EXHIBIT 10.4
JOINT VENTURE AGREEMENT BETWEEN
XXXXX RESEARCH SDN. BHD., SARAWAK
AND
MEDICHEM RESEARCH INC., USA
DECEMBER, 1996
AGREEMENT
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THIS AGREEMENT is made the 21st day of December, 1996
BETWEEN:
(1) XXXXX RESEARCH SENDIRIAN BERHAD a company incorporated in Sarawak, Malaysia
under the Companies Xxx, 0000, whose registered office is at Levels 5, 8
and 12, Xxxxx Xxxxx, Xxxxx Xxxxx, 00000 Xxxxxxx, Xxxxxxx and place of
business at Xxx 0000 Xxxxx 00, Xxxxx Xxxxxxxxx, 00000 Xxxxxxx, Xxxxxxx
(hereinafter referred to as "XXXXX") of the one part and
(2) MEDICHEM RESEARCH INC. a company organized and incorporated under the laws
of the United States of America and State of Illinois, with a place of
business at 00000 Xx. Xxx Xxxxxx, Xxxxxx, XXXXXXXX 00000, Xxxxxx Xxxxxx of
America (hereinafter referred to as "MEDICHEM") of the other part.
WHEREAS
(1) XXXXX is the duly authorized agent for and on the behalf of the Government
of the State of Sarawak, Malaysia ("the State Government") where the
species of Callophylum plants from which the COMPOUND known scientifically
as (+) - Calanolide A (hereinafter referred to as "the said COMPOUND") is
isolated; and XXXXX, therefore, enters into this Agreement for and on
behalf of the State Government;
(2) MEDICHEM is primarily engaged in research and early stage development of
therapeutic agents. MEDICHEM has title or has the exclusive licenses to
the following patents and patent applications relating to the COMPOUND
which are potent inhibitors of Human Immunodeficiency Virus (HIV) reverse
transcriptase and intermediates, namely:
(a) MediChem U.S. Patent No. 5,489,697; 1996 - Method for the Preparation
of (+)-Calanolide A and Intermediates Thereof (Boulanger, Flavin,
et al.).
(b) MediChem U.S. Patent Application No. 08/510,213; 1995, and
International Application No. PCT/US95/09804; 1995 - Method for the
Preparation of (+)-Calanolide A and Intermediates Thereof (Flavin, Xu,
et al.).
(c) MediChem U.S. Patent Application No. 08/609,537; 1996 - Method for the
Preparation of (+)-Calanolide A and Analogues Thereof (Flavin, Xu,
et al).
(d) NCI U.S. Patent Application No. 08/065,618; 1993 - Calanolide and
Related Antiviral Compounds, Compositions, and Uses Thereof (Boyd,
Cardellina, et al.).
(e) NCI International Patent Application No. PCT/US94/05658; 1995 -
Calanolide and Related Antiviral Compounds, Compositions, and Uses
Thereof (Boyd, Cardellina, et al.).
(3) MEDICHEM has by virtue of a Patent License Agreement (Patent License No.
L-135-94) with National Cancer Institute ("'NCI") of the National Institute
of Health which is an agency of the United States Public Health Service
within the Department of Health and Human Services, U.S.A. (a copy whereof
is hereto attached as Appendix A) the use of the Patent rights licensed
thereunder to undertake research into the said COMPOUND with a
view to developing a drug for the treatment of acquired immunodeficiency
syndrome (AIDS) diseases, and to use and sell the licensed PRODUCTS, i.e.,
the drug derived from the said COMPOUND;
(4) MEDICHEM entered into an Agreement with the State Government whereby in
consideration of the State Government agreeing to NIH granting to MEDICHEM
a license to use the COMPOUND and to sell and distribute drugs developed
therefrom, MEDICHEM agrees to pay royalties, at the rate stated therein, to
the State Government. A copy of the Agreement is attached as Appendix B;
(5) MEDICHEM has a duly executed license with vita of Spain under the License
Agreement attached as Appendix C.
(6) MEDICHEM has invited the State Government, through XXXXX, to form a COMPANY
for the clinical trials for the said COMPOUND and subscribe to purchase
shares in the COMPANY with a view to enhancing benefits to the State
Government in the event of the successful development and commercialization
of the PRODUCT;
(7) Both the Sarawak Government (through XXXXX) and MEDICHEM wish to jointly
cooperate to form a COMPANY for conducting research into the COMPOUND and
more particularly in the conduct of the clinical trials for the said
COMPOUND, with a view to the production and medical application of the
PRODUCT. XXXXX and MEDICHEM wish to be equal shareholders in the COMPANY.
In pursuance thereof, the parties hereto have agreed to enter into mutual
commitments and to regulate their rights in relation to such COMPANY in the
manner and upon the terms and conditions hereinafter appearing.
IT IS MUTUALLY AGREED as follows:
1. Interpretations
1.1 In this Agreement unless the context otherwise requires:
1.1.1 "the COMPOUND" means the anti-viral molecule or agent isolated from the
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plants of the genus callophylum found in the State of Sarawak in
Malaysia and including Calanolide or any synthesized form thereof or
that derived from preparation made by MEDICHEM under the said patents.
1.1.2 "the COMPANY" means the COMPANY incorporated under Clause 4 below.
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1 1.3 "FDA" means the Food and Drug Administration of the United States of
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America.
1.1.4 MEDICHEM "intellectual Property Rights" means technical information, all
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trade secrets, patent applications and patents and licenses related to
COMPOUND or PRODUCT in which MEDICHEM has right, title and interest at
the date of signing this Agreement.
1.1.5 "State Government" means the Government of the State of Sarawak,
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Malaysia.
1.1.6 COMPANY Intellectual Property Rights shall mean technical information,
trade secrets, and patent rights developed or obtained by the COMPANY.
1 1.7 "The PRODUCT" means any drug or pharmaceutical goods or PRODUCT derived
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from the COMPOUND for the treatment of Human Immunodeficiency (HIV) or
HIV related diseases, developed through or under this Project.
1.1.8 "This Project" means
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(a) the development of Calanolide as a Therapeutic for treatment of
HIV infection;
(b) development of Calanolide A as a Therapeutic for treatment of non
HIV viral infections;
(c) development of Calanolide-related compounds including Costatolide
as Therapeutic agent for treatment of viral infections;
(d) the research and study into medicinal properties of other plant
materials from the State of Sarawak, and
(e) undertake any current or future endeavours or collaboration
entered into between MEDICHEM and the U.S. National Institute of
Health in connection with the research and study into Calanolide
Compounds.
1.2 References to statutory provisions shall be construed as references to
those provisions as respectively amended or re-enacted or as their
application is modified by other provisions (whether before or after the
making of this agreement) from time to time and shall include any
provisions of which they are re-enactments (whether with or without
modifications).
1.3 The headings are inserted for convenience only and shall not affect the
construction of this Agreement.
1.4 The Appendices shall be considered as an integral part of this Agreement.
1.5 Words importing one gender include all other genders and words importing
the singular include the plural and vice versa.
1.6 Any covenant by a party not to do an act or thing shall be deemed to
include an obligation not to permit or suffer such act or thing to be done
by another person.
2. Term
This Agreement shall commence on the date shown hereinabove and shall
continue until and unless terminated in accordance with hereunder.
3. Nature of Collaboration
3.1 XXXXX and MEDICHEM hereby mutually agree to cooperate with each other to
form a COMPANY for the purpose of taking the COMPOUND through its clinical
trials which shall start as soon as such trials are approved by the FDA and
to comply with and achieve the Benchmarks for the development thereof as
set out in Appendix D to the Patent License Agreement between MEDICHEM and
the National Institutes of Health (further set out in Appendix C hereof).
3.2 The COMPANY shall seek the requisite approvals of the FDA and any other
governing bodies (hereinafter referred to as "the regulatory authorities")
for the conduct of clinical trials for the COMPOUND and comply with all the
conditions and requirements set out in the approvals by the regulatory
authorities.
3.3 The COMPANY shall seek the approvals of the regulatory authorities in the
United States of America and those of other countries for the manufacture,
use, marketing and sale of the PRODUCT.
3.4. Upon approvals from the regulatory authorities for the manufacturing of
the PRODUCT and its medical application, the parties hereto shall proceed,
either through the COMPANY itself or by arrangements with other parties (to
be mutually agreed upon by XXXXX and MEDICHEM), to have the PRODUCT
manufactured, distributed and sold both in the United States of America and
abroad.
3.5 MEDICHEM shall make available to the COMPANY, at MEDICHEM's standard cost,
the scientists to undertake the research and clinical trials of the
COMPOUND and manufacture of the PRODUCT and shall (subject to Visa and U.S.
immigration clearance) train scientists nominated by XXXXX at MEDICHEM's
facilities in the United States and permit such scientists from Sarawak, to
participate in the clinical trials, development, manufacture, marketings
and distribution of the PRODUCT.
4. Scheme of Collaboration
4.1 XXXXX and MEDICHEM agree to have incorporated, under United States laws, a
COMPANY, with limited liability, whose shares shall be owned by the parties
hereto in the following proportions:-
XXXXX
(as agent and nominee of the State Government): 50%
XXXXX'X shares are to be obtained by making subscription payments in
accordance with Subscription Agreement. (Appendix D).
MEDICHEM: 50%.
MEDICHEM's shares are to be obtained by contribution of MEDICHEM
Intellectual Property Rights and shall vest automatically according to
Appendix E.
4.2 The COMPANY shall be known as SARAWAK MEDICHEM PHARMACEUTICALS, INC.,
or such other name as may be approved by the Secretary of State of
Delaware, United States of America.
4.3 (a) The COMPANY'S principal business and activity is to undertake the
research work and carry out clinical trials for the COMPOUND and
thereafter, to carry out research and study into other plant materials
for their medicinal properties.
(b) In the event of a successful development of the PRODUCT, the parties,
as shareholders of the COMPANY, shall mutually agree upon the mode and
manner for undertaking the commercialization of the PRODUCT, in
particular, manufacturing, sale and distribution thereof either
through the COMPANY or such third parties as may be mutually agreed by
XXXXX and MEDICHEM. In making this determination both parties will
take into consideration the following:
(i) capital expenditure that may be required for the
commercialization of the PRODUCT,
(ii) the most efficient and cost effective manner for the manufacturing,
promoting and distributing thereof.
4.4 The objects, constitution and articles of association of the COMPANY shall
be in the document set out in Appendix F, the provision of this appendix
both parties hereto may both mutually agree in writing to modify, alter, or
amend the provisions of Appendix F.
4.5 All Patents, License Agreements and Approvals relating to the development
of the PRODUCT shall be assigned or exclusively licensed to the COMPANY
upon payment by XXXXX of the sum of US $1,200,000 to the COMPANY as the
first payment for subscription of shares. These funds are to be used for
the attainment of the first benchmark stipulated in Appendix D.
5. WARRANTIES AND UNDERTAKINGS
5.1 MEDICHEM undertakes that its scientists whose names appear in Appendix G
will carry out for the COMPANY all research and trials envisaged under the
Project and throughout the duration of this Agreement. MEDICHEM will be
reimbursed for services of MEDICHEM scientists at a rate approved by the
COMPANY's Board of Directors.
5.2 MEDICHEM warrants that all the scientists named in Appendix G possess the
requisite knowledge, skill and experience to undertake the research and
trials described hereinabove, and will undertake such responsibilities to
the best of their professional competence and according to the highest
standard of professional conduct and ethics.
5.3 MEDICHEM undertakes to recruit, engage, appoint, or involve other
scientists for the COMPANY whose skills and professional abilities are
required for the successful
implementation of the Project or for the development and commercialization
of the PRODUCT in addition to or in substitution of those scientists named
in Appendix G.
5.4 MEDICHEM undertakes to procure or obtain for the COMPANY from the
scientists named in Appendix G and any scientists recruited or appointed
under clause 5.3, written undertakings in the form acceptable to the State
Government, that they will not make any unauthorised use or disclosure of
any data, findings or knowledge acquired that may or come into their
possession during or in the course of their involvement or participation in
the Project.
5.5 MEDICHEM warrants that no other person has any claim, interest or right
whatsoever to any of the Patents, and that the same can be validly be
assigned to the COMPANY and that the COMPANY shall have absolute right and
ownership of the Patents and entitled to custody and control of the
certificates and the documentary evidence relating thereto except as that
provided in Appendices A, B and C.
5.6 XXXXX warrants that it has the authority to enter into this Agreement on
behalf of the State Government and has secured funds to meet the payments
due under this Agreement.
5.7 XXXXX undertakes to procure or obtain for the COMPANY from its scientists
involved in the Project, a written undertaking, in a form acceptable to
MEDICHEM, that they will not make any unauthorized use or disclosure of any
date, findings, or knowledge acquired or come into their possession during
or in the course of their involvement or participation in the Project.
5.8 Neither XXXXX nor MEDICHEM shall, during the subsistence of the Agreement
enter into or establish any relationship, arrangement or collaboration with
any other parties or institution for the purpose of undertaking any
research, study, trial, manufacture, production, distribution, or sale of
the PRODUCT, the COMPOUND or any analogs or derivatives thereof without the
prior written consent of the other party.
6. FUNDS FOR PROJECT AND PAID UP CAPITAL OF COMPANY
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6.1 MEDICHEM has estimated that the costs of both Phases of the clinical trials
for the COMPOUND would have US $21,000,000 particulars of which are as
follows:
Phase Amount
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(a) Phase 1A/1B US $ 6,000,000
(b) Phase II US $15,000,000
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Total U.S. $21,000,000
A detailed schedule for the disbursement of the above mentioned sum is
found in Appendix D hereto.
6.2 The clinical trials shall be undertaken by the Company from funds provided
as follows:-
(i) XXXXX will provide to the COMPANY a total sum of US$9,000,000 through
subscription in COMPANY stocks to cover the full costs of the Phase
1A/1B clinical trials and part of the costs of Phase II of the trials.
The sum of US $9,000,000 shall be made available in the manner and at
the times set out in subscription Appendix D, subject always to the
condition that prior to each payment the results of the clinical
trials are shown to be satisfactory and the benchmarks stipulated in
Appendix D are attained. The COMPANY shall issue
stocks in accordance with the provisions of Appendices D and E within
30 days from the date of the subscription payment.
(ii) MEDICHEM shall be issued shares in the COMPANY equivalent to the value
of the MEDICHEM Intellectual Property Rights assigned or licensed to
the COMPANY. Both parties agree that the ultimate value of the
MEDICHEM Intellectual Property Rights assigned or licensed to the
COMPANY shall be US $9,000,000, but the shares for MEDICHEM shall be
vested and be issued at the same time as the shares are issued to
XXXXX, to the intent that the amount of shares issued to XXXXX and
MEDICHEM shall be equal at all material times. Except if XXXXX fails
to make subscription payments, XXXXX shall not receive any further
shares, MEDICHEM shares shall continue to automatically be vested
according to the Schedule E.
(iii) The balance of the sum required to complete the clinical trials of US
$12,000,000 shall be raised by the COMPANY as follows:
(a) through license fees or royalties received by the COMPANY from
the licensing of the rights to manufacture, sale, and
distribution of the PRODUCT to a pharmaceutical company or
companies:
(b) by loans or finance obtained from banks or financial
institutions;
(c) by a combination of (a) and (b);
(d) by loans provided by XXXXX to the COMPANY, or;
(e) by the COMPANY calling for additional working capital from its
shareholders and XXXXX and MEDICHEM will purchase an equal number
of shares to meet the working capital needs of the COMPANY. In
such an event, XXXXX will make available a loan [on terms to be
agreed upon by the parties hereto] to MEDICHEM to subscribe to
the shares of the COMPANY to the intent that MEDICHEM shall
retain 50% equity interest in the COMPANY.
6.3 Both parties shall endeavor to ensure that the COMPANY has sufficient funds
at all material times, to complete the clinical trials for the COMPOUND.
7. Intellectual Property Rights
7.1 Any Product created jointly by the parties in pursuance of this Agreement,
shall belong to the Company at the date of its creation:
(a) Where in the course of developing the PRODUCT Intellectual Property
Rights are brought into existence, such Intellectual Property Rights
SHALL be COMPANY Intellectual Property Rights and be held in the name
of the COMPANY, and the COMPANY'S expense, shall take all reasonable
steps necessary to protect the same by applying for US and Worldwide
Patents and such foreign rights corresponding to them or registrations
of them as may be reasonable.
(b) If at any time during the existence of the COMPANY any Intellectual
Property Rights belonging to the COMPANY or assigned or licensed to
the COMPANY by MEDICHEM are infringed by a third party then the
COMPANY shall take all
reasonable steps necessary to enforce the COMPANY and MEDICHEM
Intellectual Property Rights at COMPANY expense. Both parties shall
use all steps and provide all information and assistance reasonably
required for the purpose of such proceedings. Any sums recovered as a
result of proceedings taken to enforce the COMPANY or MEDICHEM
Intellectual Property Rights shall after deduction of all legal fees
and other expenses incurred in connection with such proceedings by the
parties be paid to the COMPANY'S general account.
8. Termination and breach of Agreement and their consequences.
8.1 This Agreement shall be deemed to have been terminated if:
(a) both XXXXX and MEDICHEM mutually agree in writing not to proceed
further with any stage of the clinical trials of the COMPOUND;
(b) the State Government fails to provide share subscription funds
required for the clinical trials of the COMPOUND in accordance with
the provisions of Clause 6 above or in the manner stipulated and at
the times mentioned in Appendix D hereto or fails, without reasonable
cause, to provide the funds in accordance with clause 6.2 (iii).
8.2.1 Where this Agreement is terminated pursuant to clause 8.1(a) both parties
will be released from their prospective obligations hereunder and any
liabilities of the COMPANY will be settled by the parties hereto equally.
Upon settlement of such liabilities, all patents assigned or licensed to
the COMPANY shall be reassigned back to
MEDICHEM, including rights to clinical trials, and the parties will take
steps to dissolve the COMPANY in accordance with the laws of the State of
Delaware of the United States of America.
8.2.2 Where this Agreement is terminated pursuant to Clause 8.1(b), the
MEDICHEM Intellectual Property Rights shall be reassigned by the COMPANY
back to MEDICHEM, who shall be entitled to continue with the development
of the COMPOUND.
8.3 In the event that the parties are unable to arrive at a joint decision as
required under Clause 8.1(a) and the provisions of Clause 8.1(b) do not
apply on whether or not to proceed further with any stage of the clinical
trials for the PRODUCT that the party that wishes to proceed with the
development of the PRODUCT is entitled to do so, subject to the
following:
(a) in the event that it is XXXXX that does not want to proceed,
MEDICHEM shall have the right but not the obligation to purchase
XXXXX'x shares at the price paid by XXXXX.
(b) in the event it is MEDICHEM that does not wish to proceed, XXXXX
shall have the right, but not the obligation to purchase MEDICHEM's
shares at the price of $9,000,000 US being the price paid by
MEDICHEM.
(c) in the event that the conditions in subparagraphs (a) and (b) above
cannot be fulfilled within a period of six months from the date when
either party gives written notice to the other of its desire not to
proceed with the clinical trial of the
COMPOUND, this Agreement shall be deemed mutually terminated and the
provisions of clause 8.2 shall apply.
8.4. Subject to the provisions of 8.1(b), a breach of any of the provisions of
the Agreement shall not result in its termination, but the party in breach
shall be liable to compensate the other party for all damages and loss
suffered or sustained by the innocent party in consequence of such breach.
9. Profit Sharing
The profits derived from the sale of the PRODUCT when commercialized shall
be shared by the parties hereto in the manner and in the proportion set out
in Appendix H.
10. Nature of this Agreement
This Agreement relates only to the single COMPANY referred to in it and
shall neither constitute either party to it the agent of the other party
nor shall it constitute a partnership between such parties.
11. Taxation
Each of the parties hereto agrees that each shall bear its own liability
for any taxation chargeable in the United States of America or Malaysia in
respect of its participation in this collaboration and each undertakes to
indemnify the other in respect of any such taxation assessed on and paid by
the other in respect of which the former is primarily liable.
12. General
12.1 This Agreement shall be binding on the parties to it and their
respective successors and permitted assigns, provided that neither of
such parties shall be entitled to assign this Agreement or any of its
rights and obligations under this Agreement without the consent of the
other (which consent either party may in its absolute discretion
withhold).
12.2 No exercise or failure to exercise or delay in exercising any right,
power, or remedy vested in either party under or pursuant to this
Agreement shall constitute a waiver by that party of that or any other
right, power, or remedy.
12.3 Each party shall bear its own costs of or in connection with the
preparation and execution of this Agreement.
12.4(a) Neither party hereto shall issue any press release or other public
statement or publish any article or account of any patent findings,
conclusions, or results of any trials carried out under this agreement
without the prior written consent of the other party but such consent
should not be unreasonably withheld.
(b) Both parties shall and also ensure that their respective scientists
and staff keep and maintain complete confidentiality over any
information, data, findings, conclusions, or outcome of any research,
patents, patent applications, approvals, negotiations, discussions,
records pertaining to the PRODUCT, or any activity carried out under
this Agreement.
12.5 This Agreement (together with all agreements and documents executed
contemporaneously with it or referred to in it) constitutes the entire
Agreement between
the parties in relation to its subject matter and supersedes all prior
Agreements and undertakings whether oral or written with respect to
that subject matter and no variation of this Agreement shall be
effective unless reduced to writing and signed by or on behalf of a
duly authorised representative of each of the parties to this
Agreement.
12.6 In the event that any term, condition, or provision of this Agreement
is held to be in violation of any applicable law, statute or
regulation, the same shall be deemed to be deleted from this Agreement
and shall be of no force and effect and this Agreement shall remain in
full force and effect as if such term, condition or provision had not
originally been contained in this Agreement. Notwithstanding the
foregoing in the event of any such deletion the parties shall
negotiate in good faith in order to agree to the terms of a mutually
acceptable and satisfactory alternative provision in place of the
provision so deleted.
12.7 This Agreement may be executed in any number of counterparts or
duplicates each of which shall be an original but such counterparts or
duplicates shall together constitute as one and the same Agreement.
12.8 Time shall be of the essence for the purposes of any provision of this
Agreement.
12.9 This Agreement supersedes, overrides, rescinds and revokes all
previous arrangements, agreements, promises, undertakings and deeds
(if any) entered into between the parties which is the subject matter
of this Agreement provided that the provisions of this clause shall
not apply to the Agreement (Appendix B) subsisting between the State
Government and MEDICHEM.
13. Notices
Any notice to be given by either party to this Agreement shall be in
writing and shall be deemed duly served if delivered personally or sent by
telex or facsimile transmission or by prepaid air mail registered post to
the addressee at the address or (as the case may be) the telex or facsimile
number of that party set opposite its name below:
XXXXX'x Address: x/x XXXXX XXXXXXXX XXXXXXX'x XXXXXX
00xx Xxxxx, Xxxxx Bapa Malaysia,
Petra Java. 00000 Xxxxxxx, Xxxxxxx
Xxxxxxxx
Facsimile Number: 60-82-440525
[Marked for the attention of:]
MEDICHEM RESEARCH, INC.
00000 X. Xxx Xxxxxx
Xxxxxx, XX 00000
Telex Number: 000-000-0000
Facsimile Number: 000-000-0000
ATTN: Xx. Xxxxxxx X. Xxxxxx
or at such other address (or telex or facsimile number) as the party to be
served may have notified (in accordance with the provisions of this clause)
for the purposes of this Agreement.
13.2 Any notice sent by telex or facsimile shall be deemed served when
dispatched and any notice served by prepaid air mail registered post shall
be deemed served 10 days after posting to an address in the United States
of America or Malaysia. In proving the service of any notice it will be
sufficient to prove in the case of a letter that such letter was property
stamped, addressed and placed in the post or delivered or left at the
current address if delivered personally and in the case of a telex or
facsimile that such telex or
facsimile transmission was duly dispatched to the telex or facsimile number
of the addressee given above or subsequently notified for the purposes of
this Agreement.
14. Law and jurisdiction
This Agreement shall be governed by and construed in all respects in
accordance with the law of England applicable at the time of the execution
of this Agreement.
15. Arbitration
All disputes which arise out of this Agreement shall be settled by
arbitration in accordance with the conciliation and arbitration rules and
regulations of the International Arbitration Centre in England to which the
parties hereto submit. The arbitrator shall have background and expertise
relating to the issues(s) involved. The arbitration shall be in a mutually
agreed location and the UNCITRAL (United Nations Commission on
International Trade Laws) rules shall apply to such arbitration. The
parties shall share equally the fees and expenses of the arbitration. The
arbitrator's decision shall be binding, final and non-appealable.
IN WITNESS
SIGNED by )
Datuk Wan Ali Tuanku Yubi )
Chairman/Director of )
XXXXX RESEARCH SDN BHD )
under and by virtue of a )
Resolution of its Board of Directors, ) __________________________________
in the presence of: Datuk Wan Ali Tuanku Yubi
Name of Witness:
__________________________________
Datuk X.X. Xxxx
Address: State Attorney-General's Xxxxxxxx,
Kuching.
Occupation: State Attorney-General, Sarawak
SIGNED by )
Xx. Xxxxxxx X. Xxxxxx )
President, for and on behalf of )
MEDICHEM RESEARCH INC. ) __________________________________
in the presence of: ) Xx. Xxxxxxx X. Xxxxxx
Name of Witness:
Address:
Occupation:
APPENDIX A
MEDICHEM/NCI LICENSE L-135-95
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NATIONAL INSTITUTES OF HEALTH
CENTERS FOR DISEASE CONTROL
PATENT LICENSE AGREEMENT - EXCLUSIVE
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COVER PAGE
_____________________________________________________________
For Office of Technology Transfer/NIH internal use only:
_____________________________________________________________
Patent License Number: L-135-94
Serial Numbers of Licensed Patents: USPA SN 07/861.249
SN 08/065,618
Licensee: MediChem Research, Inc.
CRADA Number (if applicable):
Additional Remarks:
_____________________________________________________________
This Patent License Agreement, hereinafter referred to as the "Agreement,"
consists of this Cover Page, an attached Agreement, a Signature Page, Appendix A
((Patent or Patent Application) , Appendix B (Fields of Use and Territory),
Appendix C (Royalties), Appendix D (Modifications), and Appendix E (Benchmarks).
This Cover Page serves to identify the Parties to this Agreement:
1) The National Institutes of Health ("NIH") or the Centers for Disease
Control ("CDC"), hereinafter singly or collectively referred to as
"PHS," agencies of the United States Public Health Service within the
Department of Health and Human Services ("DHHS") ; and
2) The person, corporation, or institution identified above and/or on
the Signature Page, having offices at the address indicated on the
Signature Page, hereinafter referred to as "Licensee."
PHS and Licensee agree as follows:
1. BACKGROUND
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1.01 In the course of conducting biomedical and behavioral research, PHS
investigators made inventions that may have commercial applicability.
1.02 By assignment of rights from PHS employees and other inventors, DHHS,
on behalf of the United States Government, owns intellectual property
rights claimed in any United States and foreign patent applications
or patents corresponding to the assigned inventions. DHHS also owns
any tangible embodiments of these inventions actually reduced to
practice by PHS.
1.03 The Assistant Secretary for Health of DHHS has delegated to PHS the
authority to enter into this Agreement for the licensing of rights to
these inventions under 35 U.S.C. (S)(S)200-212, the Federal
Technology Transfer Act of 1986, 15 U.S.C.
(S)3710a, and/or the regulations governing the licensing of
Government-owned inventions, 37 CFR Part 404.
1.04 PHS desires to transfer these inventions to the private sector
through commercialization licenses to facilitate the commercial
development of products and processes for public use and benefit.
1.05 Licensee desires to acquire commercialization rights to certain of
these inventions in order to develop processes, methods, or
marketable products for public use and benefit.
2. DEFINITIONS
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2.01 "Licensed Patent Rights" shall mean:
a) U.S. patent applications and patents listed in Appendix A, all
divisions and continuations of these applications, all patents
issuing from such applications, divisions, and continuations, and
any reissues, reexaminations, and extensions or all such patents;
b) to the extent that the following contain one or more claims
directed to the invention or inventions claimed in a) above: i)
continuations-in-part of a) above; ii) all divisions and
continuations of these continuations-in-part; iii) all patents
issuing from such continuations-in-part, divisions, and
continuations; and iv) any reissues, reexaminations, and
extensions of all such patents;
c) to the extent that the following contain one or more claims
directed to the invention or inventions claimed in a) above:
Licensed Products in the Licensed Fields of Use and to practice
and have practiced any Licensed Processes in the Licensed Fields
of Use.
3.02 This Agreement confers no license or rights by implication, estoppel,
or otherwise under any patent applications or patents of PHS other
than Licensed Patent Rights regardless of whether such patents are
dominant or subordinate to Licensed Patent Rights.
4. SUBLICENSING
------------
4.01 Upon written approval by PHS, which approval will not be unreasonably
withheld, Licensee may enter into sublicensing agreements under the
Licensed Patent Rights.
4.02 Licensee agrees that any sublicenses granted by it shall provide that
the obligations to PHS of Paragraphs 5.01-5.05, 8.01, 10.01, 10.02,
12.05, and 13.08-13.11 of this Agreement shall be binding upon the
sublicensee as if it were a party to this Agreement. Licenses further
agrees to attach copies of these Paragraphs to all sublicense
agreements.
4.03 Any sublicenses granted by Licensee shall provide for the termination
of the sublicense, or the conversion to a license directly between
such sublicensees and PHS, at the option of the sublicensee, upon
termination of this Agreement under Article 13. Such conversion is
subject to PHS approval and contingent upon acceptance by the
sublicensee of the remaining provisions of this Agreement.
4.04 Licensee agrees to forward to PHS a copy of each fully executed
sublicense agreement postmarked within sixty (60) days of the
execution of such agreement.
5. STATUTORY AND PHS REQUIREMENTS AND RESERVED GOVERNMENT RIGHT
------------------------------------------------------------
5.01 PHS reserves on behalf of the Government an irrevocable,
nonexclusive, nontransferable, royalty-free license for the practice
of all inventions licensed under the Licensed Patent Rights
throughout the world by or on behalf of the Government and an behalf
of any foreign government or international organization pursuant to
any existing or future treaty or agreement to which the Government is
a signatory.
5.02 Licensee agrees that products used or sold in the United States
embodying Licensed Products or produced through use of Licensed
Processes shall be manufactured substantially in the United States,
unless a written waiver is obtained in advance from PHS.
5.03 Licensee acknowledges that PHS may enter into future Cooperative
Research and Development Agreements (CRADAs) under the Federal
Technology Transfer Act of 1986 that relate to the subject matter of
this Agreement. Licensee Agrees not to unreasonably deny requests for
sublicense or cross-license rights from such future collaborators
with PHS when acquiring such derivative rights is necessary in order
to make a CRADA project feasible. Licensee may request an opportunity
to join as a party to the proposed CRADA.
5.04 DHHS has responsibility for funding basic biomedical research, for
funding medical treatment through programs such as Medicare and
Medicaid, for providing direct medical care and, more generally, for
protecting the health and safety of the public. Because of these
responsibilities, and the public investment in the research that
culminated in the Licensed Patent Rights, PHS may require Licensee to
submit documentation in confidence showing a reasonable relationship
between the pricing of a Licensed Product, the public investment in
that product, and the health and safety needs of the public. This
paragraph shall not restrict the right of Licensee to price a
Licensed Product or Licensed Process so as to obtain a reasonable
profit for its sale or use. This Paragraph 5.04 does not permit PHS
to set or dictate prices for Licensed Products or Licensed Processes.
5.05 In addition to the reserved license of Paragraph 5.01 above, PHS
reserves the right to grant nonexclusive licenses to make and to use
the inventions defined by the Licensed Patent Rights for purposes of
research involving the inventions
themselves, and not for purposes of commercial manufacture or in lieu
of purchase if the inventions are available as commercial products
for research purposes. The purpose of this research license is to
encourage basic research, whether conducted at an academic or
corporate facility. In order to safeguard the Licensed Patent Rights,
however, PHS shall consult with Licensee before granting to
commercial entities a research license or providing to them research
samples of the materials claimed in the Licensed Patent Rights.
6. ROYALTIES AND REIMBURSEMENT
---------------------------
6.01 Licensee agrees to pay to PHS a noncreditable, nonrefundable license
issue royalty as set forth in Appendix C within thirty (30) days from
the date that this Agreement becomes effective.
6.02 Licensee agrees to pay to PHS a nonrefundable minimum annual royalty
as set forth in Appendix C. The minimum annual royalty is due and
payable on January 1 of each calendar year and may be credited
against any earned royalties due for sales made in that year. The
minimum annual royalty due for the first calendar year of this
Agreement may be prorated according to the fraction of the calendar
year remaining between the Effective Date of this Agreement and the
next subsequent January 1.
6.03 Licensee agrees to pay PHS earned royalties as set forth in Appendix
C.
6.04 Licensee agrees to pay PHS benchmark royalties as set forth in
Appendix C.
6.05 A claim of a patent or patent application licensed under this
Agreement shall cease to fall within the Licensed Patent Rights for
the purpose of computing the minimum annual royalty and earned
royalty payments in any given country an the earliest of the dates
that a) the claim has been abandoned but not continued, b) the patent
expires, c) the patent is no longer maintained by the Government, or
d) all claims of the Licensed Patent Rights have been held to be
invalid or unenforceable by an unappealed or unappealable decision of
a court of competent jurisdiction or administrative agency.
6.06 No multiple royalties shall be payable because any Licensed Products
or Licensed Processes are covered by more than one of the Licensed
Patent Rights.
6.07 On sales of Licensed Products by Licensee to sublicensees or
affiliated parties or on sales made in other than an arm's-length
transaction, the value of the Net Sales attributed under this Article
6 to such a transaction shall be that which would have been received
in an arm's-length transaction, based on sales of like quantity and
quality products an or about the time of such transaction.
6.08 As an additional royalty, Licensee agrees to pay PHS, within sixty
(60) days of PHS's submission of a statement and request for payment,
an amount equivalent to all reasonable expenses previously incurred
by PHS in the preparation, filing, prosecution, and maintenance of
Licensed Patent Rights. Licensee further agrees
to pay PHS annually, within sixty (60) days of PHS's submission of a
statement and request for payment, a royalty amount equivalent to all
such future patent expenses incurred during the previous calendar
year, as of the date the statement and request for payment is sent by
PHS to Licensee. Fifty percent (50%) of the cumulative amount of such
payments may be credited against royalties due under Paragraph 6.03;
however, the net royalty payment in any calendar year may not be
lower than the minimum annual royalty specified in Appendix B.
Licensee may elect to surrender its rights in any country of the
Licensed Territory under any Licensed Patent Rights upon sixty (60)
days' written notice to PHS and owe no payment obligation under this
paragraph for subsequent patent-related expenses incurred in that
country.
7. DOMESTIC AND FOREIGN PATENT-FILING, PROSECUTION, AND MAINTENANCE
----------------------------------------------------------------
7.01 PHS agrees to take responsibility for, but to consult with the
Licensee in, the preparation, filing, prosecution, and maintenance of
any and all patent applications or patents included in the Licensed
Patent Rights and shall furnish copies of relevant patent-related
documents to Licensee.
7.02 Each party shall promptly inform the other as to all matters that
come to its attention that may affect the preparation, filing,
prosecution, or maintenance of the Licensed Patent Rights and permit
each other to provide comments and suggestions with respect to the
preparation, filing, and prosecution of Licensed Patent Rights, which
comments and suggestions shall be considered by the other party.
8. RECORD KEEPING
--------------
8.01 Licensee agrees to keep accurate and correct records of Licensed
Products made, used, or sold and Licensed Processes practiced under
this Agreement appropriate to determine the amount of royalties due
PHS. Such records shall be retained for at least five (5) years
following a given reporting period. They shall be available during
normal business hours for inspection at the expense of PHS by an
accountant or other designated auditor selected by PHS for the sole
purpose of verifying reports and payments hereunder. The accountant
or auditor shall only disclose to PHS information relating to the
accuracy of reports and payments made under this Agreement. If an
inspection shows an underreporting or underpayment in excess of five
percent (5%) for any twelve (12) month period, then Licensee shall
reimburse PHS for the cost of the inspection at the time Licensee
pays the unreported royalties, including any late charges as required
by Paragraph 7.06 of this Agreement. All payments required under this
Paragraph shall be due within thirty (30) days of the date PHS
provides Licensee notice of the payment due.
9. REPORT ON PROGRESS, BENCHMARKS, SALES, AND PAYMENTS
---------------------------------------------------
9.01 Prior to signing this Agreement, Licensee has provided to PHS a
written commercialization plan ("Commercial Development Plan") under
which Licensee intends to bring the subject matter of the Licensed
Patent Rights into commercial use. The Commercial Development Plan is
hereby incorporated by reference into this Agreement. Based on this
plan, performance benchmarks are determined as specified in Appendix
E ("Benchmarks")
9.02 Licensee shall provide written annual reports on its product
development progress or efforts to commercialize under the Commercial
Development Plan for each of the Licensed Fields of use within sixty
(60) days after December 31 of each calendar year. These progress
reports shall include, but not be limited to: progress on research
and development, status of applications for regulatory approvals,
manufacturing, sublicensing, marketing, and sales during the
preceding calendar year, as well as plans for the present calendar
year. If reported progress differs from that projected in the
Commercial Development Plan and Benchmarks, Licensee shall explain
the reasons for such differences. Licensee may propose amendments in
any such annual report to the Commercial Development Plan, acceptance
of which by PHS may not unreasonably be denied. Licensee agrees to
provide any additional data reasonably required by PHS to evaluate
Licensee's performance. Licensee may amend the Benchmarks at any time
upon written consent by PHS. PHS shall not unreasonably withhold
approval of any request of Licensee to extend the time periods of
this schedule if such request is supported by a reasonable showing by
Licensee of diligence in its performance under the Commercial
Development Plan and toward bringing the Licensed Products to the
point of practical application as defined in 37 CFR 404.3(d). License
shall amend the Commercial Development Plan and Benchmarks at the
request of PHS to address any Licensed Fields of Use not specifically
addressed in the plan originally submitted.
9.03 Licensee shall report to PHS the date of the First Commercial Sale in
each country in the Licensed Territory within thirty (30) days or
such occurrence.
9.04 Licensee shall submit to PHS within sixty (60) days after each
calendar half-year ending June 30 and December 31 a royalty report
setting forth for the preceding half-year period the amount of the
Licensed Products sold or Licensed Processes practiced by or on
behalf of Licensee in each country within the Licensed Territory, the
Net Sales, and the amount of royalty accordingly due. With each such
royalty report, Licensee shall submit payment or the earned royalties
due. If no earned royalties are due to PHS for any reporting period,
the written report shall so state. The royalty report shall be
certified as correct by an authorized officer of Licensee and shall
include a detailed listing of all deductions made under Paragraph
2.05 to determine Net Sales made under Article 6 to determine
royalties due.
9.05 Licensee agrees to forward semi-annually to PHS a copy of such
reports received by Licensee from its sublicensees during the
preceding half-year period as shall
be pertinent to a royalty accounting to PHS by Licensee for
activities under the sublicense.
9.06 Royalties due under Article 6 shall be paid in U.S. dollars. For
conversion of foreign currency to U.S. dollars, the conversion rate
shall be the rate quoted in The Wall Street Journal on the day that
the payment is due. All checks and bank drafts shall be drawn on
United States banks and shall be payable to NIH/Patent Licensing at
the address shown on the Signature Page below. Any loss of exchange,
value, taxes, or other expenses incurred in the transfer or
conversion to U.S. dollars shall be paid entirely by Licensee. All
royalty payments due under this Agreement shall be mailed to the
following address: NIH, X.X. Xxx 000000, Xxxxxxxxxx, Xxxxxxxxxxxx
00000-0000. The royalty report required by paragraph 9.04 of this
Agreement shall accompany each such payment and a copy of such report
shall also be mailed to PHS at its address for notices indicated on
the Signature Page of this Agreement.
9.07 Late charges will be applied to any overdue payments as required by
the U.S. Department of Treasury in the Treasury Fiscal Requirements
Manual, Section 8025.40. The payment of such late charges shall not
prevent PHS from exercising any other rights it may have as a
consequence of the lateness of any payment.
9.08 All plans and reports required by this Article 9 and marked
"confidential" by Licensee shall be treated by PHS as commercial and
financial information obtained from a person and as privileged and
confidential and, to the extent permitted by law, shall not be
subject to disclosure under the Freedom of Information Act, 5
U.S.C. (S)552.
10. PERFORMANCE
-----------
10.01 Licensee shall use its reasonable best efforts to introduce the
Licensed Products into the commercial market or apply the Licensed
Processes to commercial use as soon as practicable. "Reasonable best
efforts" for the purpose of this provision shall include, but not be
limited to, adherence to the Commercial Development Plan and
performance of the Benchmarks. The efforts of a sublicensee shall be
considered the efforts of Licensee.
10.02 Upon the First Commercial Sale, until the expiration of this
Agreement, Licensee shall use its reasonable best efforts to keep
Licensed Products and Licensed Processes reasonably accessible to the
public.
11. INFRINGEMENT AND PATENT ENFORCEMENT
-----------------------------------
11.01 PHS and Licensee agree to notify each other promptly of each
infringement or possible infringement, as well as any facts which may
affect the validity, scope, or enforceability of the Licensed Patent
Rights of which either Party becomes aware.
11.02 Pursuant to this Agreement and the provisions of Chapter 29 of Title
35, United States Code, Licensee may a) bring suit in its own name,
at its own expense, and
on its own behalf for infringement of presumably valid claims in the
Licensed Patent Rights; b) in any such suit, enjoin infringement and
collect for its use, damages, profits, and awards of whatever nature
recoverable for such infringement; and c) settle any claim or suit
for infringement of the Licensed Patent Rights-provided, however,
that PHS and appropriate Government authorities shall have the first
right to take such actions and shall have a continuing right to
intervene in such suit. Licensee shall take no action to compel the
Government either to initiate or to join in any such suit for patent
infringement. Licensee may request the Government to initiate or join
any such suit if necessary to avoid dismissal of the, suit. Should
the Government be made a party to any such suit, Licensee shall
reimburse the Government for any costs, expenses, or fees which the
Government incurs as a result of such motion or other action,
including any and all costs incurred by the Government in opposing
any such motion or other action. Upon Licensee's payment of all costs
incurred by the Government as a result of Licensee's joinder motion
or other action, these actions by Licensee will not be considered a
default in the performance of any material obligation under this
Agreement. In all cases, Licensee agrees to keep PHS reasonably
apprised of the status and progress of any litigation. Before
Licensee commences an infringement action, Licensee shall notify PHS
and give careful consideration to the views of PHS and to any
potential effects of the litigation on the public health in deciding
whether to bring suit.
11.03 In any infringement action commenced under Paragraph 11.02, the
expenses including costs, fees, attorney fees, and disbursements,
shall be paid by Licensee. Up to fifty percent (50%) of such expenses
may be credited against the royalties payable to PHS under Paragraph
6.03 under the Licensed Patent Rights in the country in which such a
suit is filed. In the event that fifty percent (50%) of such expenses
exceed the amount of royalties payable by Licensee in any calendar
year, the expenses in excess may be carried over as a credit on the
same basis into succeeding calendar years. A credit against
litigation expenses, however, may not reduce the royalties due in any
calendar year to less than the minimum annual royalty. Any recovery
made by Licensee, through court judgment or settlement, first shall
be applied to reimburse PHS for royalties withheld as a credit
against litigation expenses and then to reimburse Licensee for its
litigation expense. Any remaining recoveries shall be shared equally
by Licensee and PHS.
11.04 PHS shall cooperate fully with Licensee in connection with an
infringement action initiated under Paragraph 11.02. PHS agrees
promptly to provide access to all necessary documents and to render
reasonable assistance in response to a request by Licensee.
11.05 In the event that a declaratory judgment action alleging invalidity
or non-infringement of any of the Licensed Patent Rights shall be
brought against Licensee or raised by way of counterclaim or
affirmative defense in an infringement suit brought by Licensee under
Paragraph 11.02, pursuant to this Agreement and the provisions of
Chapter 29 of Xxxxx 00, Xxxxxx Xxxxxx Code or other statutes,
Licensee may a) defend the suit in its own name, at its own
expense, and on its own behalf for presumably valid claims in the
Licensed Patent Rights; b) in any such suit, ultimately to enjoin
infringement and to collect for its use, damages, profits, and
awards of whatever nature recoverable for such infringement; and c)
settle any claim or suit for declaratory judgment involving the
Licensed Patent Rights-provided, however, that PHS and appropriate
Government authorities shall have the first right to take such
actions and shall have a continuing right to intervene in such suit.
Licensee shall take no action to compel the Government either to
initiate or to join in any such declaratory judgment action.
Licensee may request the Government to initiate or join any such
suit if necessary to avoid dismissal of the suit. Should the
Government be made a party to any such suit by motion or any other
action of Licensee, Licensee shall reimburse the Government for any
costs, expenses, or fees which the Government incurs as a result of
such motion or other action. Upon Licensee's payment of all costs
incurred by the Government as a result of Licensee's joinder motion
or other action, these actions by Licensee will not be considered a
default in the performance of any material obligation under this
Agreement. If Licenses elects not to defend against such declaratory
judgment action, PHS, at its option, may do so at its own expense.
In all cases, Licensee agrees to keep PHS reasonably apprised of the
status and progress of any litigation. Before Licensee commences an
infringement action, Licensee shall notify PHS and give careful
consideration to the views of PHS and to any potential effects of
the litigation on the public health in deciding whether to bring
suit.
12. NEGATION OF WARRANTIES AND INDEMNIFICATION
------------------------------------------
12.01 PHS offers no warranties other than those specified in Article 1.
12.02 PHS does not warrant the validity of the Licensed Patent Rights and
makes no representations whatsoever with regard to the scope of the
Licensed Patent Rights, or that the Licensed Patent Rights may be
exploited without infringing other patents or other intellectual
property rights of third parties.
12.03 PHS MAKES NO WARRANTIES, EXPRESSED OR IMPLIED, OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE OF ANY SUBJECT MATTER DEFINED BY
THE CLAMS OF THE LICENSED PATENT RIGHTS.
12.04 PHS does not represent that it will commence legal actions against
third parties infringing the Licensed Patent Rights.
12.05 Licenses shall indemnify and hold PHS, its employees, students,
fellows, agents, and consultants harmless from and against all
liability, demands, damages, expenses, and losses, including but not
limited to death, personal injury, illness, or property damage in
connection with or arising out of a) the use by or on behalf of
Licensee, its sublicensees, directors, employees, or third parties
of any Licensed Patent Rights, or b) the design, manufacture,
distribution, or use of any Licensed Products, Licensed Processes or
materials, or other products or processes
developed in connection with or arising out of the Licensed Patent
Rights. Licensee agrees to maintain a liability insurance program
consistent with sound business practice.
13. TERMINATION, AND MODIFICATION OF RIGHTS
---------------------------------------
13.01 This Agreement is effective when signed by all parties and shall
extend to the expiration of the last to expire of the Licensed
Patent Rights unless sooner terminated as provided in this
Article 13.
13.02 In the event that Licensee is in default in the performance of any
material obligations under this Agreement, and if the default has
not been remedied within ninety (90) days after the date of notice
in writing of such default, PHS may terminate this Agreement by
written notice.
13.03 At least thirty (30) days prior to filing a petition in bankruptcy,
Licensee must inform PHS in writing of its intention to file the
petition in bankruptcy or of a third party's intention to file an
involuntary petition in bankruptcy.
13.04 In the event that Licensee becomes insolvent, files a petition in
bankruptcy, has such a petition filed against it, determines to file
a petition in bankruptcy, or receives notice of a third party's
intention to file an involuntary petition in bankruptcy, Licensee
shall immediately notify PHS in writing. Furthermore, PHS shall have
the right to terminate this Agreement by giving Licensee written
notice. Termination of this Agreement is effective upon Licensee's
receipt of the written notice.
13.05 Licensee shall have a unilateral right to terminate this Agreement
and/or any licenses in any country by giving PHS sixty (60) days'
written notice to that effect.
13.06 PHS shall specifically have the right to terminate or modify, at its
option, this Agreement, if PHS determines that the Licenses: 1) is
not executing the Commercial Development Plan submitted with its
request for a license and the Licensee cannot otherwise demonstrate
to PHS's satisfaction that the Licensee has taken, or can be
expected to take within a reasonable time, effective steps to
achieve practical application of the Licensed Products or Licensed
Processes; 2) has not achieved the Benchmarks as may be modified
under Paragraph 9.02; 3) has willfully made a false statement of, or
willfully omitted, a material fact in the license application or in
any report required by the license agreement; 4) has committed a
substantial breach of a covenant or agreement contained in the
license; 5) is not keeping Licensed Products or Licensed Processes
reasonably available to the public after commercial use commences;
6) cannot reasonably satisfy unmet health and safety needs; or 7)
cannot reasonably justify a failure to comply with the domestic
production requirement of Paragraph 5.01 unless waived. In making
this determination, PHS will take into account the normal course of
such commercial development programs conducted with sound and
reasonable business practices and judgment and the annual reports
submitted by Licensee under Paragraph 9.02. Prior to invoking this
right, PHS shall give written notice to Licensee providing Licensee
specific notice of, and a ninety (90) day opportunity to respond to,
PHS's concerns as to the previous items 1) to 7). If Licensee fails
to alleviate PHS's concerns as to the previous items 1) to 7) or
fails to initiate corrective action to PHS's satisfaction, PHS may
terminate this Agreement.
13.07 When the public health and safety so require, and after written
notice to Licensee providing Licensee a sixty (60) day opportunity
to respond, PHS shall have the right to require Licensee to grant
sublicenses to responsible applicants, on reasonable terms, in any
Licensed Fields of Use under the Licensed Patent Rights, unless
Licensee can reasonably demonstrate that the granting of the
sublicense would not materially increase the availability to the
public of the subject matter of the Licensed Patent Rights. PHS will
not require the granting of a sublicense unless the responsible
applicant has first negotiated in good faith with Licensee.
13.08 PHS reserves the right according to 35 U.S.C. (S)209(f) (4) to
terminate or modify this Agreement if it is determined that such
action is necessary to meet requirements for public use specified by
Federal regulations issued after the date of the license and such
requirements are not reasonably satisfied by Licensee.
13.09 Within thirty (30) days of receipt of written notice of PHS's
unilateral decision to modify or terminate this Agreement, Licensee
may, consistent with the provisions of 37 CFR. (S)404.11, appeal the
decision by written submission to the Director of NIH or designee.
The decision of the NIH Director or designee shall be the final
agency decision. Licensee may thereafter exercise any and all
administrative or judicial remedies that may be available.
13.10 Within ninety (90) days of termination of this Agreement under this
Article 13 or expiration under Paragraph 3.02, a final report shall
be submitted by Licensee. Any royalty payments, including those
related to patent expense, due to PHS shall become immediately due
and payable upon termination or expiration. If terminated under this
Article 13, sublicensees may elect to convert their sublicenses to
direct licenses with PHS pursuant to Paragraph 4.03.
14. GENERAL PROVISIONS
------------------
14.01 Neither Party may waive or release any of its rights or interests in
this Agreement except in writing. The failure of the Government to
assert a right hereunder or to insist upon compliance with any term
or condition of this Agreement shall not constitute a waiver of that
right by the Government or excuse a similar subsequent failure to
perform any such term or condition by Licensee.
14.02 This Agreement constitutes the entire agreement between the Parties
relating to the subject matter of the Licensed Patent Rights, and
all prior negotiations,
representations, agreements, and understandings are merged into,
extinguished by, and completely expressed by this Agreement.
14.03 The provisions of this Agreement are severable, and in the event
that any provision of this Agreement shall be determined to be
invalid or unenforceable under any controlling body of law, such
determination shall not in any way affect the validity or
enforceability of the remaining provisions of this Agreement.
14.04 If either Party desires a modification to this Agreement, the
Parties shall, upon reasonable notice of the proposed modification
by the Party desiring the change, confer in good faith to determine
the desirability of such modification. No modification will be
effective until a written amendment is signed by the signatories to
this Agreement or their designees.
14.05 The construction, validity, performance, and effect of this
Agreement shall be governed by Federal law as applied by the Federal
courts in the District of Columbia.
14.06 All notices required or permitted try this Agreement shall be given
by prepaid, first class, registered or certified mail properly
addressed to the other Party at the address designated an the
following Signature Page, or to such other address as may be
designated in writing by such other Party, and shall be effective as
of the date of the postmark of such notice.
14.07 This Agreement shall not be assigned by Licensee except a) with the
prior written consent of PHS, such consent to be reasonably given;
or b) as part of a sale or transfer of substantially the entire
business of Licensee relating to operations which concern this
Agreement. Licensee shall notify PHS within ten (10) days of any
assignment of this Agreement by Licensee.
14.08 Licensee agrees in its use of any PHS-supplied materials to comply
with all applicable statutes, regulations, and guidelines, including
Public Health Service and National Institutes of Health regulations
and guidelines. Licensee agrees not to use the materials for
research involving human subjects or clinical trials in the United
States without complying with 21 CFR Part 50 and 45 CFR Part 46.
License agrees not to use the materials for research involving human
subjects or clinical trials outside of the United States without
notifying PHS, in writing, of such research or trials and complying
with the applicable regulations of the appropriate national control
authorities. Written notification to PHS of research involving human
subjects or clinical trials outside of the United States shall be
given no later than sixty (60) days prior to commencement of such
research or trials.
14.09 Licensee acknowledges that it is subject to and agrees to abide by
the United States laws and regulations (including the Export
Administration Act of 1979 and Arms Export Control Act) controlling
the export of technical data, computer software, laboratory
prototypes, biological material, and other commodities. The
transfer of such items may require a license from the cognizant
agency of the U.S. Government or written assurances by Licensee that
it shall not export such items to certain foreign countries without
prior approval of such agency. PHS neither represents that a license
is or is not required or that, if required, it shall be issued.
14.10 Licensee agrees to xxxx the Licensed Products or their packaging
sold in the United States with all applicable U.S. patent numbers
and similarly to indicate "Patent Pending" status. All Licensed
Products manufactured in, shipped to, or sold in other countries
shall be marked in such a manner as to preserve PHS patent rights in
such countries.
14.11 By entering into this Agreement, PHS does not directly or indirectly
endorse any product or service provided, or to be provided, by
Licensee whether directly or indirectly related to this Agreement.
Licensee shall not state or imply that this Agreement is an
endorsement by the Government, PHS, any other Government
organizational unit, or any Government employee. Additionally,
Licensee shall not use the names of NIH, CDC, or PHS or their
employees in any advertising, promotional, or sales literature
without the prior written consent of PHS.
14.12 The Parties agree to attempt to settle amicably any controversy or
claim arising under this Agreement or a breach of this Agreement,
except for appeals of modification or termination decisions provided
for in Article 13. Licensee agrees first to appeal any such
unsettled claims or controversies to the Director of NIH, or
designee, whose decision shall be considered the final agency
decisions Thereafter, Licensee may exercise any administrative or
judicial remedies that may be available.
14.13 Nothing relating to the grant of a license, nor the grant itself,
shall be construed to confer upon any person any immunity from or
defenses under the antitrust laws or from a charge of patent misuse,
and the acquisition and use of rights pursuant to 37 CFR Part 404
shall not be immunized from the operation of state or Federal law by
reason of the source of the grant.
14.14 Paragraphs 4.03, 8.01, 9.06, 9.07, 12.01-12.05, 13.09, 13.10, and
14.12 of this Agreement shall survive termination of this Agreement.
SIGNATURES BEGIN ON NEXT PAGE
PHS PATENT LICENSE AGREEMENT-EXCLUSIVE
---------------------------------------
SIGNATURE PAGE
--------------
FOR PHS:
By:____________________________________________ _________________
Xxxxxxx XxXxxxx, X.X. Date
Deputy Director, Office of Technology Transfer
National Institutes of Health
Mailing Address for Notices:
Office of Technology Transfer
National Institutes of Health
0000 Xxxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
Form Licensee:
By:____________________________________________ _________________
Xxxxxxx X. Xxxxxx, Ph.D. Date
President
MediChem Research, Inc.
Mailing Address for Notices:
MediChem Research, Inc.
00000 Xxxxx Xxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
APPENDIX A - Patent or Patent Application
-----------------------------------------
Patent or Patent Application:
USPA SN 07/861,249 "Calanolides, Novel Antiviral Compounds, Compositions
and Uses Thereof"
USPA SN 08/065,618 (CIP of SN 07/861,249) "Calanolides, Novel Antiviral
Compounds, Compositions and Uses Thereof"
APPENDIX B - Licensed Fields of Use and Territory
-------------------------------------------------
Licensed Territory: World-wide, including all countries, states, provinces and
territories.
Licensed Fields of Use: Treatment of viral infection, viral-related infection
or viral-related disease in humans.
APPENDIX C - Royalties
----------------------
Royalties:
Licensee agrees to pay to PHS a noncreditable, nonrefundable license issue
royalty in the amount of Fifty Thousand Dollars ($50,000.00) according to the
-----------------------------------
following payment schedule:
A. Fifteen Thousand Dollars ($15,000.00) within thirty (30) days from the
-------------------------------------
Effective Date; and
B. Thirty-Five Thousand Dollars ($35,000.00) within one (1) year from the
-----------------------------------------
Effective Data less a credit of up to Twenty-Five Thousand Dollars
($25,000.00) for license issue royalties paid by Licensee to government of
Sarawak for the manufacture and sale of Licensed Products.
Licensee agrees to pay to PHS a nonrefundable minimum annual royalty according
to the following schedule:
A. Five Thousand Dollars ($5,000.00) beginning in 1996 less an annual
---------------------------------
credit of up to Two Thousand Five Hundred Dollars ($2,500.00) for minimum
annual royalties paid by Licensee to government of Sarawak for the
manufacture and sale of Licensed Products; and
B. Ten Thousand Dollars ($10,000.00) for 1998 and subsequent years less
---------------------------------
an annual credit of up to Five Thousand Dollars ($5,000.00) for minimum
annual royalties paid by Licensee to government of Sarawak for the
manufacture and sale of Licensed Products.
Licensee agrees to pay PHS earned royalties on Net Sales as follows:
A. Four percent (4.0%) of Net Sales by Licensee or an Affiliate of
-------------------
Licensee of all Licensed Products manufactured or sold in the Licensed
Territory; and;
B. Licensee shall be entitled to a One Hundred percent (100%) credit
against PHS earned royalty payments for earned royalty payments Licensee
must pay to the government of Sarawak for the manufacture and sale of
Licensed Products. Said reduction, however, shall not reduce the earned
royalty payments to PHS below half of the rate provided for under Paragraph
above.
Licensee agrees to pay PHS Sublicensing Royalties as follows:
A. Four percent (4.0%) of Net Sales by Sublicensee, or an Affiliate of
-------------------
Sublicensee of all Licensed Products manufactured and sold in the Licensed
Territory plus Twenty per cent (20%) of the value of any consideration
received in granting the sublicense.
B. Licensee shall be entitled to a One Hundred percent (100%) credit
against PHS Sublicensing Royalties for sublicensing royalty payments
Licensee must pay to the government of Sarawak. Said reduction, however,
shall not reduce the sublicensing royalty payments to PHS below half of the
rates provided for under Paragraph A above.
Licensee agrees to pay PHS benchmark royalties as follows:
A. Twenty-Five Thousand Dollars ($25,000.00) upon filing of an IND
-----------------------------------------
application in the United States; and
B. Fifty Thousand Dollars ($50,000.00) upon completion of Phase I and
-----------------------------------
initiation of Phase II clinical trials; and
C. One Hundred- Thousand Dollars ($100,000.00) upon completion of Phase
-------------------------------------------
II and initiation of Phase III clinical trials; and
D. Two Hundred Thousand Dollars ($200,000.00) upon filing of a NDA
------------------------------------------
application or equivalent in the United States, Europe or Japan; and
E. Licensee shall be entitled to a One Hundred percent (100%) credit
against PHS benchmark royalties for benchmark royalty payments Licensee
must pay to the government of Sarawak. Said reduction, however, shall not
reduce the benchmark royalty payments to PHS below half of the rates
individually provided for under Paragraphs A through D above. One hundred
percent (100%) of such benchmark royalty payments actually made to PHS may
be credited against royalties due under Paragraph 6.03; however, the net
royalty payment in any calendar year may not be lower than the minimum
annual royalty specified in Appendix C although uncredited benchmark
royalty payments may be carried forward into subsequent years.
APPENDIX D - Modifications
--------------------------
PHS and Licensee agree to the following modifications to the Articles and
Paragraphs of this Agreement:
Article Two
2.09 (new) "Effective Date" shall mean the date when the last party to sign
has executed this Agreement.
Article Five
5.03 (revised) Licenses acknowledges that PHS may enter into future
Cooperative Research and Development Agreements (CRADAs) under the Federal
Technology Transfer Act of 1986 that relate to the subject matter of this
Agreement. Licensee agrees not to unreasonably deny requests for sublicense or
cross-license rights from such future collaborators with PHS when acquiring
such derivative rights is necessary in order to make a CRADA project feasible.
Licensee may request an opportunity to join as a party to the proposed CRADA,
such request not to be unreasonably denied by PHS.
5.04 (revised) DHHS has responsibility for funding basic biomedical
research, for funding medical treatment through programs such as Medicare and
Medicaid, for providing direct medical care and, more generally, for protecting
the health and safety of the public. Because of these responsibilities, and the
public investment in the research that culminated in the Licensed Patent Rights,
Licensee agrees, upon regulatory approval for marketing, to set up a special
patient access program in the United States so that Licensed Products may be
provided to individuals who are unable to afford them.
5.05 (revised) In addition to the reserved license of Paragraph 5.01
above, PHS reserves the right to grant nonexclusive licenses to make and to use,
but not to sell or have sold, the inventions defined by the Licensed Patent
Rights for purposes of research involving the inventions themselves, and not for
purposes of commercial manufacture or in lieu of purchase if the inventions are
available as commercial products for research purposes. The purpose of this
research license is to encourage basic research, whether conducted at an
academic or corporate facility. In order to safeguard the Licensed Patent
Rights, however, PHS shall consult with Licensee before granting to commercial
entities a research license or providing to them research samples of the
materials claimed in the Licensed Patent Rights. In the event that Licenses can
provide convincing written evidence to PHS that a commercial entity that has
been granted a research license to Licensed Patent Rights is developing the
inventions for commercial manufacture or in lieu of purchase if the inventions
are available as commercial products, then Licensee can request that PHS
terminate its research license with such commercial entities, such request not
to unreasonably denied.
Article Six
6.01 (revised) Licensee agrees to pay to PHS a noncreditable, nonrefundable
license issue royalty as set forth in Appendix C within thirty (30) days from
the Effective Date of this Agreement.
6.02 (revised) Licensee agrees to pay to PHS a nonrefundable minimum annual
royalty as set forth in Appendix C. The minimum annual royalty is due and
payable on January 1 of each calendar year and may be credited against any
earned royalties due for sales made in that year.
6.08 (revised) As an additional royalty, Licensee agrees to pay PHS upon
submission of a statement and request for payment, an amount equivalent to all
reasonable expenses previously incurred by PHS in the preparation, filing,
prosecution, and maintenance of Licensed Patent Rights according to the
following schedule: one-third within sixty (60) days; one-third within one (1)
year of the Effective Date of this Agreement; and one-third within two (2) years
of the Effective Date of this Agreement. Licensee further agrees to pay PHS
annually, within sixty (60) days of PHS's submission of a statement and request
for payment, a royalty amount equivalent to all such future patent expenses
incurred during the previous calendar year, as of the date the statement and
request for payment is sent by PHS to Licensee. Licensee may elect to surrender
its rights in any country of the Licensed Territory under any Licensed Patent
Rights upon sixty (60) days' written notice to PHS and owe no payment obligation
under this paragraph for subsequent patent-related expenses incurred in that
country.
Article Seven
7.01 (revised) Upon Effective Date of this Agreement, Licensee agrees to
take the responsibility for, as well as pay for, but to consult with PHS in, the
preparation, filing, prosecution, and maintenance of any and all patent
applications or patents included in the Licensed Patent Rights and shall furnish
copies of relevant patent-related documents to PHS, who shall retain its
principle power of attorney. Licensee may elect to surrender its rights in any
country of the Licensed Territory under any Licensed Patent Rights upon sixty
(60) days' written notice to PHS and owe no payment obligation under this
paragraph for subsequent patent-related expenses incurred in that country.
APPENDIX E - Benchmarks
-----------------------
Licensee agrees to the following Benchmarks for its performance under this
Agreement and, within ten (10) days of achieving a Benchmark, shall notify PHS
that the Benchmark has been achieved:
A. Development of Calanolide As A Therapeutic For Treatment of HIV Infection
-------------------------------------------------------------------------
1. Begin negotiations for an agreement with Sarawak as to the extent of
return to Sarawak from eventual marketing of synthetic licensed product
within one (1) month of the Effective Date of the Agreement. Complete
agreement with Sarawak within nine (9) months of the Effective Date of the
Agreement.
2. Develop and validate a plasma assay (using mouse, rat and dog plasma)
for (+)Calanolide A. Compare behavior of (-) Dihydrocalanolide B (to be
supplied by the National Cancer Institute (NCI) ) in same. To be completed
by February 28, 1996.
3. Determine pharmacology of (+)Calanolide A in the mouse, rate and dog
following single dose IV administration. Provide results in the mouse to
NCI to allow scheduling of efficacy and combination studies in hollow fiber
and PBL-SCID models. To be completed by March 31, 1996.
4. Develop and validate with respect to shelf stability of product a
formulation of (+) Calanolide suitable for use in further toxicologic and
eventual clinical evaluation. To be completed by March 31, 1996.
5. Using the results in (3) to select dose and schedule, conduct initial
dose-ranging studies in the rate and the dog with a frequency of
administration IV that would support a two-week duration clinical trial.
To be completed by June 30, 1996.
6. Formulate a quantity of GMP-prepared Calanolide A sufficient to
complete IND-directed toxicology studies and two Phase I studies. To be
completed by June 30, 1996.
7. Conduct IND-directed toxicology studies in the rat and the dog
according to protocols reviewed by NCI's Toxicology and Pharmacology Branch
to support a two-week IV infusion study. To be completed by September 30,
1996.
8. Complete reports and quality control to support IND-filing. To be
completed by November 30, 1996.
9. File IND To be completed by December 31, 1996.
10. Commence two-week infusion Phase I clinical trial. To be completed by
March 31, 1997.
11. Commence Phase II clinical trials by July 31, 1997.
12. Commence Phase III clinical trials (if necessary) by September 30,
1998.
13. Submit NDA by December 31, 1999.
B. Development of Calanolide A As A Therapeutic For Treatment of non-HIV Viral
---------------------------------------------------------------------------
Infections
----------
1. Begin assessment of activity of Calanolide A in primary screens
against a panel of non-HIV viral strains which include but are not limited
to: Herpes Simplex Virus-2, Herpes Simplex Virus-2, Cytomegalo Virus,
Variella Zoster Virus, Xxxxxxx-Xxxx Virus, Adenovirus Type 5, Parainfluenza
Type 3 Virus, Respiratory Syncytial Virus, Hepatitis B Virus, Measles
Virus, Influenza A (H1N1) , Influenza A (H3N2) by December 31, 1995.
2. Conclude analysis of activity of Calanolide A in primary screens
against non-HIV viral strains by March 31, 1996.
3. Election of non-HIV anti-viral therapeutic areas demonstrating
potential for development and submission of development plan for those
indications by June 30, 1996.
C. Development of Calanolide -related Compounds, including Costatolide, As
-----------------------------------------------------------------------
Therapeutics For Treatment of Viral Infections
----------------------------------------------
1. Synthesize and submit to NCI for further testing at least one backup
compound to Calanolide A per calendar year from 1995 through 1997.
2. Election of Calanolide-related compounds demonstrating potential for
development and submission of development plan for those compounds by
December 31, 1997.
APPENDIX B
MEDICHEM/STATE GOVERNMENT AGREEMENT
-----------------------------------
LICENSE AGREEMENT
-----------------
This Agreement made this 27th day of December, 1995 between MEDICHEM
SEARCH, INC., 00000 Xx. Xxx Xxxxxx, Xxxxxx, Xxxxxxxx 00000 (hereinafter
"MEDICHEM") of one part and the GOVERNMENT OF SARAWAK, Tingkat 17, Wisma Bapa
Xxxxxxxx, Xxxxx 000000 Xxxxxxx, Xxxxxxx, Malaysia (herein after 'SARAWAK') of
the other part.
WHEREAS there exists An Agreement between the United States Government
National Institute of Health (NIH) and SARAWAK related to Calanolide compounds
WHEREAS MEDICHEM is the NIH licensee under U.S. Patent Application Serial
Nos. 861,249 and 08/065,618; and License is granted by NIH subject to MEDICHEM
entering into this Agreement with SARAWAK
WHEREAS MEDICHEM wishes to obtain an exclusive license for SARAWAK's entire
_______, title, interest relating to the said Calanolide compounds in the
Agreement with NIH;
SARAWAK and MEDICHEM agree as follows:
ARTICLE I DEFINITION
--------------------
SARAWAK and MEDICHEM mutually agree and declare as follows:
_______ of Licensee or its sublicensees in exchange for cash or some equivalent
to which value can be assigned for the purpose of determining Net Sales.
EAST ASIA REGION
----------------
China Laos
Korea Malaysia
Japan Singapore
Hong Kong The Philippines
Macau Brunei
Taiwan Indonesia
Myanmar (Burma) Papua New Guinea
Thailand Cambodia
Vietnam
Licensed Territory - Worldwide
ARTICLE II LICENSE GRANTS
--------------------------
SARAWAK hereby agrees to the grant of License by NIH to MEDICHEM to make,
have made, use and sell License Product in the Licensed Territory under any
right, title or interest that SARAWAK may have related to the Licensed Product.
MEDICHEM shall, subject to the conditions stipulated in this Agreement, have the
right to grant sublicenses.
ARTICLE III PAYMENTS
---------------------
MEDICHEM agrees to pay to SARAWAK a noncreditable, nonrefundable license
issue royalty for the manufacturing and sale of Licensed Products in the amount
of Sixteen Thousand Six Hundred and Sixty Seven U.S. Dollars (US$16,667.00)
according to the following payment schedule:
A Five Thousand U.S. Dollars (US$5,000.00) within thirty (30) days from
the Effective Date of this Agreement; and
B. Eleven Thousand Six Hundred and Sixty Seven U.S. Dollars
(US$11,667.00) within one (1) year from the Effective Date.
MEDICHEM, agrees to pay to SARAWAK a nonrefundable minimum annual royalty
according to the following schedule:
A One Thousand Six Hundred and Sixty Seven U.S. Dollars (US$1,667.00)
beginning in 1996.
B. Three Thousand Three Hundred and Thirty Three U.S. Dollars
(US$3,333.00) for 1998 and subsequent years.
MEDICHEM agrees to pay SARAWAK earned royalties on Net Sales as follows:
One and One-Third percent (1.33%) of Net Sales by Licensee or an Affiliate of
Licensee of all Licensed Products manufactured or sold in the Licensed
Territory; except the royalty in the East Asia Region shall be two percent (2%)
of Net Sales.
MEDICHEM agrees to pay SARAWAK Sublicensing Royalties as follows:
One and One-Third percent (1.33% of Net Sales by Sublicensee, or an Affiliate of
Sublicensee of Licensed Products manufactured and sold in the Licensed Territory
(except for the East Asia region, the royalities rate shall be two per cent
(2.0%) of Net Sales) PLUS Six and Two-Thirds percent (6.6%) of the value of any
consideration received or receivable by MEDICHEM in granting the sublicense.
MEDICHEM agrees to pay SARAWAK benchmark royalities as follows:
Eight Thousand Three Hundred and Thirty Three U.S. Dollars (US$8,333.00)
upon filing __ IND application in the United States; and
Sixteen Thousand Six Hundred and Sixty Seven U.S. Dollars (US$16,667.00)
upon completion of Phase I and initiation of Phase II clinical trials; and
C. Thirty-Three Thousand Three Hundred and Thirty Three U.S. Dollars
(US$33,333.00) upon completion of Phase II and initiation of Phase III
clinical trials; and
D. Sixty-Six Thousand Six Hundred and Sixty Seven U.S. Dollars
(US$66,667.00) upon filing of a NDA application or equivalent in the United
States, Europe or Japan.
One Hundred percent (100%) of such benchmark royalty payments actually made
to SARAWAK may be credited against earned royalties due above.
MEDICHEM agrees with SARAWAK that the computation of Net Sales shall be
based on the sale price of the Licensed Products published from time to time by
MEDICHEM as the selling price of the Licensed Products to MEDICHEM's Licensed or
Sub-Licensees, and the published Sale Price shall be made available to SARAWAK
upon request by the latter.
ARTICLE IV CONTINUATION OF PAYMENT
----------------------------------
Royalty payments hereunder shall be made in U.S. dollars within thirty days
from the end of each calendar year throughout the period of validity of this
Agreement. The payment shall be accompanied with a statement of accounts duly
certified by auditors of MEDICHEM sufficient to determine how the royalty
payment was determined or assessed.
SARAWAK shall have the right to inspect and audit MEDICHEM's accounting,
sales and other records to the extent necessary to determine or assess royalties
due hereunder. SARAWAK shall pay the expenses of any such inspection of audits.
ARTICLE V TERM AND TERMINATION
------------------------------
1. Term. Except as otherwise provided in this Agreement, this Agreement
----
shall terminate with the expiration of the period of validity of NIH patent
covering Licensed Product.
2. Termination. MEDICHEM may terminate this Agreement during the term of
-----------
the license granted for any reason by giving SARAWAK ninety (90) days prior
written notice, in which case the license granted pursuant to Article II shall
also terminate. MEDICHEM agrees on termination to discontinue use, manufacture,
and sale of Licensed Product for which MEDICHEM was obligated to pay just prior
to such termination and account for the stocks of any products manufactured from
the Licensed Products. Such stocks shall be sold or disposed of under the
supervision of or with the agreement of SARAWAK and the proceeds derived
therefrom, after deducting the costs of such sale, be shared by MEDICHEM and
SARAWAK equally.
3. Obligations Upon Termination. MEDICHEM shall be liable for all
----------------------------
royalty payments due SARAWAK during the ninety (90) days notice period.
4. Termination for Default. Either party may terminate this Agreement on
-----------------------
written notice to the other party, effective immediately, if any of the
following events of default should occur and not be cured within sixty (60) days
after written notice from the Notifying party describing the default:
(i) the material failure of the notified party to meet its
obligations hereunder; or
(ii) the filing by or against SARAWAK or MEDICHEM of a petition under
any bankruptcy or insolvency law, an assignment for the benefit of MEDICHEM's
creditors or the appointment of a receiver for substantially all of MEDICHEM's
property. Such termination shall be without prejudice to any rights or remedies
which the non-defaulting party hitherto may have against the party in default,
for any breach of this Agreement.
ARTICLE VI WARRANTIES; DISCLAIMERS; INDEMNIFICATION
---------------------------------------------------
1. Each party represents and warrants to the other party that it has no
pre-existing contractual or other obligations to any third party which preclude
it from entering into this Agreement and meeting its obligations hereunder, or
which conflict with any provision of this Agreement.
2. Each party shall have the status of an independent contractor without
the authority legally to bind the other party, its officers, directors or
employees. This Agreement shall not be deemed to have created any partnership
between the parties hereto in relation to any of the matters contained in this
Agreement.
ARTICLE VII TRAINING SARAWAK PERSONNEL
--------------------------------------
MEDICHEM agrees to train, or to provide scientific training for, two (2)
SARAWAK designated scientists in technology related to the synthesis of
Calanolide compounds at MEDICHEM's Lemont, Illinois facilities for up to one
year. SARAWAK will pay for all transportation, compensation and living expenses
for such scientists. It is acceptable to MEDICHEM if the SARAWAK scientists
participate in clinical trials, if this participation is approved by the
institution where the clinical trials are carried out.
ARTICLE VIII MISCELLANEOUS
--------------------------
1. Governing Law. This Agreement shall be deemed made in and construed
-------------
in accordance with the law of England.
2. Actions Survive. All causes of action accruing to either party under
---------------
this Agreement shall survive termination for any reason, as shall those
provisions which expressly state survival unless such survival is conditional
and the requisite conditions(s) has been fulfilled prior to or on such
termination.
3. Entire Agreement. This Agreement constitutes the only and entire
----------------
understanding between the parties concerning its subject matter.
4. Amendments. This Agreement may be amended or modified only in writing
----------
signed by both parties.
5. Arbitration. All disputes which arise out of this Agreement shall be
-----------
settled by arbitration in accordance with the conciliation and arbitration rules
and regulations of the International Arbitration Centre in England to which the
parties hereto submit. The arbitrator shall have background and expertise
relating to the issue(s) involved. The arbitration shall be in a mutually
agreed location and the UNCITRAL (United Nations Commission on International
Trade Laws) rules shall apply to such arbitration. The parties shall share
equally the fees and expenses of the arbitration. The arbitrator's decision
shall be binding, final and non-appealable.
6. Force Majeure. If either party is prevented from performing any
-------------
obligation hereunder by reason of fire, explosion, strike, labor dispute,
casualty, accident, lack or failure of transportation facilities, flood, war,
civil commotion, acts of God, or any law, order or decree of
any government or subdivision thereof, then such party shall be excused from
performance hereunder to the extent and for the duration of such prevention,
provided that such party first notifies the other party in writing of such
prevention.
7. Publicity. Except as required by law or applicable stock exchange
---------
rule, no public statements shall be made by either party concerning this
Agreement, its subject matter or its existence without prior consultation with
and the approval of the other party.
8. Severability. In the event that any provision of this Agreement shall
------------
be found to be illegal, invalid or unenforceable for any reason, such shall not
affect the validity of the remainder of this Agreement, which shall be construed
and interpreted as though such provision was not present.
9. Notices. Notices may be given to an officer of a party by
-------
(i) personal delivery,
(ii) telex or facsimile transmission, or
(iii) first class, registered mail addressed as follows:
If to MEDICHEM: President
00000 Xxxxx Xxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
If to SARAWAK: State Financial Secretary
Pejabat Setiausaha Kewangan Negeri
Tingkat 17
Wisma Bapa Malaysia
Petra Jaya 93502 Kuching
Sarawak, Malaysia
Notice given under (i) above shall be deemed given on the date of delivery
and if given under (ii) shall be deemed to have been received 24 hours after the
time of transmission. Notice under (iii) above shall be deemed given on the
second week after that on which the letter is mailed.
10. Binding Effect. This Agreement shall inure to the benefit of and be
--------------
binding on each party's successors in interest and assigns.
11. Assignment. Except as otherwise contemplated by this Agreement,
----------
either party may with the prior written consent of the other, assign this
Agreement only in connection with the sale or disposition of the entire business
of such party or that portion to which this Agreement pertains.
12. Sub-License. MEDICHEM may grant a sub-license to any third party,
-----------
subject to the assignee agreeing to the payment of royalty stipulated in Article
III hereinabove.
13. In the event MEDICHEM has no further interest in any LICENSED PRODUCT,
MEDICHEM shall notify SARAWAK and SARAWAK shall have whatever right, title and
interest it had in the LICENSED PRODUCT and MEDICHEM may be willing to negotiate
the availability of MEDICHEM's data under terms to be agreed upon.
IN WITNESS WHEREOF, this Agreement has been executed in duplicate originals
on behalf of the parties by their below authorized officers as of the date first
written above. This Agreement is effective on the date that the Government of
Sarawak approves the Agreement.
MEDICHEM RESEARCH, INC.
By:________________________________
Its:_______________________________
Date:______________________________
GOVERNMENT OF SARAWAK
By:________________________________
Its:_______________________________
Date:______________________________
APPENDIX C
----------
MEDICHEM/VITA INVEST AGREEMENT
------------------------------
LICENSE AGREEMENT
-----------------
This Agreement, made this ____ day of December, 1996, between MediChem
Research, Inc., 00000 Xxxxx Xxx Xxxxxx, Xxxxxx, Xxxxxxxx 00000, X.X.X.
(hereinafter MEDICHEM), and Vita-Invest, S.A., c/Fontsanta, 12-14, 08970 Sant.
Xxxx Xxxxx, Barcelona, Spain (hereinafter VITA-INVEST).
WHEREAS, MEDICHEM and VITA-INVEST have entered into a Joint Venture
Agreement and license agreement related to the development of (+)-calanolide A
(Exhibit A) and now wish to enter into this revised Licensing Agreement which
grants VITA-INVEST exclusive rights to use and sell Licensed Product in Spain
and Portugal.
NOW, THEREFORE, in consideration of the mutual covenants and obligations
contained herein, the parties agree as follows:
I. DEFINITIONS
-----------
Licensed Product shall mean the active ingredient (+)-calanolide A, the
making, using or selling of which utilized MEDICHEM Patent Rights or MEDICHEM
Technical Information.
MEDICHEM Patent Rights shall mean any patents in which MEDICHEM has any
right, title or interest, including patents licensed MEDICHEM which relate to
the active ingredient (+)-calanolide A or the use or manufacture of such agent.
MEDICHEM Technical Information shall mean all unpatented information
related to the active ingredient(+)-calanolide A, or use or manufacturer
thereof.
Net Sales Price shall mean the gross sales price less standard trade
allowances and discounts not to exceed 5% of the gross sales price.
II. LICENSE GRANT
-------------
1. All previous agreements between VITA-INVEST and MEDICHEM are
cancelled and neither party has any claim against each other with respect to the
prior agreements.
2. MEDICHEM hereby grants VITA-INVEST an exclusive license to use and
sell Licensed Product in Spain and Portugal, and including the right to
sublicense Licensed Product in Spain which includes its right to use and sell
Licensed Product in Spain and Portugal.
3. MEDICHEM hereby exclusively sublicenses VITA-INVEST under MEDICHEM's
right and interest in Patent Rights and Technical Information licensed to
MEDICHEM for using or selling Licensed Product in Spain and Portugal. Such
sublicenses shall be subject to the terms of the license to MEDICHEM from the
NIH appended to this Agreement as Exhibit B.
III. PAYMENTS
--------
1. VITA-INVEST shall reimburse MEDICHEM within thirty (30) days for any
licensing payments of 4% of Net Sales Price of Licensed Product sold in Spain
and Portugal, of which 2.67% of Net Sales Price of Licensed Product sold in
Spain and Portugal is paid to NIH directly by MEDICHEM (Exhibit B).
2. MEDICHEM agree to supply VITA-INVEST at VITA-INVEST's request with
Licensed Product for sale in Spain and Portugal at MEDICHEM's manufacturing
costs up to $3 million dollars and VITA-INVEST shall pay MEDICHEM 15% above
MEDICHEM's manufacturing costs for such product thereafter. In the event that
MEDICHEM is unable or unwilling to supply VITA-INVEST with Licensed Product,
then MEDICHEM agrees to provide
VITA-INVEST with information necessary for the manufacture of Licensed Product
and VITA-INVEST shall have the right to manufacture in Spain and to sell
Licensed Product in Spain and Portugal.
3. VITA-INVEST shall bear the cost of obtaining regulatory approval to
market Licensed Product in Spain and Portugal. MEDICHEM shall provide VITA-
INVEST with all technical information in the possession of MEDICHEM and its
licensees for obtaining regulatory approval in Spain and Portugal.
4. VITA-INVEST shall have the right to audit MEDICHEM's books to the
extent necessary to determine MEDICHEM's manufacturing costs hereunder. VITA-
INVEST shall pay the expenses of any such audits.
5. MEDICHEM will provide VITA-INVEST with a semi-annual summary report on
their research work and licensing activity on the active ingredient(+)-
calanolide A.
IV. INFRINGEMENT
------------
1. Each party agrees to notify the other party of infringement of
MEDICHEM's Patent Rights by third parties.
2. Either party may bring suit or action for infringement of the
MEDICHEM's Patent Rights in Spain at its expense. If it fails to take action
with respect to such infringement within three (3) months following receipt of
reasonable notice thereof, and other party may bring suit or action for
infringement at the litigating party's expense, and if necessary or desirable
the other party may be joined as a party plaintiff and shall execute all papers
and perform all such other acts as may reasonably be requested by the litigating
party. Any amount recovered,
whether by judgment, award, decree or settlement, after deduction by the
litigating party of an amount equal to the expenses incurred by it in conducting
such suit or action, shall be divided equally between MEDICHEM and VITA-INVEST.
V. TERM AND TERMINATION
--------------------
1. Term. Except as otherwise provided in this agreement, this Agreement
----
shall terminate with the expiration of the last to expire patent within Patent
Rights or fifteen (15) years after the first commercial sale of Licensed Product
in Spain whichever of the two conditions occurs last.
2. Termination. VITA-INVEST may terminate this Agreement during the term
-----------
of the license granted for any reason by giving MEDICHEM ninety (90) days prior
written notice, in which case the license granted pursuant to Section II shall
also terminate. VITA-INVEST agrees to discontinue use and sale of Licensed
Product for which VITA-INVEST was obligated to pay just prior to such
termination.
3. Termination for Default. Either party may terminate this Agreement on
-----------------------
written notice to the other party, effective immediately, if any of the
following events of default should occur and not be cured within thirty (30)
days after written notice from the notifying party describing the default: (i)
the material failure of the notified party to meet its obligations hereunder; or
(ii) the filing by or against VITA-INVEST or MEDICHEM of a petition under any
bankruptcy or insolvency law, an assignment for the benefit of VITA-INVEST's or
MEDICHEM's creditors or the appointment of a receiver for substantially all of
VITA-INVEST's or MEDICHEM's property.
VI. WARRANTIES, DISCLAIMERS; INDEMNIFICATION
----------------------------------------
1. Each party represents and warrants to the other party that it has no
pre-existing, contractual or other obligations to any third party which preclude
it from entering into this Agreement and meeting its obligations hereunder, or
which conflict with any provision of this Agreement.
2. Each party represents and warrants to the other party that it shall
use reasonable efforts to achieve the objectives of the license. However, the
parties agree that no guarantees or warranties are made or intended as to the
success or outcome of this license on an overall or interim basis, or as to the
achievement of the various goals, steps, tasks, time schedules and the other
particulars of the project.
3. VITA-INVEST will not be liable for Product Liability Claims when such
claims arise from the product made by MEDICHEM and sold by VITA-INVEST in Spain
and Portugal.
4. MEDICHEM shall not be liable to VITA-INVEST, its Affiliates or the
officers, directors or employees of any of them for any consequential damages
arising out of any breach of this Agreement by such party, including without
limitation any lost profits or incidental or indirect damages.
5. Each party shall have the status of an independent contractor without
the authority legally to bind the other party, its officers, directors or
employees.
VII. MISCELLANEOUS
-------------
1. Governing Law. This Agreement shall be deemed made in and construed in
-------------
accordance with the law of Delaware.
2. Actions Survive. All causes of action accruing to either party under
---------------
this Agreement shall survive termination for any reason, as shall those
provisions which expressly state such survival unless such survival is
conditional and the requisite condition(s) has been fulfilled prior to or on
such termination.
3. Entire Agreement. This Agreement constitutes the only and entire
----------------
understanding between the parties concerning its subject matter.
4. Amendments. This Agreement may be amended or modified only in
----------
writing signed by both parties.
5. Arbitration. All disputes which arise out of this Agreement shall be
-----------
settled by arbitration in accordance with the conciliation and arbitration rules
and regulations of the International Chamber of Commerce in Switzerland to which
the parties hereto submit. The arbitrator shall have background and expertise
relating to the issue(s) involved. The arbitration shall be in a mutually agreed
location. The parties shall share equally the cost of such arbitration. The
arbitrator's decision shall be binding, final and non-appealable.
6. Force Majeure. If either party is prevented from performing any
-------------
obligation hereunder by reason of fire, explosion, strike, labor dispute,
casualty, accident, lack or failure of transportation facilities, flood, war,
civil commotion, acts of God, or any law, order or decree of any government or
subdivision thereof, then such party shall be excused from performance hereunder
to the extent and for the duration of such prevention, provided that such party
first notifies the other party in writing of such prevention.
7. Publicity. Except as required by law or applicable stock exchange
---------
rule, no public statements shall be made by either party concerning this
Agreement, its subject matter or its existence without prior consultation with
and the approval of the other party.
8. Severability. In the event that any provision of this Agreement shall
------------
be found to be illegal, invalid or enforceable for any reason, such shall not
affect the validity of the remainder of this Agreement, which shall be construed
and interpreted as though such provision was not present.
9. Notices. Notices may be given to an officer of any party by (i)
-------
personal delivery, (ii) telex or telecopy, or (iii) first class, registered mail
addressed as follows:
If to MEDICHEM: 00000 Xxxxx Xxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
If to VITA-INVEST: c/Fontsanta, 12-14
08970 Sant. Xxxx Xxxxx
Barcelona, Spain
Notice given under (i) or (ii) above shall be deemed given on the date of
delivery or telecommunication transmission. Notice under (iii) above shall be
deemed given on the third business day after that on which the letter is mailed.
10. Binding Effect. This Agreement shall inure to the benefit of and be
--------------
binding on each party's successors in interest and assigns.
11. Assignment. Except as otherwise contemplated by this Agreement,
----------
either party may assign this Agreement only in connection with the sale or
disposition of the entire business
of such party or that portion to which this Agreement pertains. Either party may
assign this Agreement to an Affiliate(s) without permission of the other party.
IN WITNESS WHEREOF, this Agreement has been executed in duplicate originals
on behalf of the parties by their authorized officers as of the date first
written above.
This Agreement has originally been executed in both the English and Spanish
languages. In the event that any disagreement between the two versions may
arise, the English version shall take legal precedence over the Spanish version.
MEDICHEM RESEARCH, INC.
By__________________________
Its__________________________
Date_________________________
VITA-INVEST, S. A.
By__________________________
Its__________________________
Date_________________________
APPENDIX D
----------
SCHEDULE FOR REMITTANCE OF STOCK SUBSCRIPTION FUNDS
---------------------------------------------------
BY XXXXX ON BEHALF OF SARAWAK GOVERNMENT
----------------------------------------
APPENDIX D
----------
SCHEDULE FOR REMITTANCE OF STOCK SUBSCRIPTION FUNDS
---------------------------------------------------
BY XXXXX ON BEHALF OF SARAWAK GOVERNMENT
----------------------------------------
SUBSCRIPTION
AMOUNT US $
PERIOD BENCHMARK @ $10.000/SHARE SHARE
------ --------- --------------- -----
January, 1997 Execution of J.V. agreement
Incorporation of J.V. Company
Appointment of XXXXX'x and
MEIDICHEM's Directors to Board
of COMPANY
Assignment/Transfer of MEDICHEM's
patents, etc.
Opening of Bank account for COMPANY;
and appointment of joint signatories for
account $1,200,000 120
March 15, 1997 Phase IA Trial begins
April 30, 1997 Review of Phase IA Trial Progress
Progress if deemed satisfactory $ 800,000 80
June 15, 1997 Review of Phase IA Trial Progress
Progress if deemed satisfactory $1,000,000 100
July 15, 1997 Board of Directors' approval for Phase
IB after progress review $1,264,000 126.4
August 31, 1997 Review of Phase IB trial progress
Progress if deemed satisfactory $1,078,000 107.8
Nov. 30, 1997 Review of Phase IB trial progress
Progress if deemed satisfactory $ 658,000 65.8
January, 1998 Board of Directors' approval for Phase
II Progress if deemed satisfactory $3,000,000 300
---------- -----
Total $9,000,000 900
(1) If at any stage XXXXX feels that the progress of the Trial is
unsatisfactory, XXXXX can elect to terminate, with 15 days written notice,
its participation in the joint venture and thereafter, released from its
obligations to provide further funds.
(2) At time of approval for Phase II, Board of Directors shall determine how to
raise the balance of US $12,000,000 required for the completion of Phase II
trials. Such funds should be available from the beginning of February,
1998.
(3) All remittances shall be made to a bank account in USA in the name of the
joint venture company and operated jointly by 2 Treasurers of the Company
with XXXXX and MEDICHEM appointing one Treasurer each.
APPENDIX E
----------
MEDICHEM VESTING OF SHARES
--------------------------
APPENDIX E
----------
MEDICHEM VESTING OF SHARES
--------------------------
Shares
------
February 01, 1997 120
March 31, 1997 80
May 31, 1997 100
June 30, 1997 126.4
August 31, 1997 107.8
October 31, 1997 65.8
December 01, 1997 300
-----
900
State of Delaware
Office of the Secretary of State
_______________________
I, XXXXXX X. XXXXX, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
INCORPORATION OF "SARAWAK MEDICHEM PHARMACEUTICALS, INC.", FILED IN THIS OFFICE
ON THE TWENTY-SEVENTH DAY OF DECEMBER, A.D. 1996, AT 10 O'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE
COUNTY RECORDER OF DEEDS FOR RECORDING.
____________________________________
Xxxxxx X. Xxxxx, Secretary of State
AUTHENTICATION: 8263196
DATE: 12-27-96
Certificate of Incorporation
of
Sarawak Medichem Pharmaceuticals, Inc.
For the purpose of forming a corporation (the "Corporation") under the
General Corporation Law of the State of Delaware (the "Delaware General
Corporation Law"), the undersigned incorporator certifies as follows:
Article 1
Name
The name of the Corporation is Sarawak Medichem Pharmaceuticals, Inc.,
Article 2
Initial Registered Office and Agent
The address of the Corporation's registered office in the State of
Delaware is Corporation Trust Center, 0000 Xxxxxx Xxxxxx, Xxxx xx Xxxxxxxxxx,
Xxxxxx of New Castle. The name of its registered agent at this address is The
Corporation Trust Company.
Article 3
Purpose
The nature of the business or purposes to be conducted or promoted by
the Corporation are to engage in any lawful act or activity for which
corporations may be organized under the Delaware General Corporation Law.
Article 4
Authorized Shares
The total number of shares of stock which the Corporation shall have
authority to issue is 3000 shares of Common Stock, par value $0.01 per share.
Article 5
By-Laws
The Corporation's board of directors shall have the power to adopt,
amend or repeal the Corporation's by-laws.
Article 6
Election of Directors
Elections of directors need not be by written ballot unless the
Corporation's by-laws so provide.
Article 7
Liability of Directors
No director of the Corporation shall have personal liability to the
Corporation or its stockholders for monetary damages for breach of his or her
fiduciary duty as a director, except for liability: (i) for a breach of the
director's duty of loyalty to the Corporation or its stockholders; (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law; (iii) under (S) 174 of the Delaware General
Corporation Law; or (iv) for any transaction from which the director derived an
improper personal benefit.
If the Delaware General Corporation Law is amended to authorize
further limitation or elimination of the liability of directors, then in
addition to the limitation on personal liability provided in this Article 7, the
liability of a director of the Corporation shall be further limited or
eliminated to the fullest extent permitted by the Delaware General Corporation
Law as so amended.
No amendment or repeal of this Article 7 shall apply to or have any
effect on the liability or alleged liability of any director of the Corporation
for or in respect of acts or omissions occurring prior to the amendment or
repeal.
Article 8
Indemnification of Directors and Officers
The corporation shall indemnify each person who was or is made a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, other than an action by or in the right of the Corporation (a
"proceeding") by reason of the fact that he or she, or the person of whom he or
she is the legal representative, is or was a director or officer of the
Corporation or, while a director or officer, is or was serving at the
Corporation's request as a director, officer, trustee, employee or agent of
another corporation or a partnership, joint venture, trust or other enterprise,
against all expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement, which he or she reasonably incurs in connection with the
proceeding, to the fullest extent authorized by the Delaware General Corporation
Law, as it now exists and as it may be amended (but in the case of any
amendment, only to the extent that the amendment authorizes the Corporation to
provide broader indemnification rights than were permitted prior to the
amendments). This right to indemnification shall continue as to a person who
has ceased to be a director or officer of the Corporation and shall inure to the
benefit of his or her heirs and legal representatives.
The right to indemnification under this Article 8 shall include the
right to be paid by the Corporation the expenses incurred in defending any
proceeding in advance of its final deposition. If required by the Delaware
General Corporation Law, however, the payment of the expenses incurred by a
director or officer of the Corporation in his or her capacity as such (and not
in any other capacity in which he or she renders or rendered service while
serving as an officer or director) shall be made only on delivery of an
undertaking by the director or officer to repay all amounts advanced if it is
ultimately determined that he or she is not entitled to indemnification under
this Article 8 (or otherwise).
The Corporation, by action of its board of directors, may provide
indemnification to its employees and agents with the same scope and effect as
the indemnification provided to its directors and officers in this Article 8.
Article 9
Incorporator
The name and mailing address of the sole incorporator of the
Corporation are:
Name Mailing Address
Xxxxxxxx X. XxXxxxx
Xxxxxxx and Colmar
000 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Signed on December 24, 1995.
_________________________________
Xxxxxxxx X. XxXxxxx, Incorporator
APPENDIX G
----------
LIST OF MEDICHEM SCIENTISTS
---------------------------
CALANOLIDE PROJECT APPENDIX G
MediChem Scientists Involved
1. Xxxxxxx X. Xxxxxx, Ph.D.
2. Ze-Xx Xx, Ph.D. (Calanolide Project Manager)
3. Xxxxx Xxxxxxxx, Ph.D.
4. Sergy Dzekhster, M.S.
5. Xxx Xxx, M.S.
6. Xx Xxxx, M.S.
7. Xxxxxx Xxx, M.S.
8. Xxxx X. Xxxxx, B.S.
9. Xxxxx Xxxxxxxxx, B.S.
10. Xxxxxx Xxxxxxxxx, B.S.
APPENDIX H
----------
DETERMINATION/DEFINITION OF NET PROFIT
--------------------------------------
Appendix ___
DETERMINATION/DEFINITION OF NET PROFIT
(UNIT: US $)
Gross Sales X.XX
Less: Returns and Allowances -X.XX
------------------------------
Net Sales X.XX
Less: Cost of Goods Sold (Produced) -X.XX
------------------------------
Gross Margin X.XX
Less: Sales, General, and Administration Expenses -X.XX
------------------------------
Operating Income X.XX
Less: Interest and Taxes -X.XX
------------------------------
Net Profit (Loss) X.XX
------------------------------
Note (1): Cost of Goods Sold (Produced) includes but is not limited to royalty
payments, subcontracting fees, direct salaries and wages, supplies, and raw
materials
Note (2): All recognition of revenues, costs, expenses, and profit shall be
accounted for using Generally Accepted Accounting Principles (GAAP)
Note (3): All Net Profits/Losses shall be shared by each shareholder in a 50/50
proportion
