ROYALTY, DISTRIBUTION RIGHTS AND JOINT COOPERATION AGREEMENT

 

                        ROYALTY, DISTRIBUTION RIGHTS AND

                           JOINT COOPERATION AGREEMENT

 

         This Royalty, Distribution Rights and Joint Cooperation Agreement (this

"Agreement"), is entered into as of this 7th day of April, 2004, among Alembic,

Limited ("Alembic"), Xechem International, Inc. ("Xechem USA") and Xechem

Pharmaceuticals Nigeria, Limited (the "Company").

 

                                    RECITALS

 

         A. Xechem USA is licensee from NIPRD with worldwide exclusive rights to

manufacture and sell the product NIPRISAN, known as NICOSAN(TM)/HEXOXIN(TM) (the

"Product").

 

         B. Xechem USA is a majority shareholder of the Company, and Alembic has

a minority ownership position in the Company.

 

         C. The Company desires to establish a large scale manufacturing

operation in Nigeria (the "Manufacturing Operation") to manufacture and sell the

Product.

 

         D. Xechem USA has agreed to grant the Company a license to manufacture

and sell the Product in Nigeria and other African countries in consideration for

a royalty and upon the other terms and conditions set forth herein.

 

         E. Alembic has agreed to lend $3,000,000 or more to Xechem USA pursuant

to that certain form of Convertible Promissory Note previously delivered to

Alembic (the "Note"), on the condition that the Company pays Alembic a fee as

provided herein.

 

         NOW, THEREFORE, in consideration of the foregoing and the mutual

representations, warranties, covenants and agreements contained in this

Agreement, Xechem USA, the Company, and Alembic hereby agree as follows:

 

                                   ARTICLE I

 

                                   DEFINITIONS

 

         Whenever used herein, the following words and terms shall have the

meanings set forth in this ARTICLE I:

 

         1.1 "Affiliate" shall mean a person or entity controlled by or under

common control with another person or entity, as more fully construed under the

Securities Act of 1933, as amended.

 

         1.2 "API" means one or more Active Pharmaceutical Ingredients or Active

Phyto-pharmaceutical Ingredients, as the case may be, contained in the Product.

 

         1.3 "Confidential Information" shall mean confidential, non-public

technical information, including without limitation, proprietary data, technical

know-how, trade secrets,

 

 

 

 

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formulae, production processes, manufacturing, engineering and drawings, and

similar information oral or written or in other tangible forms recording or

evidencing Xechem USA's or the Company's proprietary expertise relating to the

Products.

 

         1.4 "Copyrights" shall mean all copyrights and registrations, owned by

Xechem USA relating to the Product.

 

         1.5 "Improvement" shall mean any modification, improvement or

derivative work of the Licensed Property as contemplated by SECTION 2.7.

 

         1.6 "Licensed Property" shall mean the Product Rights, Trademarks,

Trade Secrets, Copyrights, and Improvements licensed hereunder.

 

         1.7 "Licensed Territory" shall mean the geographic area constituting

the country of Nigeria and other African countries.

 

         1.8 "Product Rights" shall mean Xechem USA's right to manufacture,

produce, market, sell, distribute and exploit the Product.

 

         1.9 "Trademarks" shall mean (a) the service marks, trademarks, and

trade names incorporating the words "Xechem", NICOSAN(TM) or HEXOXIN(TM), and

all derivations of such service marks, trademarks and trade names, and (b) any

other service marks, trademarks, and trade names created during the License Term

and relating to the Product.

 

         1.10 "Trade Secrets" shall mean all technical information, business

information and know how, now or hereafter possessed by Xechem USA with respect

to manufacturing the Product.

 

                                    ARTICLE II

 

                       GRANT OF RIGHTS; CONDUCT BY PARTIES

 

         2.1 GRANT OF RIGHTS. Subject to the terms and conditions of this

Agreement, for the License Term (as defined below), Xechem USA hereby grants to

the Company and the Company hereby accepts from Xechem USA, a non-transferable

license to use the Licensed Property in the Licensed Territory to manufacture,

produce, sell, distribute, market and exploit the Product within the Licensed

Territory. The license shall be exclusive with respect to the Licensed

Territory. In addition, subject to the terms and conditions of this Agreement,

for the License Term, Xechem USA hereby grants to the Company the limited right

to sell the Product or the corresponding API to Xechem USA for sale in the

United States through Xechem USA, one of its affiliates or other person approved

by Xechem USA. Prior to the Commencement Date (as defined below), the Company

shall have the right to use the Licensed Property as reasonably necessary to

establish a Manufacturing Operation. Other than as set forth above, the Company

shall have no right to manufacture, distribute, sell, market or exploit the

Product in any other territory.

 

         2.2 NO OTHER LICENSES. Xechem USA represents and warrants that it has

not granted any other license for the Licensed Property in the Licensed

Territory and agrees that it will not

 

 

 

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grant any licenses or permit access to the Licensed Property in the License

Territory to any other entity whatsoever.

 

         2.3 NO RIGHT TO SUBLICENSE. The Company shall not have the right to

sublicense to others any of the rights that have been granted under ARTICLE II

hereof.

 

         2.4 RESERVATION OF RIGHTS. Any right or license not expressly granted

to the Company is reserved to Xechem USA. Except as expressly set forth herein,

no express or implied license is granted to the Company to use, receive,

reproduce, copy, market, sell, distribute, license, or sublicense the Licensed

Property. The Company acknowledges that Xechem USA is the owner of the entire

right, title and interest in and to the Licensed Property, acknowledges the

validity of Xechem USA's title to or right to use, as the case may be, the

Licensed Property, and agrees not to challenge or cooperate in challenging

Xechem USA's rights in any of the Licensed Property. The Company further agrees

that during the License Term and thereafter, the Company shall not without the

consent of Xechem USA: (a) apply for or seek registration anywhere at any time

of any of the Trademarks or any components or any words or marks confusingly

similar thereto; or (b) do anything or commit any act which might prejudice or

adversely affect the validity of the Licensed Property or the ownership of

Xechem USA thereof.

 

         2.5 CONFIDENTIALITY. Each of the parties hereto agrees with respect to

Confidential Information which it received from the other party, not to disclose

any of the Confidential Information to any person or other entity, or to reduce

the Confidential Information to writing or reproduce it without prior and

specific written permission from the other, except to the extent required to be

disclosed to directors, officers, employees, accountants, attorneys, and agents

of either of the parties and except to the extent such information is required

to be reduced to writing in internal reports of the parties. Each of the parties

hereto will take all reasonable steps necessary to ensure that the obligations

and restrictions imposed on it by this Agreement are observed by its directors,

officers, employees, accountants, attorneys and agents, such reasonable steps

shall include, but are not limited to, requiring any such entities or persons to

sign a Confidentiality Agreement with regard to the Confidential Information.

The obligations set forth above shall not apply to any Confidential Information

which either party is able to demonstrate to the other's satisfaction:

 

             (a) was known by either party through independent third parties

prior to the execution of this Agreement; or

 

             (b) was publicly known prior to the execution of this Agreement or

which became publicly known after the execution of this Agreement through no

fault of either of the parties or its directors, employees, officers,

accountants, attorneys or agents; or

 

             (c) becomes available to either party at any time from another

source which is under no obligation of confidentiality directly or indirectly,

to either of the parties with respect thereto. The confidentiality obligations

hereunder shall survive the expiration or termination of this Agreement for a

period of ten (10) years.

 

         2.6 DISCLOSURE OF INFORMATION. The Company shall timely provide and

disclose to Xechem USA full and complete detailed information with respect to

all present and future improvements, inventions, know-how and the like, made by

the Company during the term of the License Term which relate to the Licensed

Property.

 

 

 

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<PAGE>

 

         2.7 IMPROVEMENTS. Any and all rights in and to improvements,

inventions, know-how and the like relating to the Licensed Property and made by

the Company shall belong to Xechem USA. Any trademarks, service marks and trade

names, create jointly or individually by either or both of Xechem USA or the

Company, and relating to the Products, shall exclusively belong to Xechem USA

with the rights to the Company for use in Nigeria and other African countries.

If requested by Xechem USA, the Company shall, without further consideration, do

all acts necessary for obtaining, sustaining, reissuing or extending patents,

trademarks, copyrights or similar right based on improvements to the Licensed

Property and shall give testimony and otherwise provide evidence in cases of

interference. All improvements shall be considered Confidential Information.

 

                                  ARTICLE III

 

                                 TERM OF LICENSE

 

         3.1 TERM. The term of this license granted pursuant to ARTICLE II of

Agreement (the "License Term") shall commence on the date the Manufacturing

Operation is fully approved by all governmental and regulatory bodies to

manufacture the Product (the "Commencement Date"), and shall terminate fifteen

years from the Commencement Date, or such earlier date as a result of a

termination as provided in SECTION 3.2.

 

         3.2 EARLY TERMINATION. Subject to SECTION 4.3 of this Agreement, if any

Royalty payments to Xechem USA are in arrears for twenty (20) days after the

delivery of notice of default by Xechem USA, or if the Company defaults in

performing any other provision of this Agreement and such default continues for

a period of thirty (30) days following delivery of notice of default by Xechem

USA, or if the Company is adjudicated a bankrupt or becomes insolvent, or enters

into a composition with or assignment for the benefit of creditors, or is

subject to a voluntary or involuntary bankruptcy proceeding which is not

dismissed within thirty (30) days from institution, or if a receiver is

appointed for it, then Xechem USA shall have the right to terminate the License

Term, and this Agreement and all rights and licenses granted to the Company

hereunder shall terminate, without prejudice to Xechem USA's or Alembic's right

to collect monies due or to become due under this Agreement, and without

prejudice to any other rights of Xechem USA or Alembic. Notwithstanding anything

to the contrary contained herein should NIPRD terminate its license with Xechem

USA for the Product, Xechem USA shall have the right to terminate this

Agreement. Xechem USA shall indemnify Alembic against any loss or damages which

it may suffer or likely to suffer due to such early termination of agreement by

Xechem USA; such indemnity shall be limited to actual losses or actual damages,

shall not include consequential damages and shall not create any liability to

Xechem where NIPRD wrongfully terminates its license with Xechem USA or where

the Company's default on its obligations to Xechem USA is not caused by a