SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
(MARK ONE)
|X| ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended June 30, 1999
|_| TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from______________to_______________
Commission File Number 0-24875
BIOENVISION INC.
(Name of small business issuer in its charter)
DELAWARE 11-3375915
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
ONE ROCKEFELLER PLAZA - SUITE 1600
NEW YORK, NEW YORK 10020
(Address of principal executive offices)
Issuer's telephone number: (212) 445-6581
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered pursuant to Section 12(g) of the Exchange Act:
Common Stock, $0.001 par value per share
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes |X| No |_|.
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Check if there is no disclosure of delinquent filers pursuant to Item 405
of Regulation S-B not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to the Form 10-KSB. [_]
The issuer's revenues for its most recent fiscal year were $-0-.
The aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock, as of October 12, 1999, was $32,870,351.
ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDING DURING THE PAST FIVE YEARS
Check whether the issuer has filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes |_| No |_|.
APPLICABLE ONLY TO CORPORATE REGISTRANTS
The number of shares outstanding of the issuer's common stock, $0.001 par value,
as of October 12, 1999 was 7,249,147.
Documents Incorporated by Reference: None.
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TABLE OF CONTENTS
PART I.......................................................................2
ITEM 1. DESCRIPTION OF BUSINESS.............................................2
General................................................................2
Technologies...........................................................2
Products...............................................................4
Contractual Arrangements with Partners and Licensors...................5
Manufacturing..........................................................6
Sales and Marketing....................................................6
Competition............................................................7
Raw Materials..........................................................7
Patents and Proprietary Rights.........................................7
Government Regulation..................................................8
Product Liability Insurance ...........................................8
Employees.............................................................11
Corporate History.....................................................11
ITEM 2. DESCRIPTION OF PROPERTY............................................11
Facilities............................................................11
Investment Policies...................................................12
ITEM 3. LEGAL PROCEEDINGS..................................................12
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS................12
PART II.....................................................................12
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS ............................................................12
Market Information....................................................12
Recent Sales of Unregistered Securities...............................13
Dividend Policy.......................................................14
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.........14
Overview..............................................................14
Plan of Operations....................................................14
Liquidity and Capital Resources.......................................15
Year 2000 Issue.......................................................15
ITEM 7. FINANCIAL STATEMENTS...............................................17
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ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE..................................................17
PART III....................................................................19
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a).........................................19
Directors and Executive Officers......................................19
Compensation of Directors.............................................20
Compliance with Section 16(a) of the Exchange Act.....................20
ITEM 10. EXECUTIVE COMPENSATION.............................................20
Summary Compensation..................................................20
Stock Options.........................................................21
Employment Agreements.................................................21
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.....22
PRINCIPAL STOCKHOLDERS................................................22
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.....................23
ITEM 13. EXHIBITS, LIST AND REPORTS ON FORM 8-K.............................25
Exhibits..............................................................25
Reports on Form 8-K...................................................25
SIGNATURES............................................................26
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FORWARD LOOKING STATEMENTS
This report contains forward-looking statements within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"). These forward-looking
statements are not historical facts, but rather are based on the Company's
current expectations, estimates, beliefs, assumptions and projections about the
biopharmaceutical industry and technologies for the treatment of cancer. Words
or phrases such as "the Company anticipates," "management anticipates,"
"expects," "intends," "plans," "believes," "seeks," "estimates" and similar
expressions are intended to identify forward-looking statements. These
statements are not guarantees of future performance and are subject to certain
risks, uncertainties, assumptions and other factors, some of which are beyond
the Company's control and are difficult to predict. Should one or more of such
risks, uncertainties or other factors materialize, or should underlying
assumptions prove incorrect, actual results, performance or achievements of the
Company may vary materially from any future results, performance or achievements
expressed or implied by such forward-looking statements. The Company disclaims
any obligation to publicly announce the results of any revisions to any of the
forward-looking statements contained herein to reflect future events or
developments or the occurrence of unanticipated events.
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
GENERAL
The Company is a development-stage, biopharmaceutical company primarily
focused in the research and development of products and technologies for the
treatment of cancer. The Company has acquired development and marketing rights
to a portfolio of four platform technologies that have been developed over the
past fifteen years, from which seven products and five product candidates have
been derived and additional products may be developed in the future. The
Company's primary objectives are to commence marketing its lead product,
Modrefen, and to continue developing its existing platform technologies and
commercializing products derived from those technologies.
The Company intends to begin marketing Modrefen (a selective steroid
receptor modulator) on a commercial scale in the United Kingdom before the end
of December 1999. Modrefen is currently licensed in the U.K. for the treatment
of post-menopausal breast cancer and is licensed in the U.S. for the treatment
of certain adrenal disorders. The Company intends to apply before the end of
December 1999 for regulatory approval of Modrefen in the U.S. for treatment of
hormone sensitive cancers. The Company's second lead product, clofarabine (a
purine nucleoside analog), has recently concluded Phase I clinical trials at The
University of Texas M.D. Anderson ("M.D. Anderson"), and the Company anticipates
that it will commence Phase II clinical trials within approximately three
months. Based on third-party studies conducted to date, the Company believes
that clofarabine may be effective in the treatment of leukemia and lymphoma. The
Company intends to request orphan drug designation for clofarabine for leukemia
and lymphoma indications, which will enable the Company to apply for approval of
clofarabine from the U.S. Food and Drug Administration ("FDA") for such
indications upon completion of Phase II clinical trials. In addition, two of the
other products to which the Company has rights are presently being tested in
clinical trials, and an additional eight are in the pre-clinical stage of
development.
The Company has adopted an aggressive product development program and,
assuming the successful completion of clinical trials, anticipates that by the
end of 2002, five of such products will have received regulatory approval for
certain disease indications in the U.S. or Europe, and seven will be emerging
through the clinical trial process. There can be no assurance, however, that any
of such products will be developed and/or receive applicable regulatory approval
within such time frame.
The following is a description of the Company's current portfolio of
platform technologies and products.
TECHNOLOGIES
SELECTIVE STEROID RECEPTOR MODULATION TECHNOLOGY
The Company has acquired development and marketing rights to a selective
steroid receptor modulation technology. The lead compound of this technology is
Modrefen, which is currently licensed in the U.K. for the treatment of
post-menopausal breast cancer and in several other countries, including the U.S.
and Canada, for the treatment of certain adrenal disorders, such as Cushing's
disease. The Company intends to begin marketing Modrefen on a commercial scale
in the U.K. in the last quarter of 1999 for the treatment of post-menopausal
breast cancer, and at the same time to apply for regulatory approval of Modrefen
in the U.S. for treatment of hormone sensitive cancers. The Company anticipates
that Modrefen will be able to compete with its principal competitor, tamoxifen,
upon receipt of such approval. The Company also intends to pursue opportunities
for Modrefen adrenal disorder products on a smaller scale, principally in the
veterinary market. The Company will also devote its research efforts to discover
new applications for Modrefen and related compounds and to build upon the
selective steroid receptor modulation technology. The Company believes that
Modrefen's dual mode of action not only
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makes it a versatile treatment for breast cancer, but may enable it to be
developed for additional disease indications in the future, such as endometrial
and prostate cancers.
PURINE-BASED NUCLEOSIDE TECHNOLOGY
The Company has an agreement with the Southern Research Institute ("SRI")
in Birmingham, Alabama to co-develop purine-based nucleoside analogs which,
based on third-party studies conducted to date, may be effective in the
treatment of leukemia and lymphoma. The lead compound of such purine-based
nucleosides is known as clofarabine. Clofarabine has recently successfully
concluded Phase I clinical trials at M.D. Anderson, and the Company anticipates
that it will enter Phase II clinical trials within approximately three months.
Unlike many competing drugs which are administered intravenously, clofarabine
and related products are anticipated to be developed for oral administration,
making it easier for patients to receive them as treatment. The Company intends
to request orphan drug designation for clofarabine for leukemia and lymphoma
indications, which will enable the Company to apply for approval from the FDA
upon completion of Phase II clinical trials. In addition to clofarabine's
effects against leukemia cells, scientists at SRI have shown that it has
anti-tumor activity in vitro against several solid tumors, including cancers of
the colon, kidney and prostate, which distinguishes clofarabine from other drugs
in its class that have shown relatively little activity against solid tumors.
Moreover, other drugs in the purine nucleoside class have been shown to be
effective in the treatment of certain autoimmune diseases. The Company intends
to develop purine nucleoside products for the treatment of solid tumors and
autoimmune diseases simultaneously with the development of clofarabine for the
treatment of hematological cancers. The regulatory approval cycles of those
products, however, are expected to be longer than those for the Company's
hematological cancer products.
CELL DIFFERENTIATION TECHNOLOGY
The Company has acquired a right to develop and market three distinct
groups of compounds the Company believes could play an important role in
controlling the rate of growth of cancer cells. The first group of compounds are
synthetic analogs of a drug derived from cottenseed oil. The drug has been
widely tested by clinicians in several countries for a variety of clinical
indications, and data has been published in medical literature. The drug has
shown efficacy against certain cancers by, it is believed, preventing cell
division and promoting cell differentiation. The first compound derived from
this technology, the cancer cytostatic drug, is currently approved for a Phase I
clinical trial at a leading cancer center in the U.K.
The second group of compounds block enzymes that metabolize RA, a
derivative of vitamin A. RA helps to regulate cell differentiation, a crucial
factor in preventing normal cells from transforming into cancer cells. When the
enzyme that breaks down RA is blocked, there is a buildup of natural RA within
the cell which can prevent or decrease the malignant transformation of cells.
The compounds have been extensively tested in the U.K. at Cardiff University,
and the Company expects to have the lead compounds in Phase I clinical trials
within 18 months.
The Company has also acquired a license to develop a third group of
compounds that control cell growth and differentiation by effectively blocking
hormone synthesis. A key feature of these compounds is they are non-steroidal
inhibitors of an important enzyme, 17(beta), involved in the production of
androgens and estrogen. Prostate cancer growth is controlled, at least in the
early stages, by androgens and the blockade of these hormones is an essential
part of treating this particular cancer. As with the second group of compounds,
this third group has been extensively tested in the U.K. at Cardiff University,
and the Company also expects to have the lead compounds of this group in Phase I
clinical trials within 18 months.
GENE THERAPY TECHNOLOGY
The Company's product portfolio also includes a variety of gene therapy
products which, the Company believes, may offer advancements in the field of
cancer treatment and may have additional applications in certain non-cancer
diseases such as diabetes, cystic fibrosis and other auto-immune disorders.
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The company has co-development agreements with the Royal Free and University
College Medical School, London (the "Royal Free Medical School"), one of the
leading medical and scientific institutions in the U.K., pursuant to which the
Company is developing Deoxyribonucleic Acid ("DNA") vector technologies. Based
on pre-clinical research and early Phase I/II clinical trials conducted by a
member of the Company's Scientific Advisory Board, the Company believes these
DNA vector technologies are capable of elevating albumin levels in cancer and
cirrhosis patients with hypo-albuminemia, a serious physiological disorder. The
Company further believes that these technologies have considerable market
potential since low albumin levels are considered to be very dangerous
consequences of many diseases, including cirrhosis and liver cancer. The Company
is also currently working on a gene marker which, based on research work
performed to date by scientists at a London teaching hospital, the Company
believes will enable clinicians to identify the location of DNA transferred
during gene therapy. Although the Company's gene marker product is currently in
the pre-clinical development stage, it is expected to have a relatively short
development cycle and the Company anticipates that, subject to applicable
regulatory approval, the product will be suitable for market distribution by
2002. In addition, the Company is conducting pre-clinical research on a product
that may have the ability to cause tumor regression by enhancing and stimulating
the human body's natural immune cells.
PRODUCTS
The following table summarizes the current status of the Company's
research, development and marketing program:
PRODUCT/TECHNOLOGY DISEASE INDICATION DEVELOPMENT PHASE (1)
------------------ ------------------ ---------------------
CANCER TREATMENT
- -----------------
Modrefen(2) Breast Cancer Market
Clofarabine Leukemia and Lymphoma Phase I/Phase II
Purine Nucleoside Solid Tumor Colon and Breast Cancer Phase I
Anti-Estrogen Prostate Prostate Cancer Pre-clinical
Cancer Cytostatic Drug Bladder Cancer Phase I
RA Inhibitor Hormone-Dependent Cancers Research
17(beta) Inhibitor Hormone-Dependent Cancers Research
GENE THERAPY
- -----------------
Gene Marker Gene Therapy Research
Albumin Gene Product Metastatic Cancer Phase I/Phase II
Non-Viral Vector Gene Therapy Research
Immunomodulator Cancer Research
OTHER PRODUCTS AND TECHNOLOGIES
- -------------------------------
Purine Nucleoside Autoimmune Autoimmune Disorders Pre-clinical
- ----------
(1) "Development Phase" refers to the current stage of development of the most
advanced indication.
"Research" is a pre-clinical Phase and includes research related to
specific targets and the identification of lead compounds.
"Lead compounds" are chemicals that have been identified that meet
pre-selected criteria in cell culture models for activity and potency
against specific targets. More extensive evaluation is then undertaken to
determine if the compound should be selected to enter into pre-clinical
development. Once a lead compound is selected, chemical modification of
the compound is then undertaken to create the best drug candidate.
"Pre-clinical" includes pharmacology and toxicology testing in
pre-clinical models (in vitro and in vivo), formulation work and
manufacturing scale-up to gather necessary data to comply with applicable
regulations prior to commencement of human clinical trials.
Clinical trials are typically conducted in three sequential phases that
may overlap. In "Phase I," the initial introduction of the pharmaceutical
into healthy human volunteers, the emphasis is on testing for safety
(adverse effects), dosage tolerance, metabolism, distribution, excretion
and clinical pharmacology. "Phase II" involves studies in a limited
patient population to determine the efficacy of the pharmaceutical for
specific targeted indications, to determine dosage tolerance and optimal
dosage and to identify possible adverse side effects and safety risks.
Once a compound is found
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to be effective and to have an acceptable safety profile in Phase I and II
evaluations, "Phase III" trials are undertaken to evaluate clinical
efficacy further, to further test for safety within an expanded patient
population at multiple clinical study sites, and to compare the results of
the trials with those of currently available treatments. Sometimes Phase I
and II trials or Phase II and III trials are combined. The FDA reviews
both the clinical plans and the results of the trials and may discontinue
the trials at any time if there are significant safety issues.
(2) Modrefen is currently licensed in the U.K. for the treatment of
post-menopausal breast cancer. It is also presently licensed in several
other countries, including the U.S. and Canada, for the treatment of
certain adrenal disorders, such as Cushing's disease. The Company intends
to file for FDA approval of Modrefen for the treatment of breast cancer in
the United States in the last quarter of 1999.
CONTRACTUAL ARRANGEMENTS WITH PARTNERS AND LICENSORS
STEROID RECEPTOR MODULATION TECHNOLOGY SELECTIVE
In July 1998, the Company entered into an agreement with Stegram
Pharmaceuticals, a U.K. pharmaceutical company ("Stegram"), to co-develop the
selective steroid synthesis-inhibiting and receptor-blocking technology. Under
the terms of the agreement, the Company was granted the exclusive worldwide
license, excluding Japan and South Africa, to make, use and sell products
derived from the technology for a term expiring on the date of expiration of all
current and future patents covered by the agreement (approximately in
2005--subject to earlier termination under certain circumstances), and to
utilize information related to the technology to obtain patent and other
proprietary rights to products developed by the Company and its collaborator
from the technology. In consideration of the licenses granted to the Company,
the Company agreed to pay to its collaborator, among other things, a royalty of
10% of the gross sales revenues of all products, less any discounts or
deductions for value-added taxes incurred and not recovered by the Company.
Beginning July 2001, the Company will be required to pay Stegram a minimum
royalty of $50,000 per year. In addition, the Company has agreed to pay, among
other things, certain costs associated with pre-clinical development and
clinical trials of such products. Under the terms of the agreement, the clinical
trial costs are not to exceed $4,000,000 unless agreed to by both parties.
PURINE-BASED NUCLEOSIDE TECHNOLOGY
In August 1998, the Company entered into an agreement with SRI in
Birmingham, Alabama to co-develop the purine-based nucleoside technology. Under
the terms of the agreement, the Company was granted the exclusive worldwide
license, excluding Japan and Southeast Asia, to make, use and sell products
derived from the technology, and to utilize technical information related to the
technology to obtain patent and other proprietary rights to products developed
by the Company and SRI from the technology for a term expiring on the date of
expiration of all current and future patents covered by the agreement. Based on
the patents currently covered by the agreement, the license will expire in the
year 2008, subject to earlier termination under certain circumstances. In
consideration of the liceses granted to the Company, the Company agreed to pay
to SRI, among other things, a royalty of 7% of the gross sales revenues of all
products derived from the technology, less any discounts or deductions for
value-added taxes incurred and not recovered by the Company, plus certain
additional royalty payments in the event the Company achieves certain gross
profit margins. In addition, the Company has agreed to pay, among other things,
certain costs associated with pre-clinical development and clinical trials of
the products developed for hematologic malignancies, including the cost
associated with Phase I clinical trails at M.D. Anderson, which are not to
exceed $1,250,000, unless agreed by both parties.
Certain patents and other intellectual property rights granted by SRI to
the Company for use in developing clofarabine products are held by the
Sloan-Kettering Institute for Cancer Research ("Sloan-Kettering") in New York
City. In August 1998, SRI entered into an agreement with Sloan-Kettering,
pursuant to which the parties agreed to cooperate in the commercialization of
their respective purine nucleoside technologies. Under the terms of the
agreement, Sloan-Kettering granted to SRI an exclusive, worldwide license to
utilize its technology and agreed to permit SRI to sublicense such technology to
the Company. The parties also agreed that all proceeds received by SRI from the
licensing or other commercial utilization of any portion of Sloan-Kettering's
technology, excluding fees for research and development, will be apportioned 75%
to SRI and 25% to Sloan-Kettering until the termination of SRI's agreement with
the Company.
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The Company has also reached an agreement in principle with M.D. Anderson
pursuant to which M.D. Anderson would be the principal clinical research center
in the United States for all of the Company's products currently in development.
The agreement contemplates the establishment of a trust fund at M.D. Anderson to
receive royalty payments from the direct sale by the Company of its products and
to finance future research at M.D. Anderson. This agreement will become
effective upon the completion of the Company's pending private financing.
CELL DIFFERENTIATION TECHNOLOGY
In June 1999, the Company entered into an agreement with the University
College Cardiff Consultants Limited, a company incorporated under the laws of
England and Wales ("Cardiff Consultants"), to develop and commercialize a group
of compounds that are believed to inhibit cancer cell division, and a group of
compounds that inhibit steriodgenesis. Under the agreement the Company acquired
the commercial rights worldwide to develop, manufacture, use, sell or otherwise
deal in these products in connection with cancer therapy in humans and animals
for a term expiring on the date of expiration of all current and future patents
covered by the agreement. In consideration of the licenses granted to the
Company, the Company agreed to pay to Cardiff Consultants, among other things,
an annual royalty of 5% of the gross sales revenues of all products derived from
the technology, less any reasonable discounts and rebates actually given by the
Company for returned products, and a royalty of 35% of the total amounts
received by the Company from any sub-licenses or sales of the technology. In
addition, the Company has agreed to pay, among other things, approximately
$330,000 in connection with a feasibility study of the products to be conducted
by Cardiff University.
GENE THERAPY TECHNOLOGY
In March 1999, the Company entered into a co-development and licensing
agreement with the Royal Free and University College Medical School, London
("Royal Free"), a long-established and renowed scientific institution. Royal
Free is the registered owner of patents relating to a DNA vector technology.
Under the terms of the agreement, the Company was granted the exclusive license
to commercially develop the technology for the treatment of liver disorders and
cancer and to market any products derived from the technology in Europe, the
U.S., Canada, Japan and the middle east, for a term expiring on the date of
expiration of all current and future patents covered by the agreement, subject
to earlier termination under certain circumstances. In consideration of the
licenses granted to the Company, the Company agreed to pay to Royal Free, among
other things, a royalty of 6% of the gross sales revenues of all products
derived from the technology, less any normal trade discounts, which shall not be
less than $3,000 in any calendar year. The Company has also agreed to pay Royal
Free a milestone payment of approximately $340,000 in addition to any royalty or
other payments to be made under the agreement upon successful completion of
Phase III clinical trials for the first of the products developed under the
agreement. In addition, the Company has agreed to pay, among other things,
certain costs associated with pre-clinical development and clinical trials of
the products developed from the technology, which are not to exceed $3,000,000.
MANUFACTURING
The Company does not have and does not intend to establish any internal
product testing, manufacturing or distribution capabilities. The Company's
strategy is to enter into collaborative arrangements with other companies for
the clinical testing, manufacture and distribution of its products. Such
collaborators are generally expected to be responsible for funding or
reimbursing all or a portion of the development costs, including the costs of
clinical testing necessary to obtain regulatory clearances and for
commercial-scale manufacturing, in exchange for exclusive or semi-exclusive
rights to market specific products in particular geographic territories.
As of the date of this report, however, the Company had only a purchase
order arrangement with a Canadian company for the manufacture and purchase of
clofarabine at the price quotations provided to the Company and had not entered
into any definitive agreements for the manufacture and distribution of any of
its products. The lead compound of the Company's selective steroid receptor
modulation technology, which the Company plans to market as Modrefen, has
historically been manufactured by Sterling-Winthrop Group Limited, from whom
Stegram acquired all right, title and interest in the lead compound. However,
the Company does not have any direct definitive agreement with Sterling-Winthrop
for the continued manufacture of Modrefen. Manufacturers of the Company's
products will be subject to cGMP prescribed by the FDA or other rules and
regulations prescribed by foreign regulatory authorities
SALES AND MARKETING
The Company has not yet established sales and marketing capabilities. The
Company intends to hire sales and marketing personnel in North America in the
next 12 months upon completion of a private financing and to rely on joint
marketing arrangements with commercial partners for the marketing, sale and
distribution of its products in Europe and other international markets; however,
as of the date of this report, the Company had no such arrangements in place. To
market any of its products directly, the Company will need to develop a
marketing and sales force with technical expertise and distribution capability
or contract with other pharmaceutical and/or health care companies with
distribution systems and direct sales forces. To the extent that the Company
enters into co-promotion or other licensing arrangements, any revenues to be
received by the Company will be dependent on the efforts of third parties.
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COMPETITION
Competition in the pharmaceutical industry is intense. Potential
competitors in the United States and Europe are numerous and include
pharmaceutical, chemical and biotechnology companies, most of which have
substantially greater capital resources, marketing experience, research and
development staffs and facilities than the Company. The Company seeks to limit
potential sources of competition by developing products that are eligible for
orphan drug designation or other forms of protection, but its competitors may
nevertheless succeed in developing similar technologies and products more
rapidly than the Company.
The generic drug industry is also intensely competitive and includes large
brand-name and multi-source pharmaceutical companies. Because generic drugs do
not have patent protection or any other market exclusivity, competitors of the
Company may introduce competing generic products, which may be sold at lower
prices or with more aggressive marketing. Conversely, as the Company introduces
branded drugs into its product portfolio, it will face competition from
manufacturers of generic drugs which may claim to offer equivalent therapeutic
benefits at a lower price.
The pharmaceutical industry is characterized by rapid and significant
technological change. The Company expects that pharmaceutical technology will
continue to develop rapidly, and the Company's future success will depend, in
large part, on its ability to develop and maintain a competitive position.
Technological development by others may result in products developed by the
Company, branded or generic, becoming obsolete before they are marketed or
before the Company recovers a significant portion of the development and
commercialization expenses incurred with respect to such products. In addition,
alternative therapies or new medical treatments could alter existing treatment
regimes, and thereby reduce the need for one or more of the Company's products.
The Company expects that its proposed products will compete on the basis
of, among other things, safety, efficacy, reliability, price, quality of life
factors (including the frequency and method of drug administration), marketing,
distribution, reimbursement and effectiveness of intellectual property rights.
The Company believes that its competitive success will be based partly on its
ability to attract and retain scientific personnel, establish specialized
research and development capabilities, gain access to manufacturing, marketing
and distribution resources, secure licenses to external technologies and
products, and obtain sufficient development capital. The Company intends to
obtain many of these capabilities from pharmaceutical or biotechnology companies
through collaborative or license arrangements. However, there is intense
competition among early stage biotechnology firms to establish such
arrangements. The Company's development products may not be of suitable
potential market size or provide a compelling return on investment to attract
other firms to commit resources to a collaboration, and even if such
collaborations can be established, the Company may not be able to secure
financial terms that meet the Company's commercial objectives.
RAW MATERIALS
The Company's raw materials (such as laboratory chemicals) and other
supply items to be used in its research and development processes are available
from many different suppliers and are generally immediately available in
sufficient quantities. The Company does not anticipate any significant problems
in the availability of, or significant price increases for, required raw
materials or other production items in the foreseeable future.
PATENTS AND PROPRIETARY RIGHTS
The Company's success will depend, in part, on its ability to obtain and
enforce protection for its products under United States and foreign patent laws
and other intellectual property laws, preserve the confidentiality of its trade
secrets and operate without infringing the proprietary rights of third parties.
The Company's policy is to file patent applications in the United States and/or
foreign jurisdictions to protect technology, inventions and improvements to its
inventions that are considered important to the development of its business. The
Company will also rely upon trade secrets, know-how, continuing technological
innovations and licensing opportunities to develop a competitive position.
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The Company, through its current license agreements, has acquired the
right to exploit the technology covered by nine issued patents and six patent
applications, covering the U.S., U.K., Europe, Canada and Japan, as well as
additional intellectual property and know-how that could be the subject of
further patent applications in the future. The Company evaluates the
desirability of seeking patent or other forms of protection for its products in
foreign markets based on the expected costs and relative benefits of attaining
such protection. The Company may not, however, be able to obtain all or any of
the patents for which it applies, and those patents which are issued to the
Company may not afford adequate protection to the Company. Further, issued
patents may be challenged, invalidated, infringed or circumvented and rights
granted thereunder may not provide competitive advantages to the Company.
Furthermore, parties not affiliated with the Company may have obtained or may in
the future obtain United States or foreign patents or may now possess or in the
future may possess proprietary rights relating to the Company's products that
will adversely affect the development or commercialization of the Company's
products or result in the Company's planned activities infringing patents owned
by others.
The Company could incur substantial costs in defending itself in
infringement suits brought against it or any of its licensors or in asserting
any infringement claims that the Company may have against others. The Company
could also incur substantial costs in connection with any suits relating to
matters for which the Company has agreed to indemnify its licensors or
distributors. An adverse outcome in any such litigation could have a material
adverse effect on the Company's business and prospects. In addition, the Company
could be required to obtain licenses under patents or other proprietary rights
of third parties and, if the Company does not obtain any such required licenses,
it could be prevented from, or encounter delays in, developing, manufacturing or
marketing one or more of its products.
The Company also relies upon trade secret protection for its confidential
and proprietary information. Third parties may independently develop
substantially equivalent proprietary information and techniques or otherwise
gain access to the Company's trade secrets or disclose such technology, in any
one or more of such events the Company might not be able to protect its trade
secrets.
The Company plans to implement a policy to require its employees,
consultants, members of the Scientific Advisory Board and parties to
collaborative agreements to execute confidentiality agreements upon the
commencement of employment or consulting relationships or a collaboration with
the Company. These agreements provide that all confidential information
developed or made known during the course of the relationship with the Company
is to be kept confidential and not disclosed to third parties except in specific
circumstances. In the case of employees, the agreements provide that all
inventions resulting from work performed for the Company, utilizing property of
the Company or relating to the Company's business and conceived or completed by
the individual during employment shall be the exclusive property of the Company
to the extent permitted by applicable law. These agreements may not, however,
provide meaningful protection of the Company's trade secrets or adequate
remedies in the event of unauthorized use or disclosure of such information.
GOVERNMENT REGULATION
Virtually all aspects of the Company's business are regulated by federal
and state statutes and governmental agencies in the United States and other
countries. The development, testing, manufacturing, processing, quality, safety,
efficacy, packaging, labeling, record-keeping, distribution, storage and
advertising of pharmaceutical products, and disposal of waste products arising
from such activities, are subject to regulation by one or more federal agencies,
including the FDA, the Department of Environmental Protection ("DEA"), the
Federal Trade Commission ("FTC"), the consumer Product Safety Commission
("CPSC"), the Occupational Safety and Health Administration ("OSHA") and the
Environmental Protection Agency ("EPA"). These activities are also regulated by
corresponding state and local agencies and equivalent foreign authorities.
All pharmaceutical manufacturers in the United States are subject to
regulation by the FDA under the authority of the Food, Drug and Cosmetics Act
(the "FDC Act"). Under the FDC Act, the federal government has extensive
administrative and judicial enforcement powers over the activities of
pharmaceutical manufacturers to ensure compliance with FDA regulations. Those
powers include, but are not limited to, the authority to initiate
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court action to seize unapproved or non-complying products, to enjoin
non-complying activities, to halt manufacturing operations that are not in
compliance with cGMP, to recall products which present a health risk, and to
seek civil monetary and criminal penalties. Other enforcement activities include
refusal to approve product applications or the withdrawal of previously approved
applications. In addition, product recalls may be issued at the discretion of
the Company, the FDA or other domestic and foreign government agencies having
regulatory authority for pharmaceutical product sales. Recalls may occur due to
disputed labeling claims, manufacturing issues, quality defects or other
reasons. The pharmaceutical products developed by the Company may be subject to
any one or more of such recalls in the future.
The Company has a variety of products under development, including line
extensions of existing products, reformulations of existing products and new
products. All "new drugs" must be the subject of an FDA-approved new drug
application ("NDA") before they may be marketed in the United States. All
generic equivalents of previously approved drugs or new dosage forms of existing
drugs must be the subject of an FDA-approved abbreviated new drug application
("ANDA") before they may by marketed in the United States. In both cases, the
FDA has the authority to determine what testing procedures are appropriate for a
particular product and, in some instances, has not published or otherwise
identified guidelines as to the appropriate procedures. The FDA has the
authority to withdraw existing NDA and ANDA approvals and to review the
regulatory status of products marketed under the enforcement policy. The FDA may
require an approved NDA or ANDA for any drug product marketed under the
enforcement policy if new information reveals questions about the drug's safety
or effectiveness. All drugs must be manufactured in conformity with cGMP and
drugs subject to an approved NDA or ANDA must be manufactured, processed,
packaged, held and labeled in accordance with information contained in the NDA
or ANDA.
Even if required FDA approval has been obtained with respect to a product,
foreign regulatory approval of a product must also be obtained prior to
marketing the product internationally. Foreign approval procedures vary from
country to country and the time required for approval may delay or prevent
marketing. In certain instances, the Company or its collaborative partners may
seek approval to market and sell certain of its products outside of the United
States before submitting an application for approval to the FDA. The regulatory
procedures for approval of new pharmaceutical products vary significantly among
foreign countries. The clinical testing requirements and the time required to
obtain foreign regulatory approvals may differ from that required for FDA
approval. Although there is now a centralized European Union ("EU") approval
mechanism for new pharmaceutical products in place, each EU country may
nonetheless impose its own procedures and requirements, many of which are
time-consuming and expensive, and some EU countries require price approval as
part of the regulatory process. Thus, there can be substantial delays in
obtaining required approval from both the FDA and foreign regulatory authorities
after all relevant applications are filed.
ANDA PROCESS. FDA approval is required before a generic equivalent to a
previously approved brand drug or new dosage form of an existing brand drug can
be marketed. Approval to market such products in the United States may be
obtained by submitting an ANDA to the FDA. Among the requirements for drug
approval by the FDA is that the manufacturing procedures and operations of
companies that manufacture products for the Company conform to cGMPs. If the FDA
believes a company is not in compliance with cGMPs, certain sanctions are
imposed upon that company including: (i) withholding from the company new drug
approvals as well as approvals for supplemental changes to existing
applications; (ii) preventing the company from receiving the necessary export
licenses to export its products; and (iii) classifying the company as an
"unacceptable supplier" and thereby disqualifying the company from selling
products to federal agencies. Moreover, in May 1992, the Generic Drug
Enforcement Act (the "Generic Act") was enacted. The Generic Act allows the FDA
to impose debarment and other penalties on individuals and companies that commit
certain illegal acts relating to the generic drug approval process. In some
situations, the Generic Act requires the FDA to debar (i.e., not accept or
review ANDAs for a period of time) a company or an individual that has committed
certain violations. It also provides for temporary denial of approval of
applications during the investigation of certain violations that could lead to
debarment and also, in more limited circumstances, provides for the suspension
of the marketing of approved drugs by the affected company. Lastly, the Generic
Act allows for civil penalties and the withdrawal of previously approved
applications. Neither the Company nor any of its employees has ever been subject
to debarment.
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NDA PROCESS. FDA approval is required before any new drug can be marketed.
An NDA is a filing submitted to the FDA to obtain approval of a drug not
eligible for an ANDA and must contain complete pre-clinical and clinical safety
and efficacy data or a right of reference to such data. Clinical trials are
typically conducted in three sequential phases. In Phase I, the product is
tested for safety, adverse effects, dosage, tolerance absorption, metabolism,
excretion and other elements of clinical pharmacology, frequently through
introduction of the compound into healthy human beings. Phase II typically
involves studies in a small sample of the intended patient population to assess
the efficacy of the compound for a specified indication, to determine dose
tolerance and the optimal dose range and to gather additional information
relating to safety and potential adverse effects. Phase III trials are
undertaken to further evaluate clinical safety and efficacy in an expanded
patient population at typically dispersed study sites, in order to determine the
overall risk-benefit ratio of the compound, and to provide an adequate basis for
product labeling.
Data from pre-clinical testing and clinical trials are submitted to the
FDA as an NDA for marketing approval and to other health authorities as a
marketing authorization application. The approval process is affected by a
number of factors, and the FDA or other health authorities may deny an NDA or
marketing authorization application if the regulatory criteria are not
satisfied. Even after initial FDA or other health authority approval has been
obtained, further studies, including Phase IV post-marketing studies, may be
required to provide additional data on safety. Additional studies generally also
are required to gain approval for the use of a product as a treatment for
clinical indications other than those for which the product was initially
tested. Also, the FDA or other regulatory authorities require post-marketing
reporting to monitor the adverse effects of the drug. Results of post-marketing
programs may limit or expand the further marketing of the products. Further, if
there are any modifications to the drug, including changes in indication,
manufacturing process or labeling or a change in the manufacturing facility, an
application seeking approval of such changes must be submitted to the FDA or
other regulatory authority. The Company has not experienced sanctions or fines
for non-compliance with the foregoing regulations.
FOREIGN REGULATORY PROCESS. To market drugs in non-U.S. jurisdictions, the
Company must also receive authorization from the respective regulatory
authorities in those jurisdictions. The requirements governing the conduct of
clinical trials, applications for marketing authorization, pricing and
reimbursement vary widely from jurisdiction to jurisdiction. In the EU,
pharmaceutical legislation requires that a Marketing Authorization Application
("MAA") for a drug produced through the use of biotechnology be submitted for
review in accordance with a centralized procedure administered by the European
Medicines Evaluation Agency (the "EMEA"), headquartered in London. If approved
by the EMEA, an MAA is recommended for acceptance by the EU. Following approval
of an MAA for a drug, the sponsoring company is required to negotiate with the
regulatory agency in each member country to establish reimbursement levels and
the maximum price at which the drug may be marketed in that country. These
reimbursement levels and maximum prices vary from country to country for the
same pharmaceutical. The regulatory requirements applicable to any product may
be modified, perhaps extensively, in the future. The Company cannot determine
what effect changes in regulations or statutes or legal interpretations, when
and if promulgated or enacted, may have on its business in the future. Moreover,
regulatory approval for marketing a proposed pharmaceutical product in any
particular jurisdiction will not necessarily result in similar approval in other
jurisdictions.
ORPHAN DRUG DESIGNATION. Under the Orphan Drug Act, the FDA may grant
orphan drug designation to drugs intended to treat a "rare disease or
condition," which generally is a disease or condition that affects populations
of fewer than 200,000 people in the United States. Orphan drug designation must
be requested before submitting an NDA, and after the FDA grants orphan drug
designation, the generic identity of the therapeutic agent and its potential
orphan use are publicized by the FDA. Under current law, orphan drug status is
conferred upon the first company to receive FDA approval to market the
designated drug for the designated indication, which also grants United States
marketing exclusivity for a period of seven years following approval of the NDA,
subject to certain limitations. Orphan drug designation does not convey any
advantage in, or shorten the duration of, the FDA regulatory approval process.
Moreover, although obtaining FDA approval to market a product with orphan drug
status can be advantageous, the scope of protection and/or the level of
marketing exclusivity that is currently afforded by orphan drug status and
marketing approval may be diminished or eliminated in the future. Moreover, NDA
approval of a drug with an orphan drug designation does not prevent the FDA from
approving the same drug for a different indication, or a molecular variation of
the same drug for the same indication. Because doctors are not
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restricted by the FDA from prescribing an approved drug for uses not approved by
the FDA, it is also possible that another company's drug could be prescribed for
indications for which a product developed by the Company has received orphan
drug designation and NDA approval.
PRODUCT LIABILITY AND INSURANCE
The Company faces exposure to product liability claims in the event that
the use of its technologies or products or those it licenses from third parties
is alleged to have resulted in adverse effects in users thereof. Receipt of
regulatory approval for commercial sale of such products does not mitigate such
product liability risks. While the Company has filed applications with a
reputable insurance company for the purpose of obtaining what it believes to be
adequate product liability insurance, as of the date of this report the Company
has not obtained any such insurance. There can be no assurance that the
precautions taken by the Company will be sufficient to avoid significant product
liability exposure. in addition, future product labeling may include disclosure
of additional adverse effects, precautions and contradictions, which may
adversely impact sales of such products.
EMPLOYEES
As of September 15, 1999, the Company had four employees, consisting of
one sales and marketing executive, two research and development executives and
one financial executive. None of the Company's employees is represented by a
labor union and the Company believes its relations with its employees are good.
CORPORATE HISTORY
The Company was incorporated as Express Finance Inc. under the laws of the
State of Delaware on August 16, 1996 and changed its name to Ascot Group Inc. on
August 26, 1998. Although the Company was initially formed to act as the U.S.
holding company for Mayhem Ltd., a U.K. corporation, it did not engage in any
active trade or business throughout the period from its inception to December
1998.
In December 1998, the Company entered into an agreement to purchase all of
the issued and outstanding shares of capital stock of Bioenvision Inc., a
development-stage company incorporated in November 1996 under the laws of the
State of Delaware ("Old Bioenvision"). Old Bioenvision primarily engaged in the
research and development of products and technologies for the treatment of
cancer and had acquired development and marketing rights to a portfolio of
platform technologies that had been developed over the past fifteen years and
from which various products were being derived. Old Bioenvision had two
wholly-owned subsidiaries, Biotechnology & Healthcare Ventures Ltd. ("BHV"), a
corporation organized under the laws of the Republic of Ireland, and Eurobiotech
Group, Inc., a company incorporated under the laws of the State of Delaware.
BHV, in turn, owned all of the outstanding shares of capital stock of each of
Bioheal Ltd., a corporation organized under the laws of the Republic of Ireland,
and Biomed (UK) Ltd., a corporation organized under the laws of the United
Kingdom.
Pursuant to the Company's agreement to acquire Old Bioenvision, the
Company effected a 1-for-15 reverse stock split of its then outstanding shares
of Common Stock and issued 7,013,897 post-reverse split shares of Common Stock
to the former stockholders of Old Bioenvision in exchange for all of the issued
and outstanding shares of capital stock of Old Bioenvision. Consequently, upon
consummation of the transaction in January 1999, the former stockholders of Old
Bioenvision became the controlling stockholders of the Company, Old Bioenvision
became a wholly-owned subsidiary of the Company and changed its name to Bionco
Marketing Inc., and the Company changed its name from Ascot Group Inc. to
Bioenvision Inc.
ITEM 2. DESCRIPTION OF PROPERTY
FACILITIES
As of the date of this report the Company does not have any interest in
real property. The Company currently uses the offices of its financial advisor
at One Rockefeller Plaza, Suite 1600, New York, New York for its principal
executive offices at no cost. This office space is used by management and
administration. To date, most of the Company's drug development programs have
been conducted at scientific institutions around the world. It is the Company's
policy to continue development at leading scientific institutions in the United
States and Europe. The Company intends to lease facilities that will serve as
its corporate headquarters in the United States upon completion of a private
financing. These facilities will be the center for all of the Company's
administrative and marketing functions in the United States. The Company does
not plan to conduct laboratory research in such facilities in the near future,
but, rather, will conduct research through collaborative arrangements with SRI
and M.D. Anderson.
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INVESTMENT POLICIES
The Company does not currently have any investments in real estate or
interests in real estate, nor in real estate mortgages nor in the securities of
or interests in persons primarily engaged in real estate. The Company generally
acquires its assets for the purpose of ultimately producing sales revenues from
the exploitation of such assets in the development of the Company's
biopharmaceutical business. The Company does not currently have any surplus cash
to invest, but the Company intends to invest any surplus cash it may have on
hand in the future in interest-bearing deposit accounts, short-term certificates
of deposit and governmental debt instruments.
ITEM 3. LEGAL PROCEEDINGS
There are no material legal proceedings pending to which the Company or
any of its property is currently subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of security holders during the fourth
quarter of the Company's fiscal year ended June 30, 1999.
PART II
In January 1997, the Board of Directors and stockholders approved a
1-for-1.986 reverse split of the Company's Common Stock, and in January 1999
effected a 1-for-15 reverse stock split. Unless otherwise stated, all share
amounts in this report have been adjusted for these stock splits.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
MARKET INFORMATION
The following represents the range of reported high and low bid quotations
for the Company's Common Stock on a quarterly basis since the Company's stock
commenced active trading on March 5, 1999, as reported on the Over-the-Counter
Bulletin Board of the National Association of Securities Dealers (OTCBB). The
Company's trading symbol is "BIOV." Prior to that time the Company's stock was
not listed on OTCBB and was inactive, trading in the over-the-counter "pink
sheets" under the symbol "ASGP." The quotations also reflect inter-dealer
prices, without retail mark-up, mark-down or commission, and may not represent
actual transactions.
- --------------------------------------------------------------------------------
QUARTER HIGH BID LOW BID
- --------------------------------------------------------------------------------
First Quarter 1999* 5 1/2 5 1/2
- --------------------------------------------------------------------------------
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- --------------------------------------------------------------------------------
Second Quarter 1999* 6 2 1/2
- --------------------------------------------------------------------------------
Third Quarter 5-3/8 2 1/2
- --------------------------------------------------------------------------------
*In accordance with the terms of the Acquisition Agreement between Old
Bioenvision and the Company dated December 21, 1998 (the "Acquisition
Agreement"), the Company effected a 1-for-15 reverse stock split, reducing its
issued and outstanding shares of Common Stock from 3,450,000 to 230,000,
immediately prior to issuing 7,013,897 shares of post 1-for-15 reverse stock
split Common Stock at the closing of the Acquisition on January 5, 1999.
HOLDERS. On September 15, 1999 the Company had 261 stockholders of record.
RECENT SALES OF UNREGISTERED SECURITIES
In September 1998, the Company granted options to Glen Investments
Limited, a Jersey (Channel Islands) corporation ("Glen Investments") wholly
owned by Kevin R. Leech, a U.K. citizen, to purchase up to 500,000 shares of
Common Stock at an exercise price of $1.00 per share in exchange for the
agreement by Glen to loan funds to the Company on an as-needed basis based upon
previously agreed budgets. Such optioins are presently exercisable. The issuance
of such options was exempt from registration under Regulation S promulgated
under the Securities Act based upon representations and warranties made by Glen
as to the status of Glen as an offshore buyer and Glen's covenants and
agreements not to offer or sell the subject shares within the United States at
any time such as would disqualify the private placement from the exemption under
Regulation S.
Effective as of January 5, 1999, pursuant to the Acquisition Agreement the
Company effected a 1-for-15 reverse stock split and thereafter issued 7,013,897
post-reverse split shares of Common Stock to the stockholders of Old Bioenvision
in exchange for 7,013,897 shares of common stock of Old Bioenvision, comprising
all of the issued and outstanding shares of capital stock of Old Bioenvision, in
a tax-free exchange. The issuance of such shares was exempt from registration
under Regulation S promulgated under the Securities Act based upon
representations and warranties made by the purchasers thereof who were citizens
of the United Kingdom as to their status as offshore buyers and their covenants
not to offer or sell the subject shares within the United States at any time
such as would disqualify the private placement from the exemption under
Regulation S, and under Section 4(2) of the Securities Act with respect to those
investors who were United States citizens, based upon their representations that
they were accredited investors as defined under the Commission's Rule 501(a).
In April 1999 the Company issued an aggregate of 4,000 shares of Common
Stock to Inpharmation Ltd. in partial consideration for consulting services
rendered to the Company. The issuance of such shares was exempt from
registration under Regulation S promulgated under the Securities Act based upon
representations and warranties made by the purchaser as to its status as an
offshore buyer and its covenant not to offer or sell the subject shares within
the United States at any time such as would disqualify the private placement
from the exemption under Regulation S.
In April 1999 the Company issued 1,250 shares of Common Stock to
Christopher P. Oliver. The issuance of such shares was exempt from registration
under Regulation S promulgated under the Securities Act based upon
representations and warranties made by the purchaser as to its status as an
offshore buyer and its covenant not to offer or sell the subject shares within
the United States at any time such as would disqualify the private placement
from the exemption under Regulation S.
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DIVIDEND POLICY
The Company has never declared or paid cash dividends on its capital
stock, and the Company's Board of Directors does not intend to declare or pay
any dividends on the Common Stock in the foreseeable future. Earnings of the
Company, if any, are expected to be retained for use in expanding the Company's
business. The declaration and payment in the future of any cash or stock
dividends on the Common Stock will be at the discretion of the Board of
Directors of the Company and will depend upon a variety of factors, including
the ability of the Company to service its outstanding indebtedness and to pay
its dividend obligations on securities ranking senior to the Common Stock, the
Company's future earnings, if any, capital requirements, financial condition and
such other factors as the Company's Board of Directors may consider to be
relevant from time to time.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
OVERVIEW
The Company was organized in August 1996 for the purpose of acting as a
publicly traded holding company for Mayhem Ltd., a United Kingdom corporation.
That purpose was never realized and prior to the change in control of the
Company in January 1999, the Company did not engage in any active trade or
business. The Company is considered a development-stage company for accounting
purposes because it has not generated any material revenues to date.
Accordingly, the Company has no relevant operating history upon which an
evaluation of the Company's performance and prospects can be made. Moreover, the
Company is still subject to all of the business risks associated with a new
enterprise, including, but not limited to, risks of unforeseen capital
requirements, lack of fully developed products, failure of market acceptance,
failure to establish business relationships, reliance on outside contractors for
the manufacture and distribution of proposed products, and competitive
disadvantages as against larger and more established companies. The likelihood
of the success of the Company must be considered in light of the development
cycles of new pharmaceutical products and technologies and the competitive and
regulatory environment in which the Company operates.
The company is an international biopharmaceutical company primarily
engaged in the research and development of products and technologies for the
treatment of cancer. During its development stage the Company has been primarily
engaged in organizational activities, including developing a strategic operating
plan, entering into various collaborative agreements for the development of
products and technologies, hiring personnel and developing and testing its
products. The Company plans to begin marketing its lead product, Modrefen, on a
commercial scale in the U.K. prior to the end of December of 1999. The Company
has assembled the core of its management team, which includes a Chairman of the
Board and Chief Executive Officer, Senior Vice President and Chief Medical
Officer.
PLAN OF OPERATIONS
The Company has acquired development and marketing rights to a portfolio
of four platform technologies developed over the past fifteen years, from which
seven products and five product candidates have been derived and additional
products may be developed in the future. Although the Company intends to
commence marketing its lead product, Modrefen, and to continue developing its
existing platform technologies and commercializing products derived from such
technologies, a key element of the Company's business strategy is to continue to
acquire, in-license and develop new technologies and products that the Company
believes offer unique market opportunities and/or complement the Company's
existing product lines. Once a product or technology has been launched into the
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market for a particular disease indication, the Company plans to work with
numerous collaborators, both pharmaceutical and clinical, in the oncology
community to extend the labeling of the drug to other indications. In order to
market its products effectively, the Company intends to develop marketing
alliances with strategic partners and may co-promote and/or co-market in certain
territories.
LIQUIDITY AND CAPITAL RESOURCES
From the period of its inception through December 1998, the Company did
not engage in any active trade or business. In January 1999, the Company
consummated a merger with Old Bioenvision by effecting a 1-for-15 reverse stock
split of its then outstanding shares of Common Stock and thereafter issuing
7,013,897 post-reverse split shares of Common Stock to the former stockholders
of Old Bioenvision in exchange for all of the issued and outstanding shares of
capital stock of Old Bioenvision. Consequently, upon consummation of the merger,
the former stockholders of Old Bioenvision became the controlling stockholders
of the Company, Old Bioenvision became a wholly-owned subsidiary of the Company
and changed its name to Bionco Marketing Inc., and the Company changed its name
from Ascot Group Inc. to Bioenvision Inc.
To date, the Company has incurred significant net losses, including net
losses of $765,154 for the fiscal year ended June 30, 1998 and net losses of
$495,193 for the fiscal year ended June 30, 1999. The Company had an accumulated
deficit of $837,193 at June 30, 1998 and $1,332,386 at June 30, 1999 and, since
that date, the Company has continued to incur significant and increasing losses.
The Company anticipates that it may continue to incur significant operating
losses for the foreseeable future. There can be no assurance as to whether or
when the Company will generate material revenues or achieve profitable
operations. The Company's independent public accountants have included an
explanatory paragraph in their report on the Company's financial statements,
stating that certain factors raise substantial doubt about the Company's ability
to continue as a going concern.
In the year ended June 30, 1999 administrative expenses totaled pound 379,279
compared to pound 689,499 for the year ended June 30, 1998. The reduction in
expenses is a result of the Company realizing cost savings following
reorganization the year.
Research and development expenses were $100,000 in the year ended June 30, 1999
compared to ---[?]--- for the year ended June 30, 1998. The increase in research
and development costs is a result of the Company increasing it's research
activities during 1999 in-line with the development of its products.
Based on its current operating plan, the Company believes that the
estimated minimum amount of net proceeds from its anticipated private financing
will be sufficient to meet its cash, operational and liquidity requirements for
at least 12 months following the completion of such financing, and that the
estimated maximum net proceeds from such private financing will be sufficient to
meet its cash, operational and liquidity requirements for at least 18 months
following the completion thereof. The Company may, however, require additional
financing within this time frame due to unanticipated changes in economic
conditions or other unforeseen circumstances. In the event the Company's plans
change or its assumptions change or prove to be inaccurate, the Company could be
required to seek additional financing sooner than currently anticipated. The
Company currently has an agreement with Glen Investments Limited, a Jersey
(Channel Islands) company wholly owned by Kevin R. Leech (a private investor who
is also the sole owner of Phoenix Ventures Limited, the holder of approximately
19% of the outstanding shares of Common Stock of the Company), whereby Glen
Investments has agreed to loan funds to the Company on an as-needed basis based
upon previously agreed budgets. A facility of pound is currently available to
the Company based an budgets that assume the above private plaement is
successful. Glen Investments Ltd. has agreed to satisfactory review of revised
budgets. Any additional financing may not, however, be available to the Company
when needed on commercially reasonable terms, or at all. If the Company is
unable to obtain such additional financing, the Company's operations will, in
all likelihood, cease.
YEAR 2000 ISSUE
The year 2000 issue refers to the potential failures that computer systems
may incur as a result of the date change from 1999 to 2000. Many existing
computer programs use only two digits to identify a change of the century. As a
result, computer systems using these programs may be unable to properly
recognize date-sensitive data resulting in the creation of erroneous information
or system failure.
Although the Company does not currently have any computer or other systems
that may be susceptible to the year 2000 issue, the Company's products
are mostly being developed in various research institutions which may have
systems that are not year 2000 compliant. A possible worst case year 2000
scenario for the Company would be if the research institutions' systems failed.
If their networks fail for an extended period of time due to the
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year 2000 issue, the Company may no longer be able to continue developing and
testing its products. In the event such systems are not year 2000 compliant on a
timely basis, the Company will seek to develop and test its products at
institutions whose systems are year 2000 compliant. The Company has no assurance
that this can be accomplished in a timely or cost effective manner.
The Company is currently evaluating such year 2000 issues and their
potential impact on its business, and has commenced inquiries to determine the
status of preparations by the research institutions where the Company's products
are tested to become year 2000 compliant. Although the Company's management
expects to incur cots in correcting any year 2000 issues arising as a result of
such research institutions' handling of their own year 2000 issues, management
cannot currently estimate those costs. All such costs will be expensed as
incurred. The Company does not expect that the cost of addressing any year 2000
issue will be a material event or uncertainty that would cause its reported
financial information not to be necessarily indicative of future operating
results or future financial condition, or that the costs or consequences of
incomplete or untimely resolution of any year 2000 issue represent a known
material event or uncertainty that is reasonably likely to affect its future
financial results, or cause its reported financial information not to be
necessarily indicative of future operating results or future financial
condition. However, if the Company encounters any unanticipated delays in, or
costs associated with, the resolution of any year 2000 issue, the Company's
business, financial condition and results of operations could be materially
adversely affected.
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ITEM 7. FINANCIAL STATEMENTS
Page Number
-----------
Report of Independent Auditors F-1
Consolidated Balance Sheets as of June 30, 1999 F-2
Consolidated Statements of Operations for years ended
June 30, 1998 and 1999 and for the Period From August 16,
1996 (Date of Inception) Through June 30, 1999 F-3
Consolidated Statements of Stockholders' Equity for the period
from August 16, 1996 (date of inception) through June 30, 1997
and for the years ended June 30, 1998 and 1999 F-4
Consolidated Statements of Cash Flows for years ended
June 30, 1999 and 1998 and for the Period From August 16,
1996 (Date of Inception) Through June 30, 1999 F-6
Notes to Consolidated Financial Statements F-7
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
On September 30, 1999 the Company and its former auditors, Graf Repetti &
Co., LLP ("Graf Repetti") agreed to terminate their relationship as of such
date. As of October 1, 1999, the Company retained Ernst & Young as its
independent public accountants. The decision to terminate its relationship with
Graf Repettis was recommended and approved by the Board of Directors and was
based upon the Company's need to have auditors with international auditing
capability.
During the period from inception on August 16, 1996 through and including
June 30, 1998, and for the interim period from July 1, 1998 through March 31,
1999, Graf Repetti's reports on the Company's financial statements neither
contained any adverse opinions or disclaimers of opinions nor were qualified or
modified as to uncertainty, except that Graf Repetti's auditors' report on the
Company's consolidated financial statements for the fiscal period ended June 30,
1998 expressed substantial doubt about the Company's ability to continue as a
going concern owing to the Company's losses from operations and net capital
deficiency.
During the fiscal period commencing with inception on August 16, 1996 and
ended June 30, 1998, and for the interim period from July 1, 1998 through March
31, 1999, there were no disagreements with Graf Repetti on any matter of
accounting principles or practices, financial statement disclosure or auditing
scope or procedure, which disagreements, if not resolved to the satisfaction of
Graf Repetti, would have caused it to make reference to the subject matter of
the disagreements in connection with its reports.
17
<PAGE>
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(A)
DIRECTORS AND EXECUTIVE OFFICERS
The names and ages of the executive officers and directors of the Company,
and their positions with the Company, are as follows:
NAME AGE POSITION
---- --- --------
Christopher B. Wood, M.D. 53 Chairman of the Board and Chief Executive
Officer
Andrew Turner 28 Senior Vice President-Finance
Stuart Smith, Ph.D. 36 Senior Vice President, Secretary and
Director
George Margetts, M.D. 65 Chief Medical Officer
Thomas Nelson CA 60 Director
- ----------
CHRISTOPHER B. WOOD, M.D. has served as the Chairman of the Board and
Chief Executive Officer of the Company since January 1999. Prior to that time,
Dr. Wood served as Chairman of the Board of Eurobiotech, a subsidiary of the
Company, from December 1996 through December 1998, as a general surgeon at a
U.KL. hospital from April 1991 to March 1994, and as a specialist surgeon at The
Royal Postgraduate Medical School, London, England from April 1979 to March
1991. Dr. Wood has more than 15 years experience in the European biotechnology
sector. Dr. Wood holds an M.D. degree from the University of Wales School of
Medicine and the Fellowship of the Royal College of Physicians and Surgeons of
Edinburgh.
ANDREW TURNER has served as Senior Vice President - Finance since January
1999. Mr. Turner has had extensive experience in corporate financing techniques
and arranging the financing of technology companies. He has worked as an
independent consultant for a corporate finance company since 1997, and before
this Mr. Turner worked for a subsidiary of a publicly listed Swedish company,
focusing on sales promotion and marketing with responsibility for the financial
controls of a high turnover facility. Prior to this Mr. Turner worked for Shell
Research Laboratories implementing laboratory financial controls in the
collection of data for the finance department.
THOMAS NELSON has served as a director of the Company since January 1999.
In July 1998 Mr. Nelson became a director of Old Bioenvision and before that he
served as the Director of Finance of the Management Board of the Royal & Sun
Alliance Insurance Group from 1996 to 1998. Prior thereto, Mr. Nelson served as
Group Finance Director of the Main Board of Sun Alliance Insurance Group from
1991 to 1996, and has served as Chairman of the UK insurance industry committee
on European regulatory, fiscal and accounting issues. He has also worked with
Deloittes in Paris and as a consultant with PA Consultants Management. Mr.
Nelson is a Member of Institute of Chartered Accountants of Scotland and a
Fellow of the Institute of Cost and Management Accountants. Mr. Nelson holds a
B.A. degree from Cambridge University.
STUART SMITH, PH.D. has served as Senior Vice President and as a director
of the Company since January 1999 and as the Executive Vice President of
EuroBiotech since May 1997. Prior to that time, Dr. Smith served as Business
Development Director of CBC (Oxford) Limited, a medical communications company,
from June 1995 to May 1997. He served as Marketing Manager (Oncology) of British
Biotech Pharmaceuticals Ltd. from July 1994 to June 1995, and as International
Product Manager (Oncology) of Schering AG in Berlin, Germany from March 1992 to
June 1994. Prior thereto, Dr. Smith worked in the veterinary and public health
fields, focusing on animal health research and parasitology. Dr. Smith holds a
B.S. degree, with honors, in Biology and a Ph.D. degree in Philosophy from the
University of Aberdeen.
GEORGE MARGETTS, M.D. has served as Chief Medical Officer of the Company
since January 1999. Since 1979 Dr. Margetts has been Managing Director of
Stegram Pharmaceutical Ltd. Dr. Margetts served as Chief Executive
Officer/Managing Director of Sterling Winthrop Group
18
<PAGE>
between 1984 and 1989, and as its Medical Director between 1971 and 1989. Dr.
Margetts holds B. Pharm. and M.Sc. degrees from the University of London and
M.R.C.S., L.R.C.P., M.D. and B.S. degrees from University College Hospital
Medical School, London.
Each director is elected to serve for a term of one year or until his or
her successor is duly elected and qualified. The Company's officers are elected
by, and serve at the pleasure of, the Board of Directors, subject to the terms
of any employment agreements. No family relationship exists among any directors
or executive officers of the Company.
COMPENSATION OF DIRECTORS
Non-management directors of the Company each receive a director's fee of
$1,000 per meeting for attendance at Board of Director's meetings, and will be
reimbursed for actual expenses incurred in respect of such attendance. The
Company does not separately compensate employees for serving as directors. The
Company does not provide additional compensation for committee participation or
special assignments of the Board of Directors.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than 10% of the outstanding equity
securities of the Company, to file initial reports of beneficial ownership and
reports of changes in beneficial ownership of such equity securities with the
Commission and any national securities exchange on which such equity securities
are listed. Such persons are required by Commission regulations to furnish the
Company with copies of all Section 16(a) forms they file.
Based upon the Company's, the Company believes that no director, executive
officer or holder of more than 10% of the outstanding shares of Common Stock
filed on a timely basis the reports required by Section 16(a) of the Exchange
Act during, or with respect to, the year ended June 30, 1999. In particular: (i)
Christopher B. Wood, a director and the Chief Executive Officer of the Company,
and his wife, Julie Wood, each inadvertently failed to file a Form 3 and Form 5
with respect to their acquisition as of January 5, 1999 of more than 10% of the
Company's Common Stock in connection with its reorganization; (ii) Phoenix
Ventures Limited, and its sole beneficial owner, Kevin R. Leech, each
inadvertently failed to file a Form 3 and Form 5 with respect to the acquisition
as of January 5, 1999 of more than 10% of the Company's Common Stock in
connection with its reorganization; (iii) Three W Capital, Ltd. inadvertently
failed to file a Form 3 and Form 5 with respect to the acquisition as of January
5, 1999 of more than 10% of the Company's Common Stock in connection with its
reorganization; (iv) L. Wise Investments Limited, and its sole beneficial owner,
John Cole, each inadvertently failed to file a Form 3 and Form 5 with respect to
the acquisition as of January 5, 1999 of more than 10% of the Company's Common
Stock in connection with its reorganization; and (v) General Capital Investments
Limited, and its sole beneficial owner, David Chester, each inadvertently failed
to file a Form 3 and Form 5 with respect to the acquisition as of January 5,
1999 of more than 10% of the Company's Common Stock in connection with its
reorganization.
ITEM 10. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION
The following table sets forth the amount of all compensation paid by the
Company and/or its affiliates and allocated to the Company's operations for
services rendered during each of the fiscal years 1999, 1998, and 1997 to all
persons serving as the Company's Chief Executive Officer during 1999. There were
no executive officers other than the Chief Executive Officer whose total salary
and bonus compensation exceeded $100,000 during any such year.
SUMMARY COMPENSATION TABLE
19
<PAGE>
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
--------------------------------- -----------------------------
OTHER SECURITIES ALL
ANNUAL RESTRICTED UNDER- OTHER
COMPEN- STOCK LYING LTIP COMPEN-
NAME AND PRINCIPAL SALARY BONUS SATION AWARD(S) OPTIONS PAYOUTS SATION
POSITION YEAR ($) ($) ($) ($) (#) ($) ($)
- -------------------- ---- ------ ---- ------- ------- --------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Christopher B. Wood
Chief Executive 1999(1)$100,000 -0- -0- -0- -0- -0- -0-
Officer and 1998(2)$100,000 -0- -0- -0- -0- -0- -0-
Director 1997(3)$ 50,000 -0- -0- -0- -0- -0- -0-
</TABLE>
- ----------
(1) Mr. Wood's salary through January 4, 1999 was accrued by Eurobiotech
Group, Inc., a wholly-owned subsidiary of the Company.
(2) Accrued by Eurobiotech Group, Inc.
STOCK OPTIONS
The Company does not presently have any stock option plans.
EMPLOYMENT AGREEMENTS
The Company intends to enter into employment agreements with each of its
principal executive officers before the end of the current quarter. Pursuant to
such agreements, the Company's executive officers will agree to devote all or
substantial portion of their business and professional time efforts to the
business of the Company as executive officers. The employment agreements will
provide for certain compensation packages, which will include bonuses and other
incentive compensation. The agreements will also contain covenants (a)
restricting the employee from engaging in an activities competitive with the
business of the Company during the term of such employment agreements and for a
certain period thereafter, (b) prohibiting the employee from disclosure of
confidential information regarding the Company, and (c) confirming that all
intellectual property developed by the employee and relating to the business of
the Company constitutes the sole property of the Company.
In July 1998 Old Bioenvision entered into an employment agreement with
Thomas Nelson pursuant to which he agreed to serve as a director of Old
Bioenvision for a period of two years at an annual compensation of $______. Upon
execution of an employment agreement with the Company, Mr. Nelson's employment
agreement with Old Bioenvision will terminate. In May 1997, EuroBiotech Group,
Inc., a wholly-owned subsidiary of Old Bioenvision, entered into an employment
agreement with Stuart Smith to serve as EuroBiotech's Executive Vice President
at an annual compensation of $80,000 for a term expiring on December 31, 1999.
Upon execution of an employment agreement with the Company, Mr. Smith's
employment agreement with EuroBiotech will terminate. To date all compensation
due to Messrs. Nelson and Smith under their respective employment agreements has
been accrued.
20
<PAGE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of October 13, 1999, certain
information concerning the shares of Common Stock beneficially owned (i) by each
director and executive officer of the Company, (ii) by all executive officers
and directors of the Company as a group, and (iii) by each stockholder that is
known to the Company to be a beneficial owner of more than 5% of the outstanding
shares of Common Stock. Unless otherwise indicated, the owners have sole voting
and investment power with respect to their respective shares.
AMOUNT OF
NAME OF BENEFICIAL PERCENTAGE
BENEFICIAL OWNER OWNERSHIP OWNERSHIP(1)
- ---------------- --------- ------------
Christopher B. Wood ........................... 2,100,000(2) 29.0%
Phoenix Ventures Limited(3) ................... 1,400,000 19.3%
Three W Capital, Ltd. ......................... 905,303 12.5%
L. Wise Investments Limited(4) ................ 887,500 12.3%
General Capital Limited(5) .................... 887,500 12.3%
Glen Investments Limited(6) ................... 500,000(7) 6.5 %
Stuart Smith .................................. 50,000 *
Thomas Nelson ................................. 13,750 *
All Executive Officers and
Directors as a group (4 persons) ............. 2,163,750 29.8%
- ----------
(1) Based on a total of 7,249,147 shares of Common Stock outstanding as of
September 15, 1999.
(2) Includes 318,750 shares of Common Stock owned by Julie Wood, Mr. Wood's
spouse.
(3) Phoenix Ventures Limited is a Guernsey, Channel Islands corporation
wholly-owned by Kevin R. Leech, a private investor.
(4) L. Wise Investments Limited is a Gibraltar corporation wholly-owned by
John Cole, a private investor.
(5) General Capital Limited is a Bermuda corporation wholly-owned by David
Chester, a private investor.
(6) Glen Investments Limited is a Jersey, Channel Islands corporation
wholly-owned by Kevin R. Leech, a private investor.
(7) Represents shares issuable upon exercise of currently outstanding options
granted to Glen Investments Limited. See "Certain Transactions."
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In May 1998, Bioheal Ltd., a subsidiary of the Company, entered into an
agreement with Christopher B. Wood, the Chairman of the Board and Chief
Executive Officer of the Company, to co-develop a gene marker and
immunomodulator system for use in gene therapy and related technologies. Under
the terms of the agreement, Bioheal was granted the exclusive license to make,
use and sell products derived from technology, and to utilize technical
information related to the technology to obtain patent and other proprietary
rights to products developed by Bioheal and its collaborators from the
technology for a term expiring on the date of expiration of all current and
future patents covered by the agreement, subject to earlier termination under
certain circumstances. In consideration of the licenses granted to Bioheal,
Bioheal agreed to pay to Dr. Wood, among other things, a royalty of 10% of the
gross sales revenues of all products, less and discounts or deductions for
value-added taxes. In addition, Bioheal has agreed to pay, among other things,
certain costs associated with pre-clinical development and clinical trials of
such products. Under the terms of the agreement, the pre-clinical costs are not
to exceed $1,500,000, and the clinical trial costs are not to exceed $4,000,000,
unless agreed by both parties.
21
<PAGE>
The Company has an agreement with Glen Investments, a corporation wholly
owned by Kevin R. Leech, whereby Glen Investments has agreed to loan funds to
the Company on an as-needed basis based upon previously agreed budgets. Mr.
Leech is a private investor who is also the sole owner of Phoenix Ventures
Limited, a Guernsey (Channel Islands) corporation and the holder of
approximately 19% of the outstanding shares of Common Stock of the Company. In
exchange for its agreement to loan funds to the Company, the Company granted to
Glen Investments options to purchase up to 500,000 shares of Common Stock at an
exercise price of $1.00 per share, all of which options are currently
exercisable. As of the date of this Memorandum, Glen Investments had loaned the
Company a total of $280,000 (approximately $170,000) out of a total facility
currently of pound 1 million (approximately $1.65 million).
22
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholders
Bioenvision, Inc. (formerlly Ascot Group, Inc.) (a development stage company)
We have audited the accompanying consolidated balance sheets of Bioenvision,
Inc. (formerlly Ascot Group, Inc.) (a development stage company) as of June 30,
1999, and the related consolidated statements of operations, stockholders'
equity, and cash flows for each of the two years in the period ended June 31,
1999 and for the period from August 16, 1996 (inception) through June 30, 1999.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Bioenvision, Inc.
(formerlly Ascot Group, Inc.) at June 30, 1999, and the consolidated results of
its operations and its consolidated cash flows for each of the two years in the
period ended June 30, 1999 and for the period from August 16, 1996 (inception)
through June 30, 1999, in conformity with accounting principles generally
accepted in the United States.
As discussed in Note 1 to the consolidated Financial Statements, the Company has
incurred losses from operations and is not currently generating cash from
operations. This factor raises substantial doubt about the Company's ability to
continue as a going concern. Management's plans as to this matter are also
described in Note 1. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
Reading, England
October 13, 1999
F-1
<PAGE>
Bioenvision, Inc. (formerly Ascot Group, Inc.)
(a development stage company)
- --------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
June 30, June 30,
1999 1999
Amounts in Amounts in
Pounds Sterling US Dollars
(note 1)
ASSETS
Current Assets
Cash and cash equivalent 10 16
Accounts receivable 613 966
---------- ----------
623 982
Property, plant and equipment 38,405 60,546
Intangible assets 14,642 23,083
---------- ----------
53,670 84,611
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities
Accounts payable 962,427 1,517,266
Other Liabilities - related parties 219,330 345,774
---------- ----------
Total Liabilities 1,181,757 1,863,040
Stockholders' equity
Common Stock, $.001 par value,
Authorised 25,000,000 Shares;
Issued and outstanding:
7,249,096 at June 30, 1999 17,307 27,284
Additional paid in capital 188,305 296,863
Accumulated comprehensive loss and deficit
accumulated during the development stage (1,332,386) (2,100,506)
Cumulative translation adjustment (1,313) (2,070)
---------- ----------
Total stockholders' equity (1,128,081) (1,778,429)
========== ==========
Total liabilities and stockholders' equity 53,670 84,611
========== ==========
See accompanying notes.
- --------------------------------------------------------------------------------
F-2
<PAGE>
Bioenvision, Inc. (formerly Ascot Group, Inc.)
(a development stage company)
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year ended Year ended Period from Year ended
June 30, June 30, August 16, 1996 June 30,
1998 1999 (inception) 1999
through
June 30,
1999
Amounts in Pounds Sterling Amounts in
US Dollars
(note 1)
<S> <C> <C> <C> <C>
TOTAL REVENUES -- -- 21,738 --
---------- ---------- ---------- ----------
OPERATING EXPENSES
Administrative expenses 689,499 379,279 1,207,510 597,933
Research & development costs -- 100,000 100,000 157,650
Interest payable 13,631 2,215 15,846 3,492
Minority interest 44,955 -- -- --
Depreciation expense 17,069 12,800 29,869 20,179
Amortisation expense -- 899 899 1,417
---------- ---------- ---------- ----------
Operating loss 765,154 495,193 1,354,124 780,671
Income taxes -- -- -- --
---------- ---------- ---------- ----------
NET LOSS 765,154 495,193 (1,332,386) 780,671
========== ========== ========== ==========
Basic and diluted net
loss per share 0.14 0.07 0.11
========== ========== ==========
Shares used in computing basic
and diluted net loss per share 5,423,063 7,057,696 7,057,696
========== ========== ==========
</TABLE>
See accompanying notes.
- --------------------------------------------------------------------------------
F-3
<PAGE>
Bioenvision, Inc. (formerly Ascot Group, Inc.)
(a development stage company)
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
<TABLE>
<CAPTION>
Retained
Accumulate
Comprehensive
Common Stock Additional Loss and Total
Shares Amount Paid in Capital Deficit Stockholders
Equity
(pound) (pound) (pound) (pound)
<S> <C> <C> <C> <C> <C>
Shares issued at inception
(August 1996) 167,899 3,212 -- -- 3,212
Shares issued in exchange
for cash in October 1996 97,348 1,806 16,250 -- 18,056
Shares issued in November 1996
in exchange for services 71,429 2,983 26,850 -- 29,833
Shares issued in November 1996
in exchange for cash 21,428 894 6,257 -- 7,151
Shares issued in January 1997
in exchange for services 271,039 2,260 20,330 -- 22,590
Surrender of common stock in
January 1997 (35,247) (632) 632 -- --
Shares issued in April 1997 on
the inception of Biotechnology
& Healthcare Ventures Ltd. 3,315,000 4 -- -- 4
Shares issued in April 1997 on
the inception of Eurobiotech
Group, Inc. 1,375,000 6,060 97,405 -- 103,465
Net Loss -- -- -- (72,039) (72,039)
---------- ---------- ---------- ---------- ----------
Balance at 30 June 1997 5,283,896 16,587 167,724 (72,039) 112,272
Stock issued on the acquisition
of Biomed UK Ltd, in May 1998 300,000 2 -- -- 2
Stock issued on the acquisition of
Bioheal Ltd. in May 1998 535,000 2 -- -- 2
Net loss -- -- -- (765,154) (765,154)
---------- ---------- ---------- ---------- ----------
Balance at 30 June 1998 6,118,896 16,591 167,724 (837,193) (652,878)
</TABLE>
- --------------------------------------------------------------------------------
F-4
<PAGE>
Bioenvision, Inc. (formerly Ascot Group, Inc.)
(a development stage company)
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
<TABLE>
Retained
Accumulate
Comprehensive
Common Stock Additional loss and Total
Shares Amount Paid in Capital Deficit Stockholders
Equity
(pound) (pound) (pound) (pound)
<S> <C> <C> <C> <C> <C>
Shares issued on the purchase of
the minority interest in Eurobiotech
Group, Inc. in September 1998 1,125,000 713 14,828 -- 15,541
Issuance of shares in exchange
for services in April 1999 5,200 3 5,753 -- 5,756
Net loss -- -- -- (495,193) (495,193)
---------- ---------- ---------- ---------- ----------
Balance at 30 June 1999 7,249,096 17,307 188,305 (1,332,386) (1,126,774)
========== ========== ========== ========== ==========
</TABLE>
See accompanying notes.
- --------------------------------------------------------------------------------
F-5
<PAGE>
Bioenvision, Inc. (formerly Ascot Group, Inc.) DRAFT
(a development stage company)
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
Year ended Year ended Period from Year ended
June 30, June 30, August 16, 1996 June 30,
1998 1999 (inception) 1999
through
June 30,
1999
Amounts in Pounds Sterling Amounts in
US Dollars
(Note 1)
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net loss (765,154) (495,193) (1,332,386) (780,671)
Adjustments to reconcile net income (loss) to
net cash provided (used) by operating activities
Other liabilities - related party 145,000 74,330 219,330 117,181
Minority interest 44,955 -- -- --
Depreciation 17,069 12,800 29,869 20,179
Amortisation -- 899 899 1,417
Other 104 (2,370) (1,313) (3,736)
Accounts Receivable (613) -- (613) --
Accounts Payable 558,989 403,438 962,427 636,020
---------- ---------- ---------- ----------
Net cash provided (used) by operating activities 350 (6,096) (121,787) (9,610)
FINANCING ACTIVITIES
Purchase of property & equipment -- -- (68,274) --
INVESTING ACTIVITIES
Net proceeds from issuance of
common stock -- 5,756 190,071 9,074
---------- ---------- ---------- ----------
Net increase (decrease) in cash
& cash equivalents 350 (340) 10 (536)
Cash & cash equivalent at
beginning of period -- 350 -- 552
---------- ---------- ---------- ----------
Cash & cash equivalent at
end of period 350 10 10 16
========== ========== ========== ==========
</TABLE>
See accompanying notes.
- --------------------------------------------------------------------------------
F-6
<PAGE>
Bioenvision, Inc. (formerly Ascot Group, Inc.)
(a development stage company)
- --------------------------------------------------------------------------------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANISATION AND SIGNIFICANT ACCOUNTING POLICES.
DESCRIPTION OF BUSINESS
The Company is a development stage, biopharmaceutical company primarily focused
in the research and development of products and technologies for the treatment
of cancer. The Company has acquired development and marketing rights to a
portfolio of four platform technologies.
The Company was incorporated as Express Finance, Inc. under the laws of the
State of Delaware on August 16, 1996 and changed its name to Ascot Group, Inc.
on August 26, 1998 and further to Bioenvision, Inc. in December 1998.
BASIS OF PRESENTATION
In January 1999 the Company merged with Bioenvision, Inc, ('Old Bioenvision') a
development stage Company primarily engaged in the research and development of
products and technologies for the treatment of cancer. The transaction was
accounted for as a reorganisation of companies under common control in a manner
similar to a pooling of interests as they had a common majority shareholder. All
prior period amounts have been restated to include the financial results of Old
Bioenvision.
In September 1998, Old Bioenvision merged with Eurobiotech Group, Inc., a
development stage company involved in the research and development of products
and technologies for the treatment of cancer. The transaction was accounted for
as a combination of a reorganisation of companies under common control in a
manner similar to a pooling as they had a common majority shareholder, and the
purchase of a minority interest. All prior year amounts have been restated.
In July 1998, Old Bioenvision merged with Biotechnology & Healthcare Ventures
Limited ('BHV'), a development stage company involved in the research and
development of products and technologies for the treatment of cancer. The
transaction was accounted for as a reorganisation of companies under common
control in a manner similar to a pooling of interests as they had a common
majority shareholder. All prior period amounts have been restated to reflect the
financial results of BHV.
BHV acquired Bioheal Limited and Biomed UK Limited in May 1998, both of which
are development stage companies involved in the research and development of
products and technologies for the treatment of cancer. Both of the transactions
were accounted for as purchases and the results of Biomed UK Limited and Bioheal
Limited have been included in the financial statements of BHV from the date of
acquisition.
Where mergers have been accounted for as reorganisations under common control in
a manner similar to a pooling of interests, no fair values have been attributed
to any tangible or intangible assets, including technology rights.
The financial statements expressed in pounds sterling as of June 30, 1999 and
for the year then ended and the period August 16, 1996 (inception) to June 30,
1999 were translated in to US dollars, solely for the convenience of the reader,
at the prevailing exchange rate of (pound)1 = $1.5765. These translations should
not be construed as representations that the pound sterling amounts actually
represent US dollar amounts or that they could be converted into US dollars at
the rate indicated or at any other rate.
The Company has incurred significant losses from operations and is not currently
generating cash from operations. The Company anticipates that it may continue to
incur significant operating losses for the foreseeable future. Operations to
date have been funded principally by equity capital and borrowings. The Company
intends to continue to fund its development expenses through additional capital
raising activities, including one or more offerings of equity and/or debt
through private placements and/or public offerings.
In particular, stockholders have approved the offering, through a private
placement, of 1,000,000 shares of preferred stock in the Company. Based on its
current operating plan, the Company believes that the estimated amount of net
proceeds will be sufficient to meet its cash, operational and liquidity
requirements for at least the 12 months following the closing of such a private
placement.
In addition, the Company has entered into an agreement with Glen Investments
Ltd., a related party (see note 8) whereby Glen Investments Ltd. has agreed to
loan funds to the Company on an as-needed basis based upon previously agreed
budgets. A facility of pound 1 million is currently available to the Company
based on budgets that assume the above private placement is successful. If the
private placement proves to be unsuccessful, Glen Investments Ltd. has agreed to
support the Company for the forthcoming year, subject to satisfactory review of
revised budgets.
The Company's ability to continue to develop its infrastructure depends upon its
ability to raise equity capital through the approved private placement, the
continuing availability of funding from Glen Investments and upon its ability to
raise other additional capital. The financial statements do not include any
adjustments that may result from this uncertainty.
- --------------------------------------------------------------------------------
F-7
<PAGE>
Bioenvision, Inc. (formerly Ascot Group, Inc.)
(a development stage company)
- --------------------------------------------------------------------------------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts of the
Company and its wholly owned subsidiaries. All significant intercompany accounts
and transactions have been eliminated.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements as
well as the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates, and such differences
may be material to the financial statements.
INCOME TAXES
The Company accounts for income taxes under Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" (FAS 109). Under FAS 109,
deferred tax assets and liabilities are determined based on the differences
between the financial reporting and tax bases of assets and liabilities and are
measured using the enacted tax rates that will be in effect when the differences
are expected to reverse.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost, net of accumulated
depreciation and amortisation. Depreciation and amortisation is provided on a
reducing balance basis at the rate of 25% per year.
INTANGIBLE ASSETS
Intangible assets consist of acquired development and marketing rights to
platform technologies. Acquired development and marketing rights are stated at
their cost less accumulated amortisation. Amortisation is provided on a
straight-line basis over 20 years.
RESEARCH AND DEVELOPMENT
Research and Development costs are charged to expense as incurred.
NET LOSS PER SHARE
Basic net loss per share is computed using the weighted average number of common
shares outstanding during the periods. Diluted net loss per share is computed
using the weighted average number of common shares and potentially dilutive
common shares outstanding during the periods.
Options to purchase 500,000 shares of common stock have not been included in the
calculation of net loss per share as their effect would have been anti-dilutive.
FOREIGN CURRENCY TRANSLATION
The functional currency of the Company is Pounds Sterling. The functional
currency of the Company and its subsidiary, Old Bioenvision, was previously the
US dollar. Following various re-organisations (see Note 2) all historical
amounts have been restated with the adoption of Pounds Sterling as the
functional currency. This did not have a material impact.
- --------------------------------------------------------------------------------
F-8
<PAGE>
Bioenvision, Inc. (formerly Ascot Group, Inc.)
(a development stage company)
- --------------------------------------------------------------------------------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2. BUSINESS COMBINATIONS
During the two years ended June 30, 1999 the Company and its subsidiaries
completed a number of mergers and acquisitions. The Company merged with Old
Bioenvision, Inc. (" Old Bioenvision") on January 5, 1999, in exchange for
7,013,897 shares which was accounted for as a reorganisation of companies under
common control. Previously, on September 8, 1998, Bioenvision had merged with
Eurobiotech Group Inc. ("Eurobiotech") in exchange for 2,500,000 shares of its
common stock which was accounted for as a combination of a reorganisation of
companies under common control and the purchase of a minority interest. The
purchase price for the minority interest was (pound)15,541 and has been
allocated as follows:
(pound)
Technology rights 682,650
Less negative goodwill (667,109)
--------
Total consideration 15,541
========
The value of technology is based on an assessment performed by an independent
specialist.
In addition, on July 3, 1998 Old Bioenvision merged with Biotechnology &
Healthcare Ventures Limited ('BHV') in exchange for 4,150,000 shares of common
stock in a transaction accounted for as a reorganisation of companies under
common control.
On May 21, 1998 BHV acquired Biomed UK Limited ("Biomed") in exchange for
300,000 shares of common stock and warrants to purchase up to $900,000 of BHV
common stock. Following the acquisition of BHV by Old Bioenvision, the agreement
was amended which resulted in 300,000 shares of common stock in Old Bioenvision
being issued in lieu of the cancellation of the BHV stock and warrants. Proforma
information for the transaction has not been presented as Biomed had immaterial
operations, assets and liabilities at the date of acquisition. The value of the
shares issued was not material and approximated the value of Biomed's tangible
net assets at the date of acquisition.
Further, on May 20, 1998 BHV acquired Bioheal Limited ("Bioheal") in exchange
for 450,000 shares of common stock and warrants to purchase up to $1,600,000
worth of BHV common stock. Following the acquisition of BHV by Old Bioenvision,
the agreement was amended which resulted in 535,000 shares of common stock in
Old Bioenvision being issued in lieu of the cancellation of the BHV stock and
warrants. Proforma information for the transaction has not been presented as
Bioheal had immaterial operations, assets and liabilities at the date of
acquisition. The value of the shares issued was not material and approximated
the value of Bioheal's tangible net assets at the date of acquisition.
The following table reconciles the operating results for prior periods to the
amounts reflecting restatement of prior periods to include the results of Old
Bioenvision:
- --------------------------------------------------------------------------------
F-9
<PAGE>
Bioenvision, Inc. (formerly Ascot Group, Inc.)
(a development stage company)
- --------------------------------------------------------------------------------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2. BUSINESS COMBINATIONS - continued
Year ended June
30, 1998
(pound)
Net loss
Bioenvision 7,561
(formally Ascot Group, Inc.)
Old Bioenvision 757,593
-------
As restated 765,154
=======
3. PROPERTY PLANT AND EQUIPMENT
Property, plant and equipment consists of the following:
June 30, 1999
(pound)
Office equipment 1,140
Motor vehicles 67,154
-------
68,294
Less: accumulated depreciation (29,889)
-------
38,405
=======
4. INTANGIBLE ASSETS
June 30, 1999
(pound)
Purchased technology 15,541
Accumulated amortisation (899)
--------
At June 30, 1999 14,642
========
- --------------------------------------------------------------------------------
F-10
<PAGE>
Bioenvision, Inc. (formerly Ascot Group, Inc.)
(a development stage company)
- --------------------------------------------------------------------------------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
5. COMMITMENTS
The Company leases its principal facilities under an operating lease
arrangement. The future minimum annual rental payments are as follows for years
ended June 30:
(pound)
2000 18,000
2001 --
2003 --
2004 --
2005 --
Thereafter --
======
18,000
======
Rent expense for 1998 and 1999 was (pound)nil and (pound)9,000 respectively and
(pound)18,000 for the period from August 16, 1996 (inception) through June 30,
1997.
The Company uses office space for its executive offices which it receives from
its financial advisor at no cost.
6. INCOME TAXES
Due to operating losses and the inability to recognise corporation tax benefit
therefrom, there is no provision for income taxes for the years ended June 30,
1998 and 1999 and for the period from August 16, 1996 (inception) through June
30, 1999.
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amount used for corporation tax purposes. Significant
components of the Company's deferred tax assets are as follows:
1998 1999
(pound) (pound)
Capitalised start-up costs (US) 141,610 48,604
Net operating loss carry forwards (US) 94,147 78,967
-------- --------
Total deferred tax assets 235,757 127,571
Valuation allowance (235,757) (127,571)
-------- --------
Net deferred tax asset -- --
======== ========
As of June 30, 1999 the Company had net operating loss carry forwards of
approximately (pound)151,000 which do not expire under UK law.
7. STOCKHOLDERS' EQUITY
In January 1997, the Board of Directors and stockholders approved a 1 for 1.986
reverse split of the Company's common stock and in January 1999 effected at 1
for 15 reverse stock split. All share and per share amounts in the accompanying
financial statements have been adjusted for these stock splits retroactively.
- --------------------------------------------------------------------------------
F-11
<PAGE>
Bioenvision, Inc. (formerly Ascot Group, Inc.) DRAFT
(a development stage company)
- --------------------------------------------------------------------------------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
8. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On September 8, 1998 the Company entered to an agreement with Glen Investments,
Limited, a Jersey, Channel Islands corporation wholly owned by Kevin R. Leech,
whereby Glen Investments has agreed to loan funds to the Company on an as-needed
basis based upon previously agreed budgets. Mr Leech is a private investor who
is also the sole owner of Phoenix Ventures Limited, a Guernsey, Channel Islands
corporation and the holder of approximately 19% of the outstanding shares of
Common Stock of the Company. In exchange for its agreement to loan funds to the
Company, the Company issued to Glen Investments options to purchase up to
500,000 shares of Common Stock at an exercise price of $1.00 per share, all of
which options are currently exercisable. As such options were issued at an
exercise price greater than the fair value of common stock, no amount has been
included in the statement of operations to reflect the issuance of the options.
(pound)219,330 was outstanding under this agreement at June 30, 1999.
As of June 30, 1998 and 1999 financial advisors to the Company held 325,036
shares in the Company, which were issued in exchange for financial planning
services rendered. These services are reflected in the statement of operations
as start-up and organisational costs. They are valued at $0.01 per share, which
reflects the most recent transaction for shares.
In May 1998, Bioheal Ltd., a subsidiary of the Company, entered into an
agreement with Christopher B. Wood, the Chairman of the Board and Chief
Executive Officer of the Company, to co-develop a gene marker and
immunomodulator system for use in gene therapy and related technologies. Under
the terms of the agreement, Bioheal was granted the exclusive license to make,
use and sell products derived from technology, and to utilize technical
information related to the technology to obtain patent and other proprietary
rights to products developed by Bioheal and its collaborators from the
technology for a term expiring on the date of expiration of all current and
future patents covered by the agreement, subject to earlier termination under
certain circumstances. In consideration of the licenses granted to Bioheal,
Bioheal agreed to pay to Dr. Wood, among other things, a royalty of 10% of the
gross sales revenues of all products, less and discounts or deductions for
value-added taxes. In addition, Bioheal has agreed to pay, among other things,
certain costs associated with pre-clinical development and clinical trials of
such products. Under the terms of the agreement, the pre-clinical costs are not
to exceed $1,500,000, and the clinical trial costs are not to exceed $4,000,000,
unless agreed by both parties.
9. SUBSEQUENT EVENT
During October 1999 the stockholders approved the offering, through a private
placement, of 1,000,000 shares of Preferred Stock in the Company.
- --------------------------------------------------------------------------------
F-12
<PAGE>
ITEM 13. EXHIBITS, LIST AND REPORTS ON FORM 8-K
EXHIBITS
Number Description of Exhibit
- ------ ----------------------
2.1 Acquisition Agreement between Registrant and Bioenvision Inc. dated
December 21, 1998 for the acquisition of 7,013,897 shares of
Registrant's Common Stock by the stockholders of Bioenvision Inc. (1)
3.1 Certificate of Incorporation of the Registrant. (2)
3.2 By-Laws of the Registrant. (2)
10.4 Sponsored Research Agreement between Eurobiotech Corporation, Ltd.
and University of Texas, MD Anderson Cancer Center dated February 26,
1998.
10.5 Co-Development Agreement between Bioheal, Ltd. and Christopher Wood
dated May 19, 1998.
10.6 Co-Development Agreement between Biomed (UK) Ltd. and
EuroLifesciences, Ltd. dated May 20, 1998.
10.7 Co-Development Agreement between Stegram Pharmaceuticals, Ltd. and
Bioenvision Inc. dated July 15, 1998.
10.8 Co-Development Agreement between Southern Research Institute and
Eurobiotech Group, Inc. dated August 31, 1998.
10.9 Loan Agreement between Glen Investments Ltd. and Bionenvision Inc.
dated September 8, 1998 and affirmed July 15, 1999.
<PAGE>
10.10 Co-Development and Licensing Agreement between Orion Pharmaceuticals
Canada and Bioenvision Inc. dated November 1998.
10.11 Terms for a Co-Development and Licensing Agreement between WinWin
Pharmaceuticals Canada and Bioenvision Inc. dated November 3, 1998.
10.13 License Agreement between Bioenvision Inc. and University College
Cardiff Consultants Limited dated June 21, 1999. (_)
10.16 Employment Agreement between Bioenvision Inc. and Thomas Nelson dated
July 1998.
21.1 Subsidiaries of the Registrant.
- ----------
(1) Incorporated by reference and filed as an Exhibit to Registrant's Current
Report on Form 8-K filed with the Securities and Exchange Commission on January
12, 1999.
(2) Incorporated by reference and filed as an Exhibit to Registrant's
Registration Statement on Form 10 filed with the Securities and Exchange
Commission on September 3, 1998.
<PAGE>
REPORTS ON FORM 8-K
No reports of Form 8-K were filed during the last quarter of the period covered
by this report.
24
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
has caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
BIOENVISION INC.
By: /s/ Christopher B. Wood
-------------------------------------
Chairman of the Board and
Chief Executive Officer
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/ Christopher B. Wood Chairman of the Board and Chief October __, 1999
- ----------------------------------- Executive Officer (Principal
Christopher B. Wood executive officer) and Director
/s/ Andrew Turner Senior Vice President-Finance and October __, 1999
- ----------------------------------- Principal Accounting Officer
Andrew Turner (Principal financial and accounting
officer)
/s/ Stuart Smith October __, 1999
- -----------------------------------
Stuart Smith
/s/ George Margetts Chief Medical Officer October __, 1999
- -----------------------------------
George Margetts
/s/ Christopher B. Wood Director October __, 1999
- -----------------------------------
Christopher B. Wood
</TABLE>
25
TERMS FOR A CO-DEVELOPMENT AND LICENSING AGREEMENT
WHEREAS WinWin Pharmaceuticals Canada ("WinWin") to 136 Northview, Dollard,
Quebec, Canada and Bioenvision, Inc. ("Bioenvision") of Trafalgar House, 11
Waterloo Place, St. James's, London SW1Y 4AU wish to jointly develop technology
related to the development and uses of DNA vectors for the treatment of
typoalbumunaemia ("the technology"), and;
WHEREAS WinWin has rights in patents and technical information relating to
the technology, and;
WHEREAS Bioenvision recognises that its anticipated business activity will
encompass the practice of the Technology that requires a license under patents
and know-how owned by WinWin, and;
WHEREAS Bioenvision wishes to acquire certain rights to practice the
inventions of such patents and technical information, the parties hereby agree
on the following Terms for a Co-development and Licensing Agreement.
1. TERMS
1.1 WinWin shall grant to Bioenvision an exclusive world-wide license
to commercially develop the Technology and to market any
product(s) derived from the commercial development ("Products").
All development work shall be done in full discussion with, and
with the agreement of, WinWin. This license shall not be
transferable without the permission of WinWin, but such
permission shall not be unreasonably withheld. Any transfer or
assignment shall require the assignee to covenant to be bound by
the terms of the Agreement.
1.2 Bioenvision shall pay the costs of further development of the
product, based on a budget to be agreed between the parties and
to include the sum of up to $1.5 million payable over a period of
36 months, as per the budget provided by WinWin. The total
investment not to exceed $4 million, unless agreed by both
parties.
1.3 The license shall continue to force until expiry of the last
patents or trade-mark, this term to include new patents or
trade-marks applied for during the course of this co-development
programme.
1.4 WinWin shall have the right to assign or license aspects of the
Technology, other than for the treatment of hypoalbuminemia, to
other parties provided such assignment or license does not
contravene the rights assigned by this agreement or the
definitive agreement.
<PAGE>
1.5 Within 60 days of signing this Agreement Bioenvision shall
transfer 100,000 shares to WinWin.
2. ROYALTIES & PAYMENTS
2.1 Bioenvision shall pay to WinWin a royalty of 10% of net sale
price for Products sold directly by Bioenvision or any of its
subsidiaries. Net sale price is defined as the total sale price
charge by Bioenvision or its subsidiaries minus discounts and
tax.
2.2 If Bioenvision shall transfer rights acquired under the Agreement
to a third party other than a subsidiary of Bioenvision any
payments received, including mile-stone payments and royalties,
shall be divided equally between the parties after deduction of
development costs incurred by Bioenvision, such costs will be
limited to 20% of the payments received for such transfer.
3. PATENTS & TRADE-MARKS
3.1 All patients and trade-marks shall remain the property of WinWin.
Bioenvision agrees to pay the costs of filing new patents and
maintaining patents in the territory.
4. WARRANTIES
4.1 Both parties warrant that they have the right and authority to
enter into this Agreement.
4.2 WinWin, shall have the right to inspect the relevant financial
and other records of Bioenvision to verify the royalties and
payments due to WinWin, under this Agreement.
5. TERMINATION
5.1 This Agreement shall be terminated in the event:
(i) Of solvency or liquidation of Bioenvision.
(ii) Of failure of Bioenvision to fulfill the obligations
of this Agreement within 90 days. This period may be
extended if both parties agree.
(iii) That Bioenvision is prevented by whatever cause from
marketing the product.
2
<PAGE>
6. LAW
This Agreement shall be governed by the laws of the United Kingdom.
Signed on behalf of WinWin, Ltd. Signed on behalf of Bioenvision, Inc.
/s/ [Signature] /s/ CB Wood
- --------------------------------------- ------------------------------
President Chairman
- --------------------------------------- ------------------------------
Position Position
3 November 1998 3 November 1998
- --------------------------------------- ------------------------------
Date Date
3
<PAGE>
GLEN INVESTMENTS LTD
35/39 Maxwell Chambers
Colombiere
St. Helier, Jersey, CI
September 8th 1998
Bioenvision Inc.
Trafalgar House
11 Waterloo Place
London, SWIY 4AU
Dear Sirs
We hereby agree to loan funds to Bioenvision Inc, on an as needed basis
providing that we have previously agreed budgets. A condition of this is that we
have the right to call upon an option to purchase 500,000 shares at $1 should
the money lent exceed $100,000.
Yours sincerely
For and on Behalf of Glen Investments
GLEN INVESTMENTS LTD
35/39 Maxwell Chambers
Colombiere
St. Helier, Jersey, CI
July 15, 1999
Bioenvision Inc.
Trafalgar House
11 Waterloo Place
London, SWIY 4AU
Dear Sirs
As per our previous agreement we hereby confirm that we are willing to continue
loaning funds to Bioenvision Inc on an agreed budget basis.
Yours sincerely,
For and on Behalf of Glen Investments
SPONSORED RESEARCH AGREEMENT
THIS Agreement is made this ___ day of _____________, 1998, between The
University of Texas M.D. Anderson Cancer Center, 1515 Holcombe Boulevard,
Houston, Texas 77030 ("Institution"), a component of The University of Texas
System ("System"), and Eurobiotech Corporation Limited of Hamilton House, 1
Temple Avenue, Victoria Embankment, London, ECAY 0HA, ("Sponsor"), to conduct a
clinical and preclinical study and evaluation ("Study"). Institution and Sponsor
agree as follows:
WHEREAS, SPONSOR is the manufacturer or licensee of the Clofarabine ("Study
Drug") which has potential utilization in patient care and treatment; and
1. PROTOCOL
1.1 Institution agrees to use its best efforts to conduct the Study, as an
independent contractor, in accordance with Institutional policy, applicable
laws and regulations and the Preclinical Workscope and Protocol entitled
"Clofarabine Development Plan" ("Study"), as described in Exhibit A
attached hereto and incorporated herein. The Study will be supervised by
Michael J. Keating M.B., B.S. ("Principal Investigator"), at Institution,
with assistance from associates and colleagues as required.
1.2 Sponsor agrees to engage the services of Institution to conduct the Study
and further agrees to provide at no cost to Institution the Study Drug for
the conduct of the Study.
2. AWARD
In consideration for performance Study by Institution, Sponsor shall pay
Institution a total of One Million One Seventy-Seven Thousand One Hundred
Eighty-Eight and No/l00 Dollars ($1,177,188.00) for the preclinical and
clinical expenses for the Study, which is detailed by budget category in
Exhibit B. The first installment of Two Hundred Fifty Thousand and No/l00
Dollars ($250,000.00) is payable upon execution of this Agreement.
Subsequent installments will be made as outlined in Exhibit B.
3. TERM
3.1 This Agreement shall continue in force until the earlier of completion of
the Study as mutually agreed upon by the parties or Three (3) year from the
date set forth above; provided, however, that either party may terminate
the Agreement by giving thirty (30) days advance notice to the other.
3.2 Upon early termination of this Agreement, Sponsor shall be liable for all
reasonable costs incurred or obligated by Institution at the time of such
termination, subject to the maximum amount specified in Article 2. Sponsor
shall pay Institution for such costs within thirty (30) days of receipt of
an invoice for same.
1
<PAGE>
3.3 Upon termination of this Agreement, Institution shall return Sponsor's
materials and equipment to Sponsor.
4. INDEMNIFICATION
4.1 Institution shall, to the extent authorized under the Constitution and laws
of the State of Texas, indemnify and hold Sponsor harmless from liability
resulting from the negligent acts or omissions of Institution, its agents
or employees pertaining to the activities to be carried out pursuant to the
obligations of this Agreement; provided, however, that Institution shall
not hold Sponsor harmless from claims arising out of the negligence or
willful malfeasance of Sponsor, its officers, agents, or employees, or any
person or entity not subject to Institution's supervision or control.
4.2 Sponsor shall indemnify and hold harmless System, Institution, their
Regents, officers, agents and employees from any liability or loss
resulting from judgments or claims against them arising out of the
activities to be carried out pursuant to the obligations of this Agreement,
including but not limited to the use by Sponsor of the results of the
Study; provided, however, that the following is excluded from Sponsor's
obligation to indemnify and hold harmless:
a. the negligent failure of Institution to comply with any applicable
governmental requirements or to adhere to the terms of the Protocol;
or
b. the negligence or willful malfeasance by a Regent, officer, agent, or
employee of Institution or System.
5. PUBLICATION AND PUBLICITY
5.1 Institution reserves the right to publish the results of the Study.
Institution will, however, notify Sponsor and will submit a draft of the
manuscript to Sponsor for comments at least thirty (30) days prior to
submission for publication or oral presentation. Sponsor shall notify
Institution in writing within thirty (30) days of receipt of such draft
whether such draft contains information deemed to be confidential under the
provisions of Article 6, or information that if published within thirty
(30) days would have an adverse effect on a patent application in which
Sponsor owns full or part interest, or intends to obtain an interest from
Institution pursuant to this Agreement. In the latter case Sponsor has the
right to request a delay and Institution agrees to delay said publication
for a period not exceeding ninety (90) days. In any such notification,
Sponsor shall indicate with specificity to what manner and degree
Institution may disclose said information. Institution shall have the final
authority to determine the scope and content of any publication, provided
that such authority shall be exercised with reasonable regard for the
commercial interests of Sponsor. It is the intent of the parties that no
publication will contain any of confidential information disclosed by
Sponsor without Sponsor's prior written permission.
2
<PAGE>
5.2 Except as otherwise required by law or regulation, neither party shall
release or distribute any materials or information containing the name of
the other party or any of its employees without prior written approval by
an authorized representative of the non-releasing party, but such approval
shall not be unreasonably withheld.
6. CONFIDENTIAL INFORMATION
The parties may wish from time to time, in connection with work
contemplated under this Agreement, to disclose confidential information to
each other ("Confidential Information"). Each party will use reasonable
efforts to prevent the disclosure of any of the other party's Confidential
Information to third parties for a period of three (3) years from receipt
thereof, provided that the recipient party's obligation shall not apply to
information that:
a. is not disclosed in writing or reduced to writing and so marked with
an appropriate confidentiality legend within thirty (30) days of
disclosure;
b. is already in the recipient party's possession at the time of
disclosure thereof;
c. is or later becomes part of the public domain through no fault of the
recipient party;
d. is received from a third party having no obligations of
confidentiality to the disclosing party;
e. is independently developed by the recipient party; or
f. is required by law or regulation to be disclosed.
In the event that information is required to be disclosed pursuant to
subsection f, the party required to make disclosure shall notify the other
to allow that party to assert whatever exclusions or exemptions may be
available to it under such law or regulation.
7. INTELLECTUAL PROPERTY
7.1 Institution understands and acknowledges that the Study Drug which is being
provided to Institution for the purpose of conducting the Study is the
property of Sponsor and/or that the pharmaceutical compound may be subject
to certain intellectual property rights owned by or licensed to Sponsor.
This Agreement shall not be deemed or construed to convey or transfer any
of such intellectual property rights to Institution except insofar as
necessary to permit Institution to conduct the Study which is the subject
of this Agreement.
7.2 Sponsor understands and acknowledges that any new and patentable discovery,
unpatentable technology, technical know how or other intellectual property
developed solely by Institution as a result of Institution's conduct of the
Study hereunder shall be and remain the property of Institution. Sponsor
shall have an option to negotiate an exclusive, world wide license in and
to any such intellectual property developed and owned by Institution (as
well as that owned by it jointly with the Sponsor) under reasonable terms
and conditions which shall be negotiated within one hundred and eighty
(180) days following written notice to Sponsor by Institution that such
intellectual property has been developed as a result of the conduct of the
Study which is the subject of this Agreement and specifically referencing
the start of the one hundred eighty (180) day period in this
3
<PAGE>
Section 7.2. In the event that Sponsor and Institution fail to enter into a
license agreement during the time specified above, or during such extension
of time as the parties may mutually agree, then Institution's obligations
to Sponsor under this Section 7.2 shall cease.
8. GENERAL
8.1 This Agreement, including the attached Exhibit A and B, constitutes the
entire and only Agreement between the parties relating to the Study, and
all prior negotiations, representations, agreements, and understandings are
superseded hereby. No agreements altering or supplementing the terms
hereof, including the exhibits attached hereto, may be made except by a
written document signed by the duly authorized representatives of the
parties.
8.2 Any conflicts between the Protocol and this Agreement are controlled by
this Agreement.
8.3 This Agreement shall be construed and enforced in accordance with the laws
of the State of Texas.
IN WITNESS WHEREOF, Institution and Sponsor hereby enter into this
Agreement, effective as of the date first set forth above, and execute two (2)
original counterparts.
Eurobiotech Corporation Limited The University of Texas
M.D. Anderson Cancer Center
By: /s/ [ILLEGIBLE] By: Donna S. Gilberg
-------------------------------- ----------------------------
Donna S. Gilberg, CPA
Manager, Sponsored Programs
Title CEO
Date 26/2/98 Date 2/26/98
I have read this agreement and
understand my obligations
hereunder:
By: /s/ Michael J. Keating
-------------------------------
Michael J. Keating, M.B., B.S.
Make Payment To: Principal Investigator
The University of Texas
M.D. Anderson Cancer Center By: /s/ Hagop Kantarjian
Atten: Manager, Sponsored Programs -------------------------------
P.O. Box 297402 Hagop Kantarjian, M.D.,
Houston, TX 77297 Chairman, Leukemia Dept.
Tax I.D. 74 6001118 A1
By: /s/ Robert C. Bast
-------------------------------
Robert C. Bast, Jr., M.D.
Head, Division of Medicine
4
CO-DEVELOPMENT AGREEMENT
THIS AGREEMENT (the "Agreement") is entered into and effective this 19 day of
May 1998, the same date affixed hereto by the party last signing this Agreement,
by and between Bioheal Ltd ("Bioheal") of International House, Church Road,
Hendon, London and Christopher Wood ("C B Wood") of The Cedars, Hollybush Hill,
Stoke Poges, Bucks SL2 4QN
WITNESSETH
WHEREAS, C B Wood has rights in patents and technical information relating to
the development and uses of a a gene marker and immunomodulator system for use
in gene therapy and related technologies [Technology(s)];
WHEREAS, Bioheal recognizes that its anticipated business activity will
encompass the practice of technology that requires a license under intellectual
property owned by C B Wood; and
WHEREAS, Bioheal wishes to acquire certain rights to practice the inventions of
such patents and technical information; and
NOW THEREFORE, in consideration of the mutual covenants herein contained and
intending to be legally bound thereby, the parties agree as follows:
1. DEFINITIONS
As usual herein the following terms shall have the meanings set forth below:
Co-Development Program means the joint development of the Technology by C B Wood
and Bioheal.
B. Field means, and is limited to, the practice of the Patent, Invention and
Technical information licensed hereunder for use in human and animal health
applications.
C. Net Sale Price means the gross amount recognized by Bioheal or its affiliates
for the sale of a Product(s) through normal distribution channels (as determined
by generally accepted accounting principles), less any discounts or deductions
for value added taxes incurred and not recovered by Bioheal or the equivalent in
Great Britain or elsewhere in the Territory.
D. Invention means patented and unpatented, patentable and unpatentable,
proprietary technology ("Technology") related to a cell-based vector system for
use in gene therapy and related technologies, developed by or on behalf of C B
Wood, that is (i) related to human and animal health applications of the
Technology or (ii) necessary for the practice of Technology for human and animal
health applications as disclosed and claimed in the Patent(s).
<PAGE>
2. LICENSE AND CO-DEVELOPMENT PROGRAM
The parties to this Agreement hereby agree to jointly co-develop the Technology
according to the terms of this Agreement which supersedes all other written or
verbal agreements, express or implied, between Bioheal and C B Wood relating to
co-development of the Technology.
C B Wood hereby grants to Bioheal, to the extent of the Field for the Territory,
an exclusive license to make, have made, use and sell Product(s), provided
Bioheal sells Product(s) under existing trade-marks or under new trade-mark(s)
to be agreed by both parties and the terms of clause 6H shall apply to such new
trade-mark(s).
The exclusive license set forth herein shall remain exclusive for so long as
Bioheal meets the payments and other obligations set forth with regard to the
development and commercialization of the Licensed Technology or a Product. If
such conditions are not met, C B Wood, in his sole discretion, may elect to
terminate the Co-Development Agreement or take whatever actions it deems
necessary.
The licence shall continue in force until expiry of the last patent for
which the product is covered, this term to include new patents applied for
during the course of this Agreement.
3. TECHNICAL INFORMATION LICENSE
A. To the extent it is able to do so, C B Wood hereby grants to Bioheal, to the
extent of the Field for the Territory, an exclusive license to use the Technical
Information necessary to practice the Technology such that Bioheal may make,
have made, use and sell Product(s), including disclosures of the Technical
Information as needed to obtain patent rights or authorization to sell or
manufacture Products or services in the Field within any political jurisdiction
requiring such disclosure.
B. The exclusive license set forth herein shall remain exclusive for so long as
Bioheal meets the payments and other obligations set forth with regard to the
development and commercialization of the Licensed Technology or a Product. If
such conditions are not met, C B Wood in his sole discretion may elect to
terminate the Co-Development Agreement or take whatever action it deems
necessary
C. (1) C B Wood shall make efforts to make available to Bioheal Technical
Information in his possession related to the Technology that C B Wood has the
obligation to disclose under this Agreement. Bioheal shall not disclose to third
parties any Technical Information furnished by CB Wood during the term of this
Agreement, or any time thereafter, provided, however, that disclosure may be
made of any such Technical Information at any time: (i) with the prior written
consent of C B Wood, or (ii) to the extent necessary, to Bioheal's sublicensees
and
<PAGE>
purchasers of Bioheal's Product(s) or services, or (iii) after the same shall
have entered into the public domain through no fault of Bioheal or Bioheal's
subsidiaries. Disclosure of Technical Information is permitted without a prior
written consent of C B Wood to the extent required by statute, rule or
regulation of a governing body during the course of Bioheal's normal business
practices, or in the application or prosecution of an application for patent
rights, or in connection with securing financing for the development or
commercialization of the Technology or a Product. Bioheal shall inform C B Wood
of any such disclosure and use its best efforts to protect its confidentiality
under such disclosure. Any combination of Technical Information shall not be
considered in the public domain merely because individual elements thereof are
in the public domain. To the extent that any such Technical Information is
disclosed to Bioheal's sublicensees and purchasers of Bioheal's Product(s) or
services, the agreements contained in this Section shall be made by Bioheal
under a confidentiality agreement to apply to and be made binding upon all such
parties.
(2) The fact that some or all of the Technical Information becomes public
knowledge shall not affect the financial obligations for use of the Technical
Information licensed under this Agreement if such Technical Information was used
or usable in the discovery, development, manufacture, or approval for sale of a
Product within the Field.
4. LICENSE FEE AND RESEARCH AND DEVELOPMENT FUNDING
Bioheal shall pay the costs of any further pre-clinical development work deemed
necessary prior to commencing clinical trials, and this shall include the
development of the Product for other therapeutic applications, the use of
different formulations and preparations of the Product. The pre-clinical costs
not to exceed $1.5 million, unless agreed to buy both parties.
B. Bioheal shall pay the costs of clinical trials of the Product. The costs of
such development will not exceed $4 million (four million U.S. dollars).
C Bioheal shall pay the cost of prosecuting, filing and maintaining patents and
defending revocation proceedings on patents and patent applications, on the
Product within the Territory.
5. ACQUISITION
Acquisition of the Licensed Technology is meant in its broadest sense
including assignment, transfer, sublicense, merger, joint venture and so on and
so forth.
A. If all or part of the rights granted to Bioheal are acquired by a third party
all current or future payments derived by Bioheal from the transfer, whether in
cash, shares, property or any other form of payment, including but not limited
to up-front payments, milestone payments and royalties will be divided equally
between
<PAGE>
C B Wood and Bioheal, after repayment to Bioheal of all development costs
incurred by Bioheal.
ROYALTY PAYMENTS
A. Bioheal shall have exclusive rights to market the Product in the Territory
under the following terms: For the Patent and Technical Information licenses
granted herein, Bioheal shall pay to C B Wood a royalty of 10% of the Net Sale
Price of all Product(s) sold to an unaffiliated third party, likely to be a
distributor or wholesaler, but not limited to such, where Bioheal is responsible
for the marketing of the Product.
B. If the Product incorporates inventions, patents, or technical information
that is necessary for the successful commercialization of the Product and that
is obtained from sources other than C B Wood, the Parties agree to negotiate in
good faith a new royalty rate to reflect the contribution of such third party
inventions, patents, or technical information, but in no event shall the royalty
rate be reduced by more than 50%.
C. If this Agreement is for any reason terminated before all the earned
royalties herein provided for have been paid, Bioheal shall immediately pay to C
B Wood any remaining unpaid balance of earned royalties even though the due date
provided in Article 8 has not been reached.
If Bioheal shall sell the rights to the Technology in combination with the sale,
acquisition, merger or disposition of Bioheal Ltd., Bioheal, C B Wood and the
third party(ies) shall negotiate in good faith the specific details for such
sale of rights, subject to the approval of C B Wood which shall not be
unreasonably withheld.
7. SUBLICENSING
A. Bioheal shall have the right to sublicense in the Field for the Territory.
B. Bioheal will keep C B Wood routinely updated on progress of discussions and
negotiations with potential sub-licensees. C B Wood shall have the right to
review the form of sublicenses to be granted hereunder prior to the execution of
the same by Bioheal. Bioheal agrees that sublicense agreements shall conform in
all material respects to the terms and conditions of this Agreement. If C B Wood
has not objected within thirty (30) days of receiving the form of such agreement
describing the material terms, Bioheal may proceed to negotiate and grant
sublicenses without further review by C B Wood if the form of the sublicense has
not materially changed. Bioheal shall provide C B Wood with a copy of each
sublicense within thirty (30) days of execution, and shall not grant to its
sublicensees any rights not conveyed by this Agreement.
C. If this Agreement is terminated for any reason, except breach of contract by
Bioheal, any sublicense shall automatically transfer to C B Wood, unless
sublicensee is in breach or default of sublicense, and remain in full force and
effect so long as
<PAGE>
the sublicensees performs the obligations of the sublicense, and Bioheal will
execute such documents as may be requested by C B Wood to attest to the transfer
to C B Wood of all sublicense rights, including the right to receive future
payments.
8. PAYMENTS AND REPORTS
Payments owed to C B Wood shall be payable within thirty (30) days of receipt by
Bioheal except as stated otherwise elsewhere in this Agreement and except for
royalties and profit-sharing compensation as a result of direct marketing of
Product by Bioheal.
B. Royalties and profit-sharing compensation owed to C B Wood as a consequence
of direct marketing of Product by Bioheal shall be due for each calendar quarter
beginning with the first calendar quarter in which sales occur and shall be
payable to C B Wood within forty-five (45)days following the last day of the
applicable calendar quarter. All payments from Bioheal to C B Wood shall be made
in Pounds Sterling (pounds,) by bank credit transfer to C B Wood at the address
designated in writing by C B Wood from time-to-time.
C. In the event that Bioheal is prevented from making any payment to C B Wood
under this Agreement by virtue of restrictions on currency conversion or
repatriation under the statutes, laws, codes or governmental regulations of the
country from which the payment is to be made, then such payments may be paid by
depositing them in the currency in which accrued to C B Wood's account in a bank
acceptable to C B Wood in the country whose currency is involved. If the local
currency cannot be converted or remitted to C B Wood within twelve (12) months
from the initial deposit, Bioheal shall pay C B Wood the equivalent of such
amount at the initially computed conversion rate (including any interest
earnings) in Pounds Sterling (pounds), and the local currency shall be
transferred to an account in a bank acceptable to C B Wood in that country.
D. Payments to C B Wood hereunder shall be deemed paid as of the day on which
they are received at the address designated. Any part of a payment which is not
paid on or before the date when due shall accrue interest thereon from such date
until the date of its payment in full at two (2) percentage points over the per
annum interest rate published as the "Prime Rate" in The Wall Street Journal
(Eastern Edition), but in no event shall such rate exceed the maximum rate
permitted by applicable law.
E. Bioheal shall deliver to C B Wood within forty-five (45) days after the end
of each calendar quarter a report, certified by the chief financial officer (or
equivalent) of Bioheal, setting forth in reasonable detail the calculation of
payments made during the quarter and for each calendar quarter, including gross
sales, value added taxes, number of units sold, unit price and the like on a
country-by-country basis by Bioheal, sublicensees, joint ventures and their
affiliates.
<PAGE>
F. The Bioheal report to C B Wood shall be supported by and based upon a similar
financial report or, if permitted, a copy from each sublicensee and other
commercialization entity(ies).
G. The parties will promptly share all information generated under the
Co-Development Program pursuant to the confidentiality provisions of Article 21
and with particular respect to the pre-clinical studies and clinical trials.
9. RECORDS
Bioheal shall keep accurate records of all operations affecting payments
hereunder, and shall permit C B Wood or a duly authorized agent to inspect all
such records and to make copies of or extracts from such records during regular
business hours throughout the term of this Agreement and for a reasonable period
of not less than three (3) years thereafter. The fees charged for an audit shall
be paid by C B Wood; provided, however, that if an audit discloses an
underpayment by Bioheal of more than five percent (5%) for such audited period,
Bioheal shall pay the reasonable fees and expenses charged by the firm
conducting the audit.
10. OWNERSHIP OF THE TECHNOLOGY, TECHNICAL INFORMATION AND IMPROVEMENTS
C B Wood and Bioheal shall each retain full ownership of their existing
intellectual property rights including rights in the process of being protected
and rights conceived but not yet reduced to practice as of the effective date of
this Agreement.
All Improvements developed under projects funded, in whole or in part, by
Bioheal shall be owned by C B Wood and shall be included in the licenses granted
in this Agreement. In the event that a conflicting obligation prevents C B Wood
from including such an Improvement, C B Wood shall use reasonable efforts to
assist Bioheal to obtain rights from the appropriate third party or parties.
All Improvements made during the first three (3) years from the effective date
of the Agreement and not developed under projects funded, in whole or in part,
by Bioheal, shall be owned by C B Wood and if deemed reasonably necessary for
Bioheal's practice of the Technology, without which such practice would
constitute an infringement of Bioheal's rights, shall be included to the extent
necessary, as decided solely by C B Wood, in the licenses granted in this
Agreement, unless inclusion is not possible due to C B Wood's obligations to a
third party. In the event that a conflicting obligation prevents C B Wood from
including such an Improvement, he shall use reasonable efforts to assist Bioheal
to obtain rights from the appropriate third party or parties.
Bioheal shall have the first right of negotiation to a license or other
commercial arrangement to any C B Wood intellectual property developed under
projects funded, in whole or in part, by Bioheal, which does not constitute an
Improvement.
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11.PATENT PROSECUTION
A. Bioheal shall file, prosecute and maintain all of the Patent(s) that are the
property of C B Wood as of the date of this Agreement.
B. Bioheal shall bear all patenting expenses related to the filing, prosecution
or maintenance of all Patent and Improvement licensed hereunder in whole or in
part.
C. C B Wood shall furnish Bioheal with copies of all allowed claims when such
claims are allowed in the Field and in the Territory for all Patent and
Improvement licensed hereunder.
D. C B Wood shall provide Bioheal with draft copies of all correspondence and
filings and related prosecution documents on the Patent and Improvement licensed
hereunder and Bioheal shall promptly provide comments, if any, to C B Wood. C B
Wood shall confer with Bioheal, and make reasonable efforts to adopt Bioheal's
suggestions regarding prosecution tactics and strategy. Notwithstanding the
foregoing, Bioheal shall have the right to take such actions as are reasonably
necessary, in its good faith judgement, to preserve all rights under the Patent
and Improvement throughout the Territory. As soon as practical, subsequent to
the filing of any prosecution document, Bioheal shall provide C B Wood with a
copy of such document. In addition, Bioheal shall copy C B Wood with any
official office action and responses and submissions. Bioheal shall bear the
expenses of the activities noted in this Article 11.E.
.E. Bioheal will inform C B Wood at least sixty (60) days prior to any decision
having as a result the failure to file, or the abandonment of Patent
applications or failure to maintain a Patent, Patents and Improvements licensed
hereunder so that Bioheal may take over and maintain such Patent and
Improvements in force.
.F. Provided that Bioheal has been informed by Bioheal at least sixty (60) days
in advance, in the event that Bioheal decides not to pay patenting expenses in
any jurisdiction, C B Wood may elect to maintain such Patent and Improvements in
force and terminate Bioheal's licenses granted as for the jurisdiction in which
Bioheal abandoned or failed to file or maintain such Patent rights.
12. INFRINGEMENT BY THIRD PARTY
Either party shall notify the other party of any suspected infringement by a
third party of the Patent in the Field and the Territory, and each party shall
inform the other of any evidence of such infringement(s).
Bioheal shall have the first right to institute suit for infringement(s) in the
Field and Territory so long as this Agreement remains exclusive. At Bioheal's
expense, C B Wood will reasonably assist Bioheal in such prosecutions if so
requested by Bioheal, and will lend his name to such actions if requested by
Bioheal or required by law. Notwithstanding the foregoing C B Wood shall have
the right to
<PAGE>
participate and be represented in any such prosecutions by his own counsel at
his own expense.
If C B Wood notifies Bioheal of his desire to institute suit for infringement(s)
and Bioheal fails to exercise its first right to do so within ninety (90) days
of such notice, then C B Wood may, at his own expense, bring suit or take any
other appropriate action. At Bioheal's expense, Bioheal will reasonably assist C
B Wood in such prosecutions if so requested by C B Wood, and will lend its name
to such actions if requested by C B Wood or required by law. Notwithstanding the
foregoing C B Wood shall have the right to participate and be represented in any
such prosecutions by his own counsel at his own expense.
No settlement of any suspected infringement(s), whether or not a suit has been
instituted, may be entered into without the express written consent of C B Wood
and Bioheal.
Any amounts recovered pursuant to an infringement suit, settlement or
otherwise shall be retained by and be the property of the party bringing the
action. In the event Bioheal receives any monies or other consideration from a
third party as a result of Bioheal's exercise of its rights under this
Agreement, Bioheal shall first be reimbursed for expenses incurred and paid for,
C B Wood shall then receive a portion of the remainder in accordance with the
applicable provision(s) of Article 6 as applied to all such monies or other
considerations whether such monies or other considerations are denoted as
"royalties," "damages," "releases" from prior acts, or any other designation.
If Bioheal fails to exercise its first right to institute suit for
infringement(s) and C B Wood elects not to institute suit, then C B Wood shall
provide Bioheal with at least sixty (60) days notice of its intention to
terminate Bioheal's licenses granted in those jurisdictions affected by the
infringement or to take any other action it sees fit in its best judgement.
13. REVOCATION PROCEEDINGS
In the event either party becomes aware of the institution by a third party of
any proceedings for the revocation of any Patent, patents or Improvements in any
country in the Territory licensed hereunder to Bioheal, such party shall notify
the other party promptly. Bioheal shall defend any such proceedings at its own
expense, in its own name.
B. C B Wood shall have the right to participate in such revocation proceedings
at Bioheal's expense, and will lend its name to such proceedings if requested by
C B Wood or required by law. Sublicensees of Bioheal shall also have the right
to participate in such revocation proceedings.
C. Settlement of any revocation proceedings shall be subject to the approval of
C B Wood; such approval shall not be unreasonably withheld.
<PAGE>
14. INFRINGEMENT OF THIRD PARTY RIGHTS
C B Wood will reasonably assist Bioheal to defend or settle such third
party claim if so requested and at the expense of Bioheal.
B C B Wood shall have the right to participate and be represented in any such
claim by a third party by its own counsel.
C. No settlement of any third party claim may be entered into without the
express written consent of C B Wood.
D. In the event, by way of counterclaim or otherwise, either party or both
parties recover any damages or other sums in any action, suit, or proceeding
involving a claim by a third party, or in settlement thereof, such recovery
shall be applied and shared as mutually agreed.
15. REPRESENTATIONS
A. C B Wood represents that it has the right to grant all of the rights herein.
C B Wood is unaware of any claims asserted against C B Wood by any third
parties with respect to Patent infringement or any other type of liability
relevant to licensing of the Inventions, which have not been disclosed to
Bioheal as of the Effective Date of this Agreement.
C B Wood represents that he has full power, authority and legal right to
enter into this contemplated Agreement and to consummate the transactions
contemplated therein.
D. Bioheal represents that it has full power, authority and legal right to enter
into this contemplated Agreement and to consummate the transactions contemplated
therein.
E. Bioheal shall accept liability to the extent of the Field and for the
Territory for or on account of any injury, loss or damage, of any kind or nature
sustained by, or any damage assessed or asserted against, or any other liability
incurred by or imposed upon either party arising out of or in connection with or
resulting from (i) the production, use or sale of any Product(s) or (ii) the use
of any technical information, techniques, or practices disclosed by either
party, or (iii) any advertising or other promotional activities with respect to
any of the foregoing. If a sublicense is granted by Bioheal to a third party
that third party shall accept all liability for any injury, loss or damage as
defined above.
16. INDEMNIFICATION
Bioheal hereby agrees to indemnify, hold harmless and defend liability to
the extent of the Field and for the Territory C B Wood and his representatives
and
<PAGE>
agents from and against any and all demands, claims, suits or actions of any
character presented or brought on account of any injuries, losses or damages
sustained by any person or property in consequence of (i) any act or omission of
Bioheal or its agents, employees or subcontractors, or (ii) any liability,
except for any injuries, losses or damages that specifically result from the
negligence or willful misconduct of Bioheal. The foregoing indemnity shall
include but not be limited to court costs, attorneys' fees, costs of
investigation and costs of defense associated with such demands, claims, suits
or actions. The foregoing indemnity shall apply only to the extent of the Field
and in the Territory.
17. INSURANCE
Bioheal shall maintain, during the term of this Agreement, reasonable amounts of
comprehensive general liability insurance, including products liability
insurance, with reputable and financially secure insurance carriers to cover the
activities of C B Wood and his affiliates. Such insurance shall be written to
cover claims incurred, discovered, manifested, or made during or beyond the
expiration or termination of this Agreement during the period that any product,
process, or service, relating to, or developed pursuant to, this Agreement is
being commercially distributed or sold by Bioheal or by a sublicensee, affiliate
or agent of Bioheal. Bioheal shall furnish to C B Wood a certificate of
insurance evidencing such coverage and periodically, upon request, provide
evidence that the coverage is still in effect.
18. TERM AND TERMINATION
A. This Agreement shall commence on the Effective Date and, unless sooner
terminated under this Article 18, shall expire upon the later of: (i) expiration
of the last to expire of all Patent(s), Improvement(s), and Patent(s) licensed
under this Agreement including any extensions thereof and any periods of
exclusivity granted by regulatory agencies or other governmental bodies; (ii) C
B Wood is no longer due any payments from Sublicensee(s); or (iii) Bioheal is no
longer directly marketing a Product.
The payment obligations under the licenses granted to Bioheal for Licensed
Patents and Technical Information shall continue throughout the term as defined
in this Agreement but would be subject to good faith renegotiations upon the
expiration of the last to expire of the Licensed Patents, or upon the
abandonment of the last to be abandoned of any patent applications if no patents
have been issued, whichever is the later, unless this Agreement is sooner
terminated. Such good faith renegotiations shall take into account on a
country-by-country or regional basis but not be limited to: (i) Product
competition; (ii) utilization, incorporation and value of Technical Information;
(iii) value of Technical Information if no longer confidential or proprietary
through no fault of Bioheal, its Sublicensee(s), contractors, financiers or any
other Bioheal agent(s) or purchasers of Product or services having access to
Technical Information; (iv) the applicable contract or patent law or (v) prior
payment commitments.
<PAGE>
C. Bioheal may terminate this Agreement at any time upon ninety (90) days
written notice to C B Wood and upon payment of all amounts due C B Wood through
the effective date of the termination.
Upon termination of this Agreement, neither party shall be released from
any obligation that matured prior to the effective date of such termination.
Bioheal and any sublicensee may, however, after the effective date of such
termination, sell all Products in inventory provided that Bioheal shall pay to C
B Wood the royalties and profit-sharing thereon as required by Article 6 hereof
and submit the reports required by Article 8 hereof.
Except as provided in above, if either party shall be in default of any
obligation hereunder, the other party may terminate this Agreement by giving
Notice of Termination by Certified or Registered Mail to the party at fault,
specifying the basis for termination. If within sixty (60) days after the
receipt of such Notice of Termination, the party in default shall remedy the
condition forming the basis for termination such Notice of Termination shall
cease to be operative, and this Agreement shall continue in full force.
C B Wood shall have the right to terminate this Agreement if Bioheal shall
cease to carry out its business as related to the Product(s), become bankrupt or
insolvent, apply for or consent to the appointment of a trustee, receiver or
liquidator of its assets or seek relief under any law for the aid of debtors.
Bioheal shall inform C B Wood of its intention to file a voluntary petition
in bankruptcy or of another's intention to file an involuntary petition in
bankruptcy to be received at least thirty (30) days prior to filing such a
petition.
Notwithstanding anything else in this Agreement to the contrary, the
parties agree that Bioheal's obligation to pay C B Wood any payments or other
consideration accrued but unpaid prior to termination shall survive the
termination of this Agreement.
19. CONFIDENTIALITY; PUBLICATION; PUBLICITY
In fulfilling their obligations under this Agreement, it may be desirable
or necessary for the parties to disclose to one another certain of their
Confidential Information. In the event of receipt of such Confidential
Information, the receiving party agrees to preserve such information as
confidential and not to disclose it to third parties or to use it except in
connection with this Agreement during the term of this Agreement and for a
period of five (5) years following its termination. The foregoing obligations
shall not apply to any information that:
1. is now in the public domain or becomes generally available to the public
through no fault of the receiving party;
2. is already known to, or in the possession of, the receiving party as can
be demonstrated by documentary evidence;
<PAGE>
3. is disclosed to the receiving party on a non-confidential basis by a
third party having the right to make such disclosure; or
4. is independently developed by the receiving party as can be demonstrated
by documentary evidence.
In addition, to the extent reasonably necessary to fulfil its obligations
or exercise its rights under this Agreement (i) a party may disclose
Confidential Information to its Affiliates, Sub-licensees, consultants, outside
contractors, research investigators and clinical investigators, on a
need-to-know basis on condition that such persons or entities agree to be bound
by the provisions of this Agreement, (ii) a party or its Affiliates or
Sub-licensees may disclose Confidential Information to governmental or other
regulatory authorities to the extent that such disclosure is reasonably
necessary to obtain patents or regulatory authorizations, provided the
disclosing party shall request confidential treatment thereof, and (iii) a party
may disclose Confidential Information as required by applicable law, regulation
or judicial process, provided that such party shall give the other party (x)
prior written notice thereof, (y) adequate opportunity to object to any such
disclosure or to request confidential treatment thereof, and (z) shall take all
steps reasonably possible to minimize the disclosure to that level mandated by
law.
B. (i) If either party desires to publish or present the results of the
Co-Development Program, the publishing/presenting party shall provide the
non-publishing/non-presenting party a copy of the manuscript of any proposed
publication or presentation. The non-publishing/non-presenting party shall then
have thirty (30) days to review and comment on the manuscript or presentation,
and the publishing/presenting party agrees to delete any information identified
by the non-publishing/non-presenting party as its Trade Secrets or Confidential
Information.
(ii) In the event the non-publishing/non-presenting party determines that a
Patent application covering information contained in the proposed publication or
presentation should be filed, the party proposing the publication or
presentation shall delay such publication or presentation for up to sixty (60)
days after the thirty (30) days outlined in clause B (i) above to allow such
filing to be made.
Each party shall provide the other party with the prior opportunity to
review and approve any press releases or similar public announcements concerning
this Agreement or clinical, regulatory and commercial developments related to
Products as soon as practicable, but in no event later than 24 hours before an
announcement is made. Bioheal shall not use the name of C B Wood or otherwise
refer to any organization related to C B Wood, except with the written approval
of C B Wood, such approval not to be unreasonably withheld.
20. DISPUTE RESOLUTION
<PAGE>
A. The parties shall attempt to resolve through good faith discussions any
dispute which arises under this Agreement. Any dispute may, at the election of
either party, be referred to the chief executive officers, or the equivalent, of
each party. If they are unable to resolve the dispute, within thirty (30) days
after delivery of written notice of the dispute from one party to the other,
either party may seek to resolve it by referring the matter to an appropriate
arbitration service with experience in the field relevant to the dispute.
ASSIGNABILITY
C B Wood or Bioheal shall not assign any rights under this Agreement not
specifically transferable by its terms without prior written consent of the
other party
22. REFORM
The parties agree that if any part, form, or provision of this Agreement
shall be found illegal or in conflict with any valid controlling law, the
validity of the remaining provisions shall not be affected thereby.
In the event the legality of any provision of this Agreement is brought
into question because of a decision by a court of competent jurisdiction of any
country in which this Agreement applies, Bioheal, by written notice to C B Wood,
may revise the provision in question or may delete it entirely so as to comply
with the decision of the said court.
23. WAIVER AND ALTERATION
The failure of either party to insist, in any one or more instances, upon
the performance of any of the terms, covenants or conditions of this Agreement
and to exercise any right hereunder, shall not be construed as a waiver or
relinquishment of the future performance of any such term, covenant or condition
or the future exercise of such right, but the obligations of the other party
with respect to such future performance shall continue in full force and effect.
A provision of this Agreement may be altered only by a writing signed by both
parties.
24. MARKING
A. Bioheal shall place in a conspicuous location on any product or its
packaging, which is made or sold under any Patent coming within this Agreement,
a patent notice in accordance with the laws concerning the marking of patented
articles.
B. Bioheal shall include a marking provision similar to Paragraph A above in
every sublicense granted pursuant to Article 7 above.
25. IMPLEMENTATION
<PAGE>
Each party shall execute any instruments reasonably believed by the other party
to be necessary to implement the provisions of this Agreement.
26. GOVERNING LAW
This Agreement shall be deemed to have been entered into and shall be governed
by, construed and enforced in accordance with laws of England and in the English
language, and any action brought to enforce any provision or obligation
hereunder shall be brought in a court of competent jurisdiction in the United
Kingdom.
27. HEADINGS
The headings of the articles, sections and paragraphs used in this Agreement are
included for convenience only and are not to be used in construing or
interpreting this Agreement.
28. PARTIES INDEPENDENT
In making and performing this Agreement, the parties act and shall act at all
times as independent entities and nothing contained in this Agreement shall be
construed or implied to create an agency, partnership or employer and employee
relationship between Bioheal and C B Wood. Except as specifically provided
herein, at no time shall either party make commitments or incur any charges or
expenses for or in the name of the other party.
29. COUNTERPARTS
This Agreement shall become binding when any one or more counterparts hereof,
individually or taken together, shall bear the signatures of each of the parties
hereto. This Agreement may be executed in any number of counterparts, each of
which shall be an original as against either party whose signature appears
thereon, but all of which together shall constitute but one and the same
instrument.
30. FORCE MAJEURE
The parties shall not be responsible for failure to perform any of the
obligations imposed by this Agreement (except an obligation to pay money),
provided the failure is not due to negligence and provided such failure is
caused by fire, storms, floods, strikes, lockouts, accidents, war, riots or
civil commotions, inability to obtain railroad cars or raw materials, embargoes,
any State or Federal regulation, law, or restriction, seizure or acquisition of
the Technology or the Product(s) by the Government of the United Kingdom or the
United States of America or of any state, or of any agency thereof or by reason
of any compliance with a demand or request for such Product for any purpose for
national defense, or any other cause or contingency beyond the reasonable
control of said party (whether or not of the
<PAGE>
same kind or nature as the causes or contingencies above enumerated) shall not
subject the party so failing to any liability to the other.
31. EXECUTION
IN WITNESS WHEREOF the parties have caused this Agreement to be executed by
their duly authorized officers on the respective dates and at the respective
places hereinafter set forth.
BIOHEAL: C B WOOD:
By: /s/ [ILLEGIBLE] By: /s/ [ILLEGIBLE]
-------------------------- ----------------------------
Position: Director Position: Director
Date: 9/05/98 Date: 9/5/98
CO-DEVELOPMENT AGREEMENT
THIS AGREEMENT (the "Agreement") is entered into and effective this 20 day of
May 1998, the same date affixed hereto by the party last signing this Agreement,
by and between Biomed (UK) Ltd ("Biomed") of St Budeaux, Packhorse Rd, Gerrards
Cross, Bucks and EuroLifesciences Ltd ("EuroLife") of City Tower, Level 4, 40
Basinghall Street, London EC2V 5DE.
WITNESSETH
WHEREAS, EuroLife has rights in patents and technical information relating to
the development and uses of a cell-based vector system for use in gene therapy
and related technologies [Technology(s)]; and stem cell cryopreservation.
WHEREAS, Biomed recognizes that its anticipated business activity will encompass
the practice of technology that requires a license under intellectual property
owned by EuroLife; and
WHEREAS, Biomed wishes to acquire certain rights to practice the inventions of
such patents and technical information; and
NOW THEREFORE, in consideration of the mutual covenants herein contained and
intending to be legally bound thereby, the parties agree as follows:
1. DEFINITIONS
As usual herein the following terms shall have the meanings set forth below:
Co-Development Program means the joint development of the Technology by EuroLife
and Biomed.
B. Field means, and is limited to, the practice of the Patent, Invention and
Technical information licensed hereunder for use in human and animal health
applications.
C. Net Sale Price means the gross amount recognized by Biomed or its affiliates
for the sale of a Product(s) through normal distribution channels (as determined
by generally accepted accounting principles), less any discounts or deductions
for value added taxes incurred and not recovered by Biomed or the equivalent in
Great Britain or elsewhere in the Territory.
D. Invention means patented and unpatented, patentable and unpatentable,
proprietary technology ("Technology") related to a cell-based vector system for
use in gene therapy and related technologies, developed by or on behalf of
EuroLife, that is (i) related to human and animal health applications of the
Technology or (ii) necessary for the practice of Technology for human and animal
health applications as disclosed and claimed in the Patent(s).
<PAGE>
2. LICENSE AND CO-DEVELOPMENT PROGRAM
The parties to this Agreement hereby agree to jointly co-develop the Technology
according to the terms of this Agreement which supersedes all other written or
verbal agreements, express or implied, between Biomed and EuroLife relating to
co-development of the Technology.
EuroLife hereby grants to Biomed, to the extent of the Field for the Territory,
an exclusive license to make, have made, use and sell Product(s), provided
Biomed sells Product(s) under existing trade-marks or under new trade-mark(s) to
be agreed by both parties and the terms of clause 6H shall apply to such new
trade-mark(s).
The exclusive license set forth herein shall remain exclusive for so long as
Biomed meets the payments and other obligations set forth with regard to the
development and commercialization of the Licensed Technology or a Product. If
such conditions are not met, EuroLife, in his sole discretion, may elect to
terminate the Co-Development Agreement or take whatever actions it deems
necessary.
The licence shall continue in force until expiry of the last patent for
which the product is covered, this term to include new patents applied for
during the course of this Agreement.
3. TECHNICAL INFORMATION LICENSE
A. To the extent it is able to do so, EuroLife hereby grants to Biomed, to the
extent of the Field for the Territory, an exclusive license to use the Technical
Information necessary to practice the Technology such that Biomed may make, have
made, use and sell Product(s), including disclosures of the Technical
Information as needed to obtain patent rights or authorization to sell or
manufacture Products or services in the Field within any political jurisdiction
requiring such disclosure.
B. The exclusive license set forth herein shall remain exclusive for so long as
Biomed meets the payments and other obligations set forth with regard to the
development and commercialization of the Licensed Technology or a Product. If
such conditions are not met, EuroLife in his sole discretion may elect to
terminate the Co-Development Agreement or take whatever action it deems
necessary
C. (1) EuroLife shall make efforts to make available to Biomed Technical
Information in his possession related to the Technology that EuroLife has the
obligation to disclose under this Agreement. Biomed shall not disclose to third
parties any Technical Information furnished by EuroLife during the term of this
Agreement, or any time thereafter, provided, however, that disclosure may be
made of any such Technical Information at any time: (i) with the prior written
consent of EuroLife, or (ii) to the extent necessary, to Biomed's sublicensees
and purchasers of Biomed's Product(s) or services, or (iii) after the same shall
have
<PAGE>
entered into the public domain through no fault of Biomed or Biomed's
subsidiaries. Disclosure of Technical Information is permitted without a prior
written consent of EuroLife to the extent required by statute, rule or
regulation of a governing body during the course of Biomed's normal business
practices, or in the application or prosecution of an application for patent
rights, or in connection with securing financing for the development or
commercialization of the Technology or a Product. Biomed shall inform EuroLife
of any such disclosure and use its best efforts to protect its confidentiality
under such disclosure. Any combination of Technical Information shall not be
considered in the public domain merely because individual elements thereof are
in the public domain. To the extent that any such Technical Information is
disclosed to Biomed's sublicensees and purchasers of Biomed's Product(s) or
services, the agreements contained in this Section shall be made by Biomed under
a confidentiality agreement to apply to and be made binding upon all such
parties.
(2) The fact that some or all of the Technical Information becomes public
knowledge shall not affect the financial obligations for use of the Technical
Information licensed under this Agreement if such Technical Information was used
or usable in the discovery, development, manufacture, or approval for sale of a
Product within the Field.
4. LICENSE FEE AND RESEARCH AND DEVELOPMENT FUNDING
Biomed shall pay the costs of any further pre-clinical development work deemed
necessary prior to commencing clinical trials, and this shall include the
development of the Product for other therapeutic applications, the use of
different formulations and preparations of the Product. The pre-clinical costs
not to exceed $1.5 million, unless agreed to buy both parties.
B. Biomed shall pay the costs of clinical trials of the Product. The costs of
such development will not exceed $4 million (four million U.S. dollars).
C Biomed shall pay the cost of prosecuting, filing and maintaining patents and
defending revocation proceedings on patents and patent applications, on the
Product within the Territory.
5. ACQUISITION
Acquisition of the Licensed Technology is meant in its broadest sense
including assignment, transfer, sublicense, merger, joint venture and so on and
so forth.
A. If all or part of the rights granted to Biomed are acquired by a third party
all current or future payments derived by Biomed from the transfer, whether in
cash, shares, property or any other form of payment, including but not limited
to up-front payments, milestone payments and royalties will be divided equally
between
<PAGE>
EuroLife and Biomed, after repayment to Biomed of all development costs incurred
by Biomed.
ROYALTY PAYMENTS
A. Biomed shall have exclusive rights to market the Product in the Territory
under the following terms: For the Patent and Technical Information licenses
granted herein, Biomed shall pay to EuroLife a royalty of 10% of the Net Sale
Price of all Product(s) sold to an unaffiliated third party, likely to be a
distributor or wholesaler, but not limited to such, where Biomed is responsible
for the marketing of the Product.
B. If the Product incorporates inventions, patents, or technical information
that is necessary for the successful commercialization of the Product and that
is obtained from sources other than EuroLife, the Parties agree to negotiate in
good faith a new royalty rate to reflect the contribution of such third party
inventions, patents, or technical information, but in no event shall the royalty
rate be reduced by more than 50%.
C. If this Agreement is for any reason terminated before all the earned
royalties herein provided for have been paid, Biomed shall immediately pay to
EuroLife any remaining unpaid balance of earned royalties even though the due
date provided in Article 8 has not been reached.
If Biomed shall sell the rights to the Technology in combination with the sale,
acquisition, merger or disposition of Biomed Ltd., Biomed, EuroLife and the
third party(ies) shall negotiate in good faith the specific details for such
sale of rights, subject to the approval of EuroLife which shall not be
unreasonably withheld.
7. SUBLICENSING
A. Biomed shall have the right to sublicense in the Field for the Territory.
B. Biomed will keep EuroLife routinely updated on progress of discussions and
negotiations with potential sub-licensees. EuroLife shall have the right to
review the form of sublicenses to be granted hereunder prior to the execution of
the same by Biomed. Biomed agrees that sublicense agreements shall conform in
all material respects to the terms and conditions of this Agreement. If EuroLife
has not objected within thirty (30) days of receiving the form of such agreement
describing the material terms, Biomed may proceed to negotiate and grant
sublicenses without further review by EuroLife if the form of the sublicense has
not materially changed. Biomed shall provide EuroLife with a copy of each
sublicense within thirty (30) days of execution, and shall not grant to its
sub-licensees any rights not conveyed by this Agreement.
C. If this Agreement is terminated for any reason, except breach of contract by
Biomed, any sublicense shall automatically transfer to EuroLife, unless
sublicensee is in breach or default of sublicense, and remain in full force and
effect so long as
<PAGE>
the sublicensees performs the obligations of the sublicense, and Biomed will
execute such documents as may be requested by EuroLife to attest to the transfer
to EuroLife of all sublicense rights, including the right to receive future
payments.
8. PAYMENTS AND REPORTS
Payments owed to EuroLife shall be payable within thirty (30) days of receipt by
Biomed except as stated otherwise elsewhere in this Agreement and except for
royalties and profit-sharing compensation as a result of direct marketing of
Product by Biomed.
B. Royalties and profit-sharing compensation owed to EuroLife as a consequence
of direct marketing of Product by Biomed shall be due for each calendar quarter
beginning with the first calendar quarter in which sales occur and shall be
payable to EuroLife within forty-five (45) days following the last day of the
applicable calendar quarter. All payments from Biomed to EuroLife shall be made
in Pounds Sterling (pound) by bank credit transfer to EuroLife at the address
designated in writing by EuroLife from time-to-time.
C. In the event that Biomed is prevented from making any payment to EuroLife
under this Agreement by virtue of restrictions on currency conversion or
repatriation under the statutes, laws, codes or governmental regulations of the
country from which the payment is to be made, then such payments may be paid by
depositing them in the currency in which accrued to EuroLife's account in a bank
acceptable to EuroLife in the country whose currency is involved. If the local
currency cannot be converted or remitted to EuroLife within twelve (12) months
from the initial deposit, Biomed shall pay EuroLife the equivalent of such
amount at the initially computed conversion rate (including any interest
earnings) in Pounds Sterling (pounds) and the local currency shall be
transferred to an account in a bank acceptable to EuroLife in that country.
D. Payments to EuroLife hereunder shall be deemed paid as of the day on which
they are received at the address designated. Any part of a payment which is not
paid on or before the date when due shall accrue interest thereon from such date
until the date of its payment in full at two (2) percentage points over the per
annum interest rate published as the "Prime Rate" in The Wall Street Journal
(Eastern Edition), but in no event shall such rate exceed the maximum rate
permitted by applicable law.
E. Biomed shall deliver to EuroLife within forty-five (45) days after the end of
each calendar quarter a report, certified by the chief financial officer (or
equivalent) of Biomed, setting forth in reasonable detail the calculation of
payments made during the quarter and for each calendar quarter, including gross
sales, value added taxes, number of units sold, unit price and the like on a
country-by-country basis by Biomed, sublicensees, joint ventures and their
affiliates.
<PAGE>
F. The Biomed report to EuroLife shall be supported by and based upon a similar
financial report or, if permitted, a copy from each sublicensee and other
commercialization entity(ies).
G. The parties will promptly share all information generated under the
Co-Development Program pursuant to the confidentiality provisions of Article 21
and with particular respect to the pre-clinical studies and clinical trials.
9. RECORDS
Biomed shall keep accurate records of all operations affecting payments
hereunder, and shall permit EuroLife or a duly authorized agent to inspect all
such records and to make copies of or extracts from such records during regular
business hours throughout the term of this Agreement and for a reasonable period
of not less than three (3) years thereafter. The fees charged for an audit shall
be paid by EuroLife; provided, however, that if an audit discloses an
underpayment by Biomed of more than five percent (5%) for such audited period,
Biomed shall pay the reasonable fees and expenses charged by the firm conducting
the audit.
10. OWNERSHIP OF THE TECHNOLOGY, TECHNICAL INFORMATION AND IMPROVEMENTS
EuroLife and Biomed shall each retain full ownership of their existing
intellectual property rights including rights in the process of being protected
and rights conceived but not yet reduced to practice as of the effective date of
this Agreement.
All Improvements developed under projects funded, in whole or in part, by Biomed
shall be owned by EuroLife and shall be included in the licenses granted in this
Agreement. In the event that a conflicting obligation prevents EuroLife from
including such an Improvement, EuroLife shall use reasonable efforts to assist
Biomed to obtain rights from the appropriate third party or parties.
All Improvements made during the first three (3) years from the effective date
of the Agreement and not developed under projects funded, in whole or in part,
by Biomed, shall be owned by EuroLife and if deemed reasonably necessary for
Biomed's practice of the Technology, without which such practice would
constitute an infringement of Biomed's rights, shall be included to the extent
necessary, as decided solely by EuroLife, in the licenses granted in this
Agreement, unless inclusion is not possible due to EuroLife's obligations to a
third party. In the event that a conflicting obligation prevents EuroLife from
including such an Improvement, he shall use reasonable efforts to assist Biomed
to obtain rights from the appropriate third party or parties.
Biomed shall have the first right of negotiation to a license or other
commercial arrangement to any EuroLife intellectual property developed under
projects funded, in whole or in part, by Biomed, which does not constitute an
Improvement.
<PAGE>
11. PATENT PROSECUTION
A. Biomed shall file, prosecute and maintain all of the Patent(s) that are the
property of EuroLife as of the date of this Agreement.
B. Biomed shall bear all patenting expenses related to the filing, prosecution
or maintenance of all Patent and Improvement licensed hereunder in whole or in
part.
C. EuroLife shall furnish Biomed with copies of all allowed claims when such
claims are allowed in the Field and in the Territory for all Patent and
Improvement licensed hereunder.
D. EuroLife shall provide Biomed with draft copies of all correspondence and
filings and related prosecution documents on the Patent and Improvement licensed
hereunder and Biomed shall promptly provide comments, if any, to EuroLife.
EuroLife shall confer with Biomed, and make reasonable efforts to adopt Biomed's
suggestions regarding prosecution tactics and strategy. Notwithstanding the
foregoing, Biomed shall have the right to take such actions as are reasonably
necessary, in its good faith judgement, to preserve all rights under the Patent
and Improvement throughout the Territory. As soon as practical, subsequent to
the filing of any prosecution document, Biomed shall provide EuroLife with a
copy of such document. In addition, Biomed shall copy EuroLife with any official
office action and responses and submissions. Biomed shall bear the expenses of
the activities noted in this Article 11.E.
.E. Biomed will inform EuroLife at least sixty (60) days prior to any decision
having as a result the failure to file, or the abandonment of Patent
applications or failure to maintain a Patent, Patents and Improvements licensed
hereunder so that Biomed may take over and maintain such Patent and Improvements
in force.
.F. Provided that Biomed has been informed by Biomed at least sixty (60) days in
advance, in the event that Biomed decides not to pay patenting expenses in any
jurisdiction, EuroLife may elect to maintain such Patent and Improvements in
force and terminate Biomed's licenses granted as for the jurisdiction in which
Biomed abandoned or failed to file or maintain such Patent rights.
12. INFRINGEMENT BY THIRD PARTY
Either party shall notify the other party of any suspected infringement by a
third party of the Patent in the Field and the Territory, and each party shall
inform the other of any evidence of such infringement(s).
Biomed shall have the first right to institute suit for infringement(s) in the
Field and Territory so long as this Agreement remains exclusive. At Biomed's
expense, EuroLife will reasonably assist Biomed in such prosecutions if so
requested by Biomed, and will lend his name to such actions if requested by
Biomed or required
<PAGE>
by law. Notwithstanding the foregoing EuroLife shall have the right to
participate and be represented in any such prosecutions by his own counsel at
his own expense.
If EuroLife notifies Biomed of his desire to institute suit for infringement(s)
and Biomed fails to exercise its first right to do so within ninety (90) days of
such notice, then EuroLife may, at his own expense, bring suit or take any other
appropriate action. At Biomed's expense, Biomed will reasonably assist EuroLife
in such prosecutions if so requested by EuroLife, and will lend its name to such
actions if requested by EuroLife or required by law. Notwithstanding the
foregoing EuroLife shall have the right to participate and be represented in any
such prosecutions by his own counsel at his own expense.
No settlement of any suspected infringement(s), whether or not a suit has been
instituted, may be entered into without the express written consent of EuroLife
and Biomed.
Any amounts recovered pursuant to an infringement suit, settlement or otherwise
shall be retained by and be the property of the party bringing the action. In
the event Biomed receives any monies or other consideration from a third party
as a result of Biomed's exercise of its rights under this Agreement, Biomed
shall first be reimbursed for expenses incurred and paid for, EuroLife shall
then receive a portion of the remainder in accordance with the applicable
provision(s) of Article 6 as applied to all such monies or other considerations
whether such monies or other considerations are denoted as "royalties,"
"damages," "releases" from prior acts, or any other designation.
If Biomed fails to exercise its first right to institute suit for
infringement(s) and EuroLife elects not to institute suit, then EuroLife shall
provide Biomed with at least sixty (60) days notice of its intention to
terminate Biomed's licenses granted in those jurisdictions affected by the
infringement or to take any other action it sees fit in its best judgement.
13. REVOCATION PROCEEDINGS
In the event either party becomes aware of the institution by a third party of
any proceedings for the revocation of any Patent, patents or Improvements in any
country in the Territory licensed hereunder to Biomed, such party shall notify
the other party promptly. Biomed shall defend any such proceedings at its own
expense, in its own name.
B. EuroLife shall have the right to participate in such revocation proceedings
at Biomed's expense, and will lend its name to such proceedings if requested by
EuroLife or required by law. Sublicensees of Biomed shall also have the right to
participate in such revocation proceedings.
C. Settlement of any revocation proceedings shall be subject to the approval of
EuroLife; such approval shall not be unreasonably withheld.
<PAGE>
14. INFRINGEMENT OF THIRD PARTY RIGHTS
EuroLife will reasonably assist Biomed to defend or settle such third party
claim if so requested and at the expense of Biomed.
B EuroLife shall have the right to participate and be represented in any such
claim by a third party by its own counsel.
C. No settlement of any third party claim may be entered into without the
express written consent of EuroLife.
D. In the event, by way of counterclaim or otherwise, either party or both
parties recover any damages or other sums in any action, suit, or proceeding
involving a claim by a third party, or in settlement thereof, such recovery
shall be applied and shared as mutually agreed.
15. REPRESENTATIONS
A. EuroLife represents that it has the right to grant all of the rights herein.
EuroLife is unaware of any claims asserted against EuroLife by any third parties
with respect to Patent infringement or any other type of liability relevant to
licensing of the Inventions, which have not been disclosed to Biomed as of the
Effective Date of this Agreement.
EuroLife represents that he has full power, authority and legal right to enter
into this contemplated Agreement and to consummate the transactions contemplated
therein.
D. Biomed represents that it has full power, authority and legal right to enter
into this contemplated Agreement and to consummate the transactions contemplated
therein.
E. Biomed shall accept liability to the extent of the Field and for the
Territory for or on account of any injury, loss or damage, of any kind or nature
sustained by, or any damage assessed or asserted against, or any other liability
incurred by or imposed upon either party arising out of or in connection with or
resulting from (i) the production, use or sale of any Product(s) or (ii) the use
of any technical information, techniques, or practices disclosed by either
party, or (iii) any advertising or other promotional activities with respect to
any of the foregoing. If a sublicense is granted by Biomed to a third party that
third party shall accept all liability for any injury, loss or damage as defined
above.
16. INDEMNIFICATION
Biomed hereby agrees to indemnify, hold harmless and defend liability to
the extent of the Field and for the Territory EuroLife and his representatives
and
<PAGE>
agents from and against any and all demands, claims, suits or actions of any
character presented or brought on account of any injuries, losses or damages
sustained by any person or property in consequence of (i) any act or omission of
Biomed or its agents, employees or subcontractors, or (ii) any liability, except
for any injuries, losses or damages that specifically result from the negligence
or willful misconduct of Biomed. The foregoing indemnity shall include but not
be limited to court costs, attorneys' fees, costs of investigation and costs of
defense associated with such demands, claims, suits or actions. The foregoing
indemnity shall apply only to the extent of the Field and in the Territory.
17. INSURANCE
Biomed shall maintain, during the term of this Agreement, reasonable
amounts of comprehensive general liability insurance, including products
liability insurance, with reputable and financially secure insurance carriers to
cover the activities of EuroLife and his affiliates. Such insurance shall be
written to cover claims incurred, discovered, manifested, or made during or
beyond the expiration or termination of this Agreement during the period that
any product, process, or service, relating to, or developed pursuant to, this
Agreement is being commercially distributed or sold by Biomed or by a
sublicensee, affiliate or agent of Biomed. Biomed shall furnish to EuroLife a
certificate of insurance evidencing such coverage and periodically, upon
request, provide evidence that the coverage is still in effect.
18. TERM AND TERMINATION
A. This Agreement shall commence on the Effective Date and, unless sooner
terminated under this Article 18, shall expire upon the later of: (i) expiration
of the last to expire of all Patent(s), Improvement(s), and Patent(s) licensed
under this Agreement including any extensions thereof and any periods of
exclusivity granted by regulatory agencies or other governmental bodies; (ii)
EuroLife is no longer due any payments from Sublicensee(s); or (iii) Biomed is
no longer directly marketing a Product.
The payment obligations under the licenses granted to Biomed for Licensed
Patents and Technical Information shall continue throughout the term as defined
in this Agreement but would be subject to good faith renegotiations upon the
expiration of the last to expire of the Licensed Patents, or upon the
abandonment of the last to be abandoned of any patent applications if no patents
have been issued, whichever is the later, unless this Agreement is sooner
terminated. Such good faith renegotiations shall take into account on a country-
by-country or regional basis but not be limited to: (i) Product competition;
(ii) utilization, incorporation and value of Technical Information; (iii) value
of Technical Information if no longer confidential or proprietary through no
fault of Biomed, its Sublicensee(s), contractors, financiers or any other Biomed
agent(s) or purchasers of Product or services having access to Technical
Information; (iv) the applicable contract or patent law or (v) prior payment
commitments.
<PAGE>
C. Biomed may terminate this Agreement at any time upon ninety (90) days written
notice to EuroLife and upon payment of all amounts due EuroLife through the
effective date of the termination.
Upon termination of this Agreement, neither party shall be released from
any obligation that matured prior to the effective date of such termination.
Biomed and any sublicensee may, however, after the effective date of such
termination, sell all Products in inventory provided that Biomed shall pay to
EuroLife the royalties and profit-sharing thereon as required by Article 6
hereof and submit the reports required by Article 8 hereof.
Except as provided in above, if either party shall be in default of any
obligation hereunder, the other party may terminate this Agreement by giving
Notice of Termination by Certified or Registered Mail to the party at fault,
specifying the basis for termination. If within sixty (60) days after the
receipt of such Notice of Termination, the party in default shall remedy the
condition forming the basis for termination such Notice of Termination shall
cease to be operative, and this Agreement shall continue in full force.
EuroLife shall have the right to terminate this Agreement if Biomed shall
cease to carry out its business as related to the Product(s), become bankrupt or
insolvent, apply for or consent to the appointment of a trustee, receiver or
liquidator of its assets or seek relief under any law for the aid of debtors.
Biomed shall inform EuroLife of its intention to file a voluntary petition
in bankruptcy or of another's intention to file an involuntary petition in
bankruptcy to be received at least thirty (30) days prior to filing such a
petition.
Notwithstanding anything else in this Agreement to the contrary, the
parties agree that Biomed's obligation to pay EuroLife any payments or other
consideration accrued but unpaid prior to termination shall survive the
termination of this Agreement.
19. CONFIDENTIALITY; PUBLICATION; PUBLICITY
In fulfilling their obligations under this Agreement, it may be desirable
or necessary for the parties to disclose to one another certain of their
Confidential Information. In the event of receipt of such Confidential
Information, the receiving party agrees to preserve such information as
confidential and not to disclose it to third parties or to use it except in
connection with this Agreement during the term of this Agreement and for a
period of five (5) years following its termination. The foregoing obligations
shall not apply to any information that:
1. is now in the public domain or becomes generally available to the public
through no fault of the receiving party;
2. is already known to, or in the possession of, the receiving party as can
be demonstrated by documentary evidence;
<PAGE>
3. is disclosed to the receiving party on a non-confidential basis by a
third party having the right to make such disclosure; or
4. is independently developed by the receiving party as can be demonstrated
by documentary evidence.
In addition, to the extent reasonably necessary to fulfil its obligations
or exercise its rights under this Agreement (i) a party may disclose
Confidential Information to its Affiliates, Sub-licensees, consultants, outside
contractors, research investigators and clinical investigators, on a
need-to-know basis on condition that such persons or entities agree to be bound
by the provisions of this Agreement, (ii) a party or its Affiliates or
Sub-licensees may disclose Confidential Information to governmental or other
regulatory authorities to the extent that such disclosure is reasonably
necessary to obtain patents or regulatory authorizations, provided the
disclosing party shall request confidential treatment thereof, and (iii) a party
may disclose Confidential Information as required by applicable law, regulation
or judicial process, provided that such party shall give the other party (x)
prior written notice thereof, (y) adequate opportunity to object to any such
disclosure or to request confidential treatment thereof, and (z) shall take all
steps reasonably possible to minimize the disclosure to that level mandated by
law.
B. (i) If either party desires to publish or present the results of the
Co-Development Program, the publishing/presenting party shall provide the
non-publishing/non-presenting party a copy of the manuscript of any proposed
publication or presentation. The non-publishing/non-presenting party shall then
have thirty (30) days to review and comment on the manuscript or presentation,
and the publishing/presenting party agrees to delete any information identified
by the non-publishing/non-presenting party as its Trade Secrets or Confidential
Information.
(ii) In the event the non-publishing/non-presenting party determines that a
Patent application covering information contained in the proposed publication or
presentation should be filed, the party proposing the publication or
presentation shall delay such publication or presentation for up to sixty (60)
days after the thirty (30) days outlined in clause B(i) above to allow such
filing to be made.
Each party shall provide the other party with the prior opportunity to
review and approve any press releases or similar public announcements concerning
this Agreement or clinical, regulatory and commercial developments related to
Products as soon as practicable, but in no event later than 24 hours before an
announcement is made. Biomed shall not use the name of EuroLife or otherwise
refer to any organization related to EuroLife, except with the written approval
of EuroLife, such approval not to be unreasonably withheld.
20. DISPUTE RESOLUTION
<PAGE>
A. The parties shall attempt to resolve through good faith discussions any
dispute which arises under this Agreement. Any dispute may, at the election of
either party, be referred to the chief executive officers, or the equivalent, of
each party. If they are unable to resolve the dispute, within thirty (30) days
after delivery of written notice of the dispute from one party to the other,
either party may seek to resolve it by referring the matter to an appropriate
arbitration service with experience in the field relevant to the dispute.
ASSIGNABILITY
EuroLife or Biomed shall not assign any rights under this Agreement not
specifically transferable by its terms without prior written consent of the
other party
22. REFORM
The parties agree that if any part, form, or provision of this Agreement
shall be found illegal or in conflict with any valid controlling law, the
validity of the remaining provisions shall not be affected thereby.
In the event the legality of any provision of this Agreement is brought into
question because of a decision by a court of competent jurisdiction of any
country in which this Agreement applies, Biomed, by written notice to EuroLife,
may revise the provision in question or may delete it entirely so as to comply
with the decision of the said court.
23. WAIVER AND ALTERATION
The failure of either party to insist, in any one or more instances, upon the
performance of any of the terms, covenants or conditions of this Agreement and
to exercise any right hereunder, shall not be construed as a waiver or
relinquishment of the future performance of any such term, covenant or condition
or the future exercise of such right, but the obligations of the other party
with respect to such future performance shall continue in full force and effect.
A provision of this Agreement may be altered only by a writing signed by
both parties.
24. MARKING
A. Biomed shall place in a conspicuous location on any product or its packaging,
which is made or sold under any Patent coming within this Agreement, a patent
notice in accordance with the laws concerning the marking of patented articles.
B. Biomed shall include a marking provision similar to Paragraph A above in
every sublicense granted pursuant to Article 7 above.
25. IMPLEMENTATION
<PAGE>
Each party shall execute any instruments reasonably believed by the other party
to be necessary to implement the provisions of this Agreement.
26. GOVERNING LAW
This Agreement shall be deemed to have been entered into and shall be governed
by, construed and enforced in accordance with laws of England and in the English
language, and any action brought to enforce any provision or obligation
hereunder shall be brought in a court of competent jurisdiction in the United
Kingdom.
27. HEADINGS
The headings of the articles, sections and paragraphs used in this Agreement are
included for convenience only and are not to be used in construing or
interpreting this Agreement.
28. PARTIES INDEPENDENT
In making and performing this Agreement, the parties act and shall act at all
times as independent entities and nothing contained in this Agreement shall be
construed or implied to create an agency, partnership or employer and employee
relationship between Biomed and EuroLife. Except as specifically provided
herein, at no time shall either party make commitments or incur any charges or
expenses for or in the name of the other party.
29. COUNTERPARTS
This Agreement shall become binding when any one or more counterparts hereof,
individually or taken together, shall bear the signatures of each of the parties
hereto. This Agreement may be executed in any number of counterparts, each of
which shall be an original as against either party whose signature appears
thereon, but all of which together shall constitute but one and the same
instrument.
30. FORCE MAJEURE
The parties shall not be responsible for failure to perform any of the
obligations imposed by this Agreement (except an obligation to pay money),
provided the failure is not due to negligence and provided such failure is
caused by fire, storms, floods, strikes, lockouts, accidents, war, riots or
civil commotions, inability to obtain railroad cars or raw materials, embargoes,
any State or Federal regulation, law, or restriction, seizure or acquisition of
the Technology or the Product(s) by the Government of the United Kingdom or the
United States of America or of any state, or of any agency thereof or by reason
of any compliance with a demand or request for such Product for any purpose for
national defense, or any other cause or contingency beyond the reasonable
control of said party (whether or not of the
<PAGE>
same kind or nature as the causes or contingencies above enumerated) shall not
subject the party so failing to any liability to the other.
31. EXECUTION
IN WITNESS WHEREOF the parties have caused this Agreement to be executed by
their duly authorized officers on the respective dates and at the respective
places hereinafter set forth.
BIOMED: EUROLIFE:
By: /s/ [ILLEGIBLE] By: /s/ [ILLEGIBLE]
-------------------------- ----------------------------
Position: Director Position: Director
Date: 20/5/98 Date: 20/5/98
CO-DEVELOPMENT AGREEMENT
THIS AGREEMENT (the "Agreement") is entered into and effective this 15th day of
July 1998, the same date affixed hereto by the party last signing this
Agreement, by and between Stegram Pharmaceuticals Ltd ("Stegram") of 44
Broomfield Drive, Billinghurst, Sussex RH14 9TN and Bioenvision, Inc
("Bioenvision") of Trafalgar House, 11 Waterloo Place, St James's, London SW1Y
4AU
WITNESSETH
WHEREAS, Stegram has rights in patents and technical information relating to the
development and uses of a dehydrogenase inhibitor and receptor blocker and
related compounds [Product(s)]; and
WHEREAS, Bioenvision recognizes that Stegram owns inventions and intellectual
property useful in the conduct of Bioenvision's business; and
WHEREAS, Bioenvision recognizes that its anticipated business activity will
encompass the practice of technology that requires a license under patents owned
by Stegram; and
WHEREAS, Bioenvision wishes to acquire certain rights to practice the inventions
of such patents and technical information; and
WHEREAS the parties have signed a "Terms for Co-Development Agreement" set forth
in Appendix I, to enter into this Agreement, and
NOW THEREFORE, in consideration of the mutual covenants herein contained and
intending to be legally bound thereby, the parties agree as follows:
1. DEFINITIONS
As usual herein the following terms shall have the meanings set forth below:
A. Co-Development Program means the joint development of the Technology by
Bioenvision and Stegram.
B. Field means, and is limited to, the practice of the Patent, Invention and
Technical information licensed hereunder for use in human and animal health
applications.
C. Net Sale Price means the gross amount recognized by Bioenvision or its
affiliates for the sale of a Product(s) through normal distribution channels (as
determined by generally accepted accounting principles), less any discounts or
deductions for value added taxes incurred and not recovered by Bioenvision or
the equivalent in Great Britain or elsewhere in the Territory.
D. Invention means patented and unpatented, patentable and unpatentable,
proprietary technology ("Technology") related to a dehydrogenase inhibitor and
receptor blocker developed by or on behalf of Stegram, that is (i) related to
human
CONFIDENTIAL 1
<PAGE>
and animal health applications of the Technology or (ii) necessary for the
practice of Technology for human and animal health applications as disclosed and
claimed in the Patent(s).
E. Improvement means those unencumbered technology advances in the Technology
made by or on behalf of Stegram during the term of this Agreement that are
either within the scope of and would constitute an infringement of the Patent
claims or use Technical Information and are within the Field. Stegram shall be
obligated to include within the licenses granted only those Stegram improvements
developed during the first three (3) years from the effective date of the
Agreement which would be reasonably deemed necessary for Bioenvision's practice
of the Technology, and without which such practice would constitute an
infringement of Stegram's rights, unless such grant is not possible due to
Stegram's obligations to a third party. Notwithstanding the limitation of
Stegram's obligation set forth in the previous sentence, all Improvements
developed under projects funded, in whole or in part, by Bioenvision will be
included in the licenses granted in this Agreement. In the event that a
conflicting obligation prevents Stegram from including an Improvement within the
grant of license, Stegram shall use reasonable efforts to assist Bioenvision to
obtain rights from the appropriate third party or parties.
F Licensed Technology means the Patent, Improvement, and Technical Information
relating to human and animal health applications of the Technology or
Product(s).
G. Patent means the patents and/or patent applications, covering the Technology,
Product(s), Invention or Improvement as defined above, patents to be issued
pursuant thereto, and all divisionals, continuations, continuations-in-part,
reissues, substitutions, and extensions thereof, and any patent issuing on a
patent application filed after the Effective Date of this Agreement which is
included in the grant of license hereunder and any foreign counterparts of the
foregoing.
H. Product means a product, service, test, or information which is sold or
provided for a fee and but for the license granted herein would infringe one or
more claims of a Patent, or was discovered, developed, approved, manufactured or
marketed using an Invention, Improvement or Technical Information.
I. Technical Information means unencumbered published or unpublished
confidential and proprietary information in the nature of research and
development information, knowledge and technical data, together with trade
secrets relating to the Technology, including any inventions in the possession
of and belonging solely to Stegram on or prior to the Effective Date of this
Agreement and which Stegram has the obligation to include in this Agreement, or
which comes into the possession of Bioenvision during the term of this Agreement
and which is generated as a consequence of access to technical information
provided by Stegram. Stegram shall include herein only that Technical
Information which is reasonably necessary for Bioenvision's practice of the
Invention or without which such practice would constitute an infringement of
Stegram's rights. Technical Information includes only the above information
which is developed by or on behalf of Stegram, or is generated pursuant to
research funded, in whole or in part, by Bioenvision.
CONFIDENTIAL 2
<PAGE>
J. Territory means worldwide, with the exception of Japan and South Africa. The
United Kingdom shall be excluded from the Territory until such time that
Bioenvision assumes responsibility for marketing Product(s) in the UK at which
time the responsibilities and obligations for payments as defined in this
Agreement shall apply.
2. LICENSE AND CO-DEVELOPMENT PROGRAM
A. The parties to this Agreement hereby agree to jointly co-develop the
Technology according to the terms of this Agreement which supersedes the "Heads
of Terms for a Co-Development Agreement" set forth in Appendix I and all other
written or verbal agreements, express or implied, between Stegram and
Bioenvision relating to co-development of the Technology.
B. Stegram hereby grants to Bioenvision, to the extent of the Field for the
Territory, an exclusive license to make, have made, use and sell Product(s),
provided Bioenvision sells Product(s) under existing Stegram trade-marks or
under new trade-mark(s) to be agreed by both parties and the terms of clause 6H
shall apply to such new trade-mark(s).
C. The exclusive license set forth herein shall remain exclusive for so long as
Bioenvision meets the payments and other obligations set forth with regard to
the development and commercialization of the Licensed Technology or a Product.
If such conditions are not met, Stegram, in its sole discretion, may elect to
terminate the Co-Development Agreement or take whatever actions it deems
necessary.
D. The licence shall continue in force until expiry of the last patent for which
the product is covered, this term to include new patents applied for during the
course of this Agreement. This term shall also continue in force until such time
as Bioenvision ceases to use any trade-mark belonging to Stegram.
3. TECHNICAL INFORMATION LICENSE
A. To the extent it is able to do so, Stegram hereby grants to Bioenvision, to
the extent of the Field for the Territory, an exclusive license to use the
Technical Information necessary to practice the Technology such that Bioenvision
may make, have made, use and sell Product(s), including disclosures of the
Technical Information as needed to obtain patent rights or authorization to sell
or manufacture Products or services in the Field within any political
jurisdiction requiring such disclosure.
B. The exclusive license set forth herein shall remain exclusive for so long as
Bioenvision meets the payments and other obligations set forth with regard to
the development and commercialization of the Licensed Technology or a Product.
If such conditions are not met, Stegram in its sole discretion may elect to
terminate the Co-Development Agreement or take whatever action it deems
necessary
C. (1) Stegram shall make efforts to make available to Bioenvision Technical
Information in Stegram's possession related to the Technology that Stegram has
the obligation to disclose under this Agreement. Bioenvision shall not disclose
to third parties any Technical Information furnished by Stegram during the term
of this Agreement, or any time thereafter, provided, however, that disclosure
may be made of
CONFIDENTIAL 3
<PAGE>
any such Technical Information at any time: (i) with the prior written consent
of Stegram, or (ii) to the extent necessary, to Bioenvision's sublicensees and
purchasers of Bioenvision's Product(s) or services, or (iii) after the same
shall have entered into the public domain through no fault of Bioenvision or
Bioenvision's subsidiaries. Disclosure of Technical Information is permitted
without a prior written consent of Stegram to the extent required by statute,
rule or regulation of a governing body during the course of Bioenvision's normal
business practices, or in the application or prosecution of an application for
patent rights, or in connection with securing financing for the development or
commercialization of the Technology or a Product. Bioenvision shall inform
Stegram of any such disclosure and use its best efforts to protect its
confidentiality under such disclosure. Any combination of Technical Information
shall not be considered in the public domain merely because individual elements
thereof are in the public domain. To the extent that any such Technical
Information is disclosed to Bioenvision's sublicensees and purchasers of
Bioenvision's Product(s) or services, the agreements contained in this Section
shall be made by Bioenvision under a confidentiality agreement to apply to and
be made binding upon all such parties.
(2) The fact that some or all of the Technical Information becomes public
knowledge shall not affect the financial obligations for use of the Technical
Information licensed under this Agreement if such Technical Information was used
or usable in the discovery, development, manufacture, or approval for sale of a
Product within the Field.
4. LICENSE FEE AND RESEARCH AND DEVELOPMENT FUNDING
A. Bioenvision shall pay the costs of any further pre-clinical development work
deemed necessary prior to commencing clinical trials, and this shall include the
development of the Product for other therapeutic applications, the use of
different formulations and preparations of the Product.
B. Bioenvision shall pay the costs of clinical trials of the Product. The costs
of such development will not exceed $4 million (four million U.S. dollars).
C. Bioenvision shall issue to Stegram 100,000 shares of common stock of
Bioenvision Group, Inc. within 90 days of the Effective Date of this Agreement.
D Bioenvision shall pay the cost of prosecuting, filing and maintaining patents
and defending revocation proceedings on patents and patent applications, on the
Product within the Territory.
E. Bioenvision agrees to purchase at cost price from Stegram its existing
stockpile of Product and/or raw material and pharmaceutically prepared forms of
the Product, provided they are in a good and stable condition and suitable to
meet regulatory requirements for the sale or manufacture of pharmaceutical
products. Bioenvision thereafter reserves the right to purchase raw material
from independent suppliers and to purchase Product from independent suppliers,
but shall ensure that such suppliers comply with statutory requirements for
manufacture.
CONFIDENTIAL 4
<PAGE>
5. ACQUISITION
Acquisition of the Licensed Technology is meant in its broadest sense
including assignment, transfer, sublicense, merger, joint venture and so on and
so forth.
A. If all or part of the rights granted to Bioenvision are acquired by a third
party all current or future payments derived by Bioenvision from the transfer,
whether in cash, shares, property or any other form of payment, including but
not limited to up-front payments, milestone payments and royalties will be
divided equally between Stegram and Bioenvision, after repayment to Bioenvision
of all development costs incurred by Bioenvision.
6. ROYALTY PAYMENTS
A. Bioenvision shall have exclusive rights to market the Product in the
Territory under the following terms: For the Patent and Technical Information
licenses granted herein, Bioenvision shall pay to Stegram a royalty of 10% of
the Net Sale Price of all Product(s) sold to an unaffiliated third party, likely
to be a distributor or wholesaler, but not limited to such, where Bioenvision is
responsible for the marketing of the Product.
B. If the Product incorporates inventions, patents, or technical information
that is necessary for the successful commercialization of the Product and that
is obtained from sources other than Stegram, the Parties agree to negotiate in
good faith a new royalty rate to reflect the contribution of such third party
inventions, patents, or technical information, but in no event shall the royalty
rate be reduced by more than 50%.
C. If this Agreement is for any reason terminated before all the earned
royalties herein provided for have been paid, Bioenvision shall immediately pay
to Stegram any remaining unpaid balance of earned royalties even though the due
date provided in Article 8 has not been reached.
D. If Bioenvision shall sell the rights to the Technology in combination with
the sale, acquisition, merger or disposition of Bioenvision, Inc., Bioenvision,
Stegram and the third party(ies) shall negotiate in good faith the specific
details for such sale of rights, subject to the approval of Stegram which shall
not be unreasonably withheld.
E. After three (3) years from the signing of this Agreement Bioenvision shall
pay a minimum annual royalty of $50,000 to Stegram. If sales of Product(s) are
not of sufficient to meet the minimum royalty Bioenvision shall have the right
to offset any excess payment against future royalties for up to two (2) years
after the minimum royalty becomes payable.
F. After expiry of the last patent a royalty of 5% of net sale price for
products sold directly by Bioenvision shall be payable if Bioenvision continues
to use any or all trade-marks currently owned by Stegram, or other trade-mark(s)
used by Bioenvision as defined in clause 2B.
CONFIDENTIAL 5
<PAGE>
7. SUBLICENSING
A. Bioenvision shall have the right to sublicense in the Field for the
Territory.
B. Bioenvision will keep Stegram routinely updated on progress of discussions
and negotiations with potential sub-licensees. Stegram shall have the right to
review the form of sublicenses to be granted hereunder prior to the execution of
the same by Bioenvision. Bioenvision agrees that sublicense agreements shall
conform in all material respects to the terms and conditions of this Agreement.
If Stegram has not objected within thirty (30) days of receiving the form of
such agreement describing the material terms, Bioenvision may proceed to
negotiate and grant sublicenses without further review by Stegram if the form of
the sublicense has not materially changed. Bioenvision shall provide Stegram
with a copy of each sublicense within thirty (30) days of execution, and shall
not grant to its sub-licensees any Stegram rights not conveyed by this
Agreement.
C. If this Agreement is terminated for any reason, except breach of contract by
Stegram, any sublicense shall automatically transfer to Stegram, unless
sublicensee is in breach or default of sublicense, and remain in full force and
effect so long as the sublicensees performs the obligations of the sublicense,
and Bioenvision will execute such documents as may be requested by Stegram to
attest to the transfer to Stegram of all sublicense rights, including the right
to receive future payments.
8. PAYMENTS AND REPORTS
A. Payments owed to Stegram shall be payable within thirty (30) days of receipt
by Bioenvision except as stated otherwise elsewhere in this Agreement and except
for royalties and profit-sharing compensation as a result of direct marketing of
Product by Bioenvision.
B. Royalties and profit-sharing compensation owed to Stegram as a consequence of
direct marketing of Product by Bioenvision shall be due for each calendar
quarter beginning with the first calendar quarter in which sales occur and shall
be payable to Stegram within forty-five (45) days following the last day of the
applicable calendar quarter. All payments from Bioenvision to Stegram shall be
made in Pounds Sterling (pound) by bank credit transfer to Stegram at the
address designated in writing by Stegram from time-to-time.
C. In the event that Bioenvision is prevented from making any payment to Stegram
under this Agreement by virtue of restrictions on currency conversion or
repatriation under the statutes, laws, codes or governmental regulations of the
country from which the payment is to be made, then such payments may be paid by
depositing them in the currency in which accrued to Stegram's account in a bank
acceptable to Stegram in the country whose currency is involved. If the local
currency cannot be converted or remitted to Stegram within twelve (12) months
from the initial deposit, Bioenvision shall pay Stegram the equivalent of such
amount at the initially computed conversion rate (including any interest
earnings) in Pounds Sterling (pound), and the local
CONFIDENTIAL 6
<PAGE>
currency shall be transferred to an account in a bank acceptable to Bioenvision
in that country.
D. Payments to Stegram hereunder shall be deemed paid as of the day on which
they are received at the address designated. Any part of a payment which is not
paid on or before the date when due shall accrue interest thereon from such date
until the date of its payment in full at two (2) percentage points over the per
annum interest rate published as the "Prime Rate" in The Wall Street Journal
(Eastern Edition), but in no event shall such rate exceed the maximum rate
permitted by applicable law.
E. Bioenvision shall deliver to Stegram within forty-five (45) days after the
end of each calendar quarter a report, certified by the chief financial officer
(or equivalent) of Bioenvision, setting forth in reasonable detail the
calculation of Stegram payments made during the quarter and for each calendar
quarter, including gross sales, value added taxes, number of units sold, unit
price and the like on a country-by-country basis by Bioenvision, sublicensees,
joint ventures and their affiliates.
F. The Bioenvision report to Stegram shall be supported by and based upon a
similar financial report or, if permitted, a copy from each sublicensee and
other commercialization entity(ies).
G. The parties will promptly share all information generated under the
Co-Development Program pursuant to the confidentiality provisions of Article 21
and with particular respect to the pre- clinical studies and clinical trials.
9. RECORDS
Bioenvision shall keep accurate records of all operations affecting payments
hereunder, and shall permit Stegram or its duly authorized agent to inspect all
such records and to make copies of or extracts from such records during regular
business hours throughout the term of this Agreement and for a reasonable period
of not less than three (3) years thereafter. The fees charged for a Stegram
authorized audit shall be paid by Stegram; provided, however, that if an audit
discloses an underpayment by Bioenvision of more than five percent (5%) for such
audited period, Bioenvision shall pay the reasonable fees and expenses charged
by the firm conducting the audit.
10. OWNERSHIP OF THE TECHNOLOGY, TECHNICAL
INFORMATION AND IMPROVEMENTS
A. Stegram and Bioenvision shall each retain full ownership of their existing
intellectual property rights including rights in the process of being protected
and rights conceived but not yet reduced to practice as of the effective date of
this Agreement.
B. All Improvements by Stegram developed under projects funded, in whole or in
part, by Bioenvision shall be owned by Stegram and shall be included in the
licenses granted in this Agreement. In the event that a conflicting obligation
prevents Stegram from including such an Improvement, Stegram shall use
reasonable efforts to assist Bioenvision to obtain rights from the appropriate
third party or parties.
CONFIDENTIAL 7
<PAGE>
C. All Improvements by Stegram made during the first three (3) years from the
effective date of the Agreement and not developed under projects funded, in
whole or in part, by Bioenvision, shall be owned by Stegram and if deemed
reasonably necessary for Bioenvision practice of the Technology, without which
such practice would constitute an infringement of Stegram's rights, shall be
included to the extent necessary, as decided solely by Stegram, in the licenses
granted in this Agreement, unless inclusion is not possible due to Stegram's
obligations to a third party. In the event that a conflicting obligation
prevents Stegram from including such an Improvement, Stegram shall use
reasonable efforts to assist Bioenvision to obtain rights from the appropriate
third party or parties.
D. Bioenvision shall have the first right of negotiation to a license or other
commercial arrangement to any Stegram intellectual property developed under
projects funded, in whole or in part, by Bioenvision, which does not constitute
an Improvement.
11. PATENT PROSECUTION
A. Stegram shall file, prosecute and maintain all of the Patent that are the
property of Stegram as of the date of this Agreement.
B. Bioenvision shall bear all patenting expenses related to the filing,
prosecution or maintenance of all Patent and Improvement licensed hereunder in
whole or in part.
.C. Stegram shall furnish Bioenvision with copies of all allowed claims when
such claims are allowed in the Field and in the Territory for all Patent and
Improvement licensed hereunder.
.D. Stegram shall provide Bioenvision with draft copies of all correspondence
and filings and related prosecution documents on the Patent and Improvement
licensed hereunder and Bioenvision shall promptly provide comments, if any, to
Stegram. Stegram shall confer with Bioenvision, and make reasonable efforts to
adopt Bioenvision's suggestions regarding prosecution tactics and strategy.
Notwithstanding the foregoing, Stegram shall have the right to take such actions
as are reasonably necessary, in its good faith judgement, to preserve all rights
under the Patent and Improvement throughout the Territory. As soon as practical,
subsequent to the filing of any prosecution document, Stegram shall provide
Bioenvision with a copy of such document. In addition, Stegram shall copy
Bioenvision with any official office action and Stegram responses and
submissions. Bioenvision shall bear the expenses of the activities noted in this
Article 11.E.
.E. Stegram will inform Bioenvision at least sixty (60) days prior to any
decision having as a result the failure to file, or the abandonment of Patent
applications or failure to maintain a Patent, Patents and Improvements licensed
hereunder so that Bioenvision may take over and maintain such Patent and
Improvements in force.
.F. Provided that Stegram has been informed by Bioenvision at least sixty (60)
days in advance, in the event that Bioenvision decides not to pay patenting
expenses in any jurisdiction, Stegram may elect to maintain such Patent and
Improvements in
CONFIDENTIAL 8
<PAGE>
force and terminate Bioenvision's licenses granted as for the jurisdiction in
which Bioenvision abandoned or failed to file or maintain such Patent rights.
12. INFRINGEMENT BY THIRD PARTY
A. Either party shall notify the other party of any suspected infringement by a
third party of the Patent in the Field and the Territory, and each party shall
inform the other of any evidence of such infringement(s).
B. Bioenvision shall have the first right to institute suit for infringement(s)
in the Field and Territory so long as this Agreement remains exclusive. At
Bioenvision's expense, Stegram will reasonably assist Bioenvision in such
prosecutions if so requested by Bioenvision, and will lend its name to such
actions if requested by Bioenvision or required by law. Notwithstanding the
foregoing Stegram shall have the right to participate and be represented in any
such prosecutions by its own counsel at its own expense.
C. If Stegram notifies Bioenvision of its desire to institute suit for
infringement(s) and Bioenvision fails to exercise its first right to do so
within ninety (90) days of such notice, then Stegram may, at its own expense,
bring suit or take any other appropriate action. At Stegram's expense,
Bioenvision will reasonably assist Stegram in such prosecutions if so requested
by Stegram, and will lend its name to such actions if requested by Stegram or
required by law. Notwithstanding the foregoing Bioenvision shall have the right
to participate and be represented in any such prosecutions by its own counsel at
its own expense.
D. No settlement of any suspected infringement(s), whether or not a suit has
been instituted, may be entered into without the express written consent of
Bioenvision and Stegram.
E. Any amounts recovered pursuant to an infringement suit, settlement or
otherwise shall be retained by and be the property of the party bringing the
action. In the event Bioenvision receives any monies or other consideration from
a third party as a result of Bioenvision's exercise of its rights under this
Agreement, Bioenvision shall first be reimbursed for expenses incurred and paid
for, Stegram shall then receive a portion of the remainder in accordance with
the applicable provision(s) of Article 6 as applied to all such monies or other
considerations whether such monies or other considerations are denoted as
"royalties," "damages," "releases" from prior acts, or any other designation.
F. If Bioenvision fails to exercise its first right to institute suit for
infringement(s) and Stegram elects not to institute suit, then Stegram shall
provide Bioenvision with at least sixty (60) days notice of its intention to
terminate Bioenvision's licenses granted in those jurisdictions affected by the
infringement or to take any other action it sees fit in its best judgement.
13. REVOCATION PROCEEDINGS
A. In the event either party becomes aware of the institution by a third party
of any proceedings for the revocation of any Patent, patents or Improvements in
any country
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<PAGE>
in the Territory licensed hereunder to Bioenvision, such party shall notify the
other party promptly. Bioenvision shall defend any such proceedings at its own
expense, in its own name.
B. Stegram shall have the right to participate in such revocation proceedings at
Bioenvision's expense, and will lend its name to such proceedings if requested
by Bioenvision or required by law. Sublicensees of Bioenvision shall also have
the right to participate in such revocation proceedings.
C. Settlement of any revocation proceedings shall be subject to the approval of
Stegram; such approval shall not be unreasonably withheld.
14. INFRINGEMENT OF THIRD PARTY RIGHTS
A. Stegram will reasonably assist Bioenvision to defend or settle such third
party claim if so requested and at the expense of Bioenvision.
B Stegram shall have the right to participate and be represented in any such
claim by a third party by its own counsel.
C. No settlement of any third party claim may be entered into without the
express written consent of Stegram.
D. In the event, by way of counterclaim or otherwise, either party or both
parties recover any damages or other sums in any action, suit, or proceeding
involving a claim by a third party, or in settlement thereof, such recovery
shall be applied and shared as mutually agreed.
15. REPRESENTATIONS
A. Stegram represents that it has the right to grant all of the rights herein.
B. Stegram is unaware of any claims asserted against Stegram by any third
parties with respect to Patent infringement or any other type of liability
relevant to licensing of the Inventions, which have not been disclosed to
Bioenvision as of the Effective Date of this Agreement.
C. Stegram represents that it has full power, authority and legal right to enter
into this contemplated Agreement and to consummate the transactions contemplated
therein.
D. Bioenvision represents that it has full power, authority and legal right to
enter into this contemplated Agreement and to consummate the transactions
contemplated therein.
E. Bioenvision shall accept liability to the extent of the Field and for the
Territory for or on account of any injury, loss or damage, of any kind or nature
sustained by, or any damage assessed or asserted against, or any other liability
incurred by or imposed upon either party arising out of or in connection with or
resulting from (i) the
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production, use or sale of any Product(s) or (ii) the use of any technical
information, techniques, or practices disclosed by either party, or (iii) any
advertising or other promotional activities with respect to any of the
foregoing. If a sublicense is granted by Bioenvision to a third party that third
party shall accept all liability for any injury, loss or damage as defined
above.
16. INDEMNIFICATION
Bioenvision hereby agrees to indemnify, hold harmless and defend liability
to the extent of the Field and for the Territory Stegram and its officers,
directors, representatives, agents and employees from and against any and all
demands, claims, suits or actions of any character presented or brought on
account of any injuries, losses or damages sustained by any person or property
in consequence of (i) any act or omission of Bioenvision or its agents,
employees or subcontractors, or (ii) any liability, except for any injuries,
losses or damages that specifically result from the negligence or willful
misconduct of Stegram. The foregoing indemnity shall include but not be limited
to court costs, attorneys' fees, costs of investigation and costs of defense
associated with such demands, claims, suits or actions. The foregoing indemnity
shall apply only to the extent of the Field and in the Territory.
17. INSURANCE
Bioenvision shall maintain, during the term of this Agreement, reasonable
amounts of comprehensive general liability insurance, including products
liability insurance, with reputable and financially secure insurance carriers to
cover the activities of Bioenvision and its affiliates. Such insurance shall be
written to cover claims incurred, discovered, manifested, or made during or
beyond the expiration or termination of this Agreement during the period that
any product, process, or service, relating to, or developed pursuant to, this
Agreement is being commercially distributed or sold by Bioenvision or by a
sublicensee, affiliate or agent of Bioenvision. Bioenvision shall furnish to
Stegram a certificate of insurance evidencing such coverage and periodically,
upon request, provide evidence that the coverage is still in effect.
18. TERM AND TERMINATION
A. This Agreement shall commence on the Effective Date and, unless sooner
terminated under this Article 18, shall expire upon the later of: (i) expiration
of the last to expire of all Patent(s), Improvement(s), and Patent(s) licensed
under this Agreement including any extensions thereof and any periods of
exclusivity granted by regulatory agencies or other governmental bodies; (ii)
Bioenvision is no longer due any payments from Sublicensee(s); or ( iii )
Bioenvision is no longer directly marketing a Product.
B. The payment obligations under the licenses granted to Bioenvision for
Licensed Patents and Technical Information shall continue throughout the term as
defined in this Agreement but would be subject to good faith renegotiations upon
the expiration of the last to expire of the Licensed Patents, or upon the
abandonment of the last to be abandoned of any patent applications if no patents
have been issued, whichever is the later, unless this Agreement is sooner
terminated. Such good faith renegotiations
CONFIDENTIAL 11
<PAGE>
shall take into account on a country-by-country or regional basis but not be
limited to: (i) Product competition; (ii) utilization, incorporation and value
of Technical Information; (iii) value of Technical Information if no longer
confidential or proprietary through no fault of Bioenvision, its Sublicensee(s),
contractors, financiers or any other Bioenvision agent(s) or purchasers of
Product or services having access to Technical Information; (iv) the applicable
contract or patent law or (v) prior payment commitments.
C. Bioenvision may terminate this Agreement at any time upon ninety (90) days
written notice to Stegram and upon payment of all amounts due Stegram through
the effective date of the termination.
D. Upon termination of this Agreement neither party shall be released from any
obligation that matured prior to the effective date of such termination.
Bioenvision and any sublicensee may, however, after the effective date of such
termination, sell all Products in inventory provided that Bioenvision shall pay
to Stegram the royalties and profit-sharing thereon as required by Article 6
hereof and submit the reports required by Article 8 hereof.
E. Except as provided in above, if either party shall be in default of any
obligation hereunder, the other party may terminate this Agreement by giving
Notice of Termination by Certified or Registered Mail to the party at fault,
specifying the basis for termination. If within sixty (60) days after the
receipt of such Notice of Termination, the party in default shall remedy the
condition forming the basis for termination such Notice of Termination shall
cease to be operative, and this Agreement shall continue in full force.
F. Stegram shall have the right to terminate this Agreement if Bioenvision shall
cease to carry out its business as related to the Product(s), become bankrupt or
insolvent, apply for or consent to the appointment of a trustee, receiver or
liquidator of its assets or seek relief under any law for the aid of debtors.
G. Bioenvision shall inform Stegram of its intention to file a voluntary
petition in bankruptcy or of another's intention to file an involuntary petition
in bankruptcy to be received at least thirty (30) days prior to filing such a
petition.
H. Notwithstanding anything else in this Agreement to the contrary, the parties
agree that Bioenvision's obligation to pay Stegram any payments or other
consideration accrued but unpaid prior to termination shall survive the
termination of this Agreement.
19. CONFIDENTIALITY; PUBLICATION; PUBLICITY
A. In fulfilling their obligations under this Agreement, it may be desirable or
necessary for the parties to disclose to one another certain of their
Confidential Information. In the event of receipt of such Confidential
Information, the receiving party agrees to preserve such information as
confidential and not to disclose it to third parties or to use it except in
connection with this Agreement during the term of this Agreement and for a
period of five (5) years following its termination. The foregoing obligations
shall not apply to any information that:
CONFIDENTIAL 12
<PAGE>
1. is now in the public domain or becomes generally available to the public
through no fault of the receiving party;
2. is already known to, or in the possession of, the receiving party as can
be demonstrated by documentary evidence;
3. is disclosed to the receiving party on a non-confidential basis by a
third party having the right to make such disclosure; or
4. is independently developed by the receiving party as can be demonstrated
by documentary evidence.
In addition, to the extent reasonably necessary to fulfil its obligations
or exercise its rights under this Agreement (i) a party may disclose
Confidential Information to its Affiliates, Sub-licensees, consultants, outside
contractors, research investigators and clinical investigators, on a
need-to-know basis on condition that such persons or entities agree to be bound
by the provisions of this Agreement, (ii) a party or its Affiliates or
Sub-licensees may disclose Confidential Information to governmental or other
regulatory authorities to the extent that such disclosure is reasonably
necessary to obtain patents or regulatory authorizations, provided the
disclosing party shall request confidential treatment thereof, and (iii) a party
may disclose Confidential Information as required by applicable law, regulation
or judicial process, provided that such party shall give the other party (x)
prior written notice thereof, (y) adequate opportunity to object to any such
disclosure or to request confidential treatment thereof, and (z) shall take all
steps reasonably possible to minimize the disclosure to that level mandated by
law.
B. (i) If either party desires to publish or present the results of the
Co-Development Program, the publishing/presenting party shall provide the
non-publishing/non-presenting party a copy of the manuscript of any proposed
publication or presentation. The non-publishing/non-presenting party shall then
have thirty (30) days to review and comment on the manuscript or presentation,
and the publishing/presenting party agrees to delete any information identified
by the non-publishing/non-presenting party as its Trade Secrets or Confidential
Information.
(ii) In the event the non-publishing/non-presenting party determines that a
Patent application covering information contained in the proposed publication or
presentation should be filed, the party proposing the publication or
presentation shall delay such publication or presentation for up to sixty (60)
days after the thirty (30) days outlined in clause B(i) above to allow such
filing to be made.
C. Each party shall provide the other party with the prior opportunity to review
and approve any press releases or similar public announcements concerning this
Agreement or clinical, regulatory and commercial developments related to
Products as soon as practicable, but in no event later than 24 hours before an
announcement is made. Bioenvision shall not use the name of Stegram or otherwise
refer to any organization related to Stegram, except with the written approval
of Stegram, such approval not to be unreasonably withheld.
CONFIDENTIAL 13
<PAGE>
20. DISPUTE RESOLUTION
A. The parties shall attempt to resolve through good faith discussions any
dispute which arises under this Agreement. Any dispute may, at the election of
either party, be referred to the chief executive officers, or the equivalent, of
each party. If they are unable to resolve the dispute, within thirty (30) days
after delivery of written notice of the dispute from one party to the other,
either party may seek to resolve it by referring the matter to an appropriate
arbitration service with experience in the field relevant to the dispute.
21. ASSIGNABILITY
A. Stegram or Bioenvision shall not assign any rights under this Agreement not
specifically transferable by its terms without prior written consent of the
other party
22. REFORM
A. The parties agree that if any part, form, or provision of this Agreement
shall be found illegal or in conflict with any valid controlling law, the
validity of the remaining provisions shall not be affected thereby.
B. In the event the legality of any provision of this Agreement is brought into
question because of a decision by a court of competent jurisdiction of any
country in which this Agreement applies, Stegram, by written notice to
Bioenvision, may revise the provision in question or may delete it entirely so
as to comply with the decision of the said court.
23. WAIVER AND ALTERATION
A. The failure of either party to insist, in any one or more instances, upon the
performance of any of the terms, covenants or conditions of this Agreement and
to exercise any right hereunder, shall not be construed as a waiver or
relinquishment of the future performance of any such term, covenant or condition
or the future exercise of such right, but the obligations of the other party
with respect to such future performance shall continue in full force and effect.
B. A provision of this Agreement may be altered only by a writing signed by both
parties.
24. MARKING
A. Bioenvision shall place in a conspicuous location on any product or its
packaging, which is made or sold under any Patent coming within this Agreement,
a patent notice in accordance with the laws concerning the marking of patented
articles.
B. Bioenvision shall include a marking provision similar to Paragraph A above in
every sublicense granted pursuant to Article 7 above.
25. IMPLEMENTATION
Each party shall execute any instruments reasonably believed by the other party
to be necessary to implement the provisions of this Agreement.
CONFIDENTIAL 14
<PAGE>
26. GOVERNING LAW
This Agreement shall be deemed to have been entered into and shall be governed
by, construed and enforced in accordance with laws of England and in the English
language, and any action brought to enforce any provision or obligation
hereunder shall be brought in a court of competent jurisdiction in the United
Kingdom.
27. HEADINGS
The headings of the articles, sections and paragraphs used in this Agreement are
included for convenience only and are not to be used in construing or
interpreting this Agreement.
28. PARTIES INDEPENDENT
In making and performing this Agreement, the parties act and shall act at all
times as independent entities and nothing contained in this Agreement shall be
construed or implied to create an agency, partnership or employer and employee
relationship between Bioenvision and Stegram. Except as specifically provided
herein, at no time shall either party make commitments or incur any charges or
expenses for or in the name of the other party.
29. COUNTERPARTS
This Agreement shall become binding when any one or more counterparts hereof,
individually or taken together, shall bear the signatures of each of the parties
hereto. This Agreement may be executed in any number of counterparts, each of
which shall be an original as against either party whose signature appears
thereon, but all of which together shall constitute but one and the same
instrument.
30. FORCE MAJEURE
The parties shall not be responsible for failure to perform any of the
obligations imposed by this Agreement (except an obligation to pay money),
provided the failure is not due to negligence and provided such failure is
caused by fire, storms, floods, strikes, lockouts, accidents, war, riots or
civil commotions, inability to obtain railroad cars or raw materials, embargoes,
any State or Federal regulation, law, or restriction, seizure or acquisition of
the Technology or the Product(s) by the Government of the United Kingdom or the
United States of America or of any state, or of any agency thereof or by reason
of any compliance with a demand or request for such Product for any purpose for
national defense, or any other cause or contingency beyond the reasonable
control of said party (whether or not of the same kind or nature as the causes
or contingencies above enumerated) shall not subject the party so failing to any
liability to the other.
CONFIDENTIAL 15
<PAGE>
31. EXECUTION
IN WITNESS WHEREOF the parties have caused this Agreement to be executed by
their duly authorized officers on the respective dates and at the respective
places hereinafter set forth.
BIOENVISION: STEGRAM:
By: [ILLEGIBLE] By: [ILLEGIBLE]
--------------------------- -------------------------
Position: CEO Position: Director
---------------------- --------------------
Date: 17/2/98 Date: 17/7/98
--------------------------- -------------------------
CONFIDENTIAL 16
<PAGE>
TERMS FOR A
CO-DEVELOPMENT AGREEMENT
WHEREAS Stegram Pharmaceuticals Ltd ("Stegram") of 44 Broomfield Drive,
Billinghurst, Sussex RH14 9TN and Bioenvision, Inc ("Bioenvision") of Trafalgar
House, 11 Waterloo Place, St James's, London SW1Y 4AU wish to jointly develop
the dehydrogenase inhibitor, trilostane ("the product"), it is hereby agreed:
1. TERMS
1.1 Stegram shall grant to Bioenvision an exclusive world-wide licence to
develop and market the product in all territories excluding Japan and South
Africa. Stegram shall continue to market the Product(s) in the United
Kingdom until such time that Bioenvision shall take on the marketing of the
Product(s), at which time the Terms of the Agreement shall apply in full in
that territitory. All development work shall be done in full discussion
with, and with the agreement of, Stegram. This licence shall not be
transferrable without the permission of Stegram, but such permission shall
not be unreasonably withheld. Any transfer or assignment shall require the
assignee to covenant to be bound by the terms of the Agreement.
1.2 Bioenvision shall pay the costs of further development of the product,
based on a budget to be agreed between the parties, but not to exceed $4
million over the next 3 years.
1.3 The licence shall continue in force until expiry of the last patent in
which the product is covered, this term to include new patents applied for
during the course of this co-development programme. This term shall also
continue in force until such time as Bioenvision ceases to use any
Trademark belonging to Stegram.
2. ROYALTIES & PAYMENTS
2.1 Bioenvision shall pay to Stegram a royalty of 10% of net sale price for
product sold directly by Bioenvision or any of its subsidiaries. Net sale
price is defined as the total sale price charged by Bioenvision or its
subsidiaries minus discounts and tax. After expiry of the last patent a
royalty of 5% of net sales shall be payable so long as Bioenvision uses any
Trademarks owned by Stegram.
2.2 If Bioenvision shall transfer rights acquired under the Agreement to a
third party other than a subsidiary of Bioenvision any payments received,
including mile-stone payments and royalties, shall be divided equally
between the parties after deduction of development costs incurred by
Bioenvision.
2.3 Bioenvision shall transfer to Stegram 100,000 shares in Bioenvision, Inc.
within ninety (90) days of signing the definitive Agreement.
2.4 After three (3) years of the date of the definitive Agreement Bioenvision
agrees to pay a minimum royalty of $50,000 per year. If sales of the
Product(s) are not sufficient to meet the minimum royalty Bioenvision shall
have the right to offset any excess payment against future royalties for up
to two (2) years after the minimum royalty becomes payable.
2.5 Bioenvision shall purchase the existing stocks or Product and raw material
and pharmaceutically prepared forms of the product from Stegram, provided
they are in a good and stable condition and suitable to meet regulatory
requirements for the sale or manufacture of pharmaceutical products.
Thereafter
<PAGE>
Bioenvision shall be responsible for the manufacture of the raw material
and pharmaceutical dose forms.
3. PATENTS & TRADE-MARKS
3.1 All patents and trade-marks shall remain the property of Stegram.
Bioenvision agrees to pay the costs of filing and maintaining new and
existing patents and trade-marks and of transferring filing and maintaining
Product Licenses in the Territory.
4. WARRANTIES
4.1 Both parties warrant that they have the right and authority to enter into
this Agreement.
4.2 Stegram shall have the right to inspect the relevant financial and other
records of Bioenvision to verify the royalties and payments due to Stegram
under this Agreement.
4.3 Bioenvision agrees to maintain reasonable Product Liability insurance
within the Territory and to indemnify and defend Stegram from and against
any Third Party claims arising either directly or indirectly from the
product whether manufactured either by Stegram or by Bioenvision.
5. TERMINATION
5.1 This Agreement shall be terminated in the event:
(i) Of insolvency or liquidation of Bioenvision.
(ii) Of failure of Bioenvision to fulfil the obligations of this Agreement
(iii) That Bioenvision is prevented by whatever cause from marketing the
product
6. LAW
6.1 This Agreement and the definitive Agreement between the parties shall be
governed by the laws of the United Kingdom.
Signed on behalf of Stegram Signed on behalf of Bioenvision, Inc.
Pharmaceuticals Ltd
[ILLEGIBLE] [ILLEGIBLE]
- ------------------------------ ------------------------------
Director CEO
- ------------------------------ ------------------------------
Position Position
17/7/98 17/7/98
- ------------------------------ ------------------------------
Date Date
<PAGE>
TERMS FOR A
CO-DEVELOPMENT AGREEMENT
WHEREAS Stegram Pharmaceuticals Ltd ("Stegram") of 44 Broomfield Drive,
Billinghurst, Sussex RH14 9TN and Bioenvision, Inc ("Bioenvision") of Trafalgar
House, 11 Waterloo Place, St James's, London SW1Y 4AU wish to jointly develop
the dehydrogenase inhibitor, trilostane ("the product"), it is hereby agreed:
1. TERMS
1.1 Stegram shall grant to Bioenvision an exclusive world-wide licence to
develop and market the product in all territories excluding Japan and South
Africa. Stegram shall continue to market the Product(s) in the United
Kingdom until such time that Bioenvision shall take on the marketing of the
Product(s), at which time the Terms of the Agreement shall apply in full in
that territitory. All development work shall be done in full discussion
with, and with the agreement of, Stegram. This licence shall not be
transferrable without the permission of Stegram, but such permission shall
not be unreasonably withheld. Any transfer or assignment shall require the
assignee to covenant to be bound by the terms of the Agreement.
1.2 Bioenvision shall pay the costs of further development of the product,
based on a budget to be agreed between the parties, but not to exceed $4
million over the next 3 years.
1.3 The licence shall continue in force until expiry of the last patent in
which the product is covered, this term to include new patents applied for
during the course of this co-development programme. This term shall also
continue in force until such time as Bioenvision ceases to use any
Trademark belonging to Stegram.
2. ROYALTIES & PAYMENTS
2.1 Bioenvision shall pay to Stegram a royalty of 10% of net sale price for
product sold directly by Bioenvision or any of its subsidiaries. Net sale
price is defined as the total sale price charged by Bioenvision or its
subsidiaries minus discounts and tax. After expiry of the last patent a
royalty of 5% of net sales shall be payable so long as Bioenvision uses any
Trademarks owned by Stegram.
2.2 If Bioenvision shall transfer rights acquired under the Agreement to a
third party other than a subsidiary of Bioenvision any payments received,
including mile-stone payments and royalties, shall be divided equally
between the parties after deduction of development costs incurred by
Bioenvision.
2.3 Bioenvision shall transfer to Stegram 100,000 shares in Bioenvision, Inc.
within ninety (90) days of signing the definitive Agreement.
2.4 After three (3) years of the date of the definitive Agreement Bioenvision
agrees to pay a minimum royalty of $50,000 per year. If sales of the
Product(s) are not sufficient to meet the minimum royalty Bioenvision shall
have the right to offset any excess payment against future royalties for up
to two (2) years after the minimum royalty becomes payable.
2.5 Bioenvision shall purchase the existing stocks of Product and raw material
and pharmaceutically prepared forms of the product from Stegram, provided
they are in a good and stable condition and suitable to meet regulatory
requirements for the sale or manufacture of pharmaceutical products.
Thereafter
<PAGE>
Bioenvision shall be responsible for the manufacture of the raw material
and pharmaceutical dose forms.
3. PATENTS & TRADE-MARKS
3.1 All patents and trade-marks shall remain the property of Stegram.
Bioenvision agrees to pay the costs of filing and maintaining new and
existing patents and trade-marks and of transferring filing and maintaining
Product Licenses in the Territory.
4. WARRANTIES
4.1 Both parties warrant that they have the right and authority to enter into
this Agreement.
4.2 Stegram shall have the right to inspect the relevant financial and other
records of Bioenvision to verify the royalties and payments due to Stegram
under this Agreement.
4.3 Bioenvision agrees to maintain reasonable Product Liability insurance
within the Territory and to indemnify and defend Stegram from and against
any Third Party claims arising either directly or indirectly from the
product whether manufactured either by Stegram or by Bioenvision.
5. TERMINATION
5.1 This Agreement shall be terminated in the event:
(i) Of insolvency or liquidation of Bioenvision.
(ii) Of failure of Bioenvision to fulfil the obligations of this Agreement
(iii) That Bioenvision is prevented by whatever cause from marketing the
product.
6. LAW
6.1 This Agreement and the definitive Agreement between the parties shall be
governed by the laws of the United Kingdom.
Signed on behalf of Stegram Signed on behalf of Bioenvision, Inc.
Pharmaceuticals Ltd
[ILLEGIBLE] [ILLEGIBLE]
- ------------------------------ ------------------------------
Director CEO
- ------------------------------ ------------------------------
Position Position
17/7/98 17/7/98
- ------------------------------ ------------------------------
Date Date
CO-DEVELOPMENT AGREEMENT
BETWEEN SRI AND EUROBIOTECH
<PAGE>
TABLE OF CONTENTS
1. DEFINITIONS ..............................................................1
2. LICENSE AND CO-DEVELOPMENT PROGRAM .......................................3
3. TECHNICAL INFORMATION LICENSE ............................................4
4. LICENSE FEE AND RESEARCH AND DEVELOPMENT FUNDING .........................5
5. ACQUISITION ..............................................................6
6. COMMERCIALIZATION STAGE ..................................................7
7. SUBLICENSING .............................................................8
8. PAYMENTS AND REPORTS .....................................................8
9. RECORDS .................................................................10
10. DILIGENCE ...............................................................10
11. OWNERSHIP OF THE TECHNOLOGY, TECHNICAL INFORMATION AND
IMPROVEMENTS ............................................................10
12. PATENT PROSECUTION ......................................................11
13. INFRINGEMENT BY THIRD PARTY .............................................11
14. REVOCATION PROCEEDINGS ..................................................12
15. INFRINGEMENT OF THIRD PARTY RIGHTS ......................................13
16. REPRESENTATIONS .........................................................13
17. DISCLAIMER ..............................................................14
18. INDEMNIFICATION .........................................................14
19. INSURANCE ...............................................................15
20. TERM AND TERMINATION ....................................................15
i
<PAGE>
2]. CONFIDENTIALITY; PUBLICATION; PUBLICITY .................................16
22. DISPUTE RESOLUTION ......................................................18
23. ASSIGNABILITY ...........................................................19
24. REFORM ..................................................................20
25. WAIVER AND ALTERATION ...................................................20
26. MARKING .................................................................20
27. IMPLEMENTATION ..........................................................21
28. GOVERNING LAW ...........................................................21
29. EXPORTATION OF TECHNICAL INFORMATION ....................................21
30. HEADINGS ................................................................21
31. PARTIES INDEPENDENT .....................................................21
32. COUNTERPARTS ............................................................22
33. FORCE MAJEURE ...........................................................22
34. NOTICE ..................................................................21
35. EXECUTION ...............................................................23
APPENDIX I - PATENTS
APPENDIX II - TERMS FOR EUROBIOTECH GROUP, INC. ("EUROBIOTECH")
AND SOUTHERN RESEARCH INSTITUTE ("SOUTHERN") CO-
DEVELOPMENT AGREEMENT
APPENDIX III - EXTENSION OF THE CO-DEVELOPMENT PROGRAM BETWEEN
SOUTHERN RESEARCH INSTITUTE AND EUROBIOTECH GROUP,
INC.
APPENDIX IV - GROSS PROFIT MARGIN AND NET INCOME EXAMPLES
APPENDIX V - INTER-INSTITUTIONAL AGREEMENT
ii
<PAGE>
CO-DEVELOPMENT AGREEMENT
THIS AGREEMENT (the "Agreement") is entered into and effective this 31st day of
August 1998, the same date affixed hereto by the party last signing this
Agreement, by and between Southern Research Institute having its principal place
of business in Birmingham, Alabama, herein called "SRI", and Eurobiotech Group,
Inc. having a place of business in 40 South Audley Street, London W1, Great
Britain herein called "Eurobiotech".
WITNESSETH
WHEREAS, SRI has rights in patents and technical information relating to the
development and uses of 2'-fluoro-2-halo substituted purine nucleosides
effective in vivo against hematologic malignancies and solid tumors as well as
potentially effective for other therapeutic indications such as skin disorders,
arthritis and transplantation immunity; and
WHEREAS, Eurobiotech recognizes that SRI owns inventions and intellectual
property useful in the conduct of Eurobiotech's business; and
WHEREAS, Eurobiotech recognizes that its anticipated business activity will
encompass the practice of technology that requires a license under patents owned
by SRI; and
WHEREAS, Eurobiotech wishes to acquire certain rights to practice the inventions
of such patents and technical information; and
WHEREAS the parties have signed a "Terms for ... Co-Development Agreement" set
forth in Appendix II, to enter into this Agreement, and
NOW THEREFORE, in consideration of the mutual covenants herein contained and
intending to be legally bound thereby, the parties agree as follows:
1. DEFINITIONS
As usual herein the following terms shall have the meanings set forth below:
A. Co-Development Program means the joint development of the Technology by
Eurobiotech and SRI.
B. Commercialization Stage means that period of time during which Eurobiotech
is directly marketing and selling Product(s) through normal distribution
channels in any region of the Territory after receiving regulatory agency
approval to do so in such region.
C. Cost of Goods Sold means the release to the current period as a result of
the sale of a Product(s) of inventoriable costs (the sum of direct costs
and manufacturing overhead) adjusted for changes in ending and beginning
inventory levels.
1
<PAGE>
D. Eurobiotech means Eurobiotech Group, Inc. and joint ventures, subsidiaries,
or other business entities controlled directly or indirectly by Eurobiotech
or in which Eurobiotech owns at least fifty-one percent (51%) interest.
E. Field means, and is limited to, the practice of the Patent, Invention and
Technical Information licensed hereunder for use in human health
applications.
F. Gross Margin means the difference between the manufacturing Cost of Goods
Sold and Gross Sales Revenue, with SRI royalties treated as an excluded
cost.
G. Gross Profit Margin means the ratio of Gross Margin to Gross Sales Revenue
expressed in percentage terms.
H. Gross Sales Revenue means the gross amount recognized by Eurobiotech or its
affiliates for the sale of a Product(s) through normal distribution
channels (as determined by generally accepted accounting principles), less
any deductions for value added taxes incurred and not recovered by
Eurobiotech or the equivalent in Great Britain or elsewhere in the
Territory.
I. Invention means patented and unpatented, patentable and unpatentable,
proprietary technology related to a 2'-fluoro-2-halo substituted purine
nucleoside (hereafter "Technology") developed by or on behalf of SRI, that
is (i) related to human health applications of the Technology or (ii)
necessary for the practice of Technology for human health applications as
disclosed and claimed in the Patent(s).
J. Improvement means those unencumbered technology advances in the Technology
made by or on behalf of SRI during the term of this Agreement that are
either within the scope of and would constitute an infringement of the
Patent claims or use Technical Information and are within the Field. SRI
shall be obligated to include within the licenses granted only those SRI
Improvements developed during the first three (3) years from the effective
date of the Agreement which would be reasonably deemed necessary for
Eurobiotech's practice of the Technology, and without which such practice
would constitute an infringement of SRI's rights, unless such grant is not
possible due to SRI's obligations to a third party. Notwithstanding the
limitation of SRI's obligation set forth in the previous sentence, all
Improvements developed under projects funded, in whole or in part, by
Eurobiotech will be included in the licenses granted in this Agreement. In
the event that a conflicting obligation prevents SRI from including an
Improvement within the grant of license, SRI shall use reasonable efforts
to assist Eurobiotech to obtain rights from the appropriate third party or
parties.
K. Licensed Technology means the Patent, Improvement, and Technical
Information relating to human health applications of Technology.
2
<PAGE>
L. Net Income means the difference between Gross Sales Revenue and the sum of
Cost of Goods sold and Operating Expenses (Appendix IV), with SRI
royalties, local taxes, corporate income taxes and foreign taxes treated as
excluded costs.
M. Patent means the patents and/or patent applications, set forth in Appendix
1, covering the Invention or Improvement as defined above, patents to be
issued pursuant thereto, and all divisionals, continuations,
continuations-in-part, reissues, substitutions, and extensions thereof, and
any patent issuing on a patent application filed after the Effective Date
of this Agreement which is included in the grant of license hereunder and
any foreign counterparts of the foregoing.
N. Product means a product, service, test, or information which is sold or
provided for a fee and but for the license granted herein would infringe
one or more claims of a Patent, or was discovered, developed, approved,
manufactured or marketed using an Invention, Improvement or Technical
Information.
0. Technical Information means unencumbered published or unpublished
confidential and proprietary information in the nature of research and
development information, knowledge and technical data, together with trade
secrets relating to the Technology, including any inventions in the
possession of and belonging solely to SRI on or prior to the Effective Date
of this Agreement and which SRI has the obligation to include in this
Agreement, or which comes into the possession of Eurobiotech during the
term of this Agreement and which is generated as a consequence of access to
technical information provided by SRI. SRI shall include herein only that
Technical Information which is reasonably necessary for Eurobiotech's
practice of the Invention or without which such practice would constitute
an infringement of SRI's rights. Technical Information includes only the
above information which is developed by or on behalf of SRI, or is
generated pursuant to research funded, in whole or in part, by Eurobiotech.
P. Territory means worldwide, with the exception of Japan and Southeast Asia.
Southeast Asia consists of Indonesia, Malaysia, Taiwan, Hong Kong,
Singapore, Vietnam, Cambodia, Thailand, Laos, Philippines and South Korea.
2. LICENSE AND CO-DEVELOPMENT PROGRAM
A. The parties to this Agreement hereby agree to jointly co-develop the
Technology according to the terms of this Agreement which supersedes the
"Terms for ... Co-Development Agreement" set forth in Appendix II and all
other written or verbal agreements, express or implied, between SRI and
Eurobiotech relating to co-development of the Technology except for the
written understanding set forth in Appendix III.
B. SRI hereby grants to Eurobiotech, to the extent of the Field for the
Territory, an exclusive license to make, have made, use and sell
Product(s).
3
<PAGE>
C. The exclusive license set forth herein shall remain exclusive for so long
as Eurobiotech meets the payments and other obligations set forth with
regard to the development and commercialization of the Licensed Technology
or a Product. If such conditions are not met, SRI, in its sole discretion,
may elect to terminate the Co-Development Agreement or take whatever
actions it deems necessary.
D. SRI reserves for itself all rights to practice the Inventions, Patent,
Improvements and Technical Information except as exclusively licensed
herein.
3. TECHNICAL INFORMATION LICENSE
A. To the extent it is able to do so, SRI hereby grants to Eurobiotech, to the
extent of the Field for the Territory, an exclusive license to use the
Technical Information necessary to practice the Technology such that
Eurobiotech may make, have made, use and sell Product(s), including
disclosures of the Technical Information as needed to obtain patent rights
or authorization to sell or manufacture Products or services in the Field
within any political jurisdiction requiring such disclosure.
B. The exclusive license set forth herein shall remain exclusive for so long
as Eurobiotech meets the payments and other obligations set forth with
regard to the development and commercialization of the Licensed Technology
or a Product. If such conditions are not met, SRI in its sole discretion
may elect to terminate the Co-Development Agreement or take whatever action
it deems necessary.
C. (1) SRI shall make efforts to make available to Eurobiotech Technical
Information in SRI's possession related to the Technology that SRI has the
obligation to disclose under this Agreement. Eurobiotech shall not disclose
to third parties any Technical Information furnished by SRI during the term
of this Agreement, or any time thereafter, provided, however, that
disclosure may be made of any such Technical Information at any time: (i)
with the prior written consent of SRI, or (ii) to the extent necessary, to
Eurobiotech's sublicensees and purchasers of Eurobiotech's Product(s) or
services, or (iii) after the same shall have entered into the public domain
through no fault of Eurobiotech or Eurobiotech's subsidiaries. Disclosure
of Technical Information is permitted without a prior written consent of
SRI to the extent required by statute, rule or regulation of a governing
body during the course of Eurobiotech's normal business practices, or in
the application or prosecution of an application for patent rights, or in
connection with securing financing for the development or commercialization
of the Technology or a Product. Eurobiotech shall inform SRI of any such
disclosure and use its best efforts to protect its confidentiality under
such disclosure. Any combination of Technical Information shall not be
considered in the public domain merely because individual elements thereof
are in the public domain. To the extent that any such Technical Information
is disclosed to Eurobiotech's sublicensees and purchasers of Eurobiotech's
Product(s) or services, the agreements contained in this Section shall be
made
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Eurobiotech under a confidentiality agreement to apply to and be made
binding upon all such parties.
(2) The fact that some or all of the Technical Information becomes public
knowledge shall not affect the financial obligations for use of the
Technical Information licensed under this Agreement if such Technical
Information was used or usable in the discovery, development, manufacture,
or approval for sale of a Product within the Field.
4. LICENSE FEE AND RESEARCH AND DEVELOPMENT FUNDING
A. Eurobiotech shall pay the costs of any further pre-cliical development work
deemed necessary prior to commencing clinical trials, and this shall
include the development of the Product for other therapeutic applications,
the use of different formulations and preparations of the Product and oral
and parenteral preclinical toxicology. The costs of pre-clinical
development is anticipated not to exceed $1 million (one million U.S.
dollars). Subject to funding by Eurobiotech, SRI shall perform the
necessary pre-clinical studies whenever appropriate, unless agreed by both
parties that the work would be more advantageously performed by a third
party. Eurobiotech's retention of rights to therapeutic areas outside of
cancer is contingent upon Eurobiotech providing funding support for
development of such areas in accordance with the commitments of the
business development plan, as indicated in Article 10, and as periodically
reviewed and updated as agreed to by the parties.
B. Eurobiotech shall pay the costs of a Phase I clinical trial of the Product
for hematologic malignancies, to be performed at the Leukemia Unit at the M
D Anderson Cancer Center in Houston, Texas. The costs of such development
will not exceed $1.25 million (one million, two hundred and fifty thousand
U.S. dollars). Both parenteral and oral modes of administration will be
studied if warranted by commercial considerations and the preclinical
toxicology work.
C. Upon successful completion of Phase I clinical trials Eurobiotech shall pay
the costs of a multi-center Phase II clinical trial of the Product in
hematologic malignancies.
D. Upon successful completion of Phase II clinical trials SRI and Eurobiotech
may jointly pay the costs of Phase III clinical trials and further Product
development. If SRI shall not jointly fund the cost of such trials
Eurobiotech may pay the costs in full after paying a non-refundable option
fee of $750,000 within 60 days of completion and evaluation of Phase II
trials or 60 days from the commencement of Phase III trials, whichever is
the earlier. If the parties jointly develop the Product in Phase III trials
no option fee shall be payable by Eurobiotech.
E. Eurobiotech shall issue to SRI 100,000 shares of common stock of
Eurobiotech Group, Inc. within 30 days of the Effective Date of this
Agreement.
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F. Eurobiotech shall pay to SRI the sum of $750,000 upon the earlier of the
completion of Phase III trials in Europe or the initiation of sales of the
Product in the USA.
G. Eurobiotech shall pay the cost of prosecuting, filing and maintaining
patents and defending revocation proceedings on patents and patent
applications, on the Product within the Territory.
H. Eurobiotech shall also pay the costs as in 4G, if any, for those
Sloan-Kettering Institute for Cancer Research ("SKI") patents which the
Product might infringe but for the separate Agreement between SKI and SRI
(Appendix V) which provides SRI and Eurobiotech the rights to such
Sloan-Kettering Institute for Cancer Research patents in the Field for the
Territory for the Product.
5. ACQUISITION
Acquisition of the Licensed Technology is meant in its broadest sense
including assignment, transfer, sublicense, merger, joint venture and so on
and so forth.
A. Prior to Phase III Clinical Trials
If all or part of the rights granted to Eurobiotech are acquired by a third
party at, or before completion of Phase II clinical trials or prior to
Phase III clinical trials, all current or future payments derived by
Eurobiotech from the transfer, whether in cash, shares, property or any
other form of payment, including but not limited to up-front payments,
milestone payments and royalties will be divided equally between SRI and
Eurobiotech.
B. During or After Phase III Clinical Trials
If Eurobiotech alone funds Phase III clinical trials, then if all or part
of the rights are acquired by a third party during or after completion of
Phase III trials, all current or future payments derived by Eurobiotech
from the transfer, whether in cash, shares, property or any other form of
payment, including but not limited to up-front payments and milestone
payments but excluding royalties will be shared on the basis of 65% to
Eurobiotech and 35% to SRI until 50% of the monies expended by Eurobiotech
in conducting the Phase III trials are reimbursed. Thereafter, both parties
shall receive 50% each of all payments derived form the acquisition,
exclusive of royalty payments. Royalty payments related to the acquisition
of rights by a third party in order to market or further sublicense
Product(s) shall be divided in the ratio Eurobiotech 65; SRI 35.
If a third party funds the Phase III trials either in whole or in part in
return for rights, the parties to this Agreement shall divide all payments
including up-front payments, milestone payments and royalties from that
third party in equal amounts.
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If the parties to this Agreement share Phase III trial costs equally, then
if all or part of the rights are acquired by a third party during or after
completion of Phase III trials, all current or future payments derived from
the acquisition will be divided equally between SRI and Eurobiotech.
C. Manufacturing
Should Eurobiotech manufacture or have Product(s) manufactured for sale to
any unaffiliated third party acquirer such as a sublicensee or joint
venture prior to, during or after Phase III clinical trials, SRI shall
receive 35% of Net Income from such sale(s).
D. Approval
The foregoing scenarios (articles 5A and 5B) are subject to the approval of
SRI which shall not be unreasonably withheld.
6. COMMERCIALIZATION STAGE
A. Eurobiotech shall have exclusive rights to market the Product in the
Territory under the following terms: For the Patent and Technical
Information licenses granted herein, Eurobiotech shall pay to SRI a royalty
of 7% of the Gross Sales Revenue of all Product(s) sold to an unaffiliated
third party, likely to be a distributor or wholesaler, but not limited to
such, where Eurobiotech is responsible for the marketing of the Product. In
addition to the seven percent of Gross Sales Revenue, if the Gross Profit
Margin from operations in any geographical area equals or exceeds 31% a
further profit-sharing agreement will apply, according to the following
formula and further exemplified in Appendix IV:
Gross Profit Margin Payment as % of Net Income
------------------- --------------------------
>70% 20%
50-70% 10%
31-49% 5%
B. If the Product incorporates inventions, patents, or technical information
that is necessary for the successful commercialization of the Product and
that is obtained from sources other than SRI, the Parties agree to
negotiate in good faith a new royalty rate to reflect the contribution of
such third party inventions, patents, or technical information, but in no
event shall the royalty rate be reduced by more than 50%.
C. If this Agreement is for any reason terminated before all the earned
royalties herein provided for have been paid, Eurobiotech shall immediately
pay to SRI any remaining unpaid balance of earned royalties even though the
due date provided in Article 8 has not been reached.
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D. If Eurobiotech shall sell the rights to the Technology during the
Commercialization Stage, in combination with the sale, acquisition, merger
or disposition of Eurobiotech Group, Inc., Eurobiotech, SRI and the third
party(ies) shall negotiate in good faith the specific details for such sale
of rights, subject to the approval of SRI which shall not be unreasonably
withheld.
7. SUBLICENSING
A. Eurobiotech shall have the right to sublicense in the Field for the
Territory.
B. Eurobiotech will keep SRI routinely updated on progress of discussions and
negotiations with potential sublicensees. SRI shall have the right to
review the form of sublicenses to be granted hereunder prior to the
execution of the same by Eurobiotech. Eurobiotech agrees that sublicense
agreements shall conform in all material respects to the terms and
conditions of this Agreement. If SRI has not objected within thirty (30)
days of receiving the form of such agreement describing the material terms,
Eurobiotech may proceed to negotiate and grant sublicenses without further
review by SRI if the form of the sublicense has not materially changed.
Eurobiotech shall provide SRI with a copy of each sublicense within thirty
(30) days of execution, and shall not grant to its sublicensees any SRI
rights not conveyed by this Agreement.
C. If this Agreement is terminated for any reason, except breach of contract
by SRI, any sublicense shall automatically transfer to SRI, unless
sublicensee is in breach or default of sublicense, and remain in full force
and effect so long as the sublicensees performs the obligations of the
sublicense, and Eurobiotech will execute such documents as may be requested
by SRI to attest to the transfer to SRI of all sublicense rights, including
the right to receive future payments.
8. PAYMENTS AND REPORTS
A. Payments owed to SRI shall be payable within ten (10) days of receipt by
Eurobiotech except as stated otherwise elsewhere in this Agreement and
except for royalties and profit-sharing compensation as a result of direct
marketing of Product by Eurobiotech.
B. Royalties and profit-sharing compensation owed to SRI as a consequence of
direct marketing of Product by Eurobiotech shall be due for each calendar
quarter beginning with the first calendar quarter in which sales occur and
shall be payable to SRI within forty-five (45) days following the last day
of the applicable calendar quarter.
C. All payments from Eurobiotech to SRI shall be made in U.S. dollars by
corporate check SRI at the address specified in Article 34 or an address
designated in writing by SRI from time-to-time.
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D. With respect to non-dollar denominated payments owed by Eurobiotech to SRI,
such payments shall be converted into U.S. Dollars at the conversion
rate(s) published in The Wall Street Journal (Eastern Edition) as of the
last business day of the calendar quarter included in the report.
E. In the event that Eurobiotech is prevented from making any payment to SRI
under this Agreement by virtue of restrictions on currency conversion or
repatriation under the statutes, laws, codes or governmental regulations of
the country from which the payment is to be made, then such payments may be
paid by depositing them in the currency in which accrued to SRI's account
in a bank acceptable to SRI in the country whose currency is involved. If
the local currency cannot be converted or remitted to SRI within twelve
(12) months from the initial deposit, Eurobiotech shall pay SRI the
equivalent of such amount at the initially computed conversion rate
(including any interest earnings) in United States dollars, and the local
currency shall be transferred to an account in a bank acceptable to
Eurobiotech in that country.
F. Payments to SRI hereunder shall be deemed paid as of the day on which they
are received at the address designated pursuant to Article 34. Any part of
a payment which is not paid on or before the date when due shall accrue
interest thereon from such date until the date of its payment in full at
two (2) percentage points over the per annum interest rate published as the
"Prime Rate" in The Wall Street Journal (Eastern Edition), but in no event
shall such rate exceed the maximum rate permitted by applicable law.
G. All foreign taxes, assessments and fees of any nature levied or incurred on
account of any payments accruing under this Agreement will be assumed and
paid by Eurobiotech and not deducted from payments owed to SRI.
H. Eurobiotech shall deliver to SRI within forty-five (45) days after the end
of each calendar quarter a report, certified by the chief financial officer
(or equivalent) of Eurobiotech, setting forth in reasonable detail the
calculation of SRI payments made during the quarter and for each calendar
quarter, including gross sales, value added taxes, number of units sold,
unit price and the like on a country-by-country basis by Eurobiotech,
sublicensees, joint ventures and their affiliates.
I. The Eurobiotech report to SRI shall be supported by and based upon a
similar financial report or, if permitted, a copy from each sublicensee and
other commercialization entity(ies).
J. The parties will promptly share all information generated under the
Co-Development Program pursuant to the confidentiality provisions of
Article 21 and with particular respect to the preclinical studies and
clinical trials. Upon commercialization of the Product(s), Eurobiotech
shall provide SRI with quarterly updates (which may be oral unless other
requested by SRI) in reasonable detail, describing Eurobiotech's plans,
activities and accomplishments.
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9. RECORDS
Eurobiotech shall keep accurate records of all operations affecting payments
hereunder, and shall permit SRI or its duly authorized agent to inspect all such
records and to make copies of or extracts from such records during regular
business hours throughout the term of this Agreement and for a reasonable period
of not less than three (3) years thereafter. The fees charged for an SRI
authorized audit shall be paid by SRI; provided, however, that if an audit
discloses an underpayment by Eurobiotech of more than five percent (5%) for such
audited period, Eurobiotech shall pay the reasonable fees and expenses charged
by the firm conducting the audit.
10. DILIGENCE
A. In conjunction with the developmental actions and commercialization
activities of Eurobiotech referred to throughout this Agreement, the
parties shall prepare, within 90 days of the date of signing of this
Agreement, a business development plan outlining the strategy, timing and
implementation of steps to commercialize the technology.
B. Retention of rights by Eurobiotech is contingent upon submission of a NDA
to the FDA within four years of the effective date of this Agreement.
11. OWNERSHIP OF THE TECHNOLOGY, TECHNICAL
INFORMATION AND IMPROVEMENTS
A. SRI and Eurobiotech shall each retain full ownership of their existing
intellectual property rights including rights in the process of being
protected and rights conceived but not yet reduced to practice as of the
effective date of this Agreement.
B. All Improvements by SRI developed under projects funded, in whole or in
part, by Eurobiotech shall be owned by SRI and shall be included in the
licenses granted in this Agreement. In the event that a conflicting
obligation prevents SRI from including such an Improvement, SRI shall use
reasonable efforts to assist Eurobiotech to obtain rights from the
appropriate third party or parties.
C. All Improvements by SRI made during the first three (3) years from the
effective date of the Agreement and not developed under projects funded, in
whole or in part, by Eurobiotech, shall be owned by SRI and if deemed
reasonably necessary for Eurobiotech practice of the Technology, without
which such practice would constitute an infringement of SRI's rights, shall
be included to the extent necessary, as decided solely by SRI, in the
licenses granted in this Agreement, unless inclusion is not possible due to
SRI's obligations to a third party. In the event that a conflicting
obligation prevents SRI from including such an Improvement, SRI shall use
reasonable efforts to assist Eurobiotech to obtain rights from the
appropriate third party or parties.
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D. Eurobiotech shall have the first right of negotiation to a license or other
commercial arrangement to any SRI intellectual property developed under
projects funded, in whole or in part, by Eurobiotech, which does not
constitute an Improvement.
12. PATENT PROSECUTION
A. SRI shall file, prosecute and maintain all of the Patent that are the
property of SRI.
B. Eurobiotech shall bear all patenting expenses related to the filing,
prosecution or maintenance of all Patent and Improvement licensed hereunder
in whole or in part.
C. SRI shall furnish Eurobiotech with copies of all allowed claims when such
claims are allowed in the Field and in the Territory for all Patent and
Improvement licensed hereunder.
D. SRI shall provide Eurobiotech with draft copies of all correspondence and
filings and related prosecution documents on the Patent and Improvement
licensed hereunder and Eurobiotech shall promptly provide comments, if any,
to SRI. SRI shall confer with Eurobiotech, and make reasonable efforts to
adopt Eurobiotech's suggestions regarding prosecution tactics and strategy.
Notwithstanding the foregoing, SRI shall have the right to take such
actions as are reasonably necessary, in its good faith judgement, to
preserve all rights under the Patent and Improvement throughout the
Territory. As soon as practical, subsequent to the filing of any
prosecution document, SRI shall provide Eurobiotech with a copy of such
document. In addition, SRI shall copy Eurobiotech with any official office
action and SRI responses and submissions. Eurobiotech shall bear the
expenses of the activities noted in this Article 14.E.
E. SRI will inform Eurobiotech at least sixty (60) days prior to any decision
having as a result the failure to file, or the abandonment of Patent
applications or failure to maintain a Patent, Patents and Improvements
licensed hereunder so that Eurobiotech may take over and maintain such
Patent and Improvements in force.
F. Provided that SRI has been informed by Eurobiotech at least sixty (60) days
in advance, in the event that Eurobiotech decides not to pay patenting
expenses in any jurisdiction, SRI may elect to maintain such Patent and
Improvements in force and terminate Eurobiotech's licenses granted as for
the jurisdiction in which Eurobiotech abandoned or failed to file or
maintain such Patent rights. Notwithstanding the foregoing, Eurobiotech
shall be obligated to pay patenting expenses within the European Community.
13. INFRINGEMENT BY THIRD PARTY
A. Either party shall notify the other party of any suspected infringement by
a third party of the Patent in the Field and the Territory, and each party
shall inform the other of any evidence of such infringement(s).
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B. Eurobiotech shall have the first right to institute suit for
infringement(s) in the Field and Territory so long as this Agreement
remains exclusive. At Eurobiotech's expense, SRI will reasonably assist
Eurobiotech in such prosecutions if so requested by Eurobiotech, and will
lend its name to such actions if requested by Eurobiotech or required by
law. Notwithstanding the foregoing SRI shall have the right to participate
and be represented in any such prosecutions by its own counsel at its own
expense.
C. If SRI notifies Eurobiotech of its desire to institute suit for
infringement(s) and Eurobiotech fails to exercise its first right to do so
within ninety (90) days of such notice, then SRI may, at its own expense,
bring suit or take any other appropriate action. At SRI's expense,
Eurobiotech will reasonably assist SRI in such prosecutions if so requested
by SRI, and will lend its name to such actions if requested by SRI or
required by law. Notwithstanding the foregoing Eurobiotech shall have the
right to participate and be represented in any such prosecutions by its own
counsel at its own expense.
D. No settlement of any suspected infringement(s), whether or not a suit has
been instituted, may be entered into without the express written consent of
Eurobiotech and SRI.
E. Any amounts recovered pursuant to an infringement suit, settlement or
otherwise shall be retained by and be the property of the party bringing
the action. In the event Eurobiotech receives any monies or other
consideration from a third party as a result of Eurobiotech's exercise of
its rights under Article 13 of this Agreement, Eurobiotech shall first be
reimbursed for expenses incurred and paid for, SRI shall then receive a
portion of the remainder in accordance with the applicable provision(s) of
Article 6 as applied to all such monies or other considerations whether
such monies or other considerations are denoted as "royalties," "damages,"
"releases" from prior acts, or any other designation.
F. If Eurobiotech fails to exercise its first right to institute suit for
infringement(s) and SRI elects not to institute suit, then SRI shall
provide Eurobiotech with at least sixty (60) days notice of its intention
to terminate Eurobiotech's licenses granted in those jurisdictions affected
by the infringement or to take any other action it sees fit in its best
judgement.
14. REVOCATION PROCEEDINGS
A. In the event either party becomes aware of the institution by a third party
of any proceedings for the revocation of any Patent, patents or
Improvements in any country in the Territory licensed hereunder to
Eurobiotech, such party shall notify the other party promptly. Eurobiotech
shall defend any such proceedings at its own expense, in its own name.
B. SRI shall have the right to participate in such revocation proceedings at
Eurobiotech's expense, and will lend its name to such proceedings if
requested by Eurobiotech or required by law. Sublicensees of Eurobiotech
shall also have the right to participate in such revocation proceedings.
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C. Settlement of any revocation proceedings shall be subject to the approval
of SRI; such approval shall not be unreasonably withheld.
15. INFRINGEMENT OF THIRD PARTY RIGHTS
A. SRI "does not warrant" as stated in Article 17. Disclaimer, "that the
patents will be free from claims of infringement by third parties or any
other rights of third parties."
B. Eurobiotech as stipulated in Article 18. Indemnification, "agrees to
indemnify, hold harmless and defend SRI.... from and against any and all
demands, claims, suits, and actions ..." which includes infringement of
third party rights.
C. SRI will reasonably assist Eurobiotech to defend or settle such third party
claim if so requested and at the expense of Eurobiotech.
D. SRI shall have the right to participate and be represented in any such
claim by a third party by its own counsel.
E. No settlement of any third party claim may be entered into without the
express written consent of SRI.
F. In the event, by way of counterclaim or otherwise, either party or both
parties recover any damages or other sums in any action, suit, or
proceeding involving a claim by a third party, or in settlement thereof,
such recovery shall be applied and shared as mutually agreed.
16. REPRESENTATIONS
A. This Agreement is entered into by SRI in its corporate capacity. It is
understood and agreed that the U.S. Government is not a party to this
Agreement and in no manner whatsoever shall be liable for or assume any
responsibility or obligation for any claim, cost, or damages arising out of
or resulting from this Agreement or the subject matter licensed.
B. Nothing in this Agreement shall be deemed to be a representation or
warranty by SRI, or the U.S. Government, of the safety, merchantability or
usefulness for any purpose, of any technical information, techniques or
practices at any time made available by SRI to Eurobiotech hereunder.
C. SRI represents that it has the right to grant all of the rights herein,
except for a non-exclusive, non-royalty bearing, non-commercial license to
the Government of The United States of America.
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D. SRI is unaware of any claims asserted against SRI by any third parties with
respect to Patent infringement or any other type of liability relevant to
licensing of the Inventions, which have not been disclosed to Eurobiotech
as of the Effective Date of this Agreement.
E. SRI represents that it has full power, authority and legal right to enter
into this contemplated Agreement and to consummate the transactions
contemplated therein.
F. Eurobiotech represents that it has full power, authority and legal right to
enter into this contemplated Agreement and to consummate the transactions
contemplated therein.
G. Eurobiotech shall accept liability for or on account of any injury, loss or
damage, of any kind or nature sustained by, or any damage assessed or
asserted against, or any other liability incurred by or imposed upon either
party arising out of or in connection with or resulting from (i) the
production, use or sale of any Product or (ii) the use of any technical
information, techniques, or practices disclosed by either party, or (iii)
any advertising or other promotional activities with respect to any of the
foregoing. If a sublicense is granted by Eurobiotech to a third party that
third party shall accept all liability for any injury, loss or damage as
defined above.
17. DISCLAIMER
EXCEPT AS EXPRESSLY SET FORTH IN ARTICLE 16, SRI DOES NOT MAKE ANY EXPRESS OR
IMPLIED WARRANTIES, STATUTORY OR OTHERWISE, CONCERNING THE TECHNOLOGY OR ANY
TECHNICAL INFORMATION COMMUNICATED TO EUROBIOTECH BY SRI. SPECIFICALLY, BUT
WITHOUT LIMITING THE FOREGOING, SRI MAKES NO EXPRESS OR IMPLIED WARRANTY OF
MERCHANTABILITY, FITNESS (FOR A PARTICULAR PURPOSE OR OTHERWISE), QUALITY OR
USEFULNESS OF THE TECHNOLOGY. ALL PHYSICAL EMBODIMENTS OF THE TECHNOLOGY
PROVIDED BY SRI HEREUNDER ARE PROVIDED ON AN "AS IS" BASIS. SRI DOES NOT WARRANT
THE ACCURACY OF ANY INFORMATION INCLUDED WITHIN THE TECHNICAL INFORMATION NOR
DOES SRI WARRANT THAT ANY SUCH INFORMATION CONSTITUTES TRADE SECRETS OR
CONFIDENTIAL INFORMATION OR THAT THE PATENTS WILL BE FREE FROM CLAIMS OF
INFRINGEMENT BY THIRD PARTIES OR ANY OTHER RIGHTS OF THIRD PARTIES.
UNDER NO CIRCUMSTANCES SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY OR ANY
THIRD PARTY FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES IN TORT, CONTRACT,
STRICT LIABILITY OR OTHERWISE INCURRED BY OTHER PARTY OR ANY THIRD PARTY.
18. INDEMNIFICATION
Eurobiotech hereby agrees to indemnify, hold harmless and defend SRI and
SKI and its officers, directors, representatives, agents and employees from and
against any and all demands,
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claims, suits or actions of any character presented or brought on account of any
injuries, losses or damages sustained by any person or property in consequence
of (i) any act or omission of Eurobiotech or its agents, employees or
subcontractors, or (ii) any liability under Article 160, except for any
injuries, losses or damages that specifically result from the negligence or
willful misconduct of SRI or SKI. The foregoing indemnity shall include but not
be limited to court costs, attorneys' fees, costs of investigation and costs of
defense associated with such demands, claims, suits or actions.
19. INSURANCE
Eurobiotech shall maintain, during the term of this Agreement, reasonable
amounts of comprehensive general liability insurance, including products
liability insurance, with reputable and financially secure insurance carriers to
cover the activities of Eurobiotech, its affiliates and sublicensees hereunder.
Such insurance shall be written to cover claims incurred, discovered,
manifested, or made during or beyond the expiration or termination of this
Agreement during the period that any product, process, or service, relating to,
or developed pursuant to, this Agreement is being commercially distributed or
sold by Eurobiotech or by a sublicensee, affiliate or agent of Eurobiotech. Such
insurance shall include SRI as an additional insured. Eurobiotech shall furnish
to SRI a certificate of insurance evidencing such coverage and periodically,
upon request, provide evidence that the coverage is still in effect.
20. TERM AND TERMINATION
A. This Agreement shall commence on the Effective Date and, unless sooner
terminated under this Article 20, shall expire upon the later of: (i)
expiration of the last to expire of all Patent(s), Improvement(s), and
Patent(s) licensed under this Agreement [hereafter "Licensed Patents" only
for Article 20], including any extensions thereof and any periods of
exclusivity granted by regulatory agencies or other governmental bodies;
(ii) Eurobiotech is no longer due any payments from Sublicensee(s); or
(iii) Eurobiotech is no longer directly marketing a Product.
B. The payment obligations under the licenses granted to Eurobiotech for
Licensed Patents and Technical Information shall continue throughout the
term as defined in Article 20.A but would be subject to good faith
renegotiations upon the expiration of the last to expire of the Licensed
Patents, or upon the abandonment of the last to be abandoned of any patent
applications if no patents have been issued, whichever is the later, unless
this Agreement is sooner terminated. Such good faith renegotiations shall
take into account on a country-by-country or regional basis but not be
limited to: (i) Product competition; (ii) utilization, incorporation and
value of Technical Information; (iii) value of Technical Information if no
longer confidential or proprietary through no fault of Eurobiotech, its
Sublicensee(s), contractors, financiers or any other Eurobiotech agent(s)
or purchasers of Product or services having access to Technical
Information; (iv) the applicable contract or patent law or (v) prior
payment commitments such as in Article 3.C(2).
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C. Eurobiotech may terminate this Agreement at any time upon ninety (90) days
written notice to SRI and upon payment of all amounts due SRI through the
effective date of the termination.
D. Upon termination of this Agreement, neither party shall be released from
any obligation that matured prior to the effective date of such
termination. Eurobiotech and any sublicensee may, however, after the
effective date of such termination, sell all Products in inventory provided
that Eurobiotech shall pay to SRI the royalties and profit-sharing thereon
as required by Article 6 hereof and submit the reports required by Article
8 hereof.
E. Except as provided in Article 13F above, if either party shall be in
default of any obligation hereunder, the other party may terminate this
Agreement by giving Notice of Termination by Certified or Registered Mail
to the party at fault, specifying the basis for termination. If within
sixty (60) days after the receipt of such Notice of Termination, the party
in default shall remedy the condition forming the basis for termination
such Notice of Termination shall cease to be operative, and this Agreement
shall continue in full force.
F. SRI shall have the right to terminate this Agreement if Eurobiotech shall
cease to carry out its business, become bankrupt or insolvent, apply for or
consent to the appointment of a trustee, receiver or liquidator of its
assets or seek relief under any law for the aid of debtors, or if
Eurobiotech fails to submit an NDA as provided in Article 10B.
G. Eurobiotech shall inform SRI of its intention to file a voluntary petition
in bankruptcy or of another's intention to file an involuntary petition in
bankruptcy to be received at least thirty (30) days prior to filing such a
petition. Eurobiotech's filing without conforming to this requirement shall
be deemed a material, pro-petition incurable breach not subject to the
Notice requirement of Paragraph 20.
H. Notwithstanding anything else in this Agreement to the contrary, the
parties agree that Eurobiotech's obligation to pay SRI any payments or
other consideration accrued but unpaid prior to termination shall survive
the termination of this Agreement. In addition, Articles 5, 6, 8, 9, 17,
18, 19, 21, 22, 28 and 34 as well as any other provisions to the extent
required for the full observation and performance of the foregoing Articles
or which by their nature are intended to survive such termination, shall
survive the termination of this Agreement and continue to be enforceable.
21. CONFIDENTIALITY; PUBLICATION; PUBLICITY
A. In fulfilling their obligations under this Agreement, it may be desirable
or necessary for the parties to disclose to one another certain of their
Confidential Information. In the event of receipt of such Confidential
Information, the receiving party agrees to preserve such information as
confidential and not to disclose it to third parties or to use it except in
connection with this
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Agreement during the term of this Agreement and for a period of five (5)
years following its termination. The foregoing obligations shall not apply
to any information that:
1. is now in the public domain or becomes generally available to the
public through no fault of the receiving party;
2. is already known to, or in the possession of, the receiving party as
can be demonstrated by documentary evidence;
3. is disclosed to the receiving party on a nonconfidential basis by a
third party having the right to make such disclosure; or
4. is independently developed by the receiving party as can be
demonstrated by documentary evidence.
For the purposes of the preceding portion of this Section A, Article 21
only, "parties" or "party" but not "third parties" or "third party" may
also include SKI.
In addition, to the extent reasonably necessary to fulfill its obligations
or exercise its rights under this Agreement (i) a party may disclose
Confidential Information to its Affiliates, Sublicensees, consultants,
outside contractors and clinical investigators, on a need-to-know basis on
condition that such persons or entities agree to be bound by the provisions
of this Article 20, (ii) a party or its Affiliates or Sublicensees may
disclose Confidential Information to governmental or other regulatory
authorities to the extent that such disclosure is reasonably necessary to
obtain patents or regulatory authorizations, provided the disclosing party
shall request confidential treatment thereof, and (iii) a party may
disclose Confidential Information as required by applicable law, regulation
or judicial process, provided that such party shall give the other party
(x) prior written notice thereof, (y) adequate opportunity to object to any
such disclosure or to request confidential treatment thereof, and (z) shall
take all steps reasonably possible to minimize the disclosure to that level
mandated by law.
B. (i) If either party desires to publish or present the results of the
Co-Development Program, the publishing/presenting party shall provide
the non-publishing/non-presenting party a copy of the manuscript of
any proposed publication or presentation. The
non-publishing/non-presenting party shall then have thirty (30) days
to review and comment on the manuscript or presentation, and the
publishing/presenting party agrees to delete any information
identified by the non-publishing/non-presenting party as its Trade
Secrets or Confidential Information.
(ii) In the event the non-publishing/non-presenting party determines that a
Patent application covering information contained in the proposed
publication or presentation should be filed, the party proposing the
publication or presentation shall
17
<PAGE>
delay such publication or presentation for up to sixty (60) days to
allow such filing to be made.
C. Each party shall provide the other party with the prior opportunity to
review and approve any press releases or similar public announcements
concerning this Agreement or clinical, regulatory and commercial
developments related to Products as soon as practicable, but in no event
later than 24 hours before an announcement is made. Eurobiotech shall not
use the name of SRI or otherwise refer to any organization related to SRI,
except with the written approval of SRI, such approval not to be
unreasonably withheld.
22. DISPUTE RESOLUTION
A. The parties shall attempt to resolve through good faith discussions any
dispute which arises under this Agreement. Any dispute may, at the election
of either party, be referred to the chief executive officers, or the
equivalent, of each party. If they are unable to resolve the dispute,
within thirty (30) days after delivery of written notice of the dispute
from one party to the other, either party may seek to resolve it by
initiating Alternative Dispute Resolution ("ADR") at the geographical
location of the noninitiating party in which the Judicial Arbitration and
Mediation Services ("JAMS") of such location, through a panel of three (3)
arbitrators (the "Arbitrators"), shall control the proceedings as provided
herein. If JAMS is not in existence at the time of such dispute, the
American Arbitration Association, of such location shall be substituted.
B. An ADR shall be initiated by a party by sending written notice thereof to
the other party and JAMS, which notice shall state the issues to be
resolved. Within ten (10) business days after receipt of such notice, the
other party may, by sending written notice to the initiating party and
JAMS, add issues to be resolved. Within twenty (20) business days after the
date of the original ADR notice, JAMS shall nominate to the parties at
least ten (10) qualified nominees from JAMS' panel. Each party shall have
five (5) business days after the receipt of such nominations to select one
Arbitrator. The two (2) Arbitrators so selected shall mutually agree on a
third arbitrator to complete the panel.
C. Each Arbitrator shall have experience in the Field relevant to the dispute
and in intellectual property law matters. In the event of a dispute between
the parties relating to the calculation of any royalties or the amount of
other consideration payable under this Agreement (including without
limitation, the results of any audit conducted on behalf of a party
pursuant to Article 9), then, in addition to the procedure set forth above
and in Article 22.B, the Arbitrators shall be partners or full members of
an internationally recognized certified public accounting firm which is not
an auditing firm for either party and has not provided material services to
either party during the last two (2) year period prior to the date of ADR
initiation.
D. Except as otherwise provided in this Article 22, such hearing shall be
conducted pursuant to the JAMS Rules or the Commercial Arbitration Rules of
the American Arbitration Association (AAA) as applicable.
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<PAGE>
E. The Arbitrators shall render a disposition on the proposed rulings as
expeditiously as possible after the hearing, but not later than fifteen
(15) business days after the conclusion of the hearing. In the
circumstances where the Arbitrators rule for a party on a claim in the form
of a claim for monetary damages, the parties will then submit a proposed
remedy within ten (10) days of notice of the ruling. The proposed remedy
may be accompanied by a brief in support of the remedy not to exceed five
(5) pages. The Arbitrators will rule on the proposed remedies within ten
(10) days of their submission. The Arbitrators' disposition shall be final
and not appealable, except that either party shall have the right to appeal
such disposition on the basis it was affected by fraud or bad faith in
connection with the ADR proceedings. A judgment on the Arbitrators'
disposition may be entered in any court having jurisdiction over the
parties. The reasonable fees and expenses of the Arbitrators, as well as
the standard charges of JAMS for its assistance, shall be borne equally by
the parties or as they may otherwise agree.
F. A party shall not be prohibited from bringing a claim for resolution under
this Article 22 on the ground that the claim could have been brought during
an earlier proceeding under this same Article.
G. The following disputes, causes of action or claims shall not be subject to
the dispute resolution process set forth in this Article 22:
(i) a claim arising from a suit, action, or proceeding brought by a third
party or Sublicensee not subject to ADR;
(ii) a claim relating to undisputed amounts owed by either party to the
other under this Agreement;
(iii) a suit, action, or proceeding to compel either party to comply with
the dispute resolution procedures set forth in this Article 22;
(iv) a dispute, controversy, or claim relating to the scope,
enforceability, infringement or validity of a patent or trademark of
either party; and
(v) a cause of action seeking temporary or preliminary injunction relief.
23. ASSIGNABILITY
A. Eurobiotech shall not assign any rights under this Agreement not
specifically transferable by its terms without prior written consent of
SRI. SRI may not assign its rights hereunder without the prior written
consent of Eurobiotech.
B In the event of a Change of Control (as defined below) of Eurobiotech, SRI
may elect, upon not less than sixty (60) days written notice following the
Change of Control or receipt of notice provided pursuant to Article 23.C,
to terminate this Agreement if such Change of Control is not,
19
<PAGE>
in the good faith judgement of SRI, in the developmental and/or commercial
interest of the Licensed Technology or significantly limits its
applicability or scope.
C. For purposes of this Article 23C, "Change of Control" shall be deemed to
have taken place if (a) a third party, including a "group" as defined in
section 13(d)(3) of the Securities Exchange Act of 1934 but excluding the
current directors of Eurobiotech, becomes the beneficial owner of shares
having fifty percent (50%) or more of the total number of votes that may be
cast for the election of directors of Eurobiotech; or (b) as the result of,
or in connection with, any cash tender or exchange offer, merger or other
business combination, sale of assets or contested election, or any
combination of the foregoing transactions (a "Transaction"), (X) the
persons who were directors of Eurobiotech before the Transaction shall
cease to constitute a majority of the Board of Directors of Eurobiotech or
any successor to Eurobiotech, or (Y) there is the sale, exchange of other
disposition of all or substantially all of Eurobiotech's assets to a third
party. Within thirty (30) days following a Change of Control of
Eurobiotech, Eurobiotech shall provide notice thereof to SRI.
24. REFORM
A. The parties agree that if any part, form, or provision of this Agreement
shall be found illegal or in conflict with any valid controlling law, the
validity of the remaining provisions shall not be affected thereby.
B. In the event the legality of any provision of this Agreement is brought
into question because of a decision by a court of competent jurisdiction of
any country in which this Agreement applies, SRI, by written notice to
Eurobiotech, may revise the provision in question or may delete it entirely
so as to comply with the decision of the said court.
25. WAIVER AND ALTERATION
A. The failure of either party to insist, in any one or more instances, upon
the performance of any of the terms, covenants or conditions of this
Agreement and to exercise any right hereunder, shall not be construed as a
waiver or relinquishment of the future performance of any such term,
covenant or condition or the future exercise of such right, but the
obligations of the other party with respect to such future performance
shall continue in full force and effect.
B. A provision of this Agreement may be altered only by a writing signed by
both parties, except as provided by Article 24, above.
26. MARKING
A. Eurobiotech shall place in a conspicuous location on any product or its
packaging, which is made or sold under any Patent coming within this
Agreement, a patent notice in accordance with the laws concerning the
marking of patented articles.
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<PAGE>
B. Eurobiotech shall include a marking provision similar to Paragraph A above
in every sublicense granted pursuant to Article 7 above.
27. IMPLEMENTATION
Each party shall execute any instruments reasonably believed by the other party
to be necessary to implement the provisions of this Agreement.
28. GOVERNING LAW
This Agreement shall be deemed to have been entered into and shall be governed
by, construed and enforced in accordance with laws of the State of Alabama of
the United States of America and in the English language, and any action brought
to enforce any provision or obligation hereunder shall be brought in a court of
competent jurisdiction in the State of Alabama.
29. EXPORTATION OF TECHNICAL INFORMATION
Eurobiotech agrees not to export from The United States of America, directly or
indirectly, any Technical Information furnished to Eurobiotech either directly
or indirectly by SRI, except to the extent and to the countries permitted by the
laws of The United States of America. Eurobiotech agrees to indemnify, defend
and hold harmless SRI, its officers, agents and employees from all liability
involving the violation of such export regulations, either directly or
indirectly by Eurobiotech.
30. HEADINGS
The headings of the articles, sections and paragraphs used in this Agreement are
included for convenience only and are not to be used in construing or
interpreting this Agreement.
31. PARTIES INDEPENDENT
In making and performing this Agreement, the parties act and shall act at all
times as independent entities and nothing contained in this Agreement shall be
construed or implied to create an agency, partnership or employer and employee
relationship between Eurobiotech and SRI. Except as specifically provided
herein, at no time shall either party make commitments or incur any charges or
expenses for or in the name of the other party.
32. COUNTERPARTS
This Agreement shall become binding when any one or more counterparts hereof,
individually or taken together, shall bear the signatures of each of the parties
hereto. This Agreement may be executed in any number of counterparts, each of
which shall be an original as against either party whose signature appears
thereon, but all of which together shall constitute but one and the same
instrument.
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33. FORCE MAJEURE
The parties shall not be responsible for failure to perform any of the
obligations imposed by this Agreement (except an obligation to pay money),
provided such failure is caused by fire, storms, floods, strikes, lockouts,
accidents, war, riots or civil commotions, inability to obtain railroad cars or
raw materials, embargoes, any State or Federal regulation, law, or restriction,
seizure or acquisition of the Technology or the Product(s) by the Government of
the United States or of any state, or of any agency thereof or by reason of any
compliance with a demand or request for such Product for any purpose for
national defense, or any other cause or contingency beyond the reasonable
control of said party (whether or not of the same kind or nature as the causes
or contingencies above enumerated) shall not subject the party so failing to any
liability to the other.
34. NOTICE
For the purpose of all written communications between the parties, their
addresses shall be:
If to EUROBIOTECH: If to SRI:
Address: ________________________ Address: ________________________
________________________ ________________________
________________________ ________________________
Attention: ________________________ Attention: ________________________
Telephone: ________________________ Telephone: ________________________
FAX: ________________________ FAX: ________________________
or any other addresses of which either party shall notify the other party in
writing.
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<PAGE>
35. EXECUTION
IN WITNESS WHEREOF the parties have caused this Agreement to be executed by
their duly authorized officers on the respective dates and at the respective
places hereinafter set forth.
EUROBIOTECH: SRI:
By: /s/ [ILLEGIBLE] By: /s/ [ILLEGIBLE]
----------------------- -----------------------
Print Name: [ILLEGIBLE] Print Name: [ILLEGIBLE]
----------------------- -----------------------
Its: CEO Its: President and CEO
----------------------- -----------------------
Date: 19 Aug 98 Date: 9/1/98
----------------------- -----------------------
23
<PAGE>
APPENDIX I
<TABLE>
<CAPTION>
Filing Expiration
Country Serial No. Date Priority Patent No. Issued Date
<S> <C> <C> <C> <C> <C> <C>
United States 07/355,358 5/23/89 5/23/89 5,034,518 7/23/91 7/23/2008
United States 07/693,646 5/10/91 5/23/89 5,384,310 1/24/95 7/23/2008
& 5/10/91
United States 08/320,879 9/21/94 5/10/91 5,661,136 8/26/97 8/26/2014
European 90909080.5 5/23/90 5/23/89 U.S. 0473708
France 0473708 1/15/97 5/23/2010
Germany 0473708 1/25/97 5/23/2010
Great Britain 0473708 1/15/97 5/23/2010
Italy 0473708 1/25/97 5/23/2010
Netherlands 0473708 1/25/97 5/23/2010
Spain 0473708 1/25/97 5/23/2010
Sweden 90909080.5 1/15/97 5/23/2010
Switzerland 0473708 1/25/97 5/23/2010
European 92912163.0 5/7/92 5/23/89 U.S. (Substantive (first) examination
Austria & 5/10/91 U.S. report received; Claims equivalent
Belgium to U.S. 07/693,646
Germany
Greece
France
Italy
Luxembourg
Monaco
Netherlands
Spain
Sweden
Switzerland
United
Kingdom
Japan 2-508789 5/23/90 5/23/89 U.S. (Request for examination filed
5/23/97; case expected to be taken
up for examination about 5/99;
Claims equivalent to U.S.
07/355,358)
Japan 500121/1993 5/7/92 5/23/89 U.S. (Request for examination must be
& 5/10/91 U.S. filed prior to 5/7/99; Claims
equivalent to U.S. 07/693,646)
Canada 2,102,782 5/7/92 5/7/90 (Request for examination must be
filed prior to 5/7/99; Claims
equivalent to U.S. 07/693,646)
</TABLE>
<PAGE>
APPENDIX II
<PAGE>
Terms for Eurobiotech Group. Inc. ("Eurobiotech")
and Southern Research Institute ("Southern").
Co-Development Agreement
Scope
Co-develop Product(s) based on Southern's patented and patent-pending
2`-fluoro-2-halo substituted purine nucleoside technology.
Product(s)
Drugs effective against hematologic malignancies and solid tumors as well
as other therapeutic indications, such as (but not exclusively) skin disorders
and transplantation immunity. All modes of administration, particularly oral and
iv., are included in these terms as are specialized formulations such as those
imparting controlled-release characteristics.
Agreement
The parties hereby agree to enter into good faith discussions, based on the
terms agreed to in this document, for the exclusive co-development, exclusive
world-wide commercial rights except for Japan and Southeast Asia, to the
Product(s) and all therapeutic indications and all modes of administration of
the 2'-fluoro-2-halo substituted purine nucleoside technology.
Preclinical Development
Funding provided by Eurobiotech not to exceed US$1 million for parenteral
and oral preclinical toxicology, oral formulation, and other preclinical work
needed prior to commencing clinical trials including development funds to
explore other therapeutic indications.
Drug Synthesis for Preclinical and Phase I
Discussions for the definitive Agreement will include the possible role of
Southern in the supply of material and production of GMP and non-GMP Product(s).
Preclinical Toxicology
To be performed by Southern whenever appropriate at a price to be
negotiated. This agreement takes full account of the initial preparations for
preclinical toxicology studies conducted and planned by the MD Anderson group.
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Phase I
Funding provided by Eurobiotech not to exceed US$1.25 million for Phase I
clinical trials to be performed at the M. D. Anderson Cancer Center in Houston,
Texas, for hematologic malignancies. Eurobiotech to further fund the preclinical
and, if indicated, the clinical development for other therapeutic indications
including, but not limited to, solid tumors, skin disorders and transplantation
immunity.
Phase II
Eurobiotech to fund the multi-center Phase II clinical trials of the
2'-fluoro-2-halo substituted purine nucleoside in hematologic malignancies. A
decision to proceed or not will be made prior to or at the time when US$1.25
million has been expended. Eurobiotech's rights to hematologic malignancies will
revert to Southern if the decision is not to proceed. Retention of rights to
other therapeutic indications is contingent upon adequate levels of funding to
be provided by Eurobiotech for fast-track preclinical and clinical development.
NDA After Phase II
An NDA or equivalent document may be submitted to the FDA and/or foreign
regulatory agencies if the results after completion of Phase II trials are
encouraging and the agencies appear receptive.
Phase Ill
If Eurobiotech decides not to proceed after completion of Phase II trials,
the rights to the technology will revert to Southern. If Southern decides not to
proceed with the co-development program (i.e., equal sharing of phase III costs)
after completion of Phase II trials, Eurobiotech shall have the right to conduct
the Phase III trials after paying a non-refundable option fee of $750,000 within
60 days of completion and evaluation of Phase II trials or 60 days from the
commencement of Phase III trials, whichever is the earlier. If Southern decides
to proceed with the co-development program, if Phase III trials are successful,
and the parties decide to proceed with Phase III clinical trials, the costs
incurred will be shared equally between Southern and Eurobiotech. In that case,
there will be no option fee for commencing Phase III trials.
2
<PAGE>
Intellectual Property Ownership
Southern and Eurobiotech shall each retain full ownership of their existing
intellectual property rights.
Additional Intellectual Property
Ownership shall be linked directly to inventorship. Eurobiotech shall have
the first right of negotiation to any additional intellectual property developed
as a result of this co-development program.
Additional Compensation to Southern
100,000 Shares of common stock of Eurobiotech; $750,000 milestone payment
on completion of Phase III trials in Europe or the first sales of Product(s) in
the USA, whichever is the earlier; payment of patent costs from the effective
date of the definitive co-development Agreement for Southern and Sloan Kettering
Institute.
Acquisition of Rights by Third Party (Non-Marketing by Eurobiotech)
If all or part of the rights granted to Eurobiotech are acquired by a third
party at, or before completion of Phase II clinical trials or prior to Phase III
clinical trials, all current or future payments derived by Eurobiotech from the
transfer, whether in cash, shares, property or the like, including but not
limited to up-front payments, milestone payments and royalties will be divided
equally between Southern and Eurobiotech.
If Eurobiotech alone funds Phase III clinical trials, then if all or part
of the rights are acquired by a third party during or after completion of Phase
III trials, all current or future payments derived by Eurobiotech from the
transfer, whether in cash, shares, property or the like, including but not
limited to up-front payments and milestone payments but excluding royalties will
be shared on the basis of 65% to Eurobiotech and 35% to Southern until 50% of
the monies expended by Eurobiotech in conducting the Phase III trials are
reimbursed. Thereafter, both parties shall receive 50% each of all payments
derived from the transfer, exclusive of royalty payments. Royalty payments
related to the transfer or sublicense of the rights to market or further
sublicense Product(s) shall be divided in the ratio Eurobiotech 65; Southern 35.
If a third party funds the Phase III trials either in whole or in part in
return for rights, the parties to this Agreement shall divide all payments
including up-front payments, milestone payments and royalties from that third
party in equal amounts.
If the parties to this Agreement share Phase III trial costs equally, then
if all or part of the rights are acquired by a third party at, or before, or
after completion of Phase 111 trials, all
3
<PAGE>
payments derived from the acquisition will be divided equally between Southern
and Eurobiotech.
All of the foregoing scenarios are subject to the approval of Southern
which shall not be unreasonably withheld.
As part of the co-development program, should Eurobiotech directly
manufacture Product(s) for sale to a third party, Southern and Eurobiotech shall
agree that net income from such sales shall be divided in the ratio Eurobiotech
65: Southern 35.
Marketing by Eurobiotech
If products based on the 2'-fluoro-2-halo substituted purine nucleosides
are brought to market for the treatment of hematologic malignancies and/or other
therapeutic indications, Eurobiotech agrees to use all reasonable measures to
market the products and to provide a sales force sufficient to properly support
sales of the Product(s) in designated markets.
A. Phase III Funded by Eurobiotech
Eurobiotech will pay Southern a 7% royalty payment on gross sales revenue
on products related to the 2'-fluoro-2-halo substituted purine nucleoside
technology, applicable in all geographic areas where Eurobiotech is responsible
for the marketing of the Product(s).
If the gross profit margin from opertions in any geographical area exceeds
30% a further profit-sharing agreement will apply, in addition to the above
royalty payment, according to the following formula:
Gross Profit Margin Payment as % of net income*
------------------- ---------------------------
>70% 20%
50-70% 10%
31-49% 5%
*net income to include total revenues but not include local sales tax and
corporate income taxes.
If a sublicense is granted to third parties to sell Product(s) in specified
geographical regions, Southern shall receive 35% of all current and future
payments obtained by Eurobiotech from the third parties including 35 % of all
royalty payments made by the third parties.
4
<PAGE>
B. Regulatory License Granted After Phase II Clinical Trials
If regulatory approval is obtained after completion of Phase II trials,
Eurobiotech shall pay Southern according to the terms of section A above.
C. Phase III Trial Cost Reimbursed
If a third party reimburses the costs of a Phase III clinical trial in
exchange for a transfer or sublicense of rights, Eurobiotech shall pay Southern
for its marketing of Product(s) based on the terms of section A above, but all
payments from such a sublicensee, including up-front, milestone and royalty
payments shall be divided equally between the parties to this Agreement.
Disposition of Eurobiotech Rights
Sale or acquisition of Eurobiotech's rights to this technology in whole or
in part and whether or not in combination with the sale, acquisition, merger or
disposition of Eurobiotech shall be on the general basis of Eurobiotech 65:
Southern 35 except as otherwise specified in the Agreement with the specific
details to be negotiated in good faith and subject to the approval of Southern
which shall not be unreasonably withheld.
Payment Duration
Southern payments continue as long as Eurobiotech's, subject to good faith
negotiations regarding the impact of patent expirations, non-patent countries,
competition, infringement, know-how and other issues.
Foreign Taxes
Payments to Southern shall be made through Eurobiotech U.S.A. and will not
include deductions for foreign taxes (which not-for-profit U.S. corporations
have no means of crediting or offsetting).
Due Diligence
Upon the definitive Agreement being signed the two parties shall prepare,
within 90 days of the date of signing, a business development plan outlining the
strategy, timing and implementation of steps to commercialize the technology.
Retention of rights by Eurobiotech is contingent upon submission of a NDA to the
FDA within four years of the effective date of the definitive Agreement.
5
<PAGE>
Sloan-Kettering Institute
It is agreed that Southern shall be responsible for obtaining authorization
and agreement from Memorial Sloan Kettering Institute in order to fully carry
out its obligations under the terms of the definitive Agreement.
Authority
Southern has full power, authority and legal right to enter into this
contemplated Agreement and to consummate the transactions contemplated hereby.
Eurobiotech has full power, authority and legal right to enter into this
contemplated Agreement and to consummate the transactions contemplated hereby.
Signed on behalf of Southern Signed on behalf of Eurobiotech
/s/ [ILLEGIBLE] /s/ [ILLEGIBLE]
- ----------------------------------- -----------------------------------
Chief Executive Officer Chairman
- ----------------------------------- -----------------------------------
Position Position
Sept. 22, 1997 29/9/97
- ----------------------------------- -----------------------------------
Date Date
6
<PAGE>
Terms for Eurobiotech Group, Inc. ("Eurobiotech")
and Southern Research Institute ("Southern")
Co-Development Agreement
Scope
Co-develop Product(s) based on Southern's patented and patent-pending
2'-fluoro-2-halo substituted purine nucleoside technology.
Product(s)
Drugs effective against hematologic malignancies and solid tumors as well
as other therapeutic indications, such as (but not exclusively) skin disorders
and transplantation immunity. All modes of administration, particularly oral and
iv., are included in these terms as are specialized formulations such as those
imparting controlled-release characteristics.
Agreement
The parties hereby agree to enter into good faith discussions, based on the
terms agreed to in this document, for the exclusive co-development, exclusive
world-wide commercial rights except for Japan and Southeast Ash, to the
Product(s) and all therapeutic indications and all modes of administration of
the 2'-fluoro-2-halo substituted purine nucleoside technology.
Preclinical Development
Funding provided by Eurobiotech not to exceed US$1 million for parenteral
and oral preclinical toxicology, oral formulation, and other preclinical work
needed prior to commencing clinical trials including development funds to
explore other therapeutic indications.
Drug Synthesis for preclinical and Phase I
Discussions for the definitive Agreement will include the possible role of
Southern in the supply of material and production of GMP and non-GMP Product(s).
Preclinical Toxicology
To be performed by Southern whenever appropriate at a price to be
negotiated. This agreement takes full account of the initial preparations for
preclinical toxicology studies conducted and planned by the MD Anderson group.
1
<PAGE>
Phase I
Funding provided by Eurobiotech not to exceed US$1.25 million for Phase I
clinical trials to be performed at the M. D. Anderson Cancer Center in Houston,
Texas, for hematologic malignancies. Eurobiotech to further fund the preclinical
and, if indicated, the clinical development for other therapeutic indications
including, but not limited to, solid tumors, skin disorders and transplantation
immunity.
Phase II
Eurobiotech to fund the multi-center Phase II clinical trials of the
2'-fluoro-2-halo substituted purine nucleoside in hematologic malignancies. A
decision to proceed or not will be made prior to or at the time when US$1.25
million has been expended. Eurobiotech`s rights to hematologic malignancies will
revert to Southern if the decision is not to proceed. Retention of rights to
other therapeutic indications is contingent upon adequate levels of funding to
be provided by Eurobiotech for fast-track preclinical and clinical development.
NDA After Phase II
An NDA or equivalent document may be submitted to the FDA and/or foreign
regulatory agencies if the results alter completion of Phase II trials are
encouraging and the agencies appear receptive.
Phase III
If Eurobiotech decides not to proceed after completion of Phase II trials,
the rights to the technology will revert to Southern. If Southern decides not to
proceed with the co-development program (i.e., equal sharing of phase III costs)
after completion of Phase II trials, Eurobiotech shall have the right to conduct
the Phase III trials after paying a non-refundable option fee of $750,000 within
60 days of completion and evaluation of Phase II trials or 60 days from the
commencement of Phase III trials, whichever is the earlier. If Southern decides
to proceed with the co-development program, if Phase II trials are successful,
and the parties decide to proceed with Phase III clinical trials, the costs
incurred will be shared equally between Southern and Eurobiotech. In that case,
there will be no option fee for commencing Phase III trials.
2
<PAGE>
Intellectual Property Ownership
Southern and Eurobiotech shall each retain full ownership of their existing
intellectual property rights.
Additional Intellectual Property
Ownership shall be linked directly to inventorship. Eurobiotech shall have
the first right of negotiation to any additional intellectual property developed
as a result of this co-development program.
Additional Compensation to Southern
100,000 Shares of common stock of Eurobiotech; $750,000 milestone payment
on completion of Phase III trials in Europe or the first sales of Product(s) in
the USA, whichever is the earlier; payment of patent costs from the effective
date of the definitive co-development Agreement for Southern and Sloan Kettering
Institute.
Acquisition of Rights by Third Party (Non-Marketing by Eurobiotech)
If all or part of the rights granted to Eurobiotech are acquired by a third
party at, or before completion of Phase II clinical trials or prior to Phase HI
clinical trials, all current or future payments derived by Eurobiotech from the
transfer, whether in cash, shares, property or the like, including but not
limited to up-front payments, milestone payments and royalties will be divided
equally between Southern and Eurobiotech.
If Eurobiotech alone funds Phase III clinical trials, then if all or part
of the rights are acquired by a third party during or after completion of Phase
III trials, all current or future payments derived by Eurobiotech from the
transfer, whether in cash, shares, property or the like, including but not
limited to up-front payments and milestone payments but excluding royalties will
be shared on the basis of 65% to Eurobiotech and 35% to Southern until 50% of
the monies expended by Eurobiotech in conducting the Phase III trials are
reimbursed. Thereafter, both parties shall receive 50% each of all payments
derived from the transfer, exclusive of royalty payments. Royalty payments
related to the transfer or sublicense of the rights to market or further
sublicense Product(s) shall be divided in the ratio Eurobiotech 65; Southern 35.
If a third party funds the Phase III trials either in whole or in part in
return for rights, the parties to this Agreement shall divide all payments
including up-front payments, milestone payments and royalties from that third
party in equal amounts.
If the parties to this Agreement share Phase III trial costs equally, then
if all or part of the rights are acquired by a third party at, or before, or
after completion of Phase III trials, all
3
<PAGE>
payments derived from the acquisition will be divided equally between Southern
and Eurobiotech.
All of the foregoing scenarios are subject to the approval of Southern
which shall not be unreasonably withheld.
As part of the co-development program, should Eurobiotech directly
manufacture Product(s) for sale to a third party, Southern and Eurobiotech shall
agree that net income from such sales shall be divided in the ratio Eurobiotech
65:Southern 35.
Marketing by Eurobiotech
If products based on the 2'-fluoro-2-halo substituted purine nucleosides
are brought to market for the treatment of hematologic malignancies and/or other
therapeutic indications, Eurobiotech agrees to use all reasonable measures to
market the products and to provide a sales force sufficient to properly support
sales of the Product(s) in designated markets.
A. Phase III Funded by Eurobiotech
Eurobiotech will pay Southern a 7% royalty payment on gross sales revenue
on products related to the 2'-fluoro-2-halo substituted purine nucleoside
technology, applicable in all geographic areas where Eurobiotech is responsible
for the marketing of the Product(s).
If the gross profit margin from opertions in any geographical area exceeds
30% a further profit-sharing agreement will apply, in addition to the above
royalty payment, according to the following formula:
Gross Profit Margin Payment as % of net income*
------------------- ---------------------------
>70% 20%
50-70% 10%
31-49% 5%
*net income to include total revenues but not include local sales tax and
corporate income taxes.
If a sublicense is granted to third parties to sell Product(s) in specified
geographical regions, Southern shall receive 35% of all current and future
payments obtained by Eurobiotech from the third parties including 35 % of all
royalty payments made by the third parties.
4
<PAGE>
B. Regulatory License Granted After Phase II Clinical Trials
If regulatory approval is obtained after completion of Phase II trials,
Eurobiotech shall pay Southern according to the terms of section A above.
C. Phase III Trial Cost Reimbursed
If a third party reimburses the costs of a Phase III clinical trial in
exchange for a transfer or sublicense of rights, Eurobiotech shall pay Southern
for its marketing of Product(s) based on the terms of section A above, but all
payments from such a sublicensee, including up-front, milestone and royalty
payments shall be divided equally between the parties to this Agreement.
Disposition of Eurobiotech Rights
Sale or acquisition of Eurobiotech's rights to this technology in whole or
in part and whether or not in combination with the sale, acquisition, merger or
disposition of Eurobiotech shall be on the general basis of Eurobiotech 65:
Southern 35 except as otherwise specified in the Agreement with the specific
details to be negotiated in good faith and subject to the approval of Southern
which shall not be unreasonably withheld.
Payment Duration
Southern payments continue as long as Eurobiotech's, subject to good faith
negotiations regarding the impact of patent expirations, non-patent countries,
competition, infringement, know-how and other issues.
Foreign Taxes
Payments to Southern shall be made through Eurobiotech U.S.A. and will not
include deductions for foreign taxes (which not-for-profit U.S. corporations
have no means of crediting or offsetting).
Due Diligence
Upon the definitive Agreement being signed the two parties shall prepare,
within 90 days of the date of signing, a business development plan outlining the
strategy, timing and implementation of steps to commercialize the technology.
Retention of rights by Eurobiotech is contingent upon submission of a NDA to the
FDA within four years of the effective date of the definitive Agreement.
5
<PAGE>
Sloan-Kettering Institute
It is agreed that Southern shall be responsible for obtaining authorization
and agreement from Memorial Sloan Kettering Institute in order to fully carry
out its obligations under the terms of the definitive Agreement.
Authority
Southern has full power, authority and legal right to enter into this
contemplated Agreement and to consummate the transactions contemplated hereby.
Eurobiotech has full power, authority and legal right to enter into this
contemplated Agreement and to consummate the transactions contemplated hereby.
Signed on behalf of Southern Signed on behalf of Eurobiotech
/s/ [ILLEGIBLE] /s/ [ILLEGIBLE]
- ----------------------------------- -----------------------------------
Chief Executive Officer Chairman
- ----------------------------------- -----------------------------------
Position Position
Sept. 22, 1997 29/9/97
- ----------------------------------- -----------------------------------
Date Date
6
<PAGE>
APPENDIX III
<PAGE>
Extension of the Co-Development Program between Southern Research Institute
and Eurobiotech Group, Inc.
WHEREAS Southern Research Institute ("SRI") and Eurobiotech Group, Inc.
("Eurobiotech") have entered into an Agreement dated 8/31/98 to co-develop
2'-fluoro-2-halo substituted purine nucleoside(s) for the treatment of
hematological malignancies, other cancers and other therapeutic indications, and
WHEREAS both parties wish to further specify additional financial as well as
research and development obligations of Eurobiotech,
NOW, THEREFORE, to consummate such extensions to the Co-Development Program by
Eurobiotech, the parties agree as follows:
1. INITIAL PAYMENT
Eurobiotech agrees to pay SRI a total of $50,000 as an initial, once-only
payment within ten (10) days of the signing of the Co-Development Agreement
to co-develop 2'-fluoro-2-halo substituted purine nucleoside(s).
2. RESEARCH AND DEVELOPMENT PAYMENTS
Eurobiotech agrees to pay SRI a further $50,000 within 90 days of signing
the Co-Development Agreement to be used for research and development to be
conducted at SRI's laboratories with respect to the use of 2'-fluoro-2-halo
substituted purine nucleoside(s) for therapeutic indications other than
cancer. The research and development program will be mutually agreed upon
by the parties and funding will begin no later than thirty (30) days after
such agreement or within ninety (90) days of the effective date of the
Co-Development Agreement, whichever date is earlier. It is not intended
that the sum defined in this paragraph shall be the total cost of the
research and development program for therapeutic indications other than
cancer.
3. TERMINATION OF AGREEMENT
This extension of the Co-Development Agreement shall be governed by the
termination provisions of the Co-Development Agreement.
<PAGE>
APPENDIX IV
Gross Profit Margin and Net Income Examples
Joint product costing shall be based on the relative-sales-value method of
joint cost assignment or other joint costing method according to generally
accepted accounting principles and agreed to by Eurobiotech and SRI.
Gross Margin+
Gross Sales Revenue ______________________
Cost of Goods Sold:
Joint costs (assigned) ______________________
Separable costs ______________________
Total Cost of Goods Sold ______________________
Gross Margin ______________________
Gross Profit Margin % ______________________
+Excludes SRI royalties
Net Income++
Gross Sales Revenue ______________________
Total Cost of Goods Sold ______________________
Gross Margin ______________________
*Operating Expenses:
Joint costs (assigned):
Selling, G&A ______________________
R&D, regulatory ______________________
Depreciation & amortization ______________________
Financing & interest ______________________
Total joint costs ______________________
Separable costs:
Selling, G & A ______________________
R&D, regulatory ______________________
Depreciation &amortization ______________________
Financing & interest ______________________
<PAGE>
Total separable costs ______________________
Total Operating Expense ______________________
Net Income ______________________
++ Excludes SRI royalties, local taxes, corporate income taxes, foreign taxes.
* Assignment of such allowable operating expenses as selling, general and
administrative; research and development, regulatory; depreciation and
amortization; financing and interest shall be according to generally accepted
accounting principles.
<PAGE>
Inter Institutional Agreement Page 1
SKI/ Southern
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INTER-INSTITUTIONAL AGREEMENT
(SK#3294)
Effective on the 31st day of August, 1998 (the "Effective Date"),
SLOAN-KETTERING INSTITUTE FOR CANCER RESEARCH, a not-for-profit corporation
organized and existing under the laws of the State of New York, and having a
place of business located at 1275 York Avenue, New York, New York 10021
(hereinafter "SKI") and
SOUTHERN RESEARCH INSTITUTE, a not-for-profit corporation organized under
the laws of the State of Alabama and having a place of business located at 2000
Ninth Avenue South, P.O. Box 55305, Birmingham, Alabama 35205 (hereinafter
"Southern"),
hereinafter collectively referred to as the "Parties, or individually as a
"Party"
in consideration of the mutual covenants contained herein, AGREE AS
FOLLOWS:
ARTICLE 1
BACKGROUND & DEFINITIONS
ss.1.1 The Parties to this agreement each have patents and/or patent
applications relating to 2'-Fluoro-Arabinofuranosyl Purine Nucleoside
technology including specific compounds, the synthesis of such
compounds, and uses of such compounds as therapeutic treatments for
cancer and other disease conditions, including:
a. "SKI Patents" defined as compounds 3,4, 5 & 6 of claim 2 and
compound 2 of claim 3 of U.S. Patent No. 4,751,221, issued June
14, 1988 entitled, 2'-Fluoro-Arabinofuranosyl Purine Nucleosides,
and claim 1 of U.S. Patent No. 4,918,179 issued April 17, 1990
entitled 2'-Fluoro-Arabinofuranosyl Purine Nucleosides, and any
conversions, continuations, continuations-in-part, divisionals,
foreign equivalents, reissues, or other derivatives of these
patents and patent applications and matters that are the subject
of these patents and patent applications, (hereinafter referred
to as SKI Patents); and
b. "Southern Patents" defined as U.S. Patent 5,034,518 issued July
23, 1991 entitled, 2'-Fluoro-9-(2-Deoxy-2-Fluoro-B-D-
Arabinofuranosyl) Adenine Nucleosides, U.S. Patent 5,384,310
issued January 24, 1995 entitled 2'-Fluoro-2-
Haloarabinoadinosines and Their Pharmaceutical Compositions, and
U.S. Patent 5,661,136 issued August 26, 1997 entitled
2-halo-2'-fluoro ARA adenosines as antinoplastic agents, and any
conversions, continuations, continuations-in-part, divisionals,
foreign equivalents, reissues, or other derivatives of these
patents and patent applications and matters that are the subject
of these patents and patent
<PAGE>
Inter Institutional Agreement Page 2
SKI/ Southern
- --------------------------------------------------------------------------------
applications (hereinafter referred to as "Southern Patents").
ss.1.2 "Technology" shall include Southern Patents and those SKI Patents
(listed in Exhibit B of this Agreement) to the extent necessary to
enable the practice of Southern Patents and SKI Patents issued in
countries in which Southern Patents are not issued or pending.
ss.1.3 Inventions described in SKI Patents were developed at SKI by Drs.
Kyoichi A. Watanabe, Chung K. Chu, and Jack J. Fox, and inventions
described in Southern Patents were developed at Southern by Drs. John
A. Montgomery and John A. Secrist, III (hereinafter collectively
referred to as "Inventors").
ss.1.4 The Parties desire to provide for the development, utilization, and
commercialization of the Technology through licensing activities or
co-development activites.
ss.1.5 "Confidential Information" means (i) any know-how, information or
material in tangible form that is marked as confidential or
proprietary by the furnishing party at the time it is delivered to the
receiving party, and (ii) information that is disclosed orally,
provided that such information is specifically identified by the
disclosing party as Confidential Information; and provided further
that any information that is disclosed orally be confirmed in written
summary form by the disclosing party within thirty (30) days. The
party who receives Confidential Information from the other party is
referred to in this Agreement as the "Recipient", and the disclosing
Party is referred to as the "Discloser".
ARTICLE 2
OWNERSHIP
ss.2.1 The Parties have or shall have separate agreements with their
respective Inventors, whereby their respective Inventors agree to
assign all right, title and interest in Inventions to their
institutions, and whereby the respective Inventors agree to cooperate
with and assist their institutions in preparing, filing, prosecuting
and maintaining patent applications and patents relating to Inventions
throughout the world.
ss.2.2 Each Party shall explicitly retain their respective rights and
ownership it may have in Technology.
ARTICLE 3
COMMERCIALIZATION
ss.3.1 The Parties shall each cooperate to achieve the commercial utilization
and exploitation of Technology and shall keep each other informed of
all requests by third Parties concerning commercial utilization or
exploitation.
<PAGE>
Inter Institutional Agreement Page 3
SKI/ Southern
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ss.3.2 The Parties warrant and represent that with respect to Technology they
are under no obligation to anyone other than the inventors,
contributors, and funding agencies.
ss.3.3 Except as otherwise expressly set forth in this Agreement, each Party
MAKES NO REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY KIND, EITHER
EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, VALIDITY OF PATENT
RIGHTS CLAIMS, ISSUED OR PENDING, AND ABSENSE OF INFRINGEMENT OF OR BY
RIGHTS OF OTHERS.
ss.3.4 Each Party is unaware of any claims asserted against them by any third
parties with respect to patent infringement or any other type of
liability relevant to licensing of the Technology, which have not been
disclosed to the other Party as of the Effective Date of this
Agreement.
ARTICLE 4
GRANTS
ss.4.1 Upon execution of the co-development agreement between Southern and
Eurobiotech Group, Inc. (hereinafter "Eurobiotech") shown in Exhibit A
(hereinafter "Eurobiotech Agreement") by both Southern and
Eurobiotech, SKI will have been deemed to have granted to Southern an
exclusive, worldwide license to SKI's rights in the Technology, with
the right to sublicense, to the extent necessary for Southern to
fulfill its obligations under its license of the Technology to
Eurobiotech Group, Inc.
ss.4.2 Both SKI and Southern are free to use the Technology for their
internal purposes in any way they deem fit, without informing the
other party.
ARTICLE 5
SHARING OF PROCEEDS
ss.5.1 All proceeds received by Southern, including but not limited to cash
or common stock payments, from the licensing or other commercial
utilization of any portion of Technology pursuant to Articles 3 and 4,
excluding fees for research & development, shall be apportioned
seventy-five percent (75%) to Southern and twenty-five percent (25%)
to SKI until the termination of Eurobiotech Agreement.
ss.5.2 If Southern receives from Eurobiotech anything of value in lieu of
cash payments, Southern shall share such payment with SKI according to
Article 5.1, based on the fair market value of such payment on the
date received by Southern, unless SKI waives in writing such payment
obligation in part or in full.
<PAGE>
Inter Institutional Agreement Page 4
SKI/ Southern
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ss.5.3 Southern agrees to distribute to SKI it's share of royalty or other
income in accordance with this Agreement, within thirty (30) days of
receiving such payments. If distribution requires having shares of
stock be put into SKI's name, Southern agrees to initiate such
procedure within fifteen (15) days of of receipt of such stock shares.
Such payments shall be accompanied by a report from each licensee
detailing the calculation of royalties or milestone payment being
paid. Such payments shall show "Payment under Contract SK# 3294" on
the check stub, and shall be sent to:
Memorial Sloan-Kettering Cancer Center
Office of Industrial Affairs
1275 York Avenue
New York, New York 10021
Failure to pay such sums within thirty (30) days of receipt from
licensee shall be considered a material breach of this Agreement and,
after due notice according to Article 12, is sufficient grounds for
termination of this Agreement with the non-paying Party.
ss.5.4 Southern shall keep full, true and accurate records containing all
particulars that may be necessary for the purpose of showing the
proceeds paid. For the term of this Agreement, upon receipt of thirty
(30) days prior written notice, Southern shall allow SKI or its agents
to inspect such records for the purpose of verifying Southern's
payment statements or compliance in other respects with this
Agreement. Should such inspection lead to the discovery of a greater
than five percent (5%) discrepancy in reporting to SKI's detriment,
Southern agrees to pay the full cost of such inspection.
ss.5.5 Southern agrees to copy SKI promptly with all material correspondence
between Southern and Eurobiotech and to consult with Sloan-Kettering
on all Southern decisions which may cost an estimated $1000 or more,
or which may affect the value of the Technology or the income from the
Technology by an estimated $1000 or more.
ARTICLE 6
PATENT MANAGEMENT & EXPENSES
ss.6.1 SKI shall be responsible for preparing, filing, prosecuting and
maintaining SKI Patents. As of the Effective Date of the Eurobiotech
Agreement, SKI shall maintain SKI Patent Rights until the expiration
of such rights or the termination of this Agreement, whichever occurs
first. SKI agrees to copy Southern on patent correspondence relating
to SKI Patent Rights.
ss.6.2 Southern shall be responsible for preparing, filing, prosecuting and
maintaining Southern Patents. As of the Effective Date of the
Eurobiotech Agreement, Southern shall maintain Southern Patent Rights
until the expiration of such rights or the termination of this
Agreement, whichever occurs first. Southern agrees to copy SKI on
patent correspondence relating to Southern Patent Rights.
ss.6.3 All costs and expenses associated with preparing, filing, prosecuting
and maintaining
<PAGE>
Inter Institutional Agreement Page 5
SKI/ Southern
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all patent applications and patents relating to Technology shall be
borne by the respective Party until the execution of the Eurobiotech
Agreement. Upon signing the Eurobiotech Agreement, Southern shall be
responsible for and pay all future costs and expenses incurred by SKI
for the preparation, filing, prosecution, issuance, and maintenance of
the SKI Patents. SKI or its outside patent counsel will submit
invoices to Southern for such costs and expenses, and Southern shall
pay the invoiced amount within sixty days (60) of the date of such
invoice.
ss.6.4 Failure to pay patent expenses shall be considered a material breach
of contract and, after due notice according to Article 12, is
sufficient grounds for termination of this Agreement with the
non-paying Party.
Article 7
Interest
ss.7.1 Southern shall pay to SKI interest on any amounts not paid when due.
Such interest will accrue from the fifteenth (15th) day after the
payment was due at a rate two percent (2%) above the daily prime
interest rate, as determined by The Chase Manhattan Bank (N.A.) or its
successor entity, on each day the payment is delinquent, and the
interest payment will be due and payable on the first day of each
month after interest begins to accrue, until full payment of all
amounts due Sloan-Kettering is made.
ss.7.2 SKI's rights to receive such interest payments shall be in addition to
any other rights and remedies available to SKI.
ss.7.3 If the interest rate required in this subsection exceeds the legal
rate in a jurisdiction where a claim for such interest is being
asserted, the required interest rate shall be reduced, for such claim
only, to the maximum interest rate allowable in the jurisdiction.
ARTICLE 8
CONFIDENTIALITY
ss.8.1 During the term of this Agreement and for a period of five years
thereafter, The receiving party (hereinafter "Recipient") shall retain
in confidence, and shall not disclose to a third party without the
express written consent of the disclosing party (hereinafter
"Discloser"), any Confidential Information disclosed under this
Agreement, except for that Confidential Information which:
a) was in the possession or control of the Recipient before it was
received, as shown by written records;
b) is available, or becomes available, to the public through no
fault of Recipient or of any of Recipient agents or employees;
c) is rightfully received from sources not bound by a similar
confidentiality agreement
<PAGE>
Inter Institutional Agreement Page 6
SKI/ Southern
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with the Discloser, or
d) is independently developed by Recipient without knowledge or use
of the Confidential Information, as proven by competent evidence.
ss.8.2 After receipt of written consent from Discloser to disclose
Confidential Information to a third party, and prior to such
disclosure, Recipient hereto shall obtain the written agreement of
such third party, who is not otherwise bound by fiduciary obligations
to Recipient, to hold in confidence and not make use of Confidential
Information for any purpose other than those permitted by this
Agreement. Recipient shall notify the other promptly upon discovery of
any unauthorized use or disclosure of the Discloser's Confidential
Information.
ss.8.3 Nothing in this Agreement shall preclude SKI or Southern from making
reports or disclosures required by the National Institutes of Health
or any other organization which provided funds used for the research
relating to Technology, or disclosing Confidential Information to the
minimum extent required to comply with court orders, regulations or
statutes.
ARTICLE 9
PATENT INFRINGEMENT
ss.9.1 If any Party becomes aware of any infringement of a patent covered by
this Agreement, it shall notify and discuss with the other Party what
action is required to terminate such infringement. Each Party shall
have the option of taking action against any third party infringer of
their respective patent rights. If both Parties agree to act against
the infringement jointly, they shall share equally in the expenses and
disbursements in connection with such action and shall also share
equally all monies received as a result of such action. If one Party
does not agree to join in the action against infringement, the other
Party will have the right to prosecute a patent infringement action at
their sole expense, and shall be entitled to retain all monies
recovered.
ss.9.2 If the Eurobiotech Agreement has been executed at the time the Parties
become aware of any such infringement, Eurobiotech may join in such
action against any third party infringer as specified in the
Eurobiotech Agreement. In that event one or both Parties may elect not
to join in the action against the third party infringer as specified
in the Eurobiotech Agreement without being penalized according to
Article 9.1.
ARTICLE 10
INVENTORS SHARES
ss.10.1 This Agreement does not preclude inventors institutions their share of
royalty income and under the respective patent policies of each from
receiving from their respective such other benefits, if any, specified
of the Parties or under such other
<PAGE>
Inter Institutional Agreement Page 7
SKI/ Southern
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agreements that may exist between inventors and their respective
institutions. No Party shall be responsible for the other Parties'
obligations to their inventors.
ARTICLE 11
NON-USE OF NAMES
ss.11.1 Neither Party shall use the names of the other Party, nor any of its
Affiliates, employees, nor any adaptation thereof, in any advertising,
promotional or sales literature without prior written consent obtained
from the other Party in each case.
ARTICLE 12
TERM AND TERMINATION
ss.12.1 This Agreement shall remain in effect from the Effective Date until
the last to occur of: (a) the expiration of the last to expire of SKI
Patents and Southern Patents; (b) the expiration of the Eurobiotech
Agreement, (c) termination according to ss.12.2 of this Agreement; or
(d) by mutual agreement of the parties expressed in writing.
ss.12.2 Failure by any Party to comply with any of the material obligations
and conditions contained in this Agreement shall entitle the other
Party to give written notice requiring it to cure such default. If
such default is not cured within sixty (60) days after receipt of such
notice, the notifying Party shall be entitled (without prejudice to
any of its other rights conferred on it by this Agreement) to
terminate this Agreement with the defaulting Party by giving notice to
take effect immediately.
ss.12.3 Provisions of Article 8, and any other obligation incurred by a Party
during the term of this Agreement shall survive termination.
ARTICLE 13
SEVERABILITY
ss.13.1 If one or more of the provisions of this Agreement shall be held to be
invalid, illegal, or unenforceable in any respect, the validity,
legality, and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby, provided that the intent of
the Parties in entering into the Agreement is not materially affected
thereby.
ARTICLE 14
NOTICES
ss.14.1 Any communication required or permitted under this Agreement shall be
made in writing and sent to such Party, postage prepaid, addressed to
it as set out below, or as it shall subsequently designate by notice
to the other Party. However, if the communication involves an alleged
breach of this Agreement or a cancellation of this
<PAGE>
Inter Institutional Agreement Page 8
SKI/ Southern
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Agreement, such communication shall be sent by registered or certified
mail or other means providing proof of delivery, and also communicated
by telephone as promptly as possible. Communications or notices shall
be addressed as follows:
In the case of SKI, the communication or notice shall be addressed to:
Sloan-Kettering Institute for Cancer Research
1275 York Avenue
New York, New York 10021
Attention: James S. Quirk
Senior Vice President
Research Resources Management
In the case of Southern, the communication or notice shall be
addressed to:
Southern Research Institute
2000 Ninth Avenue South
P.O. Box 55305
Birmingham, Alabama 35255-5305
Attention: President
ARTICLE 15
GOVERNING LAW
ss.15.1 This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
ARTICLE 16
ENTIRE AGREEMENT
ss.16.1 This instrument contains the entire Agreement between the Parties
hereto and supersedes all prior Agreements with respect to Technology.
Any modifications of this Agreement to be effective must be in writing
and signed by all Parties.
ARTICLE 17
INDEMNIFICATION
ss.17.1 Southern, and any sublicensee of rights granted under this Agreement,
including Eurobiotech, shall at all times during the term of this
Agreement and thereafter, indemnify, defend and hold SKI, its Board of
Managers, officers, employees and affiliates, harmless against all
claims and expenses, including legal expenses and reasonable
attorneys' fees, arising out of the death of or injury to any person
or persons or out of any damage to property and against any other
claim, proceeding, demand, expense and liability of any kind
whatsoever resulting from the production, manufacture, sale, use,
lease, consumption or advertisement of the Licensed
<PAGE>
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SKI/ Southern
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Product(s) and/or Licensed Process(es) or arising from any obligation
of LICENSEE hereunder, except for any injuries, losses or damages that
specifically result from the gross negligence or willful misconduct of
SKI.
ARTICLE 18
MISCELANEOUS PROVISIONS
ss.18.1 Each Party hereby acknowledges that the rights and obligations of this
Agreement are subject to the laws and regulations of the United States
relating to the export of products and technical information. Without
limitation, each Party shall comply with all such laws and
regulations.
ss.18.2 This Agreement shall not be construed to grant any license or other
rights to either party in any patent rights, know-how, or other
technology of the other party, except as expressly provided in this
Agreement.
ss.18.3 Neither party shall assign its rights or obligations under this
Agreement, in whole or in part, by operation of law or otherwise,
without the prior written consent of the other, except to successor to
all or substantially all of the party's assets or business operations
relating to the intellectual property that is the subject of this
Agreement. Any purported assignment in violation of this article shall
be null and void.
ss.18.4 The waiver by either party hereto of any right hereunder or of the
failure to perform or of a breach by the other party shall not be
deemed a waiver of any other right hereunder or of any other breach or
failure by said other party whether of a similar nature or otherwise.
ss.18.5 This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the Parties have the Effective Date.
Sloan-Kettering Institute for Cancer Southern Research Institute
Research
By: /s/ G. Bernhardt By: /s/ G. E. Dwyer
------------------------------ ------------------------------
Name: James S. Quirk Name: G. E. Dwyer
Title: Senior Vice President Title: President and CEO
Research Resources Management
Date: 9/8 , 1998 Date: 9/1/98 , 1998
-------------------------------- -----------------------------
<PAGE>
Inter Institutional Agreement
SKI/ Southern
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EXHIBIT B
SKI Patents
United States Patent Number 4,751,221 issued June 14, 1988
United States Patent Number 4,918,179 issued April 17,1990
Canadian Patent Number 1,271,192 issued July 3, 1990
EPO Patent Number 0219829 issued December 30, 1992 in Germany, France, and
the United Kingdom
Japanese Patent Number 1998734 issued December 5, 1995
Southern Patents
United States Patent Number 5,034,518 issued July 23, 1991
United States Patent Number 5,384,310 issued January 24, 1995
United States Patent Number 5,661,136 issued August 26,1997
European Patent Number 0473708 issued January 15, 1997 in France, Germany,
Great Britain, Italy, Netherlands, Spain, Sweden, and Switzerland
European Patent Application Serial Number 92912163.0 filed May 7,1992,
designating Austria, Belgium, Germany, Greece, France, Italy,
Luxembourg, Monaco, Netherlands, Spain, Sweden, Switzerland, and the
United Kingdom.
Japanese Patent Application Serial Number 2-508789 filed May 23, 1990
Japanese Patent Application Serial Number 500121/1993 filed May 7, 1992
Canadian Patent Application Serial Number 2,102,782 filed May 7, 1992
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[LOGO]
Senior Vice President
Research Resources Management
September 3, 1998
TO WHOM IT MAY CONCERN:
In my absence, Mr. Gustave J. Bernhardt, Director, Research Resources
Management, will sign as an institutional official for the Sloan-Kettering
Institute for Cancer Research.
/s/ James S. Quirk
-----------------------------
James S. Quirk
Senior Vice President
JSQ:meb
Memorial Sloan-Kettering Cancer Center
1275 York Avenue, New York, New York 10021
NCI-designated Comprehensive Cancer Center
LICENCE AGREEMENT
(1) UNIVERSITY COLLEGE CARDIFF CONSULTANTS LIMITED
(2) BIOENVISION INC.
<PAGE>
THIS AGREEMENT is made the 21 day of June 1999 BETWEEN:
(1) UNIVERSITY COLLEGE CARDIFF CONSULTANTS LIMITED a company incorporated under
the laws of England and Wales (company number 1477909) whose registered
office is at P0 Box 497, 56 Park Place, Cardiff CFI 3XR ("UC3"); and
(2) BIOENVISION INC., a Delaware corporation with its main office at Trafalgar
House, 11 Waterloo Place, London SW1Y 4AU ("BIOENVISION")
WHEREAS:
(A) UC3 is the sole proprietor of the Applications.
(B) UC3 has the exclusive worldwide right to license the use of the
Applications.
(C) UC3 is the proprietor of the Know-how.
(D) Further research and development work on the application of the
Applications and Know-how in the Field of Use and the production of
Licensed Products is required.
(E) Such further research and development is the responsibility of BIOENVISION
and includes the Project.
(F) BIOENVISION wishes to take a licence under the Applications and a licence
under the Know-how and UC3 has agreed to grant such licences on and subject
to the terms and conditions set out below.
IT IS AGREED as follows:
1. Definitions and Interpretation
In this Agreement, the recitals and the Schedules hereto:
1.1 the following words and expressions shall have the following meanings
unless the context otherwise requires:
"Applications" the patent applications short particulars of
which are set out in the Schedule and also
one patent application to be filed
immediately after execution of this Agreement
by UC3 on each of the subjects of i)
1,2-diphenylethanes and 1,3-diphenylpropanes
and derivatives and ii) benzyl tetralins and
derivatives, together with
<PAGE>
any patent applications claiming priority
therefrom anywhere in the Territory; and any
patents granted pursuant thereto or divided
out therefrom anywhere in the Territory and
any extensions or renewals thereof including,
without limitation, supplementary
certificates of protection;
"Approved Sub-Licensee" any person to whom a sub-licence is granted
by BIOENVISION in accordance with the
provisions of clause 2.3 below;
"Cardiff University the University of Wales, Cardiff of PO Box 923,
Cardiff CFl 3TE, UK;
"Compound" any chemical compound falling within one or
more claims of the Patents (or any of them)
and/or utilising or incorporating the
Know-how;
"Commencement Date" the date of countersignature of this Licence
Agreement;
"Field of Use" cancer therapy in humans and animals;
"Improvements" all and any results of the Project together
with all and any Intellectual Property Rights
therein or relating thereto and assigned to
UC3 by Cardiff University;
"Improvement Patents" any patent applications filed by UC3 in the
Territory in respect of any Improvements
together with any patent applications
claiming priority therefrom anywhere in the
Territory; and any patents granted pursuant
thereto or divided out therefrom anywhere in
the Territory and any extensions or renewals
thereof including, without limitation,
supplementary certificates of protection;
"Intellectual Property
Rights" all and any rights in or to inventions,
patents, trademarks, registered designs,
applications for any of the foregoing and the
right to apply therefor in any part of the
world; copyrights, database rights,
topography rights, design rights, trade
names, get-up, rights to confidential
information, know-how; any rights under
<PAGE>
licences or consents in relation to the
foregoing, and any similar or equivalent
rights arising and/or subsisting anywhere in
the world;
"Know-how" all technical, industrial and commercial
information and techniques relating to the
application of the Applications in the Field
of Use in whatever form and on whatever media
stored which UC3 is free to disclose and to
licence;
"Licensed Products" Products designed, developed, and/or
manufactured for use in the Field of Use;
"Net Receipts" in the case of any sub-licence by BIOENVISION
to an Approved Sub-Licensee at arm's length
the total sums payable to BIOENVISION for or
in connection with the grant of such
sub-licence in whatever form including
without limitation lump sum payments and
royalties after the deduction of
BIOENVISION's reasonable legal costs
necessarily incurred in connection with the
preparation, negotiation and execution of
such sub-licences. In the case of any
sub-licences by BIOENVISION to Approved
Sub-Licensees other than at arm's length the
sum equivalent to the sums for which a
sub-licence at arm's length would have been
granted less BIOENVISION's reasonable legal
costs referred to above;
"Net Sales Value" in the case of sales at arm's length the
invoiced price of each Licensed Product sold
by BIOENVISION after the deduction of any
reasonable discounts and rebates actually
granted and any credits actually given by
BIOENVISION for returned Licensed Products.
In all other cases (including but not limited
to commercial uses of the Licensed Products
which are not invoiced by BIOENVISION) the
sum equivalent to the invoiced price of the
Licensed Products at which a sale at arm's
length would have been made less the
deductions referred to above:
"Patents" together the Applications and any Improvement
Patents;
<PAGE>
"Products" together Compounds and any medical products
comprising one or more Compounds as an active
ingredient; and each a Product,
"Project" the Research Agreement of even date herewith
between BIOENVISION and Cardiff University
for the provision by Cardiff University of
research and development services on and
subject to the terms and conditions therein
contained;
"Term" the period during which this Agreement is in
force in accordance with the provisions of
clause 14.1 below;
"Territory" the Field of Use anywhere in the world,
including countries where there are no
Patents;
"Year" each calendar year during the Term or part
thereof in the case of the first and last
calendar years of the Term;
1.2 words and expressions (including words and expressions defined in clause
1.1 above) in the singular shall include the plural and vice versa;
references to a "party" or the "parties" shall mean a party or the parties
to this Agreement; words importing any gender shall include every gender;
references to a person shall include bodies corporate, unincorporated
associations, partnerships, trusts and individuals;
1.3 headings are for convenience only and shall not affect the construction
interpretation or of this Agreement; references to sub-clauses are to
sub-clauses of the clause in which the reference appears and references to
clauses are to clauses of this Agreement;
1.4 the recitals and the Schedules to this Agreement shall form part of this
Agreement as if set out in the body of this Agreement and references to
this Agreement shall include the recitals and the Schedules;
1.5 references to sales of Licensed Products shall include all sales and other
disposals of or dealings with the Licensed Products by or on behalf of or
with the consent of BIOENVISION.
2. Licence
2.1 In consideration of and conditional upon BIOENVISION:
<PAGE>
(a) meeting is obligations under clauses 6 and 8 below; and
(b) paying to UC3 is costs and expenses pursuant to clauses 6 and 8.2 (d)
below (save to the extent of any notice given under clause 8.2 (e)
below); and
(c) performing its other obligations hereunder
UC3 hereby grants to BIOENVISION with effect from the Commencement Date and
during the Term and subject always to the provisions of clauses 2.3, 2.4
and 2.5 below:
(i) an exclusive licence under the Applications; and
(ii) a non-exclusive licence under the Know-how
to develop, manufacture, use, sell, offer for sale or otherwise deal in or
with Licensed Products in the Territory together with the right to grant
sub-licences thereunder to Approved Sub-Licensees on and subject to the
terms and conditions herein contained.
2.2 Nothing contained in this Agreement shall be interpreted or construed as in
any way granting any rights or permission to BIOENVISION to utilise the
Patents, the Know-how, the Improvements and/or the Compounds or any part
thereof and/or to manufacture, use, sell or otherwise deal in or with
Products for any purpose or application other than in the Field of Use.
2.3 BIOENVISION shall have the right to grant sub-licences hereunder PROVIDED
THAT:
(a) all sub-licences shall be expressly restricted to the Field of Use;
(b) all such sub-licences shall determine when and to the same extent that
this Agreement determines howsoever arising;
(c) all sub-licences shall be at arm's length terms unless otherwise
agreed in writing by UG3;
(d) BIOENVISION shall provide UC3 with the name, registered office and
trading address of any sub-licensee prior to such sub-licence being
granted; and
(e) UC3 shall be provided by BIOENVISION with a copy of any sub-licence
within thirty (30) days of such sub-licence being entered into.
2.4 If at any time during the Term either:
<PAGE>
(a) BIOENVISION Is to make payment to UC3 in accordance with the
provisions of clause 8.2 (d) below in respect of any Patents; or
(b) BIOENVISION determines its payment obligations under clause 8.2 (d)
below in accordance with the provisions of clause 8.2 (e) below
UC3 shall in its sole discretion have the option to terminate BIOENVISION's
licence pursuant to clause 2.1 above in that part of the Territory to which
the relevant costs and/or expenses relate immediately on giving BIOENVISION
written notice.
2.5 Nothing contained in this Agreement or in clause 2.1 above shall be
interpreted or construed as in any way precluding or restricting Cardiff
University and UC3 from undertaking or continuing with any research and
development work in the Territory utilising the Patents, the Know-how, the
Improvements and/or any Compounds.
3. Disclosure of Know-how
As soon as reasonably practicable following execution of this Agreement UC3
shall to the extent that:
(a) it has not already done so; and
(b) such Know-how is reasonably necessary for BIOENVISION to exercise its
rights granted hereunder
disclose to BIOENVISION the Know-how.
4. Improvements
4.1 UC3 shall disclose to BIOENVISION any Improvements as soon as reasonably
practicable but, in any event, no more than one (1) month from the date
that UC3 is made aware of such Improvements.
4.2 UC3 grants to BIOENVISION with effect from the date of disclosure to
BIOENVISION of the Improvements (if any) and during the Term on and subject
to the terms and conditions contained herein an exclusive licence under the
Improvements (if any) to use such Improvements in the development,
manufacture, use, sale and offer for sale of Licensed Products in the
Territory together with the right subject always to the provisions of
clause 2.3 above to grant sub-licences thereunder to Approved Sub-Licenses.
5. Confidential Information
5.1 For the purposes of this clause 5 "Confidential Information" shall mean all
information of a confidential nature whether oral or written comprising or
relating to:
<PAGE>
(a) the Compounds;
(b) the Products;
(c) the Licensed Products;
(d) the terms of this Agreement;
(e) the Patents;
(f) the Know-how;
(g) the Improvements; and
(h) any other information of a confidential nature relating to the
business of either party
disclosed or made available by either party to the other party pursuant to
the terms of this Agreement whether prior to the Commencement Date or
subsequent thereto.
5.2 Subject to the provisions of clauses 5.3, 5.4 and 5.5 below neither party
(the "Recipient") shall in respect of Confidential Information belonging to
and provided or disclosed by the other party (the "Disclosing Party"):
(a) disclose such Confidential Information or any part thereof to any
person;
(b) use such Confidential Information or any part thereof otherwise than
in accordance with and for the purposes of this Agreement;
(c) copy such Confidential Information or any part thereof other than to
the extent necessary to exercise its rights or to perform its
obligations under this Agreement.
5.3 The Recipient shall be permitted to disclose Confidential Information
belonging to the Disclosing Party (and all or any part thereof) in
confidence to those of its professional advisers, officers and employees
who need to know the same in order to perform their duties in connection
herewith or, in the case of professional advisers, to provide advice in
respect hereof.
5.4 BIOENVISION shall be permitted to disclose Confidential Information
belonging in UC3 (and all or any part thereof):
(a) to customers who purchase Licensed Products to the extent necessary to
enable such customers to use the Licensed Products;
<PAGE>
(b) in confidence to Approved Sub-Licensees on the same terms and
conditions as are contained in this clause 5;
(c) in confidence to approved financial institutions and potential
investors in BIOENVISION, to the extent necessary to enable
BIOIENVISION to attract investment;
(d) to such governmental agencies, bodies and/or other organisations
anywhere in the Territory as may be necessary in order to apply for,
obtain and/or maintain in force any medical and/or any governmental
approvals, licences and/or consents as may from time to time be
required in connection with the manufacture, use and/or sale of
Licensed Products in the Territory;
(e) in confidence to potential Approved Sub-Licensees but only to the
extent strictly necessary to enable such persons to evaluate whether
in the case of potential Approved Sub-Licensees they wish to become
Approved Sub-Licensees or in the case of potential investors they wish
to invest in BIOENVISION.
5.5 The obligations as to confidentiality contained in clause 5.1 above shall
not apply to any Confidential Information:
(a) which is in the public domain at the date of disclosure or which
subsequently enters the public domain through no act or failure to act
on the part of the Recipient, its professional advisers, officers or
employees or on the part of Approved Sub-Licensees or its officers or
employees; or
(b) which was lawfully and properly in the possession of the Recipient at
the date of disclosure; or
(c) which the Recipient subsequently obtains otherwise than in confidence
from a person in good faith who did not derive the same whether
directly or indirectly in confidence from the Disclosing Party or from
any person to whom the Disclosing Party disclosed the same in
confidence; or
(d) the disclosure of which is required by any applicable law or by any
supervisory or regulatory body to whose rules the Recipient is subject
or with whose rules it is necessary for the Recipient to comply.
5.6 The provisions of this clause 5 shall survive the expiry or termination of
this Agreement howsoever arising.
6. Consideration
6.1 In part consideration of the licence and rights hereby granted to
BIOENVISION, BIOENVISION undertakes to pay to UC3:
<PAGE>
(a) royalties calculated at a rate of five per cent (5%) of the Net Sales
Value of each Licensed Product sold by or on behalf of BIOENVISION in
the Territory each Year during the Term; and
(b) royalties calculated at a rate of: thirty five per cent (35%) of Net
Receipts from sub-licences granted by BIOENVISION and relating to the
grant and exercise of such sub-licences and/or sale of Licensed
Products in the Territory.
6.2 All sums to be paid to UC3 hereunder shall be paid in pounds sterling and
shall be exclusive of value added tax which shall be payable (if
applicable) in addition by BIOENVISION and where applicable shall be paid
at the rate of exchange in force at Barclays Bank plc, PO Box 522, Northway
House, Ty Glas Avenue, Llanishen, Cardiff CF4 5ZY on the date for payment
thereof (or if such date is not a day when the banks are open for business
the next business day when the banks are so open) PROVIDED ALWAYS THAT
where any payment is made after the date provided for herein conversion
shall be made at UC3's option at the rate of exchange in force on the day
payment is in fact made if this is more favourable to UC3.
6.3 BIOENVISION shall and shall procure that all Approved Sub-Licensees shall
during the Term and for a period of six (6) years thereafter maintain
complete and accurate records of all matters connected with the
manufacture, use and sale and other disposal of Licensed Products in the
Territory showing separately in the case of BIOENVISION the number of
sub-licences granted and in the case of both BIOENVISION and Approved
Sub-Licensees, the quantity of all Licensed Products manufactured, used,
sold or otherwise disposed of in the Territory showing the Net Receipts
and/or Net Sales Values therefor (as applicable).
6.4 BIOENVISION shall submit to UC3 within thirty (30) days after March 31,
June 30, September 30 and December 31 in each Year a report showing on a
country by country basis:
(a) the Net Receipts received by BIOENVISION in the preceding calendar
quarter; and
(b) the total number of Licensed Products manufactured, used, sold and
otherwise disposed of by BIOENVISION in the preceding calendar quarter
and the Net Sales Values therefor.
6.5 At the time of delivery of each such report pursuant to clause 6.4 above
BIOENVISION shall pay to UC3 the full amount of all sums due and payable to
UC3 in respect of that calendar quarter pursuant to the provisions of
clause 6.1 above.
6.6 All sums due to UC3 hereunder shall be paid free and clear of all
deductions or withholdings whatsoever save that BIOENVISION shall be
entitled to deduct and to
<PAGE>
pay over to the relevant revenue authorities such taxes and duties as
BIOENVISION is required by law to deduct on remittance of such payments to
UC3. BIOENVISION shall provide UC3 with such documentary evidence as UC3
may reasonably require regarding the amounts so deducted and such evidence
of payment to such revenue authorities as UC3 may reasonably require for
the purposes of seeking to recover such taxes (or any part thereof) under
any applicable legislation or to enable the appropriate provisions of any
double tax agreement to operate in respect of any such payments.
6.7 Without prejudice to any other rights or remedies to which UC3 may be
entitled whether hereunder or at law, UC3 shall be entitled to charge
interest at the rate of two per cent (2%) above the base lending rate of
Barclays Bank plc from time to time in force on all overdue sums owing to
UC3 hereunder (before as well as after judgement).
6.8 BIOENVISION shall and shall procure that all Approved Sub-Licensees shall
whenever required by UC3 allow an independent accountant upon reasonable
notice and during normal business hours to verify the accuracy of the
reports required to be furnished under the provisions of clause 6.4 above
by inspecting and taking copies of BIOENVISION and any Approved
Sub-Licensee's records and accounts PROVIDED ALWAYS THAT such inspection
shall not take place more than once in every two (2) years. The costs of
any such inspection shall be borne by UC3 unless an underpayment of monies
due to UC3 hereunder of more than five percent (5%) is found in which case
all costs incurred shall be borne by BIOENVISION or if already incurred by
UC3 reimbursed by BIOENVISION immediately upon written demand by UC3 for
payment of the same.
7. Obligations of UC3
Subject always to the provisions of clause 8 below UC3 shall during the
Term:
(a) diligently prosecute to grant the patent Applications listed in the
Schedule;
(b) maintain in force any granted patents included within the Patents;
(c) use its reasonable efforts to amend any patent Applications listed in
the Schedule and /or any other patent Applications contained within
the Patents to include any additional claims reasonably requested by
BIOENVISION; and
(d) keep BIOENVISION regularly informed of the status and progress of the
patent Application included in the Schedule and discuss with
BIOENVISION the content of any and all amendments to patent
Applications before submission.
8. Obligations of BIOENVISION
<PAGE>
8.1 BIOENVISION shall use its best efforts to commercialise the Compounds.
Specifically, in the first instance BIOENVISION shall undertake clinical
development of Compounds or Licensed Products for the purposes of preparing
such Compounds or Licensed Products for market. BIOENVISION shall use its
best efforts to commence Phase 1 clinical trials of one or more Compounds
within four (4) years of execution of this Agreement.
8.2 During the Term BIOENVISION shall:
(a) be responsible for obtaining and maintaining in force all such
licences, consents and approvals of any government or regulatory
authority in the Territory as may be required from time to time in
connection with the manufacture, use, sale, import, export,
advertisement, storage or use of Licensed Products anywhere in the
Territory;
(b) attend meetings with UC3 at regular intervals and in any event at
least twice in any Year to discuss without limitation BIOENVISION's
development and exploitation of the Patents, the Know-how and the
Licensed Products in the Territory;
(c) not act as agent of UC3 and not give any indication that it is acting
otherwise than as a principal and not make any representation or give
any warranty on behalf of UC3;
(d) subject always to the provisions of clauses 8.2 (e) and 8.3 below
within thirty (30) days of receipt of an invoice from UC3 in respect
thereof, reimburse UC3 for all costs and expenses incurred by UC3 in:
(i) prosecuting to grant the patent Applications listed in the
Schedule and any other patent Applications contained within
the Patents from time to time; and/or
(ii) maintaining in force any granted patents included within the
Patents; and/or
(iii) amending any patent Applications listed in the Schedule
and/or any other patent Applications contained within the
Patents to include any additional claims reasonably
requested by BIOENVISION;
(e) BIOENVISION shall be entitled at any time on giving to UC3 three (3)
months notice in writing to determine its payment obligations pursuant
to clause 8.2 (d) above in respect of any or all of the Patents within
any part of the Territory.
8.3 If at any time during the Term UC3 grants to any person a licence and
sub-licence under the Patents and Know-how in a field of use other than the
Field of Use, UC3
<PAGE>
and BIOENVISION shall re-negotiate the level of costs and expenses to be
borne by BIOENVISION pursuant to the provisions of clause 8.2 (d) above.
8.4 BIOENVISION shall and shall procure that all Approved Sub-Licensees shall,
to the extent reasonably practicable:
(a) mark the packaging for all Licensed Products with the applicable
patent application number in the relevant country in the Territory or,
where patents have been granted in respect of the Licensed Products in
such countries, the relevant patent number; and
(b) include a statement in a form approved by UC3 making it clear that the
Licensed Products are manufactured under licence from UC3.
9. Intellectual Property Rights
The Improvements and all Intellectual Property Rights in or relating to the
manufacture and use of Compounds, the Know-how and the Patents shall belong
to UC3 absolutely and save as expressly provided herein no rights or
licences in respect thereof are or shall be granted to BIOENVISION.
10. Infringement of Patents and/or Licensed Know-how
10.1 Each party shall immediately inform the other party of any infringement of
the Patents, Improvements, Know-how and/or any part thereof by any person
which comes to its attention during the Term.
10.2 BIOENVISION shall at the request and expense of UC3 take or join with UC3
in taking all such action as UC3 may in its sole discretion decide and
require for the purpose of protecting the Patents, Improvements, Know-how
and/or any part thereof.
10.3 Nothing contained in this clause 10 shall be interpreted or construed as
imposing any obligation on UC3 to take any action or proceedings against
any person who infringes or is alleged to infringe the Patents,
Improvements, Know-how or any part thereof. If UC3 decides not to take any
action for infringement BIOENVISION shall be entitled to do so and UC3
shall SUBJECT ALWAYS to BIOENVISION agreeing to indemnify UC3 to its
reasonable satisfaction in respect of any costs, damages, expenses or other
loss incurred or suffered by UC3 in any such action at the request and
expense of BIOENVISION join with BIOENVISION in any such action and provide
such assistance in connection therewith as BIOENVISION may reasonably
require.
11. UC3 Warranties and Limitations of Liability
11.1 UC3 warrants that:
<PAGE>
(a) it has the right to enter into this Agreement and to grant the
licenses hereby granted;
(b) so far as UC3 is aware not having made an exhaustive search the
practice in the Field of Use of any of the inventions included in the
Applications does not infringe any person's Intellectual Property
Rights;
(c) UC3 has no notice of any reason why any of the patent Applications
listed in the Schedule should not proceed to grant.
11.2 Save as set out in clause 11.1 above UC3 makes no warranties or
representations whether express or implied regarding the Patents, Know-how,
the Improvements, Licensed Products and/or the adequacy or accuracy of the
Know-how and/or the Patents and in particular (without limitation) UC3 does
not warrant nor provide any representation that the manufacture, use and/or
sale of Licensed Products and/or use of the Patents and/or Know-how and/or
Improvements will not infringe any person's Intellectual Property Rights
and all or any warranties or representations implied by law or statute are
hereby expressly excluded.
12. BIOENVISION Warranty
BIOENVISION warrants that it has the right to enter into this Agreement and
to perform its obligations hereunder.
13. Indemnity
13.1 UC3 shall not be responsible for and BIOENVISION shall indemnify and hold
UC3 harmless from and against all or any loss, costs, claims, proceedings,
expenses (including without limitation legal costs) and damages howsoever
suffered or incurred by UC3 as a result of or in connection with the use by
BIOENVISION and/or any Approved Sub-Licensees of the Patents and/or
Know-how and/or Improvements including without limitation any manufacture,
use and/or sale of Licensed Products.
13.2 The indemnity contained in clause 13.1 above shall not apply to any loss,
costs, claims, proceedings, expenses and damages to the extent that they
are suffered or incurred by UC3 as a result of any breach by UC3 of any of
the provisions of this Agreement on its part to be performed.
14. Term and Termination
14.1 This Agreement shall be deemed to have come into force on the Commencement
Date and unless earlier determined in accordance with the provisions of
clause 2.4 above and clauses 14.2, 14.3, 14.4, 14.5 and/or 18.3 below shall
continue until expiry of the last of the Patents to expire or if none of
the patent Applications contained within the Patents proceed to grant until
the tenth (10th) anniversary date of the Commencement Date.
<PAGE>
14.2 Either party shall be entitled to terminate this Agreement on three (3)
calendar months written notice to the other party
14.3 UC3 shall be entitled to terminate this Agreement immediately on written
notice to BIOENVISION if:
(a) at any time later than four (4) years after the date of execution of
this Licence Agreement BIOENVISION fails to demonstrate to UC3's
satisfaction that BIOENVISION has complied with the provisions of
clause 8.1 above or
(b) BIOENVISION challenges or assists any person to challenge the validity
of the Patents and/or the Know-how or any part thereof.
14.4 Without prejudice to any other right or remedy either party may immediately
by notice in writing to the other party terminate this Agreement at any
time if:
(a) the other party shall commit a breach of any of the provisions of this
Agreement and shall not within thirty (30) days of notice of such
breach remedy the same (if capable of remedy). For the avoidance of
doubt and without prejudice to the provisions of clause 14.3 above
failure to achieve any milestone by the date set out therefor in
clause 8.1 shall not be considered to be a breach by BIOENVISION of
the provisions of this Agreement; or
(b) the other party has a petition for winding-up presented against it
and/or a petition presented against it for the appointment of an
administrator of its undertaking or an application for an interim
order under Part VIII of the Insolvency Act 1986 or if the other party
has an administrator, receiver or administrative receiver appointed
over any of its assets or undertaking or if the other party resolves
to or goes into voluntary liquidation (other than for the purposes of
a bona fide reconstruction or amalgamation of a solvent company) or if
the other party proposes or makes any voluntary arrangement with its
creditors or if the other party ceases to carry on business or if the
other party is unable to pay its debts within the meaning of Sections
123 or 236 of the Insolvency Act 1986 or upon the happening of any
equivalent event under the laws of any relevant jurisdiction.
14.5 BIOENVISION shall be entitled to terminate its rights in any country within
the Territory at the end of any Year on giving not less than three (3)
months notice in writing to UC3 such notice to expire at the end of a Year.
15. Effects of Expiry and Termination
15.1 In the event of the expiry of this Agreement by effluxion of time and
PROVIDED ALWAYS that where such expiry occurs upon the tenth (10th)
anniversary of the Commencement Date the Know-how and/or any Improvements
do not at that date
<PAGE>
remain secret and substantial BIOENVISION shall be entitled to an
irrevocable, royalty free, non-exclusive licence to use the Know-how and
the Improvements in the development, manufacture, use, sale and offer for
sale of Licensed Products in the Territory together with the right to grant
sub-licences thereunder.
15.2 In the event of termination of this Agreement pursuant to the provisions of
clause 2.4, 14.2, 14.3, sub-clauses 14.4 (a) or (b) or clause 14.5 above or
clause 18.3 below all rights and licences hereunder shall cease. In the
event of BIOENVISION exercising its rights to terminate its rights in any
country within the Territory in accordance with the provisions of clause
14.5 above but not the entire Agreement all rights and licences in respect
of such country shall cease.
15.3 Nothing in this Agreement shall be construed as preventing BIOENVISION
after termination of this Agreement from developing, manufacturing, using,
selling, offering for sale or otherwise dealing with Licensed Products in
countries where no patents granted pursuant to the Patents are in force but
only if and to the extent that the Licensed Products do not:
(a) utilise or incorporate any Know-how and/or Improvements which are
secret and not in the public domain or are in the public domain but
only as a result of a breach by BIOENVISION and/or any Approved
Sub-Licensee and/or any of its employees or agents of any of its
confidentiality obligations hereunder or under any sub-licence.
15.4 BIOENVISION shall within thirty (30) days of the date of termination or
expiry of this Agreement howsoever arising render to UC3 a written report
in the form referred to in clause 6.4 above in respect of the calendar
quarter or part thereof up to and including the said date of expiry or
termination and shall at the same time pay to UC3 the full amount of all
sums due and payable pursuant to clause 6 above in respect of all Licensed
Products sold by BIOENVISION and/or Net Receipts received by BIOENVISION
during the calendar quarter or part thereof up to and including the said
date of expiry or termination. Subsequent to termination of this Licence
Agreement BIOENVISION shall pay to UC3 royalties as defined in clause 6
above on Licensed Products manufactured but unsold at the effective date of
termination.
15.5 The expiry or termination of this Agreement howsoever arising shall not
release either party from any obligations arising hereunder prior to the
date of termination.
15.6 The provisions of clauses 5, 6, 9, 11.2, 13, 16, 18 and this clause 15
shall survive the expiry or termination of this Agreement howsoever
arising.
15.7 References in clauses 15.3, 15.4, 15.5 and 15.6 above to termination of
this Agreement shall be deemed to include termination of BIOENVISION's
rights and licences in any country within the Territory.
16 Notices
<PAGE>
Any notice required or authorised to be given hereunder shall be in writing
and served personally or sent by post or facsimile addressed to the
relevant party as follows:
UC3 PO Box 497
56 Park Place
Cardiff
CF1 3XR
For the attention of: Dr. Nick Bourne
Facsimile Number: 01222 874189
BIOENVISION Trafalgar House
11 Waterloo Place
London SW1Y 4AU
For the attention of: Mr. Chris Wood
Facsimile Number: 0171 8397570
or to such other address or facsimile number as may from time to time be
notified to the other party hereto in writing for this purpose. Any notice
served personally shall be deemed to have been given upon such service. Any
notice sent by post shall be deemed to have been served two (2) days after
the same shall have been posted and any notice sent by facsimile shall be
deemed to have been served upon transmission and in proving such service it
shall be sufficient to prove that the letter or facsimile was properly
addressed and as the case may be posted or transmitted.
17. Assignment
BIOENVISION shall be entitled to assign any or all of its rights or
obligations arising hereunder to any person subject always to:
(a) the assignee entering into a novation of this Agreement with
BIOENVISION and UC3 in such form as UC3 shall reasonably require; and
(b) BIOENVISION reimbursing UC3 for all costs and expenses incurred by UC3
in connection with any such novation; and
(c) all payments due to UC3 prior to the effective date of such assignment
having been paid in full.
18. Miscellaneous
<PAGE>
18.1 Any reasonable forbearance or delay on the part of either party in
enforcing the provisions of this Agreement or any of its rights hereunder
shall not be construed as a waiver of such provisions or any of its rights
thereafter to enforce the same.
18.2 This Agreement embodies the entire understanding of the parties hereto
relating to the subject matter hereof and supersedes all representations,
understandings, documents and agreements made or exchanged by the parties
prior to the date hereof.
18.3 If either party shall by reason of events or circumstances beyond its
control including without limitation acts of God, political intervention,
fire, flood, legislation or industrial dispute be prevented from or delayed
in performing its obligations hereunder and shall promptly give notice of
such event or circumstance to the other party the parties' obligations
hereunder shall from the date of such notice and without prejudice to any
rights or remedies accrued or arising prior to such date be suspended. If
such event shall continue for a period of more than three (3) consecutive
calendar months either party shall be entitled to terminate this Agreement
in which event the provisions of clause 15 above shall apply. Nothing
contained in this clause 18.3 shall be interpreted or construed as
releasing BIOENVISION from its obligation to pay the royalties in
accordance with the provisions of clause 6 above.
18.4 The parties shall execute such further documents and do all such things as
may be necessary to carry the provisions of this Agreement into full force
and effect.
18.5 This Agreement shall be governed by and construed in all respects in
accordance with the laws of England and Wales.
18.6 This Agreement may be executed in duplicate each of which shall be an
original and shall constitute one and the same instrument.
IN WITNESS whereof the parties hereto have caused this Agreement to be executed
the day and year first before written.
<PAGE>
THE SCHEDULE
Patent Applications
Country Application Number Date of Filing
UK
<PAGE>
SIGNED by /s/ N.B. Bourne
Dr. NB Bourne, Director
duly authorised representative
for and on behalf of
UNIVERSITY COLLEGE CARDIFF
CONSULTANTS LIMITED
SIGNED by /s/ [ILLEGIBLE]
Dr. [ILLEGIBLE]
duly authorised representative
for and on behalf of
BIOENVISION INC.
THIS AGREEMENT is made the_______ day of__________July 1998
BETWEEN;
(1) Bioenvision, Inc. whose registered office is at Trafalgar House, 11
Waterloo Place, London SW1Y 4AU (the 'Company') and
(2) Thomas Nelson, of Castlefield, Old Park Lane, Farnham, Surrey, England
(the 'Director').
Whereas it is agreed that the Company shall employ the Director and the
Director shall serve as a Director of the Company on the following terms
and subject to the following conditions:
1 DEFINITIONS AND INTERPRETATION
1.1 In this agreement unless the context otherwise requires the following
expressions shall have the following meanings:
"Board" The Board of Directors for the time being of the Company
"Group" The Company and its subsidiaries from time to time
"Incapacity" Any illness or other like cause incapacitating the Director
from attending to his duties
"Index Where any amount is stated to be index linked it shall be
linked" adjusted annually on 1 May each year commencing on 1 May 1998
by a percentage equal to the percentage increase in the retail
price index published by the Government to 30 April in the
year in question from the 30 April in the previous year
"Intellectual Includes letters patent, trade marks, service marks, designs,
property" utility models, copyrights, design rights, applications for
registration of any of the foregoing and the right to apply
for them in any part of the world; moral rights, inventions,
confidential information, know-how, and rights of like nature
arising or subsisting anywhere in the world, in relation to
all of the foregoing, whether registered or unregistered
"Subsidiary" A subsidiary (as defined by the Companies Act 1985) for the
time being of the Company
1.2 Any reference to a statutory provision shall be deemed to include a
reference to any statutory modification or re-enactment of it.
1.3 The headings of this agreement are for convenience only and shall not affect
its construction or interpretation.
2 TERM OF EMPLOYMENT
The employment of the Director (subject to termination as provided below) shall
be for an initial period of 2 years from _______ 1998 and shall be terminable by
either
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Agreement between Company and Director
Page 2 of 9
party giving to the other not less than 3 months notice in writing expiring at
any time after the expiry of such period.
3 DUTIES
3.1 The Director shall during his employment under this Agreement:
3.1.1 perform the duties and exercise the powers which the Board may from
time to time properly assign to him in his capacity as Director of
the Company or the Director of any one or more of its subsidiaries
including serving on the Board of such subsidiaries or on any other
executive body or any committee of such a company, and
3.1.2 do all that is reasonably in his power to promote, develop and
extend the business of the Company and of its subsidiaries and at
all times and in all respects to conform to and comply with the
proper and reasonable directions and regulations of the Board.
3.2 During any notice period the Director shall carry out his duties and
exercise his powers with any other directors appointed by the Board to act
with him and the Board may at any time during such period require the
Director to cease performing or exercising any duties or powers.
3.3 The Director shall work in any place within the United Kingdom which the
Board may require for the proper performance and exercise of his duties
and powers and he may be required to travel on the business of the Company
or any of its subsidiaries anywhere in the world.
3.4 If the Company requires the Director to work permanently at a place which
necessitates a move from his present address the Company will reimburse
the Director for all removal expenses directly and reasonably incurred as
a result of the Company's requirement up to the maximum permitted under
the Inland Revenue's Extra Statutory concession from time to time relating
to such reimbursement.
4 OFFICE OF DIRECTOR
During his employment under this Agreement the Director shall not:
4.1 voluntarily resign as Director of the Company.
4.2 voluntarily do or refrain from doing any act whereby the office as a
director of the Company is or becomes liable to be vacated.
5 REMUNER4TION
5.1 Salary
As remuneration, the Director shall be paid a basic salary (which shall be
index linked) at the rate of $ (US dollars) per annum (or such higher rate
as the Company may in its absolute discretion from time to time decide or
award) inclusive of any director's fees payable to him under the Articles
of Association of the Company and its subsidiaries, payable in arrears by
equal monthly instalments on the 25th day of every month.
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Agreement between Company and Director
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5.2 Bonus
The Director shall be entitled to an annual bonus which shall be
calculated as a percentage of the Director's salary on the achievement by
the Company of its Target as agreed. The bonus may be paid as shares in
the Company, at the Director's request.
6 PENSION SCHEME
The Director shall during his employment under this Agreement be entitled to
become a member of a private pension plan scheme and in the event that the
Director shall become such a member of such a scheme the Company will pay a
contribution equal to 5% of the Director's Salary to the Scheme provided that
the Director also pays a contribution equal to 3% of his salary to the scheme.
7 EXPENSES
The Company shall by way of reimbursement pay, or procure to be paid, to the
Director all reasonable travelling hotel and other expenses wholly exclusively
and necessarily incurred by him in or about the performance of his duties under
the Agreement.
8 ILLNESS
8.1 The Director shall continue to be paid during his absence due to his
incapacity (such payment to be inclusive of any statutory sick pay or
social security benefits to which he may be entitled) for a total of up to
8 weeks in any one year.
8.2 After the expiry of the 8 week period referred to in clause 8.1 the
Director shall continue to be paid 50% of his basic salary (inclusive of
any statutory sick pay or social security benefits to which he may be
entitled) up to a further period of 4 weeks in any one year.
9 DEATH IN SERVICE
9.1 On the death of the Director in service the Director's Estate shall be
entitled to receive a lump sum benefit equal to two times his basic salary
at the previous May, excluding any bonus (hereinafter the "Pensionable
Salary").
10 PERSONAL ACCIDENT
10.1 The Director is entitled to become a member of the Company's Personal
Accident Travel policy.
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Agreement between Company and Director
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11 DIRECTORS AND OFFICERS LIABILITY INSURANCE
The Director shall be entitled to become a member of the Company's Directors and
Officers Liability Insurance Scheme.
12 RESTRICTIONS DURING EMPLOYMENT
12.1 During the continuance of his employment under this Agreement the Director
shall, unless prevented by incapacity, devote to the Company (or any other
member of the group by whom he is employed) his time, attention and skill
for (______days) per month and during this time use his reasonable
endeavours to develop the business and interests of the Group and perform
his duties to the best of his ability.
12.2 The Company recognises and acknowledges the Director's rights to be
employed by other companies or to be the director of another company of
which he is a major shareholder, but the Director undertakes to the
Company that during his employment with the Company or any subsidiary of
the Company he shall not, whether as principal, partner, shareholder,
director, manager, employee, contractor, consultant, agent either on his
own account or for any other person or otherwise howsoever:
12.2.1 directly or indirectly engage or be concerned or interested in any
business in competition with any business carried on by the Company
or any of its subsidiaries from time to time, solicit the custom of
any person who is a supplier to the Company or any of its
subsidiaries or to whom the Company or any of its subsidiaries has
made a quotation with a view to such person becoming a customer of
any such businesses or has a continuing course of dealing with the
Company or any of its subsidiaries, or
12.2.2 endeavour to entice away from the Company or any of its
subsidiaries any person who is an employee of the Company or any of
its subsidiaries.
12.3 The Director undertake to the Company that he shall have no material
interest in any contract (other than his own contract of employment)
entered into by the Company or any of its subsidiaries without the prior
consent of the Board.
12.4 The Director undertakes to the Company that he shall not, either during
the continuance of his employment by the Company or any of its
subsidiaries thereafter or for so 1ong as he is a shareholder of the
Company or any of its subsidiaries or thereafter (except with the
authority of the Board or if required by law) use to the detriment or
prejudice of the Company or any of its subsidiaries or, except in the
proper course of his duties, divulge to any person, any trade secret or
confidential information concerning the business or affairs of the Company
or any of its subsidiaries
4
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Agreement between Company and Director
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PROVIDED THAT the restriction shall cease to apply to information or knowledge
which comes into the public domain otherwise than by reason of default of the
Director concerned.
12.5 The Director undertakes to the Company that if his position (if any) as a
director of the Company or any of its subsidiaries is terminated he shall
not for a period of six months from the date of such termination (which
shall be taken to mean the expiry of his notice period) whether as
principal, partner, shareholder, director, manager, employee, contractor,
consultant, agent either on his own account or for any other person or
otherwise howsoever:
12.5.1 within the United Kingdom and in competition with any of the
businesses carried on by the Company or any of its subsidiaries at
the date of termination, solicit the custom of any person who (as
at the date of such termination) is a supplier to the Company or
any of its subsidiaries or to whom (as at the date of termination)
the Company or any of its subsidiaries has made a quotation with a
view to such person becoming a customer of any such businesses or
whom at the date of such termination either is a customer of any
such businesses or has a continuing course of dealing with the
Company or any of its subsidiaries, or
12.5.2 endeavour to entice away from the Company or any of its
subsidiaries any person who at the date of such termination was an
employee of the Company or any of its subsidiaries.
PROVIDED THAT sub-clauses 12.5.1 and 12.5.2 of the Clause shall not apply if the
Director has been wrongfully or unfairly dismissed or wrongfully or unfairly
constructively dismissed within the meaning of the Employment Protection
(Consolidation) Act 1978.
12.5.3 The Director agrees that if such restrictions as are contained in
this Clause as a whole shall be judged by a competent court to go
beyond what is reasonable for the protection of the interests of
the Company, but would be reasonable and enforceable if certain
words were deleted or if the area or time covered were reduced,
the same restrictions shall apply with such words deleted and the
said area or time shall be reduced by whatever extent shall be
necessary to make such restrictions valid and effective and such
restrictions shall apply as so modified.
13 INVENTIONS
13.1 The parties foresee that the Director may make, discover or create
Intellectual Property in the course of his duties under this
Agreement and agree that in this respect the Director has a special
obligation to further the interests of the Company.
13.2 In accordance with the provisions of the Patent Act 1977, the
Registered Designs Act 1949 and the Copyright, Designs and Patents
Act 1988, if at any time in the course of his employment under this
Agreement the Director makes or discovers or participates in the
making or discovery of any
5
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Agreement between Company and Director
Page 6 of 9
Intellectual Property relating to or capable of being used in the business
for the time being carried on by the Company or any of its subsidiaries,
full details of the Intellectual Property shall immediately be
communicated by him to the Company and shall be the absolute property of
the Company. At the request and expense of the Company the Director shall
give and supply all such information, data, drawings and assistance as may
be required to enable the Company to exploit the Intellectual Property to
the best advantage and shall execute all documents and do all things which
may be necessary or desirable for obtaining patents or other protection of
the Intellectual Property in such parts of the world as may be specified
by the Company and for vesting the same in the Company or as it may
direct.
13.3 If the Director makes or discovers or participates in the making or
discovery of any Intellectual Property during his employment under the
Agreement but which is not the property of the Company under Clause 13.2,
the Company shall, subject only to the provisions of the Patent Act 1977,
have the right to acquire for itself or its nominee the Director's rights
in the Intellectual Property within 3 months after disclosure pursuant to
Clause 13.2 on fair and reasonable terms to be agreed or settled by a
single arbitrator.
13.4 The Director waives all his Moral Rights as defined in the Copyright,
Designs and Patents Act 1988 in respect of any acts of third parties done
with the Company's authority in relation to the Intellectual Property (the
property of the Company by virtue of Clause 13.2 hereof).
13.5 Rights and obligations under this Section shall continue in force after
termination of this Agreement in respect of Intellectual Property made or
discovered during the Director's employment under this Agreement and shall
be binding upon his representatives, heirs and assigns.
14 CONFIDENTIALITY
14.1 The Director is aware that in the course of his employment under this
Agreement he will have access to and be entrusted with information in
respect of the business and financing of the Company and its dealings
transactions and affairs and likewise in relation to its subsidiaries, all
of which information is or may be confidential.
14.2 The Director shall not (except in the proper course of his duties) during
or after the period of employment under this Agreement divulge to any
person whomsoever or otherwise make use of (and shall use his best
endeavours to prevent the publication or disclosure of) any trade secret
or any confidential information concerning the business of the Company or
any of its subsidiaries or any of its/their dealings, transactions or
affairs.
14.3 All notes and memoranda of any trade secrets or confidential information
concerning the business of the Company or any of its subsidiaries or any
of its/their suppliers, agents, distributors or customers which shall have
been acquired, received or made by the Director during the course of his
employment shall be the property of the Company and shall be surrendered
by the Director to someone duly authorised in that behalf at the
termination of his
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Agreement between Company and Director
Page 7 of 9
employment or at the request of the Board at any time during the course of
his employment.
15 TERMINATION OF DIRECTORSHIP
The employment of the Director under this Agreement shall terminate
automatically in the event of him ceasing to be a Director of the Company
and in that event the Director shall have no claim for damages against the
Company unless he shall so cease by virtue of a resolution passed by the
members of the Company in general meeting to remove him as director and at
the same time of such removal the Company is not otherwise entitled to
terminate his employment under this Agreement.
16 SUMMARY TERMINATION OF EMPLOYMENT
The employment of the Director may be terminated by the Company without notice
or payment in lieu of notice:
16.1 in the event of any serious (the Director having been warned in respect
thereof) persistent breach or non-observance by the Director of any of the
stipulations contained in the Agreement, or
16.2 if the Director has an interim receiving order made against him, becomes
bankrupt or makes any composition or enters into any deed of arrangement
with his creditors, or
16.3 if the Director is convicted of any arrestable criminal offence (other
than an offence under road-traffic legislation in the United Kingdom or
elsewhere for which a fine or non-custodial penalty is imposed), or
16.4 if the Director is disqualified from holding office in another company in
which he is concerned or interested because of wrongful trading under the
Insolvency Act 1983, or
16.5 if the Director shall become of unsound mind or become a patient under the
Mental Health Act 1983, or
16.6 if the Director is convicted of an offence under the Companies Securities
(Insider Dealing) Act 1985 or under any other present or future statutory
enactment or regulations relating to insider dealing, or
16.7 if the Director resigns as a director of the Company otherwise than at the
request of the Company
17 RESIGNATION FROM DIRECTORSHIPS UPON TERMINATION
Upon the termination by whatever means of this Agreement:
17.117.1 the Director shall at the request of the Company immediately resign
from office as a director of the Company and from such offices held by him
in subsidiaries as may be so requested without claim for compensation and
in the event of his failure so to do the Company is hereby irrevocably
authorised to
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Agreement between Company and Director
Page 8 of 9
appoint some person in his name and on his behalf to sign and deliver such
resignation or resignations to the Company or any of its subsidiaries, and
17.2 the Director shall not without the consent of the Company at any time
thereafter represent himself still to be connected with the Company or any
of its subsidiaries.
18 RECONSTRUCTION OR AMALGAMATION
If the employment of the Director under this Agreement is terminated by
reason of the liquidation of the Company for the purpose of reconstruction
or amalgamation and the Director is offered employment with any concern or
undertaking resulting from the reconstruction or amalgamation on terms and
conditions not less favourable than the terms of this Agreement then the
Director shall have no claim against the Company in respect of the
termination of his employment under this Agreement.
19 NOTICES
19.1 Any notice or other communication under or in connection with this
Agreement shall be in writing and shall be delivered personally or sent by
first class post pre-paid recorded delivery (and air-mail if overseas) or
by telex or by telefax to the party due to receive the notice or
communication at its address set out in this Agreement or such other
address as either party may specify by notice in writing to the other.
19.2 In the absence of evidence of earlier receipt any notice or other
communication shall be deemed to have been duly given:
19.2.1 if delivered personally, when left at the address referred to in
Clause 19.1;
19.2.2 if sent by mail other than air-mail, two days after posting it;
19.2.3 if sent by air-mail, six days after posting it;
19.2.4 if sent by telex, when the proper answer back is received, and;
19.2.5 if sent by telefax, on completion of its transmission.
20 STATUTORY INFORMATION
The schedule to this Agreement set out information required to be given to the
Director by the Employment Protection (Consolidation) Act 1978 as amended.
21 GOVERNING LAW AND JURISDICTION
This Agreement is governed by and shall be construed in accordance with the laws
of England, and the parties hereto submit to the non-exclusive jurisdiction of
the English courts.
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Agreement between Company and Director
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22 ENTIRE AGREEMENT
This Agreement contains the entire understanding between the parties and
supersedes all previous agreements and arrangements (if any) relating to the
employment of the Director by the Company (which shall be deemed to have been
terminated by mutual consent).
23 COUNTERPARTS
This Agreement may be executed by the different parties in separate
counterparts, each of which when executed and delivered shall constitute an
original but both of which shall together constitute one and the same
instrument.
IN WITNESS of which the parties have executed this Agreement as follows:
- ---------------------------------
DIRECTOR ---------------------
Date:
- ---------------------------------
For COMPANY
---------------------
Date:
Exhibit 21.1
STATE OR JURISDICTION
NAME OF SUBSIDIARY OF INCORPORATION PERCENTAGE OWNED
- ------------------ ---------------------- ----------------
Bionco Marketing Inc. Delaware 100%
Eurobiotech Group, Inc. Delaware 100%(1)
Biotechnology & Healthcare Republic of Ireland 100%(1)
Ventures, Ltd.
Bioheal Ltd. Republic of Ireland 100%(2)
Biomed (UK) Ltd. United Kingdom 100%(2)
___________
(1) Indirect ownership; wholly owned by Bionco Marketing Inc.
(2) Indirect ownership; wholly owned by Biotechnology & Healthcare Ventures
Ltd.
