LICENSE AGREEMENT
This License Agreement (the "Agreement") is made and entered into as of
this 18th day of April, 2000 by and between Columbia Laboratories, Inc., a
Delaware corporation having its principal place of business at 0000 X.X. 000
Xx., Xxxxx 000, Xxxxxxxx, Xxxxxxx 00000 ("Licensor"), and Lil' Drug Store
Products, Inc., an Iowa corporation with its principal place of business at 0000
Xxxxxxxxxxx Xxxxx XX, Xxxxx Xxxxxx, Xxxx 00000 ("Licensee");
WITNESSETH:
WHEREAS, Licensor is the owner and has the right to grant licenses with
respect to certain Technology, Patents and the Trademarks (as hereinafter
defined); and
WHEREAS, Licensor wishes to grant to Licensee an exclusive license to
the Technology, Patents and the Trademarks for the manufacture, use and sale of
the Products (as hereinafter defined) in the Territory (as hereinafter defined),
and Licensee wishes to receive such a license, on the terms and subject to the
conditions set forth herein;
NOW, THEREFORE, for and in consideration of the mutual promises and
covenants herein contained, the parties hereto agree as follows.
1. DEFINITIONS. As used in this Agreement, the following terms (except as
otherwise expressly provided or unless the context otherwise requires)
shall have the respective meanings set forth below (it being understood
that the terms defined in this Agreement shall include the singular
number in the plural, and the plural number in the singular):
(a) "Affiliate" shall mean any corporation or other business
entity that either directly or indirectly controls a party to
this Agreement, is controlled by such party, or is under
common control of such party. As used herein, the term
"control" means possession of the power to direct or cause the
direction of the management and policies of a corporation or
other entity, whether through the ownership of voting
securities, by contract or otherwise.
(b) "cGMP" shall mean current good manufacturing practice
regulations promulgated by the FDA and other regulatory
agencies.
(c) "Confidential Information" shall mean all information and/or
technical data that is disclosed by one party hereto to the
other party hereto pursuant to this
Agreement, whether written or oral, that the disclosing party
treats as confidential and identifies as such (by marking
written information "Confidential" and if oral, by promptly
reducing it to writing and marking it "Confidential"), other
than (i) information known to the receiving party or its
Affiliates prior to the disclosure of such information to such
party, provided said prior knowledge is supportable by
documentary evidence, (ii) information which at the time of
the disclosure is generally known to the public, provided that
such public knowledge does not result from any act or
disclosure by the receiving party or one of its Affiliates in
violation of the terms of this Agreement or of any other
confidentiality obligation owed to the disclosing party, (iii)
information that can be shown to be independently discovered,
after the date hereof, by a party, or one of its Affiliates,
without the aid, application or use of the disclosed
information, or (iv) information obtained by the receiving
party from a third party that is determined to be in lawful
possession of such information, provided such third party is
not in violation of any contractual or legal obligation to the
disclosing party or one of its Affiliates with respect to such
information.
(d) "Effective Date" shall mean the date May 5, 2000.
(e) "Field" shall mean the present formulations of Vaporizer in a
Bottle(R) brand cough and cold product, Advanced Formula
Legatrin P.M.(R) brand sleep-aid analgesic and Legatrin GCM(R)
brand nutritional, and their generic equivalents.
(f) "Intellectual Property Rights" shall mean trade secrets,
trademarks, trade names, logos, trade dress, graphics,
designs, patents, copyrights or other proprietary rights used
by Licensor in connection with the Products.
(g) "Net Sales" shall mean the aggregate equivalent of gross sales
received by Licensee, its Affiliates or sublicensees from or
on account of the sale of the Products to non-affiliated third
parties on which payments are due under this Agreement, less
(i) credits or allowances, if any, actually granted on account
of cash or trade discounts, recalls, rebates, rejection or
return of the Products previously sold, and (ii) excises,
sales taxes, value added taxes, consumptions taxes, duties or
other taxes imposed upon and paid with respect to such sales
(excluding income or franchise taxes of any kind). Net Sales
shall not include any transfer between Licensee and any of its
Affiliates or sublicensees for resale. No transfer of the
Products for test or development purposes or as free samples
shall be considered a sale
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hereunder for accounting and payment purposes. Net Sales shall
be determined in accordance with generally accepted accounting
principles ("GAAP").
(h) "Patents" shall mean the patents filed in the Territory owned
by the Licensor or its Affiliates or with respect to which
Licensor or its Affiliates have the right to grant licenses in
the Territory, the claims of which may be infringed, absent a
license, by the manufacture, use or sale of the Products
within the Territory, i.e. U.S. Patent No. 4,742,960.
(i) "Products" shall mean the current formulations of Advanced
Formula Legatrin P.M./Registered trademark/ brand sleep-aid
analgesic, Legatrin GCM/Registered trademark/ brand
nutritional, and Vaporizer in a Bottle/Registered trademark/
brand cough and cold product, and any and all improvements,
reformulations or advances to the existing formulations.
(j) "Technology" shall mean all pharmacological, toxicological,
preclinical, clinical, technical and other information, data
and analysis and know-how relating to the registration,
manufacture, packaging, use, marketing and sale of the
Products (including, without limitation, all words copyrighted
by Licensor) and all proprietary rights relating thereto owned
by Licensor or its Affiliates or to which Licensor or its
Affiliates has rights so as to be able to license, whether
prior to or after the Effective Date, and relating or
pertaining to the Products.
(k) "Territory" shall mean the United States of America and its
territories.
(l) "Trademarks" shall mean the United States trademarks "Advanced
Formula Legatrin P.M." (Reg. No. 1,973,493), "Legatrin GCM"
(Serial No. 75/793300), "Vaporizer in a Bottle" (Reg. No.
1,000,400), and any variations thereof.
(m) "Unit" shall mean a single item package of any of the
Products.
2. GRANT OF LICENSE.
(a) Licensor grants to Licensee, and Licensee accepts from
Licensor, on the terms and conditions stated herein, an
exclusive (even as to Licensor and Licensor's Affiliates)
right and license, with the right to sublicense, under the
Patents and Technology, only to manufacture, produce, market,
distribute, use and sell the Products in the Territory;
provided, however that Licensee will only
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sublicense the Products with Licensor's prior written
approval, which approval shall not be unreasonably withheld.
(b) Licensor grants to Licensee, and Licensee accepts from
Licensor, on the terms and conditions contained herein an
exclusive right and license, with the right to sublicense, to
use the Trademarks in the manufacture, distribution,
advertising, marketing, use and sale of the Products (and any
line extension to the Products as to which Licensee has
obtained Licensor's prior written consent, not to be
unreasonably withheld) only in the Territory. Neither Licensor
or Licensee shall use, nor permit any of its Affiliates or
other licensees to use, the Trademarks or any similar marks on
any other product marketed, used or sold in the Territory
without the prior written consent of the other party hereto.
Licensee shall not use, nor permit any of its Affiliates or
any other licensees to use, the Trademarks or any similar
marks outside the Territory.
(c) Licensee may at any time request from Licensor, and Licensor
agrees to grant directly to any party in the Territory
exclusive license rights consistent with those granted to
Licensee herein. Accordingly, upon receipt of Licensee's
request, Licensor shall enter into and sign a separate direct
license agreement or agreements with the companies designated
by Licensee in the request. All direct agreements shall be
prepared by Licensee. In the absence or upon the expiration of
laws and regulations to the contrary, the terms and conditions
thereof shall not be less favorable to Licensor than those
contained in this Agreement and shall be similar to the terms
and conditions contained in this Agreement. Such licenses and
agreements, and the party to whom they are granted, must be
approved by Licensor, which approval shall not be unreasonably
withheld.
(d) To the extent reasonable and necessary for Licensee to fulfill
its obligations hereunder, Licensor shall transfer or grant
Licensee the rights to use Licensor's art work, customer
lists, records, web-sites, contracts, advertising/media
schedules in connection with the manufacturing, production,
use or sale of the Products in the Territory.
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3. LICENSE FEES. In consideration of the license and other rights granted
to Licensee hereunder, Licensee shall pay to Licensor twenty percent
(20%) of the Net Sales of the Products during the term hereof, with
such fees to be paid to Licensor within (thirty) 30 days after the end
of the second month following the Effective Date, and thereafter on a
monthly basis within thirty (30) days after the close of each month.
Each payment of license fee shall be accompanied by documentation
evidencing the Net Sales for the previous period.
4. MANUFACTURE AND DISTRIBUTION.
(a) Licensor shall assign all contracts or agreements with
suppliers, wholesalers, manufacturers, distributors and
retailers in connection with the manufacture, production, sale
and distribution exclusively of the Products during the term
hereof (including any open customer purchase orders), and
Licensee shall assume responsibility for the same. In
addition, Licensor shall transfer, assign or license to
Licensee all necessary rights to the Products, Intellectual
Property and Technology reasonably necessary for Licensee to
assume such responsibility; provided, however, in no event
shall Licensee be responsible for any royalty, license or
other similar fees or payments to third parties required in
connection with the rights to the Products, Intellectual
Property or Technology. Licensor shall reasonably make
available to Licensee all staff necessary to facilitate the
transition of the manufacturing and production of the
Products, with such staff to include, but not be limited to,
the Director of Sales, the Vice President of Research and
Development, the Corporate Controller, and the Chairman and
CEO. The transition period is anticipated to last sixty (60)
days. Licensee and Licensor each agree to use their
commercially reasonable best efforts to facilitate the
transition.
(b) During the term of the Agreement, Licensor shall not sell or
license for sale in the Territory any product in the Field.
Licensor represents that as of the Effective Date it has not
entered into any arrangement that would contravene the
intentions of this paragraph.
(c) As may be required for regulatory purposes, Licensee grants
Licensor the right to refer to, and shall cause its contract
supplier to grant to Licensor access to,
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contract supplier's master file relating to the Products and
undertakes to notify Licensor and provide Licensor with
details of any changes to said master file or other filings by
the contract supplier with the regulatory authorities relative
to the Products. Licensee shall obtain Licensor's consent
before it or its contract supplier makes any material change
in any manufacturing process for the Products, which consent
shall not be unreasonably withheld.
(d) Upon reasonable prior written notice given by Licensor to
Licensee, Licensee shall permit and shall cause its contract
supplier to permit representatives of Licensor or designees of
Licensor acceptable to Licensee and/or contract supplier, to
inspect any manufacturing, quality control or testing
facilities used by or in connection with the manufacture or
testing of the Products and annual cGMP audits provided that
such representatives or designees of Licensor shall conduct
such inspections in a manner that shall reasonably cause the
least possible interruption to Licensee's or the contract
supplier's operations under the particular circumstances. Such
inspection shall take place in a timely manner and shall be
permitted to take place during any or all phases of
manufacturing, quality control and testing, and shall provide
for Licensee and/or the contract supplier's granting to
Licensor access to information in its possession relevant to
determining whether cGMP and Licensor's quality standards in
effect as of the Effective Date are being met and are likely
to be met with respect to manufacture of the Products.
(e) Personnel of Licensor or Licensor's designee shall be entitled
to witness the manufacturing of test batches, scale-up batches
and full-size production batches.
(f) All Products manufactured and supplied hereunder shall meet
the quality control specifications and the specifications in
the applicable regulatory filing through the expiration date
stated on that Product package, as reasonably determined by
Licensor. Such Products shall also not be adulterated or
misbranded within the meaning of the U.S. Food, Drug and
Cosmetic Act, as amended.
(g) Licensor agrees that the manufacturers and manufacturing
processes currently used by Licensor in the manufacture of the
Products, if continued by Licensee, shall meet all of the
requirements set out in this Section 4.
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(h) Licensee shall have the right to purchase from Licensor the
Product inventory (samples and Product prepared for sale) on
an as needed basis for a six month period beginning after the
Effective Date. The Product inventory to be purchased by
Licensee shall be selected by Licensee in its sole discretion.
Initially, Licensee intends to use Licensor's current
outsource distribution partner, Redford Distributing in
Redford, Michigan. Licensee shall be responsible for the
distribution/shipping fees for inventory shipped out of the
Redford facility; provided, however, if, within ninety (90)
days after the Effective Date, Licensee elects to move the
Product inventory to a Licensee designated warehouse for
fulfillment, Licensor and Licensee shall each bear one-half
(1/2) the costs of transportation of such Product inventory to
such warehouse. The parties agree to work together in
connection with the distribution and sale of such inventory
because the inventory lists Licensor as the manufacturer.
Licensee shall pay Licensor for the Product inventory
purchased within the first two months after the Effective Date
within thirty (30) days after the end of such second month
following the Effective Date and thereafter on a monthly basis
within thirty (30) days after the close of each month in which
Licensee purchases Product inventory from Licensor.
5. RETURNS AND CUSTOMER COMMITMENTS. Licensor shall be responsible for any
returns of Products sold and shipped by Licensor prior to the Effective
Date ("Returns"). Licensee shall be entitled to a credit against the
next license fees due hereunder for Returns as follows: (i) a credit
equal to the gross margin (net wholesale price less cost of goods sold)
on such Returns; or (ii) a credit equal to the amount of any refund
paid by Licensee for any Returns of expired or damaged Products.
Expired Products shall mean Units of (i) Legatrin P.M. that have twelve
(12) months or less before their expiration date; (ii) Legatrin GCM
that have eighteen (18) months or less before their expiration date;
and (iii) Vaporizer in a Bottle that have less than twenty-four (24)
months or less before their expiration date. Damaged Products shall
include, but are not limited to, those Products with a retailer's
inventory or pricing marking affixed. Notwithstanding the above, if
Licensee sells any expired Product after receiving a credit for such
returned Product, Licensee shall pay Licensor the Net Sales of such
returned Product, less any out-of-pocket expenses incurred by Licensee
in such sale.
To the extent Licensee, in its reasonable judgment, is required to
honor any documented customer commitment, Licensor will promptly reimburse
Licensee for such commitment. Licensee shall provide Licensor with all necessary
financial records to verify such commitment. A documented customer commitment
shall mean any written documentation related to financial or non-financial
customer or broker commitments made by Licensor related to the Products.
Commitments may include customer or broker rebates, deductions, credits,
allowances, promotional guarantees, xxxx backs and SPIFFS. Such documented
customer commitments must clearly indicate that Licensor and/or its
representatives agreed to such commitment. If a customer or broker commitment is
undocumented, Licensee and Licensor agree to review such alleged commitment and,
subject to Licensor's approval, which approval shall not be unreasonably
withheld, Licensor will promptly reimburse Licensee for any commitment Licensee
makes to honor such undocumented customer or broker commitment.
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6. MARKETING.
(a) Licensee will be responsible for actively marketing and
selling the Products (Vaporizer in a Bottle/Registered
trademark/ brand cough and cold product and Advanced Formula
Legatrin P.M./Registered trademark/ brand sleep-aid analgesic
only) in the Territory, which may include use of samples,
national media marketing plans, coop advertising, trade shows,
etc., and Licensor may, at its option, participate in or
support such marketing efforts. Licensee will use reasonable
efforts to market and sell Legatrin GCM/Registered trademark/
brand nutritional.
(b) Licensee will timely provide quarterly sales and other
marketing information useful to Licensor in monitoring sales
progress.
(c) Licensor shall notify Licensee prior to Licensor communicating
with any regulatory authorities with respect to the Products.
Licensee shall promptly disclose and refer to Licensor any
regulatory action or inquiry concerning the Products.
(d) Licensee will maintain a qualified, national sales force to
sell/promote the Product.
7. MAINTENANCE OF PATENTS AND TRADEMARKS.
(a) Licensor and Licensee expressly acknowledge that Licensor does
not intend to further develop the Patents, Trademarks or
Technology for the Products. However, Licensor shall keep
Licensee currently advised of the status of the Patents, the
Trademarks and/or Technology. Licensor shall bear all costs
for the maintenance of the Patents and Trademarks. If Licensor
fails to carry out such obligations set forth in this Section
7, Licensee may, in its sole discretion, carry out such
maintenance on Licensor's behalf and may set off such cost
against amounts due to Licensor hereunder, provided that such
action by Licensee is commercially reasonable.
(b) Trademark Use and Quality Control
(i) Licensee agrees to use the Trademarks in accordance
with good customary trademark practice, and to avoid
taking any action that would
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in any manner impair or detract from the value of the
Trademarks, or the goodwill and reputation of
Licensor; provided, however, Licensee may modify
and/or redesign the labels and other packaging of the
Products with Licensor's prior written approval,
which approval shall not be unreasonably withheld.
Licensee acknowledges Licensor's ownership of the
Trademarks and related goodwill.
(ii) Licensee agrees to use the Trademarks only in the
form and manner and with appropriate legends as
approved from time to time by Licensor, and not to
use or allow use of any other trademark or service
xxxx in combination with the Trademarks without the
prior written approval of Licensor, provided that
such approval shall be granted unless Licensor
reasonably objects.
8. INFRINGEMENT OF PATENTS, TECHNOLOGY AND/OR TRADEMARKS.
(a) Licensee and Licensor shall each promptly notify the other
following the discovery of any alleged infringement or
unauthorized use of the Patents, Technology and/or Trademarks
that may come to their attention. Licensor shall promptly
undertake, at Licensor's expense, commercially reasonable
efforts to obtain a discontinuance of the infringement or
unauthorized use and, if not successful, Licensor may, at its
sole option, bring suit against such infringer.
(b) If Licensor fails to obtain a discontinuance of such
infringement and/or elects not to bring an infringement suit,
then Licensor shall give notice in writing to Licensee within
thirty (30) days of such failure or election and Licensee may,
but is not required to, obtain a discontinuance of the alleged
infringement or unauthorized use or bring an infringement
suit; provided, that without the prior written consent of
Licensor, Licensee shall not agree to any settlement with
respect to such infringement or unauthorized use that
compromises the value of the license granted hereunder. Any
infringement suit by Licensee shall be in the name of
Licensee, or in the name of Licensor, or jointly by both
Licensee or Licensor, as may be required by the law of the
forum or as may be reasonably requested by Licensor to protect
its interests.
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Licensor shall execute such documentation as may be reasonably
required by Licensee with respect to such suit.
(c) It is understood and agreed that the party to this Agreement
that institutes suit shall bear solely all costs and expenses
in connection therewith and shall be entitled to recover all
costs first and then the balance of any sums received,
obtained, collected or recovered, whether by judgment,
settlement or otherwise as a result of such suit, shall be
paid to Licensor and/or Licensee to cover their respective
damages, with any balance to be divided 50% to Licensee and
50% to Licensor; provided, however, that if a settlement by
Licensee (with the prior written consent of Licensor to the
extent required above) includes the granting by Licensee of
rights hereunder to a third party, amounts received by
Licensee from such settlement shall not be shared with
Licensor and sales of the Products by such third party
pursuant to such rights shall not be included in Net Sales. In
addition, with respect to any suit for infringement or
unauthorized use of the Patents, Technology and/or Trademarks,
the party that did not institute suit shall render all
reasonable assistance to the party that did institute suit at
the latter's expense, including, but not limited to, executing
all documents as may be reasonably requested by the party that
did institute the suit. The party that did institute suit
shall keep the other party informed of, and shall promptly
consult with the other party regarding, the status of any such
suit and shall provide the other party with copies of all
pleadings filed in such suit.
9. INFRINGEMENT OF THIRD-PARTY INTELLECTUAL PROPERTY RIGHTS.
(a) Each party hereto shall notify the other promptly of the
receipt of notice of any action, suit or claim alleging
infringement by the Patents, the Technology, the Trademarks or
the Products of any intellectual property rights of a third
party.
(b) In no event shall either party settle any such allegation of
infringement without the prior written consent of the other,
which consent shall not be unreasonably withheld or delayed.
If any such settlement requires Licensee to make royalty or
other payments to a third party in order for Licensee to make,
have made, use
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or sell or to continue making, having made, using or selling
the Products in the Territory, Licensee shall be entitled to
offset such amounts so paid to any third party against any
amounts that may thereafter become due to Licensor under this
Agreement.
10. CONFIDENTIALITY. Each party hereto shall hold all Confidential
Information in confidence, use it only in connection with the
performance of its obligations pursuant to this Agreement and use its
diligent effects (consistent with those it uses to safeguard its own
confidential information) to safeguard Confidential Information and to
prevent the unauthorized use or disclosure of any Confidential
Information. Each party hereto shall ensure that its Affiliates or
employees who have access to any Confidential Information shall be made
aware of and subject to these obligations. The receiving party may
disclose Confidential Information to regulatory authorities for the
purpose of seeking marketing approval of the Products pursuant to this
Agreement and may also disclose Confidential Information to individuals
who have a need to know to effectuate the development and
commercialization of the Products pursuant to this Agreement, provided
such individual is bound by a confidentiality obligation comparable to
the obligation set forth in this Section 10. The obligations of the
parties hereto under this Section 10 shall survive the expiration or
termination of this Agreement.
11. REPRESENTATIONS, WARRANTIES AND COVENANTS AND INDEMNIFICATION.
(a) Licensor hereby represents, warrants and covenants the
following:
(i) Licensor is a corporation duly organized, existing
and in good standing under the laws of Delaware, with
full right, power and authority to enter into and
perform this Agreement and to grant all of the
rights, powers and authorities herein granted.
(ii) The execution, delivery and performance of this
Agreement do not conflict with, violate or breach any
agreement to which Licensor is a party, or Licensor's
articles of incorporation or bylaws.
(iii) All manufacturing, production, marketing and sales
agreements that are assigned hereby related to the
Products, are assignable to Licensee.
(iv) This Agreement has been duly executed and delivered
by Licensor and is a legal, valid and
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binding obligation enforceable against Licensor in
accordance with its terms.
(v) Licensor shall comply with all applicable laws,
consent decrees and regulations of any federal, state
or other governmental authority in performing this
Agreement.
(vi) As of the Effective Date, Licensor knows of no issued
or pending patents, trademarks or patent or trademark
applications relating to the Products that would
prevent Licensee from using or selling the Products
in the Territory.
(vii) As of the Effective Date, there are no outstanding,
pending or threatened product liability or breach of
warranty or other similar claims, actions, suits,
demands, investigations, arbitrations, administrative
or other proceedings, or orders, injunctions,
judgments or decrees of any court or government
agency in connection with the Products in the
Territory.
(viii) As of the Effective Date, there are no outstanding,
pending or threatened violations, notice of
noncompliance, warning letters, orders, injunctions,
judgments or decrees of any court or government
agency, investigations, claims, actions, suits,
demands, administrative or other proceedings that
have resulted or might result in the revocation,
suspension or modification of any regulatory approval
for the Products in the Territory.
(ix) Licensor ceased, as of March 13, 2000, all further
sales of the Products to Quality King.
(x) Licensor has conducted the sales of the Products
consistent with its past practices and in the
ordinary course of business from January 1, 2000
through the Effective Date.
(xi) All contracts relating to the Products, the
Intellectual Property Rights and the Technology, as
they relate exclusively to the Products, including
all manufacturing, production, marketing and sales
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agreements related thereto, are assignable to
Licensee.
(xii) All historical sales, costs of goods sold and
operating expenses in connection with the Products
are substantially accurate and properly classified on
Licensor's financial statements and on any other
written information provided by Licensor to Licensee
in connection with this Agreement.
(b) Licensee hereby represents, warrants and covenants the
following:
(i) Licensee is a corporation duly organized, existing
and in good standing under the laws of the State of
Iowa, U.S.A., with full right, power and authority to
enter into and perform this Agreement.
(ii) The execution, delivery and performance of this
Agreement do not conflict with, violate or breach any
agreement to which Licensee is a party, or Licensee's
articles of organization or bylaws.
(iii) This Agreement has been duly executed and delivered
by Licensee and is a legal, valid and binding
obligation enforceable against Licensee in accordance
with its terms.
(iv) Licensee shall comply with all applicable laws,
consent decrees and regulations of any federal, state
or other governmental authority in performing this
Agreement.
(c) Indemnification.
(i) Licensor agrees to indemnify and hold harmless
Licensee, its Affiliates and sublicensees and their
respective employees, agents, officers and directors
from and against any claims, losses, liabilities,
damages, costs and expenses (including reasonable
attorney fees) incurred by Licensee, its Affiliates
or sublicensees arising out of or in connection with
any (A) breach by Licensor of any representation,
warranty, covenant or obligation hereunder, (B) act
or omission on the part of
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Licensor or any of its employees or agents in the
performance of this Agreement, (C) claim or demand of
any kind or injury to a person or property arising
from Licensor's or its contractor manufacturer's
manufacturing, packaging or labeling of the Products;
provided, that this indemnification shall not apply
to the extent that such claim or demand has resulted
from changes in such manufacturing, packaging or
labeling conducted by or at the direction of Licensee
after Closing, and (D) payments, commissions or fees
of any kind due to consultants or brokers retained by
Licensor relating to the Products.
(ii) Licensee agrees to indemnify and hold harmless
Licensor and its Affiliates and their respective
employees, agents, officers and directors from and
against any claims, losses, liabilities, damages,
costs and expenses (including reasonable attorney
fees) incurred by Licensor or its Affiliates arising
out of or in connection with any (A) breach by
Licensee of any representation, warranty, covenant or
obligation hereunder, (B) claim or demand of any kind
for injury to person or property arising from
Licensee's, its Affiliates' or sublicensee's
manufacture, marketing, distribution and sale of the
Products, provided, that this indemnification shall
not apply to the extent such claim or demand has
resulted from any negligent act or omission with
respect to such Products by Licensor, its Affiliates,
their employees, agents or contract manufacturers,
(C) act or omission on the part of Licensee or any of
its employees or agents in the performance of this
Agreement, (D) third party claims alleging
infringement of such third parties' intellectual
property rights as a result of the advertisement,
promotion or marketing materials created by or at the
direction of Licensee, its Affiliates or sublicensees
and used in connection with the sale of the Products
hereunder, and (E) payments, commissions or fees of
any kind due to consultants or brokers retained by
Licensee relating to the Products.
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(iii) A party seeking indemnification under this paragraph
11(c) (the "Indemnified Party") must give prompt
written notice thereof to the other party (the
"Indemnifying Party"). The Indemnifying Party shall
have the right to defend any such claim or demand
subject to the right of the Indemnified Party to
participate with counsel of its choice in such
defense, but the fees and expenses of such additional
counsel shall be at the expense of the Indemnified
Party. The Indemnified Party shall cooperate fully in
all respects with the Indemnifying Party in any such
compromise, settlement or defense, including, without
limitation, by making available all pertinent
information and personnel under its control to the
Indemnifying Party. The Indemnifying Party will not
compromise or settle any claim or demand (other than,
after consultation with Indemnified Party, a claim or
demand to be settled by the payment of money damages
and/or the granting of releases) without the prior
written consent of the Indemnified Party, which
consent shall not be unreasonably withheld.
(iv) Each party shall maintain and keep in force for the
term of this Agreement comprehensive general
liability insurance including Products/Completed
Operations, Contractual and Broad Form Property
Damage covering its indemnification obligations
hereunder with a minimum limit of Ten Million Dollars
($10,000,000) per annum combined single limit for
Bodily Injury and Property Damage, to be increased as
appropriate, consistent with prudent business
practices prevailing in the business. Promptly after
execution and delivery of this Agreement, each party
shall furnish a certificate of insurance to the other
party evidencing the foregoing endorsements, coverage
and limits, and providing that such insurance shall
not expire or be canceled or modified without at
least thirty (30) days prior notice to the other
party.
12. TERM OF LICENSE. Except as otherwise provided for herein, the term of
the Agreement shall be for five (5) years from the Effective Date, and
shall automatically renew for additional five (5) year periods unless
either party provides the other with
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written notice of its intent not to renew this Agreement at least
ninety (90) days prior to the expiration of the then current term.
13. TERMINATION.
(a) This Agreement may be terminated upon the mutual written
agreement of the parties.
(b) Either party may terminate this Agreement forthwith by written
notice to the other, if the other party commits a material
breach of any part of this Agreement and such breach has not
been remedied by the breaching party within sixty (60) days
after written notice of such breach has been given by the
other party. If the breach cannot be remedied within sixty
(60) days, the breaching party may submit a plan within this
sixty (60) day period, reasonably acceptable to the other
party, outlining the steps that it intends taking to cure the
breach and then must cure the breach in accordance with the
terms of such plan or be subject to an action by the other
party for termination of this Agreement pursuant to this
paragraph 13(b) for breach of such plan.
(c) This Agreement may also be terminated by written notice of one
party, if the other party shall be involved in financial
difficulties as evidenced:
(i) by its commencement of a voluntary case under any
applicable bankruptcy code or statute, or by its
authorizing, by appropriate proceedings, the
commencement of such voluntary case; or
(ii) by its failing to receive dismissal of any
involuntary case under any applicable bankruptcy code
or statute within sixty (60) days after initiation of
such action or petition; or
(iii) by its seeking relief as a debtor under any
applicable law of jurisdiction finding it to be
bankrupt or insolvent, or ordering or approving its
liquidation, reorganization or any modification or
alteration of the rights of its creditors or assuming
custody of, or appointing a receiver or other
custodian for, all or a substantial part of its
property or assets; or
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(iv) by the entry of an order by a court of competent
jurisdiction finding it to be bankrupt or insolvent,
or during or approving its liquidation,
reorganization or any modification or alteration of
the rights of its creditors or assuming custody of,
or appointing a receiver or other custodian for, all
or a substantial part of its property or assets; or
(v) by its making an assignment for the benefit of, or
entering into a composition with its creditors, or
appointing or consenting to the appointment of a
receiver or other custodian for all or a substantial
part of its property.
(d) Licensee may terminate this Agreement at any time with ninety
(90) days written notice to Licensor if the Products are not a
commercial success, as determined by Licensee in its sole
discretion, or for reasons of safety or efficacy of the
Products.
(e) Licensor may terminate this Agreement at any time with ninety
(90) days written notice to Licensee if Licensee fails to meet
its marketing obligations set out in Section 6 above.
(f) The failure by a party to exercise its rights to terminate
this Agreement pursuant to this Section 13 in the event of any
occurrence giving rise thereto shall not constitute a waiver
of such rights in the event of any subsequent occurrence.
(g) Termination of this Agreement shall not release either party
from its obligations accrued prior to the effective date of
termination nor deprive either party from any rights that this
Agreement provides shall survive termination.
14. OPTION. Licensor hereby grants Licensee an option to purchase any or
all of the applicable Intellectual Property Rights and Technology
related exclusively to the Products at any time during the term hereof
upon ninety (90) days written notice to Licensor. The purchase price
for such Intellectual Property Rights and Technology shall be an amount
equal to one times the average annual Net Sales of such Products from
1999 until the date Licensor exercises the option; provided, however,
such purchase price shall not be less than the average annual Net Sales
of such Products in 1999. The
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purchase of such Intellectual Property Rights and Technology shall
include, at no additional cost or expense, any necessary license of the
Technology or Patents or Intellectual Property Rights from third
parties. The closing, which closing shall be established by Licensor
and Licensee, shall be no later than one hundred twenty (120) days
after Licensor receives Licensee's written notice of its election to
exercise the option to purchase such Intellectual Property Rights and
Technology.
In addition, Licensor hereby grants Licensee a right of first refusal
to purchase or license the Products in other territories as such purchases or
licenses may become available.
15. PUBLICITY. The parties hereto shall coordinate the preparation and
issuance of any public announcement of Agreement. Any such announcement
shall comply with relevant Securities and Exchange Commission
requirements and shall take into account any reasonable concern
regarding the trade. The wording of such announcement shall be agreed
upon by the parties before release.
16. AUDITS. Licensee shall keep accurate records of all Product sales and
other relevant data concerning the Products for a period of two (2)
years following the year in which such records were created, and
Licensee shall provide Licensor quarterly reports thereof thirty (30)
days after the end of the applicable calendar quarter. Such reports
shall state the number of Units of Product sold by Licensee, its
Affiliates or sublicensees, if any, during the applicable quarter, as
well as the number of free samples of the Products distributed, any
Product returns made during such calendar quarter, together with an
accounting of Net Sales with respect to such calendar quarter. Once a
year, upon reasonable notice, at times mutually agreed upon and during
business hours, Licensor, at Licensor's cost, may have the accounts of
Licensee, its Affiliates or sublicensees for the preceding two (2)
calendar years relating to the Products reviewed by independent
certified public accountants appointed by Licensor and reasonably
approved by Licensee, solely in order to verify amounts due under this
Agreement. Licensor and Licensee shall mutually determine a general
strategy for such audit in advance of its conduct. Said accountant
shall not disclose to Licensor any information except that which should
properly be contained in a quarterly report required under this
Agreement. Licensee shall promptly pay any underpayment evidenced by
such audit, and Licensor shall promptly refund any overpayment
evidenced by such audit. If such an audit evidences an underpayment of
more than five percent (5%) with respect to the amounts actually paid,
Licensee shall promptly pay such underpayment to Licensor with interest
at the prime rate as set by Citibank, from the time when such
underpayment accrued, and shall reimburse Licensor for the reasonable
costs and expenses (including fees) of such audit.
17. ARBITRATION.
(a) ARBITRATION. In the event of any dispute (a "Dispute") between
the parties hereto subsequent to the Effective Date with
respect to the breach, interpretation or
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enforcement of this Agreement, such dispute shall be resolved
by binding arbitration in accordance with the commercial
arbitration rules of the American Arbitration Association
("AAA"). Notwithstanding the foregoing, the parties intend to
depart from the AAA commercial arbitration rules to the extent
any of the following provisions conflict with such rules.
(b) PANEL. Any arbitration shall take place before a panel of
three (3) arbitrators (the "Panel"). The Panel shall be
selected in accordance with the AAA's procedures for selecting
an arbitration Panel, provided, that the Panel shall include
one certified public accountant and one transactional lawyer,
each of whom shall have had at least ten (10) years experience
in his or her respective field, and at least three (3) years
of arbitration experience. If any arbitrator on the Panel
neglects or refuses to act or is or becomes incapable of
acting, or dies before the Panel shall have made its award,
and the parties fail to agree or concur in the appointment of
another arbitrator, either party may serve on the other a
notice in writing requiring him to agree and concur in the
appointment of another arbitrator, and if such appointment is
not made within twenty (20) days from the service of said
notice, then the remaining arbitrators shall have power on the
request in writing of either party to appoint another
arbitrator who shall have the like authority to act in the
arbitration and make an award and the like powers in all
respects as if he had been appointed by the parties.
(c) BINDING EFFECT. Each of the parties agrees that the decision
of the Panel shall be final and binding on the parties hereto
and, provided diversity or other federal jurisdiction exists,
the parties hereby consent to the entry of final judgment
thereon in the United States District Court for the Southern
District of New York, and to the issuance of execution on the
judgment. The award may be appealed only to the court in which
judgment on the award is required to be entered and only to
the extent the award contains material errors of applicable
law, is arbitrary or capricious, or was fraudulently obtained.
If the parties cannot meet the applicable requirements for
federal jurisdiction, the parties agree to the entry of
judgment in the State Court of New York, and to the issuance
of execution on such judgment. The parties hereto hereby
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consent to the jurisdiction of such court (i.e., such federal
court, or, in the event federal jurisdiction does not exist,
such state court) in reference to any matter arising out of
the arbitration or this Agreement including but not limited to
confirmation of any arbitration award and enforcement thereof
by entry of judgment thereon or by any other legal remedy. As
to any Dispute which under the terms hereof is made subject to
arbitration, no suit at law or in equity based on such Dispute
shall be instituted by either party hereto other than to
enforce the award of the Panel. If any controversy shall arise
after the award as to whether the award or any part thereof
has been complied with, such controversy shall be determined
by the same Panel.
(d) EVIDENCE. The Panel shall not be bound by strict rules of
evidence and may give such right to evidence as may seem right
and proper to it. The Panel shall schedule a pre-hearing
conference to resolve procedural matters, arrange for the
exchange of information, obtain stipulations, and narrow the
issues. The parties will submit proposed discovery schedules
to the Panel at the pre- hearing conference. The scope and
duration of discovery will be within the sole discretion of
the Panel. Unresolved discovery disputes may be brought to the
attention of the chair of the arbitration panel and may be
disposed of by the chair of the panel. The Panel shall have
the discretion to order a pre-hearing exchange of information
by the parties, including, without limitation, production of
requested documents, exchange of summaries of testimony of
proposed witnesses, and examination by deposition of parties
and third-party witnesses. This discretion shall be exercised
in favor of discovery reasonable under the circumstances. The
arbitration shall be conducted in New York, New York. Any
party may be represented by counsel or other authorized
representative. In rendering a decision(s), the Panel shall
determine the rights and obligations of the parties according
to the substantive and procedural laws of New York and the
terms and provisions of this Agreement. The Panel's decision
shall be based on the evidence introduced at the hearing,
including all logical and reasonable inferences therefrom. The
Arbitrator may make any determination, and/or grant any remedy
or relief that is just and equitable, subject to the express
provisions of this Agreement. The Panel shall have power to
award and direct that the parties
-20-
or any of them shall execute such releases, conveyances,
assurances, and do things as the Panel shall think fit and
such releases, conveyances, assurances and things shall be
executed and done accordingly. The Panel shall have the
authority to proceed ex parte in case of the nonattendance of
either of the parties or of their witnesses after thirty (30)
days prior notice in writing by the Panel given to the parties
respectively or their respective attorneys or agents notifying
the time and place of meeting to proceed with the reference.
Any provisional remedy that would be available from a court of
law shall be available from the arbitrator to the parties to
this Agreement pending arbitration.
(e) WAIVER OF CONSEQUENTIAL DAMAGES. The Panel shall have no
authority to award consequential damages, punitive damages,
and all other damages not measured by the prevailing party's
actual damages, and each party hereby waives all claims to
same. The Panel may not in any event make any ruling, finding
or award that does not conform to the terms and conditions of
the Agreement. Liabilities for taxes are direct damages.
(f) DISCLOSURE. Except to the extent disclosure, filing, reporting
or announcement thereof is required by law, including by any
rules or regulations of any applicable governmental,
regulatory or stock exchange agency or authority, neither a
party nor an arbitrator may disclose the existence, content or
results of any arbitration hereunder without the prior written
consent of both parties, except to the extent that the
recordation of a final judgment causes such matters to become
public.
18. RIGHT OF FIRST OFFER AND REFUSAL. If at any time during the term of
this Agreement, Licensor desires to market, sell or distribute in the
Territory any over-the- counter product closely related to the Field,
then Licensor shall provide Licensee the right of first offer and
refusal to present a proposal to Licensor to market and distribute any
such product on an exclusive basis within the Territory.
19. NOTICES. All notices required hereunder shall be in writing and shall
be deemed to be properly given if sent by air courier to the party to
be notified at the address set forth on page 1 hereof, or at such other
latest address as either party may hereafter designate in writing to
the other; provided that a copy of each notice to be sent to Licensor
hereunder shall also be sent by the same means to Xxxxxxx X. Xxxxxxx,
Chairman of the Board, Columbia Laboratories, Inc., 0000 X.X. 000 Xx.,
Xxxxx 000,
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Xxxxxxxx, Xxxxxxx 00000; and further provided that a copy of each
notice set to Licensee hereunder shall also be sent by the same means
to Xxxxx XxXxxx, 0000 Xxxxxxxxxxx Xxxxx XX, Xxxxx Xxxxxx, Xxxx 00000.
The date of service of any notice to sent by air courier shall be the
date of receipt.
20. TAX. All taxes levied on account of any payments accruing under this
Agreement that constitute income to Licensor, shall be the obligation
of Licensor, and if provision is made in law or regulation for
withholding, such tax shall be deducted from any payment then due, paid
to the proper taxing authority, and receipt for payment of the tax
secured and promptly sent to Licensor.
21. INDEPENDENT CONTRACTORS. The relationship of the parties under this
Agreement is that of independent contractors. Neither party shall be
deemed to be the agent of the other and neither is authorized to take
any action binding upon the other.
22. ENTIRE AGREEMENT; MODIFICATION. This Agreement, including the Schedules
hereto, contains the entire understanding between the parties hereto
relating to the subject matter hereof, there being no terms and
conditions other than those set forth herein, and it supersedes all
prior agreements, written or oral, between the parties hereto with
respect to the matters covered hereunder. This Agreement may not be
modified, altered or otherwise changed other than by an instrument in
writing, duly executed by each of the parties hereto.
23. SEVERABILITY. If any provision of this Agreement should be or becomes
fully or partly invalid or unenforceable for any reason whatsoever or
should be adjudged to violate any applicable law, this Agreement is to
be considered divisible as to such provision and such provision is
deemed to be deleted from this Agreement, and the remainder of this
Agreement shall be valid and binding as if such provision were not
included herein; provided, however, that this Agreement is not rendered
fundamentally different in its content or effect.
24. EFFECT OF HEADINGS. The headings for the sections and paragraphs of
this Agreement are to facilitate reference only, do not form a part of
this Agreement, and shall not in any way affect the interpretation
hereof.
25. CHOICE OF LAW. This Agreement and performance hereof shall be construed
and governed by the laws of the State of New York and of the United
States. Any dispute, controversy, claim or difference arising between
the parties out of, relating to, or in connection with this Agreement
shall be submitted to the jurisdiction of the courts sitting in the
State of Iowa or the State of New York, at the option of the party
filing such action.
26. NO WAIVER. No delay or omission or failure to exercise any right or
remedy provided for herein shall be deemed to be a waiver thereof or
acquiescence in the event giving rise to such right or remedy.
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27. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate
counterparts, each of which, when so executed shall be deemed an
original, but all such counterparts shall constitute but one and the
same instrument.
28. FURTHER ASSURANCES. Licensor and Licensee each agree to produce or
execute such other documents or agreements as may be necessary or
desirable for the execution and implementation of this Agreement and
the consummation of the transactions contemplated hereby.
29. BANKRUPTCY. All Trademark, Patent and Technology rights and licenses
granted to the Products under or pursuant to this Agreement by Licensor
to Licensee are, and shall otherwise be deemed to be, for purposes of
Section 365(n) of the United States Bankruptcy Code, as amended from
time to time (the "Bankruptcy Code"), licenses of rights to
"intellectual property" as defined under Section 101 (35A) of the
Bankruptcy Code. The parties hereto agree that so long as Licensee, as
a licensee of such rights under this Agreement, makes all payments to
Licensor required under this Agreement, Licensee shall retain and may
fully exercise all of its rights and elections under the Bankruptcy
Code. The parties further agree that, if any proceeding shall be
instituted by or against Licensor seeking to adjudicate it as bankrupt
or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief or composition of it or its
debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking an entry of an order
for relief or the appointment of a receiver, trustee or other similar
official for its or any substantial part of its property or appointment
of a receiver, trustee or other similar official for it or any
substantial part of its property or it shall take an action to
authorize any of the foregoing actions, Licensee, as a licensee of such
rights under this Agreement, shall retain and may fully exercise all of
its rights and elections under the Bankruptcy Code. The parties further
agree that, in the event of the commencement of a bankruptcy proceeding
by or against Licensor under the Bankruptcy Code, Licensee shall be
entitled to a complete duplicate of (or complete access to, as
appropriate) any such intellectual property and all embodiment of such
intellectual property, and the same, if not already in its possession,
shall be promptly delivered to Licensee (i) upon any such commencement
of a bankruptcy proceeding upon written requires therefor by Licensee,
unless Licensor elects to continue to perform all of its obligations
under this Agreement, or (ii) if not delivered under (i) above, upon
the rejection of this Agreement by or on behalf of Licensor, upon
written request therefor by Licensee. In addition the parties agree
that in such event the intellectual property delivered to Licensee
shall include all Technology necessary or useful to give Licensee the
capability of manufacturing the Products and such Technology shall be
delivered to Licensee in such a way as to communicate it to Licensee
promptly, effectively and economically.
30. FORCE MAJEURE. No failure or omission by a party hereto in the
performance of any obligation of this Agreement shall be deemed a
breach of this Agreement nor shall
-23-
it create any liability if the same shall arise from any cause or
causes beyond the control of the party, including, but not limited to,
the following, which, for the purposes of this Agreement, shall be
regarded as beyond the control of the party in question: acts of God,
acts or omissions of any government, any rules, regulations, or orders
issued by any governmental authority or any officer, department,
agency, or instrumentality thereof, fire, storm, flood, earthquake,
accident, war, rebellion, insurrection, riot, invasion, strikes,
lockouts; provided however, that the party so affected shall promptly
advise the other party of the existence of such causes of
nonperformance, shall use its best efforts to avoid or remove such
causes of nonperformance and shall continue hereunder wit the utmost
dispatch whenever such causes are removed.
31. PERFORMANCE BY AFFILIATES. The parties agree that certain of their
rights and obligations under this Agreement may not be carried out by
one or more of their Affiliates; provided, however, that each party
shall remain responsible for the acts and omission of its Affiliates.
The parties further understand and agree that no such Affiliate is a
party to this Agreement, and, except as contemplated by this Agreement,
is not the agent of such party for purposes hereof, is not authorized
to bind such party and cannot enter into amendments to this Agreement,
which can only be made in accordance with the terms of Section 22
hereof.
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IN WITNESS WHEREOF, the parties hereto have set their hands as of the
day and year first above written.
COLUMBIA LABORATORIES, INC. LIL' DRUG STORE PRODUCTS, INC.
By:/S/ XXXXXXX X. XXXXXXX By:/S/ XXXXXX X. XXXXXX
---------------------- --------------------
Xxxxxxx X. Xxxxxxx, Chairman of Xxxxxx X. Xxxxxx, Chairman of
the Board the Board
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