EXHIBIT 10.10
*CONFIDENTIAL PORTIONS OF THIS AGREEMENT HAVE BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION PURSUANT TO
A REQUEST FOR CONFIDENTIAL TREATMENT*
EXCLUSIVE
PATENT AND KNOW HOW LICENSE OPTION AGREEMENT
This Exclusive Patent and Know How License Option Agreement (this
"AGREEMENT"),
effective as of December 28, 2005 (the "EFFECTIVE DATE"), is
entered into by and
between SAFETEK
INTERNATIONAL, INC., a
corporation organized under the laws of
the State of Delaware, directly or through one of its subsidiaries (the
"COMPANY"), and
MATRIX PHARMA INC., a privately held Delaware company
("MATRIX").
R E C I T A L S
WHEREAS, Matrix has
developed Thrombin Inhibitor compounds with potential
therapeutic value ("COMPOUNDS"); and
WHEREAS, Matrix has
commenced the R&D Program (as
defined below), it shall
continue its conduct after the date hereof and fund it independently according
to the terms set forth herein, and it anticipates with no guarantee of success
that the oral bio
availability of the
Compound will be
achieved and the First
Milestone will be obtained by it prior to January 31, 2006; and
WHEREAS, Matrix
confirms that it is the sole and exclusive owner or sublicensee
of all rights to the Compounds; and
WHEREAS, Matrix
desires to grant the
Company an Option to obtain an exclusive
license to the Compounds upon the terms and conditions
hereinafter
set forth;
and
WHEREAS, the Company desires to obtain an Option for an exclusive
license to the
Compounds, upon the terms and conditions hereinafter set forth;
and
WHEREAS, the Company
desires to enter into research and development program for
the development of License Products based on the Compounds after
the exercise of
the Option, subject to the terms set forth herein and in the
R&D Agreement; and
WHEREAS, Matrix is
willing to assist the Company with the development of the
Licensed Product and to provide it with research and development
services under
the terms set forth herein and in the R&D Agreement.
NOW, THEREFORE, the parties hereby agree as follows:
1
DEFINITIONS
1.1
"AFFILIATE"
means any Person
directly or
indirectly
controlling,
controlled by, or under common control with such other Person.
1.2
"BANKRUPTCY
EVENT" of a Person
means any event where
such Person:
(i) shall become
insolvent; (ii) shall
apply for or consent to the
appointment of any liquidator, receiver, trustee or administrator
for all or a substantial part of its business, properties, assets
or
<PAGE>
-2-
revenues; (iii) a
liquidator, receiver,
trustee or
administrator
shall be appointed for such Person; (iv) a bankruptcy, arrangement,
readjustment of debt, dissolution, liquidation or similar
executory
or judicial proceeding
shall be instituted
against such Person; or
(v) such Person shall call a creditors' meeting for the purpose of
entering into an arrangement with them.
1.3
"EXERCISE DATE"
means March 31, 2006.
1.4
"FIELD"
means
antithrombotics, including anticoagulants,
antiplatelets and
thrombolytics classes
and specifically
Thrombin
inhibitors, for treatment of thrombosis and thromboembolic
diseases.
1.5
"GOVERNMENTAL
AGENCY" means any local, regional, state, foreign or
other governmental agency, instrumentality, commission, authority,
board or body.
1.6
"INTELLECTUAL
PROPERTY RIGHTS" means any and all intellectual
property rights,
including
without limitation patents, patent
applications, any
copyrights and registrations and applications for
registration thereof,
computer
software, programs, data and
documentation,
technology, trade
secrets and confidential business
information, whether patentable or non-patentable and whether or
not
reduced to
practice, know-how, designs, prototypes, laboratory
protocols, enhancements, improvements, works-in-progress, research
and development
information, and other
proprietary rights relating
to any of the
foregoing (including without limitation remedies
against infringements
thereof and rights of protection of an
interest therein under the laws of all jurisdictions).
1.7
"LICENSE" shall
have the meaning set forth in Section 3.1 hereunder.
1.8
"LICENSE
TERM" shall mean the term of the License which shall
commence upon the
exercise of the Option and shall remain in effect
until terminated
in accordance with the provisions of this
Agreement.
1.9
"LICENSED
PRODUCT" shall mean
the Compounds,
or any part
thereof,
and/or any
new Intellectual Property Rights developed made,
conceived or created
(including through
third party
contractors)
containing any
inventions,
innovations
and other improvements,
resulting from the Compounds or any part thereof and/or are
deriving
from and/or containing the Compounds and/or any part thereof.
1.10
"LIEN" means any
mortgage, pledge,
security interest,
encumbrance,
lien right of third
party or charge of any kind (including any
conditional sale or other title retention agreement or lease in the
nature thereof),
any trust, any filing or agreement to grant,
deposit or file a
pledge or financing
statement as debtor under
applicable law, or any subordination arrangement in favor of
another
person.
1.11
"MATRIX IP" means any proprietary technologies, know-how and
Intellectual Property Rights of Matrix Ltd. required for the
conduct
of Matrix's
obligations pursuant
to the R&D Agreement and/or this
Agreement, whether
existing today or in the future, all subject to
section 3.7 herein.
1.12
"MATRIX LTD" means
Matrix Advanced Solutions Limited.
1.13
"NET RIGHTS
INCOME" means any net income actually generated and
received, directly
or indirectly, by the Company and/or on its
behalf in connection with the Licensed Products and/or Compounds,
other than Net
Sales, resulting from the grant of any rights to
third parties which
are Subsidiaries
of the Company,
directly or
indirectly, in the
Territory, with
respect to any Licensed Product
and/or Compounds or any part thereof (e.g., sale, transfer,
license,
sublicense, commercial rights, etc.)("RIGHTS"), less any Deductions
(as defined in Section y1.14 hereunder) applicable to such
income.
<PAGE>
-3-
1.14
"NET SALES" shall mean
the revenue actually
received by the Company
or on its behalf,
directly or
indirectly,
from sales of
Licensed
Product and/or Compounds or any part thereof in Territory,
less the
following deductions
to the extent: (i) such amounts have been
incurred by the
Company in connection
with such sales;
(ii) have
been included in the amounts invoiced; and (iii) thereafter
actually
allowed or taken, ("DEDUCTIONS"):
1.14.1 Brokers' or agents' commissions actually allowed and
taken;
1.14.2 Trade, cash and/or quantity discounts allowed, if any;
1.14.3 Actual returns
or rejections of Licensed Products for which
Royalty was paid or payable hereunder;
1.14.4 Value-added
taxes, sales
taxes, excise taxes and other
governmental charges
based directly
on sales, turnover or
delivery of the Licensed Products actually paid or allowed;
1.14.5 Duty; and
1.14.6 Freight charges
paid for delivery and
other
transportation
costs, including insurance charges, duties and tariffs.
1.15
"NON COMPETE FIELD"
means the field of Thrombin Inhibitors used to
inactivate or sequester thrombin.
1.16
"OPTION" shall have
the meaning set forth in Section 2.1 hereunder.
1.17
"PERSON" means an
individual, corporation, partnership, association,
trust or other entity or organization, including a government or
political subdivision or an agency or instrumentality thereof.
1.18
"QUALIFIED
ENTITY" means established pharmaceutical corporation
which is a production,
marketing or research
leader with an annual
turnover exceeding
US$20,000,000 or
company valuation of
at least
US$100,000,000.
1.19
"REPORTING
PERIOD" means each
calendar quarter
during the License
Term.
1.20
"R&D AGREEMENT" shall have the meaning set forth in Section 5.1
hereunder.
1.21
"SCIENTIFIC
ARBITRATOR" shall have
the meaning set forth in Section
20.1 hereunder.
1.22
"STEERING COMMITTEE" shall have the meaning set forth
in Section 6
hereunder.
1.23
"SUB-LICENSEE"
shall mean any sub-licensee, whether direct or
indirect, of the rights herein.
1.24
"SUBSIDIARY"
means, with respect to any Person,
its wholly owned
subsidiary.
1.25
"TERRITORY" shall mean
world-wide.
1.26
the terms "MILESTONE",
"FIRST MILESTONE", "SECOND MILESTONE", "THIRD
MILESTONE",
""FOURTH MILESTONE",
"FIFTH MILESTONE", "STAGE OF
DEVELOPMENT", "FIRST
STAGE OF DEVELOPMENT", "SECOND STAGE OF
DEVELOPMENT", "THIRD
STAGE OF DEVELOPMENT",
and "FOURTH
STAGE OF
DEVELOPMENT", "FIFTH
STAGE OF DEVELOPMENT"
shall have the
meaning
ascribed to them in Exhibit 5.1.
2
THE OPTION
2.1
The Company is hereby granted an option to obtain License (the
"OPTION"). The
Option will be exercisable by the Company by
providing Matrix with
written notice not later then the
Exercise
Date, such notice
containing the Company's undertaking to initiate
the R&D Program
and fund the First
Stage of Development and the
Second Stage of Development pursuant to the R&D Program and
pursuant
<PAGE>
-4-
to the terms of this
Agreement (the
"EXERCISE NOTICE").
Upon the
receipt of the
Exercise Notice and repayment of the costs as set
forth in Section 2.3
by Matrix the
Company shall be granted the
License, automatically and without any further action.
2.2
For the
avoidance of doubt, the Company does not undertake to
exercise the Option, and it shall be the Company's decision,
in its
sole discretion,
whether to exercise the Option, including (without
limitation of the generality of the aforesaid), as the result of
the
IP due diligence conducted by the Company. Notwithstanding any
other
provision of this
Agreement,
in the event that (i) the Company
decides not to
exercise the Option as a result of due
diligence
conducted, which
reveals the
likelihood
of invalidation of, or
infringement by, any
of the patents listed
in the IP Due Diligence
report provided
November 11th, 2005
("MATERIAL ISSUE"),
and (ii)
Matrix did not disclose the Material Issue to the Company prior to
the Closing
Date (as defined hereunder), and (iii) the Company
notifies Matrix of its decision not to exercise the Option within
45
days of
the Closing Date, then US$ 30,000, constituting one half of
the Advance,
shall be returned to
the Company within 90
days from
the Company's
notification
of its decision not to exercise the
Option due to the above circumstances.
2.3
Upon the
exercise of the
Option, and subject to
Section 3.2 of the
R&D Agreement, the
Company shall reimburse Matrix for the costs of
its work as part of the First Stage of Development until such date
(less the Advance of US$60,000) ("MATRIX INTERNAL R&D"). For the
avoidance of doubt, upon the exercise of the Option and repayment
to
Matrix of costs of work pursuant to this Section, all Matrix
Internal R&D
shall be deemed to be conducted by Matrix for the
Company under the R&D Agreement.
2.4
If the Company
fails to exercise the Option until the Exercise Date,
all Matrix Internal R&D shall remain the sole and exclusive
property
of Matrix and the
Agreement shall be regarded to as terminated
according to Section y17.617.5.
2.5
Matrix
hereby
undertakes,
to provide the Company with any
documentation
and details, including, without limitation, financial
reports, as
shall be required by the Company in order to fully
comply with any
applicable reporting
requirements
of the SEC (as
defined below) in timely manner, including, without limitation, the
submission of
financial statements
of Matrix,
and, to the extent
required, the
relevant financial reports of its parent company
Matrix Ltd. and
prepared in
accordance
with US GAAP (the
"MATRIX
DOCUMENTATION"), to be provided to the Company by February 15,
2006.
All direct
and indirect expenses with regards to such Matrix
Documentation shall be
equally divided
between the parties up to
US$30,000,
provided that
if it is determined that Matrix
Documentation
requested by the
Company and prepared
by Matrix was
not in fact required
by the Company in
order to fully comply
with
any applicable
reporting requirements of the SEC then the entire
cost of preparation
of such documentation shall be borne by the
Company. Any
expense over US$30,000 will be paid by Company and
Matrix will be fully
reimbursed
for such sum.
In addition, all
documentation of NSCI
Novel Science
International
GmbH ("NSCI")
required by the Company pursuant shall be provided to the Company
by
NSCI,
according to NSCI letter in the form attached hereto as
EXHIBIT 2.5 (the "NSCI Letter"). To prevent any doubt, Matrix
shall
not be responsible for
the performance of NSCI's undertakings and
obligations hereunder.
<PAGE>
-5-
3
THE LICENSE
3.1
Subject to the
exercise of the Option by the Company, Matrix hereby
grants the Company, an
exclusive (subject to
Sections y3.2,
y12.2
and
17.3 hereunder),
irrevocable for the License Term, transferable
(subject to the terms
of Section
y3.3 herein), royalty bearing
license, for the
License Term, to research, develop, perform,
produce, make, have
made, use, market, sell, lease, dispose, copy,
modify, lease,
distribute, display,
bundle, sub-license,
import,
export and
commercialize the
Licensed Products and/or Compounds in
the Territory,
including, without limitation, through the grant of
Right (the "LICENSE").
3.2
Matrix agrees
that, unless otherwise
agreed between the Company and
Matrix in advance and in writing, in order to establish the
exclusivity
of the License
granted pursuant to Section y3.1 above
and subject to Section y12.2 hereunder, for the License Term,
Matrix
shall not grant any other license, to research, develop, perform,
produce, make, have
made, use, market, sell, lease, dispose, copy,
modify, lease,
distribute, display,
bundle, sub-license,
import,
export or
commercialize: (a) the
Compounds; and (b) in
the Field,
for a period of three (3) years from the Option Exercise Date, any
other compounds owned
or developed by Matrix prior to or during the
License Term, and (c) in the Non-Compete Field, without limitation
on period, , any other
compounds owned or developed by Matrix prior
to or during the
License Term,
all subject to the
terms set forth
herein.
For the avoidance of doubt, the exclusivity granted hereunder shall
not apply with
respect to general know how of Matrix which is
customary knowledge
of Persons
operating in the Field, or with
respect to any patent underlying the Compounds in the case of
expiry
or invalidity of such patent.
3.3
The Company may, grant sublicenses or other Rights to Licensed
Products and/or Compounds to Affiliates or other Persons, in an
arms
length bona
fide transaction ("SUB-LICENSE") provided that the
Company shall
incorporate terms and conditions into its Sub-License
agreements sufficient
to enable the
Company to comply with this
Agreement, and the Sub-Licensee must provide that the obligations
of
the Company
under this Agreement shall be binding upon the
Sub-Licensee as if it were a party to this Agreement. In the event
that this Agreement
is terminated while the Sub-Licensee is in
compliance with its
Sub-License,
Matrix agrees to grant to such
Sub-Licensee, at such
Sub-Licensee's
request, a direct
license to
the rights sublicensed
under the Sub-License,
on substantially the
same terms and
conditions of this
Agreement, provided
that Matrix
may require adequate
assurances protecting
its rights and economic
benefit.
3.4
Matrix shall be
responsible
to have each and every
Person that may
materially participate
in any future
research activity of Matrix
with regards
to the Compounds, or that may be exposed to any
material part
of the technology or information underlying the
License, execute a confidentiality and acknowledgement agreement in
a form acceptable to
Company, in which such
person shall undertake
to abide by the obligations stated in this Section 3, and the
confidentiality
obligations herein. At
the request of the Company,
Matrix shall provide the Company with a list of all Persons
involved
in such future research and shall provide the Company with copies
of
all undertakings signed by such Persons.
3.5
Subject
to Section hereafter, neither Matrix nor any of its
shareholders, directors,
officers,
employees
or
other
representatives or
agents, nor any other
Person involved in any
future research
by Matrix,
shall have the right to publish any
material, including
but not limited to
articles and papers,
that
incorporate
information relating
to the Compounds which can effect
their patentability,
unless Matrix has prepared and filed an
appropriate patent
applications
to protect its rights in such
information and the commercial interest of the Company;
<PAGE>
-6-
3.6
Neither
Matrix nor any of its
shareholders,
directors,
officers,
employees or other
representatives or
agents, nor any other Person
involved in any future research by Matrix, shall take any action or
enter into any
agreement after the date hereof relating to the
Licensed Products
and/or the
Compounds during the License Term,
which is inconsistent with the provisions hereof, (including,
without limitation,
making
any disposition of the Compounds,
including by way of
transfer, option
grant, mortgage, pledge or
otherwise).
3.7
Matrix hereby
undertakes to exploit
the Matrix IP, if required, in
order to provide the services pursuant to the R&D Agreement.
Matrix
hereby undertakes
that, for a period of three (3) years
from the
Effective Date, Matrix will be provided by Matrix Ltd. and by any
of
the subsidiaries
and affiliates of Matrix Ltd. (together, the
"RELATED PARTIES")
with any services required in order to fully and
professionally fulfill
the obligations of Matrix hereunder and
pursuant to the
R&D agreement ("MATRIX IP SERVICES"). For the
avoidance of doubt, and notwithstanding any other provisions of
this
Agreement or the R&D Agreement, Matrix IP Services shall be
subject
to any reasonable
request of the Company, and provided at the cost
price of such Matrix IP Services to the Related Parties, provided
that if Matrix. ceases
to be a wholly owned
subsidiary
of Matrix
Ltd. and following such cessation the cost to Matrix of the
services
provided to Matrix by
the Related
Parties increases beyond the
actual cost of such
services to such Related Parties, then the
parties hereto shall negotiate in good faith the possible
increment
in the cost of the
Matrix IP Services provided by Matrix to the
Company.
4
SUBLICENSE FEE AND PAYMENT TERMS
From and
after the exercise of
the Option, and in
consideration
of the
grant of
rights hereunder, the
Company undertakes to pay Matrix milestone
payments
and royalties as follows:
4.1
Upon the
completion of each Stage of Development, subject to Section
y6.3.4, or upon
continuing to the next Stage of Development, which
shall automatically
be regarded to as
fulfillment of the
previous
milestone, the Company
shall pay to Matrix the applicable milestone
payments ("MILESTONE
PAYMENTS") within 45
days of such completion,
as follows:
4.1.1 upon the
achievement of the First Milestone at the completion
of the First Stage of Development - an amount of *;
4.1.2 upon the achievement of the Second Milestone at the
completion
of the Second Stage of Development - an amount of *;
4.1.3 upon the
achievement of the Third Milestone at the completion
of the Third Stage of Development - an amount of *;
4.1.4 upon the achievement of the Fourth Milestone at the
completion
of the Fourth Stage of Development - an amount of * ; and
4.1.5 upon the
achievement of the Fifth Milestone at the completion
of the Fifth Stage of Development - an amount of *;
----------
*
Omitted pursuant
to a request for confidential treatment and filed
separately
with the Securities and Exchange Commission.
<PAGE>
-7-
4.2
Each Milestone
Payments shall be paid, at the Company's discretion,
either by:
4.2.1 cash payment
in U.S. dollars payable by means of a wire
transfer to
a bank account designated by Matrix; or,
alternatively -
4.2.2 by the issuance
of shares of Common
Stock $0.0001 par
value
each of the Company of the type listed in the Over the Counter
Bulletin Board
or NASDAQ or any other exchange or other
quotation system which
requires timely
filings with the SEC,
to Matrix, in such
amount to be
determined by dividing
the
applicable Milestone Payment by the average closing sale price
per share at which such shares (the "SHARES") were traded
during the last 60 days prior to the issuance of such Shares,
and subject to the following terms and conditions:
4.2.2.1 The Shares, if
and when issued and allotted, will be
duly authorized,
validly
issued,
fully
paid,
non-assessable, and
free of any preemptive rights, will
be issued free and clear of any Liens or transfer
limitations other
than as provided under applicable
securities laws and
duly registered
in the Company's
stock ledger.
4.2.2.2 Matrix
represents to the Company that it understands
that the Shares it may receive hereunder are "restricted
securities" under the
United States securities laws
since the Shares are being acquired from the Company in
a transaction not involving a public offering, and that
under such laws and
applicable regulations
the Shares
may not be resold without registration under the
Securities Act of 1933, as amended, or an exemption from
registration. Matrix further understands
and
acknowledges that the
Company has no obligation to file
a registration
statement under the Securities Act of
1933, as amended, for
the Shares or to otherwise assist
Matrix in
complying
with
any exemption from
registration. Matrix
further represents that it is
familiar with Rule 144 promulgated under the Securities
Act of 1933, as
amended, and understands the resale
limitations imposed thereby and by the Securities Act of
1933, as amended.
4.2.2.3 Matrix
further represents and warrants that the
following representations and warranties are correct and
complete as of the
date of the Agreement,
and will be
correct and
complete on the date that the Option is
exercised:
(a) Matrix will be
acquiring the Shares for its
own account as principal, not as a nominee or agent, for
investment purposes
only, and not with a view to,
or
for, resale,
distribution or fractionalization thereof
in whole or in part and no other person has a direct or
indirect beneficial
interest in such Shares or any
portion thereof.
Further, Matrix does not have any
contract, undertaking, agreement or arrangement with any
person to sell, transfer or grant participations to such
person or to any
third person, with respect to the
Shares or any part thereof.
(b) Matrix is not
subscribing for the Shares as a
result of or subsequent to any advertisement, article,
notice or
other communication published in any
newspaper, magazine or
similar media or broadcast over
television or radio,
or presented at any seminar or
meeting, or any solicitation of a subscription by person
previously not known to Matrix.
<PAGE>
-8-
(c) Matrix further
represents and warrants to and
agrees with the Company and its affiliates as follows:
(i) Matrix realizes
that the basis for
the exemption
may not be present if,
notwithstanding
such
representations, the
undersigned has in
mind merely
acquiring the
Shares for a fixed or determinable period in the
future, or for a market rise, or for sale if the
market
does not rise. The
undersigned does
not
have any such intention;
(ii) Matrix
has such knowledge and
experience in financial and business matters as
to be capable of evaluating the merits and risks
of the prospective
investment
in the Shares.
Matrix also represents it has not been organized
for the purpose of acquiring the Shares;
(iii) Matrix
has been provided an
opportunity for a
reasonable
period of time
prior to the date
hereof to obtain
information
concerning the Company and all other information
to the extent the Company possesses such
information or can acquire it without
unreasonable effort or expense;
(iv) Matrix has
carefully reviewed
all
of the Company's
filings under the
Securities
Exchange Act of 1934, as amended. Matrix further
understands that the
Company has not filed
its
Form 10-QSB
which was due to be filed by
November 14, 2005 and will be de-listed from the
Over the Counter Bulletin Board.
(v) Matrix
is not relying on the
Company, or
its affiliates or agents with
respect to economic
considerations
involved in
this investment.
Matrix undersigned has
relied
solely on its
own advisors;
(d) No representations
or warranties have been
made to Matrix by the Company, or any officer, employee,
agent, affiliate or
subsidiary
of the Company,
other
than the representations of the Company contained
herein, and
Matrix
is not relying upon any
representations other than those contained herein.
(e) Each certificate representing the Shares shall
be endorsed with the following legends, in addition to
any other legend required to be placed thereon by
applicable federal or state securities laws:
<PAGE>
-9-
"THESE SECURITIES
HAVE NOT BEEN
REGISTERED
UNDER THE
SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES
ACT"), AND
MAY NOT BE OFFERED, SOLD, PLEDGED,
HYPOTHECATED,
ASSIGNED OR
TRANSFERRED
EXCEPT
(i)
PURSUANT TO
A REGISTRATION STATEMENT UNDER THE
SECURITIES ACT WHICH HAS BECOME EFFECTIVE AND IS CURRENT
WITH RESPECT TO THESE SECURITIES, OR (ii) PURSUANT TO A
SPECIFIC
EXEMPTION FROM
REGISTRATION
UNDER
THE
SECURITIES ACT BUT
ONLY UPON A HOLDER HEREOF FIRST
HAVING OBTAINED
THE WRITTEN
OPINION OF COUNSEL TO
THE
CORPORATION, OR OTHER
COUNSEL REASONABLY
ACCEPTABLE TO
THE CORPORATION,
THAT
THE PROPOSED DISPOSITION IS
CONSISTENT WITH
ALL APPLICABLE PROVISIONS OF THE
SECURITIES ACT AS WELL AS ANY APPLICABLE "BLUE SKY" OR
SIMILAR SECURITIES LAW."
(f) Matrix
consents to the Company making a
notation on its
records or giving
instructions to
any
transfer agent of the
Company in order to implement the
restrictions on transfer of the Shares set forth herein.
(g) Matrix understands
that an investment in
the
Shares is a speculative investment which involves a high
degree of risk.
(h) Matrix
is aware that no federal or state
agency has (i) made any finding or determination as to
the fairness
of this investment, (ii) made any
recommendation or
endorsement
of the Shares or the
Company, or (iii)
guaranteed or insured
any investment
in the Shares or any investment made by the Company.
(i) Matrix
understands
that the price of the
Shares offered
hereby bear no relation to the
assets,
book value
or net worth of the Company and were
determined arbitrarily
by the Company. The
undersigned
further understands
that there is a substantial risk of
further dilution on the Company's shares.
4.2.2.4
Notwithstanding the
aforesaid,
after the date
that
Matrix is issued Shares, if at any time the Company
intends to file a
registration statement
under the US
Securities Act of
1933, as amended, for
its securities
for its own account or
for the account of a third party
(other than a
registration of
securities
issuable on
Forms S-4, S-8 or any
similar form
available for the
Company, or any
successor form thereto
pursuant to an
employee share option, share purchase or similar benefit
plan, or pursuant to a merger, exchange offer or a
registration on any
registration
form which does not
include substantially
the same information
as would be
required to be
included in a registration statement
covering the
resale of the
Shares), it shall give a
written notice to
Matrix of such
intention.
Upon the
written request of
Matrix given within twenty (20) days
after its receipt of any such notice, the Company shall
use its reasonable efforts to include in such
registration all of
the then outstanding
Shares which
<PAGE>
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Matrix holds and
indicated its desire to register in
such request,
so as to permit the
disposition
of the
shares so registered, subject to Matrix agreeing to sign
any underwriting
agreement in customary
form to which
the Company
or it stockholders may be a party and
agreeing to such lockup obligation and other obligations
related to the
registration that are
applicable to all
other shareholders
who hold at least 2%
of the issued
and outstanding shares
of the Company that
participate
in such
registration.
Notwithstanding the
aforesaid,
in the event of an
underwritten offering,
if the managing underwriters
advise Matrix
in writing that in their opinion the
number of securities included in the registration
requests exceeds
the number that can be sold in such
offering without
adversely affecting the ability to
effect an orderly distribution of the registered
securities, the
Company will be entitled to subordinate
the registration
of the Shares to the
registration of
securities by
the Company for its own account.
Additionally,
and notwithstanding
anything
to the
contrary in the first paragraph of this Section 4.2.2.4,
if the Company
is requested to register the Shares
together with
the registration of third parties'
securities as part of
the purchase from the
Company of
such securities
by such third parties then the
registration of the Shares may be subject by the Company
to a special
lock-up for a period of six months,
regardless of
whether or not such third parties'
securities are subject to lock-up.
The registration
rights granted to Matrix under this
Section 4.2.2.4
shall terminate with respect to any
Shares upon
the earlier of (i) the lapse of 5 years
following the
issuance by the
Company of such
Shares;
and (ii) if and for so long as such Shares can be sold
freely without
registration
under the Securities Act
(such as under Rule 144 or any successor thereof). In
the event of an underwritten offering, if the managing
underwriters advise
Matrix in writing that in their
opinion the amount of securities proposed to be sold in
such underwritten
offering exceeds the
amount that can
be sold in such underwritten offering, then there shall
be included in such underwritten offering the number of
Shares which in the opinion of the managing underwriters
can be sold. Without
limiting the generality of the
foregoing, in the
event Matrix is at any time able to
sell Shares under Rule 144(k) and thereafter is unable
to do so due
to its status as an affiliate of the
Company, Matrix's
rights under this section will be
reinstated with
respect to all of the
Shares held by
Matrix.
4.2.2.5 Matrix shall solely bear all tax consequences arising
from this Section
4.2.2, including the
issuance of the
Shares and their sale. Matrix will indemnify the Company
against and hold it harmless from, any liability for
such tax liability
or interest or penalty thereon,
including, without
limitation,
liabilities relating to
the necessity to withhold, or to have withheld, any such
tax.
4.2.2.6 Upon each and
every issuance of Shares to Matrix
hereunder, the
Company shall deliver to Matrix the
following documents:
<PAGE>
-11-
(i) A stock
certificate representing the Shares issues
to Matrix;
(ii) Opinion of the
legal counsel
for the Company in
the form of EXHIBIT 4.2.2.6 hereto;
(iii) A good standing
certificate from the Secretary of
the State of Delaware
dated as of the date of the
issuance of such Shares.
4.2.2.7 Upon the
holding by Matrix of at least 20% of Company
shares on a fully diluted basis, Matrix will be
entitled, upon
its sole discretion, to nominate a
director to the Company's slate.
4.2.3 If at any time after the exercise of the Option the shares
of
common stock of the
Company are not listed on the Over the
Counter Bulletin
Board, or any other exchange or other
quotation system which
requires timely filings with the SEC ,
the Company shall still be entitled to pay the next Milestone
Payment which is due
in Shares, provided
that the fair value
of said Shares shall be determined in accordance with the good
faith decision of the Company's Board of Directors which value
shall not be less than the lowest price per share paid for the
Company stock in the then past twelve-month period. Subsequent
to such Milestone
Payment being made in
Shares, the
Company
shall pay any future Milestone Payments only by cash until the
shares of the Company
become listed on the Over the Counter
Bulletin Board,
or any other exchange or other quotation
system, which requires
timely filings with
the SEC, at which
time the Milestone
Payments can be made in Shares or cash, in
the discretion of the Company.
4.3
In addition to
the Milestone
Payments, Matrix will be entitled to
receive during the
License Term
royalties of * of any
and all Net
Sales or any and all Net Rights Income (including such Net Sales or
Net Rights Income
which were intended to be received by the Company
and were received by
other Person in lieu of the Company according
to the Company's
instructions) (the
"ROYALTIES"),
subject to the
following terms and conditions:
4.3.1 Payment of Royalties shall continue during the License Term
as
long as the applicable
Licensed Products and/or Compounds are
covered by a valid patent. Notwithstanding the above, if it
has been agreed with a
third party that
royalties or other
payment with
respect to
certain Licensed Products and/or
Compounds shall be
paid even after the expiration of relevant
patent(s) during the
License Term ("POST
PATENT PAYMENTS"),
the Company shall continue paying Royalties to Matrix on Net
Rights Income
and/ or Net
Sales during such time that the
Company or anyone on its behalf receives such royalties or
other payment from
such third party. For
the purpose of this
Section, the term Post
Patent Payment will regard to all such
payments which were intended to be received by the Company and
were received by other Person in lieu of the Company. For the
voidance of
doubt, in the event that lower royalties or
payments are received
after such expiration,
the Royalties
shall be reduced
accordingly but shall
remain, at all
times
including
after such expiration,
at a rate of * of the
total
Net Rights Income and/or Net Sales if and as reduced.
----------
*
Omitted pursuant
to a request for confidential treatment and filed
separately
with the Securities and Exchange Commission.
<PAGE>
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4.3.2 All payments of Royalties should be in U.S. dollars, payable
by means of a wire
transfer to a bank account designated by
Matrix. The Royalties
shall become due and
payable within 30
days of the
end of each Reporting Period, and shall be
calculated with respect to the preceding Reporting Period.
4.3.3 In the event that any Licensed Product and/or Compounds are
sold in form of a combination product containing one or more
products other than
the Licensed
Product and/or Compounds
("COMBINATION
PRODUCT"), the amount of revenue to be included
in the Net Sales hereunder for such Combination Product shall
be calculated by multiplying the Net Sales of the
Combination
Product by the fraction A/(A+B), where A is the invoice price
of the Licensed
Product and/or
Compounds if sold
separately
and B is the total invoice price of all the other products in
the Combination Product ("OTHER Products"), if sold separately
by the Company or anyone on its behalf. In the event that any
Licensed Product,
Compounds or such Other Product is not sold
separately, than the
parties hereto shall, in good faith,
agree to the values
applicable to A and B
which reflect the
prices of such
Licensed Product,
and/or Compounds and such
Other Product,
respectively,
as if they were to be sold
separately. The provisions of this Section shall also apply to
any grant of Rights by the Company resulting with Net Rights
Income of Combined Product, mutatis mutandis.
4.3.4 Company shall
make all Royalty
payments to Matrix under this
Agreement according
to its terms. If any payment made by
Company under this
Agreement is required by law to be subject
to withholding
tax, such withholding tax shall be borne by
Matrix and shall be
deducted from the
payments by Company.
Notwithstanding
the above,
Company
shall
not deduct
withholding taxes from the payments if Matrix provides Company
all the necessary documentation from the applicable tax
authorities allowing it not to deduct withholding taxes.
4.4
Matrix
confirms that payment
under the R&D Agreement, the Advance,
the Milestone Payments and the Royalties shall be the full,
complete
and final
consideration that
Matrix is entitled to
in connection
with the License granted hereunder, and Matrix shall not be
entitled
to
any additional fee, commission, royalty, securities,
reimbursement of expenses or other payment.
5
THE RESEARCH & DEVELOPMENT PROGRAM
5.1
By the Closing
Date, the Steering
Committee shall define a detailed
research and
development program
for the development of
Compounds
and the development of License Products by the Company based on
the
Compounds (the "R&D PROGRAM"). The main Stages of Development,
the
estimated duration for each Stage of Development, the estimated
time
period from the
conclusion of each Stage of Development until the
commencement of the next Stage of Development (the "PERIODS BETWEEN
STAGES") and the
Milestone to be achieved upon the compilation of
each Stage of
Development
of such R&D
Program are detailed in
EXHIBIT 5.1.
Notwithstanding the
provisions of Exhibit
5.1, it is
hereby agreed
that if upon the
completion
of any Period
Between
Stages the Company will be in substantial negotiations for the
grant
of Sub-License
or other Rights to a Qualified Entity, and such
Qualified Entity
provided the Company with letter of intent or
similar written
document (whether binding or non-binding) with
respect to such proposed transaction, then the applicable Period
Between Stages
will be extended by an additional six (6) month
period.
<PAGE>
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5.2
The estimated budget for each Stage of Development of the R&D
Program, to the extent
preformed (the "COSTS") is detailed in
Exhibit 5.1 hereto (the "BUDGET").
5.3
Matrix has
commenced the R&D Program, it shall continue its conduct
after the date hereof
and fund it
independently
according to the
terms herein and it
anticipates
with no guarantee of
success that
the oral bio
availability of the
Compound will be achieved and the
First Milestone will be obtained by it prior to January 31, 2006.
On
the Closing
Date the Company shall pay Matrix an advance in the
amount of US$35,000,
in addition to an amount of US$25,000 that has
been advanced to
Matrix by the Company on September 29, 2005, to
partially fund the
First Stage of
Development
(collectively, the
"ADVANCE").
5.4
Upon the
exercise of the Option it shall be the Company's decision,
in its sole discretion, whether to undertake the R&D
Program or any
part thereof,
or whether to request Matrix to provide it with
services pursuant to the R&D Agreement, provided however, that if
the Company
exercised the Option, it shall be obliged to: (i)
conduct the First Stage of Development through Matrix; (ii) to fund
the First Stage of
Development;
and (iii) if the First
Milestone
will be successfully
achieved, to further
fund the Second Stage of
Development.
5.5
The Company may
conduct, according to
reasonable industry standards
in the Field, the R&D Program or any part therefrom,
other than the
First Stage of
Development
which will be
conducted through the
services of
Matrix pursuant to the R&D Agreement, through the
service of third
parties or otherwise,
at its premises or at the
premises of any third
party, at the Company's sole discretion.
Matrix hereby
undertakes
to conduct all or any part of the R&D
Program with regards to the Compounds, or any Stage of Development,
all subject to
reasonable request by
the Company, pursuant
to the
terms of the R&D Agreement and subject to the agreed payment.
It is
hereby agreed that since Matrix holds certain unique know how, the
performance of the First Stage of Development, if preformed by the
Company, shall be
solely through the
services of Matrix
under the
R&D Agreement.
5.6
For the avoidance of doubt, is it
hereby clarified that the election
of certain Compound(s)
as subject of the
R&D Program
will be the
Company's decision, at its sole discretion, after consultation with
Matrix and after
reviewing the advice of the Steering Committee in
this matter and subject to Section 9 hereafter. In addition, and
based on the results
of the R&D
Program, the
Company may
request
that Matrix shall use
and exploit the Matrix IP, according to the
Matrix IP Services and
subject to section
3.7 above,
in order to
improve certain Compound or develop new Compounds.
5.7
In the
event that the R&D Program will indicate that certain
Compound may have
potential therapeutic
value in field other
than
the Field (the "OTHER FIELD"), the Company may initiate research
and
development program for the exploitation of the therapeutic value
of
such Compound in such Other Field. In such case, it is hereby
agreed
that Matrix will grant the Company a transferable, royalty bearing,
exclusive license
(subject to other licenses Matrix has provided to
third parties
in the Other Field) to use such Compound, in the
Territory in the Other Field, and the parties will negotiate in
good
faith the terms of the
research and
development
program and the
terms of the license
for such Compound in the Other Field. Any
disagreement on any of the above terms shall be brought
before, an
industrial expert,
the identity of which shall be agreed by the
parties prior to the
exercise of the
Option, who shall solve the
deadlock to the best interest of both parties, and whose resolution
shall be final. The
terms of Section 20
hereunder shall
apply to
such arbitration,
mutatis mutandis. Company shall provide Matrix
with general details
of such exploitation
in the Other Field which
do not harm the rights of third parties and its rights with
regards
to such activities.
<PAGE>
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5.8
The parties will
work together to
establish an advisory
board for
the R&D Program in addition to the Steering Committee,
with members
who are reputable experts in the Field.
6
STEERING COMMITTEE
6.1
Immediately
following the Closing
Date, the parties shall establish
a two-member committee
(the "STEERING
COMMITTEE"), each
member of
which shall have a professional scientific background in the
Field.
One member
shall serve on behalf of the Company and one member shall
serve on behalf of Matrix.
6.2
The initial
members of the Steering Committee shall be Prof.
David
Varon on behalf of the Company, and Dr. Marcel Thurk, on behalf of
Matrix.
6.3
The Steering
Committee shall have the following responsibilities:
6.3.1 to define a detailed R&D Program and Budget and, to the
extent
required, amend or otherwise revise their terms;
6.3.2 to supervise and oversee the performance of the R&D Program,
including, without
limitation,
receiving and
discussing the
reports presented to the Steering Committee in accordance with
the R&D Agreement
or such other reports
as shall be prepared
by the Company
and Matrix at the request of the Steering
Committee;
6.3.3 to determine
that certain Stage of
Development, or any
part
thereof, should be extended, including, without limitations,
if unexpected
scientific
difficulties or delays occurred, if
third party
contactor fail to perform its obligations in
timely manner
or if the actual costs of such Stage of
Development exceed the
estimated costs as detailed in the
Budget attached on the
date hereof,
all through no fault
of
the Company.
6.3.4 to determine
whether a Milestone
was successfully
attained
upon dispute between the parties in this matter;
6.3.5 to advise whether certain Compound has potential
therapeutic
value in the Field;
6.3.6 if a certain
Milestone was not
achieved according to this
Agreement and the R&D Program, the Steering Committee shall
be
entitled to determine that, notwithstanding such failure,
the
R&D shall continue for an additional 9 months.
6.3.7 to advise whether certain Compound has potential
therapeutic
value in fields other than the Field;
6.3.8 to advise whether Matrix should use and exploit the Matrix
IP,
through the R&D Agreement in order to improve certain
Compound
or develop
new Compound, based on the results of the R&D
Program;
6.3.9 Any other
responsibility
mutually agreed between the Company
and Matrix.
6.4
For the purpose
of carrying out its
responsibilities, the
Steering
Committee may at any reasonable time consult with the management
and
scientists of each
Party who are involved in the R&D Program. Each
Party undertakes to
offer all reasonable
assistance to the members
of the Steering
Committee that may be required for the Steering
Committee
to fulfill its responsibilities hereunder.
<PAGE>
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6.5
All decisions of
the Steering Committee must be adopted by unanimous
consent of all the members thereof. In the event of a deadlock
with
regard to a
scientific
matter only, which is subject to the
authority of the
Steering Committee,
this matter shall be
brought
before a Scientific
Arbitrator, who shall
arbitrate the matter, as
provided in Section 20 hereof, and whose resolution shall be
final.
6.6
The Steering Committee shall meet within 15 days from the
Closing
Date, and thereafter from time to time as required,
but at least
every four (4) months
during the License
Term, at a location to
be
agreed upon in
light of the
substance of discussions, unless a
different location
shall be agreed upon by the members of the
Steering Committee.
Either member of the Steering
Committee may
convene a meeting by giving notice to the other member at least 10
business days in
advance and each
member shall use
his/her best
efforts to attend all meetings.
6.7
Within
seven business days following each Steering Committee
meeting, the Steering
Committee shall
prepare a written summary of
such meeting which shall be provided to both parties. Such summary
shall include, at a minimum: (a) a list of all decisions made by
the
Steering Committee;
and (b) a report
regarding the progress of the
R&D Program.
6.8
The CEO (or the
designee of the CEO)
and patent attorneys
of each
Party shall be
entitled to participate in any and all Steering
Committee meetings.
6.9
The expenses of
each member of the Steering Committee shall be born
by the Party who designated such member to the Steering
Committee.
7
REPRESENTATIONS OF MATRIX
Matrix
represents and
warrants to the Company that on the date hereof and
as of
Closing:
7.1
Corporate
Existence
and Power. Matrix is a corporation duly
incorporated, validly
existing and in good
standing under the laws
of the State of
Delaware, and has all corporate powers and all
material governmental
licenses,
authorizations,
consents
and
approvals required to carry on its business as now conducted.
7.2
Authorization;
Execution and
Delivery; No Violation. The execution,
delivery and performance of this Agreement and each of the
ancillary
agreements and all the other agreements, documents and instruments
to be executed and
delivered by Matrix
pursuant hereto or
entered
into in connection with the transactions contemplated hereby (the
"ANCILLARY AGREEMENTS") have been duly and validly authorized by
all
necessary corporate action on the part of Matrix. This Agreement
and
each of the
Ancillary Agreements have been duly executed and
delivered by Matrix, constitute the valid and binding obligations
of
Matrix, and are
enforceable
in accordance
with their
respective
terms. The execution, delivery and performance of this Agreement
and
each of the Ancillary
Agreements
by Matrix do not and will not
violate, conflict
with, result in a breach of or constitute a
default under or
result in the creation
of any lien under (a)
the
Certificate of Incorporation, Bylaws or Articles of Association,
as
applicable, of
Matrix, as amended to date, (b) any agreement,
contract, license,
instrument,
lease or other
obligation to which
Matrix is a party or
by which it is bound,
(c) to the best of
its
knowledge and
following its due inquiry, any judgment, order,
decree, ruling or injunction or (d) to the best of its knowledge
and
following its due inquiry, any statute, law, regulation or rule of
any Governmental
Agency applicable to Matrix or by which any of its
properties or assets or business may be bound.
<PAGE>
-16-
7.3
Consents and
Approvals.
To the best of its
knowledge and following
its due inquiry, no
registration
or filings with,
notices to, or
consent, approval,
permit, authorization or action of, any third
party (including
any Governmental Agency or other Person) is
required in connection
with the execution and delivery by Matrix of
this Agreement,
the Ancillary
Agreements or any
other agreement,
document and
instrument
to be executed
and delivered by Matrix
pursuant hereto
or in connection with the consummation of the
transactions contemplated hereby or thereby.
7.4
Taxes.
There are no unpaid
taxes, assessments or
public charges of
any type or nature whatsoever, due or payable to any federal,
state
or local Governmental
Agency (including,
without limitation,
any
income, social
security,
unemployment
insurance,
worker's
compensation premiums,
withholding, sales,
use, excise,
franchise
and other taxes and charges, any deposits required to be made with
respect thereto,
and all penalties and
interest charges
thereon)
which are or could
become a Lien or
charge against
or otherwise
affect any of the Compounds or any interest therewith.
7.5
Litigation.
To the best of its knowledge and following its due
inquiry, there are no actions, suits, proceedings, citations of any
Governmental Agency,
claims
or investigations instituted and
pending, or to the
best knowledge of
Matrix and following
its due
inquiry, threatened
against or affecting Matrix or any of its
Affiliates and
involving, directly or
indirectly,
the Compounds.
There is no
unsatisfied judgment
against Matrix which
is or
