Exhibit 6.7
LICENSE AGREEMENT
This License Agreement ("Agreement"), entered into as of this 28th day of
January, 1997 by and between NexMed International Limited, a British Virgin
Island corporation, with a principal place of business at Xxxx 0000, 00X, Xx.0
Xxxxx'x Xxxx Xxxxxxx, Xxxxxxx, Xxxx Xxxx ("NexMed") and Lotus Medical Supply,
Inc., a company organized under the laws of Taiwan with a principal place of
business at 7F-I, Xx. 000 Xx-Xxxxx X. Xxxx, Xxxxxxx 0, Xxxxxx, Xxxxxx, X.X.X.
("Lotus").
WHEREAS, NexMed is a medical and pharmaceutical technology company with a
focus on the development and commercialization of, among other things, topical
treatment products based on a penetration enhancement technology; and
WHEREAS, NexMed has developed and is the proprietary owner of the NexMed
Know-How (as defined below) relating to the use of Penetration Enhancement
Ingredients in conjunction with Compound A (as defined below); and
WHEREAS, Lotus desires to secure certain rights with respect to making,
using and selling certain products incorporating such Know-How.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, Lotus and NexMed agree as follows:
I. DEFINITIONS
1.01 "Affiliate" shall mean, with respect to either party, any individual or
any legally-distinct corporation, firm or other form of business organization,
which directly or indirectly owns, controls, is controlled by, or is under
common control with, a party hereto. An entity shall be regarded as being in
control of another entity if the former entity has the direct or indirect power
to order or cause the direction of the policies of the other entity, whether
through ownership of fifty percent (50%) or more in the United States or thirty
percent (30%) or more outside the United States of the outstanding voting
securities of that entity, through other dominant equity ownership, or by
contract, statute, regulation, or otherwise.
1.02 "Agreement Year" shall mean the twelve month period ending on an
anniversary of the Approval Date.
1.03 "Application for Approval" shall mean all submissions related to
investigational use of the Licensed Product (such as an IND for the Licensed
Product filed with the FDA or the equivalent filing with a Regulatory
Authority in the Territory) and all submissions related to marketing approval
(such as an NDA or equivalent filing).
1.04 "Clinical Trials Program" shall have the meaning set forth in
Section 3.02 hereof.
1.05 "Combination Product" shall have the meaning set forth in Section
4.03 hereof.
1.06 "Compound A" shall mean alprostadil.
1.07 "Dollars" means lawful currency of the United States of America.
1.08 "Exclusive" shall mean, when used in connection with a specific
grant of a license hereunder, that (except to the extent such rights are
specifically retained herein) the granting party shall have no further right
in the Territory, for so long as such grant remains effective, to
manufacture, sell or use the Licensed Product or to grant to third parties
any license in connection with the manufacture, use or sale of the Licensed
Product in the Territory.
1.09 "FDA" shall mean the United States Food and Drug Administration or
any successor Regulatory Authority in the United States.
1.10 "Field" shall mean the development and commercialization of
therapeutic products based on proprietary delivery systems including topical
treatment products based on a penetration enhancement technology which may
enable the active drug/ ingredient to be better absorbed through the skin.
1.11 "Indication for Use" shall mean male erectile dysfunction or such
other indication for use as NexMed and Lotus may agree.
1.12 "IND" (Investigational New Drug Application) means an application
for an "Investigational Exemption for a New Drug" filed with a Regulatory
Authority (as defined below).
1.13 "Know-How" shall mean any and all technical data, drawings,
documentation, and other information, including information disclosed in an
issued patent or patent application. Know-How relating to the Field, which is
owned by NexMed as of the date hereof or is independently generated, acquired
or licensed, with the right to sublicense, by NexMed during the term of this
Agreement is referred to herein as "NexMed Know-How."
1.14 "NDA" (New Drug Application) shall mean an application submitted to
a Regulatory Authority, which contains all necessary details of the
manufacture and testing of a new drug, for purposes of obtaining regulatory
approval to market such new drug in such country or region, for a particular
indication.
1.15 "Net Sales" shall mean the gross amount invoiced by Lotus or any
sublicensee of Lotus for arm's-length sales of Licensed Product to a third
party or parties which are not Affiliates of Lotus, after deducting, if not
already deducted in the actual amount invoiced, normal and customary trade
discounts actually allowed, returns and credits. No deduction from the
invoice price shall be taken for any other costs, including taxes,
transportation, insurance and postage charges, in computing Net Sales except
that separately billed or invoiced transportation costs, sales taxes and
value added taxes shall not be included in the computation of Net Sales,
except that the Value Added Tax ("VAT") required by the Taiwanese government
will be deducted from the gross amount. The current VAT is 5%, and may vary
from time to time.
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1.16 "Licensed Product" shall mean any pharmaceutical formulation
containing Compound A, either now known or hereafter developed which utilizes
or incorporates NexMed Know-How and which is/are intended and promoted for
treatment of the Indication for Use in humans.
1.17 "Person" shall mean any individual, estate, trust, partnership,
joint venture, association, firm, corporation, company, or other legal entity.
1.18 "Pre-Clinical Development Program" shall have the meaning set forth
in Article II hereof.
1.19 "Penetration Enhancement Ingredient" shall mean all ingredients
either now known or hereafter developed by NexMed or using NexMed Know-How
that enhances the performance and absorption of Compound A.
1.20 "Proprietary Information" shall have the meaning set forth in
Section 3.04(a) hereof.
1.21 "Reimbursement Price" shall mean the price for the Licensed Product
as approved by the Taiwan National Health Insurance Bureau.
1.22 "Regulatory Authority" shall mean the agency, if any, of the
national government within the Territory with which the Licensed Product must
be registered or by which the Licensed Product must be approved prior to
manufacture, use or sale in the Territory.
1.23 "Sale" or "Sold" shall mean the transfer for value (cash and/ or
otherwise) in an arm's-length transaction of a Licensed Product in the
Territory by Lotus, Lotus Affiliate, or Lotus sublicensee to a nonaffiliated
third-party distributor, agent or end user after obtaining all necessary
government approvals applicable to such sale. Sales shall be accounted for
when shipped, and credits and refunds shall be accounted for when booked by
Lotus in accordance with Lotus's standard accounting practices.
1.24 "Territory" shall mean Taiwan.
II. PRE-CLINICAL DEVELOPMENT PROGRAM
Pursuant to the terms and conditions contained herein, Lotus and NexMed
shall equally share (on a full cost, no profit basis) the total costs of
pre-clinical and other development programs in the Territory for the Licensed
Product (such programs hereinafter collectively referred to as the "Pre-Clinical
Development Program", even though they may continue during the period of
clinical trials). Such costs shall include all costs incurred by NexMed,
including but not limited to all costs of developing the drug master file
included in the Pre-Clinical Development Program, costs of developing good
manufacturing practices for the Licensed Product, costs of manufacturing initial
quantities of the Licensed Product for clinical trials, the costs of all
necessary animal studies and trials and the costs of any other development work.
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III. CLINICAL TRIALS AND REGULATORY APPROVALS
3.01 FUNDING OF REGULATORY APPROVALS.
(a) Lotus shall be responsible for obtaining regulatory approvals
for investigational use and marketing of the Licensed Product from the
Regulatory Authorities in the Territory and shall use its best efforts to
conduct all pre-clinical and clinical trials as rapidly as possible and to
seek all necessary regulatory approvals. Lotus shall pay or cause the payment
of all costs and expenses necessary to obtain each such approval, including
all costs of human clinical trials and all costs of filing each Application
for Approval.
(b) Upon determination by NexMed that sufficient data has been
compiled to permit filing of an Application for Approval for the Licensed
Product in the Territory, Lotus shall promptly prepare and file such
Application for Approval with the Regulatory Authority in the Territory. Each
Application for Approval filed by Lotus shall be filed in the name of Lotus.
Lotus shall supply to NexMed for approval, not less than 30 days prior to
filing, copies and an English language translation of every Application for
Approval to be filed and each document submitted in connection therewith.
Lotus shall also provide evidence of filing within 30 days thereafter, and
Lotus will keep NexMed informed regarding the status of each such
application. NexMed shall wherever practical be given notice of, and a right
to participate in, all meetings and discussions with Regulatory Authorities.
NexMed shall have joint ownership wherever practical of all submissions
regardless of the particular name in which the submissions are made. In the
event this Agreement terminates (other than because of the breach by NexMed)
or expires prior to the marketing of the Licensed Product, Lotus shall assign
or otherwise cooperate in transferring to NexMed Lotus's rights under any
Applications for Approval filed by it or any approval granted pursuant
thereto and NexMed shall have the right to take over all of the contracts
relating to (and the results of) all then existing animal studies, other work
encompassed by and under the Pre-Clinical Development Program and all
clinical trials.
(c) NexMed shall be given a permanent and irrevocable right of
reference to all regulatory submissions filed with any Regulatory Authority
by Lotus or under its auspices and Lotus shall (where required to be
effective) notify said Regulatory Authorities of such right.
3.02 CLINICAL TRIALS. Unless otherwise specifically agreed by the
parties, Lotus shall conduct, manage and pay for all clinical trials. Such
clinical trials shall hereinafter be referred to as the "Clinical Trials
Program".
3.03 GRANT AND TERM OF LICENSES.
(a) NexMed hereby grants to Lotus the Exclusive right and license
(including the right to grant sublicenses) to make, have made, use and sell
the Licensed Product solely for human therapeutic uses throughout the
Territory, as and to the extent such activities are permitted to be conducted
in the Territory.
(b) Subject to the provisions of Section 4.05 hereof and Article XII
(Term and Termination), the grant of rights by NexMed to Lotus hereunder with
respect to the Licensed Product shall continue in the Territory until the
earliest of such time as Lotus relinquishes its rights to sell the
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Licensed Product in the Territory, until any necessary regulatory approval is
withdrawn or lapses in the Territory or until this Agreement is terminated.
(c) Lotus shall not grant any sublicense pursuant to its right to
grant sublicenses hereunder, unless prior to the effectiveness of such grant
Lotus provides NexMed with Lotus's written guarantee that any sublicensee
shall fulfill all of Lotus's obligations under this Agreement, including
without limitation maintenance of all books and records required hereunder.
No such sublicense shall grant any right to grant further sublicenses.
Royalties payable under Article IV hereof shall be computed on the basis of
Net Sales by all such sublicensees and not on the basis of payments made by
sublicensees to Lotus.
3.04 AVAILABILITY OF INFORMATION. Subject always to the obligations set
forth in Article V herein to maintain such information confidential, so long
as this Agreement remains in effect,
(a) all Know-How and all other information and materials related to
the development, manufacture, sale or use of a Licensed Product ("Proprietary
Information") shall be furnished by each party to the other, and significant
technical and other data and submissions shall furnished in the English
language; and
(b) all Proprietary Information shall be owned by NexMed or assigned
by Lotus to NexMed. All Proprietary Information shall be made equally
available to each of the parties, subject to any obligation by which a party
is contractually bound at the time of acquiring Proprietary Information from
a third party, not to disclose such Proprietary Information.
3.05 DILIGENT EFFORTS. Upon filing of any Application for Approval with
any Regulatory Authority to make, use or sell the Licensed Product in the
Territory, Lotus shall use diligent, good faith, commercially reasonable
efforts (including, where appropriate, conducting, or causing to be
conducted, clinical trials) to obtain regulatory approvals and, once
obtained, to commercially exploit the Licensed Product.
IV. LICENSE FEE AND ROYALTY PAYMENTS
4.01 INITIAL LICENSE FEE. As consideration for the licenses and rights
granted in this Agreement, Lotus shall pay the following amounts:
(a) an initial license fee to NexMed of Fifty Thousand U.S. Dollars
(US$50,000) for the rights granted herein, payable in full upon execution of
this Agreement, which amount shall be non-refundable; and
(b) Fifty Thousand U.S. Dollars (US$50,000) (the "Royalty
Prepayment") upon the date ("Approval Date") which is the earlier to occur of
(i)the receipt of both (A) regulatory approval in the Territory of the
Licensed Product and (B) approval of the Reimbursement Price or (ii) the
Royalty Pre-Payment Date. The Royalty Pre-Payment Date shall be two (2) years
from the Pre-Clinical Approval Date; provided, however, that (x) if at the
2-years post Pre-Clinical Approval Date, Lotus has completed at least one (1)
satisfactory Pivotal Clinical Study (as defined below) in the Territory
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and filed its results with the Regulatory Authority, the Royalty Pre-Payment
Date shall be extended to two (2) additional years or four (4) years from the
Pre-Clinical Approval Date; and (y) if at the 4-years post Pre-Clinical
Approval Date, Lotus has completed at least one (1) additional satisfactory
Pivotal Clinical Study in the Territory and filed its results with the
Regulatory Authority, the Royalty Pre-Payment Date shall be further extended
to one (1) additional year or five (5) years post Pre-Clinical Approval Date.
The "Pre-Clinical Approval Date" shall mean the date that Lotus has received
regulatory approval to go ahead with proposed clinical studies in the
Territory, based on the pre-clinical data base provided by NexMed and/or
results of, if any, additional pre-clinical work required to be conducted in
the Territory. The "Pivotal Clinical Study" shall mean an essential clinical
study with its protocol pre-approved by the Regulatory Authority that serves
as a partial requirement in order to receive marketing approval in the
Territory. The foregoing is subject to the obligation of Lotus to use its
best efforts to cause the occurrence of the Pre-Clinical Approval Date.
The Royalty Pre-Payment shall be credited against royalties due to NexMed
during the first Agreement Year, including any minimum royalty payments for that
year as specified in Section 4.02(b)(i) hereof.
4.02 ROYALTY PAYMENTS; RATE; MINIMUM ROYALTY PAYMENTS.
(a) Royalties on Net Sales shall be paid by Lotus to NexMed within
five (5) business days after the end of each month in which such Net Sales
are made. All payments shall be accompanied by a statement, certified to be
accurate by Lotus, of Net Sales of the Licensed Product by Lotus and each of
its Affiliates and permitted sublicensees during the preceding month. Such
statements shall show all royalties paid since the commencement of the
current Agreement Year, the quantity, description and gross sales price,
itemized deductions from gross sales price and net sales price of each
Licensed Product that was distributed and/or sold by Lotus and each of its
Affiliates and sublicensees during the preceding month, the quantity returned
(if any) during the preceding month and the amount of royalty due. Such
statements shall be furnished to NexMed by Lotus whether or not any Licensed
Product has been sold during the month in which such statements are due.
(b) Lotus shall pay, or in the case of Sales by Lotus Affiliate(s)
and/or sublicensee(s), cause such Lotus Affiliate(s) and/or sublicensee(s) to
pay, to NexMed royalties on Net Sales by Lotus, Lotus Affiliate, or Lotus
sublicensee, of eighteen percent (18%) of Net Sales (the "Royalty Rate"). In
no event shall any such royalty payment be less than the following:
(i) For each of the first and second Agreement Years, One
Hundred Thousand U.S. Dollars (US$100,000);
(ii) For each of the eight successive Agreement Years, the
lesser of (A) Two Hundred Thousand U.S. Dollars (US$200,000) or (B) Six
Million New Taiwan Dollars (NTD6,000,000).
(c) Except for Royalty Pre-Payments, in no event shall any amounts
payable in any Agreement Year be credited to any payments due and payable in
any other Agreement Year.
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4.03 COMBINATION PRODUCTS. No Licensed Product shall be sold in
combination with any other product or ingredient without the express prior
written consent of NexMed. In the event that NexMed consents to sales of the
Licensed Product in a fixed combination ("Combination Product") with one or
more products or active therapeutic ingredients not subject to this Agreement
("Other Items"), the invoice price of such Combination Product shall be set
by Lotus in good faith, and Net Sales of the Licensed Product included in the
Combination Product shall be determined using the following formulae:
(a) If the Licensed Product and Other Items contained in the
combination are available separately, the Net Sales for purposes of
calculating royalty payments will be the result obtained by multiplying the
Net Sales of the Combination Product by the fraction A/A+B, where A is the
invoiced price of the Licensed Product in the Combination Product, and B is
the invoiced price of all Other Items in the Combination Product.
(b) If the Combination Product includes Other Items which are not
sold separately (but the Licensed Product contained in the Combination
Product is available separately), the Net Sales for purposes of calculating
royalty payments will be the result of multiplying the Net Sales of the
Combination Product by the fraction A/C, where A is as defined above and C is
the invoiced price of the Combination Product.
(c) If neither the Licensed Product nor the Other Items contained in
the Combination Product are sold separately, or if only the Licensed Product
is not sold separately, Lotus shall, in good faith, propose the percentage of
the revenue from such Combination Product that is attributable to the
Licensed Product. Unless Lotus receives written objection from NexMed to such
proposal within 45 days following Lotus' receipt of such proposal, then the
revenue so attributed to the Licensed Product shall be the Net Sales for the
purposes of Section 4.02 hereof. In the event NexMed objects to Lotus's
proposal, Lotus and NexMed agree to negotiate in good faith to reach a
mutually acceptable determination and Lotus shall not market such Combination
Product unless and until such a determination is reached.
4.04 WITHHOLDINGS. All amounts of royalties payable by Lotus pursuant
to this Section 4.04 shall be paid in Dollars without deducting therefrom any
tax, duty, charge, conversion or remittance fee, commission, discount or
other fee payable in respect of such royalty payment, other than taxes
specified in the next following sentence. Any and all taxes levied by a
proper taxing authority required to be withheld by Lotus or its sublicensees
on account of royalties accruing to NexMed under this Agreement may be
deducted from such royalty payment provided that (i) such amount is promptly
paid for and on behalf of NexMed to the appropriate tax authorities, and (ii)
Lotus furnishes NexMed with official tax receipts or other appropriate
evidence of payment issued by the appropriate tax authorities. If any tax,
however denominated (other than a withholding tax on Lotus or sublicensee
royalties), is levied against NexMed solely because of the presence of a
Lotus facility or because Lotus is doing business in the Territory, then
Lotus shall pay such tax without deduction from such royalty payment. Receipt
or acceptance by NexMed of any statement furnished pursuant to this Agreement
or of any sum paid hereunder (or the cashing of any royalty checks paid
hereunder) shall not preclude NexMed from questioning the correctness thereof
at any time, and in the event that any inconsistency or mistake (including
the improper withholding of tax) is discovered in such statements or
payments, it shall immediately be rectified and the appropriate payment made
by Lotus.
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4.05 EXPLOITATION OF THE LICENSED PRODUCT. Lotus agrees to promote,
exploit and market the Licensed Product (where appropriate regulatory
approval has been obtained) through its manufacturing, marketing and sales
activities, using good faith, diligent, commercially reasonable efforts, as
more specifically set forth herein. Failure by Lotus to meet its obligations
under this Section 4.05 in the Territory shall be grounds for NexMed to
terminate the license granted in Section 3.03 hereof.
4.06 NON-DOLLAR SALES.
For purposes of determining the amount of royalties due on Net Sales
pursuant to Section 4.02 hereof, where Lotus or any sublicensee receives payment
in a currency other than Dollars, the amount of Net Sales in such currency shall
be converted into Dollars at the prevailing commercial rate of exchange for
purchasing Dollars with such foreign currency as quoted by Citibank, N.A. in New
York on the last business day of the month for which the relevant royalty
payment is to be made by Lotus.
4.07 RECORDS. Lotus shall (and shall cause, its Affiliates or sublicensees
to) keep complete and accurate books and records relating to their respective
sales of the Licensed Product, in sufficient detail to allow the royalties
accruing hereunder to be accurately determined. Each of such persons shall
preserve such books and records for a period of six years following the date of
any statement delivered hereunder. NexMed (or its duly authorized
representatives) shall have the right at its own expense from time to time
during the term of this Agreement until the expiration of said six-year period
to inspect the relevant records of Lotus or such Affiliate or sublicensee in
order to verify such report or statement. Lotus and such Affiliate or
sublicensee shall make its records available for such inspection during regular
business hours at such place or places where such records are customarily kept,
upon reasonable notice from NexMed to the extent reasonably necessary to verify
the accuracy of the reports and payments required hereunder. NexMed agrees to
hold strictly confidential all such records and information, other than the
total amounts of royalties paid, and all information learned in the course of
any audit or inspection hereunder, except to the extent that it is necessary for
NexMed to reveal such information order to enforce any rights it may have under
this Agreement or if disclosure is required by law (subject to the restrictions
on publicity without consent set forth under the provisions of Section 5.02
hereof). The failure of NexMed to request verification of any report or
statement during said six-year period shall be considered acceptance of the
accuracy of such report. If the audit reveals an error in NexMed's favor which
is greater than five percent (5%) of the amount of royalties due to NexMed
specified on the statement, the reasonable cost of such examination shall be
borne by Lotus or such Affiliate or sublicensee.
4.08 LATE PAYMENTS. Except as otherwise determined under Section 4.03
hereof, any amount which is not paid when due hereunder shall bear interest in
Dollars at the published prime rate of Citibank, N.A., New York, New York as in
effect from time to time plus three percent.
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V. CONFIDENTIALITY
5.01 INFORMATION SHARING; CONFIDENTIALITY.
(a) During the term of this Agreement, each party shall promptly
furnish (and shall cause its Affiliates and/or sublicensees, if any, promptly
to furnish) to the other any information concerning safety or utility of the
Licensed Product, including adverse or unexpected side effects, injury or
other events associated with uses, studies, investigations or tests of the
Licensed Product, whether or not such party is required to report such events
to regulatory authorities and whether or not such event is determined to be
attributable to the Licensed Product.
(b) Lotus recognizes that the Proprietary Information constitutes
highly valuable, proprietary, confidential information. Lotus agrees that
during the term of this Agreement and thereafter it will keep confidential,
and will cause its Affiliates, officers, employees, consultants and agents to
keep confidential, all Proprietary Information. Lotus shall disclose, or
permit any of its Affiliates, officers, employees, consultants and agents to
disclose, Proprietary Information to any other Person nor use the same for
any purpose except as set forth in this Section 5.01 or as otherwise
expressly permitted in this Agreement or in a separate written agreement with
the other party or as reasonably required in good faith for the registration
and commercialization of the Licensed Product.
(c) Lotus agrees that any dissemination of Proprietary Information
to any of its Affiliates or to any officer, employee, consultant or agent of
it or any of its Affiliates shall be made only if necessary to carry out the
purposes set forth herein and shall be limited to the maximum extent possible
consistent with such purposes. Lotus shall take such action, and each will
cause its Affiliates, officers, employees, consultants and agents to take
such action, to preserve the confidentiality of the Proprietary Information
as it would customarily take in order to preserve the confidentiality of
other valuable proprietary information owned by it, including advising all
such Persons of the confidentiality obligations set forth herein.
(d) The restrictions contained in paragraphs (b) and (c) of this
Section 5.01 shall not apply to any Proprietary Information that:
(i) is, at the time of its disclosure to Lotus, generally
available to the public or otherwise part of the public domain or, as
evidenced by written records of Lotus, is otherwise previously known to Lotus;
(ii) becomes generally available to the public or otherwise
part of the public domain after its disclosure to Lotus through no act or
omission of Lotus or any other person owing an obligation of confidentiality
to either party hereto; or
(iii) is required to be disclosed by any court or governmental
agency having proper jurisdiction, provided that NexMed is first given an
adequate opportunity to seek a protective order or similar limits on further
disclosure.
5.02 PUBLICITY. Neither party shall make any disclosure regarding the
existence of this Agreement nor the research hereunder except with the prior
consent of the other party to the text of the
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proposed disclosure, which consent shall not be unreasonably withheld, unless
the failure to make such disclosure would (in the opinion of counsel to the
disclosing party) place such party in violation of applicable law, in which
case prior notice of such disclosure shall be given to the other party to the
extent reasonably possible.
5.03 PUBLICATION. The parties recognize the traditional right of all
scientists to publish and present promptly the results of their research.
Notwithstanding anything to the contrary contained in this Article V, the
results obtained in the course of the Pre-Clinical Development Program or the
Clinical Trials Program may be submitted for publication by Lotus, but only
following notice to and approval by NexMed in its sole discretion. Lotus shall
not publish information without first providing NexMed with at least thirty (30)
days prior notice of all results and information intended to be published.
NexMed shall act as expeditiously as practicable following such notice, and
shall notify Lotus promptly of its determination. If NexMed does not approve
such publication, such results and information shall continue to be subject to
the other provisions of this Article V.
VI. MANUFACTURE AND SUPPLY
6.01 RIGHT TO MANUFACTURE. Subject to the limitations contained in
Sections 3.03 and 6.02 hereof, Lotus shall have the Exclusive right (with the
right to grant sublicenses) to manufacture and supply the Licensed Product in
the Territory. Lotus shall comply with the requirements, good manufacturing
practices and specifications for the manufacture and use of such Licensed
Product promulgated by the Regulatory Agency in the Territory where such
Licensed Product is to be manufactured or sold.
6.02 COMPONENT SUPPLY. Notwithstanding the rights granted in Section 6.01,
NexMed shall have the right to manufacture and sell to Lotus in the Territory
certain ingredients of the Licensed Product. NexMed shall sell to Lotus and
Lotus shall purchase from NexMed the Penetration Enhancement Ingredients for the
manufacture of the Licensed Product at a price equal to NexMed's full costs
associated with production of the Penetration Enhancement Ingredient plus 25%
thereof. In addition, Lotus shall purchase from NexMed the active ingredient,
Compound A, at a price equal to NexMed's full costs (no profits) delivered CIF
Taiwan.
6.03 CHANGES IN REGULATIONS. Each party shall promptly and fully advise
the other of any new regulations, instructions or specifications required by any
Regulatory Authority in the Territory of which such party becomes aware. Lotus
agrees that the Licensed Product will, upon delivery to the carrier designated
by customers, be in conformity with said product regulations, instructions and
specifications and will not be adulterated or misbranded.
6.04 QUALITY DISPUTES. NexMed shall have the right to inspect the
manufacturing facilities of Lotus and review Lotus's procedures and to take
samples of the Licensed Product manufactured by Lotus. If Lotus becomes aware
that any quantity of a Licensed Product does not comply with Sections 6.01 or
6.03 hereof, Lotus shall promptly notify NexMed thereof. NexMed shall be
provided a sample of the suspect Licensed Product upon request. Within sixty
(60) days of receipt thereof, NexMed shall report to Lotus in writing of the
fact and extent of the non-compliance. Lotus shall have sixty (60) days from
the receipt of said report to replace the non-complying Licensed Product by
shipping
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replacement products which are in compliance with Sections 6.01 and 6.03, or
to report that it considers that the original Licensed Product did comply
with Sections 6.01 and 6.03, in which case the parties shall use their best
efforts to resolve any dispute.
VII. TERM AND TERMINATION
7.01 TERM. (a) The term of this Agreement shall commence on the date
hereof and shall continue, unless terminated in accordance with the subsequent
paragraphs of this Article VII, for a period of ten (10) years following the
Approval Date.
(b) Lotus may relinquish any or all of the rights granted to it
hereunder to make, sell or use a Licensed Product in the Territory at any
time, by giving to NexMed written notice of its desire to do so at least 180
days prior to the date on which Lotus desires such right to be terminated.
Such relinquishment will not release Lotus from any obligation to make
payments that have accrued prior to the effective date of relinquishment of
such rights and Lotus shall have no right to seek reimbursement of any
amounts paid prior to such relinquishment. All rights relinquished with
respect to the Territory will return exclusively to NexMed.
7.02 EVENTS OF TERMINATION. If any of the following events shall occur and
be continuing, such event shall constitute an event of termination ("Event of
Termination"):
(a) If any representation or warranty by a party hereto contained in
this Agreement shall prove to have been incorrect in any material respect
when made or deemed made.
(b) If a party shall fail to pay any amount when due hereunder or
shall otherwise default in any material respect in the performance or
observance of any term, covenant or provision contained in this Agreement or
any of the other documents or instruments delivered pursuant to, or
concurrently with, this Agreement, and any such other default shall remain
unremedied for 30 days after written notice thereof to the defaulting party
from any other party with a copy to the other party. The foregoing
notwithstanding, no such other default shall constitute an Event of
Termination until 60 days after such notice, if the defaulting party shall
undertake throughout such 60-day period a reasonably diligent effort to
remedy such failure, provided, however that if by its nature such failure
cannot be cured, such failure shall constitute an Event of Termination
immediately upon occurrence.
(c) If this Agreement shall, at any time hereafter and for any
reason, cease to be in full force and effect, or shall be declared null and
void, or the validity or enforceability of this Agreement shall be
successfully contested by a party hereto or successfully contested by any
other Person.
(d) Because each party acknowledges that the services to be rendered
by the other are personal in nature, inasmuch as the respective capabilities
of the parties hereto are uniquely valuable, and that the determination to
enter into this Agreement was based upon the unique ability of the other
party to fulfill its respective obligations hereunder, if
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(i) such party shall make an assignment for the benefit of
creditors, file a petition in bankruptcy, petition or apply to any tribunal
for the appointment of a custodian, receiver or any trustee for it or a
substantial part of its assets, or shall commence any proceeding under any
bankruptcy, reorganization in bankruptcy or the equivalent, dissolution or
liquidation law or statute of any jurisdiction, whether now or hereafter in
effect;
(ii) there shall have been filed any such petition or
application against such party, or any such proceeding shall have been
commenced against it, in which an order for relief is entered or which
remains undismissed for a period of 30 days or more; or
(iii) such party by any act or knowing failure to act shall
indicate its consent to, approval of or acquiescence in, any such petition,
application or proceeding or order for relief or the appointment of a
custodian, receiver or any trustee for it or any substantial part of any of
its properties, or shall suffer any such custodianship, receivership or
trusteeship to continue undischarged for a period of 30 days or more.
7.03 TERMINATION.
(a) Upon the occurrence of any Event of Termination set forth in
Section 7.02, the party not responsible for such Event of Termination shall
have the following rights, (i) if the responsible party is NexMed, Lotus may,
by written notice to NexMed, relinquish its rights and terminate its future
obligations under this Agreement; (ii) if the responsible party is Lotus,
NexMed may, by written notice to Lotus terminate Lotus's rights under this
Agreement.
(b) No termination or expiration of this Agreement shall affect any
obligation of any party which arose prior to the effective date of such
termination with respect to monies owed or to confidential information. The
right of any party to terminate this Agreement as hereinabove provided shall
not be affected in any way by its waiver of or failure to take action with
respect to any previous default.
7.04 LOTUS FAILURE TO MARKET. NexMed shall have the unilateral right to
terminate this Agreement, and to obtain transfers to it of all rights of Lotus
to any contracts for investigational or clinical trial work, results of any such
work, Applications for Approval and regulatory approvals if the Regulatory
Authority in the Territory has granted marketing approval but either (A) no
detailed marketing plan (including estimated market size, projected sales and
projected advertising and promotion budgets) for such Territory has been
prepared and delivered to NexMed within six (6) months, or (B) Lotus has not
commenced implementation of such marketing plan in the Territory within twelve
(12) months; provided, however, that any such termination under this clause (a)
shall only be effective thirty (30) days after notice to Lotus thereof.
7.05 EFFECTS OF TERMINATION OR EXPIRATION. (a) Upon termination of this
Agreement by NexMed for breach by Lotus,
(i) Lotus shall immediately cease to have any right to sell, exploit
or in any way deal with or in the Licensed Product or to use any NexMed
Know-How or Proprietary Information or to use any trademarks or names
associated with the Licensed Product and all royalties and other
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payments theretofore accrued shall become due and payable immediately to
NexMed and such termination shall be without prejudice to any rights which
NexMed may otherwise have against Lotus.
(ii) Lotus shall deliver to NexMed, as soon as practicable and
within thirty days after receipt of notice of termination or the happening of
the event which terminates this Agreement where no notice is required, a
report indicating the quantity and description of Licensed Product on hand,
on order, or in the course of manufacture as of the date of expiration or
termination. NexMed shall have the right to conduct a physical inventory of
Lotus's premises (and those of its sublicensees) to ascertain or verify such
final report. In the event Lotus or such sublicensee refuses to permit NexMed
to conduct such physical inventory, NexMed shall retain all legal and
equitable rights that it may have in the premises.
(iii) All rights granted to Lotus hereunder shall forthwith revert
to NexMed, and all rights granted by Lotus under any sublicense shall
forthwith terminate. NexMed shall be free to license others in connection
with the manufacture, sale and distribution of the Licensed Product licensed
hereunder, and Lotus and each sublicensee shall refrain from further use,
manufacture, sale or distribution of the Licensed Product or any product
derived from the Licensed Product. Lotus acknowledges that its (or its
Affiliate's or sublicensee's) failure (except as otherwise provided herein)
to cease the use, manufacture, sale or distribution of the articles covered
by this Agreement or any class or category thereof at the termination of this
Agreement will result in immediate and irremediable damage to NexMed and to
the rights of any subsequent licensee. Lotus acknowledges and admits that
there is no adequate remedy at law for such failure to cease, use,
manufacture, sale or distribution, and Lotus agrees that in the event of such
failure NexMed shall be entitled to equitable relief by way of temporary and
permanent injunctions and such other further relief as any court with
jurisdiction may deem just and proper. Each sublicense hereunder shall
contain termination provisions substantially identical to this Article VII.
(iv) Lotus shall forthwith deliver to NexMed (and shall cause each
sublicensee to deliver) all reports, memoranda, drawings, data, flow sheets
and other documents and all copies thereof theretofore furnished by NexMed to
Lotus or which contain or describe any Proprietary Information and shall take
all actions necessary to assign or cause to be assigned to NexMed all of
Lotus's rights with respect to all contracts for work, results, filings,
Applications for Approval made by it or on its behalf with and approvals
granted by any Regulatory Authority.
(b) In the event of a wrongful termination by NexMed or breach by
NexMed of a material obligation to Lotus under this Agreement, Lotus shall
have the right to recover damages directly and proximately caused by such
wrongful termination or breach.
(c) The confidentiality provisions of Section 5.01 shall survive any
termination of this Agreement.
VIII. INDEMNIFICATION AND INSURANCE
8.01 INDEMNIFICATION. For purposes of this Section 8.01, "Indemnified
Parties" refers to NexMed, its officers, directors, employees and agents.
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(a) Lotus, as indemnitor, on behalf of itself and its officers,
directors, employees, agents and representatives (including its sublicensees
and distributors, and contractors undertaking work in the Pre-Clinical
Development Program or the Clinical Trials Program) shall indemnify and hold
harmless the NexMed Indemnified Parties and each of them from any and all
liability arising out of any suit, action, legal procedures, claim or demand
of whatever kind or character based upon (i) a claim or occurrence arising
from the Clinical Trials Program, or any aspect of the Pre-Clinical
Development Program undertaken by Lotus, or the manufacture or sale of the
Licensed Product; or (ii) any breach of any representation, warranty or
agreement made by Lotus hereunder.
(b) Anything to the contrary in this Article VIII notwithstanding,
Lotus shall not be obligated to indemnify an Indemnified Party for acts of
negligence or willful misconduct or for any violation of any warranty,
representation or agreement made by such Indemnified Party, hereunder.
8.02 SCOPE OF INDEMNIFICATION.
(a) The agreement to indemnify and hold harmless from liability set
forth herein shall include, without limitation, all damages of every kind,
reasonable attorney fees, all costs and expenses which may be levied against
and out-of-pocket costs incurred by the Indemnified Parties in connection
with any suit, action, legal proceeding, claim or demand.
(b) Compliance by Lotus with the insurance provision of this
Agreement shall not relieve Lotus from liability under this indemnity
provision.
(c) Lotus acknowledges and hereby agrees that the obligations set
forth in this Section 8.02 shall survive the termination or expiration of
this Agreement for a period of eight years.
(d) The Indemnified Parties will cooperate with Lotus at Lotus's
expense in the defense of any suit. Lotus shall be liable for any costs
resulting from any settlement made without its consent.
8.03 INSURANCE. Lotus hereby agrees to name NexMed as an additional
insured with respect to Compound A and the Licensed Product to the same
extent that it maintains product liability insurance with respect to any
product or compound it sells. If such insurance is obtained, such insurance
policy shall provide that it may not be canceled or amended by the insurer in
a manner which restricts coverage applicable to this Section 8.03 without at
least 30 days written notice to NexMed. Lotus shall furnish NexMed a
Certificate of Insurance including a specimen copy of the additional insured
endorsement within 30 days after the date of this Agreement.
IX. IMPROVEMENTS
If NexMed, on the one hand, or Lotus and/or its Affiliates and
sublicensee(s), on the other hand, develop or acquire Know-How relating to the
manufacture, use or sale of the Licensed Product, or make Licensed Product
improvements or process improvements, all such additional Know-How and
improvements shall be assigned to and be the property of NexMed. Such additional
Know-How and improvements shall be promptly transferred and/or communicated to
NexMed and shall become part
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of the NexMed Know-How, and by the provisions hereof shall be licensed to
Lotus for use in the Territory in connection with the Licensed Product
hereunder without further or additional royalty.
X. TRADEMARKS
The parties hereto shall mutually select the name(s) or trademarks to be
used by Lotus in connection with sales of the Licensed Product. Such trademarks
shall be registered in the name of NexMed as the owner thereof. NexMed hereby
licenses such trademarks to Lotus, for so long as this Agreement is in effect,
solely for use in connection with the Licensed Product without further or
additional royalty. NexMed shall have the right to approve in advance all uses
of the marks, including packaging, advertising and marketing materials using the
marks. Lotus hereby agrees to maintain such trademarks and to take any and all
actions necessary to protect NexMed's rights in the trademarks.
XI. WARRANTIES AND LIMITATIONS ON RIGHTS
11.01 WARRANTIES. Each of the parties hereto hereby represents and
warrants to the other party that, as of the date hereof: (a) such party has all
the requisite resources, power and authority to execute, deliver and perform
this Agreement; (b) the terms of this Agreement are not inconsistent with any
other contractual and/or legal obligations such party may have, or with such
party's policies or the policies of any entity with which such party is
associated; (c) such party has not engaged and shall not engage in any act
inconsistent with this Agreement, particularly that would allow any third party,
including any government or government agency, to acquire, own or possess any
right or interest inconsistent with the other party's rights under this
Agreement; and (d) this Agreement has been duly authorized and, when executed
and delivered by such party, shall constitute a legal, binding obligation,
enforceable against such party, according to its terms.
11.02 LIMITATION ON WARRANTIES. NexMed has not received any notice that
Compound A, the Penetration Enhancement Ingredients, or the Licensed Product (a)
are not novel entities or (b) infringe the patent rights of others.
11.03 DISCLAIMER. Lotus and NexMed each understands that neither party can
guarantee the reliability of its research findings and conclusions, and
therefore, except as expressly set forth in this Agreement, NEITHER PARTY HAS
MADE OR MAKES ANY GUARANTEES AND EXTENDS ANY WARRANTIES OF ANY KIND, EITHER
EXPRESS OR IMPLIED, EXCEPT AS EXPRESSLY PROVIDED HEREIN. THERE ARE NO EXPRESS OR
IMPLIED WARRANTIES OF DESIGN, MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE, OR THAT ANY LICENSED PRODUCT IDENTIFIED WILL NOT INFRINGE ANY PATENT,
COPYRIGHT, TRADEMARK, OR OTHER INTELLECTUAL PROPERTY RIGHTS OF ANY INDEPENDENT
THIRD PARTY. FURTHER, THERE ARE NO OTHER EXPRESS OR IMPLIED WARRANTIES ARISING
FROM COURSE OF DEALING, USAGE OR TRADE PRACTICES OR OF ANY OTHER KIND.
11.04 LIMITATIONS ON RIGHTS. Nothing in this Agreement shall be construed
as:
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(a) conferring rights to use in advertising, publicity, promotional
or sales literature the name of the other party without the prior written
consent of the other party in each instance; or
(b) granting, by implication, estoppel, or otherwise as a result of
either this Agreement, any activities hereunder or the relationship of the
parties, any license, title, ownership or other rights to the other party's
Confidential Information or under patents or know-how of the other party
except as necessary to accomplish the purposes of this Agreement or except as
explicitly provided herein.
Each party acknowledges that by virtue of this Agreement it acquires only
such rights as set forth under the terms and conditions of this Agreement.
XII. MISCELLANEOUS
12.01 NOTICES. All notices required or permitted hereunder shall be
transmitted, or at least immediately affirmed, in writing by facsimile, followed
by confirmation of that facsimile either by registered or certified mail,
postage prepaid, return receipt requested, or by overnight courier, addressed as
follows, or to such other address as may be designated from time to time by
notice given by the respective party:
If to Lotus: Lotus Medical Supply, Inc.
7F-I, Xx.000 Xx-Xxxxx X. Xxxx, Xxxxxxx 0
Xxxxxx, Xxxxxx
R.O.C.
Telephone No.: 000-0-000-0000
Facsimile No.: 886-2-778-2798
If to NexMed: NexMed International Limited
Xxxx 0000, 00X
#0 Xxxxx'x Xxxx Xxxxxxx
Xxxx Xxxx
Telephone No.: 000-0000-0000
Facsimile No.: 000-0000-0000
12.02 INDEPENDENCE OF PARTIES. The status of each party under this
Agreement is that of an independent contractor, and neither party has the right
or authority to assume or create any obligation, accept legal process, make
commitments, incur any charges or otherwise bind or act on behalf of the other
or limit the other in any manner whatsoever, except as expressly stated herein.
Neither this Agreement nor any act hereunder shall be construed as constituting
the foundation of a partnership, association, agency, joint venture or any other
entity.
12.03 NO THIRD-PARTY BENEFICIARIES. No person or entity not a party to
this Agreement, including any employee of any party to this Agreement, shall
have or acquire any rights by reason of this Agreement, nor shall any party have
any obligations or liabilities to such person or entity by reason of this
Agreement.
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12.04 NO WAIVER. Failure by either party to enforce, or delay in
exercising, or partial exercise of any covenants or rights or remedies under
this Agreement shall not be deemed or construed as a waiver of such rights nor
shall a waiver by either party in one or more instances be construed as
constituting a continuing waiver or as a waiver in other or subsequent
instances.
12.05 ENTIRE AGREEMENT. This Agreement constitutes the complete and entire
understanding between the parties with licenses conveyed hereunder, superseding
and replacing all prior oral or written agreements, communications,
representations, proposals, or negotiations specifically relating to the
activities hereunder and subject matter hereof. No change or addition to or
variation or amendment of this Agreement, nor any cancellation or waiver of any
of the terms or provisions hereof, nor any alteration or modification of any of
the terms and conditions hereof, shall be effective or valid and binding on
either party unless in writing and signed by a duly-authorized representative of
the party against which the provision is applied.
12.06 ARBITRATION. (a) Solely for the purposes of determining governing
law and jurisdiction, the parties acknowledge and agree that this Agreement
constitutes a contract pertaining to a transaction covering in the aggregate not
less than $1,000,000 This Agreement is made and delivered in New York and shall
be governed by and construed in accordance with the laws of the State of New
York applicable to agreements made and to be performed entirely within the State
of New York.
(b) In the event of any dispute under this Agreement, whether as to
the validity, construction, enforce-ability or performance of this Agreement
or any of its provisions or otherwise, both parties shall endeavor to settle
such dispute amicably between themselves. In the event that the parties fail
to agree, such dispute shall be settled by arbitration. Said arbitration
shall be conducted in the New York County, New York, in accordance with the
rules then obtaining of the American Arbitration Association with one
arbitrator. The award of the arbitrator shall be final and binding upon the
parties and enforcement thereof may be obtained in any court of competent
jurisdiction. The unsuccessful party to such arbitration shall pay to the
successful party all costs and expenses, including reasonable attorney's fees
incurred therein by such successful party.
12.07 HEADINGS. Article and Section headings are inserted in this
Agreement for convenience of reference only and no construction, meaning,
interpretation or inference shall be derived from them.
12.08 GOVERNMENTAL COMPLIANCE AND EFFECT OF INVALIDITY. This Agreement and
performance hereunder is subject to the restrictions, limitations, terms and
conditions of all applicable governmental regulations, approvals and clearances.
If any term or provision of this Agreement is held invalid, illegal or
unenforceable in any respect, for any reason, that invalidity, illegality or
unenforceability shall not affect any other term or provision hereof, and this
Agreement shall be interpreted as if such term or provision, to the extent the
same shall have been held to be invalid, illegal or unenforceable, had never
been contained herein, with the other provisions of this Agreement remaining in
force.
12.09 ASSIGNABILITY. This Agreement and the rights, obligations,
privileges, and interests hereof may not be assigned by either party, except
that either party may assign this Agreement and rights and interests, in whole
or in part, (i) to any of its Affiliates or (ii) with the consent of the other
party, which consent shall not be unreasonably withheld, to any purchaser of all
or substantially all of
17
its stock or assets of such party or to any acquirer or successor corporation
resulting from any merger or consolidation with or into such successor
corporation.
12.10 SUCCESSION. This Agreement and the rights and obligations granted
and undertaken hereunder shall be binding upon and inure to the benefit of the
parties hereto, and their permitted assign(s), successor(s), trustee(s) or
receiver(s) in bankruptcy.
12.11 GOVERNMENT COMPLIANCE. NexMed and Lotus shall comply with all
supranational, federal, state, and local laws, ordinances and regulations
applicable to the shipment, handling, storage, testing, use, development, sale
and/or disposal of any compound hereunder.
12.12 FORCE MAJEURE. If either party shall be delayed, interrupted in or
prevented from the performance of any obligation hereunder by reason of Force
Majeure including fire, flood, other natural disasters, war (declared or
undeclared), public disaster, strike or labor differences, governmental
enactment, rule or regulation, or any other cause beyond such party's control,
such party shall not be liable to the other therefor; and the time for
performance of such obligation shall be extended for a period equal to the
duration of the contingency which occasioned the delay, interruption or
prevention. The party invoking such Force Majeure rights of this paragraph must
notify the other party within a period of 15 days after the first and the last
day of the Force Majeure unless the Force Majeure renders such notification
impossible, in which case notification will be made as soon as possible. If the
delay resulting from the Force Majeure exceeds six months, the party not
invoking the Force Majeure rights may terminate the contract in accordance with
the conditions stipulated in this Agreement.
12.13 COUNTERPARTS. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, authorized representatives of the parties have duly
executed this Agreement in duplicate.
NEXMED INTERNATIONAL LIMITED
By: /s/ X. Xxxxxx Mo, Ph.D.
-------------------------
Name: X. Xxxxxx Mo, Ph.D.
Title: Managing Director
LOTUS MEDICAL SUPPLY, INC.
By: /s/ Xxxx-Xx Lin
------------------------
Name: Xxxx-Xx Xxx
Title: General Manager
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