TerminationAgreement

2.1

In accordance with the provisions and timelines set forth in Clause 12.2 of the Agreement, Novartis shall take all actions and provide all assistance and support as required pursuant to Clause 12.2 of the Agreement. Notwithstanding the timelines set forth in Clause 12.2 of the Agreement, Novartis will endeavour to provide to NexMed reports associated with the phase III clinical trials conducted by or on behalf of Novartis with respect to the formulation for the treatment of onychomycosis as described in Exhibit A of the Agreement (“NexMed Formulation”) and corresponding Product within thirty (30) days upon written request by NexMed.  Upon written request by NexMed, Novartis personnel will provide specific support to NexMed in accordance with Clause 12.2 of the Agreement.

2.2

In consideration of the transfer of Novartis Know-How related to NexMed Formulation and corresponding Product and the support to be provided and actions to be undertaken by Novartis pursuant to Article 2.1 above:

 

(a)

NexMed shall pay Novartis fifteen percent (15%) of any upfront and/or milestone payments NexMed actually receives from a third party licensee for the license of NexMed Technology relating to NexMed Formulation or Products containing the NexMed Formulation.  In addition, NexMed shall pay Novartis a royalty as follows:

 

(b)

In the event that NexMed is acquired, or its substantial part of the assets are acquired by a third party (the “Acquirer”), Novartis shall receive 15% on any upfront and milestone payment or equivalent payment received by NexMed or its successor from the Acquirer relating to NexMed Technology and NexMed Formulation. If no upfront payment is  made by Acquirer but certain milestone payments will be paid to NexMed on achieving future development milestones, then Novartis  shall  receive 15% of any such milestone payments upon actual receipt by NexMed, and, in addition, the royalty rate as defined in Clause 2.2(a) above for net sales less than or equal to $ 500 million will be 3% (instead of 2.8%). Other royalty rates as defined in Clause 2.2(a) above will not change.

 

(c)

If no upfront or milestone payment is  made by Acquirer during development of Products containing NexMed Formulation, the royalty rate for net sales on behalf of NexMed and any NexMed Affiliate, licensee or sublicensee for Product as defined in Clause 2.2(a) for less than or equal to $ 750 million will be 4% (instead of 2.8 or 3.5% respectively). Other royalty rates as defined in Clause 2.2(a) above will not change.

 

For purposes of clarity, Novartis acknowleges and agrees that, for purposes of the definition of “Product”, the only Product developed under the Agreement involved and/or contained terbinafine.  Accordingly, to the extent that NexMed makes, uses or sells any products containing anti-fungal ingredients other than terbinafine, such products shall not be considered “Products” for purposes of this Article 2.