PRODUCT DEVELOPMENT AND
LICENSE AGREEMENT
This license agreement (the
“Agreement”) dated as of June 16, 2004 (the
“Effective Date”) is entered into by and between
Nostrum Pharmaceuticals, Inc. (“Nostrum”), a Delaware
corporation, and Bionutrics, Inc. (“Bionutrics”), a
Nevada corporation.
WHEREAS,
A. Nostrum has
developed, and is in the process of developing, controlled release
and other technology for pharmaceutical products.
B. Bionutrics is
researching, developing, manufacturing, marketing and selling
pharmaceutical products.
C. Bionutrics
desires to license from Nostrum the exclusive right to develop,
manufacture, market and sell the Products (as hereinafter defined)
in the Territory (as hereinafter defined), and Nostrum desires to
grant such license to Bionutrics, all on the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the
premises, and the mutual agreements hereinafter set forth, the
parties hereby agree as follows:
Article 1 - Definitions
The capitalized terms set forth below (whether
in the singular or plural) shall have the meanings indicated for
the purposes of this Agreement.
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“Affiliate” means any Person which
controls, is controlled by or is under common control with
Bionutrics or Nostrum, as the case may be. The term
“control” means the ownership, directly or indirectly,
of more than fifty percent (50%) of the voting stock or equity
interest of the subject Person, or the right to receive over fifty
percent (50%) of the profits or earnings of such Person. Such other
relationship as in fact gives a Person the power or ability to
control the management, business and affairs of the subject Person
shall also be deemed to constitute control.
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“FDA” means the United States Food
and Drug Administration or any successor agency of the United
States government.
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“Nostrum Technology” means all of
Nostrum’s proprietary information, know-how, materials and
technology related to the Products (including without limitation,
manufacturing information) and any related patent applications or
patents owned or controlled by Nostrum or its Affiliates to the
extent they cover the Products or any such information, know-how,
materials or technology as applied to the Products.
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“Person” means any natural person,
corporation, unincorporated organization, partnership, association,
joint stock company, joint venture, limited liability company,
trust or government, or any agency or political subdivision of any
government, or any other entity.
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“Products” means four proprietary
to be named pharmaceutical canidates that qualify for filing with
the FDA under a “505(b)(2)” application using Nostrum
Technology, that have completed formulation development indicating
appropriate functionality. Bionutrics and Nostrum shall act in good
faith in the selection and approval of these Products, all of which
are expected be provided to Bionutrics within the next six
months.
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“Territory”
means the world.
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Article 2 - Grant of License
2.1
License Grant
. Nostrum hereby grants to
Bionutrics, and Bionutrics accepts, an exclusive license under the
Nostrum Technology to develop, make, have made, use, import, offer
for sale, market and sell Products in the Territory.
2.2
Retained Rights
. Subject to the licenses granted
to Bionutrics hereunder, Nostrum shall remain the sole owner of any
Nostrum Technology, which Nostrum shall have furnished to
Bionutrics in connection with the performance of Nostrum’s
obligations pursuant to this Agreement. Nostrum shall retain all
right, title and interest to use or license the Nostrum Technology
in connection with any product, formulation or process except the
Products.
2.3
Development of Other Products/Bionutrics’ Rights
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(a) In
partial consideration for the payment made by Bionutrics pursuant
to Section 4.1, Bionutrics shall have, for a period of three (3)
years after the Effective Date (the “Option Period”),
certain rights as set forth in Sections 2.3(b) and 2.3(c) with
respect to any other products using the Nostrum Technology which
meet all of the following criteria (“New
Products”):
(i) products with
SR-technology for conditions where inflammation is a significant
contributor to, or consequence of, the following
conditions:
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1.
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Cardiovascular
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2.
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Hypertension
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3.
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Diabetes
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4.
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Arthritis
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5.
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Asthma
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6.
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Prostatic
Hyperplasia
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7.
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Osteoporosis
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8.
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Systemic
Lupus
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9.
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Inflammatory
Bowel Diseases
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10.
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Auto-immune
diseases in general
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(ii) products that
qualify for filing with the FDA under a “505(b)(2)”
application or a New Drug Application (“NDA”) pursuant
to the federal Food, Drug and Cosmetic Act (the “Act”);
and
(iii) products
that are not generic equivalents to branded products that qualify
for filing with the FDA pursuant to an Abbreviated New Drug
Application under the Act.
(b)(i) At the
reasonable request of Bionutrics and acceptance by Nostrum at any
time during the Option Period, Nostrum will conduct and complete
formulation development work and pilot studies concerning up to two
(2) New Product annually. Bionutrics shall pay or reimburse
Nostrum, as the case may be, for all costs and expenses which it
may incur in connection with such development work and pilot
studies within thirty (30) days following Bionutrics’ receipt
of Nostrum’s invoice therefor.
(ii) Nostrum
hereby grants to Bionutrics the right during the Option Period to
obtain exclusive licenses with respect to any New Products for
which Nostrum has performed formulation development work and
completed pilot pursuant to Section 2.3(b)(1) . Bionutrics shall
have a period of sixty (60) days from its receipt of the results of
a successful pilot study with respect to a New Product in which to
notify Nostrum whether Bionutrics desires to exercise its option to
license such New Product. If Bionutrics does exercise its option,
the parties shall in good faith negotiate and enter into a license
agreement for the New Product, which shall contain essentially the
same terms as those set forth in this Agreement as applied to the
Products. In the event that Bionutrics does not exercise its option
with respect to a given New Product, Nostrum shall be free to
develop and commercialize such New Product alone or in
collaboration with a third party.
(c) In
addition to the rights set forth in Section 2.3(b), Bionutrics
shall have the right of first refusal during the Option Period to
obtain an exclusive license to any other New Product developed by
Nostrum during the Option Period in accordance with the following:
(x) In the event that Nostrum shall, at any time during the Option
Period, receive a bona fide offer, or propose to offer, a license
to develop, manufacture, market or sell any New Product, Nostrum
shall promptly provide to Bionutrics written notice thereof. Such
notice (“Option Notice”) shall set forth all relevant
terms and conditions of such transaction as contained in the bona
fide offer or as proposed by Nostrum and shall constitute an offer
to Bionutrics on such terms and conditions. Bionutrics shall have
90 days to elect to accept such offer. (y) If Bionutrics does not
elect to accept such offer with respect to such New Product within
the period provided therefor, Nostrum shall be entitled to enter
into an agreement with any third party with respect to such New
Product (“Third Party Agreement”) on the terms and
conditions set forth in the Option Notice; provided, however, that
if within the immediately following 30-day period, Nostrum shall
not have entered into a binding Third Party Agreement with respect
to such New Product on the same terms and conditions as set forth
in the Option Notice, such New Product shall again become subject
to the provisions of this Section 2.3(c).
2.4
Effectiveness of License, First Refusal Right and Options.
Notwithstanding any other provision of this Agreement, the license
grant, right of first refusal and options provided for in this
Article 2 shall not be effective and binding on any party for any
purpose unless and until (i) all notes and other indebtedness of
Bionutrics convertible into common stock of Bionutrics, in the
present unpaid amount of [$1,500,000], shall be paid, discharged or
converted into common stock of Bionutrics; (ii) Bionutrics has paid
or otherwise discharged all indebtedness that is secured by
property of Bionutrics; (iii) Bionutrics shall have received
unrestricted and unencumbered cash from the future issuance and
sale of its common stock in the amount of at least $1,000,000; and
(iv) Bionutrics shall have certified in writing to Nostrum that the
events described in clauses (i) through (iv) have
occurred.
Article 3-Research Program
3.1
Nostrum’s Obligations
(a) Pursuant to Bionutrics’s
written request, Nostrum will conduct and complete formulation
development and pilot studies to establish in-vivo performance with
respect to the Product(s) (the sequence of events in each case, a
“Project”). Prior to the commencement of a Project, the
parties shall develop a written project plan setting forth the
subject matter of the Project and an estimate of the costs and
expenses that would be incurred by Nostrum in connection with the
Project. Nostrum shall have the right, in its sole discretion, to
contract with Enem Nostrum Remedies Pvt. Ltd. or any of their
Affiliates or use third-party contractors to conduct the studies
and other work under this Section 3.1.
(b) Prior
to the termination of the Project, Nostrum shall provide to
Bionutrics access to information and copies of all records relating
to the Project and the results of pilot studies for the Product(s)
related thereto.
(c) Nostrum
will cooperate with Bionutrics in all phases of the work to be
performed under Section 3.2, including, without limitation, the
scale up, any pivotal studies and process validation.
(d) Within
thirty (30) days of Bionutrics’ receipt of Nostrum’s
invoice therefor, Bionutrics shall pay or reimburse Nostrum for its
reasonable costs and expenses incurred in connection with the
performance of the obligations set forth in this Section 3.1
together with such costs and expenses that Nostrum may have
incurred in connection with any Project agreed upon by the parties
prior to the Effective Date
3.2
Bionutrics Obligations .
(a) Bionutrics
shall be responsible for all work preparatory to, and necessary
for, the performance of any clinical studies for the Product(s).
Bionutrics’s obligation to conduct such studies with respect
to any Product shall be contingent upon the Product’s
successful completion of pilot studies as well as stability testing
and successful manufacture and release of finished product for use
in such clinical studies.
(b) In
the event that clinical studies conducted or arranged for by
Bionutrics demonstrate efficacy and safety for a Product in
accordance with FDA regulations, Bionutrics in cooperation with
Nostrum shall prepare, submit and prosecute a
“505(b)(2)” application or an NDA, as the case may be,
with the FDA, and Bionutrics will keep Nostrum fully informed with
respect to such activities. All such applications shall be filed in
the name of Bionutrics, which shall be responsible, at its own
expense, for continuing the post-clinical and stability testing of
the Product necessary for the approval thereof and for obtaining
all governmental approvals for the manufacture and commercial sale
of the Product(s) in the Territory. Bionutrics will have full and
complete ownership thereof.
(c) Bionutrics
shall be responsible for all costs and expenses incurred by it in
connection with the performance of its obligations under this
Section 3.2. Within thirty (30) days of Bionutrics’ receipt
of Nostrum’s invoice therefor, Bionutrics shall pay or
reimburse Nostrum for all reasonable costs and expenses which it
may incur in providing assistance to Bionutrics in the performance
of its obligations under this Section 3.2.
3.3
Diligence . Following Bionutrics’ receipt of FDA
approval with respect to the manufacture and commercial sale of the
Product(s) in the United States, Bionutrics shall use diligent
efforts to manufacture, market, distribute and sell such
Product(s).
3.5 Ownership
of Results . Subject to the provisions of Section 9.6, all data
and results obtained or generated by or on behalf of either Nostrum
or Bionutrics in performance of any development activities related
to the Product(s) to be performed pursuant to this Agreement shall
be the sole property of Bionutrics and shall be treated as
Bionutrics’ Confidential Information pursuant to Article 5
hereof.
Article 4 - Payments
4.1
Nostrum’s
Consideration. In
partial consideration for the license and option rights granted to
Bionutrics hereunder, Bionutrics shall issue Nostrum Six Million
(6,000,000) shares of its common stock in accordance with the
provisions of a certain Stock Purchase Agreement between the
parties dated as of June 16, 2004 (the “Stock Purchase
Agreement”), a copy of which is annexed hereto as Exhibit
4.1. The terms, conditions, representations and warranties
contained in the Stock Purchase Agreement are incorporated herein
by reference.
4.2
Board Representation . In further consideration for the
license and option rights granted to Nostrum hereunder, Bionutrics
shall use its best efforts to cause the Board of Directors of
Bionutrics (i) to be comprised of at least three (3) members and
(ii) to include at least one nominee of Nostrum; provided that
Nostrum and its Affiliates are beneficial owners as of the record
date for the election of directors of a minimum of two million
shares of Bionutrics’ common stock (adjusted for stock
splits, stock dividends, reclassifications, recapitalizations,
combinations and exchanges of shares).
Article 5.
Confidentiality .
5.1
Confidentiality . During the term of this Agreement and for
a period of ten (10) years after its expiration or termination,
each party shall maintain as confidential the Nostrum Technology,
any know-how relating to the Product(s), and any other proprietary,
technical or business information received from the other party
pursuant to this Agreement (“Confidential Information”)
and shall only use such Confidential Information in furtherance of
this Agreement. Both parties agree that any employees provided or
given access to the other party’s Confidential Information
shall be bound by confidentiality obligations essentially the same
as those set forth herein. The foregoing obligations of
confidentiality and use restrictions shall not apply, however, to
the extent that such Confidential Information:
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(i)
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was known to
the receiving party, as evidenced by its written records, prior to
receipt from the other party;
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(ii)
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is in the
public domain at time of receipt or subsequently enters the public
domain through no breach of this Agreement by the receiving
party;
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(iii)
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after the date
of receipt from the disclosing party, is received without secrecy
obligations from a third party with a bona fide right to disclose
it without violating any right of the disclosing party;
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(iv)
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is
independently developed by the receiving party without the aid,
application or use of any of the disclosing party’s
Confidential Information (and such independent development can be
properly documented by the receiving party);
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(v)
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is disclosed
to governmental or other regulatory agencies in order to obtain
patents or to gain approval to conduct clinical trials or to market
the Product pursuant to this Agreement, but such disclosure may be
only to the extent reasonably necessary to obtain such patents or
authorizations;
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(vi)
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is necessary
to be disclosed to agents, consultants, Affiliates and/or other
third parties for the developing, making, using, selling or
importing of Product (or for such third parties to determine their
interest in performing such activities) in accordance with this
Agreement on the condition that such third parties agree to be
bound by confidentiality obligations and use restrictions at least
as restrictive as those contained in this Agreement; or
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(vii)
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is required to
be disclosed by law or court order, provided that notice is
promptly delivered to the disclosing party in order to provide the
disclosing party sufficient opportunity to seek a protective order
or other similar order with respect to such Confidential
Information and the receiving party thereafter discloses only the
minimum information required to be disclosed in order to comply
with the request, whether or not a protective order or other
similar order is obtained by the disclosing party.
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5.2 No
Publicity; Disclosure of Agreement Terms . Neither party may
use the name of the other party or its Affiliates in any publicity
or advertising without the prior written permission of such party.
Notwithstanding the provisions of Section 5.1 and this Section 5.2,
either party may disclose the terms of this Agreement to the extent
necessary to (a) actual or potential lenders or investors; (b)
actual or potential joint venture or merger partners; (c) the
party’s agents, consultants, Affiliates and/or other third
parties necessary to facilitate an actual or potential loan,
investment, joint venture or merger with such parties; or (d) the
party’s accountants, consultants and attorneys, for other
corporate transactions and business, on a need to know basis.
Bionutri
