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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
<Page>
APPENDIX A
MEDICHEM/NCI LICENSE L-135-95
<Page>
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
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EXCLUSIVE
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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:
NIH Office of Technology Transfer
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EXCLUSIVE
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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
NIH Office of Technology Transfer
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EXCLUSIVE
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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
NIH Office of Technology Transfer
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EXCLUSIVE
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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.
NIH Office of Technology Transfer
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EXCLUSIVE
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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
NIH Office of Technology Transfer
PHS PATENT LICENSE AGREEMENT -
EXCLUSIVE
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<Page>
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").
NIH Office of Technology Transfer
PHS PATENT LICENSE AGREEMENT -
EXCLUSIVE
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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 and
shall include
