CONFIDENTIAL TREATMENT REQUESTED LICENSE AGREEMENT

Exhibit 10.13

CONFIDENTIAL TREATMENT REQUESTED

LICENSE AGREEMENT

This agreement (“ Agreement ”) entered into this 18th day of  August, 2006 by and between Human Pheromone Sciences Inc. (hereinafter “HPS”), a California corporation having an address at 84 West Santa Clara Street, San Jose, CA  95113 (hereinafter referred to as " HPS " or “ Party ”) and Personal Products Company, a division of McNeil-PPC, Inc., having an address at 199 Grandview Road, Skillman, New Jersey  08558 (hereinafter referred to as " PPC " or “ Party ”).  Capitalized terms used herein and not otherwise defined shall have the meanings ascribed in Article 1.

W I T N E S S E T H

WHEREAS, HPS is the owner of U.S. Patents Nos.  5,272,134 and 5,278,141 relating to compositions and methods of using compositions containing pheromones.  

WHEREAS, PPC wishes to acquire a license under such patents from HPS, and HPS is willing to grant such license to PPC under the terms and conditions of this Agreement.

NOW, THEREFORE, in consideration of the above premises and the covenants contained herein, the parties agree as follows:

ARTICLE 1 - DEFINITIONS

As used in this Agreement, the following terms, when used with initial capital letters, shall have the following meanings, the singular shall include the plural and vice-versa:

1.1

Affiliate means any entity that directly or indirectly controls, is controlled by, or is under common control with a party to this Agreement, and for such purpose "control" shall mean (i) directly or indirectly owning, controlling or holding more than fifty percent (50%) of the securities or other ownership interests representing the equity, the voting stock or general partnership interest in an entity or (ii) the possession, direct or indirect, of the power to direct or cause the direction of the management or the policies of the entity, whether through the ownership of voting securities, by contract or otherwise.   Any such corporation, entity or business structure shall only be considered an Affiliate for so long as such ownership or control exists.   

1.2

Commercial Sale and words of similar import means an arms’-length transaction and shipment by PPC, its Affiliates or each of its sublicensees of a Licensed Product to an independent third party in a country of the Territory.

1.3

Competing Product means a product other than a Licensed Product.

1.4

Confidential Information has the meaning set forth in Section 6.1.

1.5

Dollar means the legal currency of the US.

1.6

Effective Date of this Agreement means the date first written above.

1.7

FDA means the United States Food and Drug Administration and successor bodies or corresponding foreign administrative bodies.

1.8

Field means the use of products containing pheromones in humans, that are sold to the general consumer, including those that may be regulated as cosmetics and topical OTC monograph products, that are not subject to prior approval of a therapeutic claim by the U.S. Food and Drug Administration or if marketed outside the United States, an equivalent regulatory agency.  It shall include device products that undergo review and approval by the US Food and Drug Administration or if marketed outside the United States an equivalent regulatory agency, and that makes claims consistent with such approval. For the avoidance of any doubt, the Field will not include any drug product that would require prior regulatory approval by the U.S. Food and Drug Administration (or if it were to be marketed outside the United States, an equivalent agency) of a claim for the cure, mitigation, treatment, prevention or diagnosis of a disease in humans. The Field shall specifically exclude, without limitation, products requiring a New Drug Application (NDA) or an Abbreviated New Drug Application (“ANDA”).  Not withstanding the foregoing, the Field shall include products having an approved claim that is not subject to prior approval by the U.S. Food and Drug Administration (or an equivalent foreign agency) because of inclusion in a topical OTC monograph.

1.9

First Commercial Sale means, with respect to any Licensed Product, the first Commercial Sale to an independent third party.

1.10

Fiscal Year means the period of time commencing on the Monday following the

Sunday closest to the end of the calendar month of December and terminating on the Sunday closest to the end of the immediately succeeding December in accordance with the Johnson & Johnson Fiscal Year used in its regular course of business.

1.11

Fragrance and Fragrance Related Product means a product bearing a trade name or mark  that is associated primarily with a perfume or cologne product whose primary benefit is the enhancement of scent and is not a healthcare related product.

1.12

Licensed Know-How means all information or special knowledge on the part of HPS, not generally known to the public, including but not limited to inventions, discoveries, reports, protocols, processes, apparati, techniques, methods, models, screens, assays, products, regulatory submissions, and technical information, together with all experience, data, formulas, procedures and results, and including all chemical, pharmacological, toxicological, clinical, analytical, quality control, and safety data (including but not limited to data from use of the Licensed Product), and any other materials or compositions, relating to the manufacture of Licensed Products or being useful in the manufacture, use, sale or Registration of Licensed Products; except to the extent that the disclosure of such information or special ability is prohibited by law, rule, regulation, order, treaty, contract, agreement or other obligation.  

1.13

Licensed Patents means U.S. Patents Nos. 5,272,134 and 5,278,141, as set forth in Schedule A, including any other of their counterparts worldwide, as well as all continuations, continuations-in-part, divisions, renewals, reissues, reexaminations, extensions, and patents of

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addition and patents of importation of the foregoing containing a Valid Claim that would be infringed by the use or sale of a Licensed Product by PPC, its Affiliates or its sublicensees, in the Territory but for the licenses granted herein.  In addition, Licensed Patents shall include any other patents owned wholly or in part by HPS that are necessary for PPC to practice the patents described in the preceding sentence.

1.14

Licensed Product means a product containing one or more Pheromone Compounds the use, sale or manufacture of which would, but for the license hereunder, infringe a Valid Claim of a Licensed Patent in the country in which it is sold.  

1.15

Licensed Technology means Licensed Patents and Licensed Know-how.

1.16

Net Trade Sales means the amount invoiced by PPC, its Affiliates and its sublicensees for the sale of Licensed Products to independent third parties less the following amounts (i) discounts, including cash discounts, coupons, or rebates actually allowed or granted, (ii) credits or allowances actually granted upon claims or returns, regardless of the party requesting the return, (iii) freight charges paid for delivery, to the extent included in revenue received; and (iv) taxes or other governmental charges levied on or measured by reference to the invoiced amount, whether absorbed by the billing party or the billed party, and separately stated on the invoice.  Net Trade Sales shall not include promotional samples, including any samples affixed to or accompanying other products of PPC.

a)

In the event royalties are due to HPS under this Agreement from any Licensed Products sold in the form of a combination product containing one or more active ingredients not covered by the Licensed Patents nor derived from HPS Know-how in addition to a Licensed Product, Net Trade Sales for such combination product will be calculated by multiplying actual Net Trade Sales for such combination product by the fraction A/(A+B) where A is the average invoice price if the Licensed Product is sold separately, and B is the average total invoice price of such other active component, in the combination if sold separately, such invoice prices and Net Trade Sales calculations being on a country-by-country and SKU  (Stock Keeping Unit) by SKU  basis.

b)

If, on a country-by-country and SKU by SKU basis, one or more of the active ingredients not covered by the Licensed Patent nor derived from HPS Know-how are not sold separately in said country by PPC, its Affiliates or its sublicensees, Net Trade Sales for such combination product shall be calculated by multiplying actual Net Trade Sales of such combination product SKU by the fraction A/C, where A is the invoice price of the Licensed Product SKU sold separately, and C is the invoice price of the comparable combination product SKU sold by PPC, its Affiliates or its sublicensees; provided that the maximum value of such fraction shall be one.

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c)

If, on a country-by-country and SKU by SKU basis, neither the Licensed Product nor the other active component or components of the combination product is sold separately in said country, Net Trade Sales for such combination product shall be calculated by multiplying actual Net Trade Sales of such combination product by the fraction X/Y, where X shall be PPC's fully allocated unit cost of the Licensed Product and Y shall be PPC's fully allocated unit cost of the combination product; provided that the method of allocating unit costs for purposes of this (X/Y) calculation shall be the same for both the Licensed and the combination product and shall be consistently applied.

d)

In the event that a Licensed Product is sold in the form of a combination package or kit containing one or more other stand alone products that are separately vialed or packaged and are sold separately ("Aggregate Product"), Net Trade Sales for such Aggregate Product will be calculated by multiplying actual Net Trade Sales of such Aggregate Product by the fraction A/(A+B), where A is the invoice price of the Licensed Product if sold separately by PPC, its Affiliates or its sublicensees, and B is the total invoice price of the one or more other products in the Aggregate Product, if sold separately by PPC, its Affiliates or its sublicensees, such invoice prices and Net Trade Sales calculations being on a country-by-country basis.

e)

If, on a country-by-country basis, one or more of the products other than the Licensed Product in the Aggregate Product are not sold separately in said country by PPC, its Affiliates or its sublicensees, Net Trade Sales for such Aggregate Product shall be calculated by multiplying actual Net Trade Sales of such Aggregate Product by the fraction A/C, where A is the invoice price of the Licensed Product sold separately by PPC, its Affiliates or its sublicensees, and C is the invoice price of the Aggregate Product sold by PPC, its Affiliates or its sublicensees; provided that the maximum value of such fraction shall be one.

f)

If, on a country-by-country basis, the Licensed Product is not sold separately in said country by PPC, its Affiliates or its sublicensees, Net Trade Sales for such Aggregate Product shall be calculated by multiplying actual Net Trade Sales of such Aggregate Product by the fraction X/Y, where X shall be PPC's fully allocated unit cost of the Licensed Product and Y shall be PPC's fully allocated unit cost of the Aggregate Product; provided that the method of allocating unit costs for purposes of this (X/Y) calculation shall be the same for both the Licensed Product and the Aggregate Product.  

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[***] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

1.17

Pheromone Compounds means 16-Androstene steroids and Estrene steroids having the formulae set forth in the claims of the Licensed Patents or any analogues or derivatives thereof.

1.18

Registration means a filing with a governmental authority for the purpose of obtaining legal and regulatory approval to conduct clinical trials for a product in the Field or to commence making, using, and/or selling a product in the Field.

1.19

Territory means the entire world, excluding South Korea, China, Japan and Taiwan.

1.20

Valid Claim means a claim in any unexpired, enforceable, issued patent within the Licensed Patent which has not been held invalid by a non-appealed or unappealable decision by a court or other appropriate body of competent jurisdiction, and which is not admitted to be invalid through disclaimer or dedication to the public.

ARTICLE 2 - GRANT OF RIGHTS

2.1

HPS hereby grants to PPC a license under the Licensed Patents and Licensed Know-how to make and have made, import, use, sell, offer for sale, and have sold Licensed Product in the Territory in the Field as follows:

(a)

HPS grants to PPC an exclusive license under the Licensed Patents and Licensed Know-how in the Field in all channels of trade to make, have made, import, use, sell, offer for sale and have sold Licensed Products utilizing Licensed Technology comprising [***] products; [***] products, including but not limited to [***]; and [***];

(b)

HPS grants to PPC an exclusive license under the Licensed Patents and Licensed Know-how in the Field in all Food, Drug and Mass Market channels, including, but not limited to, the Club Channel, to make, have made, use, sell, offer for sale and have sold Licensed Products with the exclusion of [***] and [***] products bearing a [***] trade name, [***] products and new [***] products, utilizing Licensed Technology;

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[***] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS

(c)

HPS grants to PPC a non-exclusive license to make, have made, use, sell, offer for sale and have sold Licensed Products in the Field with the exclusion of [***] and [***]-related products bearing a [***] trade name, [***] products and new [***] products in all other channels of trade not specified in Sections 2.1(a) and (b) above.  However, HPS grants PPC a non-exclusive license to make, have made, use and sell [***]-related Licensed Products in the Field bearing only a trade name owned by PPC or its Affiliates in all channels utilizing Licensed Technology.

(d)

Should HPS not license on an exclusive basis the use of Licensed Technology in [***] products and new [***] products within [***] months of the Effective Date of this Agreement, HPS shall grant PPC non-exclusive rights to make, have made, use and sell such products in the Field in all channels of trade. For purposes of clarity, PPC shall have no rights under this License Agreement to make, have made, use, sublicense or sell [***] products and/or new [***] products in the Field, unless HPS has failed to license such rights within

[***] months of execution of this Agreement.  

2.2

PPC shall have the right to sublicense the rights granted under Section 2.1 of this Agreement on terms substantially similar to those contained herein to an Affiliate of PPC and to non-Affiliated third parties .  

2.3

Except as otherwise expressly provided in this Agreement, under no circumstances shall a Party hereto, as a result of this Agreement, obtain any ownership interest or license in or other right to any technology, know-how, patents, patent applications, products, or biological materials of the other Party, including, but not limited to, items owned, controlled or developed by the other Party, at any time pursuant to this Agreement.  This Agreement does not create, and shall under no circumstances be construed or interpreted as creating, an obligation on the part of either Party to grant any license to the other Party other than as expressly set forth herein.  Any further contract or license agreement between the Parties shall be in writing.

2.3.1

Right of First Discussion:  HPS grants to PPC an exclusive right of first discussion regarding collaboration on future innovations in the Field (“Innovation”) as follows:  i) upon HPS identifying a compound of potential interest, HPS shall notify PPC.  PPC shall have ninety (90) days within which to review the Innovation and notify HPS that it desires to participate in funding development for an assignment of rights  to make, use and sell such Innovation, prior to HPS disclosing such Innovation to a third party; or ii) when data sufficient to support an advertising claim for an Innovation, developed solely by HPS, becomes available to HPS, HPS shall notify PPC.  PPC shall have ninety (90) days within which to review the Innovation and notify HPS that it desires to discuss the right to make, use and sell such Innovation prior to HPS disclosing such Innovation to a third party.

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2.4

HPS shall notify all current and future customers of the existence of the licensed rights set forth in this Article 2 and the concomitant limitations upon such customers’ rights to make, use and sell products containing Pheromone Compounds subject to such limitations.  Such notification shall be in writing and rendered to current customers within thirty (30) days of the Effective Date of this Agreement and to future customers concurrently with any agreement to supply Pheromone Compounds to such future customers.  HPS shall otherwise not reveal any of the contents of this Agreement.

ARTICLE 3 – REGISTRATION AND COMMERCIALIZATION

3.1

Any   Registration application or permit regarding a Licensed Product in the Field that results from work with Licensed Technology shall be filed by and owned by PPC, subject to the terms and conditions of the remainder of this Agreement.  HPS will provide PPC with all data and information available to it (and that it may lawfully provide to PPC) as PPC may reasonably require for all regulatory filings for such Licensed Product in the Territory.  PPC shall bear all regulatory expenses related to PPC’s submissions of any  product registrations or other filing application or permit for a Licensed Product in the Field.  PPC shall be the sole communicator with the appropriate regulatory authority for any country in the Territory  

for regulatory issues concerning a Licensed Product for use in the Field.   In addition, during the term of this Agreement, PPC shall be responsible for all of the PDUFA fees and foreign counterpart fees, including, without limitation, establishment fees and product fees

3.2

In the event that an adverse product experience arises in connection with a Licensed Product, each party shall immediately inform the other party by telephone communication within one (1) day of its own receipt of notice of such adverse reaction.  The informing party will then promptly forward to the other party all written documentation relating to such adverse reaction, including a detailed description of such event.  PPC expressly disclaims that HPS acts as an agent, designee, or representative of PPC for purposes of informing PPC of such adverse reaction.   HPS expressly disclaims that PPC acts as an agent, designee, or representative of HPS for purposes of informing HPS of such adverse product experience.  

3.2.1 Except as otherwise provided in Section 3.2 above, in the event that either party determines that an event, incident or circumstance has occurred which may result in the need for a recall or other removal of any Licensed Product, or any lot or lots thereof, from the market, it shall promptly advise and consult with the other party with respect thereto. PPC shall make the final determination to recall or otherwise remove a Licensed Product or any lot or lots thereof from the market.

3.3

Subject to the obligations of PPC hereunder (including without limitation under Section 3.1), all business decisions including, without limitation, seeking regulatory approval to market, and selecting and conducting of clinical trials for supporting  the registration required for a product in the Field , as well as design, manufacture, sale, price and promotion of products covered under this Agreement and the decision whether to sell a particular product shall be within the sole discretion of PPC or its Affiliates to which this Agreement may be assigned or sublicensed in accordance with the terms of this Agreement.  HPS agrees that PPC has no obligation to use any specific level of efforts to achieve any given level of sales, and that the payments and other consideration set forth herein and received by HPS shall be good and sufficient consideration for the rights granted pursuant to the license agreement, regardless of whether any subsequent milestones are ever achieved.

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[***] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS

ARTICLE 4 – SUPPLY

4.1

Pre-Commercial Development Supply Price :  HPS shall supply PPC with the quantities of Pheromone Compounds required for any and all PPC development-related activities at lesser of  actual cost plus [***] percent ( [***] %) for administration and handling (“Supply Price”)  or [***] U.S. dollars ($ [***] ) per gram.  Supply Price shall be the  FOB place of manufacture  price.

4.2

Commercial Supply :   Prior  to the Effective Date, HPS shall have taken all necessary steps to convert its exclusive Pheromone Compound supply agreement with [***] , [***] , to a semi-exclusive agreement which provides both HPS and PPC independent co-supply rights from [***] .  HPS shall provide PPC with a copy of such revised supply agreement. PPC and HPS shall work in good faith cooperation to establish a commercial supply arrangement with [***] for supply of Licensed Product to PPC.  PPC shall define all reasonable quality standards required for supply of a cosmetic compound to PPC.  The cost of any improvements or changes required in the manufacturing process at [***] will be included in the cost of product sold to PPC.

ARTICLE 5 – REMUNERATION

5.1

In consideration of the license granted by HPS to PPC under this Agreement, PPC shall pay to HPS the following:

(a)

an upfront payment of One Million Seven Hundred and Fifty Thousand U.S.  Dollars ($1,750,000.00) payable within seven  (7) business days of the Effective Date of this Agreement ; and

(b)

In each country in which a Licensed Patent has issued and is in force and where PPC sells a Licensed Product, PPC shall pay HPS a royalty based on PPC’s Net Trade Sales of Licensed Product  in accordance with PPC’s Fiscal Year (hereinafter, “Annual”) as follows:

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[***] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS

Example: (i)  A year in which annual sales reach $[***] million: Royalty paid is $[***] million x [***]% =  $[***].  (ii)  A year in which annual sales reach $[***] million:  Royalty paid is [$[***] million x [***]%] + [$[***] million x [***]%]  = $[***]+ $[***]= $[***].

(c ) For sales of product in countries in which there are no Licensed Patents, PPC will pay HPS [***]% of sales generated in that specific country, such payment continuing until the earlier of:

1.

Expiry of Licensed Patents in the U.S.; or,

2.

Market launch of any competitive product containing a Pheromone Compound in the specific country.

5.2

No royalties due under this Article shall be payable on sales transactions as among PPC, any of its Affiliates and sublicensees.  The final vendee sale to a third party alone shall be used for the purposes of determining the royalty payments due hereunder.  Only one royalty payment shall be payable on the sale of each licensed Product, and the amount of such royalty will be provided in accordance with this Article 5 and the sales date of the Licensed Product to an independent third party.  

5.3

PPC shall not be obligated to pay any royalty payments based upon sales of a given Licensed Product in a country of the Territory after the expiration of a Licensed Patent having at least one (1) Valid Claim that would be infringed by the sale of that Licensed Product by PPC or its sublicensees in that country but for the licenses granted herein.

5.3.1

On a country by country basis, PPC shall not be obligated to pay any royalty payments based upon sales of a Licensed Product in such country upon the marketing and sale of any competitive topical OTC product, device or cosmetic product containing a Pheromone Compound by a third party.

5.4

All royalties shall be calculated and payable on a quarterly basis as of the end of each quarter of each Fiscal Year, and, except as otherwise provided herein, royalties shall be paid within  sixty (60 ) days following the end of each quarter of each such Fiscal Year.  All royalties shall be calculated on all Licensed Products . Each such payment shall be accompanied by a written report indicating the amount of Net Trade Sales during such quarter of such Fiscal Year and a calculation of the royalties due.  PPC shall deliver the written report for each such quarter of such Fiscal Year, regardless of whether any royalties are required to be paid in that quarter of such Fiscal Year, commencing in the first quarter of such Fiscal Year following the date of the First Commercial Sale of any Licensed Product.  

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5.5

HPS shall have the right, at its own expense, for the period during which a royalty is due to HPS, to have an independent certified public accountant, to whom PPC has no reasonable objection, examine the relevant books and records of account of PPC during reasonable business hours and no more than once during each Fiscal Year, to determine whether appropriate payment has been made by PPC hereunder.  The accountant shall disclose to HPS only information relating to the accuracy of the royalty report and the royalty payments made according to this Agreement.  The information received by the accountant shall be held confidential except for information necessary for disclosure to HPS to establish the accuracy of the royalty reports. If such accounting firm correctly concludes that additional royalties were owed during such period, PPC shall pay the additional royalties within thirty (30) days of the date HPS delivers to PPC such accounting firm’s written report so correctly concluding.   If it is ultimately determined that PPC has understated and underpaid the royalty due HPS in any period by more than five percent (5%), PPC shall bear the  costs of the accounting firm retained by HPS.

5.6

The royalties due shall be calculated in local currency. The remittance of royalties payable to HPS will be converted to U.S. Dollars according to the official rate of exchange of the currency of the country from which the royalties are payable as quoted by The Wall Street Journal, New York edition, for the last day of the Fiscal Quarter for which the royalty payment is made.  If the transfer or the conversion into U.S. Dollars in any such instance is not lawful or possible, the payment of such part of the royalties as is necessary shall be made by the deposit thereof, in whatever currency is allowable and acceptable by HPS, to the credit and account of HPS or its nominees in any commercial bank or trust company of its choice located in that country.  PPC shall give prompt notice of this deposit to HPS.

5.7

All royalty, milestone and other payments shall be paid in accordance with the instructions provided by HPS in immediately available funds by wire transfer to a bank or other institution designated in writing by HPS from time to time.

ARTICLE 6 - CONFIDENTIALITY AND PUBLICITY

6.1

All information disclosed by one party to the other(s) or developed by the parties pursuant to the terms of this Agreement shall be maintained confidential and used only for the purposes of this Agreement in accordanc