JOINT VENTURE AGREEMENT BETWEEN CRAUN RESEARCH SDN. BHD., SARAWAK AND MEDICHEM RESEARCH INC., USA DECEMBER, 1996 AGREEMENT

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Exhibit 10.14

JOINT VENTURE AGREEMENT BETWEEN

CRAUN RESEARCH SDN. BHD., SARAWAK

AND

MEDICHEM RESEARCH INC., USA

DECEMBER, 1996

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AGREEMENT

THIS AGREEMENT is made the 21st day of December, 1996

BETWEEN:

(1) CRAUN RESEARCH SENDIRIAN BERHAD a company incorporated in Sarawak,

Malaysia under the Companies Act, 1965, whose registered office is at

Levels 5, 8 and 12, Wisma Satok, Jalan Satok, 93400 Kuching, Sarawak

and a place of business at Lot 3147 Block 14, Jalan Santubong, 93055

Kuching, Sarawak (hereinafter referred to as "CRAUN") of the one part

and

(2) MEDICHEM RESEARCH INC. a company organised and incorporated under the

laws of the United States of America and State of Illinois, with a

place of business at 12305 So. New Avenue, Lemont, ILLINOIS 60439,

United States of America (hereinafter referred to as "MEDICHEM") of

the other part.

WHEREAS

(1) CRAUN is the duly authorised agent for and on 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 CRAUN, therefore, enters into this

Agreement for and on behalf of the State Government;

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(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 ANDANALOGUES 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

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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 CRAUN, 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 CRAUN) 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. CRAUN 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.

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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 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.

1.1.3 "FDA" means the Food and Drug Administration of the United States of

America.

1.1.4 MEDICHEM "INTELLECTUAL PROPERTY RIGHTS" means technical information,

all 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,

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 from the COMPOUND for the treatment of Human Immunodeficiency

(HIV) or HIV related diseases, developed through or under this

Project.

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1.1.8 "THIS PROJECT" means

(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.

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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 hereinunder.

3. NATURE OF COLLABORATION

3.1 CRAUN 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.

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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 CRAUN 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 CRAUN 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 CRAUN 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:-

CRAUN

(as agent and nominee of the State Government) : 50 %

CRAUN'S shares are to be obtained by making subscription payments in

accordance with Subscription Agreement. (APPENDIX D).

MEDICHEM : 50 %.

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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

CRAUN 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.

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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 CRAUN 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. WARRENTIES 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

responsibilites 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

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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 CRAUN 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 CRAUN 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 possesion during or in the course of their involvement or

participation in the Project.

5.8 Neither CRAUN 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.

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6. FUNDS FOR PROJECT AND PAID UP CAPITAL OF COMPANY

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:

<Table>

<Caption>

Phase Amount

----- ------

<S> <C>

(a) Phase IA/IB US $ 6,000,000

(b) Phase II US $ 15,000,000

---------------

Total US $ 21,000,000

</Table>

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) CRAUN 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 IA/IB 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

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the shares for MEDICHEM shall be vested and be issued at the

same time as the shares are issued to CRAUN, to the intent

that the amount of shares issued to CRAUN and MEDICHEM shall

be equal at all material times. Except if CRAUN fails to make

subscription payments, CRAUN 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 royalities 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 CRAUN to the COMPANY, or;

(e) by the COMPANY calling for additional working capital

from its shareholders and CRAUN and MEDICHEM will

purchase an equal number of shares to meet the working

capital needs of the COMPANY. In such an event, CRAUN

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.

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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.

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8. TERMINATION AND BREACH OF AGREEMENT AND THEIR CONSEQUENCES.

8.1 This Agreement shall be deemed to have been terminated if:

(a) both CRAUN 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

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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 CRAUN that does not want to proceed,

MEDICHEM shall have the right but not the obligation to

purchase CRAUN'S shares at the price paid by CRAUN.

(b) in the event it is MEDICHEM that does not wish to proceed,

CRAUN 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.

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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.

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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.

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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 fascimile number of that party set opposite its name

below:

CRAUN's Address: c/o STATE ATTORNEY GENERAL' OFFICE

17th Floor, Wisma Bapa Malaysia,

Petra Jaya, 93502 Kuching, Sarawak,

Malaysia

Facsimile Number: 60-82-440525

[Marked for the attention of:]

MEDICHEM RESEARCH, INC.

12305 S. New Avenue

Lemont, IL 60439

Telex Number: 630-257-1500

Facsimile Number: 630-257-1505

ATTN: Dr. Michael T. Falvin

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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 properly 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.

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IN WITNESS

SIGNED by )

DATUK WAN ALI TUANKU YUBI )

Chairman/Director of )

CRAUN RESEARCH SDN BHD ) /s/ Datuk Wan Ali Tuanku Yubi

under and by virtue of a ) ------------------------------------

Resolution of its Board of Directors,) DATUK WAN ALI TUANKU YUBI

in the presence of: )

Name of Witness: /s/ Datuk J.C. Fong

------------------------------------

DATUK J.C. FONG

Address: State Attorney-General's Chambers,

Kuching.

Occupation: State Attorney-General, Sarawak

SIGNED by )

DR. MICHAEL T. FLAVIN )

President, for and on behalf of ) /s/ Michael T. Flavin

MEDICHEM RESEARCH INC. ) ------------------------------------

in the presence of: ) DR. MICHAEL T. FLAVIN

Name of Witness: /s/ John L. Flavin

------------------------------------

JOHN L. FLAVIN

Address: MediChem Research, Inc.

Occupation: Vice President of Contractual

Operations

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APPENDIX A

MEDICHEM/NCI LICENSE L-135-95

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NATIONAL INSTITUTES OF HEALTH

CENTERS FOR DISEASE CONTROL

PATENT LICENSE AGREEMENT -- EXCLUSIVE

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 B

(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."

NIH Office of Technology Transfer

PHS PATENT LICENSE AGREEMENT - EXCLUSIVE

MODEL 940110 - Page 1 - FINAL - MediChem Research, Inc. - May 5, 1995

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PHS PATENT LICENSE AGREEMENT--EXCLUSIVE

PHS and Licensee agree as follows:

1. BACKGROUND

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, DHRS, 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.

Sections 2O0-212, the Federal Technology Transfer Act of 1986,

15 U.S.C. Section 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

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 of all such

patents;

b) to the extent that the following contain one o 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:

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all counterpart foreign applications and patents to a)

and b) above, including those listed in Appendix A.

Licensed Patent Rights shall not include b) or c) above

to the extent that they contain one or more claims

directed to new matter which is not the subject matter

of a claim in a) above.

2.02 "Licensed Product(s)" means tangible materials which, in the

course of manufacture, use, or sale would, in the absence of

this Agreement, infringe one or more claims of the Licensed

Patent Rights that have not been held invalid or unenforceable

by an unappealed or unappealable judgement of a court of

competent jurisdiction.

2.03 "Licensed Process(es)" means processes which, in the course of

being practiced would, in the absence of this Agreement,

infringe one or more claims of the Licensed Patent Rights that

have not been held invalid or unenforceable by an unappealed

or unappealable judgment of a court of competent jurisdiction.

2.04 "Licensed Territory" means the geographical area identified in

Appendix B.

2.05 "Net Sales" means the total gross receipts for sales of

Licensed Products or practice of Licensed Processes by or on

behalf of Licensee or its sublicensees, and from leasing,

renting, or otherwise making Licensed Products available to

others without sale or other dispositions, whether invoiced or

not, less returns and allowances actually granted, packing

costs, insurance costs, freight out, taxes or excise duties

imposed on the transaction (if separately invoiced), and

wholesaler and cash discounts in amounts customary in the

trade. No deductions shall be made for commissions paid to

individuals, whether they be with independent sales agencies

or regularly employed by Licensee, or sublicensees, and on its

payroll, or for the cost of collections.

2.06 "First Commercial Sale" means the initial transfer by or on

behalf of Licensee or its sublicensees of Licensed Products or

the initial practice of a Licensed Process by or on behalf 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.

2.07 "Government" means the government of the United States of

America.

2.08 "Licensed Fields of Use" means the fields of use identified in

APPENDIX B.

3. GRANT OF RIGHTS

3.01 PHS hereby grants and Licensee accepts, subject to the terms

and conditions of this Agreement, an exclusive license to

Licensee under the Licensed Patent Rights in the Licensed

Territory to make and have made, to use and have used, and to

sell and have sold any

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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. Licensee 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 RIGHTS

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 on 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

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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.

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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 on 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 on 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

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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. REPORTS 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").

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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). Licensee

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 of 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 of 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 an