Consulting Agreement

 

 

This Consulting Agreement ("Agreement") by and between Sancilio and Company, Inc., a Delaware corporation ("SCI"), and TherapeuticsMD, Inc., a Nevada corporation ("Therapeutics"),  is entered into as of May 7, 2013 (the "Effective Date").  Each of SCI and Therapeutics are referred to hereinafter as a "Party" and collectively as the "Parties."

WHEREAS, Therapeutics has requested SCI to provide certain consulting services (the "Consulting Services") as provided herein, and SCI is willing to provide the Consulting Services on the terms and subject to the conditions set forth in this Agreement,

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

 

 

(a)  services provided in support of Therapeutics’ drug development efforts specifically pertaining to the estradiol and progesterone second generation platform technology enabling an improved set of functional characteristics when used separately or in combination as hormone replacement drug products ("Drug Products ") including, but not limited to, services in support of Therapeutics’ ongoing and future drug development and commercialization efforts, regulatory approval efforts, third-party investment and financing efforts, marketing efforts, chemistry, manufacturing and controls ("CMC") efforts, drug launch and post-approval activities, and other exclusive intellectual property and know-how transfer associated therewith;

 

(b)  services in support of Therapeutics' efforts to successfully obtain FDA Approval for the Drug Product described in Schedule I hereto; and

 

(c)  other consulting services as mutually agreed upon from time to time by SCI and Therapeutics in relation to new drug development opportunities.

 

The term "FDA Approval," as used herein, shall mean a marketing approval for commercial distribution in the United States pursuant to Section 505 of the Food, Drug and Cosmetic Act, as amended. For clarity, an "FDA Approval" as used herein shall not include any "approvable" determinations by the U.S. Food & Drug Administration ("FDA"), including as set forth in any approvable letter under 21 CFR § 314.110.

 

2.           Expense Reimbursement.  Therapeutics agrees to reimburse SCI for all out-of-pocket expenses for reasonable business-related travel and engagement of experts required in the performance of the Consulting Services, provided however, that all such expenses shall be submitted in writing and pre-approved by Therapeutics prior to SCI incurring any such expense. All approved expenses shall be paid within 15 days of presentation of invoices and appropriate documentation therefore.

 

3.           Consulting Fee.  No cash remuneration shall be paid hereunder.

 

(a)           In consideration for the Consulting Services to be provided pursuant to Section 1 hereof, Therapeutics agrees to issue and deliver to SCI contemporaneously with the execution and delivery hereof, a five-year Common Stock Purchase Warrant ("Warrant"), in the form attached hereto as Exhibit A, granting SCI the right to purchase up to Eight hundred fifty thousand (850,000) shares of the Common Stock of Therapeutics (the "Fourth Warrant").  The exercise price of the Fourth Warrant shall be $2.01 and all shares thereunder shall vest as specified in sections (3)(i) through (3)(iii) below, but in no event prior to June 30, 2013.

 

(i)           On June 30, 2013, one-third (283,333 shares) of the Fourth Warrant will vest.

 

(ii)           Upon acceptance of an Investigational New Drug (“IND”) application by FDA for the Drug Product described in Section 1(b), one-third (283,333 shares) of the Fourth Warrant will vest.

 

(iii)           Upon the receipt by Therapeutics of any final FDA Approval of a Drug Product, one-third (283,333 shares) of the Fourth Warrant will vest.

 

(b)           SCI expressly acknowledges that the issuance of the aforementioned Warrant shall constitute full and adequate compensation for all Consulting Services to be performed pursuant to this Agreement and that SCI shall not be entitled to any additional compensation in any form.  For clarity, SCI shall not be entitled to seek additional consideration relative to any internal costs or other obligations incurred by SCI relating to its Consulting Services (so called "soft costs"), including consulting, legal, engineering and infrastructure-related costs and obligations incurred by SCI in the performance of its duties hereunder.

 

          4.2           With respect to Project IP, SCI will not knowingly or negligently incorporate or use therein any invention, discovery, process, technology or information that (a) is subject in whole or in part to a claim of any patent application or issued patent that is owned or controlled by SCI, but not assigned to Therapeutics pursuant to Section 4 ("SCI Background Patent Rights"), (b) is subject in whole or in part to a claim of any patent or patent application of a third party, or (c) incorporates any SCI processes, inventions, techniques, know-how, or trade secrets that are owned or controlled by SCI, but not assigned to Therapeutics pursuant to Section 4 ("SCI Background Know-How"). In the event any Project IP incorporates or requires the use of SCI Background Patent Rights or SCI Background Know-How (collectively, "SCI Proprietary Technology"), SCI shall grant and hereby grants to Therapeutics a non-exclusive, non-transferable, worldwide, royalty-free, fully paid license to use such SCI Proprietary Technology in connection with the procurement, use, sale and marketing of any Drug Product or other products or processes deriving from this Agreement.

 

 

         4.3           Therapeutics acknowledges that SCI is in the business of providing other services for a variety of organizations other than Therapeutics. Accordingly, nothing in this Agreement shall preclude or limit SCI from providing other services or developing materials for itself or other clients, or from utilizing the general knowledge gained during the course of its performance hereunder to perform similar services for other clients, provided that such provision of services or development of materials do not constitute a breach under Section 5 herein.

 

5.           Confidentiality.  During the performance of the Consulting Services, SCI may receive from Therapeutics confidential or proprietary information, including information concerning Therapeutics’ regulatory submissions, pre-clinical and clinical trials; other data, testing and research techniques, inventions, materials, processes, practices, product research, development and acquisition plans; acquisitions, mergers, divestitures and the like; other business and marketing plans; and other proprietary and trade secrets and like information (collectively "Confidential Information"). Therapeutics agrees that it will only provide such Confidential Information to the extent that it is required by SCI to perform the Consulting Services.

5.1           Notwithstanding the foregoing, the obligations of this Section 5 shall not apply in the case of:

(i)

information of Therapeutics that is now in the public domain or which subsequently enters the public domain without fault on the part of SCI; or

(ii)

information of Therapeutics that is presently known by SCI from its own sources, where said present knowledge can be demonstrated by written records; or

(iii)

information of Therapeutics that SCI receives in good faith from a third party, where said third party is independent of Therapeutics and is under no obligation of confidentiality with respect to such information; or

6.

Indemnification

        6.2           Indemnification by SCI.  Subject to Section 6.3 below, SCI shall indemnify and hold harmless Therapeutics, its agents, employees, directors and Affiliates from any loss, expense and liability, including reasonable attorney fees arising out of SCI’s negligence or willful misconduct in the course of providing Consulting Services pursuant to this Agreement.

 

        6.3           A Party that intends to claim indemnification (the "Indemnitee") under  Section 6.1 or 6.2 shall promptly notify the other party (the "lndemnitor") in writing of any claim, complaint, suit, proceeding or cause of action with respect to which the Indemnitee intends to claim such indemnification (for purposes of this Section 6, each a "Claim"), and the Indemnitor shall have sole control of the defense and/or settlement thereof; provided that the Indemnitee shall have the right to participate, at its own expense, with counsel of its own choosing in the defense and/or settlement of such Claim. The Indemnitor shall not settle any Claim without the consent of the Indemnitee, which consent shall not be unreasonably withheld or delayed. The Indemnitee, and its employees, at the Indemnitor’s request and expense, shall provide full information and reasonable assistance to Indemnitor and its legal representatives with respect to such Claims covered by this indemnification.

 

       6.4           SCI shall be responsible for the safety of its own employees and agents with respect to the handling or use of materials involved in the performance of this Agreement.

 
 

7.            SCI represents and warrants to Therapeutics as of the Effective Date that:

(a)           the execution and delivery of this Agreement and the performance of the transactions, rights and licenses contemplated hereby have been duly authorized by all appropriate SCI corporate action;

 

(b)           SCI has the full right and authority to enter into this Agreement, and is a legal and valid obligation binding upon SCI and enforceable in accordance with its terms, and the execution, delivery and performance of this Agreement by the terms set forth herein, and does not conflict with any agreement, instrument or understanding to which SCI is a party or by which it is bound;

 

(c)           SCI has the full right and legal capacity to grant the rights granted to Therapeutics hereunder without violating the rights of any third party; and

 

(d)           SCI is the owner of any SCI technology and Project IP, SCI Background Patent Rights, and SCI Proprietary Technology conveyed and that it is aware of no actual or threatened third party claims of ownership of the same.

 

8.           Term.  The term of this Agreement ("Term") shall commence as of the Effective Date and continue until the time of the commercial manufacture of a Drug Product. The Term may be extended by mutual, written agreement between the Parties.

 

9.           Assignment.  Neither party hereto may assign this Agreement, in whole or in part, without the prior written consent of the other party hereto.

 

10.           Notices.

 

(a)           All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (i) upon personal delivery to the party to be notified, (ii) when sent by facsimile, upon written confirmation of receipt by addressee, (iii) five days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (iv) one day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt.

 

(b)           Notices shall be sent to each party at its respective address listed below (if a party desires to change its address for notice, it shall notify the other party according to these terms):

 

If to SCI:                                               Sancilio and Company, Inc.

Attn:  Fred Sancilio, President & CEO

3874 Fiscal Court, Suite 200

Riviera Beach, Florida 33404

Facsimile No: (561) 847-2312

If to Therapeutics:                              TherapeuticsMD, Inc.

Attn:  Robert Finizio, CEO

951 Broken Sound Parkway NW, Suite 320

Boca Raton, FL 33487

Facsimile No: (561) 431-3389

11.             Records & Audits.  SCI agrees to maintain records of all Consulting Services performed under this Agreement in accordance with the FDA’s archival guidelines. Therapeutics may review the records of SCI relating to the Consulting Services performed and expenses incurred to assure compliance with all provisions of this Agreement, provided that such inspection may take place (i) only upon reasonable prior written notice (not less than ten (10) business days) and during SCI’s regular business hours.

 

11.1           Upon reasonable prior written notice (not less than fifteen (15) business days) and during regular business hours, Therapeutics may, at its own cost and expense, review SCI’s quality control procedures and records, with a representative of SCI present.

 

11.2           In the event of an inspection by any governmental or regulatory authority concerning the Consulting Services performed hereunder, SCI shall notify Therapeutics promptly upon learning of such an inspection, shall supply Therapeutics with copies of any correspondence or portions or correspondence relating to the Consulting Services and shall inform Therapeutics of the general findings and outcomes of such inspections.

12.             Certification.  SCI represents, warrants and certifies that neither it, nor its Affiliates, nor any of their respective directors, officers, principals, employees and agents was or is debarred, suspended, proposed for debarment or otherwise determined to be ineligible to participate in the drug industry, federal health care programs under or convicted of a criminal offense related to the provision of health care items or services the United States Food, Drug and Cosmetic Act (21 U.S.C. 301 et seq.), and that it has not and will not use in any capacity the services of any entity or person debarred under such law with respect to Consulting Services to be performed under this Agreement.  In the event that SCI, or any of its affiliates, directors, officers, principals, employees, or agents becomes or is debarred, suspended, proposed for debarment or otherwise determined to be ineligible to participate in the drug industry under such law or convicted of a criminal offense related to the provision of health care items or services, SCI shall notify Therapeutics in writing immediately.

13.             Waiver.  The failure of either Party hereto at any time or times to require performance of any provision of this Agreement shall in no manner affect the right of such Party at a later time to enforce the same. No waiver by any Party hereto of any condition, or of the breach of any provision, term, covenant, representation, or warranty contained in this Agreement, whether by conduct or otherwise, in any one or more instances, shall be deemed to be or construed as a further or continuing waiver of any such condition or of the breach of any other provision, term, covenant, representation or warranty of this Agreement.

 

IN WITNESS WHEREOF, the parties have each caused this Agreement to be signed and delivered by their duly authorized representatives as of the Effective Date.

 

	Sancilio and Company, Inc.
	By:	/s/ Fred Sancilio
		Fred Sancilio
		President & CEO
	TherapeuticsMD, Inc.
	By:	/s/ Robert Finizio
		Robert Finizio
		Chief Executive Officer

 

 

Form of Warrant

SCHEDULE I

An estradiol-based Drug Product in a softgel vaginal capsule for the treatment of vulvar and vaginal atrophy similar to the reference listed product Vagifem® from Novo Nordisk.  Therapeutics’ new VagiCap™ product will deliver a solubilized estradiol to the vaginal mucosa in a similar pharmacokinetic manner to Vagifem but with greater complete absorption and no residual material remaining after 24 hrs.