ASSET PURCHASE AGREEMENT

Exhibit 10.1

 

Execution Version

ASSET PURCHASE AGREEMENT

dated as of

February 3, 2009

between

WARNER CHILCOTT COMPANY INC.,

and

NEXMED INC.

 

 

 

 

 

 

EXHIBITS

 

 

ASSET PURCHASE AGREEMENT

This Asset Purchase Agreement (this “ Agreement ”) dated as of February 3, 2009 is made by and between Warner Chilcott Company, Inc., a Puerto Rico corporation (“ Buyer ”), and NexMed Inc., a Nevada corporation (“ Seller ”).

WITNESSETH:

WHEREAS, Seller controls certain proprietary patent, know-how and technology rights related to a pharmaceutical formulation containing alprostadil for the topical treatment of erectile dysfunction;

WHEREAS, Seller and Buyer are party to that certain License Agreement dated November 1, 2007 (the “ Existing License Agreement ”), whereby Buyer obtained a license from Seller to develop and commercialize the Product (as hereinafter defined);

WHEREAS, Buyer desires to purchase the Purchased Assets (as hereinafter defined) from Seller, and Seller desires to sell the Purchased Assets to Buyer, upon the terms and subject to the conditions hereinafter set forth; and

WHEREAS, in connection with such purchase and sale, Buyer and Seller desire to enter into the License Agreement (the “ License Agreement ”) attached hereto as Exhibit A, and to terminate the Existing License Agreement.

NOW, THEREFORE, in consideration of the mutual agreements and covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Buyer and Seller agree as follows:

ARTICLE 1

Definitions

Section 1.01.   Definitions .  The following initially capitalized terms, as used herein, have the following meanings:

“ Affiliate ” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with such other Person.  For purposes of this definition, “ control ” means ownership, directly or indirectly through one or more Affiliates, of 50% or more of the shares of stock entitled to vote for the election of directors, in the case of a corporation, or 50% or more of the equity interests in the case of any other type of legal entity, status as a general partner in any partnership, or any other arrangement whereby a Person controls or has the right to control the board of directors or equivalent governing body of a corporation or other entity, or otherwise has the ability to direct the affairs or operations of such Person.

“ Ancillary Agreements ” means, collectively, the License Agreement, the Bill of Sale, the Patent Assignment Agreement, the Trademark Assignment Agreement and the Co-Existence Agreement.

 

“ Applicable Law ” means, with respect to any Person, any federal, state or local law (statutory, common or otherwise), constitution, treaty, convention, ordinance, code, rule, regulation, order, injunction, judgment, decree, ruling or other similar requirement enacted, adopted, promulgated or applied by a Governmental Authority that is binding upon or applicable to such Person, as amended unless expressly specified otherwise.

“ Assumed Liabilities ” means (a) with respect to the Product, all claims and complaints (including all damages, losses, expenses, adverse reactions, recalls, product and packaging complaints and other liabilities) for the Product in the Territory that are filed, claimed, or otherwise arise out of the development, use, manufacture, purchase and/or sale by Buyer, its Affiliates, sublicensees and/or distributors, and the consumption or use, of the Product in the Territory after the Closing, and (b) all obligations and liabilities that are filed, claimed or otherwise arise or are incurred on or after the Closing to the extent such claims arise from or relate to Buyer’s, its Affiliates’ or licensees’ ownership or exploitation of the Purchased Assets, including obligations in connection with the Transferred NDAs; provided, however, any matter that would be subject to indemnification by Seller pursuant to Section 6.03 (disregarding any limitations on indemnification set forth in ARTICLE 6) shall not be considered an Assumed Liability.

“ Business Day ” means a day, other than Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by Applicable Law to close.

“ Excluded Assets ” means all assets, property, rights and interests of Seller and its Affiliates other than the Purchased Assets, including all Patents (other than the Transferred Patents), trademarks (other than the Transferred Trademarks), Intellectual Property Rights (other than the Transferred Intellectual Property) and proprietary rights, new drug applications and their equivalents (other than the Transferred NDAs), plants, property, equipment, contracts and all other assets of Seller and its Affiliates.

“ FDA ” means the United States Food and Drug Administration and any successor agency or authority thereto.

“ Governmental Authority ” means any transnational, domestic or foreign federal, state or local, governmental authority, department, court, agency or official, including any political subdivision thereof.

“ Indemnitee ” means a Buyer Indemnitee or a Seller Indemnitee, as applicable.

“ Intellectual Property Rights ” means (i) Patents, (ii) trademarks, service marks, trade dress, logos, domain names, rights of publicity, trade names and corporate names (whether or not registered) in the United States and all other nations throughout the world, including all registrations and applications for registration of the foregoing and all goodwill associated therewith, (iii) copyrights (whether or not registered) and registrations and applications for registration thereof in the United States and all other nations throughout the world, including all derivative works, moral rights, renewals, extensions, reversions or restorations associated with such copyrights, now or hereafter provided by Applicable Law, regardless of the medium of fixation or means of expression, (iv) computer software, (v) trade secrets and, whether or not confidential, business information and know-how (including manufacturing and production processes and techniques and research and development information), (vi) databases and data collections, (vii) any other similar type of proprietary intellectual property right and (viii) all rights to sue or recover and retain damages and costs and attorneys’ fees for past, present and future infringement or misappropriation of any of the foregoing.

 

“ Knowledge ” means with respect to a Person that is not an individual, the knowledge of such Person’s officers after reasonable inquiry.

“ Licensed Intellectual Property ” means the Licensed Patents and the Licensed Know-How.

“ Licensed Know-How ” shall have the meaning ascribed to such term in the License Agreement, and licensed by Seller to Buyer pursuant to the License Agreement.

“ Licensed Patents ” shall have the meaning ascribed to such term in the License Agreement, and licensed by Seller to Buyer pursuant to the License Agreement.

“ Lien ” means, with respect to any property or asset, any mortgage, lien, pledge, charge, security interest, encumbrance or other adverse claim of any kind in respect of such property or asset.  For the purposes of this Agreement, a Person shall be deemed to own subject to a Lien any property or asset which it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such property or asset.

“ NDA ” means a new drug application (as defined in Title 21 of the United States Code of Federal Regulations, as amended from time to time), or supplement thereto, filed with the FDA, seeking regulatory approval to market and sell a pharmaceutical product.

“ Patents ” means patents or patent applications (including any patents issuing therefrom), as well as any substitutions, continuations, continuations-in-part, divisionals and all reissues, renewals, reexaminations, extensions, supplementary protection certificates, confirmations, revalidations, registrations or patents of addition in connection with any of the foregoing.

“ Permitted Liens ” means (i) Liens disclosed on Schedule 1.01(a) of the Seller Disclosure Schedule, (ii) Liens which do not detract from the value of any Purchased Asset, or interfere with any present or intended use of any Purchased Asset, (iii) Liens for any and all taxes not yet due and payable or that may hereafter be paid without material penalty or for those taxes being contested in good faith by appropriate proceedings for which adequate reserves have been established and (iv) restrictions on transfer imposed by Applicable Laws.

“ Person ” means an individual, corporation, partnership, limited liability company, association, trust or other entity or organization, including a Governmental Authority.

“ Product ” means a pharmaceutical composition for use in the topical treatment of male erectile dysfunction that contains alprostadil.

 

“ Product Intellectual Property ” means the Transferred Intellectual Property and the Licensed Intellectual Property.

“ Technology ” means, whether or not patentable, any and all proprietary ideas, inventions, discoveries, trade secrets, processes, formulae, data, know-how, improvements, inventions, chemical materials, assays, techniques, marketing plans, strategies, customer lists, biologic materials, results, designs, specifications, methods, formulations, ideas, technical information (including structural and functional information), process information, pre-clinical information, clinical information, any and all proprietary biological, chemical, pharmacological, toxicological, pre-clinical, clinical, assay, control and manufacturing data and materials or other information.

“ Territory ” means the United States of America, including its possessions and territories.

“ Transferred Intellectual Property ” means (i) the Transferred Patents, (ii) the Transferred Trademarks and (ii) the Transferred Technology.

“ Transferred Technology ” means the Technology owned by Seller or its Affiliates in the Territory that is exclusively or primarily related to the Product.

“ Transferred NDAs ” means the NDAs owned by Seller relating to the Product and set forth on Schedule 1.01(b) hereto.

“ Transferred Patents ” means the Patents set forth on Schedule 3.09(a)(i) hereto.

“ Transferred Trademarks ” means the VITAROS trademark, together with all goodwill associated therewith, including the registrations and applications for such trademark set forth on Schedule 3.09(a)(i) hereto.  Notwithstanding the foregoing, “Transferred Trademarks” shall not include any of Seller’s or its Affiliates’ rights in the VITAROS trademark outside of the Territory.

Additional Definitions.   Each of the following terms is defined in the Section set forth opposite such term:

 

Section 1.02.   Other Definitional and Interpretative Provisions.   The words “hereof”, “herein” and “hereunder” and words of like import used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement.  The captions herein are included for convenience of reference only and shall be ignored in the construction or interpretation hereof.  References to Articles, Sections, Exhibits and Schedules are to Articles, Sections, Exhibits and Schedules of this Agreement unless otherwise specified.  All Exhibits and Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein.  Any capitalized terms used in any Exhibit or Schedule but not otherwise defined therein, shall have the meaning as defined in this Agreement.  Any singular term in this Agreement shall be deemed to include the plural, and any plural term the singular.  Whenever the words “include”, “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation”, whether or not they are in fact followed by those words or words of like import.  References to any Person include the successors and permitted assigns of that Person.  References from or through any date mean, unless otherwise specified, from and including or through and including, respectively.

ARTICLE 2

Purchase and Sale

Section 2.01.   Purchase and Sale .  Except as otherwise provided below, upon the terms and subject to the conditions of this Agreement, Buyer agrees to purchase from Seller and Seller agrees to sell, and cause its Affiliates to, convey, transfer, assign and deliver, or cause to be sold, conveyed, transferred, assigned and delivered, to Buyer at the Closing, free and clear of all Liens, other than Permitted Liens, all of Seller’s and its Affiliates right, title and interest in, to and under the following assets (the “ Purchased Assets ”):

(a)           the Transferred NDAs;

 

(b)           the Transferred Intellectual Property;

(c)           the manufacturing equipment set forth on Schedule (c) (the “ Transferred Manufacturing Equipment ”); and

(d)           all books, records, data (including clinical and pre-clinical data), studies, reports, correspondence, information, documentation, files and papers, whether in hard copy or computer format, exclusively or primarily relating to the Product in the Territory, the Transferred NDAs or the Transferred Intellectual Property, (collectively the “ Transferred Books and Records ”); provided, however , to the extent the Transferred Books and Records also contain information relating to any of Seller’s other products, or contain information that is not related to the Product (the “ Mixed Books and Records ”), Seller shall provide to Buyer copies of the Mixed Books and Records and may redact any such information contained in the Mixed Books and Records to the extent such information is not related to the Product and Seller shall retain ownership of such Mixed Books and Records.

Section 2.02.   Excluded Assets .  Buyer shall not acquire any assets or rights of any kind or nature, real or personal, tangible or intangible, other than the Purchased Assets, subject in each case to the conditions and rights set forth herein, and Seller and its Affiliates shall retain all other assets, including the Excluded Assets.

Section 2.03.   Assumed Liabilities.   Buyer shall assume, satisfy, perform, pay and discharge the Assumed Liabilities in accordance with their respective terms and subject to the respective conditions thereof, when and as due.

Section 2.04.   Rights Retained by Seller .  The assignment of the Purchased Assets contained in Section 2.01 shall be subject to the non-exclusive right of Seller (on behalf of itself and its Affiliates and licensees and assignees of Seller and its Affiliates) to use and reference (i) the Purchased Assets (other than the Transferred Manufacturing Equipment), and to use and reference any data, know-how or Intellectual Property Rights contained in the Purchased Assets, in each case, to the extent related to the research, development, manufacture, marketing, distribution, import, export or sale of products (including the Product) outside of the Territory and (ii) any clinical or pre-clinical data contained in the Transferred NDAs to the extent related to the research, development, manufacture, marketing, distribution, import, export or sale of products (other than the Product) inside the Territory.

Section 2.05.   Purchase Price .  The purchase price for the Purchased Assets other than the Transferred Manufacturing Equipment and the grant of the license by Seller to Buyer pursuant to the License Agreement (the “ Purchase Price ”) is $5,000,000 in cash.  The Purchase Price shall be paid as follows: $2,500,000 (the “ Initial Payment ”) shall be paid at Closing as provided in Section 2.07 and $2,500,000 shall be paid within three (3) business days after Buyer receives notice of NDA approval from the FDA for the marketing, use and sale of the Product in the Territory.  The Purchase Price for the Transferred Manufacturing Equipment (the “ Manufacturing Purchase Price ”) is $350,000 in cash and shall be paid as set forth on Schedule 2.01(c).  Seller shall pay the Purchase Price and the Manufacturing Purchase Price by wire transfer of immediately available United States dollars into an account designated by Seller. All payments made or to be made by Buyer to Seller in respect to the Purchase Price and Manufacturing Purchase Price shall be non-refundable and independent of any obligations that Seller or its Affiliates may have to Buyer under the Ancillary Agreements, and Buyer shall have no right of set-off with respect thereto.

 

Section 2.06.   Allocation of Consideration .  During the thirty (30) day period following the Closing, Seller and Buyer shall cooperate, in good faith, to reach agreement as to an allocation of the Purchase Price between and among the Purchased Assets  and the Licensed Intellectual Property in accordance with the following procedure:  (i) Seller shall prepare and provide to Buyer a schedule indicating a proposed allocation of the Purchase Price between and among the Assets (the “ Proposed Allocation Schedule ”) and (ii) within 20 days after the receipt of the Proposed Allocation Schedule, Buyer shall propose to Seller any changes to the Proposed Allocation Schedule or shall be deemed to have indicated its concurrence therewith.  Buyer and Seller shall endeavor in good faith to resolve any differences with respect to the Proposed Allocation Schedule within 20 days after Seller’s receipt of notice of objection from Buyer.  If Seller objects to the Proposed Allocation Schedule within the period provided in this Section 2.06 and Buyer and Seller are unable to resolve any differences that, in the aggregate, are material in relation to the Purchase Price, then any remaining disputed matters shall be finally and conclusively determined by an independent accounting firm of recognized national standing selected by Buyer and Seller, which firm shall not be the regular auditing firm of Buyer or Seller.

Section 2.07.   Closing .  The closing (the “ Closing ”) of the purchase and sale of the Purchased Assets and the assumption of the Assumed Liabilities hereunder shall take place at the offices of Warner Chilcott (US), Inc., 100 Enterprise Drive, Rockaway, New Jersey, immediately after the execution of this Agreement or at such other time or place as Buyer and Seller may agree. At the Closing:

(a)           Buyer shall deliver to Seller the Initial Payment and any portion of the Manufacturing Purchase Price to be paid on the Closing in accordance with Schedule 2.01(c).

(b)           Seller shall deliver to Buyer (i) the tangible embodiments of the Transferred Technology, (ii) the Licensed Know-How and (iii) the Transferred Books and Records.

(c)           Seller and Buyer shall enter into the License Agreement;

(d)           Seller and Buyer shall enter into a Bill of Sale and Assignment substantially in the form attached hereto as Exhibit B (the “ Bill of Sale ”);

(e)           Seller and Buyer shall enter into a Patent Assignment Agreement substantially in the form attached hereto as Exhibit C (the “ Patent Assignment Agreement ”);

(f)            Seller and Buyer shall enter into a Trademark Assignment Agreement substantially in the form attached hereto as Exhibit D (the “ Trademark Assignment Agreement ”); and

(g)           Seller and Buyer shall enter into a Trademark Co-Existence Agreement substantially in the form attached hereto as Exhibit E (the “ Co-Existence Agreement) .

 

ARTICLE 3

Representations and Warranties of Seller

Seller represents and warrants to Buyer that, except as set forth in the Seller Disclosure Schedule:

Section 3.01.   Corporate Existence and Power .  Seller is a corporation duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation and has all corporate powers and all governmental licenses, authorizations, permits, consents and approvals required to carry on its business as now conducted.  Seller is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction where such qualification is necessary, except for those jurisdictions where failure to be so qualified would not, individually or in the aggregate, be material.

Section 3.02.   Corporate Authorization .  The execution, delivery and performance by Seller of this Agreement and the Ancillary Agreements and the consummation of the transactions contemplated hereby and thereby are within Seller’s corporate powers and have been duly authorized by all necessary corporate action on the part of Seller.  This Agreement and each of the Ancillary Agreements constitutes a valid and binding agreement of Seller.

Section 3.03.   Governmental Authorization .  The execution, delivery and performance by Seller of this Agreement and the Ancillary Agreements and the consummation of the transactions contemplated hereby and thereby require no action by or in respect of, or filing with, any Governmental Authority.

Section 3.04.   Noncontravention .  The execution, delivery and performance by Seller of this Agreement and the A