may occur to such Party as a result of its
distribution of the Product, product liability insurance in the
name of such Party in respect of the manufacture, distribution,
sale, use and consumption of the Product by such Party for an
amount consistent with
43
industry standard practices and will duly and punctually pay all
premiums in respect of such insurance and provide evidence of
such insurance and payment of premiums to the other Party when so
requested; and
(3) not make any fraudulent misrepresentations in respect of the
quality or contents of the Product.
8.3 COMMERCIALIZATION PLANS
No later than twelve (12) months prior to the expected launch of First
Commercial Sales of the Product in the Territory, Vivus will provide to
FemPharm a commercial launch plan (the "Commercial Launch Plan"), which
will set forth in reasonable detail Vivus' actual plan and budget for
the launch and initial marketing and promotion of the Product,
including the trademarks to be used in such marketing. Such Commercial
Launch Plan will include non-binding sales projections for the Product
for at least two years from the planned First Commercial Sale. The form
of the Commercial Launch Plan and the amount of detail included will be
as established by the Steering Committee. For each full calendar after
the First Commercial Sale, Vivus agrees to provide FemPharm, no later
than February 1 of such calendar year, a report that describes in
reasonable detail the marketing activities planned to be conducted by
Vivus (or its Affiliate) for the Territory during the calendar year,
and that sets forth the actual IMS (or related source) audited
marketing data showing the actual marketing and promotional activities
that were conducted by Vivus (or its Affiliate or licensee) in the
Territory for the Product during the previous calendar year.
8.4 LAUNCH DILIGENCE
Vivus (or its Affiliate or sub-licensee) will use diligent,
commercially reasonable efforts to launch the Product for commercial
sale in the Field in the Territory within six (6) months of obtaining
regulatory approval of the Product in the Territory, and will expend
such efforts and resources in launching and initial promotion and
marketing of the Product in the Territory as are commercially
reasonable.
44
8.5 MANUFACTURE IN TERRITORY
Vivus is solely responsible for all manufacturing of its requirements
of the Product for sale in the Field in the Territory. Vivus will use
diligent, commercially reasonable efforts to meet market demand for the
Product in the Territory.
8.6 SUPPLY OF PRODUCT TO FEMPHARM
Vivus will agree to supply to FemPharm needed amounts of the Product
(in final finished and packaged form, according to the specifications
of Vivus in the Territory) for use by FemPharm in developing and
commercializing Product in the Field in Australia and New Zealand under
a mutually acceptable supply agreement on terms that are customary and
reasonable. Such Product supplied by Vivus shall be used solely for
FemPharm to develop and sell the Product in the Field in New Zealand
and Australia. Vivus shall have no obligation to supply any Product
other than that being developed or commercialized by Vivus under this
Agreement at the then current time. The transfer price for such Product
shall be (i) (*) percent (* %) above Vivus' actual purchase price if
such Product is purchased by Vivus from a contract manufacturer; and
(ii) (*) percent (* %) above Vivus' fully burdened manufacturing costs,
as determined consistent with Vivus' standard practices applied
consistently across all its operations, if Vivus manufactures the
Product. Notwithstanding the foregoing, Vivus shall have no obligation
to negotiate under this Section 8.6 until after (*).
9. SUB-LICENSING AND ASSIGNMENT
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9.1 SUB-LICENSE
Vivus has the right to grant and authorize sub-licenses, under the
rights granted to it in this Agreement, to Affiliates of Vivus and to
other third parties, without consent, BUT PROVIDED THAT prior to
granting a sub-license to a third Party Vivus shall have disclosed the
identity of the proposed third party to FemPharm and shall discuss and
consider in good faith any reasonable concerns FemPharm may have with
regard to granting a sublicense to such third party, and shall consider
in good faith FemPharm's suggestions to address any of its reasonable
concerns. Vivus is responsible for the actions of any such
sub-licensee, and if such sub-licensee breaches any Vivus obligation
under the Agreement, such breach will be deemed a breach by Vivus.
45
9.2 VIVUS BOUND
In the case of sub-licensing, Vivus remains bound by this Agreement and
responsible for performing, or having its sub-licensee perform, all its
obligations hereunder, subject to Section 9.1 above. Subject only to
Section 5.20 and 9.1, however, nothing shall prevent Vivus from relying
upon the performance and efforts of its sublicensees and contractors
for purposes of satisfying its obligations under this Agreement,
including under Articles 7 and 8, notwithstanding anything to the
contrary, such as language in Sections 5.5, 5.21, 7.1(a), 7.2, and 8.5
that indicates that Vivus shall have sole responsibility.
9.3 ASSIGNMENT
Each Party is entitled to assign and otherwise transfer without consent
all its right, title and interest in this Agreement, including its
obligations, to any other Person that acquires all or substantially all
of such Party's business or assets, whether by asset purchase, merger,
acquisition or other similar transaction, PROVIDED THAT such Person
agrees in writing to be bound by the terms hereof as the successor in
interest or assignee. Any other attempt to transfer or assign shall be
void without the prior written consent of the other Party. If a Party
is acquired by another corporation or other entity that was not its
Affiliate prior to the acquisition, then no Intellectual Property
rights of the acquiring entity developed prior to the acquisition, or
developed thereafter without using the Licensed Technology, shall be
included in the rights licensed to the other Party under this
Agreement.
10. CONFIDENTIALITY
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10.1 RESTRICTIONS ON USE
Subject to the further provisions of this Article 10, each Party agrees
that it will keep all Confidential Information disclosed to it by the
other Party secret and confidential, and will not disclose it to any
third party, or use it for its own benefit or the benefit of
46
any third party, except that either Party may use and disclose the
other Party's Confidential Information:
(a) for the purposes of exercising the licenses and other rights
granted by this Agreement; or
(b) as otherwise permitted with the prior written consent of the
other Party.
Any disclosure authorized in accordance with the foregoing shall be
subject to reasonable confidentiality provisions materially as
protective of the Confidential Information as the terms of this
Agreement.
10.2 USE OF OWN INFORMATION
Except for Section 10.13, nothing in this Article 10 prevents a Party
from disclosing or dealing in its absolute discretion with any of its
own Confidential Information, provided that FemPharm will use
reasonable efforts to keep its Confidential Information relating to the
Product and the Field secret and confidential so as to avoid any
adverse affect on the value or protection of the Licensed Intellectual
Property to the extent relevant to the Field and the Territory and
further provided that such disclosure and dealing by FemPharm shall be
subject to the other terms of this Agreement, including Sections 2.1
and 10.13.
10.3 EXCEPTIONS TO CONFIDENTIALITY
The obligations of confidentiality and non-use as provided in Section
10.1 above do not extend to, and notwithstanding Section 1.1
Confidential Information shall not include, any particular information
or Know-How received by a Party that it can demonstrate by competent
evidence:
(a) was available to the public or otherwise in the public domain
prior to receipt by such Party, or subsequent to such receipt
becomes available to the public or part of the public domain,
other than as a result of a breach of this Agreement;
(b) was already known to the recipient Party by lawful means at the
time of receipt (including trade secrets and inventions not
disclosed in existing patent applications) other than directly or
indirectly from the other Party;
47
(c) was obtained by the recipient Party from a third party who has a
lawful right to disclose it, provided that the information has
not been obtained directly or indirectly from the other Party to
this Agreement and is not subject to an obligation of
confidentiality; or
(d) was independently developed by the receiving Party without use of
the other Party's Confidential Information.
10.4 EXCEPTIONS TO NON-DISCLOSURE
Notwithstanding the restrictions of Section 10.1, a Party may disclose
the Confidential Information of the other Party beyond the disclosure
authorized in Section 10.1, subject to compliance with the following
provisions of this Section 10.4, solely to the extent such disclosure:
(a) is to its professional advisors, and provided that such
disclosure is reasonably necessary or desirable and is subject to
reasonable confidentiality protections;
(b) is required by any court or other judicial or quasi-judicial
tribunal or any administrative or government body, or as is
required by law, provided that such disclosure is no more than is
necessary to avoid the imposition of a penalty for failing or
refusing to disclose the Confidential Information, and that the
Confidential Information is disclosed in such a way as to limit
as far as possible the disclosure of the Confidential
Information, and that such disclosing Party first complies with
Section 10.5; or
(c) as reasonably necessary in prosecuting or defending any
litigation or enforcing this Agreement, provided that such Party
has first notified the other Party giving full details of the
circumstances of the required disclosure and of the relevant
information to be disclosed and takes reasonable steps to
preserve the confidentiality of the information.
10.5 DISCLOSURE BY LAW
Before any disclosure in reliance on Section 10.4(b), the Party subject
to the disclosure obligation must, unless it is not practicable to do
so:
48
(a) immediately notify the other Party giving full details of the
circumstances of the required disclosure and of the relevant
information to be disclosed;
(b) to the maximum extent permitted by law give the other Party a
reasonable opportunity in a court of law or other appropriate
body to:
(i) challenge the proposed disclosure;
(ii) challenge the obligation of the Party or any other person to
make that disclosure; and/or
(iii) secure a protective order or other ruling limiting or
preventing the disclosure and/or to protect or preserve the
confidentiality of the relevant information; and
(c) take reasonable steps to preserve the confidentiality of the
information being disclosed and to comply with any such
protective order or ruling.
10.6 SCOPE OF CONFIDENTIALITY
In the case of uncertainty as to the confidentiality of any information
a Party must treat the information as Confidential Information until
such Party or the other Party confirms that the information is not
Confidential Information.
10.7 SECURITY OF INFORMATION
Each Party must use its reasonable endeavours to minimise the risk of
disclosure of any Confidential Information of the other Party, by
providing reasonable security of its premises, its records and
materials.
10.8 PERSONNEL CONFIDENTIALITY
Each Party agrees to procure written and signed confidentiality and
non-publication undertakings with respect to the Confidential
Information of the other Party, in terms materially as protective of
such other Party's Confidential Information as this Article 10, from
all employees, agents and contractors of such Party who have or are
likely to have access to Confidential Information of the other Party.
49
10.9 RETURN OF CONFIDENTIAL INFORMATION
Upon termination of this Agreement, each Party may by written notice to
the other Party demand the return of all tangible property comprising
Confidential Information provided by such Party, but only to the extent
set forth in Article 14 and provided that Vivus shall not be required
to return any product.
10.10 PUBLICATIONS
Neither Party shall make or authorize any oral public disclosure, or
any submission to any outside person for publication of an abstract or
manuscript, disclosing the Confidential Information of the other Party,
including any scientific data resulting from the other Party's
non-clinical development or clinical development under this Agreement,
in each case except to the extent approved in writing by such other
Party or as otherwise permitted in this Article 10.
10.11 OTHER RIGHTS
Nothing herein contained excludes the right of either Party at common
law or in equity to protect its Confidential Information by application
to any court for injunction or otherwise. Notwithstanding anything to
the contrary in this Article 10, the Parties agree that the use and
disclosure of concepts and information retained in the unaided memories
of individuals who had access to Know-How from the other Party shall
not be considered a breach of the terms of this Agreement. This Section
10.11 shall not be construed to grant any rights under any Patent in
such concepts.
10.12 USE OF OTHER PARTY'S NAME
Neither Party shall make any use of the other Party's name unless
approved by the other Party in writing, such approval not to be
unreasonably withheld, or in the circumstances set forth in Section
10.13.
10.13 PRESS RELEASES AND OTHER DISCLOSURES
The Parties will issue a joint press release, in the form attached as
annexure D, promptly after the Effective Date. The Parties agree that
no other publication or other public disclosure of the terms of this
Agreement will be made by a Party without the
50
consent of the other Party, (with failure to respond to any request for
consent beyond ten (10) days from the request to be deemed consent),
such consent not to be unreasonably withheld. Notwithstanding the
foregoing, a Party may make disclosures authorized pursuant to Section
10.10 and may disclose the terms of this Agreement:
(a) to the extent required by law or regulation or court order, or by
the rules of any stock exchange on which the stock or shares of
the Party or any of its Affiliates are listed or other government
body; and
(b) in confidence to its professional advisors, and its existing or
potential investors, acquirors, and merger partners on a need to
know basis under conditions which reasonably ensure the
confidentiality thereof;
(c) in confidence, pursuant to non-disclosure and non-use
restrictions at least as stringent as included in this Article
10, to other parties that have a need to know such information
for a purpose related to this Agreement;
(d) in connection with the enforcement of this Agreement or rights
under this Agreement;
(e) in confidence as is reasonable in connection with a merger,
acquisition of stock or assets, proposed merger or acquisition,
or the like;
(f) as advisable or required in connection with any government or
regulatory filings, including filings with the SEC; provided
however, prior to any such disclosure the non-disclosing Party
shall be allowed to review the proposed disclosure, and the
disclosing Party agrees to consider in good faith any proposed
revisions thereof provided to the disclosing Party within ten
(10) Business Days of the non-disclosing Party's receipt of the
proposed disclosure and the Party making such disclosure shall
seek confidential treatment for such disclosure as permitted by
applicable law in a similar manner to the actions it takes for
its other information of like kind.
51
11. INVENTIONS
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11.1 DISCLOSURE OF INVENTIONS
During the term of this Agreement, each Party will promptly disclose to
the other Party the Inventions invented jointly by employees of both
Parties and for which the disclosing Party desires to seek Patent
protection, and Vivus will promptly disclose to FemPharm all
Improvements, provided that Vivus shall not be considered in breach of
such disclosure obligation as a result of an inadvertent failure to
disclose an Invention so long as Vivus promptly discloses the
Improvement after discovering the failure to disclose.
11.2 OWNERSHIP OF INVENTIONS AND INTELLECTUAL PROPERTY RIGHTS
As between the Parties, each Party (or its Affiliate) will own the
entire right, title and interest in and to all the Inventions made by
such Party's (or its Affiliate's) employees or others acting on behalf
of such Party or Affiliate and all Intellectual Property rights in and
to such Inventions, subject only to the licenses and other rights (if
any) to the extent granted to the other Party thereto under this
Agreement.
11.3 JOINT INVENTIONS AND JOINT PATENTS
All right, title and interest in all Patents to the extent claiming
Inventions invented jointly by the employees of both Parties ("Joint
Inventions")will be owned jointly by FemPharm and Vivus (that is, each
Party having an equal and undivided interest therein). Patent filings
to the extent claiming a Joint Invention will be conducted as set out
in Section 12.2. Neither Party may assign its interest in any Joint
Patent unless notice of such transfer has been first given to the other
Party and the transferee agrees in writing to be bound by the terms of
this Agreement with respect to the interest so transferred and as
otherwise set forth in Section 9.3. Except as otherwise expressly
provided in this Agreement, neither Party shall have any obligation to
account to the other for profits, or to obtain any consent of the other
Party to license or exploit, Joint Inventions (whether or not patented)
or Joint Patent, by reason of joint ownership thereof, and each Party
hereby waives any right it may have under the laws of any jurisdiction
to require any such consent or accounting.
52
11.4 COOPERATION OF EMPLOYEES
Each Party represents and agrees that all employees acting on its
behalf in performing its obligations under this Agreement will be
obligated under a binding written agreement to assign to such Party, or
as such Party will direct, all inventions made or conceived by such
employee.
12. PATENTS AND INTELLECTUAL PROPERTY
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12.1 PATENT RIGHTS
All right, title and interest owned by a Party in Intellectual Property
will remain owned and retained exclusively by such Party, subject only
to the applicable license and other rights granted to Vivus and
FemPharm in this Agreement. FemPharm will have sole responsibility for
and control over, at its discretion, the filing, prosecution,
maintenance and enforcement of the FemPharm Patents, at FemPharm's
expense, except as otherwise provided below. FemPharm shall use
diligent commercially reasonable efforts to obtain and maintain at all
times broad Patent protection for the Products in the Field and
Territory under this Agreement, including by using reasonable efforts
to prepare, file, prosecute and maintain Patents as desirable for
Products in the Field and Territory and to pursue as appropriate
interferences, re-examinations, reissues, oppositions and similar
proceedings regarding the FemPharm Patents. During the term of this
Agreement and thereafter to the extent Vivus has surviving rights,
FemPharm will keep Vivus reasonably informed regarding the status,
preparation, filing, prosecution and maintenance of all patent
applications and patents included or to be included in the FemPharm
Patents licensed to Vivus pursuant to Section 2.1 (including inventions
for which Vivus may desire to have a Patent application filed), and
without limiting the foregoing will reasonably consider, and give Vivus
a reasonable opportunity to provide, comments on such preparation,
filing, prosecution, or maintenance efforts that relate to Product, the
Field or the Territory. FemPharm may elect to cease preparing, filing,
prosecuting or maintaining any particular FemPharm Patent, or to cease
diligently pursue any interferences, re-examinations, reissues,
oppositions or similar proceeding relating to a particular FemPharm
Patent, but only to the extent that FemPharm has provided to Vivus, as
far
53
in advance as practicable, written notice describing its intent and, to
the extent desired by Vivus, has reasonably transitioned the
preparation, filing, prosecution, and maintenance to Vivus without
prejudice to Vivus' rights under this Agreement. If Vivus then
undertakes such activities, Vivus shall bear all of its actual out of
pocket costs and expenses incurred in such activities, and may credit
against amounts subsequently owed to FemPharm under this Agreement any
such actual costs and expenses borne, subject to providing FemPharm
with receipts and invoices and other documents as is reasonable to
properly evidence the costs and expenses and payment thereof. FemPharm
shall use reasonable efforts to cooperate and provide such documents
and assistance as is reasonably requested, in connection with such
activities by or under authority of Vivus.
12.2 JOINT PATENT RIGHTS
As to each Joint Invention, the Parties will discuss and reasonably
agree on whether and where to file a Joint Patent claiming the Joint
Invention, and on which Party shall assume responsibility for the
preparation, filing, prosecution and maintenance of such Joint Patents,
in each country in the world for which prosecution of the Joint Patent
is desired by a Party. The Parties will share equally in the expenses
of such activities related to Joint Patents. Each Party will reimburse
the other for its share of such expenses borne by the other Party upon
written request, no less frequently than quarterly and shall cooperate
and provide such documents and assistance as is reasonably requested in
connection with such activities. Each Party will keep the other
reasonably informed of, and consult with the other Party with respect
to, all significant actions in the course of such Party's prosecution
of the Joint Patents. If the Party having responsibility for
prosecuting a particular Joint Patent elects not to assume or continue
such responsibility, the other Party will have the right, but not the
obligation, to do so. If either Party elects not to continue to support
prosecution or maintenance of a particular Joint Patent, it may do so
on written notice to the other Party, and in such case it will assign
its entire interest in such Joint Patent to the other Party if such
other Party elects to prosecute and maintain such Joint Patent at its
sole expense; subject to any licenses and exclusivity in this
Agreement. Upon any such assignment, the Party that elected to
discontinue its involvement, and assign its interest, shall not be
required to bear any expenses under this Section 12.2.
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12.3 FEMPHARM PATENT PROCEEDINGS
Each Party will promptly notify the other of any legal proceedings,
including opposition or declaration of invalidity proceedings,
initiated or pursued by any third party against any of the FemPharm
Patents. FemPharm has the sole right and authority to defend against
any such proceedings, including defending against any defenses or
counterclaims of invalidity or unenforceability (including such
counterclaims as may arise out of an infringement claim under Section
12.4). For clarity, all infringement actions involving a Field
Infringement (as defined in Section 12.4) shall be pursued under
Section 12.4, and FemPharm shall have the right to control only the
defense of the FemPharm Patents in such Field Infringement actions in
the event that a defense or counterclaim is asserted against the
FemPharm Patents, shall use reasonable efforts, in such defense, not to
adversely impact the Field Infringement action by Vivus. FemPharm will
keep Vivus reasonably informed of the actions taken to defend the
FemPharm Patents and the progress of such actions. In such case, only
(*) % of FemPharm's costs and expenses of such involvement shall be
reimbursed out of the recovery in the Field Infringement action. Vivus
will provide FemPharm with reasonable assistance and cooperation in
such actions, at FemPharm's sole expense, in an effort to obtain a
successful resolution or termination of such proceedings or
counterclaims governed by this Section 12.3. Vivus will have the right
to have counsel of its choosing participate in any such defense of the
FemPharm patents, at its sole expense, subject to Section 12.4.
FemPharm will not settle any claim, suit or action involving FemPharm
Patents in any manner that would materially negatively impact upon the
FemPharm Patents, the Licensed Intellectual Property, or Vivus' rights
or exclusivity thereunder, or that would materially negatively impact
upon or limit or restrict the ability of Vivus to sell the Products in
the Territory.
12.4 INFRINGEMENT PROCEEDINGS IN THE FIELD
Each Party will promptly notify the other if it becomes aware that any
third party is infringing any FemPharm Patent in the Territory. If any
third party is infringing, or believed to be infringing any FemPharm
Patent in the Territory in connection with the exploitation, making,
use, import, offer for sale, or sale of a product in the Field in the
Territory (a "Field Infringement"), then the Parties will promptly
thereafter meet and discuss in good faith appropriate steps to take to
cause such Field Infringement to cease.
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(a) Vivus or its designee has the first right and authority, but not
the obligation, to take reasonable steps to cause termination of
such Field Infringement, which may include initiating a lawsuit
or other appropriate legal action, at its expense, as Vivus or
its designee reasonably determines is appropriate; provided that
Vivus agrees that it will not initiate a lawsuit asserting
infringement of the FemPharm Patents unless it has first
discussed the matter with FemPharm. Vivus will keep FemPharm
reasonably informed of the actions taken to cause termination of
a Field Infringement and the progress of any such actions
(including notifying FemPharm promptly if the third party raises
any defenses or counterclaims of invalidity or unenforceability
of any FemPharm Patents). FemPharm will provide Vivus or the
designee with reasonable assistance and cooperation in such
actions, at Vivus's or the designee's expense (other than as set
forth in Section 12.3), including joining such action as a party
plaintiff and taking such other actions as are required by
applicable law for Vivus or the designee to pursue such action.
FemPharm will have the right to have counsel of its choosing
participate in any such action, at its sole expense, provided
that Vivus will have the right to control the action. Vivus will
not settle any claim, suit or action that it brought under this
Section 12.4 involving FemPharm Patents in any manner that would
negatively impact upon the FemPharm Patents or the Licensed
Intellectual Property without FemPharm's consent, not to be
unreasonably withheld or delayed.
(b) If Vivus and its designees have not, within four (4) months of
request by FemPharm, initiated and pursued reasonable efforts to
cause such Field Infringement to cease, then each Party (and
Vivus' designees) shall thereafter have the right and authority,
but not the obligation, to take any such steps or actions at its
expense. Whichever of such parties first does so shall thereafter
control the action and the other Party will provide the
controlling Party (or designee) with reasonable assistance and
cooperation in such actions, at
56
expense of the controlling Party or designee (except as set forth
in Section 12.3), including joining such action as a party
plaintiff and taking such other actions as required by applicable
law to pursue such action.
(c) The Party bringing the suit, action or legal proceedings will:
(i) be reimbursed for its costs and expenses associated with
bringing the legal proceedings out of the proceeds of any
damages or costs recovered or as otherwise provided by
agreement between the Parties; and
(ii) indemnify the other Party against any liability awarded
against such other Party as a result of the subject matter
of such suit brought by the indemnifying Party, unless
caused by the acts or omissions of the indemnified Party.
(d) Any amounts remaining out of damages and costs and other amounts
recovered from a third party due to infringement of the FemPharm
Patents under a suit, action or legal proceeding brought against
a Field Infringement, will be retained by the Party that brought
the action as follows:
(i) if Vivus or its designee brought the action, then Vivus or
the designee, as the case may be, shall retain (*) percent
(* %) of the recovery and will pay the remaining (*) percent
(* %) to FemPharm; and
(ii) if FemPharm brought the action, the recovery shall be (*)%
to Vivus and (*) % to FemPharm.
12.5 OTHER INFRINGEMENT PROCEEDINGS
For clarity, FemPharm retains the sole and exclusive right to enforce
and defend the FemPharm Patents against all third party infringements
worldwide, except as otherwise provided in Section 12.4 with respect
solely to Field Infringement.
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13. REPRESENTATIONS AND WARRANTIES; DISCLAIMERS
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13.1 WARRANTY
Each Party, and each Acrux Controlled Affiliate, represents, warrants
and covenants that: (i) it has the legal power and authority to enter
into this Agreement and to perform all of its obligations hereunder;
(ii) it has and will have the right and authority to grant the rights
and licenses granted by it hereunder; (iii) this Agreement is a legal
and valid obligation binding upon it and enforceable in accordance with
its terms; (iv) it has not previously made, and during the term of this
Agreement will not make, any commitment or grant or authorization of
rights which are in conflict in any material way with, or that will
restrict or impair, the rights, licenses, or exclusivity granted to
Vivus herein.
13.2 ADDITIONAL WARRANTIES OF FEMPHARM AND THE ACRUX CONTROLLED AFFILIATES
Each of FemPharm and Acrux DDS Pty Limited represents, warrants, and
covenants as follows:
(a) it has not received notice that it has failed to comply with, and
it has not failed to comply with, any obligation, law, regulation, or
order in a manner that will materially adversely affect the rights
granted to Vivus under this Agreement;
(b) Annexure B sets forth a list of all FemPharm Patents (whether
issued or pending) owned by, or licensed to, any of FemPharm and the
Acrux Controlled Affiliates. Except for the Patents listed in Annexure
B, there are no Patents related to or useful for Products in the Field
that are owned by, or licensed to, FemPharm or any Acrux Controlled
Affiliate. All Patents in Annexure B are owned by FemPharm or an Acrux
Controlled Affiliate, except as expressly identified in Annexure B.
None of FemPharm and the Acrux Controlled Affiliates shall grant any
third party any license or rights under any Patent that is within the
FemPharm Patents that derogate from or reduce the license or rights
granted to Vivus under this Agreement;
(c) FemPharm has sufficient rights to the FemPharm Patents identified
in the annexure B for it to grant to Vivus the exclusive right (with
respect to all Persons) under such Intellectual Property, including the
right to grant and authorize
58
sublicenses, to exploit, import, export, make, have made, use, offer
for sale and sell Products for use in the Field in the Territory;
(d) as of the Effective Date: (i) the existing FemPharm Patents are in
full force and effect and not subject to any pending re-examination,
opposition, interference or claim of invalidity proceedings, none of
the Licensed Intellectual Property is subject to any litigation or
similar proceedings, and neither FemPharm nor any Acrux Controlled
Affiliate has knowledge of a third party threat of such a proceeding,
or of facts that likely would be the basis for instituting such
proceeding; (ii) none of FemPharm and the Acrux Controlled Affiliates
has reason to believe that any of the existing FemPharm Patents likely
will be invalid, unenforceable, or will fail to issue, or that the
claims of any pending FemPharm Patent likely will be materially limited
or restricted beyond the presently pending claims;
(e) as of the Effective Date, none of FemPharm and the Acrux Controlled
Affiliates is aware of any Person that is infringing a FemPharm Patent
in the Territory;
(f) FemPharm and/or one of the Acrux Controlled Affiliates have access
and rights to all Regulatory Materials filed by or under authority of
any of them with regulatory authorities, and the supporting raw data
for such materials, relevant to Product and may be useful to support
the development or marketing approval of the Product in the Field in
the Territory, and has the right to include the same within the
Know-how disclosed to Vivus hereunder;
(g) FemPharm has not knowingly failed to provide to Vivus any documents
or information requested by Vivus as part of its due diligence process,
and FemPharm and Acrux DDS Party Limited believe that FemPharm has
provided to Vivus, prior to the Effective Date, access to sufficient
Know-How Controlled by FemPharm or any Acrux Controlled Affiliate for
Vivus to conduct a reasonable and fully informed evaluation of the
Licensed Technology and the development status and results relating to
the current Product in deciding whether or not to enter into this
Agreement, including all adverse information and all relevant
agreements. None of the materials provided to Vivus by FemPharm or an
Acrux Controlled Affiliate prior to the Effective Date contained any
untrue statement of material fact, and to FemPharm's
59
and Acrux Controlled Affiliate's knowledge, none of FemPharm or any
Acrux Controlled Affiliate failed to disclose to Vivus, or concealed,
any material fact that would, absent such disclosure, make the
materials provided to Vivus materially misleading;
(h) as of the Effective Date, to each of FemPharm's and the Acrux
Controlled Affiliates' knowledge, none of FemPharm and the Acrux
Controlled Affiliates has made an untrue statement of a material fact,
or has failed to disclose a material fact, to any regulatory authority
with respect to the Product in the Field, or any portion thereof;
(i) Acrux DDS Pty Limited shall use diligent, commercially reasonable
efforts to (*). FemPharm and the Acrux Controlled Affiliates shall not
terminate, amend or modify the (*). FemPharm shall notify Vivus in
writing immediately if any of FemPharm, Acrux Limited or the Acrux
Controlled Affiliates receives from the licensor of any Licensed
Intellectual Property any notice of breach or termination, or any other
indication of a dispute or matter that could lead to breach or
termination, of the license agreement, or which could otherwise affect
Vivus' rights thereunder;
(j) FemPharm will not deliver to Vivus confidential or proprietary
Know-How of any third party unless FemPharm has the right to do so for
use and disclosure by Vivus in the manner set forth in this Agreement,
unless FemPharm expressly identifies at the time of such disclosure the
particular Know-How that FemPharm does not have the right to license to
Vivus hereunder;
(k) all employees, consultants, and other contractors of each of
FemPharm and the Acrux Controlled Affiliates performing work related to
or useful for any Product in the Field, including Monash, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, and Dr. ▇▇▇ ▇▇▇▇▇▇ in each case to
the extent acting as an employee, consultant, or contractor of FemPharm
or an Acrux Controlled Affiliate, have been and shall be subject to a
written agreement that vests in FemPharm or an Acrux Controlled
Affiliate all right, title, and interest in and to their work product,
including all associated Intellectual Property rights;
60
(l) none of this Agreement, or the exercise by or under authority of
Vivus of the license rights granted to Vivus under this Agreement, will
violate or otherwise be affected by any of the terms or conditions
imposed in connection any government funding or sponsorship obtained by
FemPharm or an Acrux Controlled Affiliate;
(m) FemPharm and the Acrux Controlled Affiliates are not aware, as of
the Effective Date, (1) of any Patent of any third party, including
Affiliates, that will be infringed by the manufacture, use import, or
sale of a Product in the Field in the Territory, or (2) that any
Licensed Know-How in any of their possession, and related to or useful
for Product, was misappropriated from a third party.
(n) none of the terms and conditions of the Monash License, including
Sections 6, 7, 8.1, 8.3, 12.2, and 19.1 of the Monash License, or the
Acrux DDS License bind Vivus;
(o) the FemPharm Patents are not subject to any lien or encumbrance (as
defined in the Monash License) that could materially limit or adversely
affect Vivus' rights granted under this Agreement;
(p) Acrux Limited is not controlled by any Person, and FemPharm and
Acrux DDS Pty Limited, and Cosmeceutical Solutions Pty Limited are the
only Affiliates of Acrux Limited that have any interest in (i) any
Licensed Intellectual Property, (ii) any Competitive Product or (iii)
any technology, product or Intellectual Property related to or useful
for the Product in the Field, the delivery of testosterone or other
Androgen's, or the delivery of a selective androgen receptor modulator,
to females, or any transdermal or mucosal delivery; and
(q) none of FemPharm and the Acrux Controlled Affiliates are currently
researching or developing, or have current plans to commence research
or development of, any MDTS product for the treatment of sexual
dysfunction in human females, other than the Product.
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13.3 ADDITIONAL WARRANTIES OF VIVUS
Vivus represents, warrants, and covenants to FemPharm that:
(a) Vivus has not received notice that it has failed to comply with,
and it has not failed to comply with, any obligation, law, regulation,
or order in a manner that will materially adversely affect the rights
granted to Vivus under this Agreement;
(b) Vivus has not knowingly failed to provide to FemPharm any documents
or information requested by FemPharm as part of its due diligence
process, or evaluation of whether or not to enter into this Agreement,
except as otherwise stated to FemPharm. None of the materials provided
to FemPharm by Vivus prior to the Effective Date contain any untrue
statement of material fact, and to Vivus' knowledge, Vivus has not
failed to disclose to FemPharm, or conceal, any material fact that
would, absent such disclosure, make the materials provided to FemPharm
materially misleading;
(c) Vivus will not deliver to FemPharm confidential or proprietary
Know-How of any third party unless Vivus has the right to do so for use
and disclosure by FemPharm in the manner set forth in this Agreement,
unless Vivus expressly identifies at the time of such disclosure the
particular Know-How that Vivus does not have the right to license to
FemPharm hereunder;
13.4 DISCLAIMER OF WARRANTIES
EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, VIVUS AND
FEMPHARM MAKE NO REPRESENTATIONS, WARRANTIES OR CONDITIONS OF ANY KIND,
EITHER EXPRESS, IMPLIED, STATUTORY, OR OTHERWISE, AND EACH PARTY HEREBY
DISCLAIMS ALL OTHER WARRANTIES, INCLUDING, BUT NOT LIMITED TO,
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
62
13.5 DISCLAIMER OF LIABILITY
EXCEPT WITH RESPECT TO A BREACH OF SECTIONS 2.5, 10, OR THE EXCLUSIVITY
IN SECTION 2.1(a), IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE
OTHER BASED UPON THIS AGREEMENT FOR ANY SPECIAL, CONSEQUENTIAL,
INDIRECT, OR INCIDENTAL DAMAGES ARISING OUT OF OR RELATED TO THIS
AGREEMENT, HOWEVER CAUSED, ON ANY THEORY OF LIABILITY AND WHETHER OR
NOT SUCH PARTY HAS BEEN ADVISED OR IS AWARE OF THE POSSIBILITY OF SUCH
DAMAGES.
14. TERM AND TERMINATION
--------------------------------------------------------------------------------
14.1 TERM
This Agreement will continue in full force and effect from the
Effective Date until expiration, unless earlier terminated pursuant to
Sections 5.19(b), 14.2, 14.3 or 14.8 below, on the date that Vivus no
longer has, and shall not have in the future, any payment obligations
to FemPharm under this Agreement. Upon such expiration, Vivus retains a
non-exclusive, fully-paid license in the Territory to continue to make,
have made, use, sell and otherwise exploit Products in the Field.
14.2 TERMINATION BY FEMPHARM
FemPharm is entitled by written notice to Vivus to terminate this
Agreement upon the happening of any of the following events, provided
that FemPharm provides Vivus with written notice of termination within
one hundred eighty (180) days after it becomes aware of the occurrence
of the applicable event:
(a) any material breach by Vivus of any of the terms and conditions
of this Agreement, where such breach is not fully cured and
rectified within ninety (90) days, or with respect to payment
obligations, within forty-five (45) days, after the giving of
written notice by FemPharm to Vivus specifying such breach and
requiring rectification thereof, provided that if such breach
(other than a payment breach) is not capable of cure within the
initial ninety (90) day period and Vivus is making diligent good
faith efforts to cure, then Vivus shall
63
have an additional ninety (90) days to cure such breach, and
subject to Section 15.10, and except as otherwise provided in
Section 14.7;
(b) a petition or other application or resolution being passed
against Vivus, or being presented by Vivus, in a bankruptcy
proceeding that requires the winding up, liquidation or
dissolution of Vivus or notice by Vivus of its intention to
propose such a resolution being given;
(c) the appointment of a receiver, or receiver and manager, for all
of Vivus's property in bankruptcy;
(d) if Vivus (or any of its Affiliates) bring any action, suit,
defense or counterclaim seeking to invalidate or have held
unenforceable: (i) any claim in any FemPharm Patent in
substantially the same form that the claim is issued or pending
on July 31, 2003 (an "Existing FP Claim"); or (ii) any claim in a
FemPharm Patent filed after July 31, 2003 that is substantially
the same as any such Existing FP Claim and that is entitled to an
effective filing date (e.g. as defined under 35 USCss.120) that
is the filing date of a FemPharm Patent filed prior to July 31,
2003.
14.3 TERMINATION BY VIVUS
Vivus is entitled by written notice to FemPharm to terminate this
Agreement upon the happening of any of the following events, provided
that Vivus provides FemPharm (except in case of subsection (d)) with
written notice of termination within one hundred eighty (180) days
after Vivus becomes aware of the occurrence of the applicable event:
(a) a material breach by FemPharm of any of the terms and conditions
under this Agreement or a material breach by an Acrux Controlled
Affiliate of its obligations, representations, or warranties in
this Agreement, where such breach is not fully cured or rectified
within ninety (90) days after the giving of written notice by
Vivus to FemPharm specifying such breach or non-observance and
requiring rectification thereof, provided that if such breach is
not capable of cure within the initial ninety (90) day period and
FemPharm
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and the Acrux Controlled Affiliates are making diligent good
faith efforts to cure, then FemPharm shall have an additional
ninety (90) days to cure such breach, and subject to Section
15.10;
(b) a petition or other application being presented or resolution
being passed by or against FemPharm, Acrux DDS Pty Ltd, or Acrux
Limited in a bankruptcy proceeding that requires the winding up,
liquidation or dissolution of the applicable entity, or notice by
such entity of its intention to propose such a resolution being
given;
(c) the appointment of a receiver, or receiver and manager, for all
of FemPharm's property in bankruptcy or the rejection of this
Agreement by any such receiver or manager;
(d) Vivus has provided sixty (60) days written notice that Vivus is
terminating the Agreement for its convenience; or
(e) if FemPharm (or any of its Affiliates) bring any action, suit,
defense or counterclaim seeking to invalidate or have held
unenforceable: (i) any claim in any Patent Controlled by Vivus or
its Affiliate in substantially the same form that the claim is
issued or pending on July 31, 2003 (an "Existing V Claim"); or
(ii) any claim in a Patent Controlled by Vivus or its Affiliate
filed after July 31, 2003 that is substantially the same as any
such Existing V Claim and that is entitled to an effective filing
date (e.g. as defined under 35 USCss.120) that is the filing date
of such a Patent filed prior to the July 31, 2003.
Further, in lieu of proceeding under Section 14.3(a), 14.3(b), 14.3(c)
or 14.3(e) based upon a particular event, Vivus shall have the right to
avail itself of the provisions of Section 14.6 based upon the event,
rather than terminating the Agreement in its entirety under Section
14.3(a), 14.3(b), 14.3(c), or 14.3(e), provided that proceeding under
Section 14.6 based upon an event shall not prevent Vivus from
proceeding under Section 14.3 with respect to any later event covered
by Section 14.3.
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14.4 NO RELEASE
Termination of this Agreement does not release either Party from any
liability that has accrued prior to such termination, or release either
Party from any obligation that survives termination of this Agreement.
14.5 CONSEQUENCES OF AGREEMENT TERMINATION
(a) The terms of this Section 14.5(a) shall apply upon termination
pursuant to Section 14.2 or Section 14.3(d), except if Vivus has
previously exercised its rights, under Section 14.3(a) or 14.6 to
terminate portions of this Agreement pursuant to Section 14.6 due
to uncured material breach.
(i) Section 2.1 of this Agreement shall automatically terminate,
and Section 2.3 shall survive, except rights under Section
2.3(b) shall survive to the extent set forth below.
(ii) Upon such termination, Vivus will be deemed automatically to
grant to FemPharm a perpetual, irrevocable, royalty-free,
fully paid, non-exclusive license (with full rights to
sublicense): (A) under the Improvement Blocking Patent
Rights to exploit, import, make, have made, use, offer for
sale and sell Products in the Field throughout the
Territory; and (B) under the Reversion IP to exploit,
import, make, have made, use, offer for sale and sell
Products in the Field in the Territory. As used herein,
"Reversion IP" means all trade secrets in the Improvements
to the extent Controlled by Vivus or its Controlled
Affiliate during the term and necessary or reasonably useful
for the development, manufacture or commercialization of
Products in the Field. Additionally, FemPharm shall have the
right under Section 2.3(b) to negotiate toward a
non-exclusive license under the Reversion IP for countries
outside of the Territory, New Zealand, and Australia,
provided that such license shall be royalty free if this
Agreement has been terminated by FemPharm under Section
14.2(a) for Vivus' material breach.
66
(iii) Upon such termination, Vivus will be deemed automatically
to grant to FemPharm the non-exclusive right to access, use
and cross reference all Regulatory Materials, including all
registrations and regulatory approvals, filed by Vivus with,
or obtained by Vivus from, the FDA in the development of
Products in the Field and Territory; provided that all
access, use or cross reference by and under authority of
FemPharm shall be solely for the purpose of development and
commercialization of Products in the Field in the Territory.
Additionally, the Parties agree that FemPharm's right to
negotiate under Section 2.3(b) toward a license under the
Reversion IP as set forth in Section 14.5(a)(ii) above
includes the right to negotiate toward rights to access, use
and cross-reference such Regulatory Materials for countries
outside the Territory, New Zealand, and Australia.
Notwithstanding anything to the contrary, except as
expressly set forth in this Section 14.5(a), no right,
license, or exclusivity to or under any Intellectual
Property is or shall be granted by Vivus or its Affiliates
and Vivus and its Affiliates shall maintain all right,
title, and interest in and to all Intellectual Property and
Know-How. Without limiting the foregoing, no right or
license is or shall be granted by Vivus or its Affiliates in
or to any trademarks, trade names, logos, or the like.
(iv) To the extent not previously disclosed by Vivus, Vivus will
use reasonable efforts for a period of 90 days after
termination of this Agreement to disclose and provide copies
to FemPharm of all the Data (as defined in Section 5.18)
generated by Vivus during the term of the Agreement that
Section 5.18 requires Vivus to disclose and provide copies
to FemPharm, and FemPharm (and its Affiliates and licensees)
shall have full rights to use such Data for developing and
exploiting Product in the Field to the extent that FemPharm
is licensed to do so, and is licensed to authorize its
Affiliates and sublicensees to do so, as set forth in
Sections 14.5(a)(ii) and 14.5(a)(iii) above, and provided
that such Data shall remain the Confidential Information of
Vivus and its Affiliate and sublicensee, as the case may be.
67
(v) To the extent provided for in any supply agreement between
Vivus and FemPharm pursuant to Section 8.6 above, Vivus will
continue to manufacture (or have manufactured) and supply to
FemPharm the Product covered by such agreement for use in
the Field and Territory until FemPharm is able to obtain its
own supply of its requirements of Products for use in the
Field and Territory (provided that such period shall not
exceed one (1) year) and will work cooperatively and
reasonably with FemPharm to achieve a smooth transition of
the manufacture of the Reverted Product to FemPham, and (if
applicable) to assist FemPharm in seeking to obtain a
manufacturing agreement with Vivus's contract manufacturer
of the Reverted Product on commercially reasonable terms,
provided that in each case such transition shall not impose
an unreasonable burden on Vivus.
(vi) Vivus shall, within thirty (30) days after termination,
return to FemPharm all Confidential Information delivered or
provided by FemPharm to Vivus; provided that Vivus shall be
entitled to keep a record copy of such Confidential
Information and shall not be required to return any product.
Article 10 shall survive termination (excluding the
obligation to issue a press release under Section 10.13),
but only for a period of five (5) years. Notwithstanding
termination of Vivus' rights, Vivus and its Affiliates and
sublicensees shall have the right to continue to market,
sell, offer to sell, and import any Product, in existence at
the time of termination, in the Territory for six (6) months
after termination PROVIDED THAT the terms of Article 4 will
survive and remain in force as to all such sales.
(vii) In the event an action under Section 12.4 was commenced
during the term of the Agreement and is ongoing at the time
of termination, Section 12.4 shall continue to apply to the
action in accordance with its terms, except that the Party
bringing the action for purposes of allocating any recovery
under Section 12.4(d) shall be deemed to be the Party
controlling the action at the time of termination. If
FemPharm assumes control of an action initiated by Vivus,
then
68
Section 12.4(c)(ii) shall apply as if FemPharm is the Party
bringing the action and all costs and expenses incurred by
Vivus in the action prior to the date of termination shall
be reimbursed out of any recovery before allocation under
Section 12.4(d).
(viii) Section 14.5(c) shall apply.
(b) Upon termination of this Agreement pursuant to Section 14.3
(other than 14.3(d)), or upon any termination (but not
expiration) of this Agreement after Vivus had previously
exercised its rights, under Section 14.3(a) or 14.6, to terminate
portions of this Agreement pursuant to Section 14.6 due to
uncured material breach, the terms of this Section 14.5(b) shall
apply.
(i) Section 2.1 of this Agreement shall automatically terminate.
Notwithstanding termination of Vivus' rights, Vivus and its
Affiliates and sublicensees shall have the right to continue
to market, sell, offer to sell, and import any Product, in
existence at the time of termination, in the Territory for
six (6) months after termination PROVIDED THAT the terms of
Article 4 will survive and remain in force as to all such
sales.
(ii) Section 2.3(b) shall automatically terminate.
(iii) Article 10 (excluding the obligation to issue a press
release under Section 10.13) shall survive such termination,
but only for a period of five (5) years.
(iv) Each Party shall, within thirty (30) days after termination,
return to the other Party all Confidential Information
delivered or provided by such other Party, except that it
may keep one copy of such information purely for archival
purposes and Vivus shall not be required to return Product.
(v) In the event an action under Section 12.4 was commenced
during the term of the Agreement and is ongoing at the time
of termination, Section 12.4 shall continue to apply to the
action in accordance with its terms, except that Vivus shall
be considered the Party bringing the
69
action for purposes of allocating any recovery under Section
12.4(d). If FemPharm assumes control of an action initiated
by Vivus, then Section 12.4(c)(ii) shall apply as if
FemPharm is the Party bringing the action and all costs and
expenses incurred by Vivus in the action prior to the date
of termination shall be reimbursed out of any recovery
before allocation under Section 12.4(d). For clarity, Vivus
shall have the right to continue to pursue any such action
commenced by Vivus to the extent desired.
(vi) Section 14.5(c) shall apply.
(c) In addition to survival as set forth in Sections 14.5(a) or
14.5(b) above, as applicable, Sections 1.1, 1.2, 4.9, 9.3, 11.1
(excluding Vivus' obligation to disclose Improvements), 11.2,
11.3, 12.2, 13.4, 13.5, 14.1, 14.4, and 14.5 will survive
termination of the Agreement for any reason and expiration of
this Agreement, except termination under Section 14.8. Article 15
shall survive any such termination and expiration of this
Agreement. Except as otherwise expressly set forth in this
Section 14.5 above or 14.8, all terms and conditions of this
Agreement shall terminate and have no further force or effect
upon any termination or expiration of this Agreement, even if
termination of the particular Article or Section is not expressly
referenced in this Section 14.5 or 14.8. For clarity, the
Development Plan shall be deemed terminated and of no further
force or effect upon any termination or expiration of this
Agreement. Notwithstanding anything to the contrary, no payment
shall be due or payable under Section 3 or 6.2 unless the payment
became due and payable prior to the date on which the notice of
termination was given.
14.6 VIVUS TERMINATION OF SPECIFIC PROVISIONS FOR UNCURED BREACH
If there occurs a material breach by FemPharm of any of the terms and
conditions under this Agreement, and such breach is not fully cured or
rectified within ninety (90) days after the giving of written notice by
Vivus to FemPharm specifying such breach or non-observance and
requiring rectification thereof, then, subject to Section 15.10, Vivus
may, as described in Section 14.3, (in lieu of proceeding under Section
14.3(a)), cause the following changes to occur under the Agreement:
70
(a) The following Sections of the Agreement shall automatically
terminate: 2.3(b), 2.6(b), 5.1, 5.3, 5.6, 5.7, 5.8, 5.9, 5.10,
5.11, 5.12, 5.13, 5.14, 5.15, 5.16 (but only to the extent
desired by Vivus), 5.18, 5.21, 7.1(b), 7.2 (except the first two
sentences), 8.2(b), 8.2(1), 8.2(2), 8.2(3), 8.3, 8.5, 14.2(d),
and 14.5(a). For clarity, all obligations of Vivus to pay
reimbursement shall terminate immediately. Vivus shall be
entitled to withhold consent to development in the Territory
under Section 2.1(c) for any reason or no reason..
(b) Section 8.6 shall terminate, except for the restrictions on
Product purchased from Vivus. The obligation to issue a press
release under Section 10.13, and the obligation of Vivus to
disclose Improvements under Section 11.1, shall terminate except
to the extent otherwise reasonably specified by Vivus.
Notwithstanding anything to the contrary, each of FemPharm and
the Acrux Controlled Affiliates shall, within thirty (30) days of
Vivus' request return to Vivus all Confidential Information
delivered or provided by Vivus, except that FemPharm may keep one
copy of such information purely for archival purposes.
(c) Notwithstanding this Section 14.6, Articles 3 and 4 shall survive
and remain in force. Section 12.4 shall continue to apply in
accordance with its terms, except that if FemPharm assumes
control of an action initiated by Vivus, then Section 12.4(c)(ii)
shall apply as if FemPharm is the Party bringing the action and
all costs and expenses incurred by Vivus in the action prior to
the date of Vivus relinquishing control shall be reimbursed out
of any recovery before allocation under Section 12.4(d). Section
7.1 shall terminate except for the first and last sentences of
Section 7.1(a) which shall survive. FemPharm and the Acrux
Controlled Affiliates shall cooperate in any reasonable manner
requested by Vivus to achieve a smooth transition to Vivus of any
and all Development Plan responsibilities of FemPharm.
(d) If Vivus elects to exercise its rights under this Section 14.6
due to an uncured material breach by FemPharm of its obligations
under Section 2.5(b), then Section 2.5(a) shall be deemed to
terminate unless Vivus achieves an injunction that enjoins
FemPharm from further violations of the terms of Section 2.5(b).
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14.7 LIMITATION OF TERMINATION FOR BREACH AFTER COMMERCIAL LAUNCH
Commencing upon the First Commercial Sale of a Product in the
Territory, but subject to Section 15.10, FemPharm shall have the right
to terminate the Agreement under Section 14.2(a) only for the following
uncured material breaches by Vivus:
(a) Material breach of the obligations in Section 8.2(a) or 8.2(c);
(b) Breach of the payment obligations under the Agreement, which
breach remains uncured one hundred twenty days after notice.
If Vivus materially breaches any other obligation under the Agreement,
and such breach would permit termination of the Agreement under Section
14.2(a) but for this Section 14.7, and such breach is not fully cured
or rectified within ninety (90) days after the giving of written notice
by FemPharm to Vivus specifying such breach or non-observance and
requiring rectification thereof, provided that if such breach (other
than a payment breach) is not capable of cure within the initial ninety
(90) day period and Vivus is making diligent good faith efforts to
cure, then Vivus shall have an additional ninety (90) days to cure such
breach, then (subject to Section 15.10) FemPharm shall have the right
to cause the following changes to the Agreement on written notice to
Vivus (but not to terminate the Agreement in its entirety):
(i) The following Sections of the Agreement shall automatically
terminate: 2.4, 2.7, 5.2, 5.18, and 5.19.
(ii) The penultimate sentence of Section 7.1(a) shall terminate.
The obligations of FemPharm in the penultimate sentence of
Section 7.2 shall terminate, and only the rights of FemPharm
under such sentence shall survive.
(iii) If FemPharm elects to exercise its rights under this
Section 14.7 due to an uncured material breach by Vivus of
its obligations under Section 2.5(a), then Section 2.5(b)
shall be deemed to terminate unless FemPharm achieves an
injunction that enjoins Vivus from further violations of the
terms of Section 2.5(a).
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14.8 TERMINATION FOR FAILURE TO ACHIEVE (*)
Vivus has the right to terminate this Agreement by providing written
notice thereof to FemPharm within thirty (30) days after the occurrence
of the following: Acrux DDS Pty Limited. has not (*) within (*) after
the Effective Date that (*). If Vivus terminates the Agreement under
this Section 14.8, then:
(a) FemPharm shall (*), and (*) Additionally, FemPharm and Acrux
Limited shall promptly (*) of this Section 14.8.
(b) In the event of termination under this Section 14.8, all terms
and conditions of this Agreement shall terminate and have no
further force or effect except that this Section 14.8 and
Articles and Sections 9.3, 10 (but only for five (5) years after
termination and excluding the obligation to issue a press release
under Section 10.13), 11.2, 11.3, 12.2, 13.4, 13.5, 14.4, 14.9,
and 15 shall survive. For clarity, all of Vivus' payment
obligations, including obligations to reimburse FemPharm, shall
terminate and have no further force or effect immediately upon
Vivus' notice. The Development Plan shall be deemed terminated
and of no further force or effect.
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14.9 REMEDIES
Termination of this Agreement as provided in Sections 5.19(b), 14.2,
14.3, and 14.8, and termination of certain provisions of this Agreement
as provided in Section 14.6 and 14.7, is a cumulative remedy, and each
Party will be entitled to seek any other rights or remedies available
to it at law or in equity for any breach or non-observance of this
Agreement.
15. GENERAL
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15.1 NOTICES
Any notice given pursuant to this Agreement must be in writing and may
be given by pre-paid express courier addressed to the other Party at
the address specified in this Agreement or as subsequently notified in
writing, or by hand delivery or facsimile or electronic transmission to
the same address and any such notice is deemed to have been received:
(a) if served by express courier on the date signed for;
(b) if served by hand delivery, on the date delivered by hand;
(c) if sent by facsimile transmission, when the transmitting machine
produces a written report that the notice has been effectively
sent to the other party, if the sender confirms such notice by
express courier or hand delivery;
(d) if sent by electronic transmission, when the transmitting
computer produces a written report that the notice has been
effectively sent to the other party, if the sender confirms such
notice by express courier or hand delivery;
If a notice is deemed under clause (c) or (d) to have been received on
a day which is not a Business Day, it is deemed to have been received
on the next Business Day.
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The address for service of any notice is:
To FemPharm
FemPharm Pty Ltd
▇▇▇-▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇
Facsimile:
Email:
with a copy to:
▇▇. ▇ ▇ ▇▇▇▇▇▇▇▇▇
Lander & ▇▇▇▇▇▇, Lawyers
▇▇▇▇▇ ▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇
Facsimile:
Email:
To Vivus
with a copy to:
Facsimile:
Email:
15.2 INDEMNIFICATION
(a) Vivus is responsible for, and will indemnify, hold harmless and
defend FemPharm, its Affiliates and their respective officers,
directors, employees and agents against any and all claims,
damages, losses, costs, expenses (including reasonable attorneys'
and professional fees and other expenses of litigation), and
liabilities, resulting from any third party claims, actions,
suits, or allegations ("Claims") to the extent the Claim results
from or arises out of: (a) the negligence, recklessness, or
willful misconduct of Vivus, its Controlled Affiliates, or its
sub-licensees, or their respective officers, directors,
employees, or agents; (b) Vivus's breach of its obligations,
representations or warranties under this Agreement; or (c) the
development, manufacture, promotion, use or sale of any Product
by Vivus, its Affiliate, or its sub-licensee, or by any of their
respective customers or end-users.
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Notwithstanding the foregoing, Vivus's obligations under this
Section 15.2 will not apply to any Claim, to the extent that such
Claim arises out of or results from (i) the development,
manufacture, use, promotion, and/or sale of any product or
technology (including Product) by FemPharm or its Affiliate or
licensee (other than Vivus, but including Product sold by Vivus
under any supply agreement with FemPharm or any Acrux Controlled
Affiliate), or any of their respective customers or end-users;
(ii) FemPharm's or an Acrux Controlled Affiliate's breach of its
obligations, representations, or warranties under this Agreement;
or (iii) the negligence, recklessness, or willful misconduct of
FemPharm, its Affiliates, or licensees (other than Vivus) or
their respective officers, directors, employees, or agents; or
(iv) claims of any participant in the Phase IIb Study or any
other Clinical Trials performed by or under authority of FemPharm
or an Acrux Controlled Affiliate.
(b) FemPharm and Acrux Limited shall be responsible for, and will
indemnify, hold harmless and defend Vivus, its Affiliates and
their respective officers, directors, employees and agents
against any and all claims, damages, losses, costs, expenses
(including reasonable attorneys' and professional fees and other
expenses of litigation), and liabilities, resulting from any
third party claims, actions, suits, or allegations ("Claims")
resulting from or arising out of: (i) the development,
manufacture, use, promotion, and/or sale of any product
(including Product) by FemPharm or an Acrux Controlled Affiliate
or their licensees (other than Vivus, but including Product sold
by Vivus under any supply agreement with FemPharm or any Acrux
Controlled Affiliate and including liability to patients in
connection with any Clinical Trials by FemPharm), or any of
FemPharm's or an Acrux Controlled Affiliate's or FemPharm
licensee's respective customers or end-users; (ii) FemPharm's or
an Acrux Controlled Affiliate's breach of its obligations,
representations, or warranties under this Agreement; or (iii) the
negligence, recklessness, or willful misconduct of FemPharm, an
Acrux Controlled Affiliate, or licensees (other than Vivus) or
their respective officers, directors, employees, or agents.
Notwithstanding the foregoing, FemPharm's and Acrux Limited's
obligations under this Section 15.2 will not apply to any Claim,
to the extent that such Claim is the subject of an
indemnification obligation under Section 15.2(a) above.
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(c) A Party that intends to claim indemnification under this Section
15 (the "Indemnitee") shall promptly notify the other Party (the
"Indemnitor") in writing of any Claim, in respect of which the
Indemnitee intends to claim such indemnification, and the
Indemnitor shall have sole control of the defense and/or
settlement thereof. The indemnity arrangement in this Section 15
shall not apply to amounts paid in settlement of any action with
respect to a Claim, if such settlement is effected without the
consent of the Indemnitor, which consent shall not be withheld
unreasonably. The failure to deliver written notice to the
Indemnitor within a reasonable time after the commencement of any
action with respect to a Claim, if prejudicial to its ability to
defend such action, shall relieve such Indemnitor of any
liability to the Indemnitee under this Section 15 but the
omission so to deliver written notice to the Indemnitor shall not
relieve the Indemnitor of any liability that it may have to any
Indemnitee otherwise than under this Section 15. The Indemnitee
under this Section 15, shall cooperate fully with the Indemnitor
and its legal representatives in the investigation of any action
with respect to a Claim covered by this indemnification, at the
Indemnitor's expense. Notwithstanding the foregoing, the
Indemnitor shall not be responsible for any costs or expenses
incurred by the Indemnitee or its Affiliate, or the directors,
officers, employees, successors or assigns of the Indemnitee or
its Affiliate, without the prior written consent of the
Indemnitor, not to be unreasonably withheld.
15.3 DAMAGES FOR BREACH OF REPRESENTATIONS AND WARRANTIES
Notwithstanding anything to the contrary, a breach of warranty under
this Agreement shall have the same effect as a breach of a covenant,
and each Party shall be entitled to recover for a breach of a warranty
by the other Party the same contractual damages as if such other Party
had breached a covenant, subject to Section 13.5.
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15.4 WAIVER
A waiver by any Party of any breach or a failure to enforce or to
insist upon the observance of a condition of this Agreement will not be
a waiver of any other or of any subsequent breach. No waiver under this
Agreement is binding unless in writing and signed by the Party giving
the waiver.
15.5 SEVERANCE
If any part of this Agreement is held to be invalid, unenforceable,
illegal, void or voidable for any reason, this Agreement will be
construed and be binding on the Parties to the maximum extent possible,
as if the invalid, unenforceable, illegal, void or voidable part had
been deleted from this Agreement or read down to the extent necessary
to overcome the difficulty.
15.6 SUCCESSORS AND ASSIGNS
This Agreement is binding on and continues for the benefit of each
Party, its successors and permitted assigns.
15.7 CONTINUING OBLIGATIONS
The expiration or termination of this Agreement does not operate to
terminate any of the surviving obligations under this Agreement, which
will remain in full force and effect and binding on the Party
concerned.
15.8 VARIATION
No variation, modification or amendment of this Agreement is binding on
the Parties unless in writing and signed by both Parties.
15.9 APPLICABLE LAW
This Agreement, and all disputes under Section 15.10, shall be governed
by and construed in accordance with the laws of California, USA, and
the Parties submit themselves to the non-exclusive jurisdiction of the
courts having San Francisco within their jurisdiction.
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15.10 DISPUTE RESOLUTION
If any claim, controversy, difference or dispute between the Parties
arises at any time under this Agreement, including as to its existence,
validity, interpretation, effect, breach or termination, (a "Dispute"),
then either Party may give the other a written notice of Dispute
reasonably identifying and providing a description of the Dispute.
Notwithstanding the existence of a Dispute, the Parties must continue
to perform this Agreement, unless the Agreement is terminated in
accordance with its terms. If there is a Dispute, however, regarding
whether or not a breach of this Agreement has occurred, then notice of
such a Dispute will toll the cure period, and the Agreement will remain
in effect until the Dispute is resolved. If such a Dispute is finally
resolved in favour of the Party giving notice of breach, then the
Agreement will terminate sixty (60) days after the final determination
is made unless the other Party cures the breach within such sixty (60)
day period. If a Party gives written notice of a Dispute, then senior
executive officers from both Parties will meet promptly thereafter and
negotiate in good faith to resolve the Dispute as quickly and cost
effectively as possible. If the Parties have not resolved the Dispute
within sixty (60) days of the date of the written notice of the
Dispute, then either Party may, by written notice to the other Party,
submit such Dispute to final and binding arbitration under the then
current Comprehensive Arbitration Rules and Procedures of the Judicial
Arbitration and Mediation Services ("JAMS"), except as such rules may
be modified in this agreement ("Rules"). The Parties agree that any
such Dispute will be settled by three (3) arbitrators which are
appointed within 90 days of service by one Party of a request for
arbitration on the other Party. Each Party will select one arbitrator,
and the third arbitrator will be appointed by JAMS, as provided in the
Rules. The arbitration proceedings will take place, and the
arbitrators' award will be rendered, in Honolulu, Hawaii or such other
location as may be agreed in writing by the Parties. The decision of
the arbitrators will be final and binding on the Parties. The
arbitrators will prepare and deliver to the Parties a written, reasoned
opinion conferring their decision. Judgment on the award so rendered
may be entered in any court having competent jurisdiction thereover.
Each Party may, without breach of this Section 15.10 or waiving any
remedy under this Agreement, seek from any court having jurisdiction
any injunctive or provisional relief necessary to protect the rights or
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property of that Party pending the arbitration award. Each Party shall
bear its own costs and expenses and attorneys' fees and an equal share
of the arbitrators' and any administrative fees of arbitration. The
Parties further agree that any payments made pursuant to this Agreement
pending resolution of the dispute shall be refunded if an arbitrator or
court determines that such payments are not due.
15.11 DISPUTE REGARDING LICENSE NECESSITY.
If FemPharm disputes, under Section 4.3, that a particular patent
license is "necessary" as defined in that Section, then the Parties
shall resolve such dispute by submitting such dispute for resolution to
a mutually agreed independent patent attorney with substantial
experience regarding the scope, validity and enforceability of patents
covering subject matters similar to the third party patent in question
(the "Neutral"). If the Parties cannot agree on a Neutral within thirty
(30) days of the request of either Party, then the Neutral shall be
selected by the Chairman of the Intellectual Property section of the
American Bar Association. The Neutral shall not have any current
interest in or current or prior involvement with either Party, unless
the Parties agree otherwise. Within 10 days following the
identification of the Neutral, each Party shall submit to the Neutral
in writing its statement of the issue in dispute; and the basis for its
position that the patent license that is the subject of the dispute is,
or is not, (as applicable) "necessary" as defined in Section 4.3. No
ex-parte communication with the Neutral shall be allowed without the
consent of the other Party. The Neutral may follow such procedures as
he or she desires, provided that the Neutral shall decide the issue in
favor of one Party within thirty (30) days of submission of the
statements. If the Neutral determines that the subject patent license
is "necessary", then Vivus shall be entitled to credit royalties as
provided in Section 4.3, and otherwise no credit shall be permitted
(except as may otherwise be agreed by the Parties in writing). The
Parties shall equally share the costs associated with the Neutral's
activities under this Section 15.11. Each Party shall cooperate to
allow the Neutral to complete his/her obligations under this Section.
If Vivus has in fact taken a license for the Product, the license shall
be considered necessary unless otherwise established in such
proceeding.
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15.12 COUNTERPARTS
This Agreement may be signed in any number of counterparts and all such
counterparts taken together are deemed to constitute one and the same
document.
15.13 COSTS
Each Party must pay their own legal, accounting and other costs in
relation to the negotiation, preparation, execution and implementation
of this Agreement.
15.14 PAYMENT
All payments to be made under this Agreement must be paid by electronic
transfer to the bank account nominated in writing by the Party to whom
the payment is to be made and received into that account in cleared
funds on the date the payment is due.
15.15 ENTIRE AGREEMENT
This Agreement, and the Guaranty Agreement, constitutes the entire
agreement and basis of the transaction between the Parties in relation
to its subject matter and supersedes all other prior and
contemporaneous communications, negotiations, arrangements and
agreements between FemPharm and Vivus whether oral or in writing,
except that confidential information disclosed by a Party pursuant to
the non disclosure agreement between FemPharm and Vivus prior to the
Effective Date shall be treated as Confidential Information of the
disclosing Party to the extent set forth in this Agreement, and the
Estradiol Agreement shall remain in full force and effect.
15.16 INJUNCTIVE RELIEF
Each Party acknowledges that monetary damages alone may not be adequate
compensation for a breach of this Agreement by the other Party,
including breach of Article 10. Each Party is entitled to seek
injunctive relief from a court of competent jurisdiction as a remedy
for any breach or threatened breach of this Agreement, in addition to
any other remedies available at law or in equity under or independently
of this Agreement, each to the extent available in accordance with
applicable law.
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15.17 INDEPENDENT CONTRACTORS
The relationship of the Parties hereto is that of independent
contractors. The Parties hereto shall not be deemed to be agents,
partners or joint venturers of the others for any purpose as a result
of this Agreement or the transactions contemplated thereby, and neither
Party shall have the authority to agree to any obligation or commitment
for the other.
15.18 FORCE MAJEURE
Neither Party shall lose any rights hereunder, be considered in breach
of this Agreement, or be liable to the other Party for damages or
losses on account of its failure to perform if the failure is
occasioned by war, strike, fire, act of God, earthquake, flood,
lockout, embargo, failure of suppliers, power failures, or any other
reason where failure to perform is beyond the reasonable control of the
non-performing Party (a "Force Majeure"), provided that after the Force
Majeure occurs, the non-performing Party uses reasonable efforts to
avoid the effects of such Force Majeure, and to perform its
obligations, each to the extent reasonably practicable (it being agreed
that in no event shall a Party be required to settle any labor dispute
or disturbance).
15.19 BANKRUPTCY
All rights and licenses granted under or pursuant to this Agreement by
each Party as a licensor are, and shall otherwise be deemed to be, for
purposes of Section 365(n) of Title 11, U.S. Code (the "Bankruptcy
Code"), licenses of rights to "intellectual property" as defined under
section 101(35A) of the Bankruptcy Code. The Parties agree that each
licensee of such rights under this Agreement, shall retain and may
fully exercise all rights and elections it would have in the case of a
licensor bankruptcy under the Bankruptcy Code. Each Party agrees during
the term of this Agreement to create or maintain current copies, or if
not amenable to copying, detailed descriptions or other appropriate
embodiments, of all such intellectual property licensed to the other
Party.
15.20 ACRUX DDS AS A PARTY
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Acrux DDS Pty Limited agrees to be fully and independently bound by the
Sections to which it is expressly a party under this Agreement, and
including also the provisions of Article14 (it being understood that
only Vivus or FemPharm may terminate this Agreement in accordance with
its terms). Notwithstanding the foregoing, Acrux DDS Pty Limited
acknowledges that Vivus shall have no independent obligations to Acrux
DDS Pty Limited under this Agreement, and all of Vivus' obligations
under this Agreement and this Section 15.20 shall be satisfied upon
Vivus' performance or tender of performance to FemPharm. In addition,
any notice given to or from FemPharm and FemPharm's consent, approval,
agreement, actions or inactions shall be deemed notices to and from,
and the consent, approval, or agreement of, or actions or inactions
authorized by Acrux DDS Pty Limited. Acrux DDS Pty Limited agrees to be
likewise bound by any and all amendments to this Agreement, which
amendments shall not require Acrux DDS' Pty Limited's approval. It is
understood and agreed that Acrux DDS Pty Limited may look only to
FemPharm for any share of or benefit from Vivus' performance or
undertakings under this Agreement, and Vivus shall have no
responsibilities to Acrux DDS Pty Limited in that regard.
15.21 SURVIVAL OF SUBLICENSES
If FemPharm terminates the Agreement, then any existing sublicense
agreement with a non-Affiliate granted by Vivus hereunder shall remain
in force provided that such sublicensee agrees in writing to be bound
by and perform to the same extent as required of Vivus under this
Agreement. For clarity, it is understood that the foregoing shall not
have the effect of expanding or increasing the rights of the
sublicensee beyond the rights granted to it under the sublicense
agreement.
EXECUTION
EXECUTED by FEMPHARM PTY )
LTD by being signed by: )
)
)
)
)
/s/ ▇▇▇▇ ▇▇▇▇▇ /s/ ▇▇▇▇ ▇▇▇▇▇
-------------------------------------- -------------------------------
Signature of director/secretary Signature of director
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▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
-------------------------------------- -------------------------------
Name of director/secretary (please print) Name of director (please print)
EXECUTED by VIVUS INC. by being )
signed by: )
)
)
)
)
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------
Signature
▇▇▇▇▇▇ ▇▇▇▇▇▇, President & CEO
------------------------------------- -------------------------------
Name and Title
EXECUTED by ACRUX DDS PTY )
LTD by being signed by: )
)
)
)
)
/s/ ▇▇▇▇ ▇▇▇▇▇ /s/ ▇▇▇▇ ▇▇▇▇▇
------------------------------------- -------------------------------
Signature of director/secretary Signature of director
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
------------------------------------- -------------------------------
Name of director/secretary (please print) Name of director (please print)
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ANNEXURE A
DEVELOPMENT PLAN
ANNEXURE B
FEMPHARM PATENTS AND PATENT APPLICATIONS
------- ------- ---------- ----------- ------- ------- ----------
PATENTS DATE OF DATE OF EXPIRATION
GRANTED COUNTRY PATENT NO. APPLIC. NO. ISSUE FILING DATE
------- ------- ---------- ----------- ------- ------- ----------
(**)
ANNEXURE C
METERED DOSE TRANSDERMAL SPRAY SYSTEM
(**)
ANNEXURE D
FORM OF PRESS RELEASE
ANNEXURE E
ANDROGENS
(**)
ANNEXURE F
EXCLUDED INDICATIONS
(**)