LICENSE AND SUPPLY AGREEMENT
between
GLOBAL KINETICS, INC.
and
AMARILLO BIOSCIENCES, INC.
October 19, 2005
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TABLE OF CONTENTS
ARTICLE I:
DEFINITIONS.........................................................5
ARTICLE II: RESEARCH AND
DEVELOPMENT..........................................12
Section 2.01. GKI
Obligations.......................................12
Section 2.02. ABI
Obligations.......................................13
Section 2.03.
Availability of Resources; Cooperation................13
Section 2.04.
Reporting Obligations of GKI..........................14
ARTICLE III:
LICENSE..........................................................14
Section 3.01. License
and Supply Grant..............................14
Section 3.02.
Restrictions..........................................14
Section 3.03. Retained
Rights.......................................14
ARTICLE IV: PAYMENTS AND
ROYALTIES............................................15
Section 4.01. Royalty
Payments......................................15
Section 4.02. Minimum
Payment.......................................15
Section 4.03.
Reports...............................................15
Section 4.04. Records
and Audits....................................15
Section 4.05. Exchange
Rate; Manner and Place of Payment............16
Section 4.06. Late
Payments.........................................16
Section 4.07.
Taxes.................................................16
ARTICLE V: TERM AND
TERMINATION...............................................16
Section 5.01.
Term..................................................16
Section 5.02.
Termination By GKI....................................16
Section 5.03.
Termination by ABI....................................17
Section 5.04.
Termination Upon Certain Events.......................18
Section 5.05.
Remedies..............................................18
Section 5.06. Effect
of Termination.................................18
Section 5.07.
Bankruptcy............................................19
Section 5.08.
Continuing Obligations................................19
Section 5.09. Return
of Confidential Information....................19
ARTICLE VI: SUPPLY, MANUFACTURE AND PURCHASE OF
PRODUCT.......................19
Section 6.01. Supply
of Clinical Samples............................19
Section 6.02. Supply
and Manufacturing Rights.......................20
Section 6.03. Quality
Assurance.....................................20
Section 6.04. ABI's
Duties..........................................20
Section 6.05. Failure
to Supply.....................................21
Section 6.06.
Allocation............................................22
Section 6.07. Records
and Audits....................................22
ARTICLE VII: PURCHASE AND
SALE................................................22
Section 7.01. Purchase
Price and Payment............................22
Section 7.02. Labeling
and Artwork..................................23
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Section 7.03. Purchase
Forms.........................................23
Section 7.04.
Confirmation...........................................23
Section 7.05.
Delivery...............................................23
Section 7.06. Forecasts and
Orders...................................24
ARTICLE VIII: WARRANTY, REJECTION AND
INSPECTIONS.............................25
Section 8.01. ABI
Warranty...........................................25
Section 8.02. Rejection of Product for
Failure to Conform to Specifications...................25
Section 8.03. GKI
Inspections........................................26
ARTICLE IX: REGULATORY
COMPLIANCE.............................................26
Section 9.01. Maintenance of Marketing
Authorizations................26
Section 9.02. Adverse Drug Event Reporting and
Phase IV Surveillance..................................26
Section 9.03. Commercial Sale Testing and
Reporting..................27
Section 9.04.
Assistance.............................................27
Section 9.05.
Compliance.............................................27
ARTICLE X: REPRESENTATIONS, WARRANTIES AND
COVENANTS..........................28
Section 10.01. Corporate
Power.......................................28
Section 10.02. Due
Authorization.....................................28
Section
10.03. Binding Obligation....................................28
Section 10.04. Ownership of ABI
Rights...............................28
Section 10.05. Material
Agreements...................................29
Section 10.06. Adverse
Properties....................................29
Section 10.07. Preservation of Name and
Reputation...................29
Section 10.08.
Debarment.............................................29
Section 10.09. Limitation on
Warranties..............................29
Section 10.10. Limitation of
Liability...............................30
ARTICLE XI: COVENANTS OF GKI AND
ABI..........................................30
Section 11.01. Access to Books and
Records...........................30
Section 11.02. Further
Actions.......................................30
Section 11.03. Equitable
Relief......................................30
ARTICLE XII:
INDEMNIFICATION..................................................31
Section 12.01. GKI Indemnified by
ABI................................31
Section 12.02. ABI Indemnified by
GKI................................31
Section 12.03. Prompt Notice
Required................................31
Section 12.04. Indemnitor May
Settle.................................32
ARTICLE XIII: DISPUTE
RESOLUTION..............................................32
Section 13.01.
Disputes..............................................32
Section 13.02. Trial Without
Jury....................................33
Section 13.03. Performance to
Continue...............................33
Section 13.04. Provisional
Remedies..................................33
Section 13.05. Determination of Patents and Other
Intellectual Property.................................33
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ARTICLE XIV:
CONFIDENTIALITY.................................................33
Section 14.01.
Confidentiality......................................33
Section 14.02.
Publicity Review....................................34
ARTICLE XV:
MISCELLANEOUS....................................................34
Section 15.01.
Commercially Reasonable Efforts.....................34
Section 15.02.
Notices.............................................34
Section 15.03.
Severability........................................35
Section 15.04. Entire
Agreement/Merger.............................35
Section 15.05.
Amendment...........................................36
Section 15.06.
Counterparts........................................36
Section 15.07. No
Waiver of Rights.................................36
Section 15.08. Force
Majeure.......................................36
Section 15.09. Further
Assurances..................................36
Section 15.10.
Assignment and Sublicense...........................36
Section 15.11.
Expenses............................................37
Section 15.12. Binding
Effect......................................37
Section 15.13.
Governing Law.......................................37
Section 15.14.
Survival of Representations and Warranties..........37
Section 15.15. No
Strict Construction..............................37
Section 15.16.
Independent Contractors.............................37
Exhibit A
-
Specifications.......................................A-1
Exhibit B
- Certificate of Compliance............................B-1
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LICENSE AND SUPPLY AGREEMENT
This License and Supply Agreement ("Agreement") is made as of
October
19, 2005 (the "Effective Date"), by and between Global Kinetics,
Inc., a
Washington corporation ("GKI"), with its principal place of
business located at
4628 Kent Court, Kent, Washington 98032, and Amarillo Biosciences,
Inc., a Texas
corporation ("ABI"), with its principal place of business located
at 4134
Business Park Drive, Amarillo, Texas 79110. ABI and Global
Kinetics, Inc. are
sometimes referred to collectively herein as the "Parties" and
individually as a
"Party."
WHEREAS, ABI and its contract supplier, Hayashibara Biochemical
Laboratories, Inc. ("HBL") have substantial expertise in the
production and oral
use of human interferon alpha ("IFN") and have proprietary rights
and Know-How
in the field of production, purification and formulation of
IFN;
WHEREAS, ABI is willing to disclose to GKI the ABI Know-How
consisting
of human clinical data and all other data, including safety,
bioavailability,
and clinical trial data necessary for GKI to obtain regulatory
approval for a
product for the treatment of human diseases in the Territory;
and
WHEREAS, ABI has an exclusive worldwide license (except Japan)
to
market and distribute the oral formulation of HBL IFN, and desires
to provide
HBL IFN to GKI on the terms and conditions herein set forth, and
GKI desires to
obtain the right to perform clinical trials on, distribute and
market HBL IFN on
the terms and conditions herein set forth;
WHEREAS, ABI owns certain proprietary information, intellectual
property, Patents and ABI Know-How, and other rights relating to
the use of low
dose IFN for the treatment or prevention of human diseases;
WHEREAS, subject to the terms of this Agreement, ABI desires to
grant
to GKI, and GKI wishes to obtain from ABI, an exclusive supply
agreement
license, subject to existing rights, to such Know-How and related
intellectual
property rights in the Territory in connection with the Product;
and
WHEREAS, ABI is willing to grant such rights and licenses to GKI
under
the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual promises, covenants
and
agreements hereinafter set forth, the Parties mutually agree as
follows:
ARTICLE I:
DEFINITIONS
(a) The
following terms as used in the Agreement shall, unless the
context
clearly indicates to the contrary, have the meaning set forth
below:
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"ABI Know-How" means all Know-How under the Control of ABI as of
the
Effective Date and at any time during the Term related to (but not
claimed
under) the ABI Patent Rights and which is necessary or useful to
develop,
Manufacture and/or commercialize the Product, including all
information,
reports, results, inventions, materials, and any other technical
and scientific
data, specifications and formulae directly related to the
development,
regulatory approval, Manufacture, testing, use, marketing and/or
sale of
Product, including non-patentable Improvements, and any nonpublic
information
relevant to the ABI Patent Rights, including preclinical and
clinical data from
ABI's past, current or future studies, relating to safety or
bioavailability, or
preclinical or clinical data relating to the use of HBL IFN and/or
IFN for the
treatment or prevention of human diseases.
"ABI Patent Rights" means all Patent Rights that are under the
Control
of ABI as of the Effective Date and at any time during the Term
that are
necessary or useful to the use, development, Manufacture,
marketing, promotion,
distribution, sale and/or commercialization of the Product for use
in the
treatment of the Licensed Indication, and Improvements thereto
developed by or
on behalf of ABI during the Term.
"ABI Technology" means the ABI Patent Rights and the ABI
Know-How.
"Acceptance for Filing" means GKI's receipt of a letter issued by
the
FDA indicating acceptance for filing of an NDA or equivalent
marketing
application pursuant to Applicable Laws in a country in the
Territory.
"Affiliate" means any entity, which directly or indirectly
controls, is
controlled by or is under common control with either GKI or ABI.
The term
"control" as used in the preceding sentence means the power to
direct or control
the affairs of such entity by reason of ownership of at least 50%
of such entity
by voting stock, equity interest, contract or otherwise.
"Applicable Laws" means all applicable laws, rules, regulations
and
guidelines within or without the Territory that may apply to the
marketing or
sale of the Product in the Territory or the performance of either
Party's
obligations under this Agreement including laws, regulations and
guidelines
governing the marketing, distribution and sale of the Product in
the Territory,
to the extent applicable and relevant, and including all cGMP or
current Good
Clinical Practices standards or guidelines promulgated by the FDA
or the
Governmental Authorities and including trade association
guidelines.
"Approval Letter" means a letter issued by the Cambodian Ministry
of
Health or any other Governmental authority in any country of the
Territory
indicating approval of a product for commercialization.
"Certificate of Compliance" means the certificate of compliance in
the
form attached hereto as Exhibit B.
"CFR" means the United States Code of Federal Regulations.
"cGMP" means current good manufacturing practices as defined in 21
CFR
ss. 110 et seq. and established under the Act and applicable
Regulations.
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"Competing Product" means a product for human use that contains IFN
and
is marketed, distributed or sold in the Territory that is likely to
be confused
with or used as a substitute for the Product, such confusion and
likelihood of
substitution being determined based on an analysis of factors such
as, but not
limited to, recommended dosage, similarity in indications for which
it is
marketed, distributed or sold, or similarity in tradedress or
trademarks used in
the marketing, distribution or sale thereof.
"Confidential Information" means any confidential information
(including Know-How) of a Party relating to any human interferon
use, process,
method, compound, research project, work in process, future
development,
scientific, engineering, Manufacturing, marketing, business plan,
financial or
personnel matter relating to the disclosing Party, its present or
future
product, sales, suppliers, customers, employees, investors or
business, whether
in oral, written, graphic or electronic form. Confidential
Information shall not
include any information which the receiving Party can prove by
competent
evidence:
(a) is now, or
hereafter becomes, through no act or failure to act on the
part of the receiving Party, generally known or available;
(b) is known
by the receiving Party at the time of receiving such
information, as evidenced by its written records maintained in
the
ordinary course of business;
(c) is
hereafter furnished to the receiving Party by a Third Party, as
a
matter of right and without restriction on disclosure;
(d) is
independently developed by the receiving Party, as evidenced by
its
written records, without knowledge of, and without the aid,
application
or use of, the disclosing Party's Confidential Information; or
(e) is the
subject of a written permission to disclose provided by the
disclosing Party.
"Control" means the possession of the ability to grant a license
or
sublicense as provided for herein without violating the terms of
any agreement
or other arrangement with any Third Party.
"Existing Licensees" means, as applicable, Pharma Pacific
Management
Pty, Ltd. (PPM), HBL and Interferon Sciences, Inc. (ISI), their
successors,
transferees and licensees.
"Existing Licenses" means, as applicable, the HBL Agreement, the
PPM
Agreement and the ISI Agreement.
"FDA" means the United States Food and Drug Administration.
"First Commercial Sale" means the first sale for use, consumption
or
resale of a Product by GKI, its Affiliates or its sublicensees in
the Territory
(excluding any sales for clinical trials). A sale to an Affiliate
shall not
constitute a First Commercial Sale unless the Affiliate is the end
user of the
Product.
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"GAAP" means United States generally accepted accounting
principles,
consistently applied in accordance with past practice.
"Good Clinical Practices" means good clinical practices as defined
in
21 CFR ss. 50 et. seq. and ss. 312 et. seq.
"Governmental Approval" means all permits, licenses and
authorizations,
including Marketing Authorizations, required by the FDA or any
other
Governmental Authority as a prerequisite to the Manufacturing,
packaging,
marketing and selling of the Product.
"Governmental Authority" means any federal, state, local or
other
government, administrative or regulatory agency, authority, body,
commission,
court, tribunal or similar entity, including the FDA and other
entities in each
country in the Territory responsible for the regulation of
medicinal products
intended for human use.
"HBL"
means Hayashibara Biochemical Laboratories, Inc. of Okayama,
Japan.
"HBL Agreement" means the Joint Development and
Manufacturing/Supply
Agreement by and between HBL and ABI dated as of March 13, 1992, as
amended by
the First Amendment to Joint Development and Manufacturing/Supply
Agreement
dated as of January 17, 1996 and the Addendum to
Manufacturing/Supply Agreements
dated as of May 10, 1996 and September 7, 2001.
"HBL IFN" means the cell culture derived human lymphoblastoid
IFN
produced by HBL.
"Improvements" means any and all developments, inventions or
discoveries in the Licensed Indication relating to the ABI Patent
Rights
developed, or acquired by ABI at any time during the Term and shall
include
developments intended to enhance the safety and/or efficacy of the
Product.
"IFN" means human interferon alpha.
"ISI Agreement" means the License Agreement dated October 20, 1989
by
and between Interferon Sciences, Inc. and ABI, as
successor-in-interest to
Amarillo Cell Culture Company, Incorporated.
"Know-How" means all know-how, trade secrets, inventions, data,
processes, techniques, procedures, compositions, devices, methods,
formulas,
protocols and information, whether or not patentable, which are not
generally
publicly known, including, without limitation, all chemical,
biochemical,
toxicological, and scientific research information, whether in
written, graphic
or video form or any other form or format, related to human
interferon alpha.
"Licensed Indications" means any human indication treated or
treatable
by the oral administration of IFN.
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"Manufacture" or "Manufacturing Process" means the storage,
handling,
production, processing and packaging of the Product, in accordance
with this
Agreement and Applicable Laws.
"Marketing Authorization" means all necessary and appropriate
regulatory approvals, including Pricing and Reimbursement
Approvals, where
applicable, to put the Product on the market in the Territory.
"Material Agreements" means the Existing Licenses, and the TAMU
License
Agreement.
"NDA" means a new drug application, biological license application
or
establishment license application, as applicable, and all
amendments and
supplements thereto, filed or to be filed, with the FDA seeking
authorization
and approval to Manufacture, package, ship and sell the Product as
more fully
described in the Regulations.
"Net Sales" means the invoice amounts actually received for sales
of
the Product by GKI, its Affiliates or sublicensees in a bona fide
arm's length
transaction, less the following items, provided that they are bona
fide
transactions designed to optimize the sales of Product (a) cash
discounts and
trade allowances actually granted, (b) rebates and chargebacks
required by
Applicable Laws or made pursuant to agreements with customers, (c)
credits or
allowances actually granted upon claims, damaged goods, outdated
goods,
rejections or returns of such Product, including recalls, (d)
taxes, tariffs and
similar obligations, duties or other governmental charges (other
than income
taxes) levied on, absorbed or otherwise imposed on sales of such
Product in the
Territory and shown separately on the invoice, (e) shipping charges
and (f)
insurance costs related to shipping.
Components of Net Sales shall be determined in the ordinary course
of
business in accordance with historical practice and using the
accrual method of
accounting in accordance with GAAP, but shall not include any sales
of the
Product for pre-clinical or clinical testing or for other than
commercial
purposes.
In the event GKI transfers the Product to a Third Party in a bona
fide
arm's length transaction, for consideration, in whole or in part,
other than
cash or to a Third Party in other than a bona fide arm's length
transaction, the
Net Sales price for such Product shall be deemed to be the standard
invoice
price then being invoiced by GKI in an arms length transaction with
similar
customers for similar amounts less the items set forth in (a)
through (f) above.
"Patent Rights" means all rights related to human interferon
alpha
under patents and patent applications, and any and all patents
issuing there
from (including utility, model and design patents and certificates
of
invention), together with any and all substitutions, extensions
(including
supplemental protection certificates), registrations,
confirmations, reissues,
divisional, continuations, continuations-in-part, re-examinations,
renewals and
foreign counterparts of the foregoing and all improvements,
supplements,
modifications or additions.
"Phase III Study" means a well-controlled study of sufficient size
and
appropriate design to demonstrate the safety and efficacy of the
Product for its
intended use.
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"Phase IV" means, as applicable, a study or program designed to
obtain
additional safety or efficacy data, detect new uses for a drug, or
to determine
effectiveness for labeled indications under conditions of
widespread usage,
which is commenced after Government Approval of the Product in the
applicable
country in the Territory or any such study or program required by
the FDA or
other applicable Governmental Authority.
"PPM Agreement" means the PPM/ACC Sublicense Agreement dated April
27,
1995 by and between Pharma Pacific Management Pty, Ltd. and
ABI.
"Pricing and Reimbursement Approvals" means any pricing and
reimbursement approval that must be obtained before placing the
Product on the
market in the Territory in which such approval is required.
"Prime Rate of Interest" means the prime rate of interest
published
from time to time in The Wall Street Journal as the prime rate;
provided,
however that if The Wall Street Journal does not publish the prime
rate of
interest, then the term "Prime Rate of Interest" shall mean the
rate of interest
publicly announced by Bank of America, N.A., as its prime rate,
base rate,
reference rate or the equivalent of such rate, whether or not such
bank makes
loans to customers at, above, or below said rate.
"Product" means a formulation or composition containing IFN and
designated, detailed, or labeled for oral use in the treatment of
the Licensed
Indications.
"Regulations" means regulations, statutes, rules, guidelines
and
procedures promulgated by the FDA or other governmental agency
pursuant to the
Act or other law, including without limitation, those regulations
currently
contained in Title 21 of the CFR.
"Shipment" or "Shipped" means each individual group of Product
received
by GKI from ABI or its agent.
"Specifications" means the specifications for the Product as may
be
amended from time to time by GKI on notice to ABI or in compliance
with
Applicable Laws. The initial Specifications are attached hereto as
Exhibit A.
"TAMU License Agreement" means the License Agreement between The
Texas
A&M University System and ABI dated March 22, 1988, as amended
by Amendment No.
1 dated September 17, 1998.
"Territory" means the countries of Cambodia, Vietnam, and Laos.
"Third Party" means any entity other than ABI or GKI or an
Affiliate of
ABI or GKI.
"Unit" means a single finished dosage form of Product in the
form
designated by GKI, which initially, for clinical supplies, shall
consist of a
200 mg by weight, with 150 international units by activity, tablet
or lozenge.
Clinical testing may result in a change in the optimal dose and
require a new
definition of "Unit."
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(b) Each of the following terms is defined in the Section or under
the
defined term set forth opposite such term below:
ABI............................................................Preamble
ADE........................................................Section
9.02
Agreement......................................................Preamble
Clinical Records........................................Section
2.01(c)
Disputed Amount.........................................Section
5.03(a)
DMF.....................................................Section
2.02(b)
Effective
Date.................................................Preamble
Force Majeure.............................................Section
15.08
GKI............................................................Preamble
Indemnitee................................................Section
12.03
Indemnitor................................................Section
12.03
Interferon.....................................................Recitals
Loss......................................................Section
12.01
Parties........................................................Preamble
Party..........................................................Preamble
Purchase Price.............................................Section
7.01
Representatives...........................................Section
14.01
Royalty Payment Date.......................................Section
4.01
Royalty Statement..........................................Section
4.03
SEC.......................................................Section
14.02
SOP........................................................Section
9.02
Term.......................................................Section
5.01
(c) Interpretation. The section headings contained in this
Agreement
are for reference purposes only and shall not affect the meaning
or
interpretation of this Agreement. Except where the context clearly
requires to
the contrary: (i) each reference in this Agreement to a designated
"Section" or
"Exhibit" is to the corresponding Section or Exhibit of or to this
Agreement;
(ii) instances of gender or entity-specific usage (e.g., "his"
"her" "its"
"person" or "individual") shall not be interpreted to preclude the
application
of any provision of this Agreement to any individual or entity;
(iii) the word
"or" shall not be applied in its exclusive sense; (iv) "including"
shall mean
"including, without limitation"; (v) references to laws,
regulations and other
governmental rules, as well as to contracts, agreements and other
instruments,
shall mean such rules and instruments as in effect at the time of
determination
(taking into account any amendments thereto effective at such time
without
regard to whether such amendments were enacted or adopted after the
effective
date of this Agreement) and shall include all successor rules and
instruments
thereto; (vi) references to "$" or "dollars" shall mean the lawful
currency of
the United States; (vii) references to "Federal" or "federal" shall
be to laws,
agencies or other attributes of the United States (and not to any
State or
locality thereof); (viii) the meaning of the terms "domestic" and
"foreign"
shall be determined by reference to the United States; (ix)
references to "days"
shall mean calendar days; (x) references to months or years shall
be to the
actual calendar months or years at issue (taking into account the
actual number
of days in any such month or year); (xi) days, business days and
times of day
shall be determined by reference to local time in Amarillo, Texas;
and (xii) the
English language version of this Agreement shall govern all
questions of
interpretation relating to this Agreement, notwithstanding that
this Agreement
may have been translated into, and executed in, other
languages.
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ARTICLE II:
RESEARCH AND DEVELOPMENT
Section 2.01. GKI Obligations.
(a) GKI will use commercially reasonable efforts to timely complete
at
the sole cost and expense of GKI (i) clinical trials and
development of Product
for the treatment of the Licensed Indictions, (ii) animal
toxicology and other
pre-clinical studies required for commercial launch of the Product,
(iii) Phase
III Studies, and (iv) other tasks supporting commercialization of
the final
formulation of the Product.
(b) GKI shall use commercially reasonable efforts to timely secure
any
and all Governmental Approvals in the Territory and shall own and
maintain all
Governmental Approvals and related information as provided herein.
The Parties
agree and acknowledge that Governmental Approval for the Product
will first be
sought in Cambodia and then, subject to receipt of such
Governmental Approvals,
Vietnam and Laos. GKI shall seek Governmental Approval for the
Product in other
countries for the Territory no later than six (6) months, following
receipt of
an Approval Letter for the Product from the Cambodian Ministry of
Health;
provided that if clinical trials or studies in addition to those
required in
connection with the Governmental Approvals for Cambodia are
required for any
Governmental Approval in other countries of the Territory, GKI will
seek such
Governmental Approval in a commercially reasonable time period
following receipt
of an Approval Letter for the Product from Cambodia.
(c) GKI shall maintain records in sufficient detail and in good
scientific manner appropriate for patent and regulatory purposes
and shall
properly reflect all work done and results achieved in the
performance of its
duties hereunder (including all data in the form required to be
maintained under
any Applicable Laws), and any subsequent pre-clinical or clinical
studies (the
"Clinical Records"). The Clinical Records shall be owned by GKI,
shall be
considered Confidential Information of GKI and shall include books,
records,
reports, research notes, charts, graphs, comments, computations,
analyses,
recordings, photographs, computer programs and documentation
thereof, computer
information storage means, samples of materials and other graphic
or written
data generated in connection with GKI's research and development
activities with
respect to the Product.
(d) ABI has the right, upon five business days prior written notice
to
GKI, to inspect the Clinical Records upon request and during normal
business
hours, and GKI shall, subject to Applicable Laws, provide ABI upon
request with
a summary of all requested Clinical Records, to the extent
reasonably required
for the exercise of ABI's rights under this Agreement. ABI may use
the Clinical
Records and the summaries thereof internally for non-commercial
purposes. If ABI
wants to provide a Third Party with the Clinical Records or a
summary thereof or
use information contained in such records for a commercial purpose,
ABI shall
give GKI written notice and the Parties will negotiate an agreement
therefor,
including appropriate compensation to GKI and confidentiality
requirements, in
good faith. Notwithstanding the above, ABI may provide HBL with
copies of any
summaries of Clinical Records provided to ABI by GKI hereunder
provided that HBL
agrees in writing to the restrictions set forth in this Agreement
with respect
to such information.
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Section 2.02. ABI Obligations.
(a) As soon as reasonably practicable after the Effective Date,
ABI
will make available all ABI Know-How to GKI for GKI's inspection
and at GKI's
request will provide GKI with a copy of all ABI Know-How in
tangible form and a
written summary of all ABI Know-How not in tangible form. In the
event GKI
requests that more than 1,000 pages be copied in connection with
the foregoing,
GKI shall reimburse ABI for ABI's actual out-of-pocket costs for
making copies
in excess of 1,000 pages. GKI shall pay ABI such amounts within 10
days
following GKI's receipt of an invoice therefor accompanied by
documentation
reasonably supporting such invoice.
(b) ABI hereby grants to GKI reference rights to ABI's, and agrees
to
cause HBL to grant to GKI rights of reference to HBL's, as the case
may be, FDA
Drug Master File ("DMF"), when filed, and FDA Investigational New
Drug
Application, when filed, for HBL IFN and agrees to execute or cause
HBL to
execute any necessary authorization letters in this regard.
(c) ABI agrees to maintain, or cause HBL to maintain, the DMF for
HBL
IFN up-to-date at all times during the Term. ABI shall cooperate
fully with GKI
in order to obtain all the Marketing Authorizations which now are
or later
become necessary to develop, Manufacture, use, market or sell any
Product. Such
cooperation shall include, but not be limited to, ABI providing GKI
with the ABI
Know-How and ABI appearing at and participating in meetings with
regulatory
agencies at the reasonable request of GKI to assist GKI in
obtaining such
Marketing Authorizations as are now required, or may in the future
be required
to Manufacture, use, market or sell any Product. ABI shall execute,
or cause
third parties to execute, upon request by GKI, any and all
documents reasonably
necessary to obtain such Marketing Authorizations. GKI shall
reimburse ABI for
any reasonable out-of-pocket costs, including reasonable attorney's
fees,
incurred by ABI in connection with such cooperation.
(d) ABI shall provide to GKI or any sublicensee of GKI, at
GKI's
request and, unless otherwise set forth in this Agreement, sole
expense, with
any technical assistance reasonably necessary to enable GKI or such
sublicensee
to exercise fully its rights and fulfill its obligations under this
Agreement.
Section 2.03. Availability of Resources; Cooperation.
Each Party shall maintain laboratories, offices and/or other
facilities
reasonably necessary to carry out the activities to be performed by
such Party
hereunder. Upon reasonable advance notice, each Party agrees to
make its
employees and non-employee consultants reasonably available at
their respective
work locations to consult with the other Party on issues arising
during the
collaboration and in connection with any request from any
Governmental
Authority, including regulatory, scientific, technical and clinical
testing
issues.
Confidential
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filed separately
with the Commission.
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Section 2.04. Reporting Obligations of GKI.
On or prior to December 31st of each year during the Term of
this
Agreement GKI shall provide ABI with a report of ongoing
development efforts,
including a report of efforts by GKI with respect to clinical
testing,
regulatory approval efforts, marketing/sales strategy, and any
other areas into
which GKI's reasonable business efforts in accordance with this
paragraph may
reasonably be categorized. Such report shall be provided in English
and shall be
accompanied by samples of labeling, instructions, promotional and
other support
materials, if any, developed for GKI's sales force, patients,
physicians, or
other outside parties.
ARTICLE III:
LICENSE
Section 3.01. License
and Supply Grant.
Subject to the terms of this Agreement and the Existing Licenses,
ABI
hereby grants to GKI:
(a) an exclusive sublicense, with rights to sublicense, under the
ABI
Technology to use the ABI Technology to market, advertise, promote,
Manufacture,
offer for sale, sell, and distribute the Product in the Territory;
and
(b) an exclusive sublicense, with rights to sublicense, under
all
rights granted to ABI pursuant to the HBL Agreement to market,
advertise,
promote, Manufacture, offer for sale, sell, and distribute the
Product in the
Territory.
Section 3.02.
Restrictions.
GKI shall have the right to use and sell Product only in the
Territory
and only for use in the treatment of the Licensed Indications. GKI
shall not
seek customers, establish any branch or maintain any distribution
depot for
Product in any country outside the Territory. GKI shall not sell
Product to any
customer in any country outside the Territory or to any customer in
the
Territory if, to the knowledge of GKI, such customer intends to
resell such
Product in any country outside the Territory.
Section 3.03. Retained Rights.
ABI retains all rights other than as set forth in this Agreement to
HBL
IFN and IFN, including without limitation, the right to test,
develop, license,
sublicense, market, distribute or otherwise use IFN and HBL IFN for
treatment of
the Licensed Indications outside the Territory.
Confidential
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ARTICLE IV:
PAYMENTS AND ROYALTIES
Section 4.01. Royalty
Payments.
During the Term, GKI will pay ABI a royalty on Product equal to
**** of
the aggregate Net Sales of Product in each calendar year. Royalties
shall be due
and payable thirty (30) days after the end of each calendar quarter
(each a
"Royalty Payment Date"). GKI may prepay, in whole or in part, any
royalties
prior to the applicable Royalty Payment Date.
Section 4.02. Minimum Payment.
GKI shall pay to ABI a Royalty Payment of at least **** dollars
($****)
per calendar year starting in the year 2006. Failure to make this
minimum
payment shall be a reason for Termination pursuant to Section
5.03(e).
Section 4.03. Reports.
GKI shall furnish to ABI a quarterly written report (in
sufficient
detail to determine the relevant amounts and dates specified in
this Section
4.04), which report shall contain at a minimum (a) the calculation
of Net Sales;
(b) royalties payable in U.S. dollars, if any, which shall have
accrued
hereunder based upon Net Sales; (c) withholding taxes, if any,
required by law
to be deducted with respect to such sales; (d) the dates of the
First Commercial
Sale of any Product; and (e) the exchange rates, if any, used to
determine the
amount of United States dollars (collectively, the "Royalty
Statement"). Reports
shall be due on the 30th day following the close of each
quarter.
Section 4.04. Records and Audits.
During the Term and for a period of two years thereafter or
upon
written notice to GKI received prior to the expiration of such two
year period
as otherwise required in order for ABI to comply with Applicable
Law, GKI shall
keep complete and accurate records in sufficient detail to permit
ABI to confirm
the completeness and accuracy of the information presented in each
Royalty
Statement and all payments due hereunder. GKI shall permit an
independent,
certified public accountant reasonably acceptable to GKI to audit
and/or inspect
those records of GKI (including financial records) that relate to
Net Sales for
the sole purpose of verifying the completeness and accuracy of the
Royalty
Statements and the calculation of Net Sales and confirming royalty
payments for
the Product, during the preceding calendar year. Such inspection
shall be
conducted during GKI's normal business hours, no more than once in
any 12 month
period and upon at least ten days prior written notice by ABI to
GKI. If such
accounting firm concludes that such payments were underpaid during
the periods
reviewed by such accountants, GKI shall pay ABI the amount of any
such
underpayments, plus interest at a rate equal to the Prime Rate of
Interest,
within 30 days of the date ABI delivers to GKI such accounting
firm's report so
concluding that such payments were underpaid. If such accounting
firm concludes
that such payments were overpaid during such period, ABI shall pay
to GKI the
amount of any such overpayments, without interest, within 30 days
of the date
ABI delivers to GKI such accounting firm's report so concluding
that such
payments were overpaid. ABI shall bear the full cost of such audit
unless such
audit discloses an underpayment by more than 5% of the amount due
during such
period. In such case, GKI shall bear the full cost of such
audit.
Confidential
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**** Indicates that a portion of the text has been omitted and
filed separately
with the Commission.
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Section 4.05. Exchange Rate; Manner and Place of Payment.
All payments hereunder shall be payable in United States dollars.
With
respect to each calendar quarter, whenever conversion of payments
from any
foreign currency shall be required, such conversion shall be made
at the rate of
exchange reported in The Wall Street Journal on the last business
day of the
applicable calendar quarter. All payments owed under this Agreement
shall be
made by wire transfer to a bank account designated in writing by
ABI, unless
otherwise specified in writing by ABI.
Section 4.06. Late Payments.
Unless otherwise provided in this Agreement, upon the failure of
GKI to
pay any amount due under this Agreement within five days after
receipt of notice
by ABI that such amount has become due and payable and has not been
paid, GKI
shall pay a late fee of 10% of the amount due plus interest to ABI
on such
amount from the date such amount is due under this Agreement at the
Prime Rate
of Interest, calculated on the number of days such payment is
delinquent, unless
such payment is being disputed by GKI in good faith pursuant to
Section 5.03(a).
Nothing in this Section 4.06 shall relieve GKI of GKI's obligation
to make
payments or risk Termination pursuant to Section 5.03(a) or provide
a Royalty
Statement pursuant to Section 5.03(b).
Section 4.07. Taxes.
All taxes
levied on account of the payments accruing to ABI under this
Agreement shall be paid by ABI for its own account, including taxes
levied
thereon as income to ABI. If provision is made in law or regulation
for
withholding, such tax shall be deducted from the payment made by
GKI, paid to
the proper taxing authority and a receipt of payment of the tax
secured and
promptly delivered to ABI.
ARTICLE V:
TERM AND TERMINATION
Section 5.01. Term.
This Agreement will take effect on the Effective Date and will
remain
in force as long as GKI markets Product in the Territory (the
"Term"), unless
terminated earlier under provisions of this Article V.
Section 5.02. Termination By GKI.
GKI may terminate this Agreement by notice to ABI as follows:
(a) at any time with or without cause upon three months prior
written notice to
ABI;
Confidential
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(b) if ABI shall commit any material breach of the provisions of
this
Agreement; provided however, that: (i) GKI has first given ABI
notice specifying
the details of the material breach, and (ii) ABI has not cured such
material
breach, if such breach is capable of being cured within such time
period, within
45 days of the date of notice of the material breach;
(c) immediately, if the HBL Agreement is terminated; or
(d) immediately, if GKI reasonably determines based upon the
