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TherapeuticsMD, Inc. 10-Q
[txmd-10q_063012.htm]

Exhibit 10.26

 
MASTER SERVICES AGREEMENT
 
This Master Services Agreement (“Agreement’) is entered into as of April 17,
2012 (the “Effective Date”) by and between TherapeuticsMD, Inc., a Nevada
corporation with an office at 951 Broken Sound Parkway NW, Suite 320, Boca
Raton, Florida 33487 (the “Client”), and Sancilio and Company, Inc., a Delaware
corporation with an office at 3874 Fiscal Court, Suite 200, Riviera Beach,
Florida 33404 (“SCI”).  The Client and SCI are referred to singly as “Party” and
jointly as “Parties” throughout this Agreement.
 
W I T N E S S E T H
 
WHEREAS, SCI is in the business of providing certain preclinical and clinical
drug development and formulation, drug product stability, analytical,
manufacturing and regulatory consulting services for the pharmaceutical industry
(the “Services”); and
 
WHEREAS, SCI represents that it has the necessary personnel, expertise,
facilities and experience to provide such Services to the Client;
 
WHEREAS, SCI and Client desire to enter into this Agreement to provide the terms
and conditions upon which Client may engage SCI, from time to time and as agreed
to by SCI, to provide services for individual projects in accordance with
mutually agreed upon SOWs, Change Orders and/or Letters of Authorization (each
as defined below) specifying the details of the services and the related terms
and conditions.  The SOWs, Change Orders and Letters of Authorization are
referred to herein as “Project-Specific Agreements.”
 
NOW THEREFORE, for and in consideration of the mutual covenants and agreements
set forth hereinafter and for other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties hereto do hereby
agree as follows:
 
ARTICLE I
 
SCOPE OF AGREEMENT AND STATEMENTS OF WORK/CHANGE ORDERS

1.1   This Agreement sets forth the basic terms and conditions that shall apply
to all Projects (as defined below) that are the subject of Project-Specific
Agreements entered into pursuant to this Agreement.

1.2   The specific duties and responsibilities for each project under this
Agreement (each, a “Project”) shall be separately negotiated and specified in a
statement of work on terms and in a format mutually agreed upon and executed by
the Parties (each such writing, a “SOW”). Each SOW shall include (i) the scope
and specification of the Project; (ii) deliverables and timelines; (iii) any
performance metrics; and (iv) a budget and payment schedule. Any material change
in the details of a SOW shall require a written amendment to the SOW, mutually
agreed upon and executed by the Parties (a “Change Order”).

1.3   Any and all Project-Specific Agreements issued and executed pursuant to
this Agreement will be made part hereof and incorporated herein by reference,
and shall be subject to the terms and conditions set forth in this Agreement.
Any and all Project-Specific Agreements shall also be subject to the terms and
conditions set forth in the quality requirements agreement to be executed by the
parties in concert with this present Agreement and attached hereto as
 
 
 

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Exhibit A (the “Quality Agreement”), unless otherwise expressly set forth in the
Project-Specific Agreements. To the extent there is any conflict between the
provisions of this Agreement, the Quality Agreement and/or a Project-Specific
Agreement, the terms and conditions of this Agreement and those of the
Project-Specific Agreement shall be read in accord wherever possible; where
certain provisions set forth in the Project-Specific Agreements are in more
exacting or detailed form over corresponding provisions in this Agreement, the
Project-Specific Agreement shall govern; but where such certain provisions are
otherwise ambiguous or unclear over the corresponding Agreement provisions, the
Agreement provisions shall govern.

1.4   Services provided by SCI shall comply with all applicable Good Laboratory
Practices, current Good Manufacturing Practices, Good Clinical Practices, and
all other United States governmental and regulatory standards, specifications
and guidelines, as specified in the Quality Agreement.

1.5   The Parties understand that SCI shall use commercially reasonable efforts
to initiate, conduct and complete the Services as set forth in a
Project-Specific Agreement in a timely fashion. The Client understands and
agrees that completing the Services as set forth in a Project-Specific Agreement
assumes the full cooperation of the Client, as well as any necessary third
parties.
 
ARTICLE II
 
PROJECT IMPLEMENTATION

2.1            Prior to SCI’s commencement of Services hereunder, the Parties
shall execute one or more Project-Specific Agreement. The Client’s execution of
a Project-Specific Agreement will be deemed its authorization for SCI to proceed
under the terms and conditions of this Agreement and the Quality Agreement, as
applicable.

2.2            SCI shall utilize commercially reasonable efforts to provide the
Services as agreed in any Project-Specific Agreements and, if necessary, any
associated Change Order.

2.3            The Parties recognize that in certain instances, the Client may
wish SCI to commence Services prior to the formal execution of a SOW authorizing
such Services. In such circumstances, the Client may authorize SCI in writing (a
“Letter of Authorization”) to commence specified Services pending execution of
the relevant SOW. A Letter of Authorization shall specify the Services to be
performed and a dollar limitation for the performance of such Services.

2.4            SCI shall use commercially reasonable efforts to anticipate the
scope of activities necessary to complete Services established by a
Project-Specific Agreement. However, Project-Specific Agreements constitute both
Parties’ informed estimate of those Services necessary to satisfactorily
complete a Project and are based upon the Parties’ current knowledge of the
factual situation, as well as the current regulatory environment. Therefore, the
scope of proposed Services may require modification of the Project-Specific
Agreements during the course of performance. In the event additional or
different Services are required, the Client’s authorized representative, as set
forth in Article VIII, may in writing authorize SCI to perform additional or
 
 
 

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different Services, wherein such additional or different services shall become
effective only upon a Change Order executed in writing by both Parties.

2.5            SCI will use commercially reasonable efforts to complete the
agreed upon Project according to the applicable terms set forth in any executed
Project-Specific Agreement.  However, the Parties recognize that the Services to
be provided hereunder are not subject to precise advance determination. In the
event unforeseen difficulties arise, SCI shall inform the Client, outlining the
basis of any such difficulties. In such event, the Parties agree to enter into
good faith negotiations regarding the possibility of amending applicable terms
under the Project-Specific Agreement to address such defined difficulties.  In
no event however, will any such difficulties, per se, amend or alter the terms
of this Agreement, or any related Project-Specific Agreement, absent the
subsequent mutual agreement of both Parties in writing.
 
ARTICLE III
 
PAYMENT FOR SERVICES RENDERED

3.1           The Client agrees to pay for Services as agreed upon in a
Project-Specific Agreement executed by the Client and delivered to SCI.

3.2           The Client shall reimburse SCI for reasonable and customary
out-of-pocket expenses, including any appropriate handling fees (not including
any supplies and services as set forth in Article 3.3 herein) incurred in
connection with the performance of the Services set forth in the
Project-Specific Agreements provided that SCI provides the Client with
documentation of such approved expenditures, if requested. Unless otherwise
agreed by the Parties in writing in a Project-Specific Agreement, SCI shall
invoice the Client for such expenses at cost.

3.3           Unless otherwise agreed by the Parties in writing in a
Project-Specific Agreement, SCI shall charge the Client a five percent
(5%) handling fee for all supplies, materials or services acquired for or on
behalf of the Client to satisfactorily complete the Services as set forth in the
Project-Specific Agreement.

3.4           [reserved]

3.5           If the Client delays or temporarily halts a Project after such
Project has commenced for reasons beyond the commercially reasonable control of
SCI, the Parties will negotiate a reasonable fee, payable on a monthly basis, to
compensate SCI for reasonable expenses incurred related to such delay, including
the storage of Client’s samples and materials. SCI shall provide the Client with
an itemized invoice describing such expenses. The Client will pay the expenses
associated with such invoices in accordance with Article 3.6 herein.

3.6           Unless otherwise agreed by the Parties in writing, SCI shall
invoice the Client on a calendar month basis for Services rendered, for agreed
upon costs, milestone, and other payment terms and conditions as set forth in
any Project-Specific Agreement. Invoices are due and payable net thirty
(30) days after Client’s receipt of invoice. All payments to SCI shall be made
in U.S. dollars. Invoice balances not remitted within thirty (30) days of
receipt of invoice shall be subject to a one and one-half percent (1.5%) per
month interest charge. Should any part
 
 

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 of the invoice be in dispute, the Client shall pay any undisputed amount
according to the terms and conditions described herein while said dispute is
being resolved.
 
ARTICLE IV
 
INTELLECTUAL PROPERTY

4.1           Any invention, trade secret or know-how and any materials,
documents, programs or information belonging to Client and supplied to SCI by
Client pursuant to this Agreement shall remain the property of Client. Any
invention, trade secret or know-how and any materials, documents, programs or
synthesis information belonging to SCI prior to the date of this Agreement, or
developed by SCI independently of this Agreement, i.e. not falling within
Article 4.2 below, shall remain the property of SCI.

4.2           Any inventions (whether or not patentable), processes, techniques,
improvements, discoveries, designs, formulae, copyright, trademark, trade
secrets, know-how, developments, confidential information, computer software,
data and documentation, and all similar intellectual property rights created,
discovered or reduced to practice by SCI solely or jointly in the course of
performing the Services or other work performed under a Project (collectively,
“Project IP”).  SCI shall notify the Client promptly when it has made, created,
or otherwise invented any Project IP.  SCI agrees to assign and hereby does
assign to Client all Project IP (including any patent and all other intellectual
property rights therein), and Project IP shall be deemed the Confidential
Information of Client for purposes of Article V below.  SCI will, at the expense
and the written request of the Client, take all reasonable steps and execute all
documents as the Client may reasonably request to transfer to and vest in the
Client the ownership and registration of all intellectual property rights that
may exist in such Project IP.
 
4.3           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 Client pursuant to Article IV (“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 Client pursuant to Article IV (“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 grants to Client a non-exclusive,
non-transferable, worldwide, royalty-free, fully paid license to use such SCI
Background Know-How and SCI Proprietary Technology in connection with the
procurement, use, sale and marketing of any commercial product or process
deriving from this Agreement.
 
4.4           The Client acknowledges that SCI is in the business of providing
Services for a variety of organizations other than the Client. Accordingly,
nothing in this Agreement shall preclude or limit SCI from providing 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 of confidentiality under
Article V herein.
 
 
 

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ARTICLE V
 
CONFIDENTIALITY

5.1           During the performance of Services and the Term of this Agreement,
each Party may receive from the other Party confidential or proprietary
information, including: information concerning Client’s 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”). Client agrees that it
will only provide such Confidential Information to the extent that it is
required by SCI to perform Services. For the avoidance of doubt, the following
shall in all cases be treated as Confidential Information hereunder: (a) all
samples of chemical compounds and data related thereto, (b) all Confidential
Information provided under the Parties’ prior Non-Disclosure Agreement dated
December 1, 2011, (c) all Project IP, data, results or other information as
otherwise developed or generated by SCI for the Client, or any methodologies,
technology, or assays developed by SCI for the Client, and (d) all other Project
IP, data, results or other information otherwise arising under or relating to
this Agreement.
 
5.2           The Parties will each use the same care to prevent disclosing to
third Parties the Confidential Information of the other Party as it employs to
avoid disclosure, publication or dissemination of its own information of a
similar nature, but in no event less than a reasonable standard of
care.  Neither Party will use the Confidential Information of the other Party
except in the performance of its obligations and exercise of its rights under
this Agreement.
 
 
5.2.1           For clarity, each Party agrees that without the express written
consent of the other Party, it will not itself use, or provide to, disclose to,
or permit any third party to use said Confidential Information. The Parties
agree to take commercially reasonable and appropriate measures to safeguard
Confidential Information from theft, loss or negligent disclosure to others and
to limit internal access to Confidential Information to those of its employees,
consultants, agents or subcontractors who reasonably require such access in
order to accomplish performance of the Services.  Each Party’s employees,
consultants, agents or subcontractors who have or will have access to
Confidential Information have signed or, prior to disclosure of Confidential
Information, will sign a confidentiality agreement with provisions no less
protective than this Article V. Either Party disclosing Confidential Information
under this Agreement assumes full responsibility for the acts or omissions of
such third-parties, no less than if the acts or omissions were those of the
disclosing Party.
 
 
5.2.2           Unless otherwise consented to by the disclosing Party in writing
or provided for in a Project-Specific Agreement, the receiving Party agrees not
to analyze for chemical composition any samples or materials provided by the
disclosing Party, nor to allow or cause any such samples or materials to be
released to third parties for analysis.
 
 
 
 

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5.2.3           Neither Party shall use or disclose to the other Party any
Confidential Information of a third party except as approved in advance in
writing by the receiving Party.
 
 
5.2.4           Each Party agrees to notify the other Party promptly of the date
of, and the circumstances involved in, the loss or unauthorized disclosure of
any Confidential Information of the other Party.
 
5.3           Notwithstanding the foregoing, Confidential Information will not
include any information which either Party can demonstrate was:

(a) at the time of disclosure to it, in the public domain;
 
(b) after disclosure to it, published or otherwise becomes part of the public
domain through no fault of the receiving Party;
 
(c) without a breach of duty owed to the disclosing Party, is in the possession
of the receiving Party at the time of disclosure to it;
 
(d) received after disclosure to it from a third party who had a lawful right to
and, without a breach of duty owed to the disclosing Party, did disclose such
information to it; or
 
(e) independently developed by the receiving Party without reference to
Confidential Information of the disclosing Party.

5.3.1           Furthermore, either Party may disclose the other Party’s
Confidential Information to the extent required by law or order of a court or
governmental agency or to enforce this Agreement.  However, the recipient of
such Confidential Information must give the other Party prompt notice and make a
reasonable effort to obtain a protective order or otherwise protect the
confidentiality of such Confidential Information, all at such other Party’s cost
and expense.

5.4           Upon expiration or termination of Agreement or completion or
termination of any Project-Specific Agreement, and at the written direction of
the other Party, each Party will promptly return all Confidential Information of
the other Party, including any documents prepared by SCI that contain such
information, as further set forth in Article VIII. SCI may retain a single
archival copy of the Confidential Information for the sole purpose of
determining the scope of obligations incurred under this Agreement. The
obligations of this Article V shall apply to all Confidential Information
disclosed to the receiving Party, whether such Confidential Information was
disclosed before or after the Effective Date and survive for a period of five
(5) years from the expiration or termination of this Agreement.

5.5           The Parties agree that they shall not use the other Party’s name,
or disclose the existence of this Agreement or any matters relating to the
Services provided hereunder in any advertising, promotion, written articles or
communications without the prior written consent of the other Party, such
consent not to be unreasonably withheld.
 
 
 

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ARTICLE VI
 
REPRESENTATION, WARRANTIES, AND COVENANTS

6.1           SCI’s Representations.  SCI represents and warrants to Client as
of the Effective Date that:
 
 
(i)
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;

 
 
(ii)
SCI has the full right and authority to enter into this Agreement, and this
Agreement 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;

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

 
 
(iv)
SCI is the owner of the SCI Technology and, to SCI’s actual knowledge, no third
party claims any ownership of the SCI Technology

 
EXCEPT AS SET FORTH HEREIN, SCI EXPRESSLY DISCLAIMS ALL REPRESENTATIONS AND
WARRANTIES, WHETHER EXPRESS OR IMPLIED, INCLUDING ANY IMPLIED WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE (REGARDLESS OF WHETHER OR
NOT SCI KNOWS OR HAS REASON TO KNOW OF SUCH PURPOSE). EXCEPT WITH RESPECT TO
BREACH OF ARTICLE V, AND EXCEPT TO THE EXTENT A PARTY MAY BE OBLIGATED TO
INDEMNIFY THE OTHER PARTY UNDER THIS ARTICLE VI, IN NO EVENT SHALL EITHER PARTY
BE LIABLE FOR ANY CONSEQUENTIAL, SPECIAL, EXEMPLARY INCIDENTAL OR OTHER INDIRECT
DAMAGES OR LOST PROFITS IN ANY WAY ASSOCIATED WITH THIS AGREEMENT, REGARDLESS OF
THE FORM OF ACTION.
 
6.2           Client’s Representations.  Client represents and warrants to SCI
as of the Effective Date that:
 
 
 
(i)
the execution and delivery of this Agreement and the performance of the
transactions contemplated hereby have been duly authorized by all appropriate
Client corporate action;

 
 
(ii)
Client has the full right and authority to enter into this Agreement, and this
Agreement is a legal and valid obligation binding upon Client 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

 
 
 

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conflict with any agreement, instrument or understanding to which Client is a
party or by which it is bound;
 
 
(iii)
Client has the full right and legal capacity to grant the rights granted to SCI
hereunder without violating the rights of any third party; and

 
 
 
(iv)
Client is the owner of the TherapeuticsMD Technology and, to Client’s actual
knowledge, no third party claims any ownership of the TherapeuticsMD Technology.

 

6.3           Product Warranty.  SCI represents and warrants that:
 
(i)           any drug product supplied by SCI shall meet the product
specifications set forth in the applicable Project-Specific Agreement, and
further represents and warrants that the product specifications and the
methodologies used to synthesize any drug product shall meet all requirements
that are necessary to conduct any clinical trials specified in an applicable
Project-Specific Agreement and shall support any of Client’s (or its designee’s)
contemplated New Drug Application to market a drug product in the U.S. pursuant
to the then applicable U.S. regulatory requirements.  SCI will use its
Commercially Reasonable best efforts to supply any drug product in the
quantities, at the times and at the locations designated by Client in any
applicable Product-Specific Agreement.

(ii)           any drug product that is part of any shipment or delivery made to
Client pursuant to this Agreement will not, at the time of shipment to Client by
SCI, be adulterated or misbranded within the meaning of the FD&C Act.
 
ARTICLE VII
 
INDEMNIFICATION

7.1           Indemnification by Client.  Subject to Section 7.4 below, the
Client shall indemnify and hold harmless SCI, its agents, employees, directors
and Affiliates from any loss, expense and liability, including reasonable
attorney’s fees, arising from any claim suit or proceeding to the extent
resulting from Client’s use of (a) products and services using the Project IP,
or (b) other materials or processes supplied or disclosed to Client in the
course of providing Services pursuant to this Agreement, except to the extent
the claim, suit or proceeding is subject to SCI’s indemnification obligations in
Section 7.2 below.

7.2           Indemnification by SCI.  Subject to Section 7.4  below, SCI shall
indemnify and hold harmless the Client, 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 Services pursuant to this Agreement.

7.3           Indemnification for Patent Infringement.  Subject to Section 7.4
below, if SCI is subject to allegations of or sued for patent infringement or
infringement of other intellectual property rights anywhere in the world with
respect to its pre-clinical or clinical manufacture and distribution of any drug
product pursuant to the terms of this Agreement or any Project-Specific
 
 
 

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Agreement initiated by a third party asserting infringement of its rights with
respect to the active ingredients in a drug product of combinations thereof, or
if Client is subject to allegations of or sued for patent infringement or
infringement of other intellectual property rights anywhere in the world
initiated by a third party asserting infringement of its rights with respect to
the manufacturing methods or materials used by SCI in its manufacture of a drug
product, then Client or SCI, as the case may be, will indemnify the other and
hold such indemnified Party harmless and defend against such suits. The
foregoing in this subsection 7.3 notwithstanding, Client shall not be liable to
SCI under such indemnity if such suit is based on the manufacture or use of a
drug product by SCI in a manner not specified by the terms of this Agreement or
a Project-Specific Agreement.
 
7.4           A party that intends to claim indemnification (the “Indemnitee”)
under Section 7.1, 7.2 or 7.3 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 Article VII, 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.
 
7.5           Each Party 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 and any Project-Specific Agreement
hereunder.

7.6           SCI shall perform the Services hereunder as an independent
contractor, and nothing contained in this Agreement or otherwise shall be deemed
to create any other relationship, including employment, partnership, agency or
joint venture, between the Parties. The Parties acknowledge that Services
performed are solely within the control of SCI and the provisions of this
Agreement shall not be construed as authorizing the Client to exercise any
control or direction over the employees or agents of SCI in connection with this
Agreement. Neither Party to this Agreement shall have any authority to employ
any person as agent or employee for or on behalf of the other, or to bind, or
attempt to bind, the other to any obligation with any third party.

7.7           “Affiliate” shall mean any corporation, company, partnership,
joint venture and/or firm, which controls, is controlled by or is under common
control with a Party.  For purposes of this Article VII “control” shall mean (a)
in the case of corporate entities, direct or indirect ownership of at least
fifty percent (50%) of the stock or shares entitled to vote for the election of
directors; and (b) in the case of non-corporate entities, direct or indirect
ownership of at least fifty percent (50%) of the equity interest or the power to
substantially direct the management and policies of such non-corporate entities.

 
 
 

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ARTICLE VIII
 
TERM AND TERMINATION

8.1           Unless sooner terminated in a manner herein provided, this
Agreement shall continue for a period of three (3) years from the Effective Date
(hereinafter the “Term”). The Parties may extend this Agreement by written
mutual agreement at least sixty (60) days prior to the expiration of the Term.

8.2           This Agreement, the Quality Agreement and any corresponding
Project-Specific Agreement then in effect may be terminated by (i) either Party
upon written notice for cause in the event of a failure by the other Party to
substantially perform any material obligation that, through no fault of the
Party initiating the termination, remains uncured thirty (30) days after receipt
of such prior written notice; (ii) Client upon thirty (30) days written notice
to SCI; or (iii) either Party upon dissolution, insolvency or bankruptcy as set
forth in 8.2.1 below.

8.2.1  This Agreement may be terminated by any one Party in the event that the
other Party: (i) applies for or consents to the appointment of a receiver,
conservator, trustee, liquidator, custodian or other judicial representative for
itself or any substantial portion of its assets or properties; (ii) admits in
writing its inability to pay its debts as they become due; (iii) makes an
assignment for the benefit of its creditors; (iv) has an order for relief filed
by a bankruptcy court for or against it or is adjudicated insolvent; or (v)
files a voluntary petition admitting bankruptcy or an arrangement with creditors
or takes advantage of any bankruptcy, insolvency, readjustment or debt,
dissolution or liquidation law or statute, or files an answer admitting the
material allegations of a petition filed against it in any proceeding; (vi) or a
decree is entered by any court of competent jurisdiction approving a petition
seeking reorganization or appointing a receiver, conservator, trustee,
liquidator, custodian or other judicial representative, and such order, judgment
or decree continues in effect for a period of sixty (60) consecutive days.

8.3           In the event of a termination of this Agreement pursuant to
Section 8.2, with the exception of material breach by SCI, the Client shall be
obligated to pay to SCI the cost of all Services completed, as set forth in the
relevant Project-Specific Agreements currently in effect at the time of
termination, in accordance with the terms and conditions set forth in this
Agreement. Client shall be obligated to pay for all unused supplies and
materials ordered by SCI in connection with performance of the Services. SCI
shall use commercially reasonable efforts to minimize the costs associated with
the cessation of any such Project-Specific Agreements.

8.4           Client may terminate any Project-Specific Agreement without
terminating this Agreement by providing SCI written notice. In the event of a
termination of a Project-Specific Agreement, SCI shall receive full payment for
all Services actually performed through the effective date of termination,
including any appropriate delay or cancellation fees as may be set forth in the
Project-Specific Agreements. In accordance with the Client’s written
instructions, SCI shall use commercially reasonable efforts to transfer the
results, information, documents, Project IP, and other property and information
relating to or resulting from such Project-Specific Agreement to the Client or
its agent. The Client shall pay reasonable costs incurred by SCI that are
necessary or reasonably required in connection with the orderly cessation of
such Project-Specific Agreements, not to exceed 1/12 of the cost of the Project
that is the subject of the
 
 
 

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terminated Project-Specific Agreement(s). In no event shall the total amount
calculated pursuant to this Section 8.4 exceed the total amount of payments set
forth in the budget for such Project-Specific Authorization. Within thirty
(30) days after the termination date of any Project-Specific Agreement, SCI
shall refund to Client any amounts paid by Client to SCI in excess of the
calculated amount described herein.

8.5           The accrued rights and obligations of the Parties shall not be
affected by any termination of this Agreement.  Furthermore, upon termination of
this Agreement for any reason by any party, and irrespective of any claims,
rights or remedies Client or SCI may have against the other under this Agreement
other than for payments then due and payable pursuant to the terms of any
Project-Specific Agreement, SCI expressly agrees to deliver immediately to
Client:  (i) all work product (including partial results, drafts and notes, in
all tangible media including electronic format, works in progress and patents,
know-how and other intellectual property) created or worked on by SCI in, and
relating directly to, the performance of its obligations under this Agreement;
(ii) any inventory of drug product or precursors thereto; (iii) any materials
received from Client or other sources in order for SCI to perform its
obligations under this Agreement; (iv) all Equipment procured by SCI (shipped in
accordance with Client’s instructions at Client’s cost and risk); (v) a report
by SCI to Client in reasonable detail outlining the status of the foregoing,
(vi)  any other outstanding reports or documentation required under the
Agreement.  SCI further agrees to do all things and execute documents as Client
may reasonably request and to transfer any Drug Master Files in SCI’s possession
to Client or its designee at Client’s cost, to the extent such actions are not
already required by this Agreement or any Project-Specific Agreement, so that
such termination or the pursuit of any such claims, rights and remedies shall
not interfere with the timely development of any drug product by Client in its
absolute discretion.
 
ARTICLE IX
 
CORRESPONDENCE AND NOTICE

9.1             Until advised in writing to the contrary by either Party, all
communications and notices related to this Agreement shall be effective upon
receipt and shall be addressed to:

         
CLIENT:
 
TherapeuticsMD, Inc.
     
951 Broken Sound Parkway NW, Suite 320
     
Boca Raton, Florida 33487
     
(Attention: Chief Financial Officer)
     
Fax: 561-431-3389
       
SCI:
 
Sancilio and Company, Inc.
     
3874 Fiscal Court, Suite 200
     
Riviera Beach, Florida 33404
     
(Attention: Chief Legal Officer)
     
Fax: 561-847-2312
     

 
 

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9.2           All communications and notices related to a Project-Specific
Agreement shall be addressed to the appropriate individual for each Party as set
forth in such Project-Specific Agreement.
 
ARTICLE X
 
RECORDS AND AUDITS

10.1             SCI agrees to maintain records of all Services performed under
this Agreement in accordance with the United States Food and Drug
Administration’s archival guidelines. The Client may review the records of SCI
relating to the 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, and (ii) at the Client’s
sole cost and expense. The Client shall be invoiced for any reasonable and
actual incidental expenses SCI incurs resulting from any such review, to the
extent such review exceeds four (4) business days each calendar year.
 
10.2             Upon reasonable prior written notice (not less than fifteen
(15) business days) and during regular business hours the Client may, at its own
cost and expense, review SCI’s quality control procedures and records, with a
representative of SCI present. The Client shall be invoiced for any reasonable
and actual incidental expenses SCI incurs resulting from such review, to the
extent such review exceeds one (1) review each calendar year.
 
10.3             In the event of an inspection by any governmental or regulatory
authority concerning the Services performed hereunder, SCI shall notify the
Client promptly upon learning of such an inspection, shall supply the Client
with copies of any correspondence or portions or correspondence relating to the
Services and shall inform the Client of the general findings and outcomes of
such inspections. The Client shall be invoiced for any reasonable and actual
incidental expenses SCI incurs resulting from such review.
 
ARTICLE XI
 
MISCELLANEOUS

11.1             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 Services to be performed under this Agreement.  In the
event that a 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 under such law or convicted of a
criminal offense related to the provision of health care items or services, SCI
shall notify Client in writing immediately.

11.2             Equipment and Material Ownership.  Title to any and all
equipment and other materials procured by SCI pursuant to any Project-Specific
Agreement on behalf of Client
 
 
 
 

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(“Equipment”) shall vest exclusively with Client, which shall have unencumbered
rights, title and interest in all such Equipment at all times. SCI shall deliver
to Client copies of receipts for all Equipment.  Client shall reimburse SCI for
the actual amounts paid for such Equipment, plus, for any Equipment not procured
from SCI’s existing stock, a 5% service fee.  SCI shall use commercially
reasonable efforts in the selection, installation, maintenance, and proper
operation of such Equipment.  Upon completion of the Services for which
Equipment is being utilized, Client may request that any remaining Equipment be
shipped to the destination of its choice.  Any fees associated with such
request, including the hourly fees for SCI personnel and all shipping costs,
shall be the sole responsibility of Client.

11.3             Insurance.  During the Term of this Agreement, the Parties
shall secure and maintain in full force and effect commercially appropriate and
standard insurance coverage for its responsibilities in connection with this
Agreement and any applicable Project-Specific Agreement. Upon written request by
either Party, the other Party shall provide proper evidence showing that such
insurance is in force.

11.4             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.

11.5             Entire Understanding.  This Agreement contains the entire
agreement between the Parties with respect to the subject matter thereof as of
the Effective Date and supersedes all prior agreements, negotiations,
representations and proposals, written and oral, relating to its subject matter,
except that Project-Specific Agreements and other similar service authorizations
that have been properly executed prior to the Effective Date shall remain in
full force and effect, and shall be construed, where possible, in accordance
with the terms and conditions herein.

11.6             Severability.  If a court or other tribunal of competent
jurisdiction holds any term or provision, or portion thereof, of this Agreement
to be invalid, void or unenforceable, the remaining provisions of the Agreement
shall remain in full force and effect. It is the Parties’ intention that if a
court or other tribunal holds any term or provision of this Agreement to be
excessive in scope, such term or provision shall be adjusted rather than voided,
if possible.

11.7             Modification. This Agreement may not be amended or modified
except by written instrument signed by an authorized representative of the
Parties.

11.8             Cooperation.  Each Party shall execute and deliver all such
instruments and perform all such other acts as the other Party may reasonably
request to carry out the transactions contemplated by this Agreement.

11.9             Force Majeure.  Neither Party shall be under any liability to
the other hereunder on account of any loss, damage or delay occasioned or caused
by non-performance of any
 
 
 

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obligation under this Agreement due to circumstances beyond its reasonable
control occurring after the Effective Date, including but not limited to,
strikes, riots, fire, insurrection, war, natural disaster, embargoes, failure of
carriers, inability to obtain material or transportation facilities or changes
in any law (“Force Majeure”).  The Party affected by such a Force Majeure event
is excused on a day-by-day basis to the extent of the prevention; provided, that
such Party notifies the other Party as soon as practicable of the nature and
expected duration of the claimed Force Majeure event, uses all Commercially
Reasonable Efforts to avoid or remove the causes of non-performance and resumes
performance promptly after the causes have been removed.  If a Party is unable
to perform its obligations under this Agreement (other than the obligation to
pay money) due to a Force Majeure event for a period in excess of three (3)
months (an “Extended Force Majeure Event”), then the other Party may terminate
this Agreement with no further obligation to the non-performing Party.

11.10             Binding Effect.  Subject to the restrictions on transfers,
assignments and encumbrances set forth herein, this Agreement shall inure to the
benefit of and be binding upon the undersigned Parties and their respective
legal successors.

11.11             Headings.  All headings herein are for convenience only and
shall not be construed as a limitation of the scope of the particular sections
to which they refer.

11.12             Assignment.  Neither Party shall assign its rights under this
Agreement without the prior written consent of the other Party, such consent not
to be unreasonably withheld, and any attempt to assign without such consent
shall be void and of no effect. Notwithstanding the foregoing, either Party
shall have the right to assign this Agreement, the Quality Agreement and all
outstanding Project-Specific Agreements hereunder in connection with the
transfer or sale of all or substantially all of its business or assets related
to this Agreement, or in the event of its merger, reorganization, consolidation,
change in control or similar transaction.

11.13             Non-Solicitation.  Each Party agrees not to solicit an
employee of the other party who has performed any work in connection with this
Agreement, provided that newspaper, internet or other advertisements to fill job
openings shall not be deemed to be a “solicitation” hereunder. This provision
shall remain in effect during the term of this Agreement and for one (1) year
thereafter. Any exceptions to this provision must be in writing and signed by an
authorized representative of each Party.

11.14             Surviving Provisions.  The Parties agree that the following
provisions will survive the expiration or termination of this Agreement; the
definitions contained herein to the extent such definitions pertain to terms in
surviving provisions, Articles IV, V, VII and IX in their entirety, and Articles
3.6 (with respect to Services performed prior to such expiration or
termination), 10.3, 11.12, 11.14 and 11.15.

11.15             Governing Law.  This Agreement shall be governed by and
construed in accordance with the laws of the State of Florida without regard to
any conflicts of laws provisions.  In the event that an unresolved dispute
arises over the enforcement, interpretation, construction, or breach of this
Agreement, it shall be litigated in the State of Florida, within the U.S.
District Court, Southern District of Florida, or the Florida State Court,
Broward County,
 
 
 

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17th Judicial Circuit, and both Parties irrevocably submit to the exclusive
jurisdiction of such courts for all purposes with respect to any legal action or
proceeding in connection with this Agreement.

11.16             Subcontractors and Assignees.  SCI shall not have the right to
subcontract or assign a third party to perform its development and manufacturing
obligations under this Agreement without the prior written consent of Client,
which consent Client shall have the right to withhold for any reason in its sole
discretion, provided that the Parties understand that SCI may without such
consent use subcontractors or consultants, bound by appropriate confidentiality
obligations, to assist or support its performance of this Agreement.  For
clarity, the provisions specified in this section shall not apply to third-party
API suppliers.

11.17             Taxes.  Each Party is solely liable for costs, expenses,
taxes, contributions or other charges assessed against it or its property.  Each
Party agrees to indemnify and hold the other Party and its directors, officers
and employees harmless from and against any and all liability for its delay or
failure to pay any such costs, expenses, taxes, contributions or other charges.

11.18             Equitable Relief.  The Parties acknowledge and agree that any
actual or threatened breach of the warranties or representations explicitly set
forth in this Agreement will cause irreparable harm to the non-breaching Party;
and therefore, the non-breaching Party will be entitled to equitable relief,
including injunction and specific performance, as a remedy for any such breach,
where such relief shall not require posting of a bond or any other security or
proof of actual damages or harm.  Such equitable remedies shall not be deemed to
be the exclusive relief for any such breach but shall be in addition to all
other remedies available in law or equity.

11.19.             Legal Representation.   This Agreement was negotiated by the
Parties with the benefit of legal representation. Any rule of construction or
interpretation otherwise requiring this Agreement to be construed or interpreted
against any Party shall not apply to any construction or interpretation hereof.

11.20             Counterparts.  This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by
their duly authorized officers.
 

SANCILIO AND COMPANY, INC.
 
 
THERAPEUTICSMD, INC. 
By: /s/ Frederick D. Sancilio                               
 
By: /s/ Robert Finizio                              
Name:  Dr. Frederick D. Sancilio
 
Name:  Robert Finizio
Its:  President and Chief Executive Officer
 
Its:  Chief Executive Officer

 

 

 
 

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Exhibit A
 
QUALITY AGREEMENT
 
 
 

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