License Agreement By And Between Novartis International Pharmaceutical Ltd. And NexMed, Inc. and NexMed International Limited
*
Portions marked with a "*" have been omitted pursuant to a request
for
confidential
treatment. Such portions have been filed separately with the SEC.
Execution
Copy
13
September 2005
By
And Between
Novartis
International Pharmaceutical Ltd.
And
NexMed,
Inc. and NexMed International Limited
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1.
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DEFINITIONS
AND INTERPRETATION
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1
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2.
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LICENSE
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9
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3.
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GOVERNANCE
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10
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4.
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DISCLOSURE
OF NEXMED KNOW-HOW & TECHNOLOGY TRANSFER
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10
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5.
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DEVELOPMENT
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11
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6.
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COMMERCIALIZATION
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13
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7.
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FINANCIAL
PROVISIONS
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14
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8.
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REPORTS
AND PAYMENT TERMS
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17
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9.
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INTELLECTUAL
PROPERTY RIGHTS
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19
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10.
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CONFIDENTIALITY
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21
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11.
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TERM
AND XXXXXXXXXXX
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00
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00.
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EFFECT
OF TERMINATION
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24
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13.
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REPRESENTATIONS
AND WARRANTIES
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27
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14.
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INDEMNIFICATION
AND LIABILITY
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30
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15.
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PUBLICATIONS
AND PUBLICITY
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32
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16.
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GENERAL
PROVISIONS
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32
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EXHIBIT
A - NEXMED FORMULATION
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38
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EXHIBIT
B - NEXMED PATENT RIGHTS
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39
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EXHIBIT
C - SAMPLE INVOICE
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41
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EXHIBIT
D - FULLY BURDENED MANUFACTURING COSTS
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42
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EXHIBIT
E - PATENT COUNTRIES
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44
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EXHIBIT
F - NEXMED STUDIES
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45
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This
LICENSE AGREEMENT (this “Agreement”)
is
made as of this 13th
day of
September, 2005 (“Effective
Date”),
by
and between Novartis International Pharmaceutical Ltd., a limited company
organized and existing under the laws of Bermuda (“Novartis”)
and
NexMed, Inc., a corporation organized and existing under the laws of Nevada
(“NexMed,
Inc.”)
and
NexMed International Limited, a corporation organized and existing under
the
laws of the British Virgin Islands (“NexMed
International”).
Novartis and NexMed are each referred to individually as a “Party”
and
together as the “Parties”.
RECITALS
WHEREAS,
NexMed owns or controls the NexMed Patent Rights and NexMed Know-How (each
as
defined below) relating to the NexMed Formulation (as defined below);
WHEREAS,
Novartis wishes to obtain, and NexMed wishes to grant, rights to the NexMed
Formulation; and
WHEREAS,
Novartis will have the right to develop and commercialize the Product (as
defined below) on a worldwide basis, subject to paying NexMed the royalty
and
milestone payments set out herein.
NOW,
THEREFORE, in consideration of the mutual covenants and agreements herein
contained, the Parties agree as follows.
| 1. |
DEFINITIONS
AND INTERPRETATION
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1.1
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Definitions.
Unless
the context otherwise requires, the terms in this Agreement with
initial
letters capitalized, shall have the meanings set forth below, or
the
meaning as designated in the indicated places throughout this
Agreement.
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“Accounting
Standards”means
with respect to NexMed US GAAP (United States Generally Accepted Accounting
Principles and with respect to Novartis the IFRS (International Financial
Reporting Standards), both as generally and consistently applied throughout
the
Party’s organization.
“Anti-Fungal
Ingredient”
means
any active ingredient that is used to treat fungal infection.
“Affiliate”means,
in
relation to a Party, any entity or person that controls, is controlled by,
or is
under common control with that Party. For the purpose of this definition,
“control” shall mean, direct or indirect, ownership of fifty percent (50%) or
more of the shares of stock entitled to vote for the election of directors,
in
the case of a corporation, or fifty percent (50%) or more of the equity interest
in the case of any other type of legal entity, status as a general partner
in
any partnership, or any other arrangement whereby the entity or person controls
or has the right to control the board of directors or equivalent governing
body
of a corporation or other entity, or the ability to cause the direction of
the
management or policies of a corporation or other entity. In the case of entities
organized under the laws of certain countries, the maximum percentage ownership
permitted by law for a foreign investor may be less than fifty percent (50%),
and in such case such lower percentage shall be substituted in the preceding
sentence, provided that such foreign investor has the power to direct the
management and policies of such entity.
1
“Alliance
Manager”means
the
persons set out in Clause 3.1.
“Calendar
Quarter”means
the
respective periods of three consecutive calendar months ending on March 31,
June
30, September 30 and December 31.
“Change
of Control”
means
the announcement of any agreement or the consummation of any transaction
of the
following events: (a) any Third Party (or group of Third Parties acting in
concert) becomes the beneficial owner, directly or indirectly, of more than
fifty percent (50%) of the total voting power of the stock then outstanding
of
NexMed normally entitled to vote in elections of directors; (b) NexMed
consolidates with or merges into another corporation or entity, or any
corporation or entity consolidates with or merges into NexMed, in either
event
pursuant to a transaction in which more than fifty percent (50%) of the total
voting power of the stock outstanding of the surviving entity normally entitled
to vote in elections of directors is not held by the parties holding at least
fifty percent (50%) of the outstanding shares of NexMed preceding such
consolidation or merger; (c) NexMed conveys, transfers or leases all
or
substantially all of its assets, or (d) any other arrangement whereby a third
party controls or has the right to control the board of directors or equivalent
governing body that has the ability to cause the direction of the management
or
policies of NexMed.
“Claims”
means
all demands, claims, actions, proceedings and liability (whether criminal
or
civil, in contract, tort or otherwise) brought by a Third Party for losses,
damages, legal costs and other expenses of any nature whatsoever and all
costs
and expenses incurred in connection therewith.
“Commercially
Reasonable Efforts”means
the
expenditure of those efforts and resources used consistent with the usual
practice of Novartis and its Affiliates in pursuing development or
commercialization of its other similar pharmaceutical products with similar
market potential and at a similar stage in development.
“Confidential
Information”
means
all Know-How and other proprietary information and data of a financial,
commercial or technical nature which the disclosing Party or any of its
Affiliates has supplied or otherwise made available to the other Party, whether
made available orally, in writing or in electronic form, including information
comprising or relating to concepts, discoveries, inventions, data, designs
or
formulae in relation to this Agreement.
“DDAIP
Patent Rights”
means
the NexMed Patent Rights set forth in Section 2 of Exhibit B covering the
DDAIP
Technology.
“DDAIP
Technology”
means
the NexMed Technology relating to a novel permeation enhancing
excipient.
2
“EMEA”means
the
European Medicines Agency (or any successor Agency thereto).
“Encumbrance”means
any
claim, charge, equitable interest, hypothecation, lien, mortgage, pledge,
option, license, assignment, power of sale, retention of title, right of
pre-emption, right of first refusal or security interest of any kind.
“First
Commercial Sale”means,
with respect to a Product, the first arm’s length sale to a Third Party for use
or consumption of any such Product in a country.
“Fully
Burdened Manufacturing Cost”
shall
have the meaning set out in Exhibit D.
“Generic
Equivalent”
means a
pharmaceutical product with a formulation of an Anti-Fungal Ingredient with
a
similar qualitative composition and the same pharmaceutical form as the Product
and which pharmaceutical product is approved by the relevant governmental
authority, if applicable.
“IND”means
an
Investigational New Drug application in the US filed with the Food and Drug
Administration (or any successor entity) (“FDA”)
or the
corresponding application for the investigation of the Product in any other
country or group of countries, as defined in the applicable laws and regulations
and filed with the Regulatory Authority of a given country or group of
countries.
“Insolvency
Event”means,
in
relation to either Party, any one of the following: (a) that Party
becomes
insolvent, (b) that Party is the subject of voluntary or involuntary
bankruptcy proceedings instituted on behalf of or against such Party (except
for
involuntary bankruptcy proceedings which are dismissed within sixty (60)
days),
(c) an administrative receiver, receiver and manager, interim receiver,
custodian, sequestrator or similar officer is appointed in respect of that
Party, (d) a resolution shall have been passed by that Party or that Party’s
directors to make an application for an administration order or to appoint
an
administrator; or (e) that Party makes any general assignment, composition
or arrangement with or for the benefit of all or some of that Party’s creditors
or makes or suspends or threatens to suspend making payments to all or some
of
that Party’s creditors or the Party submits to any type of voluntary
arrangement.
“Know-How”
means
all technical information, know-how and data, including inventions, discoveries,
trade secrets, specifications, instructions, processes, formulae, materials,
expertise and other technology applicable to formulations, compositions,
products or their manufacture, development, registration, use or marketing
or
methods of assaying or testing them or processes for their manufacture,
formulations containing them, compositions incorporating or comprising them
and
including all biological, chemical, pharmacological, biochemical, toxicological,
pharmaceutical, physical and analytical, safety, quality control, manufacturing,
preclinical and clinical data, instructions, processes, formulae, expertise
and
information, relevant to the development, manufacture, use or sale of and/or
which may be useful in studying, testing, development, production or formulation
of products, or intermediates for the synthesis thereof.
“MAA”means
an
application for authorization to market the Product in any country or group
of
countries outside the United States, as defined in the applicable laws and
regulations and filed with the Regulatory Authority of a given country or
group
of countries.
3
“Milestones”means
the
milestones relating to the Product as set out in Clause 7.2.
“Milestone
Payments”
means
the payments due by Novartis to NexMed upon the achievement of the corresponding
Milestones as set out in Clause 7.2.
“Nail-Infection
Field”
means
the treatment, diagnosis or prevention of (i) any nail infection, including
onychomycosis; and/or (ii) athletes foot.
“NDA”means
a
New Drug Application in the United States for authorization to market the
Product, as defined in the applicable laws and regulations and filed with
the
FDA.
“Net
Sales”means,
with respect to any Product, the gross amount invoiced by or on behalf of
Novartis or any Novartis Affiliate, licensee or sublicensee for that Product
sold to Third Parties other than licensees or sublicensees in bona fide,
arms-length transactions, less the following deductions, determined in
accordance with Novartis’ standard accounting methods as generally and
consistently applied by Novartis, to the extent included in the gross invoiced
sales price of any Product or otherwise directly paid or incurred by Novartis,
its Affiliates or distributors with respect to the sale of such
Product:
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(i)
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normal
and customary trade and quantity discounts actually allowed and
properly
taken directly with respect to sales of the
Product;
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(ii)
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amounts
repaid or credited by reasons of defects, rejection recalls, returns,
rebates and allowances of goods or because of retroactive price
reductions
specifically identifiable to the
Product;
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(iii)
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chargebacks
and other amounts paid on sale or dispensing of such
Product;
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(iv)
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amounts
payable resulting from governmental (or agency thereof) mandated
rebate
programs;
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(v)
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Third-Party
cash rebates and chargebacks related to sales of the Product, to
the
extent actually allowed;
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(vi)
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tariffs,
duties, excise, sales, value-added and other taxes (other than
taxes based
on income);
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(vii)
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retroactive
price reductions that are actually allowed or
granted;
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(viii)
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cash
discounts for timely payment;
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(ix)
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delayed
ship order credits;
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(x)
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discounts
pursuant to indigent patient programs and patient discount programs,
including, without limitation, “Together Rx” and coupon
discounts;
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(xi)
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all
freight, postage and insurance included in the invoice
price;
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(xii)
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amounts
repaid or credited for uncollectible amounts on previously sold
products;
and
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(xiii)
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any
other specifically identifiable amounts included in the Product’s gross
invoice that should be credited for reasons substantially equivalent
to
those listed above;
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4
all
as
determined in accordance with Novartis’ usual and customary accounting methods,
which are in accordance with international accounting standards (IAS) as
consistently applied at Novartis. Any of the items set forth above that would
otherwise be deducted from the invoice price in the calculation of Net Sales
but
which are separately charged to Third Parties shall not be deducted from
the
invoice price in the calculation of Net Sales. In the case of any sale for
consideration other than cash, such as barter or countertrade, Net Sales
shall
be calculated on the fair market value of the consideration received as agreed
by the Parties.
| (a) |
In
the case of any sale or other disposal of a Product between or
among
Novartis and its Affiliates or sublicensees, for resale, Net
Sales shall
be calculated only on the value charged or invoiced on the first
arm’s-length sale thereafter to a Third
Party;
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| (b) | In the case of any sale which is not invoiced or is delivered before invoice, Net Sales shall be calculated at the time of shipment or when the Product is paid for, if paid for before shipment or invoice; |
| (c) | In the case of any sale or other disposal for value, such as barter or counter-trade, of any Product, or part thereof, other than in an arm’s length transaction exclusively for money, Net Sales shall be calculated on the value of the non-cash consideration received or the fair market price (if higher) of the Product in the country of sale or disposal; and |
| (d) | In the event the Product is sold in a finished dosage form containing the NexMed Formulation in combination with one or more other active ingredients (a “Combination Product”), the Net Sales of the Product, for the purposes of determining royalty payments, shall be determined by multiplying the Net Sales of the Combination Product by the fraction, A/(A+B) where A is the weighted (by sales volume) average sale price in a particular country of the Product when sold separately in finished form and B is the weighted average sale price in that country of the other product(s) sold separately in finished form. In the event that such average sale price cannot be determined for both the Product and the other product(s) in combination, Net Sales for purposes of determining royalty payments shall be agreed by the Parties based on the relative value contributed by each component, such agreement not to be unreasonably withheld. |
“NexMed”
means,
subject to Clause 1.2(h), NexMed, Inc. and NexMed International
jointly.
“NexMed
Formulation”
means a
formulation of one or more Anti-Fungal Ingredients with the DDAIP Technology,
including the formulation described in Exhibit A, as such may be modified
and
further developed by Novartis during the Term.
“NexMed
Know-How”means
the
Know-How owned or controlled (including through a license with the right
to
sublicense to Novartis hereunder) by NexMed or its Affiliates as of the
Effective Date or thereafter during the Term relating to the NexMed Formulation,
the DDAIP Technology or the Products, their use, formulation, preparation
or
manufacture or that are reasonably necessary or useful for the research,
development, manufacture, use, import or sale of the NexMed Formulation,
the
DDAIP Technology or the Products.
5
“NexMed
Patent Rights”means
the
Patent Rights identified in Exhibit B and all other Patent Rights owned or
controlled (including through a license with the right to sublicense to Novartis
hereunder) by NexMed or its Affiliates as of the Effective Date or thereafter
during the Term that claim the use, formulation, preparation, manufacture,
research, development, import or sale of the NexMed Formulation, DDAIP
Technology or the Products.
“NexMed
Technology”means
the
NexMed Know-How and NexMed Patent Rights.
“Novartis
Formulation”means
any
topical formulation of Terbinafine (other than the NexMed Formulation) developed
by or on behalf of Novartis.
“Out-of-Pocket
Expenses”
means
the direct project related expenses paid or payable to Third Parties (other
than
Affiliates ) and specifically identifiable and incurred by the applicable
Party,
(a) in the case of NexMed, to perform the NexMed Studies for the NexMed
Formulation and (b) in the case of Novartis, to develop the NexMed
Formulation and the Product containing the NexMed Formulation under this
Agreement; such expenses to have been recorded as income statement items
in
accordance with the applicable Party’s Accounting
Standards and for the avoidance of doubt, not including pre-paid amounts,
capital expenditures or travel expenses.
“Patent
Countries”
means
the list of countries set forth in Exhibit E as such Exhibit may be updated
and
amended from time to time to reflect new countries in which there is a Valid
Claim or to remove countries where there may no longer be a Valid Claim.
“Patent
Milestone”means
the
payment of the issue fee for an allowed US Patent having a Valid Claim covering
the NexMed Formulation, excluding claims included in the DDAIP Patent Rights.
“Patent
Rights”
means
all patents and patent applications, including all divisionals, continuations,
substitutions, continuations-in-part, re-examinations, reissues, additions,
renewals, extensions, registrations, and supplemental protection certificates
and the like of any of the foregoing.
“Phase
III Clinical Trial”
means a
pivotal clinical study of a Product in patients the protocol of which is
designed to establish the efficacy and safety of such Product for the purpose
of
preparing and submitting a filing for NDA approval in the US or MAA approval
in
the EMEA.
“Phase
III Completion Milestone”means
the
positive outcome of the first Phase III Clinical Trial for a Product based
on
the final study report for such trial and demonstrating a safety and efficacy
profile sufficient to warrant preparation and filing of an NDA as determined
by
Novartis, such safety and efficacy profile to be provided to NexMed by Novartis
prior to the initiation of the first Phase III Clinical Trial.
6
“Phase
III 6 Month Milestone”means
the
positive outcome, as determined by Novartis, of a six (6) month analysis
of the
first Phase III Clinical Trial for a Product containing the NexMed Formulation
and satisfying the criteria established by Novartis prior to commencement
of
such trial, such criteria to be provided to NexMed by Novartis prior to the
initiation of such trial.
“Product”means
a
pharmaceutical product developed under this Agreement incorporating or
comprising (a) the NexMed Formulation in finished dosage pharmaceutical form,
including, in each case, all formulations and modes of administration thereof,
the manufacture, sale or use of which (i) would, but for the license granted
under this Agreement, infringe a Valid Claim of a NexMed Patent Right or
(ii)
embodies or incorporates NexMed Know-How, or (b) a Novartis Formulation in
finished dosage pharmaceutical form.
“Regulatory
Authority”means
any
governmental agency or authority responsible for granting Regulatory Approvals
for Products, including the FDA, the EMEA, and any national or regional
regulatory authorities.
“Regulatory
Approval”means,
with respect to a Product, any approval (including pricing approval),
registration, license or authorization from a Regulatory Authority required
for
the manufacture, development, commercialization, sale, storage or transport
of
such Product. In the case of EMEA, Regulatory Approval must include pricing
approval in at least three (3) of the five (5) major European countries of
France, Germany, Italy, Spain and UK.
“Regulatory
Dossier”
means
all files regarding the Regulatory Approvals, including correspondence, records,
applications (including NDAs), supplements, annual reports, adverse event
reports, to the extent related to the Product in the Territory.
“Royalty
Payments”means
the
royalty due by Novartis to NexMed on Net Sales as set out in Clause
7.
“Royalty
Term”means
the
term for payment of royalties as set forth in Clause 8.2.
“Sales
& Royalty Report”
means a
written report or reports showing each of: (a) the Net Sales of each
Product in each country in the world during the reporting period by Novartis
and
each Affiliate and sublicensee; (b) the number of Products sold in each country
in the world during the reporting period by Novartis and each Affiliate and
sublicensee, and if applicable, the average sale price during the reporting
period for each Product in any Combination Product; (c) the Royalty
Payments, in United States Dollars, which shall have accrued in respect of
such
sales and the basis of calculating the Royalty Payments; and
(d) withholding taxes, if any, required by law to be deducted in respect
of
the transfer of the Royalty Payments to NexMed.
“Terbinafine”
means
terbinafine, and its esters, salts, racemates, and stereoisomers, including
all
possible combinations of stereoisomers in any desired ratio and including
pure
enantiomers.
7
“Terbinafine
Field”
means
the treatment, diagnosis or prevention of diseases in all indications in
humans
and animals.
“Term”means
the
term as set forth in Clause 11.1.
“Territory”means
worldwide.
“Third
Party”
means
any entity or person other than a Party or an Affiliate of a Party.
“USD”
or
“US$”
means
the lawful currency of the United States.
“Valid
Claim”
means a
claim of an issued NexMed Patent Right, or a claim of a pending patent
application or a supplementary protection certificate of a NexMed Patent
Right,
that has not expired or been revoked, held invalid or unenforceable by a
patent
office, court or other governmental agency of competent jurisdiction in a
final
and non-appealable judgment (or judgment from which no appeal was taken within
the allowable time period); provided however that such claim within a patent
application has not been revoked, cancelled, withdrawn, held invalid or
abandoned or been pending for more than five (5) years from the date of its
first priority filing anywhere in the world; provided, however, that a claim
of
a pending application will only be considered a Valid Claim if its priority
date
is prior to the first anniversary of the Effective Date.
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1.2
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Interpretation.
In
this Agreement unless otherwise
specified:
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(a)
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“includes”
and “including” shall mean includes and including without
limitation;
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(b)
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a
Party includes its permitted assignees and/or the respective successors
in
title to substantially the whole of its
undertaking;
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(c)
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a
statute or statutory instrument or any of their provisions is to
be
construed as a reference to that statute or statutory instrument
or such
provision as the same may have been or may from time to time hereafter
be
amended or re-enacted;
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(d)
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words
denoting the singular shall include the plural and vice versa and
words
denoting any gender shall include all genders;
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(e)
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the
Exhibits and other attachments form part of the operative provision
of
this Agreement and references to this Agreement shall, unless the
context
otherwise requires, include references to the Exhibits and attachments;
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(f)
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the
headings in this Agreement are for information only and shall not
be
considered in the interpretation of this Agreement;
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(g)
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general
words shall not be given a restrictive interpretation by reason
of their
being preceded or followed by words indicating a particular class
of acts,
matters or things; and
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8
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(h)
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all
references to “NexMed” and all rights and obligations of NexMed under this
Agreement shall be joint unless expressly otherwise provided in
this
Agreement and shall be exercisable and enforceable by NexMed by
NexMed,
Inc. and NexMed International acting jointly and not separately
provided
that any notice or notification served upon NexMed, Inc. shall
be deemed
service on NexMed International and does not require signature
by or
notification to NexMed International to be a valid notice or notification
under the terms of this Agreement.
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| 2. |
LICENSE
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2.1
|
License
Grant. Subject
to the terms and conditions of this Agreement, NexMed hereby grants
to
Novartis in the Territory for the Term an exclusive (even as to
NexMed),
worldwide, royalty-bearing, sub-licensable (subject to Section
2.2)
license, under the NexMed Patent Rights and NexMed Know-How to
research,
have researched, develop, have developed, make, have made, use,
have used,
import, have imported, offer for sale, sell, have sold and otherwise
commercialize (a) the NexMed Formulation and Products containing
the
NexMed Formulation without Terbinafine in the Nail-Infection Field,
(b)
the NexMed Formulation and Products containing the NexMed Formulation
with
Terbinafine in the Terbinafine Field and (c) the Novartis Formulation
and
Products containing the Novartis Formulation in the Terbinafine
Field. The
foregoing license is exclusive to Novartis, and NexMed has no retained
rights (and will not attempt to license any rights, directly or
indirectly, to any Third Party) with respect to the exclusive rights
to
the NexMed Formulation, Products, the NexMed Patent Rights or NexMed
Know-How outlined above; except for activities undertaken pursuant
to the
terms of this Agreement.
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2.2
|
Sublicense
Rights. Novartis
may sublicense the rights granted to it by NexMed under this Agreement
at
any time, provided that Novartis gives NexMed a copy of any sublicense
agreement (subject to any confidentiality obligations requiring
Novartis
to omit disclosure of certain confidential information). Novartis
may
exercise its rights and perform its obligations under this Agreement
itself or through any of its Affiliates. In addition, Novartis
may
subcontract to Third Parties the performance of tasks and obligations
with
respect to the development and commercialization of the Product
as
Novartis deems appropriate. Novartis shall use Commercially Reasonable
Efforts to ensure that each of its Affiliates to which it sublicenses
its
rights and sublicensees accepts and complies with all of the terms
and
conditions of this Agreement as if such Affiliates and sublicensees
were a
party to this Agreement and Novartis shall remain responsible for
such
Affiliates’ and sublicensees’ performance under this Agreement, provided,
however, that, for purposes of Section 11.2 only, in no event shall
the
performance or non-performance by any sublicensee result in Novartis
being
deemed in material breach of this Agreement for so long as Novartis
is
using Commercially Reasonable Efforts to enforce the terms of such
sublicense on its sublicensee.
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2.3
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Right
of First Negotiation.
NexMed shall notify Novartis within thirty (30) days of it determining
to
partner with a Third Party any opportunity to develop, have developed,
make, have made, use, have used, import, have imported, offer for
sale,
sell, have sold or otherwise commercialize DDAIP Technology, the
NexMed
Formulation and Products containing the NexMed Formulation in the
dermatologic or allergic fields. Should Novartis wish to pursue
any such
opportunity, it shall notify NexMed within thirty (30) days whereupon
the
Parties shall enter into exclusive good faith negotiations relating
to
such opportunity for a period of ninety (90) days. Nothing in this
Clause
2.3 obliges either Party to enter into any such future agreement
or agree
upon any particular terms.
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9
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3.
|
GOVERNANCE
|
|
3.1
|
Alliance
Managers. Within
thirty (30) days after the Effective Date, each Party will appoint
(and
notify the other Party of the identity of) a senior representative
having
a general understanding of pharmaceutical development and
commercialization issues to act as its alliance manger under this
Agreement (“Alliance
Manager”).
The Alliance Managers will serve as the contact point between the
Parties
and will be primarily responsible for facilitating the flow of
information
and otherwise promoting communication, coordination and collaboration
within and between the Parties. Each Party may replace its Alliance
Manager on written notice to the other
Party.
|
|
3.2
|
Annual
Update.
Within thirty (30) days of the end of the first calendar year following
the Effective Date of this Agreement and each year thereafter during
the
Term, Novartis shall provide NexMed with a written summary of the
development, commercialization and regulatory status of the
Product.
|
|
3.3
|
Change
of Control.
In
the event of a Change of Control of NexMed, Novartis may provide
written
notice to NexMed (or its successor entity) terminating the provisions
included in this Clause 3
and upon such notice, Novartis will not be obligated under this
Clause
3,
or to disclose any Confidential Information to NexMed (including
under
Clause 5) for the remaining Term and Novartis may request the immediate
return or destruction of Confidential Information already disclosed
to
NexMed, provided, however, that Novartis will still be obliged
to provide
the Sales & Royalty Report.
|
| 4. |
DISCLOSURE
OF NEXMED KNOW-HOW & TECHNOLOGY
TRANSFER
|
|
4.1
|
Disclosure
of NexMed Know-How. Within
thirty (30) days after the Effective Date, NexMed will disclose
to
Novartis or its designated Affiliate all NexMed Know-How (and any
other
data, information and documents known to NexMed relating to the
NexMed
Formulation or Products), which may be necessary or useful to Novartis
to
develop, manufacture, register, use or market the NexMed Formulation
and
Products and practice the licenses granted hereunder efficiently,
including any study reports relating to the NexMed Formulation.
As part of
such disclosure, as soon as reasonably practicable, NexMed will
disclose
to Novartis all NexMed Know-How pertaining to the manufacture and
development of the NexMed Formulation and the Product, including
manufacturing batch records, development reports, analytical results,
raw
material and excipient sourcing information, quality audit findings
and
any other relevant technical information. NexMed shall also cooperate
and
assist Novartis in assigning any contract manufacturing agreements
which
NexMed may have entered into prior to the Effective Date with respect
to
the NexMed Formulation, which Novartis, in its sole discretion,
deems
useful or necessary to further its obligations under this
Agreement.
|
10
|
4.2
|
Technology
Transfer.
|
|
(a)
|
Within
thirty (30) days after the Effective Date, NexMed shall, at its
own cost,
provide to Novartis all of the quantities of NexMed Formulation
that it
has in its possession as of the Effective Date. During the Term,
NexMed
will, at its own cost and expense, provide reasonable assistance
to
Novartis in connection with understanding and using the NexMed
Know-How,
including by providing information to assist Novartis in developing
the
Product and its related activities.
|
|
(b)
|
NexMed
shall have a continuing obligation to disclose and provide promptly
and
effectively to Novartis such additional NexMed Know-How as is developed
or
obtained by NexMed or its Affiliates during the Term and which
may be
necessary or useful to Novartis to develop, manufacture, register,
use or
market the NexMed Formulation and Products and practice the licenses
granted hereunder efficiently. Novartis
and its Affiliates and sublicensees shall use such NexMed Know-How
solely
for the purposes of this Agreement and consistent with the licenses
granted hereunder.
|
| 5. |
DEVELOPMENT
|
|
5.1
|
Development.
|
|
(a)
|
Subject
to the terms and conditions of this Agreement, Novartis will be
responsible for and shall itself or through its Affiliates or
sublicensees, use Commercially Reasonable Efforts to conduct, at
its sole
expense, the preclinical, clinical and other development of the
NexMed
Formulation or any Product as it determines appropriate in its
sole
discretion.
|
|
(b)
|
Notwithstanding
the foregoing, Novartis agrees to complete the first Phase III
Clinical
Trial for a NexMed Formulation, subject to any safety concerns
(as
reasonably determined by Novartis) and/or any request or notification
from
any Regulatory Authority not to proceed.
|
|
(c)
|
Novartis
acknowledges and agrees that prior to the Effective Date it has
requested
NexMed to initiate the pre-clinical trials set forth on Exhibit
F (“NexMed
Studies”). It is acknowledged and agreed by the Parties that, after the
Effective Date, NexMed shall continue to conduct the NexMed Studies
through completion and that Novartis shall grant NexMed the right
to
continue the NexMed Studies. On a monthly basis, NexMed shall supply
Novartis with an invoice for NexMed’s Out-of-Pocket Expenses incurred for
conducting the NexMed Studies during such month and Novartis shall
reimburse NexMed for such Out-of-Pocket Expenses within forty-five
(45)
days after receipt of such an invoice from NexMed. The total Out-of-Pocket
Expenses reimbursed by Novartis shall not exceed US$3.25 million
without
the prior written consent of Novartis. The data and results of
the NexMed
Studies shall be owned by Novartis (and NexMed hereby assigns its
rights
in such data and results to Novartis); provided, however, that
Novartis
shall permit NexMed access to and grant NexMed the right to reference
and
use, in association with any product (other than the Product),
the data
and results from the NexMed Studies set forth on Exhibit
F.
|
11
|
5.2
|
Novartis
Formulation. The
Parties acknowledge that the NexMed Know-How may be valuable in
development of any Product, whichever formulation is ultimately
used for
the Product. During the Term, Novartis may develop a Novartis Formulation
as the formulation for development under this Agreement instead
of a
Product with the NexMed Formulation; provided that Novartis still
completes the first Phase III Clinical Trial for a NexMed Formulation
pursuant and subject to Clause 5.1(b). In such event, the obligations
with
respect to the development of the Product shall apply to the development
of the Product containing such Novartis Formulation and Novartis
shall pay
to NexMed the payments required under Clause 7 for Products containing
Novartis Formulations until this Agreement is terminated.
|
|
5.3
|
Regulatory.
|
|
(a)
|
Subject
to the terms and conditions of this Agreement, Novartis will determine
the
regulatory plans and strategies for the Products. Novartis will
file all
regulatory filings with respect to the Products and will be responsible
for obtaining and maintaining Regulatory Approvals throughout the
Territory in the name of Novartis or its Affiliates or sublicensees.
|
|
(b)
|
NexMed
shall fully cooperate with and provide assistance to Novartis in
connection with filings to any Regulatory Authority relating to
the NexMed
Formulation or Products, including by executing any required documents,
providing access to personnel and providing Novartis with copies
of all
reasonably required documentation.
|
|
(c)
|
To
the extent requested by Novartis or as required, NexMed, subject
to any
Third Party confidentiality obligations, shall grant or cause to
be
granted to Novartis and its Affiliates or sublicensees assignments
of, or
cross-reference rights to, any relevant drug master files and other
filings submitted by NexMed or its Affiliates with any Regulatory
Authority
with respect to the NexMed
Formulation.
|
|
(d)
|
Notwithstanding
the provisions of Clause 10, Novartis and its Affiliates shall
have the
right to disclose the existence of, and the results from, any clinical
trials conducted under this Agreement in accordance with its standard
policies. Nothing in this Clause 5.3(d) is intended to limit either
Party’s rights or obligations under Clause 15. Novartis acknowledges
and
agrees that NexMed has committed to presenting at the March 2006
American
Academy of Dermatology Conference the results from NexMed’s phase I
clinical trials for the NexMed Formulation; provided that NexMed
shall
provide such presentation to Novartis pursuant to Clause 15.1 prior
to
such conference.
|
12
|
5.4
|
Failure
to File.
If
Novartis chooses not to submit a filing for Regulatory Approval
for the
NexMed Formulation in any particular region of the Territory (i.e.
Asia,
Africa, Middle East), Novartis shall notify NexMed and the Parties
shall
discuss in good faith the filing strategy for such region and the
possibility of allowing NexMed to pursue Regulatory Approval in
such
region. Nothing in this Clause 5.4 shall oblige either Party to
agree to
any particular filing strategy, including the grant of any rights
to
NexMed.
|
| 5.5 |
Compliance.
Novartis
agrees that in performing its development obligations (a) it
shall
comply with all applicable current international regulatory standards,
laws, regulations and requirements, including cGMP, cGLP, cGCP
and
(b) it will not employ or use any person that has been debarred
under
Section 306(a) or 306(b) of the U.S. Federal Food, Drug and Cosmetic
Act.
|
| 6. |
COMMERCIALIZATION
|
|
6.1
|
Commercialization.
Subject to the terms and conditions of this Agreement, Novartis
will be
solely responsible for all aspects of worldwide commercialization
of the
Product(s), including planning and implementation. Novartis will
undertake
such activities at its sole expense. Novartis shall itself, or
through its
Affiliates or sublicensees, use Commercially Reasonable Efforts
to
commercialize, manufacture, market and sell Product(s). Notwithstanding
the foregoing, Novartis’ application of such Commercially Reasonable
Efforts shall not require Novartis to commercialize a Product in
any
country or territory in which Novartis determines it is not commercially
reasonable to do so for such Product. Subject to compliance with
the
foregoing, the commercialization and marketing of the Product shall
be at
Novartis’ sole discretion.
|
|
6.2
|
Manufacturing.
Subject to the terms and conditions of this Agreement, the manufacture
and
supply of the NexMed Formulation and Products under this Agreement
shall
be at sole discretion of Novartis.
|
|
6.3
|
Manufacturing
Know-How and Assistance.
|
|
(a)
|
During
the period from the Effective Date until the First Commercial Sale
of the
Product under this Agreement, upon the request of Novartis, NexMed
shall
fully cooperate with and provide assistance to Novartis or its
designee,
through documentation, consultation, training and face-to-face
meetings,
to enable Novartis or its designee in an efficient and timely manner
to
proceed with development and manufacturing of the NexMed Formulation
and
the Products and to obtain all appropriate Regulatory Approvals
for
manufacturing (including qualification by the applicable Regulatory
Authority of manufacturing sites). Novartis shall reimburse NexMed
for the
reasonable out-of-pocket expenses incurred by NexMed in complying
with
such request, such expenses to be pre-approved in writing by
Novartis.
|
|
(b)
|
During
such period, NexMed shall make appropriate personnel available
to assist
Novartis or its designee at any time and from time to time as reasonably
requested by Novartis, and shall provide the appropriate personnel
of
Novartis or its designee with access to the personnel and manufacturing
and other operations of NexMed for such periods of time and in
such manner
as is reasonable in order to familiarize the personnel of Novartis
or its
designee with NexMed Know-How relating to the development and manufacture
of the NexMed Formulation and the Products and the application
of the
same. At Novartis’ request, such assistance shall also be furnished at the
manufacturing facilities of Novartis or its designee. Novartis
shall
reimburse NexMed for the reasonable out-of-pocket expenses incurred
by
NexMed in complying with such request, such expenses to be pre-approved
in
writing by Novartis.
|
13
|
6.4
|
Compliance.
Novartis agrees that in performing its commercialization, manufacturing,
marketing and selling obligations it shall comply with all applicable
current international regulatory standards, laws, regulations and
requirements, including cGMP.
|
| 7. |
FINANCIAL
PROVISIONS
|
|
7.1
|
Upfront
Payment.
Novartis shall pay to NexMed a one-time, non-refundable, non-creditable
upfront payment of four million USD (US$4,000,000) promptly following
receipt by Novartis of an invoice in the form of Exhibit C from
NexMed on
or after the Effective Date.
|
|
7.2
|
Milestone
Payments.
In
consideration of the granting of the licenses and rights to Novartis
hereunder, after the achievement of each of the following Milestones
with
respect to the first Product, NexMed shall invoice and Novartis
shall make
the corresponding one-time, non-refundable, non-creditable Milestone
Payment.
|
|
(a)
|
Milestones:
|
|
Milestone
|
Milestone
Payment (USD)
|
|
Patent
|
|
|
Patent
Milestone
|
$2
million
|
|
Clinical
Milestones (subject to sub-clause (b) below)
|
|
|
Phase
III 6 Month Milestone
|
$3
million
|
|
Phase
III Completion Milestone
|
$6
million
|
|
Regulatory
Milestones
|
|
|
NDA
Submission
|
$7
million
|
|
Submission
for MAA Regulatory Approval by the EMEA
|
$3
million
|
|
NDA
Regulatory Approval
|
$14
million
|
|
MAA
Regulatory Approval by the EMEA
|
$8
million
|
|
MAA
Regulatory Approval in Japan
|
$4
million
|
14
|
(b)
|
Unless
and until the Patent Milestone is achieved, the Milestone Payments
due by
Novartis to NexMed for the achievement of the Clinical
Milestones shall
be fifty percent (50%) of the amounts set out above. In the event
that the
Patent Milestone is achieved after the achievement of a Clinical
Milestone, the remaining fifty percent (50%) of the Milestone Payment
for
the applicable Clinical Milestone not previously paid shall be
invoiced
and paid with the Milestone Payment for the Patent Milestone. For
clarity, if the Patent Milestone is achieved before a Clinical
Milestone
is achieved, then the Milestone Payment for such Clinical Milestone
shall
be the full amount set out above.
|
|
(c)
|
For
the avoidance of doubt: (i) each Milestone Payment shall be payable
only
on the first occurrence of the Milestone; (ii) none of the Milestone
Payments shall be payable more than once; (iii) should the Product
be
replaced by another Product , no additional Milestone Payments
shall be
due for Milestones completed by the previous Product; and (iv)
following
achievement of NDA Submission Milestone the Phase III Completion
Milestone
shall be deemed achieved (if not previously achieved) and where
the
Product which is the subject of the NDA Submission incorporates
the NexMed
Formulation the Phase III 6 Month Milestone shall also be deemed
achieved
(if not previously achieved). In addition, no Milestone Payments
will be
due for the development and commercialization of Products for any
additional indications.
|
|
7.3
|
Royalty
Payments.
Subject to the provisions of this Clause 7, in consideration of
the
granting of the licenses and rights to Novartis hereunder, Novartis
will make royalty payments for the Royalty Term as set forth in
Clause 8.2
to NexMed on Net Sales of Products including the NexMed Formulation
at the
applicable rates set forth below. For
the avoidance of doubt, royalties shall be payable only once with
respect
to the same unit of Product.
Multiple prescription forms of the same Anti-Fungal Ingredient
in the same
mode, but with different dosages shall be deemed the same Product
for the
purposes of aggregating annual Net
Sales.
|
|
Annual
Net Sales of each Product
|
Royalty
Rate
|
|
*
|
*
|
|
*
|
*
|
|
*
|
*
|
|
*
|
*
|
For
example, if Net Sales of a Product in a calendar year are $*, the royalty
on
such Net Sales shall be equal to *% of $*, *% of $* and *% of $*.
|
7.4
|
Know-How
Royalty. Subject
to the provisions of this Clause 7 and notwithstanding Clause
7.3, in
any country in which the sale of a Product including the NexMed
Formulation will not infringe a Valid Claim, Novartis shall pay
a royalty
equal to fifty percent (50%) (“Know-How
Royalty”)
of the royalties set forth above in Clause 7.3 on the Net Sales
in such
country for the Royalty Term as set out in Clause 8.2.
For the avoidance of doubt, a royalty on Net Sales of a Product
in a
particular country may be payable under either Clause 7.3 or Clause
7.4
but not both at the same time.
|
15
|
7.5
|
Royalty
Payable on Novartis Formulation. Subject
to the provisions of this Clause 7, Novartis shall pay NexMed a
royalty on
Net Sales of Product including the Novartis Formulation (a) in
the Patent
Countries at the royalty rates set forth above in Clause 7.3 or
(b)
outside the Patent Countries at the Know-How Royalty set forth
in Clause
7.4.
|
|
7.6
|
Loss
of Market Exclusivity. In
the event that the Net Sales of a Product in any country in any
calendar
year are reduced
below a level of eighty percent (80%) as compared with the Net
Sales of
such Product in the preceding calendar year in such country and
such
reduction is due to the marketing or sale of a Generic Equivalent
by Third
Parties in
such country, as measured in the local currency, and which Generic
Equivalent sales are evidenced by independent market data (where
available), such as that published by IMS,
then the royalty rates applicable to Net Sales of such Product
in such
country thereafter for the remainder of the Royalty Term shall
(a) be
reduced by fifty percent (50%) if there is a Valid Claim covering
the sale
of the Product in such country (or in the Patent Countries with
respect to
Products containing the Novartis Formulation) or (b) cease
to be owed
by Novartis if there is not a Valid Claim covering the sale of
the Product
in such country (or outside the Patent Countries with respect to
Products
containing the Novartis
Formulation).
|
|
7.7
|
Third
Party Obligations.
|
|
(a)
|
Scope.
If Novartis reasonably determines that it must acquire rights to
intellectual property owned by a Third Party to exercise the licenses
to
the NexMed Patent Rights or NexMed Know-How, Novartis shall have
the right
to acquire such rights through a license with such Third Party
or
otherwise and to deduct from the Royalty Payments due to NexMed
the
amounts paid (including milestone payments, royalties or other
license
fees) by Novartis to such Third Party. Novartis shall provide NexMed
with
written notice of such belief and allow NexMed to provide its input
regarding the acquisition of such rights.
|
|
(b)
|
Reductions.
Notwithstanding the foregoing, nothing contained in Clause 7.7(a)
shall
reduce the Royalty Payments otherwise due to NexMed by more than
fifty
percent (50%) for any given year. Any amount that Novartis is entitled
to
deduct that is reduced by this limitation on the deduction shall
be
carried forward and Novartis may deduct such amount from subsequent
Royalty Payments due to NexMed until the full amount that Novartis
was
entitled to deduct is deducted.
|
|
(c)
|
NexMed
shall remain responsible for the payment of royalty obligations,
if any,
due to Third Parties under any NexMed Patent Rights or NexMed Know-How
which has been licensed to NexMed and is sublicensed to Novartis
under
this Agreement. All such payments shall be made promptly by NexMed
in
accordance with the terms of its license agreement.
|
16
|
7.8
|
Cost
of Goods. In
the event that the Fully Burdened Manufacturing Costs for the Product
(including any required devices or delivery methods) exceed twenty
percent
(20%) of the Net Sales on an aggregated worldwide basis, the royalty
payable for the Product shall be reduced by fifteen percent (15%)
of the
amount that would otherwise be payable under this Agreement. In
calculating Fully Burdened Manufacturing Costs, Novartis agrees
and
acknowledges that no amounts may be both deducted from Net Sales
and
included in Fully Burdened Manufacturing
Costs.
|
| 8. |
REPORTS
AND PAYMENT TERMS
|
|
8.1
|
Payment
Terms.
|
|
(a)
|
Novartis
will notify NexMed of the achievement of each Milestone as soon
as
reasonably practicable (and at least within thirty (30)) days after
its
achievement. After receipt of notice of the achievement of a Milestone,
NexMed shall submit an invoice to Novartis substantially in the
form of
Exhibit C with respect to the corresponding Milestone Payment.
Novartis
shall make the Milestone Payment within thirty (30) days after
receipt of
the invoice.
|
|
(b)
|
Within
thirty (30) days after each Calendar Quarter during the Term following
the
First Commercial Sale of a Product, Novartis will provide to NexMed
the
Sales & Royalty Report. If NexMed has no comments on such report,
NexMed shall submit an invoice to Novartis substantially in the
form of
Exhibit C with respect to the Royalty Payment. If NexMed has comments
on
such report, NexMed shall submit an invoice to Novartis for any
undisputed
amounts substantially in the form of Exhibit C with respect to
the
undisputed portion of the Royalty Payment. Novartis shall pay the
amount
invoiced pursuant to this Clause 8.1(b) within thirty (30) days
after
receipt of invoice.
|
|
8.2
|
Royalty
Term.
Royalties will be payable on a Product-by-Product and country-by-country
basis until the later of (a) the expiration of the last
to expire
Valid Claim covering the Product or its sale or the use for which
the
Product is being sold in such country and (b) ten (10) years after
the
First Commercial Sale of such Product in such country (“Royalty
Term”).
Following the Royalty Term on a Product-by-Product and country-by-country
basis, Novartis’ licenses with respect to such Product shall continue in
effect, but become fully paid-up, royalty-free, transferable, perpetual
and irrevocable.
|
|
8.3
|
Currency.
All payments under this Agreement shall be payable in US dollars.
When
conversion of payments from any foreign currency is required to
be
undertaken by Novartis, such conversion shall be made using Novartis’
then-current standard exchange rate methodology as applied in its
external
reporting.
|
|
8.4
|
Taxes.
Any
payments made by Novartis to NexMed under this Agreement shall
be reduced
by the amount required to be paid or withheld pursuant to any applicable
law. Any such withholding taxes required by law to be paid or withheld
shall be an expense of NexMed. Novartis, as applicable, shall submit
to
NexMed reasonable proof of payment of the withholding taxes, together
with
an accounting of the calculations of such taxes, within thirty
(30) days
after such withholding taxes are remitted to the proper authority.
The
Parties will cooperate reasonably in completing and filing documents
required under the provisions of any applicable tax laws or under
any
other applicable law in connection with the making of any required
tax
payment or withholding payment, or in connection with any claim
to a
refund of or credit for any such
payment.
|
17
|
8.5
|
Records
and Audit Rights.
|
|
(a)
|
Novartis
shall keep complete, true and accurate books and records in accordance
with its Accounting Standards in relation to the Fully Burdened
Manufacturing Cost, where used to reduce the Royalty Payments pursuant
to
Clause 7.8, Net Sales and Royalty Payments under this Agreement.
Novartis
will keep such books and records for at least three (3) years following
the Calendar Quarter to which they
pertain.
|
|
(b)
|
NexMed
shall have the right for a period of three (3) years after receiving
any
Sales & Royalty Report to appoint an internationally-recognized
independent accounting firm (which is reasonably acceptable to
Novartis)
(the “Auditor”)
to inspect the relevant records of Novartis to verify such reports,
statements, records or books of accounts, as applicable. Before
beginning
its audit, the Auditor shall execute an undertaking acceptable
to Novartis
by which the Auditor shall keep confidential all information reviewed
during such audit. The Auditor shall have the right to disclose
to NexMed
its conclusions regarding any payments owed under this
Agreement.
|
|
(c)
|
Novartis
and its Affiliates shall make their records available for inspection
by
such Auditor during regular business hours at such place or places
where
such records are customarily kept, upon receipt of reasonable advance
notice from NexMed, solely to verify the accuracy of the Sales
&
Royalty Reports and the calculation of Fully Burdened Manufacturing
Costs,
solely in the event such are used to reduce the Royalty Payments
pursuant
to Clause 7.8. Such inspection right shall not be exercised more
than once
in any calendar year and not more frequently than once with respect
to
records covering any specific period of time. NexMed agrees to
hold in
strict confidence all information received and all information
learned in
the course of any audit or inspection, except to the extent necessary
to
enforce its rights under this Agreement or if disclosure is required
by
law, regulation or judicial order (which such disclosure shall
be governed
by the provision of Clause
10.3(b)).
|
|
(d)
|
NexMed
shall pay for such audits, as well as its own expenses associated
with
enforcing its rights with respect to any payments hereunder, except
that
in the event there is any upward adjustment in aggregate amounts
payable
for any year shown by such audit of more than five percent (5%)
of the
amount paid, Novartis shall pay for such
audit.
|
18
|
8.6
|
Invoicing
and Payment.
|
|
(a)
|
Each
Party shall provide to the other Party an invoice for all amounts
due to
it under this Agreement substantially in the form set out in Exhibit
C.
Except as otherwise set forth in this Agreement, payments on such
invoices
shall be made within sixty (60) days of the Party’s receipt of the
applicable invoice.
|
|
(b)
|
Payments
to each Party shall be made by electronic wire transfer of immediately
available funds to the account of the Party, as designated in writing
to
the other Party.
|
| 9. |
INTELLECTUAL
PROPERTY RIGHTS
|
|
9.1
|
Ownership
of Inventions.
All inventions arising from the Parties’ activities under this Agreement,
including any patent applications and patents covering such inventions
(collectively, “Inventions”),
made after the Effective Date solely or jointly by employees of
either
Party under this Agreement shall be owned by
Novartis.
|
|
9.2
|
Patent
Prosecution.
|
|
(a)
|
NexMed
will be responsible for filing, prosecuting and maintaining the
NexMed
Patent Rights through an outside law firm reasonably acceptable
to
Novartis. Novartis shall reimburse NexMed, within thirty (30) days
after
receipt of an invoice from NexMed, for all costs and expenses incurred
by
or on behalf of NexMed in the filing, prosecution and maintenance
of the
NexMed Patent Rights other than the DDAIP Patent Rights, as set
out in
Section 1 of Exhibit B. Novartis will be responsible for filing,
prosecuting and maintaining its Patent Rights. NexMed will be responsible
for filing, prosecuting and maintaining the DDAIP Patent Rights
at its own
cost and expense.
|
|
(b)
|
NexMed
will keep Novartis informed of the status of the NexMed Patent
Rights
being prosecuted by it and will provide to Novartis copies of substantive
documentation submitted to, or received from, the patent offices
in
connection therewith. NexMed shall allow for review and consultation
with
Novartis before NexMed makes a submission to any patent office
which could
materially affect the scope or validity of the patent coverage
that may
result. Novartis shall offer its comments
promptly.
|
|
(c)
|
NexMed
will notify Novartis of any decision not to file applications for,
or to
cease prosecution and/or maintenance of, or not to continue to
pay the
expenses of prosecution and/or maintenance of, any NexMed Patent
Rights on
a country-by-country basis. NexMed will provide such notice at
least
thirty (30) days prior to any filing or payment due date, or any
other due
date that requires action, in connection with such Patent Right.
In such
event and at Novartis’ request, NexMed will assign all its right, title
and interest in and to such NexMed Patent Rights other than the
DDAIP
Patent Rights to Novartis, subject to any Third Party rights existing
as
of the Effective Date, Novartis shall have the right, at its sole
discretion and expense, to file or to continue prosecution or maintenance
of such NexMed Patent Rights.
|
19
|
9.3
|
Patent
Infringement.
|
|
(a)
|
Each
Party will promptly notify (and at least within ten (10) business
days)
the other of any infringement by a Third Party of any of the NexMed
Patent
Rights or NexMed Know-How in the Terbinafine Field of which it
becomes
aware, including any “patent
certification” filed by a Third Party FDA application which references the
foregoing
and of any declaratory judgment or similar action alleging the
invalidity,
unenforceability or non-infringement of any of the NexMed Patent
Rights
(collectively “Third
Party Infringement”).
|
|
(b)
|
Novartis
will have the first right to bring and control any such action
in
connection with the Third Party Infringement of any Patent Rights
relating
to (i) the NexMed Technology (excluding the DDAIP Technology) in
the
Terbinafine Field and (ii) the DDAIP Technology in the Nail-Infection
Field or, if relating to a Product containing Terbinafine in the
Terbinafine Field, as it reasonably determines appropriate. NexMed
shall
have the right, at its own expense, to be represented in any such
action
by counsel of its own choice. At the request of Novartis, NexMed
shall
provide reasonable assistance to Novartis in connection therewith,
including by executing any required documents and joining as a
party to
the action if required. In connection with any such proceeding,
Novartis
shall not enter into any settlement admitting the invalidity of,
or
otherwise impairing NexMed’s rights in, the NexMed Patent Rights without
the prior written consent of NexMed (not to be unreasonably withheld
or
delayed). Any recoveries resulting from such an action brought
by Novartis
relating to a claim of Third Party Infringement (after payment
of each
Party’s costs and expenses) will be deemed Net Sales.
|
|
(c)
|
If
Novartis fails to bring an action or proceeding with respect to,
or to
terminate, the Third Party Infringement prior to the earlier of
(i) one hundred eighty (180) days following the notice of
alleged
infringement or (ii) ten (10) days before the time limit,
if any, set
forth in the appropriate laws and regulations for the filing of
such
actions, (except if Novartis notifies NexMed in writing prior to
ten (10)
days before the time limit for the filing of any such action that
Novartis
intends to file an action before the time limit), NexMed shall
have the
right to bring and control any such action in connection with the
Third
Party Infringement at its own expense and by counsel of its own
choice,
and Novartis shall have the right, at its own expense, to be represented
in any such action by counsel of its own choice. Any recoveries
resulting
from such an action relating to a claim of Third Party Infringement
brought by NexMed after Novartis’ failure to bring such an action or to
terminate such Third Party Infringement (after payment of each
Party’s
costs and expenses) will be divided equally between the Parties.
|
|
9.4
|
Trademarks.
Novartis
shall have the sole right to brand the Products using Novartis
related
trademarks and any other trademarks and trade names it determines
appropriate for the Product, which may vary by country or within
a country
(“Product
Trademarks”).
Novartis shall own all rights in the Product Trademarks and will
register
and maintain any such Product Trademarks as it determines reasonably
necessary.
|
20
|
9.5
|
Drug
Price Competition and Patent Term Restoration Act.
|
|
(a)
|
The
Parties agree to cooperate in an effort to avoid loss of any NexMed
Patent
Rights which may otherwise be available to the Parties hereto under
the
provisions of the Drug Price Competition and Patent Term Restoration
Act
of 1984 or comparable laws outside the United States, including
by
executing any documents as may be reasonably required. In particular,
the
Parties shall cooperate with each other in obtaining patent term
restoration or supplemental protection certificates or their equivalents
in any country and region where applicable to the NexMed Patent
Rights.
NexMed shall provide all reasonable assistance to Novartis, including
permitting Novartis to proceed with applications for such in the
name of
NexMed, if so required.
|
|
(b)
|
NexMed
shall provide any required relevant patent information to Novartis
so that
Novartis may determine, if applicable, which of NexMed Patent Rights
it
will attempt to extend.
|
|
(c)
|
NexMed
shall provide reasonable assistance to Novartis, including by executing
any required documents and providing any relevant patent information
to
Novartis, so that Novartis, as NDA or MAA applicant, may inform
the FDA or
other Regulatory Authority.
|
| 10. |
CONFIDENTIALITY
|
|
10.1
|
Duty
of Confidence. All
Confidential Information disclosed by a Party or its Affiliates
under this
Agreement will be maintained in confidence and otherwise safeguarded
by
the recipient Party. The recipient Party may only use the Confidential
Information for the purposes of this Agreement and pursuant to
the rights
granted to the recipient Party under this Agreement. Each Party
shall hold
as confidential such Confidential Information of the other Party
and its
Affiliates in the same manner and with the same protection as such
recipient Party maintains its own confidential information, but
in no
event less than reasonable care. A recipient Party may only disclose
Confidential Information of the other Party to employees, agents,
contractors, consultants and advisers of the Party and its Affiliates
and
sublicensees and to Third Parties to the extent reasonably necessary
for
the purposes of, and for those matters undertaken pursuant to,
this
Agreement; provided that such persons and entities are bound to
maintain
the confidentiality of the Confidential Information in a manner
consistent
with the confidentiality provisions of this
Agreement.
|
|
10.2
|
Exceptions.
The
mutual obligations under this Clause shall not apply to any information
to
the extent that such information:
|
|
(a)
|
is
(at the time of disclosure) or becomes (after the time of disclosure)
known to the public or part of the public domain through no breach
of this
Agreement by the recipient Party or its
Affiliates;
|
21
|
(b)
|
was
known to, or was otherwise in the possession of, the recipient
Party or
its Affiliates prior to the time of disclosure by the disclosing
Party;
|
|
(c)
|
is
disclosed to the recipient Party or an Affiliate by a Third Party
who is
entitled to disclose it without breaching any confidentiality obligation
to the disclosing Party or any of its Affiliates; or
|
|
(d)
|
is
independently developed by or on behalf of the recipient Party
or its
Affiliates, as evidenced by its written records, without reference
to the
Confidential Information disclosed by the disclosing Party or its
Affiliates under this Agreement.
|
Specific
aspects or details of Confidential Information shall not be deemed to be
within
the public domain or in the possession of the recipient Party merely because
the
Confidential Information is embraced by more general information in the public
domain or in the possession of the recipient Party. Further, any combination
of
Confidential Information shall not be considered in the public domain or
in the
possession of the recipient Party merely because individual elements of such
Confidential Information are in the public domain or in the possession of
the
recipient Party unless the combination and its principles are in the public
domain or in the possession of the recipient Party.
|
10.3
|
Authorized
Disclosures.
|
|
(a)
|
In
addition to disclosures allowed under Clause 10.1,
each Party may disclose Confidential Information belonging to the
other
Party to the extent such disclosure is necessary in the following
instances: (i) filing
or prosecuting Patent Rights as permitted by this Agreement;
(ii) regulatory
filings for Products such Party has a license or right to develop
hereunder;
and (iii) prosecuting
or defending litigation as permitted by this Agreement.
In
addition, Novartis and its Affiliates and sublicensees may disclose
Confidential Information of NexMed to Third Parties as may be necessary
or
useful in connection with the development and commercialization
of the
Product as contemplated by this Agreement, including in connection
with
subcontracting transactions.
|
|
(b)
|
In
the event the recipient Party is required to disclose Confidential
Information of the disclosing Party by law or in connection with
bona fide
legal process (including pursuant to any court order or governmental
regulation), such disclosure shall not be a breach of this Agreement;
provided that the recipient Party (i) informs the disclosing
Party as
soon as reasonably practicable of the required disclosure,
(ii) limits the disclosure to the required purpose, and
(iii) at
the disclosing Party’s request and expense, assists in an attempt to
object to or limit the required
disclosure.
|
| 11. |
TERM
AND TERMINATION
|
|
11.1
|
Term.
The
term of this Agreement will commence upon the Effective Date and
continue
until the expiration of the royalty obligations of Novartis (“Term”),
unless earlier terminated as permitted by this Agreement.
|
22
|
11.2
|
Termination
for Breach or Insolvency.
|
|
(a)
|
If
either Novartis or NexMed are in material breach of any material
obligation hereunder, the non-breaching Party may give written
notice to
the breaching Party specifying the claimed particulars of such
breach, and
in the event such material breach is not cured within sixty (60)
days
after such notice, in addition to any other damages or remedies
available
to the non-breaching party, the non-breaching Party shall have
the right
thereafter to terminate this Agreement immediately by giving written
notice to the breaching Party to such effect; provided, however,
that if
such breach is capable of being cured but cannot be cured within
such
sixty (60) day period and the breaching Party initiates actions
to cure
such breach within such period and thereafter diligently pursues
such
actions, the breaching Party shall have such additional period
as is
reasonable in the circumstances to cure such breach. Any termination
by
any Party under this Clause and the effects of termination provided
herein
shall be without prejudice to any damages or other legal or equitable
remedies to which it may be entitled from the other
Party.
|
|
(b)
|
Either
NexMed or Novartis may terminate this Agreement without notice
if an
Insolvency Event occurs in relation to the other Party. In any
event when
a Party first becomes aware of the likely occurrence of any Insolvency
Event in regard to that Party, it shall promptly so notify the
other Party
in sufficient time to give the other Party sufficient notice to
protect
its interests under this Agreement.
|
|
11.3
|
Termination
by Novartis. Novartis
may terminate this Agreement in its sole discretion at any time
during the
term hereof in its entirety, or on a country-by-country basis without
cause (a) on not less than ninety (90) days prior written notice
to NexMed
if such termination occurs prior to launch of such Product in such
country, or (b) on not less than one hundred eighty (180) days
prior
written notice to NexMed if such termination occurs after the launch
of
such Product in such country, in which case Novartis’ obligation to
perform any further work under this Agreement shall cease in such
country
as of the date of such notice; provided that in no event shall
Novartis
have the right to terminate this Agreement pursuant to this Clause
11.3
unless and until Novartis has completed the first Phase III Clinical
Trial
for the NexMed Formulation, subject to Clause 5.1.
|
|
11.4
|
Termination
for NexMed Formulation and Novartis Formulation
Failure.
In
the event that Novartis is commercializing a topical pharmaceutical
product for the treatment, prevention or diagnosis of onychomycosis
and is
not also commercializing a NexMed Formulation or the Novartis Formulation
due to failure to meet clinical trial endpoints or pre-clinical
criteria
established by Novartis, the Parties shall discuss in good faith
Novartis’
development efforts with respect to the NexMed Formulation or the
Novartis
Formulation. In such event, if NexMed is not reasonably satisfied
that
Novartis is using Commercially Reasonable Efforts to develop and
commercialize another NexMed Formulation, NexMed shall have the
right to
terminate this Agreement.
|
23
| 12. |
EFFECT
OF TERMINATION
|
|
12.1
|
Upon
termination of this Agreement by Novartis pursuant to Clause 11.2(a),
the licenses granted by NexMed to Novartis will remain in full
force and
effect in accordance with their respective terms, provided, however,
that
the Milestone Payments and Royalty Payments payable by Novartis
shall be
reduced to 50% of the amount that would be payable under the terms
of this
Agreement during its term and Novartis shall have the right to
prosecute,
maintain and defend the NexMed Patent Rights other than the DDAIP
Patent
Rights.
|
|
12.2
|
Upon
termination of this Agreement by NexMed pursuant to Clause 11.2
or
Clause 11.4 or by Novartis pursuant to Clause 11.3
and solely in relation to the NexMed Formulation, save in relation
to
Clause 12.2(f), and subject to Clause 12.3(a) :
|
|
(a)
|
Assignments.
Novartis will promptly (and in each case within sixty (60) days
of receipt
of NexMed’s request) and at NexMed’s cost, save in the event of
termination by NexMed pursuant to Clause
11.2:
|
(i) upon
NexMed’s request, assign to NexMed all of Novartis’ right, title and interest in
and to any agreements between Novartis and Third Parties that are freely
assignable by Novartis and that relate solely to the development, manufacture
or
commercialization of the NexMed Formulation and the corresponding
Product;
(ii) assign
to
NexMed, to the extent freely assignable by Novartis, the management and
continued performance of any clinical trials for the NexMed Formulation and
the
corresponding Product ongoing as of the effective date of such
termination;
(iii) transfer
to NexMed all of Novartis’ right, title and interest in and to any and all
clinical and regulatory data and information, including the Regulatory Dossier,
generated by or on behalf of Novartis, regulatory filings and Regulatory
Approvals relating solely to the NexMed Formulation and the corresponding
Product;
(iv) to
the
extent that any agreement or other asset described in this Clause 12.2(a)
is not
assignable by Novartis or does not relate solely to NexMed Formulation and
the
corresponding Product, then such agreement or other asset will not be assigned,
and upon the request of NexMed, Novartis will take such reasonable steps
as may
be necessary to allow NexMed to obtain and to enjoy the benefits of such
agreement or other asset in the form of a license or other right to the extent
Novartis has the right and ability to do so solely for NexMed’s continued
development and/or commercialization of the relevant NexMed Formulation and
corresponding Product; and
(v) provide
copies of any other books, records, documents and instruments to the extent
related to the technical aspects of the NexMed Formulation and the corresponding
Product and to the extent necessary for NexMed to continue the development
and
commercialization of the corresponding Product.
24
|
(b)
|
Manufacturing
Activities.
Novartis will:
|
(i) upon
NexMed’s request, use Commercially Reasonable Efforts to supply NexMed with (A)
the clinical materials for the NexMed Formulation it has on hand at the time
of
termination within a period of twelve (12) months if this Agreement is
terminated prior to First Commercial Sale of the Product or (B) commercial
quantities of NexMed Formulation and the corresponding Product for a period
of
eighteen (18) months if this Agreement is terminated after First Commercial
Sale
of the corresponding Product; provided, however, that NexMed will reimburse
Novartis for the Fully Burdened Manufacturing Costs with respect to the NexMed
Formulation and the corresponding Product; and
(ii) to
the
extent it is reasonably able to provide and subject to any Third Party
restrictions, transfer the completed manufacturing process (together with
any
unique mold or tooling used solely in connection therewith that do not
incorporate any trademarks or logos of Novartis) for the NexMed Formulation
and
the corresponding Product to NexMed or its designee upon NexMed’s request and at
its cost and expense, and cooperate with NexMed to effect the transition
of such
manufacturing responsibilities.
|
(c)
|
License
Grant.
Novartis agrees to grant and hereby grants to NexMed, effective
only upon
such termination of this Agreement, a worldwide, exclusive, royalty-free
right and license, with the right to sublicense and authorize the
grant of
further sublicenses, under any intellectual property (excluding
the Patent
Rights of Novartis as set out in sub-clause (g) below) owned or
controlled
(with the right to sublicense to NexMed) by Novartis and developed
under
this Agreement relating solely to the NexMed Formulation and the
corresponding Product solely for the purposes of developing and
commercializing the Product comprising the NexMed Formulation being
developed under this Agreement; provided, however, that NexMed
will be
responsible for any payments associated with the grant of any license
pursuant to the preceding sentence (including, without limitation,
any
royalty or other payment obligations to an upstream licensor of
any such
Patents Rights).
|
| (d) |
Disclosure
and Delivery.
Novartis will provide to NexMed any Know-How owned or controlled
(with the
right to sublicense to NexMed) by Novartis developed under this
Agreement,
to the extent then used in connection with the manufacture,
commercialization or development of the NexMed Formulation and
the
corresponding Product solely for the purposes of developing and
commercializing the Product comprising the NexMed Formulation being
developed under this Agreement; such transfer shall be effected
by the
delivery of documents, to the extent such Know-How is embodied
in
documents, and to the extent that such Know-How is not fully embodied
in
documents, Novartis shall make its employees and agents who have
knowledge
of such Know-How in addition to that embodied in documents available
to
NexMed for interviews, demonstrations and training to effect such
transfer
for a reasonable amount of time (not to exceed 200 person hours).
|
25
|
(e)
|
Disposition
of Inventory.
NexMed shall have the option, exercisable within thirty (30) days
following the effective date of such termination, to purchase any
inventory of the NexMed Formulation and the corresponding Product
affected
by such termination at Novartis’ Fully Burdened Manufacturing Costs
therefor (unless Novartis determines that it is appropriate for
it to
destroy such inventory). NexMed may exercise such option by written
notice
to Novartis during such thirty (30)-day period. Upon such exercise,
the
Parties will establish mutually agreeable payment and delivery
terms for
the sale of such inventory. If NexMed does not exercise such option
during
such thirty (30)-day period, or if NexMed provides Novartis with
written
notice of its intention not to exercise such option, then Novartis
and its
Affiliates and sublicensees will be entitled, during the period
ending on
the last day of the sixth (6th) full month following the effective
date of
such termination, to sell any inventory of the NexMed Formulation
and the
corresponding Product affected by such termination that remain
on hand as
of the effective date of the termination, so long as Novartis pays
to
NexMed the Royalty Payments, in accordance with the terms and conditions
set forth in this Agreement.
|
| (f) |
Know-How
License Grant.
NexMed agrees to grant and hereby grants to Novartis, effective
upon such
termination of this Agreement, a worldwide, non-exclusive, royalty-free
right and license, with the right to sublicense and authorize the
grant of
further sublicenses, under the NexMed Know-How solely for the purposes
of
developing and commercializing the Novartis Formulation and the
corresponding Product.
|
| (g) |
Patent
License.
Novartis will grant NexMed a right exercisable within sixty (60)
days of
termination to negotiate in good faith a royalty bearing license
to any
Patent Rights of Novartis reasonably required for the development
and
commercialization of the NexMed Formulation and corresponding Product
at
commercially reasonably terms agreed upon by the Parties (such
rate not to
exceed the Royalty Payments under Clause
7).
|
|
12.3
|
Upon
termination of this Agreement by Novartis pursuant to Clause
11.3:
|
| (a) |
Pre-Launch.
(i) Novartis shall within sixty (60) days deliver a report to NexMed
outlining the status of development of the Product and within one
hundred
eighty (180) days a report setting forth the total of the Out-of-Pocket
Expenses incurred by Novartis. NexMed shall within sixty (60) days
of
delivery of both reports notify Novartis in writing if it wishes
to
receive the support and assistance set forth in Clauses 12.2 (a)-(e)
inclusive and in the event NexMed so elects the provisions of Clauses
12.2(a)-(e) shall apply forthwith; (ii) in the event that NexMed
elects to
receive such support and assistance, Novartis shall provide such
support
and assistance to NexMed and NexMed shall pay Novartis a royalty
of one
and a half percent (1.5%) on net sales of Product invoiced by or
on behalf
of NexMed and any NexMed Affiliate, licensee or sublicensee for
the
Product, where net sales and payment terms shall have an equivalent
meaning to the definition of Net Sales and payment terms in this
Agreement
in relation to Novartis until such time as the total amount of
such
royalties equals the Novartis Out-of-Pocket Expenses.
|
26
|
(b)
|
Post-Launch.
In consideration of the provisions of Clauses 12.1 (a)-(e), NexMed
shall
pay Novartis a royalty of three percent (3%) on net sales of Product
invoiced by or on behalf of NexMed and any NexMed Affiliate, licensee
or
sublicensee for the Product, where net sales and payment terms
shall have
an equivalent meaning to the definition of Net Sales and payment
terms in
this Agreement in relation to
Novartis.
|
|
12.4
|
Upon
termination of this Agreement by NexMed pursuant to Clause 11.2
or
11.4:
|
|
(a)
|
Pre-Launch.
No royalty shall be payable by NexMed to Novartis on net sales
of
Product.
|
|
(b)
|
Post-Launch.
In consideration of the provisions of Clauses 12.1 (a)-(e), NexMed
shall
pay Novartis a royalty of one and a half percent (1.5%) on net
sales of
Product invoiced by or on behalf of NexMed and any NexMed Affiliate,
licensee or sublicensee for the Product, where net sales and payment
terms
shall have an equivalent meaning to the definition of Net Sales
and
payment terms in this Agreement in relation to
Novartis.
|
|
12.5
|
Survival.
Expiration
or termination of this Agreement shall not relieve the Parties
of any
obligation accruing prior to such expiration or termination. Without
limiting the foregoing, the obligations pursuant to the following
Clauses;
9 (Intellectual Property Rights), 12.1 (Effect of Termination),
12.2, 12.3
and 12.4 (Effect of Termination), 12.5 (Survival), 13.1 (Representations
and Warranties by Each Party), 13.2 (Representations and Warranties
by
NexMed), 13.5 (No Other Warranties), 14 (Indemnification), 15
(Publications and Publicity), 16.4 (Governing Law), 16.5 (Dispute
Resolution), 16.8 (Relationship of the Parties), 16.7 (Waivers
and
Amendments), 16.10 (Notices), 16.15 (Expenses), and any other provision
of
this Agreement which is expressly or by implication intended to
come into
or continue in force on or after termination shall survive expiration
or
termination of this Agreement. The
provisions of Clause 10
(Confidentiality) shall survive the termination or expiration of
this
Agreement for a period of ten (10)
years.
|
| 13. |
REPRESENTATIONS
AND WARRANTIES
|
|
13.1
|
Representations
and Warranties by Each Party. Each
Party represents and warrants to the other
that:
|
|
(a)
|
it
is a corporation duly organized, validly existing, and in good
standing
under the laws of its jurisdiction of
formation;
|
|
(b)
|
it
has full corporate power and authority to execute, deliver, and
perform
this Agreement, and has taken all corporate action required by
law and its
organizational documents to authorize the execution and delivery
of this
Agreement and the consummation of the transactions contemplated
by this
Agreement;
|
27
|
(c)
|
this
Agreement constitutes a valid and binding agreement enforceable
against it
in accordance with its terms (except as the enforceability thereof
may be
limited by bankruptcy, bank moratorium or similar laws affecting
creditors’ rights generally and laws restricting the availability of
equitable remedies and may be subject to general principles of
equity
whether or not such enforceability is considered in a proceeding
at law or
in equity); and
|
|
(d)
|
the
execution and delivery of this Agreement and all other instruments
and
documents required to be executed pursuant to this Agreement, and
the
consummation of the transactions contemplated hereby do not and
shall not
(i) conflict with or result in a breach of any provision
of its
organizational documents, (ii) result in a breach of any
agreement to
which it is a party, or (iii) violate any
law.
|
|
13.2
|
Representations
and Warranties by NexMed.
NexMed represents and warrants, as of the Effective Date, to Novartis
that:
|
|
(a)
|
Exhibit
B sets forth a complete and accurate list of all NexMed Patent
Rights in
existence as of the Effective Date;
|
|
(b)
|
NexMed
is the sole and exclusive owner of all of the NexMed Patent Rights
free
from Encumbrances and is listed in the records of the appropriate
governmental agencies as the sole and exclusive owner of record
for each
registration, grant and application included in the NexMed Patent
Rights;
|
|
(c)
|
NexMed
has the right to grant to Novartis the licenses under the NexMed
Patent
Rights and NexMed Know-How that it purports to grant
hereunder;
|
|
(d)
|
NexMed
has the right to use and disclose and to enable Novartis to use
and
disclose (in each case under appropriate conditions of confidentiality)
the NexMed Know-How free from
Encumbrances;
|
|
(e)
|
to
the knowledge of NexMed, the issued patents in the NexMed Patent
Rights
are valid and enforceable without any claims, challenges, oppositions,
interference or other proceedings pending or threatened and NexMed
has
filed and prosecuted the patent applications within the NexMed
Patent
Rights in good faith and complied with all duties of disclosure
with
respect thereto;
|
|
(f)
|
to
the knowledge of NexMed, NexMed has not committed any act, or omitted
to
commit any act, that may cause the NexMed Patent Rights to expire
prematurely or be declared invalid or
unenforceable;
|
|
(g)
|
all
application, registration, maintenance and renewal fees in respect
of the
NexMed Patent Rights as of the Effective Date have been paid and
all
necessary documents and certificates have been filed with the relevant
agencies for the purpose of maintaining the NexMed Patent
Rights;
|
28
|
(h)
|
NexMed
has not granted and will not grant during the Term, any Third Party,
including any academic organization or agency, any right to the
NexMed
Technology which is inconsistent with the rights granted under
this
Agreement;
|
|
(i)
|
to
the knowledge of NexMed, the development, manufacture, use and
sale of the
NexMed Formulation do not infringe the Patent Rights or misappropriate
the
Know-How of any Third Party, nor has NexMed received any written
notice
alleging such infringement or misappropriation;
|
|
(j)
|
NexMed
has not initiated or been involved in any proceedings or claims
in which
it alleges that any Third Party is or was infringing or misappropriating
any NexMed Technology, nor have any proceedings been threatened
by NexMed,
nor does NexMed know of any valid basis for any such
proceeding;
|
|
(k)
|
NexMed
has taken all reasonable precautions to preserve the confidentiality
of
the NexMed Know-How;
|
|
(l)
|
NexMed
has obtained from all individuals who participated in any respect
in the
invention or authorship of any NexMed Technology effective assignments
of
all ownership rights of such individuals in such NexMed Technology,
either
pursuant to written agreement or by operation of law; and
|
|
(m)
|
No
officer or employee of NexMed is subject to any agreement with
any other
Third Party which requires such officer or employee to assign any
interest
in any NexMed Technology to any Third
Party.
|
|
13.3
|
Covenants
of NexMed.
NexMed covenants and agrees that (a) it shall continue to
own or
possess all its rights, title and interest in and to the NexMed
Patent
Rights and the NexMed Know-How related to the Products and/or NexMed
Formulation free and clear of all Encumbrances (other than this
Agreement); (b) it will not grant any interest in the NexMed
Patent
Rights or NexMed Know-How which is inconsistent with the terms
and
conditions of this Agreement; and (c) NexMed has complied with
and will
continue to comply during the Term in all material respects, with
all laws
and regulations applicable to all activities relating to any of
the NexMed
Formulation and/or Products including without limitation, manufacturing
and development activities related to the
same.
|
|
13.4
|
Covenants
of Novartis.
Novartis covenants and agrees that it has complied with and will
continue
to comply during the Term in all material respects, with all laws
and
regulations applicable to all activities relating to any of the
Products
including without limitation, manufacturing and development activities
related to the same.
|
|
13.5
|
No
Other Warranties. Except
as expressly stated in this Clause 13,
(a) no representation, condition or warranty whatsoever
is made or
given by or on behalf of Novartis or NexMed and (b) all
other
conditions and warranties whether arising by operation of law or
otherwise
are hereby expressly excluded, including any conditions and warranties
of
merchantability, fitness for a particular purpose or
non-infringement.
|
29
|
14.
|
INDEMNIFICATION
AND LIABILITY
|
|
14.1
|
Indemnification
by NexMed.
NexMed shall indemnify and hold Novartis and its Affiliates, and
their
respective officers, directors, employees, contractors, agents
and
assigns, harmless from and against any Claims against Novartis
or any of
the foregoing persons arising or resulting
from:
|
|
(a)
|
NexMed’s
actions in connection with the development or commercialization
of the
NexMed Formulation and/or Products prior to or after the Effective
Date or
following termination in whole or in part of this Agreement and
the
reversion of the applicable rights hereunder to NexMed in accordance
with
Clause 12;
|
|
(b)
|
the
negligence or willful misconduct of NexMed;
or
|
|
(c)
|
the
breach of any of the covenants, warranties and representations
made by
NexMed to Novartis under this Agreement.
|
NexMed
shall only be obliged to so indemnify and hold Novartis harmless to the extent
that such Claims do not arise from the breach, negligence or willful misconduct
of Novartis.
|
14.2
|
Indemnification
by Novartis. Novartis
shall indemnify and hold NexMed and its Affiliates, and their respective
officers, directors, employees, contractors, agents and assigns,
harmless
from and against any Claims against NexMed or any of the foregoing
persons
arising or resulting from:
|
|
(a)
|
the
manufacture, handling, packaging, storage, sale or other disposition
of
any of the NexMed Formulation, Novartis Formulation and/or Products
by or
on behalf of Novartis, its Affiliates or sublicensees during the
Term;
|
|
(b)
|
the
negligence or willful misconduct of Novartis;
or
|
|
(c)
|
the
breach of any of the warranties and representations made by Novartis
to
NexMed under this Agreement.
|
Novartis
shall only be obliged to so indemnify and hold NexMed harmless to the extent
that such Claims do not arise from the breach, negligence or willful misconduct
of NexMed.
|
14.3
|
Indemnification
Procedure.
|
|
(a)
|
A
Party hereto or any of its Affiliates seeking indemnification hereunder
(“Indemnified
Party”)
shall notify the other Party (“Indemnifying
Party”)
in writing reasonably promptly after the assertion against the
Indemnified
Party of any claim or allegation by a Third Party (“Third
Party Claim”)
in respect of which the Indemnified Party intends to base a claim
for
indemnification hereunder, but the failure or delay to notify the
Indemnifying Party shall not relieve the Indemnifying Party of
any
obligation or liability that it may have to the Indemnified Party
except
to the extent that the Indemnifying Party demonstrates that its
ability to
defend or resolve such Third Party Claim is adversely affected
thereby.
|
30
|
(b)
|
Subject
to the provisions of sub-Clauses (d) and (e) below, the Indemnifying
Party
shall have the right, upon written notice given to the Indemnified
Party
within thirty (30) days after receipt of the notice from the Indemnified
Party of any Third Party Claim to assume the defense and handling
of such
Third Party Claim, at the Indemnifying Party’s sole expense, in which case
the provisions of sub-Clause (c) below shall
govern.
|
|
(c)
|
The
Indemnifying Party shall select counsel reasonably acceptable to
the
Indemnified Party in connection with conducting the defense and
handling
of such Third Party Claim, and the Indemnifying Party shall defend
or
handle the same in consultation with the Indemnified Party, and
shall keep
the Indemnified Party timely apprised of the status of such Third
Party
Claim. The Indemnifying Party shall not, without the prior written
consent
of the Indemnified Party, agree to a settlement of any Third Party
Claim
which could lead to liability or create any financial or other
obligation
on the part of the Indemnified Party for which the Indemnified
Party is
not entitled to indemnification hereunder. The Indemnified Party
shall
cooperate with the Indemnifying Party and shall be entitled to
participate
in the defense and handling of such Third Party Claim with its
own counsel
and at its own expense. Notwithstanding the foregoing, in the event
the
Indemnifying Party fails to conduct the defense and handling of
any Third
Party Claim in good faith after having assumed such, then the provisions
of sub-Clause (e) below shall
govern.
|
|
(d)
|
If
the Indemnifying Party does not give written notice to the Indemnified
Party, within thirty (30) days after receipt of the notice from
the
Indemnified Party of any Third Party Claim, of the Indemnifying
Party’s
election to assume the defense and handling of such Third Party
Claim, the
provisions of sub-Clause (e) below shall
govern.
|
|
(e)
|
The
Indemnified Party may, at the Indemnifying Party’s expense, select counsel
reasonably acceptable to the Indemnifying Party in connection with
conducting the defense and handling of such Third Party Claim and
defend
or handle such Third Party Claim in such manner as it may deem
appropriate, provided, however, that the Indemnified Party shall
keep the
Indemnifying Party timely apprised of the status of such Third
Party Claim
and shall not settle such Third Party Claim without the prior written
consent of the Indemnifying Party, which consent shall not be unreasonably
withheld. If the Indemnified Party defends or handles such Third
Party
Claim, the Indemnifying Party shall cooperate with the Indemnified
Party
and shall be entitled to participate in the defense and handling
of such
Third Party Claim with its own counsel and at its own expense.
|
31
|
14.4
|
Mitigation
of Loss.
Each Indemnified Party and any applicable Affiliate will take all
such
reasonable steps and action as are necessary or as the Indemnifying
Party
may reasonably require in order to mitigate any Claims under this
Clause.
Nothing in this Agreement shall or shall be deemed to relieve any
Party of
any common law or other duty to mitigate any losses incurred by
it.
|
|
14.5
|
Special,
Indirect and Other Losses. IN
NO EVENT SHALL EITHER PARTY OR ANY OF ITS AFFILIATES BE LIABLE
FOR
SPECIAL, INDIRECT, INCIDENTAL, PUNITIVE OR CONSEQUENTIAL DAMAGES
OR FOR
ANY ECONOMIC LOSS OR LOSS OF PROFITS SUFFERED BY THE OTHER PARTY,
EXCEPT
TO THE EXTENT ANY SUCH DAMAGES ARE REQUIRED TO BE PAID TO A THIRD
PARTY AS
PART OF A THIRD-PARTY CLAIM.
|
|
14.6
|
No
Exclusion. No
Party excludes any liability for death or personal injury caused
by its
negligence or that of its employees, agents or
sub-contractors.
|
| 15. |
PUBLICATIONS
AND PUBLICITY
|
|
15.1
|
Publications. Any
proposed oral public disclosures or written publications of NexMed
relating to a Product and/or NexMed Formulation shall require the
written
consent of Novartis prior to their release; provided, that the
foregoing
shall not apply to information which is in the public domain or
any public
disclosures required by law or governmental regulation or by the
rules of
any recognized stock exchange.
|
|
15.2
|
Publicity. Each
Party agrees not to issue any press release or other public statement,
whether oral or written, disclosing the existence of this Agreement,
the
terms hereof or the Parties’ relationship under this Agreement without the
prior written consent of the other Party; provided however, that
neither
Party will be prevented from complying with any duty of disclosure
it may
have pursuant to law or governmental regulation or pursuant to
the rules
of any recognized stock exchange and Novartis may issue press releases
and
other public statements as it deems appropriate in connection with
the
development and commercialization of Products under this Agreement.
In the
event of a disclosure required by law, governmental regulation
or the
rules of any recognized stock exchange, the Parties shall coordinate
with
each other with respect to the timing, form and content of such
required
disclosure and, if so requested by the other Party, the Party subject
to
such obligation shall use commercially reasonable efforts to obtain
an
order protecting to the maximum extent possible the confidentiality
of
such provisions of this Agreement as reasonably requested by the
other
Party. If the Parties are unable to agree on the form or content
of any
required disclosure, such disclosure shall be limited to the minimum
required as determined by the disclosing Party in consultation
with its
legal counsel.
|
| 16. |
GENERAL
PROVISIONS
|
|
16.1
|
Assignment.
Neither
Party may assign its rights and obligations under this Agreement
without
the other Party’s prior written consent, except that (a) either Party
may assign its rights and obligations under this Agreement or any
part
hereof to one or more of its Affiliates without the consent of
the other
Party; and (b) either Party may assign this Agreement in
its entirety
to a successor to all or a significant part of its business, which
shall
include a merger partner or the acquirer of the assets of all or
a
significant part of its business, subject to Novartis’ rights under Clause
3.3 with respect to a Change of Control of NexMed. The assigning
Party
shall provide the other Party with prompt written notice of any
such
assignment. Any permitted assignee shall by written undertaking
to the
other Party assume all obligations of its assignor under this Agreement.
Any attempted assignment in contravention of the foregoing shall
be
void.
|
32
|
16.2
|
Extension
to Affiliates.
Each
Party shall have the right to extend the rights and immunities
granted in
this Agreement to one or more of its Affiliates. All applicable
terms and
provisions of this Agreement shall apply to any such Affiliate
to which
this Agreement has been extended to the same extent as such terms
and
provisions apply to the Party extending such rights and
immunities.
The Party extending the rights and immunities granted hereunder
shall
remain primarily liable for any acts or omissions of its
Affiliates.
|
|
16.3
|
Severability. Should
one or more of the provisions of this Agreement become void or
unenforceable as a matter of law, then this Agreement shall be
construed
as if such provision were not contained herein and the remainder
of this
Agreement shall be in full force and effect, and the Parties will
use
their best efforts to substitute for the invalid or unenforceable
provision a valid and enforceable provision which conforms as nearly
as
possible with the original intent of the
Parties.
|
|
16.4
|
Governing
Law and Jurisdiction.
This Agreement shall be governed by and construed under the laws
of New
York, without giving effect to the conflicts of laws provision
thereof.
Subject to Clause 16.5,
any dispute arising out of or relating to this Agreement shall
be subject
to the exclusive jurisdiction of the courts located in New York,
New
York.
|
|
16.5
|
Dispute
Resolution. In
the event of a dispute under this Agreement, the Parties will refer
the
dispute to the Alliance Managers for discussion and resolution.
If the
Alliance Managers are unable to resolve such a dispute within thirty
(30)
days of the dispute being referred to them, either Party may require
that
the Parties forward the matter to the Chief Executive Officer of
NexMed
and the Head of Pharma Development of Novartis Pharma AG (or a
designee
with similar authority to resolve such dispute), who shall attempt
in good
faith to resolve such dispute. If they cannot resolve such dispute
within
thirty (30) days of the matter being referred to them, then
either
Party may pursue any remedy or rights it may have.
|
|
16.6
|
Force
Majeure. Neither
Party shall be responsible to the other for any failure or delay
in
performing any of its obligations under this Agreement or for other
nonperformance hereunder if such delay or nonperformance is caused
by
strike, stoppage of labor, lockout or other labor trouble, fire,
flood,
accident, war, act of terrorism, act of God or of the government
of any
country or of any local government, or by cause unavoidable or
beyond the
control of any Party hereto. In such event, the Party affected
will use
commercially reasonable efforts to resume performance of its
obligations.
|
33
|
16.7
|
Waivers
and Amendments. The
failure of any Party to assert a right hereunder or to insist upon
compliance with any term or condition of this Agreement shall not
constitute a waiver of that right or excuse a similar subsequent
failure
to perform any such term or condition by the other Party. No waiver
shall
be effective unless it has been given in writing and signed by
the Party
giving such waiver. No provision of this Agreement may be amended
or
modified other than by a written document signed by authorized
representatives of each Party.
|
|
16.8
|
Relationship
of the Parties. Nothing
contained in this Agreement shall be deemed to constitute a partnership,
joint venture, or legal entity of any type between NexMed and Novartis,
or
to constitute one as the agent of the other. Each Party shall act
solely
as an independent contractor, and nothing in this Agreement shall
be
construed to give any Party the power or authority to act for,
bind, or
commit the other.
|
|
16.9
|
Successors
and Assigns. This
Agreement shall be binding upon and inure to the benefit of the
Parties
hereto and their respective successors and permitted
assigns.
|
|
16.10
|
Notices. All
notices, consents, waivers, and other communications under this
Agreement
must be in writing and will be deemed to have been duly given when
(a) delivered by hand (with written confirmation of receipt),
(b) sent by fax (with written confirmation of receipt),
provided that
a copy is sent by an internationally recognized overnight delivery
service
(receipt requested), or (c) when received by the addressee,
if sent
by an internationally recognized overnight delivery service (receipt
requested), in each case to the appropriate addresses and fax numbers
set
forth below (or to such other addresses and fax numbers as a Party
may
designate by notice):
|
If
to
NexMed:
NexMed,
Inc.
000
Xxxxxxxxx Xxxxxxxxx
Xxxxxxxxxxxx,
XX 00000
Attn:
Chief Executive Officer
Fax:
000-000-0000
with
a
copy to:
Xxxxxx,
Xxxxx & Xxxxxxx LLP
000
Xxxxxxxx Xxxxxx
Xxxxxxxxx,
XX 00000
Attn:
Xxxxxx X. Xxxxx
Fax:
000-000-0000
34
If
to
Novartis:
Novartis
International Pharmaceutical Ltd.
“Xxxxx
Holme”, 00 Xxxxx Xxxx
X.X.
Xxx
XX 0000
Xxxxxxxx,
XX LX
Bermuda
Attn:
Board of Directors
Fax:
0-000-000-0000
with
a
copy to:
Novartis
Pharma AG
Xxxxxxxxxxxx
00
Post
Office Box 4002
Basel,
Switzerland
Attn:
Legal Department
Fax:
00-00-000-0000
and
Novartis
Pharma XX
Xxxxxxxxxxxx
00
Xxxx
Xxxxxx Xxx 0000
Xxxxx,
Xxxxxxxxxxx
Attn:
Head, Business Development and Licensing
|
16.11
|
Further
Assurances. Novartis
and NexMed hereby covenant and agree without the necessity of any
further
consideration, to execute, acknowledge and deliver any and all
such other
documents and take any such other action as may be reasonably necessary
to
carry out the intent and purposes of this
Agreement.
|
|
16.12
|
Compliance
with Law. Each
Party shall perform its obligations under this Agreement in accordance
with all applicable laws. No Party shall, or shall be required
to,
undertake any activity under or in connection with this Agreement
which
violates, or which it believes, in good faith, may violate, any
applicable
law.
|
|
16.13
|
No
Third Party Beneficiary Rights.
The provisions of this Agreement are for the sole benefit of the
Parties
and their successors and permitted assigns, and they shall not
be
construed as conferring any rights to any Third Party, except as
otherwise
expressly provided in Clause 14
(Indemnification). Except as expressly provided in Clause 14
(Indemnification), no person who is not a Party to this Agreement
(including any employee, officer, agent, representative or subcontractor
of either Party) shall have the right to enforce any term of this
Agreement which expressly or by implication confers a benefit on
that
person without the express prior agreement in writing of the Parties.
|
35
|
16.14
|
English
Language. This
Agreement is written and executed in the English language. Any
translation
into any other language shall not be an official version of this
Agreement
and in the event of any conflict in interpretation between the
English
version and such translation, the English version shall
prevail.
|
|
16.15
|
Expenses.
Except
as otherwise expressly provided in this Agreement, each Party shall
pay
the fees and expenses of its respective lawyers and other experts
and all
other expenses and costs incurred by such Party incidental to the
negotiation, preparation, execution and delivery of this
Agreement.
|
|
16.16
|
Entire
Agreement. This
Agreement, together with its Exhibits, sets forth the entire agreement
and
understanding of the Parties as to the subject matter hereof and
supersedes all proposals, oral or written, and all other communications
between the Parties with respect to such subject matter.
In
the event of any conflict between a substantive provision of this
Agreement and any Exhibit hereto, the substantive provisions of
this
Agreement shall prevail.
|
|
16.17
|
Counterparts. This
Agreement may be executed 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.
|
36
IN
WITNESS WHEREOF, the Parties intending to be bound have caused this Agreement
to
be executed by their duly authorized representatives, as of the Effective
Date.
| NOVARTIS INTERNATIONAL PHARMACEUTICAL LTD. | NEXMED, INC. |
|
By:
/s/
Name:
Title:
|
By:
/s/
Xxxxxx
Mo
Name:
Xxxxxx Mo
Title:
President
&
CEO
|
|
By:
/s/
|
By:
/s/
Xxxxxxx X.
Xxxxxxxx
|
|
NEXMED
INTERNATIONAL LIMITED
By:
/s/
Xxxxxx
Mo
Name:
Xxxxxx
Mo
Title:
Managing
Director
|
|
|
By:
/s/
Xxxxxxx X.
Xxxxxxxx
Name:
Xxxxxxx
X.
Xxxxxxxx
Title:
V.P.,
Commercial Development
|
37
EXHIBIT
A
NEXMED
FORMULATION
*
The information contained in this exhibit has been omitted pursuant to a
request
for
confidential
treatment. Such portions have been filed separately with the SEC.
*
38
EXHIBIT
B
NEXMED
PATENT RIGHTS
Section
1
|
Case
No. / Title / Inventor(s)
|
Country
|
Appln.
No./Series No.
|
Filed
|
Patent
No.
|
Granted
|
Status
|
|
NMD-130
Antifungal
Nail Coat and Method of Use
|
U.S.
|
10/514,190
|
11/10/04
|
Pending
|
||
|
(Xxxxx,
Mo, Xxxx, Xx, Xxxxxxx)
|
PCT
(all
countries)
|
PCT/US2004/008618
|
03/22/04
|
Pending
|
||
|
NMD-147
Antifungal
Nail Coat and Method of Use
(C-I-P
of Appln. No. 10/514,190, which is U.S. National Phase of
PCT/US2004/008618 and
claiming
priority of Provisional Application Xx. 00/000,000
(Xxxxx,
Xx, Xxxx, Xx, Xxxxxxx)
|
U.S.
|
In
Preparation
|
39
Section
2 - DDAIP Patent Rights
|
Case
No. / Title / Inventor(s)
|
Country
|
Appln.
No./Series No.
|
Filed
|
Patent
No.
|
Granted
|
Status
|
|
NMD-107
|
U.S.
|
09/314,571
|
5/19/99
|
6,118,020
|
09/12/00
|
Granted
|
| Crystalline Salts of Dodecyl |
Australia
|
50232/00
|
05/18/00
|
Allowed
|
||
| 2-(N,N-Dimethylamino)-Propionate |
Brazil
|
0006133-6
|
05/18/00
|
Pending
|
||
|
(Büyüktimkin)
|
Canada
|
2,338,139
|
05/18/00
|
Pending
|
||
|
China
China
(Div. 1)
|
00800913.9
|
05/18/00
|
Pending
Authorized
|
|||
|
Europe
|
00932524.2
|
05/18/00
|
1097126
|
08/04/04
|
Granted
|
|
(Albania,
Austria, Belgium, Cyprus, Denmark, Finland, France, Germany,
Great
Britain, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg,
Macedonia,
Monaco, Netherlands, Portugal, Romania, Slovenia, Spain,
Sweden,
Switzerland)
|
||||||
|
Europe
(Div. 1)
|
04006144.2
|
03/15/04
|
Pending
|
|
(Albania,
Austria, Belgium, Cyprus, Denmark, Finland, France,
Germany, Great
Britain, Greece,
Ireland, Italy, Latvia, Lithuania, Luxembourg, Macedonia,
Monaco,
Netherlands, Portugal,
Romania, Slovenia, Spain, Sweden,
Switzerland)
|
||||||
|
Hong
Kong
|
01108398.0
|
11/29/01
|
Pending
|
|||
|
Hungary
|
P
02 02090
|
05/18/00
|
Pending
|
|||
|
India
|
2000/00670
|
05/18/00
|
Pending
|
|||
|
Israel
|
140569
|
05/18/00
|
Pending
|
|||
|
Japan
|
2000-618227
|
05/18/00
|
Pending
|
|||
|
South
Korea
|
00-0000-0000000
|
05/18/00
|
Pending
|
|||
|
Mexico
|
1000669
|
05/18/00
|
(224294)
|
(11/19/04)
|
Allowed
|
|
|
South
Africa
|
2001/0142
|
05/18/00
|
2001/0142
|
03/27/02
|
Granted
|
|
|
Taiwan
|
89109133
|
05/12/00
|
Pending
|
|
Biodegradable
Absorption Enhancers
(Xxxx
et al.)
|
U.S.
|
201,029
|
06/1/88
|
4,980,378
|
12/25/90
|
Granted
|
|
Biodegradable
Absorption Enhancers
(Xxxx
et al.)
|
U.S.
|
566,758
|
08/14/90
|
5,082,866
|
01/21/92
|
Granted
|
40
EXHIBIT
C
SAMPLE
INVOICE
|
Sender's
Logo
|
INVOICE
|
||
|
INVOICE
DATE:
|
|||
|
Street
|
__
________ 200_
|
||
|
Town,
Country
|
|||
|
Phone
and Fax Nr.
|
INVOICE
No.: XXXX
|
||
|
Xxxx
To:
|
For:
|
||
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Novartis
International Pharmaceutical Ltd.
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Product
X Royalties 1st Quarter 2006
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”Xxxxx
Holme”, 00 Xxxxx Xxxx
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(or
Milestone for event Y)
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Att.
Xx. Xxxx Xxxx / Xx. Xxxxx Xxxxxxx
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P.O.
Box HM 2899
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Xxxxxxxx,
XX LX
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Bermuda
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And
via fax to no. x0 000 000 0000
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DESCRIPTION
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AMOUNT
(USD)
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Product
X royalties January - March 200_ calculated based on Novartis
provided
sales & royalty report (see attached worksheet)
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US$
000'000.00
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(Or
milestone payment for event Y, according to paragraph XY of agreement
ZZZZ
dated ……)
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Novartis
Contract Code
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Please
specify the event for which the invoice is due
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Please
remit by wire transfer within 60 days to:
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|||
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Receiving
Bank - ……..
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Swift
Code - ……..
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ABA
Number - ……..
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Credit
Account - ……..
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Beneficiary
- ……..
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TOTAL
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000'000,00
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If
you have any questions concerning this invoice, contact
…………
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or
e-mail to ……..
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VAT
-Reg. No. Xxxxxxxxxx (if applicable)
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41
EXHIBIT
D
FULLY
BURDENED MANUFACTURING COSTS
“Fully
Burdened Manufacturing Costs” mean the sum total of: Total Product Costs plus
Variance Costs plus Inventory Re-/ Devaluation Costs plus Non-Product Related
Production Costs plus Warehousing and Distribution Costs plus Write-Offs
plus
Third Party Royalties.
“Total
Product Costs” mean the total of the Material Costs and Processing
Costs.
“Material
Costs” mean the costs of raw materials and intermediates needed for the
manufacturing process and costs of packaging material for these raw materials
and intermediates.
“Processing
Costs” mean the total amount of costs related to the direct labor, equipment,
production area overhead, quality assurance, material handling overhead,
general
factory overhead, utilities and ecology.
Material
and Processing Costs are to be established on a regular, standard basis.
In this
standard setting process all relevant costs as mentioned above are
determined.
Costs
of
equipment shall be based on a planned utilization of equipment. Idle capacity
costs are not to be included in processing costs. Costs of equipment are
costs
of depreciation or rent of the building accommodating that equipment plus
repair
and maintenance for the building, and costs for equipment depreciation, and
other equipment costs such as costs for repair and maintenance. The building
costs shall be allocated to the equipment using an appropriate key such as
space
occupied by the equipment.
Production
area overhead costs are costs for personnel which typically embraces a
controlling and supervisory function, costs of indirect space such as costs
for
a break room, costs of in-process control, costs of microbiological monitoring
of production environment, costs of training of process personnel, costs
for
utilities and ecology, costs for auxiliary and consumables, costs of shop
floor
control systems, costs for cleaning of production buildings, and costs of
working clothes.
Quality
assurance costs include costs of identifying and analyzing the raw materials
and
intermediates needed for the manufacturing process, costs of finished product
control, costs of production support, costs of cleaning validation, costs
of EDP
for the QA/QC department, costs of microbiology department, costs of laboratory
infrastructure, costs of quality systems support and compliance, costs of
overheads within the QA/QC department.
Materials
handling overhead costs are costs for warehousing and internal transportation
of
raw material and semi-finished goods, costs of quality control of raw and
packaging material, costs of the purchasing department.
42
General
factory overhead (GFO hereafter) costs shall mean costs of plant and production
management, costs for ensuring sufficient levels of safety, health and
environment such as fire brigade, medical services, documentation for
transportation of hazardous goods. Other GFO costs include costs for the
scheduling of production, costs of the maintenance of the bills of materials,
costs for the technical support, expenses of the plant administration and
general services, costs of IT for non-dedicated IT systems such as
SAP.
Utility
costs are costs associated with the consumption of supportive media such
as
electricity, water, nitrogen, steam, and air.
Ecology
costs are costs associated with the deposition of solid or liquid waste,
purification of effluent water, and purification of waste air.
“Variance
Costs” mean the costs include deviations from the standard costs used to
determine the total Product Costs attributable to the product.
“Inventory
Re/Devaluation Costs” mean the gain or loss as a result of the inventory value
adjustment due to changes in the standard costs.
“Non-Product
Related Production Costs” mean the technical operations corporate headquarter
overhead costs, non product allocated QA costs, validation costs, directly
expensed IT project costs, and other costs that cannot be attributed to specific
products.
“Warehousing
& Distribution Costs” mean the deduction of a fixed percentage (1-2%) for
distribution and warehousing expenses.
“Write-Offs”
mean the costs of products that cannot be used (for example, due to expiration
of shelf-life, spoilage in the production process or transportation
mishaps).
“Third
Party Royalties” mean any royalties or other payments due by Novartis to third
parties related to the manufacture, supply, sale, import or use of the product
(other than any deducted from royalties pursuant to Clause 7.7).
43
EXHIBIT
E
PATENT
COUNTRIES
The
Patent Countries, as of the Effective Date, are set out below:
|
Algeria
|
Australia
|
|
Brazil
|
Canada
|
|
China
|
Colombia
|
|
Croatia
|
Ecuador
|
|
Egypt
|
Iceland
|
|
India
|
Indonesia
|
|
Israel
|
Philippines
|
|
Japan
|
Korea
(South)
|
|
Morocco
|
Mexico
|
|
Norway
|
New
Zealand
|
|
Poland
|
Russia
|
|
Singapore
|
South
Africa
|
|
Tunisia
|
United
Arab Emirates
|
|
USA
|
|
|
Europe
via European Patent Office (Austria, Belgium, Bulgaria, Cyprus,
Czech
Republic, Denmark, Estonia, Finland, France, Germany, Great Britain,
Greece, Hungary, Ireland, Italy, Luxembourg, The Netherlands, Poland,
Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, Switzerland,
Turkey
and all EPO extension states)
|
|
44
EXHIBIT
F
NEXMED
STUDIES
Two
(2)
year dermal carcinogenicity study of DDAIP in mice
Two
(2)
year dermal carcinogenicity study of terbinafine HCL NexMed
Formulation
45
