SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-KSB
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________to _________
Commission file number 0-27179
BioSyntech, Inc.
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(Name of Small Business Issuer in its Charter)
Nevada 88-0329399
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
475 Boulevard Armand-Frappier
Laval, Quebec, Canada H7V 4B3
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(Address of principal (Zip Code)
executive office)
(450) 686-2437
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(Issuer's Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.001 per share
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(Title of Class)
Check if the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the issuer 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 in response to
Item 405 of Regulation S-B contained herein, and no disclosure will be
contained, to the best of issuer's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ ]
State issuer's revenues for its most recent fiscal year: $ 0.
Based upon the last sale price of the issuer's Common Stock on March
23, 2000, the aggregate market value of the 19,162,036 outstanding shares of
Common Stock held by non-affiliates of the issuer was $114,972,216.
As of March 23, 2000, 27,272,036 shares of the issuer's Common Stock,
$.001 par value (the "Common Stock") were issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
The information required by Items 9 through 12 of this Annual Report on
Form 10-KSB is incorporated by reference from the issuer's definitive proxy
materials for its 2000 Annual Meeting of Stockholders, which proxy materials are
to be filed with the Securities and Exchange Commission not later than April 29,
2000.
Transitional Small Business Disclosure Format (check one):
[ ] Yes [X] No
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PART I
ITEM 1. DESCRIPTION OF BUSINESS.
The following Business section contains forward-looking statements that
involve risks and uncertainties. The Company's actual results could differ
materially from those anticipated in these forward-looking statements as a
result of certain factors. See "Item 1. Description of Business/Risk Factors--
Forward- Looking Statements." The functional currency of the Company is the
Canadian dollar. All amounts presented in this Form 10-KSB in Canadian currency
are identified as such. Other amounts are expressed in United States dollars. In
cases in which Canadian dollar amounts have been converted into United States
dollar amounts or United States dollar amounts have been converted into Canadian
dollar amounts, the exchange rate utilized was that of March 1, 2000 (CDN
$1.4495 to US $1.00).
General
Biosyntech, Inc. (together with its subsidiary, Bio Syntech Canada
Inc., referred to as "we," "us" or the "Company"), a Nevada corporation, was
incorporated on December 14, 1994. It is a development stage company engaged in
the development of biotherapeutic delivery systems made of proprietary
biomaterials. The Company's systems are intended to enable or enhance the
treatment of diseases or injuries for which therapies exist or are under
development, but which must be transported to the site of action. The Company
has had limited revenues to date. Its future operations are dependent upon
financing necessary to complete research and development projects ("R&D") and
market the Company's products. There can be no assurance that the Company will
be able to complete the development of its products, or if completed, that they
can be successfully marketed. Furthermore, there is no assurance that even if
the products are completed and marketed, the revenues therefrom will be
sufficient to fund the Company's future operations or to fund additional
research, development and marketing.
Technology Overview
The Company focuses on the creation and development of advanced
injectable vehicles for biotherapeutics, cells and genetic material, and intends
to commercialize these products for the biomedical and pharmaceutical markets.
Current development targets include all therapeutics that cannot be administered
orally, either because they are inactivated in the digestive tract, or because
their therapeutic activity is needed only at a specific site in the body. The
Company's research and development efforts, either internally or in
collaboration with corporate partners, are concentrated on several programs
exploiting the multiple benefits of its therapeutic delivery systems, which
include the delivery of, among others, therapeutic proteins and drugs, genetic
material for site-specific gene therapy, and living cells or bioartificial
organs for tissue-engineering applications.
In addition, the Company has established an instrumentation division in
which it has developed the ARTHRO-BST(TM), an arthroscopic device providing
precise and non-destructive diagnosis of articular cartilage quality, and the
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Mach-1(TM) Mechanical Tester, a universal mechanical testing system for
specimens with dimensions between hundreds of microns and a few centimeters.
Therapeutic Delivery Systems
The Company has developed three platform technologies, all aimed at the
generation of solutions to efficiently deliver biologically active therapeutics:
o BST-Gel(TM): An injectable thermosensitive self-forming
solvent and detergent-free hydrogel for biotherapeutic
delivery.
o BST-Spheres: Microspheres for biotherapeutic delivery.
o BST-Cargel(TM): Chondrocytes in an adhesive exogenous matrix
delivered arthroscopically for the treatment of cartilage
defects.
BST-Gel(TM) is a family of polymeric gels that are liquid at low
temperatures and solid at the temperature of the human body. This injectable
delivery system is derived from natural sources and contains no toxic chemicals
such as chemical cross-linkers, organic solvents, or detergents. One of its key
properties is its in situ gelling after its injection in liquid form, thus
forming a reservoir for the sustained release of its therapeutic payload.
BST-Gel(TM) requires no surgery for its implantation, is biodegradable, and has
an adjustable composition. The amounts of BST-Gel(TM) injected vary for
different requirements, which result in controllable residence times ranging
from a few days to several weeks. The Company has developed specialized matrices
and an encapsulation technology that can be used in conjunction with BST-Gel(TM)
to provide a proprietary form of delivery of therapeutic agents and can have the
following applications:
o delivery of small molecules, peptides and recombinant
proteins;
o bioengineering of tissues with cells or growth-factor
therapeutics;
o delivery of bone-repair therapeutics;
o delivery of genetic material (DNA vaccines and gene therapy);
and
o development of vaccines based on the sustained release of
antigens.
The Company has developed and patented BST-Spheres, a proprietary
process to generate polymer-based microspheres used in the delivery of
biotherapeutics. This proprietary process offers several advantages over the
current approach of making microspheres:
o It does not require the use of toxic chemicals such as
organic solvents or detergents;
o It can be adapted to a wide range of biomaterials, whether or
not biodegradable;
o It is injectable for the sustained release of
biotherapeutics;
o It can be used with a broad range of biotherapeutic types,
from small to large compounds; and o It may enhance the
biotherapeutic-loading capacity of the vehicle.
BST-Cargel(TM) is a proprietary generation of bioengineered living
articular cartilage-tissue implants developed from cells encapsulated and grown
within a BST-Gel(TM)-based matrix for arthroscopic delivery. A particular
formulation of the gel maintains the cell viability during the delivery period
while assuring the adhesion of BST-Gel(TM) to the underlying bone and
surrounding cartilage. Preclinical studies have shown that chondrocytes embedded
in BST-Gel(TM) produce a matrix having the characteristics of normal cartilage
tissue.
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Market for the Company's Therapeutic Delivery Systems
Using proprietary technologies, drug delivery companies aim at the
generation of new formulations utilizing drugs developed by others. These
formulations are intended to provide benefits, including control of drug
concentration in the blood, improved safety and efficacy, improved patient
compliance and ease of use and expanded indications. Drug delivery technologies
can provide pharmaceutical companies with a means of developing new products, as
well as expanding existing drug franchises.
Drug delivery technologies can be utilized to address certain needs of
both traditional pharmaceutical compounds and the new class of macromolecules
developed by the biotechnology industry. For example, small synthetic compounds
could benefit from the local high dose delivery of a drug to enhance the
therapeutic effect on a target organ while minimizing systemic side effects.
With the advent of biotechnology, new opportunities in drug delivery have
arisen. Advances in biotechnology have facilitated the development of a new
generation of biopharmaceutical products based on proteins, peptides and nucleic
acids.
Drugs developed by biotechnology companies can rarely be delivered
orally. This results from their instability in harsh conditions in the digestive
tract, their limited ability to be absorbed in an active form in the intestine
and their short half-life in the bloodstream. As a consequence, many of these
drugs can only be administered by the means of frequent injections, which may
limit their clinical applications. These factors have all contributed to the
development of new approaches to deliver these therapeutics to their needed site
of action in the body.
Another promising field of research and development for the Company's
technological systems is cell delivery. The overall goal of tissue engineering
is the promotion of the repair of diseased or injured tissue or organs using
therapeutics to regenerate or heal with a functional normal tissue. This is in
contrast to the approach of replacing an organ with an artificial device. It has
been recognized that artificial organs, although sometimes necessary for
short-term relief, usually have an inadequate working life expectancy. The newer
approach of tissue engineering often involves the transplantation of living
normal cells that have been expanded in the laboratory. The procedure of normal
cell transplantation requires an accurate positioning of the cell at the site
where it is to perform its therapeutic benefit. This is often accomplished by
providing to existing cells an exogenous matrix containing new cells and
facilitating the correct placement of the new cells within the body. A number of
biomaterials have been developed for this purpose. They consist of either
biodegradable or non-biodegradable materials in a number of physical forms such
as films, sponges, beads and hydrogels. These materials must sustain cell
viability and promote normal cellular activity. Biomaterials, which do not
require surgical implantation, are believed to have a greater chance of success
because of the reduced chance of complications during the injection procedure
and the potential for a faster recovery and shorter hospital stay. Injectable
biomaterials as carriers for cell delivery are therefore an active area of
development for this field of application.
Strategy
Through the development of advanced biomaterials, the Company is
focusing on enabling or enhancing the activity of a new generation of
therapeutics that cannot be administered orally. There is a relatively small
number of biomaterials that are currently approved and used for parenteral
biotherapeutic delivery. Until recently, attempts to provide delivery solutions
for the fast-growing
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demands of the medical industry have focused on trying to adapt commonly used
biomaterials to the new requirements of a given therapeutic. The Company has
gathered a multidisciplinary team of scientists working together to provide new
delivery solutions through innovations in advanced biomaterials that are
tailored to a range of unmet medical needs. As part of our business strategy, we
form collaborations to explore opportunities for applications of our delivery
systems to therapeutics developed by third parties. See "Item 6. Plan of
Operation."
Therapeutics Delivery Applications
The Company is currently conducting research to develop applications of
its core technology in the following areas.
Cartilage Injuries and Diseases
The current standard of care for the treatment of cartilage injuries
consists of inducing bleeding into the cartilage defect by compromising the bone
margin interfacing the damaged cartilage tissue. The techniques used include
drilling, microfracture and abrasion. These techniques result in the formation
of a scarred tissue (fibro-cartilage) with poor mechanical stability. As a
result, a patient must undergo repeated treatments and often the affected joint
degenerates into full blown osteoarthritis. Recently, a number of new approaches
have been proposed for the treatment of cartilage injuries that aim at the
regeneration of the cartilage tissue with transplanted cells. The cells used can
either be normal cartilage cells that have been expanded in a laboratory or
cells selected for their ability to become normal cartilage tissue (stem cells).
The procedure of transplanting normal cartilage cells is already marketed in the
United States and Europe. It necessitates a complicated surgical procedure
involving an open arthrotomy. Although the results are encouraging, there is a
recovery process that can take more than a year. If the same cells could be
delivered in a vehicle introduced in an arthroscopic procedure, in which the
cells are pushed through a small catheter, the expected recovery period and
overall healthcare costs could be greatly reduced.
The Company is actively pursuing a cell therapy program for the
treatment of articular cartilage defect, and has already developed several
formulations of its injectable BST-Gel(TM), which were used to grow human
cartilage cells for several weeks in the laboratory. This has allowed the
Company to undertake an in vivo research program in which laboratory-grown
cartilage cells delivered in BST-Gel(TM) were injected subcutaneously in a
surrogate model and formed new cartilage-like tissue. Based on these results, a
preclinical study for cartilage repair of injuries using an animal model is
currently underway. The Company is also developing ways to deliver
anti-inflammatory drugs for potential delivery into articulations. It is
optimizing formulations of its BST-Spheres microspheres technology to obtain
slow and long-lasting vehicles for anti-inflammatory drug delivery to the knee
for prolonged relief of inflammatory symptoms.
Vaccine Development
The ability to deliver large amounts of molecules over a long period of
time using the injectable BST-Gel(TM) is being explored for the sustained
release of antigens for vaccine development. The Company is currently testing
the immune response of animal models to specific antigens delivered by a single
injection of BST-Gel(TM). Based on optimal response, the Company plans to
develop the in vivo testing of BST-Gel(TM) based vaccine in 2000.
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Bone Injuries and Diseases
Two approaches are conducted simultaneously and utilize different
aspects of the proprietary properties of the Company's platform technology.
These developments could provide a series of injectable bone biomaterials that
answer the needs of bone repair: minimally-invasive, low-cost administration,
filling and stabilizing properties, resorption and biological activity.
Injectable osteoconductive/osteoinductive bone grafting biomaterial
BST-Gel(TM) is used for the development of new bone grafting materials
that enable the repair of bone defects (osteoconductive) such as calcium
phosphates. Patients with osteoporosis who are losing bone mass, patients who
have had bone tissues harvested or bone tumors removed, leaving a weakened or
voided structure, or patients with bone defects requiring prostheses could
benefit from a material favoring bone ingrowth and providing a scaffold for bone
remodeling. Several formulations of BST-Gel(TM), combined with mineral additives
similar to natural bone, are scheduled to be tested in animal models in 2000.
In some indications such as fracture repair, spinal fusion or bone
osteonecrosis, the incorporation of bone-inducing agents (osteoinductive) is
required to reach a complete and successful bone repair. The Company is also
investigating the use of BST-Gel(TM) as a carrier for bone-inducing drugs. Two
approaches are planned and consist of the delivery of either a bone-inducing
gene or a bone-inducing protein. This work is currently being tested in animal
models in collaboration with a corporate partner.
Bone cements
The Company is developing new proprietary bone cements based on
BST-Gel(TM) in an effort to provide a strong structural support for severely
weakened bones. The injectability of its carrier is expected to greatly
facilitate the medical treatment and benefit both the patient and the healthcare
provider. BST-Gel(TM)- based bone cements are being optimized, and animal
testing is expected to begin in 2000.
Fracture healing
The Company is investigating the use of BST-Gel(TM) as a carrier for
new bone-inducing drugs currently in pre clinical trials developed by Sulzer
Biologics, one of the Company's collaborators. Two approaches are planned and
consist of the delivery of either a bone-inducing gene or a bone-inducing
protein.
Wound Healing
A specific formulation of BST-Gel(TM) is being optimized for the
enhancement of skin-cell growth. This variation of BST-Gel(TM) could be used for
the delivery of skin cells for the treatment of burn victims or the healing of
skin ulcers. The Company expects to have an optimal BST-Gel(TM) formulation for
skin-cell delivery ready by the end of 2000. In addition, the Company intends to
co- develop the formulation of its technology platform with growth factors
enhancing wound healing. Research and development is ongoing with animal models.
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Material Agreements
Agreement with Polyvalor
In October 1997, the Company entered into a technology assignment
agreement, as amended in September 1999 and as amended and restated March 15,
2000 (the "Assignment Agreement"), with Polyvalor Limited Partnership, a
Canadian limited partnership, as represented by its General Partner, Polyvalor
Inc. ("Polyvalor"). Polyvalor is an entity created by Ecole Polytechnique de
Montreal (the University of Montreal's engineering faculty, "Ecole
Polytechnique") for the purpose of commercializing the technology in which Ecole
Polytechnique has an interest. Through the Assignment Agreement, the Company
acquired from Polyvalor all rights related to certain patents and know-how (the
"Technologies"). The Technologies were based upon the work of Dr. Selmani and
his team of collaborators at Ecole Polytechnique. In consideration of said
assignment, the Company agreed to pay to Polyvalor a royalty of 5% on all gross
sales of all products and services sold by the Company, up to a maximum
cumulative amount of CDN $3,000,000 (US$2,069,679). In connection with the
Assignment Agreement, Bio Syntech Canada Inc. ("Bio Syntech Canada") issued to
Polyvalor 1,072,000 of its Class A Shares and granted Polyvalor the right to
nominate one director to its board of directors. As a result of the Transactions
described below under "History of the Company," the Class A Shares are
exchangeable on a share for share basis for shares of Common Stock and Polyvalor
has the right to nominate one director to the Company's Board of Directors.
As part of our business strategy, we have formed collaborations with
third parties to explore opportunities for applications of our delivery systems
to therapeutics developed by them.
Sulzer Orthopedics Biologics Inc., Wheat Ridge, CO
The Company signed a Non-disclosure and Confidentiality Agreement dated
February 23, 1999 with Sulzer Orthopedics Biologics, Inc. for a feasibility
study of combining bone proteins developed by Sulzer with different formulations
of BST-Gel(TM) for the local induction of bone formation. Sulzer is developing
bone proteins for several applications in orthopedics including spinal fusion
and bone fracture repair. Bone proteins were formulated successfully at
different concentration in BST-Gel(TM). A first phase of pre-clinical testing
revealed cartilage and bone formation. A second phase study is currently under
way to optimize the formulation.
Sulzer Orthopedics Ltd., Switzerland
The Company signed a Material Transfer Agreement on January 4, 2000
with Sulzer Orthopedics Ltd. for the study of BST-Gel(TM) as a carrier for human
articular chondrocytes in the treatment of articular cartilage defects. Cell
compatible BST-Gel(TM) formulations are being studied in vitro using cell loaded
gels.
Reprogenesis, Inc., Cambridge MA
The Company signed a Confidentiality Agreement on May 31, 1999 and a
Material Transfer Agreement on July 27, 1999 with Reprogenesis, Inc. related to
the transfer of human auricular chondrocytes from Reprogenesis, Inc. to the
Company. The initial study aimed at the development of a human auricular
chondrocyte compatible formulation of BST-Gel(TM). This work was performed at
the Company first in vitro where good cell viability was obtained. The project
has now evolved to look at specific cellular events judged important for the
behavior of these cells in vivo. Reprogenesis, Inc. is currently developing
human auricular chondrocytes for a variety of tissue augmentation applications
such as incontinence and tissue reconstruction.
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Ophidian Pharmaceutical Inc., Madison WI
The Company signed a Confidential Disclosure Agreement and a Biological
Materials Transfer Agreement with Orphidian Pharmaceutical Inc. ("Orphidian") in
August 1999 to evaluate the ability of BST-Gel(TM) to deliver an antigen in a
sustained fashion for chicken immunization. Ophidian is developing therapeutics
based on egg yolk antibodies produced after a series of intramuscular or
subcutaneous injections of a specific antigen. The process of chicken
immunization presently requires a labor intensive process involving several
injections in several thousand chickens. The ability to formulate an antigen for
sustained release could greatly simplify the process. As part of Ophidian
inflammatory bowel disease therapeutics development, it has sent rTNF-alpha to
the Company for initial formulation study. A longer and more extensive phase two
project was initiated and is ongoing. Finally a phase three project has been
agreed upon where the antigen will be presented as genetic material for
potentially longer lasting immunization in the animal. This project is scheduled
for initial formulation study in the second quarter of 2000.
Viragen, Incorporated, Plantation FL, and Viragen Ltd, Scotland
The Company signed a Mutual Confidentiality Agreement with Viragen,
Incorporated ("Viragen") on September 2, 1999 for the study of a Viragen
proprietary formulation of Interferon-alpha (Omniferon) formulated in
BST-Gel(TM) for sustained release. Viragen is currently developing
Interferon-alpha as a therapeutic for the modulation of the immune system to
fight viral diseases such as hepatitis. The project, initially carried on at the
Company, aimed at the study of stability and release kinetics of Omniferon
formulated in BST-Gel(TM). After encouraging data, Viragen agreed to pursue the
program on formulation.
Ontogeny, Inc., Cambridge MA
The Company signed a Confidentiality Agreement and a Material Transfer
Agreement with Ontogeny, Inc. on December 3, 1999 for the study of BST-Gel(TM)
as a potential carrier for Hedgehog, a morphogenetic family of proteins. Several
applications are being investigated by Ontogeny, Inc. and include neuro-
degenerative and cartilage diseases. Formulations of BST-Gel(TM) were sent to
Ontogeny, Inc. where an initial preliminary study on inflammation and a
functional study on an animal model are ongoing.
Biomet Manufacturing Corporation, Warsaw IN
The Company signed a Material Transfer Agreement with Biomet
Manufacturing Corporation ("Biomet") on February 8, 2000 regarding the
possibility of using BST-Gel(TM) as a carrier for a growth factor in wound
healing and for plasmid DNA for site specific gene therapy. These projects are
expected to commence in the next quarter. Biomet has global operations in
orthopedics with a number of approved devices for therapeutic and diagnostic
interventions.
Instrumentation
The Company has established an instrumentation division in which it
developed the ARTHRO-BST(TM), an arthroscopic device providing precise and
nondestructive diagnosis of articular cartilage quality, and the Mach-1(TM)
Mechanical Tester, a universal mechanical testing system for specimens with
dimensions between hundreds of microns and a few centimeters. The instruments
are closely related to the work carried on by the Company on cartilage.
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The ARTHRO-BST(TM)
Description
The ARTHRO-BST(TM) is an arthroscopic device providing precise and
nondestructive diagnosis of articular cartilage quality. Degeneration of
cartilage is a prominent component of arthritis, a disease affecting more than
10% of the population. Current assessment of articular cartilage is mostly
subjective with no functional evaluation. Therefore, there is a growing need in
an aging population for non-destructive and unbiased clinical evaluation of the
health and function of this connective tissue.
The ARTHRO-BST(TM) is based on an innovative and robust design that
allows simple application of small indentation compression and collection of
resulting electrical signals (streaming potentials) indicative of cartilage
function.
The ARTHRO-BST(TM) is composed of five distinct units: i) a disposable
sterilized tip consisting of microelectrode arrays (microelectronic circuit) on
a thin aluminum substrate that is adhered to a stainless steel support providing
a connection with the handle, ii) an ergonomically designed handle, iii) an
electrical circuit for the acquisition of electrical signals, including a
preamplification and digitalization circuit inside the handle and an interface
circuit exterior to the handle, iv) software for the acquisition of electrical
signals and for the analysis and interpretation of data to quantify cartilage
quality, and v) a computer system.
A fully functional clinical version of the ARTHRO-BST(TM) will be
presented at the third meeting of the International Cartilage Repair Society
(ICRS) in Sweden at the end of April 2000.
Market
The target market has two sectors : research and clinical. The research
market is composed of pharmaceutical and biotechnology companies in addition to
academic research groups working on therapeutic products for joint disorders or
procedures for cartilage repair. There are several research projects in the
areas of arthritis and joint repair and it is regularly publicly acknowledged
that a major impediment to the understanding of joint disease and the
development of therapeutic products is the lack of an objective diagnostic test
to follow non-destructively the evolution of cartilage quality.
The clinical market is much potentially much larger. It consists of
orthopaedists practicing arthroscopy who also require a means of objectively
evaluating cartilage quality in patient knees. Currently, arthroscopists use
subjective and relatively uncertain methods of visual inspection and manual
probing (by feeling stiffness) to judge articular cartilage quality.
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Competition
To the knowledge of the Company, there are currently no competing
technologies to respond to the demand for functional non-destructive evaluation
of articular cartilage. Most instruments currently under research and
development are based on mechanical measurements of the cartilage stiffness
instead of electrical measurements of streaming potentials.
The ARTHRO-BST(TM) is based on a different technology that overcomes
the major difficulties with the control of the compression amplitude applied to
cartilage and the orientation of the indentor tip relative to cartilage surface.
Significantly inaccurate readings are given if the indentor tip is not
positioned by the orthopaedist perpendicular to the articulating surface. An
error can also be introduced by the force applied by the orthopaedist to
compress the tissue. Instead of measuring the tissue stiffness, the
ARTHRO-BST(TM) measures streaming potential generated during compression of the
tissue. Two dimensional microelectrode arrays placed on non-planar surface
permit a precise determination of (i) the contact distribution of the indentor
with the cartilage, (ii) the compression amplitude and velocity applied to the
cartilage, and (iii) the orientation of the indentor relative to cartilage
surface. Furthermore, the sterilized indentor tip with microelectrode arrays is
disposable to minimize disease transmission.
Regulatory Approval
The Company currently expects that the arthroscopic probe,
ARTHRO-BST(TM), will be classified by the United States Food and Drug
Administration ("FDA") as a Class II medical device because of the low risk
associated with its use. Moreover, since the ARTHRO-BST(TM) can be considered
substantially equivalent to existing devices used for cardiovascular and
neurological diagnoses with electrodes, we expect to submit a Pre-Market
Notification ("510(k)") to the FDA following clinical testing. However, the FDA
may reclassify the device or request additional information if it determines
that the application does not satisfy its regulatory approval criteria. See
"Item 1. Description of Business/Government Regulation". The Company expects to
initiate the filing process once it has completed its Good Manufacturing
Practices ("GMP") compliant facilities. See "Item 2. Property."
Manufacturing
If and when all necessary regulatory approvals are obtained, the
Company plans to manufacture up to 200 units per year of the ARTHRO-BST(TM),
using its current facilities and certain subcontractors for some specialized
components, such as the electronic acquisition card. The production of
disposable sterilized tips with microelectrode arrays can be easily obtained
using commercial microelectronic laboratories. The fabrication uses conventional
methods and all the instrumentation required is available. Once a final design
for the electrode tip is completed, it should be possible to transfer production
to one of several subcontractors located near the Company with approved
industrial and quality standards.
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New infrastructures will be required for large-scale production. Thus a
decision will eventually be made to acquire additional facilities or to
establish a production alliance with a large manufacturer of orthopaedic
instruments.
Distribution and Marketing Strategy
The introduction of the ARTHRO-BST(TM) has begun through scientific
abstracts presented during international conferences (Garon M et al., ORS 1997;
Legare A et al., ORS 1998; Legare A et al., CCTC 1999; Legare A et al., ICRS
2000), trade shows (25TH Society for Biomaterials Meeting, Providence, April
1999; 46TH Orthopeadic Research Society Meeting, 2000; 3rd International
Cartilage Repair Society Meeting, Sweden, April 2000; 6TH World Biomaterials
Congress, Hawaii, May 2000) and full length journal articles (Garon M et al.,
1999; Legare A et al., 2000).
Upon validation of the technology, the Company intends to introduce the
ARTHRO-BST(TM) to market through demonstration of its efficacy for cartilage
evaluation through collaborations with leading clinical orthopaedic researchers
and through the inclusion of the ARTHRO-BST(TM) in clinical trials of arthritis
drugs. In September 2000, the Company plans to have several functioning clinical
devices available for distribution to selected leading researchers in clinical
orthopaedics. Through collaborative efforts with these researchers, the ARTHRO-
BST(TM) will be publicized in presentations and publications of these studies
and a demand should be created in the research programs of other academic and
industrial research groups. The Company plans to support this strategy with data
from clinical trials to demonstrate the objective nature of the method and its
sensitivity and specificity for cartilage quality. The recently formed Canadian
Arthritis Network of Centres of Excellence could assist by providing clinical
trials to pharmaceutical companies with arthritis drugs and allowing the Company
to participate in these trials by providing objective data for drug evaluation.
Our dual strategy involving collaboration with leading opinion makers and by
providing statistically sound scientific studies should provide the basis for
market penetration.
The Company expects to rely on the distribution and sales network of a
major partner to generate sales.
The MACH-1(TM) Mechanical Tester
Description
The Mach-1(TM) Mechanical Tester is a universal mechanical testing
system for specimens with dimensions between hundreds of microns and a few
centimeters. Typical applications for the Mach-1(TM) Mechanical Tester are in
the mechanical characterization of tissues, pharmaceuticals, polymers, gels,
adhesives and food. The instrument allows the characterization of stiffness,
strength, modulus, viscoelasticity, plasticity, hardness, adhesion, swelling and
relaxation and creep using load and displacement control tests. Some of the
features of the Mach-1(TM) Mechanical Tester are:
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o Chambers for compression, tension, indentation, bending and
other test configurations are mounted on a universal
displacement actuator platform. Displacement control is to
within 25 nanometers.
o Load cells are interchangeable to allow maximum loads between
0.15 kg to 10 kg with load precision being 1 part in 20,000 of
the maximum (10mg minimum).
o The test system can be placed in an incubator for testing or
mechanical stimulation in sterile controlled environments,
such as cell culture conditions.
o Sophisticated and flexible software allows execution of stress
relaxation, ramp, dynamic sinusoidal and creep tests in
automated user-defined sequences.
o Sophisticated analysis software.
o Options include visualization of specimen during testing with
cameras, motorized control of specimen position on the
actuator, and electric field detection (electromechanical
events) during testing.
Market
The Company has identified immediate areas of interest that offer a
sufficient market base to sustain the viability of this product:
o Biomaterials and biological tissues characterization and
stimulation in controlled environments. Cells, ligaments,
collagen, skin, bone, synthetics, transgenic animals.
o Polymers and gels stability, strength, adhesion, brittleness,
cohesion, flexibility, friction, peel strength, viscosity,
elasticity. Adhesives, elastomers, hydrogels, glue, latex.
o Pharmaceuticals mechanical properties, degradation and
swelling, simulation of physiological condition
(gastrointestinal, etc.) Pills, drug delivery systems.
o Food, pulp and paper, electronic packaging and others
mechanical properties, texture analysis. Food, paper,
electronic components, wires, fibers optics, films, packaging
material, spring, switches, tapes, cosmetics, foam, sponges.
Market potential of the Mach-1(TM) Mechanical Tester also includes
conventional segments of mechanical testing. Given the specificity of this
equipment, the Company does not expect that a significant market will develop
for this product.
To date, the Company has initiated production of the Mach-1(TM)
Mechanical Tester on a small scale at its premises in Laval Quebec. A small
number of units have been sold, without any marketing efforts on the part of the
Company.
Competition
The price of other benchtop mechanical testers is around $20,000. While
the Company does offer complete systems at this price, it also offers more
enhanced versions that can be sold for up to $50,000. These high-end systems can
offer sub-micron resolution, multi-axis simultaneous motion, or other
specialized
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features. With its different versions, the Company covers a broad range of
applications and also offers custom system configurations for specific needs.
Regulatory Approval
The Mach-1(TM) Mechanical Tester is not a medical device and as such is
not subject to FDA or other regulatory approval.
Manufacturing
Given the small market for this product, the Company expects to be in a
position to fulfill existing demand (up to approximately 10 units per month) out
of its own facilities. The Company could eventually rely on the distribution and
sales network of a major partner to generate sales, in which case adequate
manufacturing capacity would have to be established.
Distribution and Marketing Strategy
The Company intends to use direct sales and direct support as a way to
reach and serve its customers. Talking directly to its customers will enable the
Company to know them and their needs and to establish an expert-to-expert
dialogue that will enhance the trust they put in the Company's products. The
Company could eventually rely on the distribution and sales network of a major
partner to generate additional sales.
Patents and Proprietary Rights
The Company's success will be dependent, in part, on its ability to
obtain patent protection for its product candidates and those of its
collaborators, maintaining trade secret protection and operating without
infringing upon the proprietary rights of others. See "Item 1. Description of
Business/Risk Factors."
Under the Assignment Agreement, Polyvalor is currently entitled to
certain royalty payments on future sales of products. See "Item 1. Description
of Business/Agreement with Polyvalor."
The Company has a proprietary portfolio of patent rights and patent
applications. The Company has filed several United States and international
patent applications directed to composition of matter as well as processes of
preparation and methods of use. The Company has been issued two patents, has
filed 21 applications and eight provisional applications. In the future, the
Company plans to file more United States and foreign patent applications
directed to new or improved products and processes. The Company's United States
patents will expire between 2018 and 2020. The Company intends to defend its
patent position aggressively.
The Company tries to protect its proprietary position by filing United
States, Canada and foreign patent applications related to its proprietary
technology, inventions and improvements that are important to the development of
its business. The patent position of biopharmaceutical companies involves
complex legal and factual questions, enforceability of patents therefore cannot
be
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projected with certainty. Patents, if issued, may be challenged, invalidated or
circumvented, and may fail to provide any protection against competitors. The
Company's pending patent applications, those which the Company may file in the
future, or those which the Company may license from third parties, may not
result in patents being issued. If patents were issued, they may not provide the
Company with proprietary protection or competitive advantages against
competitors with similar technology. Furthermore, others may independently
develop similar technologies or duplicate any technology that the Company has
developed. The laws of certain foreign countries do not protect the Company's
intellectual property rights to the same extent as do the laws of the United
States and Canada.
The Company also relies on trade secrets, know-how and technology,
which the Company tries to protect by entering into confidentiality agreements
with parties that have access to it, such as its corporate partners,
collaborators, employees and consultants. Any of these parties may breach the
agreement and disclose our confidential information or the Company's competitors
might learn of the information in some other way.
Government Regulation
The manufacture and marketing of pharmaceutical products and medical
devices in the United States and in Canada require the approval of the FDA under
the Federal Food, Drug and Cosmetic Act and the Health Protection Branch (the
"HPB") of Canada, respectively. Similar approvals by comparable agencies are
required in most foreign countries. The FDA and HPB have established mandatory
procedures and safety standards that apply to the preclinical testing and
clinical trials, manufacture and marketing of pharmaceutical products and
medical devices. Pharmaceutical manufacturing facilities are also regulated by
state, local and other authorities.
As an initial step in the FDA regulatory approval process for a new
drug product (whose newness may arise from the use of a new excipient),
preclinical studies are typically conducted in animal models to assess a drug's
efficacy and to identify potential safety problems. The results of these studies
must be submitted to the FDA as part of an Investigational New Drug application
("IND"), which must be reviewed by the FDA before proposed clinical testing can
begin. Typically, clinical testing involves a three-phase process. Phase I
trials are conducted with a small number of subjects and are designed to provide
information about both product safety and the expected dose of the drug. Phase
II trials are designed to provide additional information on dosing and
preliminary evidence of product efficacy. Phase III trials are large scale
studies designed to provide statistical evidence of efficacy and safety in
humans. The results of the preclinical testing and clinical trials of a
pharmaceutical product are then submitted to the FDA in the form of a New Drug
Application ("NDA"), or for a biological product in the form of a Product
License Application ("PLA"), for approval to commence commercial sales.
Preparing such applications involves considerable data collection, verification,
analysis and expense. In responding to an NDA or PLA, the FDA may grant
marketing approval, request additional information or deny the application if it
determines that the application does not satisfy its regulatory approval
criteria.
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In the case of a medical device, preclinical-study results must be
submitted to the FDA as part of an Investigational Device Exemption ("IDE"),
which must be reviewed by the FDA before clinical testing can begin. Phase I,
II, and III trials can then be conducted to provide safety, efficacy, and
method- of-use information. The results of the preclinical testing and clinical
trials of a medical device are then submitted to the FDA in the form of a
Pre-Market Notification a 510(k) for most Class I and Class II devices, or a
Pre-Market Approval ("PMA") request for most Class III devices. Medical devices
are classified depending upon the level of regulatory control required to
provide reasonable assurance of their safety and effectiveness. In general,
non-critical devices or new devices substantially equivalent to existing devices
fall into Classes I or II, whereas Class III devices are those for which
insufficient information exists to determine that general controls are
sufficient to provide reasonable assurance of their safety and effectiveness.
The possible future uses of BST-Gel(TM)-related biomaterials are
several and are therefore expected to fall into a number of different
categories. Depending on a proposed application, the FDA might designate a
BST-Gel(TM)-related biomaterial as a new drug, new medical device, or new
excipient.
The Company currently expects that the ARTHRO-BST(TM), will be
classified as a Class II medical device because of the low risk associated with
its use. Moreover, because the ARTHRO-BST(TM) can be considered substantially
equivalent to existing devices used for cardiovascular and neurological
diagnoses with electrodes, we expect to submit a 510(k) to the FDA following
clinical testing. However, the FDA may reclassify the device or request
additional information, if it determines that the application does not satisfy
its regulator approval criteria.
This regulatory process can require many years and the expenditure of
substantial resources. Data obtained from preclinical testing and clinical
trials are subject to varying interpretations, which can delay, limit or prevent
FDA approval. In addition, changes in FDA approval policies or requirements may
occur or new regulations may be promulgated, which may result in delay or
failure to receive FDA approval. Similar delays or failures may be encountered
in Canada and in foreign countries.
Among the conditions for NDA or PLA approval, or 510(k) approval or PMA
in the case of a medical device, is the requirement that the prospective
manufacturer's quality control and manufacturing procedures conform on an
ongoing basis with Good Manufacturing Practices (GMPs). The development of a
GMP- compliant manufacturing establishment for BST-Gel(TM)-related biomaterials
will be a multi-step process consisting of designing and building the necessary
facilities, purchasing and installing the ancillary equipment, and validating
the facilities and equipment. Simultaneously, process development and scale-up
as well as assay development will be done to supply test material and data
critical to the clinical program. Once the facilities are validated, a Type I
Drug Master File (DMF) (describing the manufacturing site, facilities, operating
procedures, and personnel) will be submitted by us to the FDA, as is recommended
for non-U.S. manufacturing establishments. Other types of DMFs, including a Type
II DMF for drug products and Type IV DMF for excipients, may be submitted by us
to the FDA.
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Before approval of an NDA, PLA, 510(k), or PMA request by us, the FDA will
perform a prelicensing inspection of the facility to determine its compliance
with GMPs and other rules and regulations. In complying with GMPs, manufacturers
must continue to expend time, money and effort in the area of production and
quality control to ensure full technical compliance. After the Company's
facilities are licensed, they will be subject to periodic inspections by the
FDA.
The Company is also subject to various laws and regulations relating to
safe working conditions, laboratory and manufacturing practices, experimental
use of animals and use and disposal of hazardous or potentially hazardous
substances, including radioactive compounds and infectious disease agents, used
in connection with our research. Compliance with existing laws and regulations
relating to the protection of the environment is not expected to have a material
effect on the Company's operations.
---------------------------
See "Item 6. Plan of Operation" for information in respect of research
and development expenditures and employees of the Company.
History of the Company
The predecessor of Bio Syntech Canada was founded in 1995 by Dr. Amine
Selmani.
Pursuant to an Amalgamation Agreement and related agreements, as
amended (the "Exchange Agreements"), dated February 15, 2000 by and among the
Company, its then wholly-owned subsidiary 9083-5661 Quebec Inc., a Quebec
corporation ("9083"), Bio Syntech Ltd., a Quebec corporation ("Bio Syntech"),
and the shareholders of Bio Syntech (the "Bio Syntech Shareholders"), on
February 29, 2000, 9083 and Bio Syntech were merged into one company under the
name of Bio Syntech Canada. As a result of the Exchange Agreements, the Company
became the record and beneficial owner of all of the issued and outstanding
shares of Bio Syntech Canada's Common Stock and the Bio Syntech Shareholders
were issued non-voting exchangeable shares of Bio Syntech Canada's Preferred
Stock (the "Class A Shares"). The Class A Shares are exchangeable on a
share-for-share basis for an aggregate of 15,177,036 shares (the "Company
Shares") of Common Stock. The Company Shares issued under the Exchange
Agreements are held in trust under the terms of an Exchange and Voting Agreement
(the "Trust Agreement"), by and among the Company, Pierre Barnard (the
"Trustee"), Bio Syntech and 9083. (The foregoing transactions are referred to
collectively hereinafter as the "Transactions").
Prior to the Transactions, there were 11,625,000 shares of Common Stock
outstanding, taking into account a 3.75 for 1 split effectuated on December 28,
1999 and the repurchase of 10,875,000 shares of Common Stock on February 2,
2000. As part of the Transactions, the Company completed two private placements
(the "Private Placements") yielding gross proceeds of $2,350,000 in which it
issued an aggregate of 470,000 shares of Common Stock and warrants (the
"Warrants") to purchase an aggregate of 470,000 additional shares of Common
Stock at a price of US $7.00 on or before September 30, 2001. After giving
effect of the Transactions,
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there are 27,272,036 shares of Common Stock outstanding. In addition, 1,500,000
shares of Common Stock are reserved for issuance upon exercise of options
granted or to be granted under the Bio Syntech Canada Stock Option Incentive
Plan, 2,500,000 shares of Common Stock are reserved for issuance upon exercise
of options to be granted under the Company's Stock Option Incentive Plan and
470,000 shares of Common Stock are reserved for issuance upon exercise of the
Warrants.
Each beneficial holder of the Class A Shares has voting rights in that
number of Company Shares equal in number to the number of the Class A Shares
held by such holder. Consequently, the Bio Syntech Shareholders hold securities
with voting rights equal to approximately 55.7% of the total voting power of the
outstanding Common Stock. At such time as the holders of Class A Shares may
exchange such shares for the Company Shares, they will have the right to direct
the disposition of such Company Shares.
The sole source of consideration for issuance to the Bio Syntech
Shareholders of the Class A Shares was the exchange of the Bio Syntech shares
held by them. At such time as the Bio Syntech Shareholders may exchange their
Class A Shares for Company Shares, the sole source of consideration for the
transfer to them of the Company Shares will be such Class A Shares.
The Exchange Agreements were structured to provide the Bio Syntech
Shareholders with a capital gain deferral under applicable Canadian tax laws,
rules and regulations. In anticipation of the Transactions, the Company changed
its name to "BioSyntech, Inc." from Dream Team International Inc.
On the effective date of the Transactions, the officers and directors
of the Company resigned and new officers and directors, who are designees of Bio
Syntech Canada, were appointed.
Copies of the Exchange Agreements and related transactions documents
are filed as exhibits to the Company's Current Report on Form 8-K dated March
15, 2000 and are incorporated in their entirety herein. The description of the
Exchange Agreements contained in this report is modified by such reference.
Risk Factors
An investment in our Common Stock involves a great deal of risk. An
investor should carefully consider the following risk factors in addition to the
other information presented in this Annual Report on Form 10-KSB before
purchasing any of our Common Stock.
We expect that we will incur losses for the foreseeable future.
We have had net operating losses since being founded and currently have
an accumulated deficit. These losses consist of research and development costs,
the costs of acquiring rights to research and development performed by others
and general and administrative expenses. We expect to have substantial
additional expenses over the next several years as our research and development
activities
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and the process of seeking regulatory approval of our products, including
clinical trials, accelerate. Because we do not expect to have significant
revenues from the sale of products for several years, if ever, we expect that
such expenses will result in additional losses.
Our future profitability depends, in part, on:
o Obtaining regulatory approval for our products;
o Entering into agreements to develop and commercialize
products;
o Developing the capacity to manufacture and market products or
entering into agreements with others to do so;
o Market acceptance of our products;
o The ability to obtain additional research and development
funding from our collaborative partners; and
o The ability to achieve certain product development
milestones.
We may not achieve any or all of these goals and, thus, cannot give
assurances that we will ever achieve significant revenues or profits. Even if we
do receive regulatory approval of one or more of our products, we may not
achieve significant commercial success.
We need to spend substantial funds to become profitable.
We will need to spend substantial amounts of money before we can be
profitable, if ever. The amount we will spend, and when we will spend it, will
depend, in part, on:
o How our research and development programs, including clinical
trials, progress;
o How much time and expense will be required to receive FDA
approval for our product candidates;
o The cost of building, operating and maintaining manufacturing
facilities;
o How many product candidates we pursue;
o How much time and money we need to prosecute and enforce
patent rights;
o How competing technological and market developments affect
our product candidates;
o The cost of possible acquisitions of drug delivery
technologies, products or companies; and
o The cost of obtaining licenses to use technology owned by
others.
We will need additional financing to continue our operations as
planned.
We will seek funds by issuing equity and debt securities and through
arrangements with our collaborative partners. If we issue equity securities, our
present stockholders will suffer dilution. If we issue debt securities, we will
face the risks associated with debt, including rises in interest rates and
insufficient cash flow to pay the principal of and interest on our debt
securities. We are unable to predict whether additional equity or debt financing
will be available to us, on favorable terms or at all. If sufficient financing
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is not available on a timely basis, we may be forced to cut back on one or more
development programs or to give up rights in products that could later prove to
be of great value.
Our delivery technologies may not produce safe, useful or commercially
viable products.
We do not yet have a therapeutic delivery system product that we can
sell commercially and we cannot be certain that we will have one in the future.
To be profitable, we must develop, manufacture and market our products, either
alone or by collaborating with others. This could take several years and we may
never be successful in bringing our product candidates to the market. A product
may appear promising at an early stage of development or after clinical trials
and never reach the market, or it may reach the market and not sell, for a
variety of reasons. The product may:
o Be shown to be ineffective or to cause harmful side effects
during preclinical testing or clinical trials;
o Fail to receive regulatory approval on a timely basis or at
all;
o Be hard to manufacture on a large scale;
o Be uneconomical;
o Not be pursued by our collaborative partner;
o Not be prescribed by doctors or accepted by patients; or
o Infringe on proprietary rights of another party.
The FDA may not approve our product candidates.
Approval from the FDA is required to manufacture and market
pharmaceutical products in the United States. The process to receive this
approval is extensive and includes preclinical testing and clinical trials to
demonstrate safety and usefulness, and a review of the manufacturing process to
ensure compliance with good manufacturing practices. This process can last many
years and be very costly and still be unsuccessful. FDA approval can be delayed,
limited or not granted at all for many reasons, including:
o A product candidate may not be safe or effective;
o Data from preclinical testing and clinical trials can be
interpreted by FDA officials in different ways than we
interpret it;
o The FDA might not approve our manufacturing processes or
facilities;
o The FDA may change its approval policies or adopt new
regulations; and
o A product candidate may not be approved for all the uses we
requested.
Countries other than the United States, including Canada, have similar
requirements. The process of getting approvals in foreign countries is subject
to delay and failure for the same reasons.
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We rely heavily on collaborators.
Our arrangements with collaborators and licensors are critical to our
success in bringing our product candidates to the market. Our partners own many
of the drug, cell and genetic material products for which we are designing
delivery systems. In some cases, we depend on these parties to conduct
preclinical testing and clinical trials and to provide funding for our
development programs. Some of our collaborators can terminate their agreements
with us for no reason and on limited notice. We cannot be assured that any of
these relationships will continue.
We also expect to rely upon our collaborators to manufacture our
therapeutic delivery products in commercial quantities and for marketing and
sales. Our present plans do not call for us to develop these capabilities on our
own. If we are unable to reach satisfactory agreements with our collaborators or
with third parties, we would incur substantial additional costs and would
experience substantial delay in commercializing most of our products.
We cannot control our collaborators' performance or the resources they
devote to our programs. If a collaborator fails to perform, the research,
development or commercialization program on which it is working will be delayed.
If this happens, we may have to use funds, personnel, laboratories and other
resources that we have not budgeted, and may not have, to continue the program,
or we may have to stop the program entirely.
Disputes may arise between us and a collaborator and may involve the
issue of which of us owns the technology that is developed during a
collaboration. Such a dispute could delay the program or result in expensive
arbitration or litigation, which we might not win. A collaborator may choose to
use its own or other technology to deliver its drug or cell product. Our
collaborators could merge with or be acquired by another company or financial or
operational difficulties that could adversely affect our programs.
We are subject to extensive government regulations and we may not be
able to obtain regulatory approvals.
Our product candidates are subject to broad government regulation. In
the United States, the FDA regulates, among other things, the development,
testing, manufacture, safety, usefulness, record-keeping, labeling, storage,
approval, advertising, promotion, sale and distribution of biopharmaceutical
products. If our products are marketed in other countries, they will also be
subject to extensive regulation by foreign governments. Certain material changes
to an approved product, such as manufacturing changes or additional labeling
claims, are subject to further FDA review and approval. Any required approvals,
once obtained, may be withdrawn. Further, if we fail to comply with FDA and
other regulatory requirements at any stage during the regulatory process, we may
be subject to sanctions, including:
o Delays, warning letters and fines;
o Product recalls or seizures and injunctions on sales;
o Refusal of the FDA to review pending market approval
applications or supplements to approval applications;
o Total or partial suspension of production;
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o Withdrawals of previously approved marketing applications;
and
o Civil penalties and criminal prosecutions.
Rapid technological change could render our therapeutic delivery
systems obsolete or noncompetitive.
Major technological changes can occur quickly in the biotechnological
and pharmaceutical industries. The development by competitors of technologically
improved or different products may make our product candidates obsolete or
noncompetitive.
The competitive nature of our industry could adversely affect market
acceptance of our products.
Our product candidates may not gain market acceptance among physicians,
patients, healthcare payors and the medical community. The degree of market
acceptance of any product candidates that we develop will depend on a number of
factors, including:
o Demonstration of their usefulness and safety;
o Their relative cost;
o Their advantage or disadvantage compared to alternative
methods;
o The marketing and distribution support they receive; and
o Reimbursement policies of government and third-party payors.
Our products may compete with new products currently under development
by others or with products that may cost less than our products. Our actual and
potential competitors include other therapeutic delivery companies,
biotechnology and pharmaceutical companies, academic and research institutions
and government agencies. Many have greater name recognition and greater
financial, research and development and personnel resources than we do. Many
have greater experience in testing and clinical trials and in the regulatory
process.
Proprietary protection for our products is important and uncertain.
The following factors are important to our success:
o Receiving patent protection for our product candidates and
those of our collaborators;
o Maintaining our trade secrets;
o Not infringing on the proprietary rights of others; and
o Preventing others from infringing our proprietary rights.
We will be able to protect our proprietary rights from unauthorized use
by third parties only if these rights are covered by valid and enforceable
patents or are effectively maintained as trade secrets.
We try to protect our proprietary position by filing United States,
Canada, and foreign patent applications related to our proprietary technology,
inventions and improvements that are important to the development of our
business. The patent position of biopharmaceutical companies involves complex
legal and factual
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questions. Therefore, enforceability of patents cannot be projected with
certainty. Patents, if issued, may be challenged, invalidated or circumvented.
Thus, any patents that we own or license from others may not provide any
protection against competitors. Our pending patent applications, those we may
file in the future, or those we may license from third parties, may not result
in patents being issued. If patents do issue, they may not provide us with
proprietary protection or competitive advantages against competitors with
similar technology. Furthermore, others may independently develop similar
technologies or duplicate any technology that we have developed. The laws of
certain foreign countries do not protect our intellectual property rights to the
same extent as do the laws of the United States.
We also rely on trade secrets, know-how and technology, which we try to
protect by entering into confidentiality agreements with parties that have
access to it, such as our corporate partners, collaborators, employees and
consultants. Any of these parties may breach the agreement and disclose our
confidential information or our competitors might learn of the information in
some other way.
Efforts to keep down the cost of healthcare may threaten our
profitability.
Third-party payors, which include governments and private health
insurers, are increasingly challenging the prices charged for medical products
and services. In their attempts to reduce healthcare costs, they have also been
limiting their coverage and reimbursement levels for new drugs. In some cases,
they are refusing to cover the costs of drugs that are not new but are being
used for newly approved purposes. Patients who use a product that we may develop
might not be reimbursed for its cost. If third-party payors do not provide
adequate coverage and reimbursement for our products, if and when they reach the
market, doctors may not prescribe them or patients may not use them.
The federal government and various state governments have considered
proposals to regulate the prices of prescription drugs, as is done in certain
foreign countries. We expect that there will be more proposals like these. If
any of these proposals are enacted, we may receive a lower price for our
products, if and when they reach the market, than we currently estimate. Lack of
adequate reimbursement or the enactment of price controls would have a material
adverse effect on our business and financial condition.
We may not be able to retain our key executives and research and
development personnel.
Our success depends on the services of key employees in executive and
research and development positions, notably our Chief Executive Officer, Dr.
Selmani. The loss of the services of one or more of these employees could have a
material adverse effect on our operations.
Our insurance coverage may be insufficient for product liability
claims.
The testing and marketing of bio-therapeutic and medical products, even
after FDA approval, have an inherent risk of product liability. We anticipate
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that we will obtain product liability insurance coverage in a limited amount at
the time that our operations warrant it. Our profitability will be affected by a
successful product liability claim in excess of our insurance coverage. We
cannot guarantee that product liability insurance will be available in the
future on reasonable terms or at all.
We will pay no dividends on our Common Stock.
We have not paid cash dividends on our Common Stock and do not expect
to do so in the foreseeable future.
Future issuance of shares may dilute present stockholders.
Our Articles of Incorporation authorize the issuance of a maximum of
50,000,000 shares of Common Stock. Our shareholders may experience a substantial
dilution in the percentage of the Common Stock they hold if we issue all or part
of the remaining authorized Common Stock in the future. Moreover, we may value
any Common Stock issued in the future on a basis other than the current market
price of the Common Stock. Dilution could also occur if we issue our Common
Stock for future services or acquisitions or other corporate actions. These
actions could depress the market price of our Common Stock.
Our Common Stock may be regulated as a "penny stock."
Under United States securities regulations, "penny stocks" generally
are equity securities with a price of less than $5.00 per share other than
securities registered on certain national securities exchanges or quoted on the
Nasdaq Stock Market. Our Common Stock may be subject to "penny stock rules" that
impose additional sales practice requirements on broker-dealers who sell such
securities to persons other than established customers and accredited investors
(generally those with assets in excess of $1,000,000 or annual income exceeding
$200,000 or $300,000 together with their spouse). For transactions covered by
these rules, the broker-dealer must make a special suitability determination for
the purchase of such securities and have received the purchaser's written
consent to the transaction prior to the purchase. Additionally, for any
transaction involving a penny stock, unless exempt, the "penny stock rules"
require the delivery, prior to the transaction, of a disclosure schedule
prescribed by the Securities and Exchange Commission relating to the penny stock
market. The broker-dealer also must disclose the commissions payable to both the
broker-dealer and the registered representative and current quotations for the
securities. Finally, monthly statements must be sent disclosing recent price
information on the limited market in penny stocks. Consequently, the "penny
stock rules" may restrict the ability of broker-dealers to sell our Common
Stock. The "penny stock rules" will not apply if the market price of our Common
Stock is $5.00 or greater. There can be no assurance that the price of our
Common Stock will maintain such a level.
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We can give no assurances that our forward looking statements will be
correct.
Certain forward-looking statements, including statements regarding our
expected financial position, business and financing plans are contained in this
Annual Report on Form 10-K. These forward-looking statements reflect our views
with respect to future events and financial performance. The words, "believe,"
"expect," "plans" and "anticipate" and similar expressions identify forward-
looking statements. Although we believe that the expectations reflected in such
forward-looking statements are reasonable, we can give no assurance that such
expectations will prove to have been correct. Important factors that could cause
actual results to differ materially from such expectations are disclosed in this
Annual Report on Form 10-K. All subsequent written and oral forward-looking
statements attributable to us are expressly qualified in their entirety by the
cautionary statements. Readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of their dates. We
undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
ITEM 2. PROPERTY
The Company has its administrative and commercial offices as well as
research and development facilities at 475 Armand-Frappier Boulevard, in Laval
(Quebec), in the Greater Montreal Area. A 90,000-square-foot area of land was
acquired by Bio Syntech Canada on which a 20,000-square-foot building was built
to specifications to house administrative, commercial, scientific, and technical
personnel. This complex is equipped to conduct high-level research and
development and preliminary production of biomaterials.
The Company's facilities are designed to be upgradeable to comply with
Good Laboratory Practices (GLPs), while additional space will be devoted in the
future to sites for operations compliant with Good Manufacturing Practices
(GMPs). The Company intends to initiate in the current fiscal year the necessary
work to comply with GMP at an estimated cost of CDN$3,000,000 (US$2,069,679).
The Company entered into a leaseback transaction in order to finance
the cost of the building. The lease is for a period of 10 years starting
September 1999 at a net rental of CDN$14,000 per month (US$9,658). The Company
has an option to terminate the lease and to acquire the property from the
landlord at a price of CDN$1,200,000 (US$827,872), which option it exercised on
March 29, 2000. Closing of the purchase is anticipated to occur during April
2000.
ITEM 3. LEGAL PROCEEDINGS
There is no action, suit, proceeding, or investigation pending or, to
the Company's knowledge, threatened against the Company, including any
investigation of any governmental authority or body, except as described below:
Robert Conyers (the "Plaintiff"), a former employee of the Company,
commenced an action on November 16, 1999 in Superior Court, Province of Quebec,
District of Montreal, against the Company and its Chief Executive Officer, Dr.
Amine Selmani. Plaintiff alleges that he was wrongfully terminated as an
-23-
<PAGE>
employee and seeks CDN$96,581 in compensation allegedly due, the issuance to him
of 100,000 shares of Common Stock that were to be subject to an option that was
allegedly to have granted to him and CDN$25,000 in punitive damages. The Company
and Dr. Selmani deny Plaintiff's allegations and believe that they have
meritorious defenses to this action.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held its annual meeting of shareholders on December 28,
1999 where holders of 4,350,000 shares of the 6,000,000 shares of Common Stock
then outstanding entitled to vote were present or represented by proxy. The
shareholders represented at the meeting unanimously voted Mr. Douglas Ansell to
serve as a director of the Company and Messrs. R.K. McBride and John Michael
Eckert to continue serving as directors of the Company. (Such directors
subsequently resigned and were replaced by designees of Bio Syntech Canada.)
Additionally, the following resolutions were voted on and unanimously approved
by the shareholders represented at the meeting:
o To allow the Board of Directors to issue up to 25,000,000
shares of Common Stock to use for acquisitions as the Board
of Directors sees fit;
o To authorize the Board of Directors to change the name of the
Company at a time and to a name as the Board of Directors
sees fit; and
o To authorize the Board of Directors to effectuate a 3.75 for
1 forward stock split.
PART II
ITEM 5. MARKET FOR COMMON STOCK AND RELATED STOCKHOLDER MATTERS
The Common Stock has been eligible for trading on the Nasdaq Over The
Counter Bulletin Board since the fourth quarter of 1999. The following table
sets out the high and low bid prices of the Common Stock during the periods
indicated. Such prices reflect inter-dealer prices, without retail mark-up,
mark-down or commissions and may not necessarily represent actual transactions.
High ($) Low ($)
-------- -------
1999 4th quarter $0.0000 $0.0000
2000 1st quarter (to March 27th) $8.5625 $3.7500
-24-
<PAGE>
According to information furnished to the Company by the transfer agent
for the Common Stock, as of March 9, 2000, there were 61 holders of record of
the Common Stock, including depositories.
The Company has never declared or paid any cash dividends on its Common
Stock and presently anticipates that any future earnings will be retained for
the development of its business. The payment of future dividends will be at the
discretion of the Company's Board of Directors and will depend upon, among other
things, future earnings, capital requirements, the financial condition of the
Company, and general business conditions.
On December 28, 1999, the Company effectuated a 3.75-for-1 split of its
Common Stock, as a result of which an aggregate of 8,525,000 shares of Common
Stock was issued. The Company relied upon the provisions of Section 2(3) of the
Securities Act of 1933, as amended (the "Securities Act"), inasmuch as such
issuance did not constitute a sale. No consideration was given for such issuance
and no underwriter was involved in such transaction.
On February 29, 2000, the Company completed private placements of its
securities yielding aggregate proceeds of US$2,350,000, in which it issued an
aggregate of 470,000 shares of Common Stock and Warrants to purchase an
additional 470,000 shares of Common Stock at a price of US$7.00 on or before
September 30, 2001. The Company relied upon the exemption provided in Regulation
S under the Securities Act. No underwriter was involved in the private
placements.
ITEM 6. PLAN OF OPERATION
The Company is a development stage company that has had only minimal
product revenues to date and is thus subject to numerous risks, including risks
associated with product development, growth, manufacturing and competition. See
"Item 1. Description of Business/Risk Factors" generally. The Company's plan of
operations for calendar year 2000 is focused on pursuing the development of its
technologies through direct research and development and collaborative
agreements.
The Company's operations are and will continue to be focused on
research and development activities intended to develop biotherapeutic delivery
systems made of proprietary biomaterials. Its strategy is to form collaborative
partnerships with producers of therapeutics seeking delivery solutions that
address the difficulties encountered with presently available delivery methods.
At such time as an effective delivery solution were developed, the Company would
enter into an agreement with its collaborative partner for the manufacture of
the product in limited quantities by the Company for the purpose of regulatory
approval and concomitant testing. At the conclusion of such phase, the product
would be manufactured in commercial quantities, marketed and sold by the
collaborative partner. The Company anticipates that the agreements with its
collaborative partners would provide for an initial payment to the Company,
progress payments as milestones are achieved during the regulatory
approval/testing phase and percentage royalty payments once the product is in
-25-
<PAGE>
commercial production. Given the early stage of the Company's operations, there
is no assurance that it will in fact enter into any such agreements.
Cash Requirements and Necessity to Raise Additional Funds During the next 12
Months
As of March 15, 2000, the Company had cash on hand and short term
investments of approximately US$4,000,000 (CDN $5,798,000). It anticipates that
it will conduct one or more private placements of its securities under
Regulation S during the remainder of 2000 and expects to raise over US
$5,000,000 (CDN $7,247,500). As described below, it will be required to expend
the sum of CDN $1,200,000 (US $827,872) to acquire the facility in which it
conducts its operations. It also expects to expend between CDN $1,000,000 and
CDN $1,500,000 (US $689,893 and US $1,034,839) during 2000 to equip its
facility. The Company believes that the capital resources presently on hand and
that it reasonably anticipates to available will be sufficient for projected
capital expenditures and operating expenses for the next 12 months. See "Item 1.
Description of Business/Risk Factors" for those risks associated with the need
to finance the activities of the Company.
Research and Development
For the fiscal years ended December 31, 1999 and 1998, Bio Syntech
Canada spent CDN $1,244,337 (US $858,459) and CDN $332,606 (US $229,463) for
R&D, respectively. Research and development activities for calendar year 2000
will be centered on improving the Company's proprietary position in the field of
advanced biomaterials and development activities with its corporate
collaborators and its own in house programs. In order to provide a streamline of
new technologies, it will dedicate a third of its research efforts to the
discovery or enhancement of new biomaterial formulations. This will include a
second generation of BST-Gel(TM) products and the creation of platform
technologies capable of delivery of additional therapeutics. Another third of
R&D efforts will be dedicated to collaborative programs of co-development with
its corporate partners. These efforts will focus on establishing the performance
of its drug delivery technologies with a number of therapeutics. Finally, the
remainder of its R&D effort will focus on internal development programs for
cartilage and bone repair. See "Item 1. Description of Business/Risk Factors"
for those risks associated with the development of the Company's products.
Purchase of Plant and Significant Equipment
See "Item 2. Property" for information in respect of the Company's
exercise of its option to acquire the facility in which it conducts its
operations.
The Company's facilities are equipped to conduct high-level research
and development and preliminary production of biomaterials. The Company's
laboratories in Laval are designed to be upgradeable to comply with Good
Laboratory Practices (GLPs). In addition, space on the second floor of the
Company's premises has already been reserved for the construction of a Good
Manufacturing Practices (GMP)-compliant facility for the production of clinical-
grade biomaterials, BST-Gel(TM) and BST-Gel(TM)-related biomaterials. This will
-26-
<PAGE>
involve designing and building the necessary facilities, purchasing and
installing the ancillary equipment, validating the facilities and equipment, and
applying for FDA approval of the facilities. This undertaking is estimated to
cost about CDN $3,000,000 (US $2,069,679), of which CDN $1,000,000 to CDN
$1,500,000 (US $689,893 to US $1,034,839) is expected to be expended during the
remainder of 2000.
Employee Growth
As of March 15, 2000, the Company had 25 employees, of whom 20 were
engaged on R&D and five were engaged in corporate and administrative activities.
Over the next 12 months, it intends to increase its corporate and administrative
personnel to eight. The existing R&D team will be expanded by 10 to 15 persons.
The total employee count is anticipated to be in the range of 40 employees by
2001. See "Item 1. Business/Risk Factors - Possible Inability to Manage Growth"
and "--Dependence upon Key Personnel; Need to Hire Additional Qualified
Personnel" for risks the Company may face in hiring and retaining additional
personnel.
ITEM 7. FINANCIAL STATEMENTS
See Table of Contents to Financial Statements below.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
Ernst & Young has served as the independent accountant for Bio Syntech
Canada and for its predecessors since such corporations' inception. Under
applicable accounting rules and policies, Bio Syntech Canada is deemed to be the
acquirer of the Company as a result of the Transactions. Since the Transactions,
Ernst & Young has served as the independent accountant of the Company.
Barry L. Friedman of Las Vegas, Nevada, was the independent accountant
of the Company prior to the Transactions.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE
ACT
The information required by this item is incorporated by
reference from the Company's definitive proxy statement to be filed not later
than April 29, 2000 pursuant to Regulation 14A of the General Rules and
Regulations under the Securities Exchange Act of 1934 ("Regulation 14A").
-27-
<PAGE>
ITEM 10. EXECUTIVE COMPENSATION.
The information required by this item is incorporated by
reference from the Company's definitive proxy statement to be filed not later
than April 29, 2000 pursuant to Regulation 14A.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT.
The information required by this item is incorporated by
reference from the Company's definitive proxy statement to be filed not later
than April 29, 2000 pursuant to Regulation 14A.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is incorporated by
reference from the Company's definitive proxy statement to be filed not later
than April 29, 2000 pursuant to Regulation 14A.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit 3.1 Articles of Incorporation - Incorporated by reference
to Exhibit 3.1 to Registration Statement on Form 10SB
filed August 30, 1999.
Exhibit 3.2 By-laws - Incorporated by reference to Exhibit 3.2 to
Registration Statement on Form 10SB filed August 30,
1999.
Exhibit 2.1 Amalgamation Agreement made December 2, 1999, as
amended and restated on February 15, 2000, among
BioSyntech Inc., Bio Syntech Ltd. and 9083-5661 Quebec
Inc. - Incorporated by reference to Exhibit 2.1 to
Current Report on Form 8-K dated March 15, 2000.
Exhibit 4.1 Exchange and Voting Agreement made February 16, 2000
among BioSyntech Inc., 9083-5661 Quebec Inc., Pierre
Barnard and Bio Syntech Ltd. - Incorporated by
reference to Exhibit 4.1 to Current Report on Form 8-K
dated March 15, 2000.
Exhibit 4.2 Support Agreement made February 15, 2000 among
BioSyntech, Inc., 9083-5661 Quebec Inc. and Bio
Syntech Ltd. - Incorporated by reference to Exhibit
4.2 to Current Report on Form 8-K dated March 15,
2000.
*Exhibit 10.1 Amended and Restated Technology Assignment Agreement
among Polyvalor Limited Partnership, Bio Syntech
Canada Inc., and BioSyntech Inc. dated March 15, 2000.
-28-
<PAGE>
*Exhibit 10.2 BioSyntech, Inc. Stock Option Incentive Plan.
*Exhibit 10.3 Bio Syntech Canada Inc. Stock Option Incentive Plan.
*Exhibit 10.4 Non-Disclosure and Confidentiality Agreement between
Bio Syntech Ltd. and Sulzer Orthopedics Biologics Inc.
dated February 23, 1999.
*Exhibit 10.5 Material Transfer Agreement between Bio Syntech Ltd.
and Sulzer Orthopedics Ltd. dated January 4, 2000.
*Exhibit 10.6 Confidentiality Agreement between Bio Syntech Ltd. and
Reprogenesis, Inc. dated May 31, 1999.
*Exhibit 10.7 Material Transfer Agreement between Bio Syntech Ltd.
and Reprogenesis, Inc. dated July 27, 1999.
*Exhibit 10.8 Confidential Disclosure Agreement between Bio Syntech
Ltd. and Ophidian Pharmaceuticals, Inc. dated August
16, 1999.
*Exhibit 10.9 Biological Material Transfer Agreement between Bio
Syntech Ltd. and Ophidian Pharmaceuticals, Inc. dated
August 16, 1999.
*Exhibit 10.10 Mutual Confidentiality and Non-Disclosure Agreement
between Bio Syntech Ltd. and Viragen Incorporated
dated September 2, 1999.
*Exhibit 10.11 Confidential Disclosure Agreement between Bio Syntech
Ltd. and Ontogeny, Inc. dated October 26, 1999.
*Exhibit 10.12 Material Transfer Agreement between Bio Syntech Ltd.
and Ontogeny, Inc. dated December 3, 1999.
*Exhibit 10.13 Material Transfer Agreement between Bio Syntech Ltd.
and Biomet Manufacturing Corporation dated February 8,
2000.
*Exhibit 21 List of Subsidiaries of Company.
*Exhibit 23 Cosnent of Barry L. Friedman, CPA
*Exhibit 27 Financial Data Schedule.
- ----------------------------------
* Filed herewith.
(b) Reports on Form 8-K:
The Company did not file any Current Report on Form 8-K during the
quarter ended December 31, 1999. The Company filed a Current Report on Form 8-K
dated March 15, 2000, reporting under Item 1. Change in Control of Registrant
and Item 2. Acquisition or Disposition of Assets - the Transactions.
-29-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
BIOSYNTECH, INC.
March 29, 2000 By: /s/ Amine Selmani
------------------------------
Amine Selmani
President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
/s/ Amine Selmani President; March 28, 2000
- ---------------------------- Chief Executive Officer; ---------------
Amine Selmani Chief Financial Officer;
Chief Accounting Officer
/s/ Denis N. Beaudry Director March 28, 2000
- --------------------------- ---------------
Denis N. Beaudry
/s/ Pierre Alary Director March 28, 2000
- --------------------------- ---------------
Pierre Alary
/s/ Jean-Yves Bourgeois Director March 28, 2000
- --------------------------- ---------------
Jean-Yves Bourgeois
/s/ Pierre Ranger Director March 28, 2000
- --------------------------- ----------------
Pierre Ranger
-31-
<PAGE>
BIOSYNTECH, INC.
(Formerly Dream Team International, Inc.) (A Development Stage Company)
FINANCIAL STATEMENTS
December 31, 1999
December 31, 1998
December 31, 1997
<PAGE>
TABLE OF CONTENTS
-----------------
PAGE #
------
INDEPENDENT AUDITORS REPORT F-1
----------------------------------------------------------------
ASSETS F-2
----------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY F-3
----------------------------------------------------------------
STATEMENT OF OPERATIONS F-4
----------------------------------------------------------------
STATEMENT OF STOCKHOLDERS' EQUITY F-5
----------------------------------------------------------------
STATEMENT OF CASH FLOWS F-6
----------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS F-7 - F-12
----------------------------------------------------------------
<PAGE>
INDEPENDENT AUDITORS' REPORT
----------------------------
Board of Directors February 28, 2000
BIOSYNTECH, INC.
Las Vegas, Nevada
I have audited the accompanying Balance Sheets of BIOSYNTECH, INC.,
(Formerly Dream Team International, Inc.), (A Development Stage Company), as of
December 31, 1999, December 31, 1998, and December 31, 1997, and the related
statements of operations, stockholders' equity and cash flows for the three
years ended December 31, 1999, December 31, 1998, and December 31, 1997. These
financial statements are the responsibility of the Company's management. My
responsibility is to express an opinion on these financial statements based on
my audit.
I conducted my audit in accordance with generally accepted auditing
standards. 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.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of BIOSYNTECH, INC.,
(Formerly Dream Team International, Inc.), (A Development Stage Company), as of
December 31, 1999, December 31, 1998, and December 31, 1997, and the results of
its operations and cash flows for the three years ended December 31, 1999,
December 31, 1998, and December 31, 1997, in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming
the Company will continue as a going concern. As discussed in Note #5 to the
financial statements, the Company has suffered recurring losses from operations
and has no established source of revenue. This raises substantial doubt about
its ability to continue as a going concern. Management's plan in regard to these
matters is described in Note #5. These financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
Barry L. Friedman
Certified Public Accountant
1582 Tulita Drive
Las Vegas, NV 89123
(702) 361-8414
<PAGE>
BIOSYNTECH, INC.
(Formerly Dream Team International, Inc.)
(A Development Stage Company)
BALANCE SHEET
-------------
ASSETS
------
December December December
31, 1999 31, 1998 31, 1997
---------- ---------- -----------
CURRENT ASSETS $ 0 $ 0 $ 0
---------- ---------- -----------
TOTAL CURRENT ASSETS $ 0 $ 0 $ 0
---------- ---------- -----------
OTHER ASSETS $ 0 $ 0 $ 0
---------- ---------- -----------
TOTAL OTHER ASSETS $ 0 $ 0 $ 0
---------- ---------- -----------
TOTAL ASSETS $ 0 $ 0 $ 0
---------- ---------- -----------
The accompanying notes are an integral part of the financial statements.
F-2
<PAGE>
BIOSYNTECH, INC.
(Formerly Dream Team International, Inc.)
(A Development Stage Company)
BALANCE SHEET
-------------
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
December December December
31, 1999 31, 1998 31, 1997
-------- -------- --------
CURRENT LIABILITIES
Advances Payable(Note #5) $ 4,235 $ 1,135 $ 235
--------- ---------- -----------
TOTAL CURRENT LIABILITIES $ 4,235 $ 1,135 $ 235
--------- ---------- -----------
STOCKHOLDERS' EQUITY (Note #4)
Common stock
Par value $0.001
Authorized 50,000,000 shares
Issued and outstanding at
December 31, 1997 -
6,000,000 shares $ 6,000
December 31, 1998 -
6,000,000 shares $ 6,000
December 31, 1999 -
22,500,00 shares $ 22,500
Additional Paid-In Capital -16,500 0 0
Deficit accumulated during
The development stage -10,235 -7,135 -6,235
TOTAL STOCKHOLDERS' EQUITY $ -4,235 $ -1,135 $ -235
--------- ---------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 0 $ 0 $ 0
--------- ---------- -----------
The accompanying notes are an integral part of the financial statements.
F-3
<PAGE>
BIOSYNTECH, INC.
(Formerly Dream Team International, Inc.)
(A Development Stage Company)
STATEMENT OF OPERATIONS
-----------------------
<TABLE>
<CAPTION>
Year Year Year Dec.15,1994
Ended Ended Ended (Inception)
Dec. 31, Dec. 31, Dec. 31, to Dec. 31,
1999 1998 1997 1999
<S> <C> <C> <C> <C>
INCOME
Revenue $ 0 $ 0 $ 0 $ 0
---------- ---------- ---------- ----------
EXPENSES
General, Selling and
Administrative $ 3,100 $ 900 $ 0 $ 10,235
---------- ---------- ---------- ----------
TOTAL EXPENSES $ 3,100 $ 900 $ 0 $ 10,235
---------- ---------- ---------- ----------
NET PROFIT/LOSS (-) $ -3,100 $ -900 $ -0 $ -10,235
---------- ---------- ---------- ----------
Net Profit/Loss(-)
per weighted share
(Note 1) $ -.0001 $ -.0001 $ NIL $ -.0005
---------- ---------- ---------- ----------
Weighted average
Number of common
shares outstanding 22,500,000 22,500,000 22,500,000 22,500,000
---------- ---------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-4
<PAGE>
BIOSYNTECH, INC.
(Formerly Dream Team International, Inc.)
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
--------------------------------------------
<TABLE>
<CAPTION>
Additional Accumu-
Common Stock paid-in lated
Shares Amount Capital Deficit
<S> <C> <C> <C> <C>
Balance,
December 31, 1996 6,000,000 $ 6,000 $ 0 $ -6,235
Net loss year ended
December 31, 1997 0
---------- ------- ----------- --------------
Balance,
December 31, 1997 6,000,000 $ 6,000 $ 0 $ -6,235
Net loss year ended
December 31, 1998 -900
---------- ------- ----------- --------------
Balance,
December 31, 1998 6,000,000 $ 6,000 $ 0 $ -7,135
December 28, 1999
Forward Stock Split
3.75:1 16,500,000 16,500 -16,500 0
Net loss year ended
December 31, 1999 -3,100
---------- ------- ----------- --------------
Balance,
December 31, 1999 22,500,000 $22,500 $ -16,500 $ -10,235
---------- ------- ----------- --------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-5
<PAGE>
BIOSYNTECH, INC.
(Formerly Dream Team International, Inc.)
(A Development Stage Company)
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Year Year Year Dec.15,1994
Ended Ended Ended (Inception)
Dec. 31, Dec. 31, Dec. 31, to Dec. 31,
1999 1998 1997 1999
<S> <C> <C> <C> <C>
Cash Flows from
Operating Activities
Net Loss $ -3,100 $ -900 $ 0 $ -10,235
Adjustment to
Reconcile net loss
To net cash provided
by operating
Activities 0 0 0 0
Changes in assets and
Liabilities
Increase in current
Liabilities
Advances Payable +3,100 +900 +4,235
---------- ------------- -------------- ---------------
Net cash used in
Operating activities $ 0 $ 0 $ 0 $ -6,000
Cash Flows from
Investing Activities 0 0 0 0
Cash Flows from
Financing Activities
Issuance of Common
Stock for Cash 0 0 0 +6,000
---------- ------------- -------------- ---------------
Net Increase (decrease) $ 0 $ 0 $ 0 $ 0
Cash,
Beginning of period 0 0 0 0
---------- ------------- -------------- ---------------
Cash, End of period $ 0 $ 0 $ 0 $ 0
---------- ------------- -------------- ---------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-6
<PAGE>
BIOSYNTECH, INC.
(Formerly Dream Team International, Inc.)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
-----------------------------
December 31, 1999, December 31, 1998, and December 31, 1997
NOTE 1 - HISTORY AND ORGANIZATION OF THE COMPANY
The Company was organized December 15, 1994, under the laws of the
State of Nevada as BIOSYNTECH, INC. The Company currently has no
operations and in accordance with SFAS #7, is considered a
development company. On December 28, 1999, the company changed its
name from Dream Team International, Inc., to BIOSYNTECH, INC.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Method
-----------------
The Company records income and expenses on the accrual
method.
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
disclosure of contingent assets and liabilities at the
date of the financial statements and the reported
amounts of revenue and expenses during the reporting
period. Actual results could differ from those
estimates.
Cash and equivalents
--------------------
The Company maintains a cash balance in a
non-interest-bearing bank that currently does not exceed
federally insured limits. For the purpose of the
statements of cash flows, all highly liquid investments
with the maturity of three months or less are considered
to be cash equivalents. There are no cash equivalents as
of December 31, 1999.
F-7
<PAGE>
BIOSYNTECH, INC.
(Formerly Dream Team International, Inc.)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
-----------------------------------------
December 31, 1999, December 31, 1998, and December 31, 1997
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Income Taxes
------------
Income taxes are provided for using the liability method
of accounting in accordance with Statement of Financial
Accounting Standards No. 109 (SFAS #109) "Accounting for
Income Taxes". A deferred tax asset or liability is
recorded for all temporary difference between financial
and tax reporting. Deferred tax expense (benefit)
results from the net change during the year of deferred
tax assets and liabilities.
Loss Per Share
--------------
Net loss per share is provided in accordance with
Statement of Financial Accounting Standards No. 128
(SFAS #128) "Earnings Per Share". Basic loss per share
is computed by dividing losses available to common
stockholders by the weighted average number of common
shares outstanding during the period. Diluted loss per
share reflects per share amounts that would have
resulted if dilative common stock equivalents had been
converted to common stock. As of December 31, 1999, the
Company had no dilative common stock equivalents such as
stock options.
Year End
--------
The Company has selected December 31st as its year-end.
F-8
<PAGE>
BIOSYNTECH, INC.
(Formerly Dream Team International, Inc.)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31, 1999, December 31, 1998, and December 31, 1997
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Year 2000 Disclosure
--------------------
The year 2000 issue is the result of computer programs
being written using two digits rather than four to
define the applicable year. Computer programs that have
time sensitive software may recognize a date using "00"
as the year 1900 rather than the year 2000. This could
result in a system failure or miscalculations causing
disruption of normal business activities. Since the
Company currently has no operating business and does not
use any computers, and since it has no customers,
suppliers or other constituents, there are no material
Year 2000 concerns.
NOTE 3 - INCOME TAXES
There is no provision for income taxes for the period ended December
31, 1999, due to the net loss and no state income tax in Nevada, the
state of the Company's domicile and operations. The Company's total
deferred tax asset as of December 31, 1999 is as follows:
Net operation loss carry forward $ 10,235
Valuation allowance $ 10,235
Net deferred tax asset $ 0
The federal net operation loss carry forward will expire in various
amounts from 2014 to 2019.
This carry forward may be limited upon the consummation of a
business combination under IRC Section 381.
F-9
<PAGE>
BIOSYNTECH, INC.
(Formerly Dream Team International, Inc.)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
-----------------------------------------
December 31, 1999, December 31, 1998, and December 31, 1997
NOTE 4 - STOCKHOLDERS' EQUITY
Common Stock
------------
The authorized common stock of the corporation consists of
50,000,000 shares with a par value of $0.001 per share.
Preferred Stock
---------------
The corporation has no preferred stock.
On December 15, 1994, the Company issued 6,000,000 shares of its
$0.001 par value common stock in consideration of $6,000 in cash.
On December 28, 1999, the company had a forward stock split of
3.75:1, thus increasing the number of shares outstanding from
6,000,000 to 22,500,000.
NOTE 5 - GOING CONCERN
The Company's financial statements are prepared using generally
accepted accounting principles applicable to a going concern which
contemplates the realization of assets and liquidation of
liabilities in the normal course of business. However, the Company
does not have significant cash or other material assets, nor does it
have an established source of revenues sufficient to cover its
operating costs and to allow it to continue as a going concern. It
is the intent of the Company to seek a merger with an existing,
operating company. Until that time, the stockholders/officers and or
directors have committed to advancing the operating costs of the
Company interest free.
F-10
<PAGE>
BIOSYNTECH, INC.
(Formerly Dream Team International, Inc.)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (Continued)
-----------------------------------------
December 31, 1999, December 31, 1998, and December 31, 1997
NOTE 6 - RELATED PARTY TRANSACTIONS
The Company neither owns nor leases any real or personal property.
An officer of the corporation provides office services without
charge. Such costs are immaterial to the financial statements and
accordingly, have not been reflected therein. The officers and
directors of the Company are involved in other business activities
and may, in the future, become involved in other business
opportunities. If a specific business opportunity becomes available,
such persons may face a conflict in selecting between the Company
and their other business interests. The Company has not formulated a
policy for the resolution of such conflicts.
NOTE 7 - SUBSEQUENT EVENTS
Pursuant to an Amalgamation Agreement and related agreements, as
amended (the "Exchange Agreements"), dated February 15, 2000 by and
among the Company, its wholly-owned subsidiary 9083-5661 Quebec Inc., a
Quebec corporation (the "Purchaser"), Bio Syntech Ltd., a Quebec
corporation ("Bio Syntech"), and the shareholders of Bio Syntech (the
"Bio Syntech Shareholders"), on February 29, 2000, the Purchaser and
Bio Syntech were merged into one company under the name of Bio Syntech
Canada Inc. ("Bio Syntech Canada"). As a result of the Exchange
Agreements, the Company became the record and beneficial owner of all
of the issued and outstanding shares of Bio Syntech Canada's Common
Stock and the Bio Syntech Shareholders were issued non-voting
exchangeable shares of Bio Syntech Canada's Preferred Stock (the "Class
A Shares"). The Class A Shares are exchangeable on a share-for-share
basis, for an aggregate of 15,177,036 shares (the "Company Shares") of
Common Stock, $.001 par value, of the Company. The Company Shares
issued under the Exchange Agreements are held in trust under the terms
of an Exchange and Voting Agreement (the "Trust Agreement"), by and
among the Company, Pierre Barnard (the "Trustee"), Bio Syntech and the
Purchaser. (The foregoing transactions are referred to collectively
hereinafter as the "Transactions").
Prior to the Transactions, there were 11,625,000 shares of Common Stock
outstanding, taking into account a 3.75 for 1 split effectuated on
December 28, 1999 and the repurchase of 10,875,000 shares of Common
Stock on February 2, 2000. As part of the Transactions, the Company
completed two private placements (the "Private Placements") yielding
gross proceeds of $2,350,000 in which it issued an aggregate of 470,000
shares of Common Stock and warrants (the "Warrants") to purchase an
aggregate of 470,000 additional shares of Common Stock at a price of
$7.00 on or before September 30, 2001. After giving effect of the
Transactions, there are 27,272,036 shares of Common Stock outstanding.
In addition, 1,500,000 shares of Common Stock are reserved for issuance
upon exercise of options granted or to be granted under the Bio Syntech
Canada Employee Stock Option Plan and 470,000 shares of Common Stock
are reserved for issuance upon exercise of the Warrants.
Each beneficial holder of the Class A Shares has voting rights in that
number of Company Shares equal in number to the number
F-11
<PAGE>
of the Class A Shares held by such holder. Consequently, the Bio
Syntech Shareholders hold securities with voting rights equal to
approximately 55.7% of the total voting power of the outstanding Common
Stock. At such time as the holders of Class A Shares may exchange such
shares for the Company Shares, they will have the right to direct the
disposition of such Company Shares.
The sole source of consideration for issuance to the Bio Syntech
Shareholders of the Class A Shares was the exchange of the Bio Syntech
shares held by them. At such time as the Bio Syntech Shareholders may
exchange their Class A Shares for Company Shares, the sole source of
consideration for the transfer to them of the Company Shares will be
such Class A Shares.
F-12
Page 1
AMENDED AND RESTATED TECHNOLOGY ASSIGNMENT AGREEMENT
EXECUTED THIS 15th DAY OF MARCH 2000
BETWEEN: POLYVALOR LIMITED PARTNERSHIP, having its
head office at 3744 Jean Brillant Street,
Suite 6332, in the City of Montreal,
Province of Quebec, H3T 1P1, herein acting
and represented by POLYVALOR INC., its
general partner, itself represented and
acting by Denis N. Beaudry, duly
authorized as he so declares;
(hereiafter "Polyvalor")
AND: BIO SYNTECH Canada INC., a duly
incorporated legal person having its head
office at 475, Armand-Frappier Boulevard,
in the City of Laval, Province of Quebec,
H7V 4B3, herein acting and represented by
Amine Selmani, duly authorized as he so
declares;
(hereinafter "Canada")
AND: BIOSYNTECH INC. (formerly Dream Team
International , a corporation subsisting
under the laws of the State of Nevada.
herein acting and represented by Amine
Selmani, duly authorized, as he so
declares;
(hereinafter "BioSyntech Inc.")
================================================================================
WHEREAS on October 3rd 1997, "La Corporation de l'Ecole Polytechnique de
Montreal" (hereinafter "Polytechnique") and Amine Selmani (hereinafter
"Selmani"), acting for and on behalf of a corporation to be constituted, which
corporation ultimately became Bio Syntech Ltd. (hereinafter "Bio Syntech"),
executed a Technology Assignment Agreement (hereinafter the "Assignment
Agreement") in virtue of which Polytechnique sold, assigned and transferred all
rights related to the Technologies, as defined therein, to Bio Syntech, subject
to those terms and conditions more fully detailed therein;
WHEREAS simultaneously with and as further consideration for the execution of
said Assignment Agreement, Bio Syntech agreed to issue to Polytechnique a
predetermined number of shares of its share capital, the whole as more
specifically provided in the Unanimous Shareholders' Agreement
<PAGE>
Page 2
of Bio Syntech executed between Polytechnique and Selmani on October 3rd 1997
(hereinafter the "Shareholders' Agreement");
WHEREAS on September 30th 1999, Polyvalor, in its capacity as assignee of all of
Polytechnique's rights and obligations under the Assignment Agreement and the
Shareholders Agreement, and Bio Syntech executed a new agreement to modify the
terms of the Assignment Agreement and the Shareholders Agreement;
WHEREAS on February 29th 2000, Canada was created as a result of the
amalgamation of Bio Syntech and 9083-5661 Quebec Inc.;
WHEREAS as a result of said amalgamation, Canada became vested with all rights,
title and interest of Bio Syntech, including those rights, title and interest in
and to the Technology existing in virtue of the Assignment Agreement;
WHEREAS BioSyntech Inc. owns all of the issued and outstanding common shares of
Canada;
WHEREAS in light of the foregoing, and for purposes of clarity, it is necessary
to amend and restate the parties' respective obligations and rights existing
under the Assignment Agreement and the Shareholders Agreement;
NOW THEREFORE, IN CONSIDERATION OF THE MUTUAL COVENANTS CONTAINED HEREIN AND
OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF WHICH ARE
HEREBY ACKNOWLEDGED, THE PARTIES HAVE AGREED AS FOLLOWS:
1. DEFINITIONS
1.1. "Technical Data" includes all technical and scientific data,
including know-how, concepts, ideas, inventions, discoveries,
results, graphics, plans, drawings, reports, experiments,
practices, methods, recipes, formulations, molecules,
algorithms, software (including source codes and
documentation), data banks, material, equipment, models,
prototypes or any part thereof created, produced or realised
in the course of the research executed by any one of the
researchers having contributed to the development of the
Technology, in whatever form said data may take and whether
same is or is not patentable or copyrightable;
1.2. "Intellectual Property" includes all patentable inventions,
patent applications, copyrights and industrial designs
pertaining to the Technology, as well as the right to request
the protection with respect thereto, but excluding any part
thereof which is of the public domain or which belongs to
third parties.
1.3. "Technology" means the technologies detailed in Schedule "A"
hereof.
<PAGE>
Page 3
2. ASSIGNMENT OF THE TECHNOLOGY
2.1. Subject to the terms and conditions hereof, Polyvalor by these
presents does hereby acknowledge that Polytechnique has sold
assigned and transferred unto Canada its entire rights, title
and interests in and to theTechnology, and in and to the
related Intellectual Property and Technical Data (hereinafter
the "Assignment").
2.2. Without limiting the generality of the foregoing, for the
duration of the Term, as defined hereinbelow, and for nominal
consideration, Polyvalor agrees and undertakes to assign to
Canada any and all of its rights, title and interests in and
to the Intellectual Property which may be developed jointly in
application of the present agreement and any other agreement
to be executed by Canada with Polytechnique. Canada shall
however have to grant equitable compensation to any researcher
who may hold rights to the Intellectual Property so developed.
3. CONSIDERATION
3.1. In consideration of the Assignment, Canada agrees and
undertakes to pay to Polyvalor a five per cent (5 %) royalty
calculated on the gross sales of Canada, including all gross
sales of all products and services, sold or offered, by or on
behalf of Canada (hereinafter the "Royalties"), said Royalties
to be payable up to a cumulative maximum of three million
canadian dollars (CDN$3,000,000). Subject to section 3.2
hereof, any sums so payable shall be paid to Polyvalor
quarterly and shall be adjusted annually in light of the
latest financial statements of Canada.
3.2. Polyvalor agrees and acknowledges that Canada shall have the
right to prepay the total cumultative maximum amount of the
Royalties to Polyvalor at any time whatsoever, without
penalty, subject however to the concurrent payment of (i) any
outstanding interests accrued on any part of said amount in
accordance with section 7.4 hereof and (ii) any of Polyvalor's
outstanding expenses provided for under section 7.3 hereof, if
any.
3.3. Polyvalor acknowledges and agrees that upon receipt of the
total cumulative maximum amount of the Royalties and all
related interests and expenses, if any, from Canada in the
manner provided hereinabove (herein, the "Term"), it shall be
immediately and irrevocably foreclosed from exercizing any of
its rights hereunder regarding the Technology, the
Intellectual Property and the Technical Data.
3.4. As further consideration for the Assignment, Bio Syntech
declares that it has issued a total of one million seventy-two
thousand (1,072,000) Class "A" shares of its capital stock to
<PAGE>
Page 4
Polyvalor, which share issuance was effected on September 30th
1999;
3.5. BioSyntech Inc. and Canada further acknowledge that pursuant
to the merger of Bio Syntech with 9083-5661 Quebec Inc. on
February 29th 2000, Polyvalor's aforesaid shares were
converted into 1,072,000 exchangeable, non-voting shares of
Canada's capital stock, which shares may be exchanged, on a
one for one basis, into 1,072,000 shares of BioSyntech Inc.
4. REPRESENTATIONS AND WARRANTIES OF POLYVALOR
4.1. Polyvalor hereby represents and warrants to Canada that:
4.1.1. it is a limited partnership duly organized, validly
existing and in good standing under the laws of the
Province of Quebec and the laws of Canada applicable
thereto;
4.1.2. on the date of the Assignment Agreement,
Polytechnique was the sole owner of all rights,
title, property, benefit and interest in and to the
Technology and that Polyvalor has every legal right
to enter into this agreement and to perform the terms
and conditions hereof or its parts to be performed,
free of any encumbrance whatsoever;
4.1.3. it has assigned to Bio Syntech good and valid title
to the Technology, free and clear of any liens,
hypothecs or other charges of any nature whatsoever;
4.1.4. it has not entered into any relationship or
agreement, written or oral, expressed or implied,
inconsistent with the provisions of the present
agreement;
4.1.5. the present agreement, further to its execution, will
constitute a valid, executable and binding obligation
of Polyvalor;
4.1.6. it has not received any notice nor does it have
knowledge that the Technology, as assigned herein,
will constitute an infringement of any patents,
patent applications or any other proprietary rights
owned by any third party regarding the Technology.
4.2. Polyvalor makes no representations and offers no warranties as
to the state of completion of the Technology and as to the
success of the commercialization of the Technology.
5. REPRESENTATIONS AND WARRANTIES OF CANADA
5.1. Canada hereby represents and warrants to Polyvalor that:
<PAGE>
Page 5
5.1.1. it is a corporation duly organized, validly existing
and in good standing under the laws of the Province
of Quebec and the laws of Canada applicable thereto;
5.1.2. it has every legal right to enter into the agreement
and to perform the terms and conditions hereof or its
parts to be performed, free of any encumbrance
whatsoever;
the present agreement, further to its execution, will
constitute a valid, executable and binding obligation
of Canada.
6. OBLIGATIONS OF CANADA
6.1. For the duration of the Term, Canada agrees and undertakes to:
6.1.1. make the Technology evolve, and to use prudent and
diligent care in doing so;
6.1.2. protect the Technology, including by patents,
copyrights or other means, and to use prudent and
diligent care in doing so;
6.1.3. diligently notify Polyvalor of its intention (i) not
to maintain any of the Intellectual Property in force
or (ii) not to protect by patents or copyrights any
additions or improvements to the Technology and any
derivative technology;
6.1.4. allow Polyvalor access to the Technology and the
derivative technology as well as any additions or
improvements thereon when Polyvalor deems it
necessary for the purpose of research and training;
6.1.5. obtain, from the representative of Polyvalor elected
to the board of directors of Canada, the prior
written approval of Polyvalor before assigning,
transferring, selling, granting a license or
sub-license, in whole or in part, with respect to the
Technology, derivative technology and any additions
or improvements thereof;
6.1.6. provide Polyvalor or any designated representative
thereof, all information concerning Canada's business
whichPolyvalor may reasonably request.
7. ROYALTIES AND ACCOUNTING
7.1. Polyvalor or any designated representative thereof shall be
allowed to have access to, consult and receive a copy of any
reports, registries or any other accounting records pertaining
to the sales of Canada. More specifically, without limiting
the generality of the foregoing, Canada shall be obligated to
furnish to Polyvalor, through its own independent auditors,
annual audited financial statements as well as quarterly sales
reports, within thirty
<PAGE>
(30) days of the termination of each said quarter.
7.2. Any sums payable to Polyvalor by Canada shall be payable in
Canadian dollars. In the event that any sales effected by
Canada are paid in foreign currency, the parties agree to
apply the exchange rate on said foreign currency at the
ongoing rate at the date of payment of the Royalties by
Canada. In the event that any payment of Royalties is not paid
by Canada at their due date, the exchange rate to be then
applied to any such late payment of Royalties shall be the
most favorable exchange rate for Polyvalor determined between
the due date and the effective date of payment by Canada.
7.3. Canada shall keep complete and thorough documentation
pertaining to the Technology as well as its business
operations. Upon a minimum prior notice of five (5) days to
Canada, Polyvalor or any designated representative thereof,
shall be allowed, for the duration of the present agreement
and at its own costs, to have access to, inspect and make
copies of said documentation during normal work hours. Canada
shall diligently provide, on Polyvalor's request, any
additional pertinent documentation for the purpose of the
aforesaid inspection. In the event that said inspection
reveals an error in excess of three percent (3 %) in regards
to the sums paid to Polyvalor by Canada as Royalties and the
sums actually due, any reasonable costs incurred by Polyvalor
for the execution of the inspection shall be borne by Canada.
7.4. Any Royalties remaining unpaid and due beyond the date same
were payable shall bear interest at the rate of twelve percent
(12%) per annum. The interest accrued on said sums shall bear
interest itself at the same rate.
8. SPECIAL PROVISIONS
8.1. Unless required by law (including any requirements to disclose
information publicly stemming from Inc's status as a reporting
issuer under U.S. Securities Laws), Canada shall be prohibited
from using, referring to, naming or otherwise employing the
name "Polytechnique" and any other name and trade name of
Polytechnique or Polyvalor in any document, publication,
publicity, note or any other form of promotion whatsoever,
directly or indirectly, without Polyvalor's prior written
approval;
8.2. Subject to section 3.3. hereof, Canada shall be prohibited
from using the Technology for the purpose of any activity,
whether commercial or otherwise, which is contrary to public
order, including without limitation, activities susceptible of
creating controversies of an ethical nature.
8.3. BioSyntech Inc., in its capacity as sole shareholder of all of
the issued and outstanding common shares of Canada
(hereinafter "Inc."), hereby agrees and undertakes to vote all
of its shares in Canada and to take all necessary or desirable
actions (including, without
<PAGE>
Page 6
limitation, attendance at meetings in person or by proxy for
purposes of obtaining a quorum and execution of written
consents in lieu of meetings) so that Amine Selmani and one
representative that Polyvalor may designate from time to time,
be at all times proposed as and elected or reelected as
directors of Canada, the whole under reserve of the other
shareholders' rights to remove a director.
8.4. Polyvalor acknowledges and agrees that upon receipt of the
total amount of the Royalties from Canada in accordance with
the terms hereof and further to its sale of one half (1/2) of
the one million seventy-two thousand (1,072,000) common shares
of the capital stock of BioSyntech Inc. that it shall be
entitled to hold further to the exchange of the corresponding
number of exchangeable shares that it presently holds in
Canada, , Polyvalor's right to have one (1) representative
elected or reelected to the Board of Directors of Canada shall
be annulled.
9. DEFAULT
Polyvalor shall be entitled to require the immediate payment of any Royalties
payable in accordance with the present agreement, without any prior notice of
demand, including any interests and costs applicable thereon, and subject to
section 3.3 hereof, to execute, at Canada's expense, any obligation incumbent
upon Canada in the event that the latter's refuses and/or neglects to execute
same and to consider resiliated the assignment of Technology effected in virtue
of the present agreement, upon the occurrence of the following defaults:
9.1.1. any Royalties payable in accordance with the present
agreement are not paid within fifteen (15) days from
the date which said Royalties were due;
9.1.2. Canada allows the Technology to deteriorate or to
diminish in value;
9.1.3. Canada encumbers the Technology with hypothecs,
charges or any other third party rights;
9.1.4. Canada sells, disposes of or assigns the Technology,
the derivative technology or any addition or
improvement of same or grants licenses or
sub-licenses without the prior written approval of
Polyvalor;
9.1.5. Canada institutes proceedings seeking relief under
bankruptcy legislation or any similar law or consents
to entry of an order for relief against it in any
bankruptcy or insolvency proceeding or similar
proceeding, or file a petition for or consents to
reorganization or other relief under any bankruptcy
legislation or other similar law, or consents to the
filing against it of any petition for the appointment
of a receiver, liquidator, assignee, trustee or
sequestrator with respect to any substantial part of
its property, or makes an assignment or a proposal
for the benefit of creditors, or admits
<PAGE>
Page 7
in writing to its inability to pay its debts as they
become due, or take any action in furtherance of the
foregoing;
9.1.6. Canada fails and/or neglects to provide a release
against any seizure executed on its assets or fails
to obtain a release of any prior notices of execution
of hypothecary rights or any other third party rights
registered against its assets or fails to remedy any
defaults under existing hypothecs or charges
pertaining to its assets;
9.1.7. Canada changes the nature of its activities or
modifies the purpose of the Technology without the
prior written consent of Polyvalor;
9.1.8. Canada refuses and/or neglects to remit to Polyvalor,
within a delay of ninety (90) days of the termination
of its financial year, its audited financial
statements and, within a reasonable delay of
termination of each trimester of its financial year,
all reports, registers and records which Polyvalor is
entitled to examine or obtain of in accordance with
the present agreement, and more specifically in
relation to sales and benefits resulting from the
Technology;
9.1.9. Canada, generally, is in default of its obligations
as determined in the present agreement and fails to
remedy said default.
9.2. In the event that the present agreement is terminated in
accordance with the foregoing provisions, the parties
undertake to diligently sign and execute any and all documents
and to do such other acts as may reasonably be required or
deemed useful by Polyvalor to permit the latter to be
registered as sole owner of the Technology and any derivative
technology, (including the Intellectual Property and the
Technical Data) and any additions or improvements of same
(including all intellectual property rights and related
technical data).
10. NOTICE
10.1. Any notice, demand or other communication required or
permitted to be given under this agreement shall be sent to
the other party by registered mail receipt return requested,
or by hand, by telecopier or by bailiff, at the following
addresses:
if to Polyvalor:
POLYVALOR, LIMITED PARTNERSHIP.
3744, Jean-Brillant Street, suite 6332
6th floor, Montreal (Quebec) H3T 1P1
Attention of Denis N. Beaudry
-----------------------------
<PAGE>
Page 9
if to Canada:
Bio Syntech CANADa INC.
475, Armand-Frappier Boulevard
Laval, Province of Quebec, H7V 4B3,
Attention of Amine Selmani
or to such other address as either party may indicate in writing to
the other party.
11. MISCELLANEOUS
11.1. The parties undertake to execute and deliver such documents
and do such things as may be necessary or advisable to give
full effect to this agreement.
11.2. The present agreement is not to be interpreted as creating a
mandate between the parties.
11.3. This agreement may not be modified or amended except in
writing signed by the parties.
11.4. If any covenant, obligation or agreement hereunder or the
application of any part of this agreement to any person, party
or circumstance shall, to any extent, be invalid or
unenforceable, the remainder of this agreement or the
application of such covenants, agreements or obligations,
other than those as to which it is held invalid or
unenforceable, shall not be affected thereby and each
covenant, obligation and agreement contained herein shall be
separately valid and enforceable to the fullest extent
permitted by law.
11.5. This agreement shall be binding upon and enure to the benefit
and advantage of the parties hereto and their respective
executors, successors and assigns.
11.6. This agreement shall be governed by and interpreted and
enforced in accordance with the laws of the Province of
Quebec, Canada.
11.7. The preamble and Schedule A attached hereto form an integral
part hereof.
11.8. No waiver by either of the parties of any condition or the
breach of any term, covenant, representation or warranty
contained in this agreement, whether by conduct or otherwise,
in any one or more instances, shall be deemed to be or
construed as a further or continuing waiver of any such
condition or breach or as a waiver of any other condition or
breach of any other term, covenant, representation or warranty
contained in this agreement.
<PAGE>
Page 10
11.9. This agreement constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof and
supersedes and replaces the provisions of any agreement
heretofore entered into by them with respect thereto,
including the Assignment Agreement and the Shareholders
Agreement.
11.10.This agreement may be executed in one or more counterparts
each of which shall be deemed an original and together shall
constitute one and the same agreement.
11.11.The parties hereto state their express wish that this
agreement as well as all documentation contemplated hereby,
pertaining hereto or to be executed in connexion herewith be
drawn up in English; les parties expriment leur desir
explicite a l'effet que cette entente de meme que tous
documents envisages par les presentes, y ayant trait ou qui
seront signes relativement aux presentes soient rediges en
anglais.
11.12.Subject to the terms hereof, all rights, remedies and
recourses provided for herein shall be in addition and without
prejudice to the rights and remedies available to the parties.
11.13.For the purpose of this agreement, the parties elect domicile
in the Montreal judicial district.
IN WITNESS WHEREOF, the parties have executed this agreement in
Montreal on this day of March 2000.
POLYVALOR LIMITED PARTNERSHIP, BIO SYNTECH Canada INC.
acting and represented by
its general partner,
PolyvaLor Inc.
Per: /S/ Denis N. Beaudry Per: /s/ Amine Selmani
--------------------------- -----------------------
Denis N. Beaudry Amine Selmani
INTERVENTIONS
I, the undersigned, AMINE SELMANI, businessman, domiciled and residing at 2084,
Jessop Street, in the City and District of Laval, declare having taken
cognizance of the present agreement executed between Polyvalor Limited
Partnership and Bio Syntech Canada Inc. and do hereby agree with the terms and
provisions provided therein, including, without limitation, those provisions
pertaining to the election of directors of Bio Syntech Canada Inc.
<PAGE>
Page 11
AND I HAVE SIGNED THIS 15TH DAY OF MARCH 2000.
----------------------------------
AMINE SELMANI
I, the undersigned, Amine Selmani, in my capacity as President of BioSyntech
Inc., hereby declare having taken cognizance of the present agreement executed
between Polyvalor Limited Partnership and Bio Syntech Canada Inc. and do hereby
agree with the terms and provisions provided therein, including, without
limitation, those provisions pertaining to the election of directors of Bio
Syntech Canada Inc.
AND I HAVE SIGNED THIS DAY OF MARCH 2000.
Per: /s/ Amine Selmani
------------------------------
BIOSYNTECH INC.
Per:
AMINE SELMANI
<PAGE>
Page 12
SCHEDULE "A"
NOTE: The Technology, as defined in section 1.3 of this agreement, means the
technologies named herein. Information regarding patents or patent applications
subsequent to the assignment by Polyvalor to Bio Syntech Ltd. on October 3rd
1997 is provided by Bio Syntech Canada Inc. ("Canada") for reference purposes
only.
Name of Technology Details
- --------------------------------------------------------------------------------
Compositions, Encapsulating -Written disclosure filed with the
Methods and Applications for "Bureau de la recherche de
Artificial/Matrix Living Cells Polytechnique" on December 20, 1996
Materials
-Patent application filed in Canada
(number CA 2,213,089) on August
14,1997 under the name "Method of
encapsulating living cellular
material in an artificial matrix for
culture or regeneration"
- --------------------------------------------------------------------------------
Implantable porous ceramic materials -Written disclosure filed with the
replication of organic templates "Bureau de la recherche de
induces ceramic foam/network Polytechnique" on December 20, 1996
materials with controlled
morphologies and microstructures
- --------------------------------------------------------------------------------
Organic-inorganic materials for -Written disclosure filed with the
organo-apatite, organo-calcium "Bureau de la recherche de
phosphate, organo-calcium carbonate Polytechnique" on December 20, 1996
and/or pure ceramic foams
- --------------------------------------------------------------------------------
Artificial meniscus implant for -Written disclosure filed with the
tissue reconstruction or regeneration "Bureau de la recherche de
- - orthopoedics, traumatology & Polytechnique" on December 20, 1996
surgery
- --------------------------------------------------------------------------------
A medical device for the diagnosis of -Written disclosure filed with the
cartilage degeneration via spatial "Bureau de la recherche de
mapping of compression-induced Polytechnique" on December 20, 1996
electrical potentials -Patent application filed in the
U.S.A. on February 7th 1997 (number
08/796,299) -Patent in the U.S.A.
(number 5,779,651) issued on July 14,
1998 -Patent application filed in
Canada (number CA 2,278,520) on
February 6, 1998
- --------------------------------------------------------------------------------
Method of preparation of polymer -Patent application filed in the
microparticles free of organic U.S.A. on October 24th 1996 (number
solvent traces 08/736,421)
-Patent in the U.S.A. (number
5,858,531) issued on January 12, 1999
- --------------------------------------------------------------------------------
Bulk formation of monolithic -Developed by the researchers
polysaccharide-based hydrogels Adbellatif Chenite, Cyril Chaput,
Cristele Combes and Amine Selmani and
originally assigned to Polytechnique
July 3rd 1997 by same.
-Patent application filed in Canada
(number CA 2,219,399) on October 24,
1997
- --------------------------------------------------------------------------------
BIOSYNTECH INC
STOCK OPTION INCENTIVE PLAN
1. NAME AND PURPOSE OF PLAN
1.1 The stock option plan constituted hereby shall be known as the Stock
Option Incentive Plan.
1.2 The purpose of the Plan is to provide a means whereby those
Employees of the Company and its Subsidiaries who have the principal
responsibility for the successful administration and management of the Company
and whose present and potential contributions are important to its success can
obtain a proprietary interest in the Company thereby providing an incentive for
continuing beneficial service to the Company.
2. INTERPRETATION
In this Plan and in any Option, unless the context otherwise requires:
"Board" means, at any time, the board of directors of the Company in
office at that time;
"Company" means BIOSYNTECH INC, any of its subsidiaries and any
successor or continuing company resulting from amalgamation of the
Company and any other company or resulting from any other form of
corporate reorganization;
"Employee"means an individual who is a bona fide employee, director,
or officer of the Company and an individual or entity which is a
consultant of the Company;
"Employment" means the relationship of an individual who is a bona
fide employee, director, or officer of the Company and the
relationship of an individual or entity which is a consultant of the
Company;
"Market Price" on any particular day means an average of daily high
and low board lot trading prices (with no discount) for the
immediately preceding five days on which trades occurred, on any
public market on which the shares of the company are traded;
"Option" means any option granted pursuant to the Plan;
"Optionee" means an Employee who has been granted an Option;
"Option Price" means the price at which Optioned Shares may be
subscribed for pursuant to an Option.
"Optioned Shares" means Shares which are the subject of an Option;
"Plan" means the Stock Option Incentive Plan as embodied herein and
as from time to time amended in accordance with the provisions
hereof;
"Shares" means Common Shares without par value in the capital of the
Company, as constituted at the effective date hereof;
<PAGE>
"Subsidiary" has the same meaning, with respect to the Company, as
that term has under the Quebec Companies Act .
2.1 The masculine gender shall include the feminine gender and singular
shall include the plural and vice versa.
3. SHARES SUBJECT TO THE PLAN
3.1 The aggregate number of Shares which may be issued in respect of
which Options may be granted, at any time, shall be 2,500,000 which number of
Shares shall include the balance of authorized and unissued Shares in respect of
which Options are outstanding at that time (or such number, class and kind of
shares which, in accordance with section 12 hereof, shall be substituted
therefor or into which they shall be altered) and the requisite number of Shares
shall from time to time be appropriated for the purposes of the Plan and
reserved and set aside for issue upon the due exercise of Options. If any Option
shall expire or terminate for any reason without having been exercised in full,
any Optioned Shares not subscribed for thereunder shall be available for further
Options.
3.2 The aggregate number of Shares in respect of which Options may be
granted, at any time to any one person, shall be that number of Shares which is
equal to 5% of the number of Shares of the Company which are issued and
outstanding at that time, (or such number, class and kind of shares which, in
accordance with section 12 hereof, shall be substituted therefor or into which
they shall be altered).
4. GRANT OF OPTIONS AND ADMINISTRATION OF THE PLAN
Subject only to the express provisions of the Plan, the Board shall have the
sole authority:
- - to determine, in its own discretion, each Employee to whom, and the
time or times at which, and the Option Price and term for which, an
Option shall be granted and the number of Optioned Shares to be
subject to the Option;
- - to determine and approve from time to time the form of Options, and
to authorize an officer or officers to execute and deliver any
Option on behalf of the Company;
- - to interpret the Plan and to amend the Plan;
- - to modify or cancel the vesting period established in respect of any
or all Options, notably in the case of a take-over bid of the
Company or other form of going pivate transaction;
- - to delegate its authority hereunder or any part thereof to the
remuneration committee of the Board; and
- - to make all other determinations and perform all such other actions
as the Board deems necessary or advisable to implement and
administer the Plan.
2
<PAGE>
4.2 In making any determinations under subsection 4.1, the Board may
take into account the nature of the services rendered by the Employee, his
present and potential contribution to the success of the Company and its
Subsidiaries and such other factors as to the Board in its discretion shall deem
applicable to carry out the purposes of the Plan. The Board may, in its
discretion, authorize the granting of additional Options to an Optionee before
an existing Option has terminated.
4.3 All decisions and interpretations of the Board respecting the Plan
or Options shall be binding and conclusive on the Company and on all Optionees
and their respective legal personal representatives and on all Employees.
5. TERM OF OPTIONS
5.1 No Option shall be for a term longer than ten years from the date of
the granting of the Option.
6. OPTION PRICE
6.1 The Option Price in any Option shall not be an amount less than the
Market Price of the Optionned Shares.
7. EXERCISE OF OPTIONS
7.1 Subject to the provisions of this section and sections 10 and 11
hereof and to any specific vesting period established by the Board at the time
of the grant, each Option shall be exercisable in whole at any time or in part
from time to time during the term thereof.
7.2 An Option may be exercised at the applicable times and in the
applicable amounts by giving to the Company written notice of exercise signed by
the Optionee specifying the number of Shares to be subscribed for and
accompanied by full payment for the Shares to be subscribed for in cash or by
cheque certified by a Canadian chartered bank.
7.3 Except as provided in sections 9, 10 and 11 hereof, no Option may be
exercised in whole or in part at any time unless at the time of such exercise
the Optionee is an Employee.
7.4 At any time the Board may, by notice in writing to all Optionees
under the Plan, require each Optionee to elect, within such period as the Board
shall prescribe, to subscribe and pay for all the Optioned Shares then remaining
unsubscribed for under his Option, or to accept termination of his Option in the
event of his failing within such period to so elect or to exercise his Option
and to subscribe and pay for all such remaining Optioned Shares.
3
<PAGE>
8. RIGHTS OF OPTIONEE
8.1 No Optionee shall have any of the rights of a member of the Company
with respect to any Optioned Shares until such Optioned Shares have been issued
to him upon exercise of the Option and full payment therefor has been made by
him to the Company.
9. NON-TRANSFERABILITY OF OPTIONS
No Option shall be assignable or transferable by an Optionee and any
purported assignment or transfer of an Option shall be void and
shall render the Option void, but if the employment or position of
an Optionee with the Company or any of its Subsidiaries, as the case
may be, is terminated by reason of his death, the Optionee's legal
personal representative or representatives may exercise the Option
in accordance with section 10.
10. DEATH OR RETIREMENT OF OPTIONEE
10.1 If the employment or position of an Optionee with the Company or any
of its Subsidiaries, as the case may be, is terminated by reason of his death at
any time during the term of an Option, then, until the earlier of the expiry
date of the Option specified at the time of its grant, or the date which is one
year from the death of the Optionee, the Option may be exercised by the
Optionee's legal personal representative or representatives as to such maximum
number of Optioned Shares which the Optionee would have otherwise been entitled
to exercise the Option in respect of at the date of his death.
10.2 If the employment or position of an Optionee with the Company or any
of its Subsidiaries, as the case may be, is terminated by reason of his
retirement in accordance with the Company's policies relating to retirement of
Employees at any time during the term of an Option, then, until the earlier of
the expiry date of the Option specified at the time of its grant, or the date
which is one year from the retirement of the Optionee, the Option may be
exercised by the Optionee or by the Optionee's legal personal representative or
representatives if the Optionee dies within the period so specified as to such
maximum number of Optioned Shares which the Optionee would have otherwise been
entitled to exercise the Option in respect of at the date of his retirement.
11. TERMINATION OF EMPLOYMENT OF OPTIONEE
11.1 If the employment or position of an Optionee with the Company or any
of its Subsidiaries, as the case may be, is terminated for any reason other than
as specified in section 10 or subsection 11.2, then, until the earlier of the
expiry date of the Option specified at the time of its grant, or the date which
is 90 days from the termination of employment of the Optionee, the Optionee may
exercise his Option in respect of the number of Optioned Shares which the
Optionee was entitled to subscribe and pay for under the Option on the date of
termination of his employment.
4
<PAGE>
11.2 If the employment or position of an Optionee with the Company or any
of its Subsidiaries, as the case may be, is terminated by the Company or any
Subsidiary for lawful cause, all of the rights of the Optionee under his Option
shall terminate and the Option shall become null and void effective immediately
upon such termination taking effect.
11.3 Nothing contained in the Plan or any Option shall confer on any
Optionee any right to, or guarantee of continued employment by the Company or
any Subsidiary, or in any way limit the right of the Company or a Subsidiary to
terminate the employment of the Optionee at any time.
12. CHANGES IN CAPITALIZATION OR NUMBER OF OUTSTANDING SHARES
12.1 If, and whenever, prior to the issuance by the Company of all the
Optioned Shares under an Option, the Shares are from time to time consolidated
into a lesser number of Shares or subdivided into a greater number of Shares,
the number of Optioned Shares remaining unissued under the Option shall be
decreased or increased proportionately, as the case may be, and the subscription
price to be paid by the Optionee for each such Share shall be adjusted
accordingly.
12.2 If from time to time any other change is made in the capital of the
Company or the Company amalgamates or combines, merges or consolidates with one
or more other companies or corporations (and the right so to do is hereby
expressly reserved by the Company) whether by way of arrangement, by exchange of
shares, or otherwise, in each such case each Option shall, unless the provisions
of paragraph 7.4 are made applicable, extend to and cover the number, class and
kind of shares or other obligations to which the holder of the Option would have
been entitled had the Option been fully exercised immediately prior to the date
such amalgamation, merger, combination or consolidation becomes effective and
the then prevailing subscription price of the Shares or other obligations so
covered shall be correspondingly adjusted if and to the extent that the Board
considers it to be equitable and appropriate.
12.3 Except as expressly provided in this section 12, the issue by the
Company of shares of any class, or of securities convertible into shares of any
class, for cash or property, or for labour or services, either upon direct sale
or upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, shall not affect, and no adjustment by reason thereof shall
be made with respect to, the number of Optioned Shares.
12.4 No Option shall in any way affect the right or power of the Company
or its members to make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the capital structure of the Company or its
business, or any amalgamation, combination, merger or consolidation of the
Company, or any issue of bonds debentures, shares with special rights and
restrictions ranking ahead of or affecting the shares or the rights thereof, or
the dissolution or liquidation of the Company, or any sale or transfer of all or
any part of its assets or business or
5
<PAGE>
any other corporate act or proceeding, whether of a similar character or
otherwise.
13. AMENDMENT AND TERMINATION OF THE PLAN
13.1 The Board may at any time terminate the Plan or make such amendments
to the Plan as it shall deem advisable provided that no such termination or
amendment shall adversely affect any outstanding Option except with the consent
of all affected Optionees.
14. RIGHT TO OPTIONS
14.1 Nothing contained herein or in any resolution adopted or hereafter
adopted by the Board or any action taken by the Board shall vest the right in
any person whomsoever to receive any Option. No person shall acquire any of the
rights of an Optionee unless and until a written Option, in form satisfactory to
the Board, shall have been duly executed on behalf of the Company and delivered
to the Optionee and executed and delivered by the Optionee to the Company. Any
agreement purporting to be an Option shall, to the extent it may be contrary to
the express provisions of the Plan, be unenforceable by the Optionee against the
Company.
15. REGULATORY AND STOCK EXCHANGE APPROVALS OR CONSENTS
15.1 The Plan and all Options are subject to all consents, receipts,
approvals or other authorization by any securities commission, administrative
agency, other governmental authority or stock exchange on which shares in the
capital of the Company are or may become listed, which are requisite to the Plan
and the granting of Options.
16. EFFECTIVE DATE OF THE PLAN
16.1 The Plan shall become effective when it has been approved by the
Board and all requisite consents, receipts, approvals or other authorizations
have been obtained and complied with.
6
BIO SYNTECH CANADA INC
STOCK OPTION INCENTIVE PLAN
1. NAME AND PURPOSE OF PLAN
1.1 The stock option plan constituted hereby shall be known as the Stock Option
Incentive Plan.
1.2 The purpose of the Plan is to provide a means whereby those Employees of the
Company and its Subsidiaries who have the principal responsibility for the
successful administration and management of the Company and whose present and
potential contributions are important to its success can obtain a proprietary
interest in the Company thereby providing an incentive for continuing beneficial
service to the Company.
2. INTERPRETATION
In this Plan and in any Option, unless the context otherwise requires:
"Board" means, at any time, the board of directors of the Company in
office at that time;
"Company" means BIOSYNTECH INC, any of its subsidiaries and any
successor or continuing company resulting from amalgamation of the
Company and any other company or resulting from any other form of
corporate reorganization;
"Employee"means an individual who is a bona fide employee, director,
or officer of the Company and an individual or entity which is a
consultant of the Company;
"Employment" means the relationship of an individual who is a bona
fide employee, director, or officer of the Company and the
relationship of an individual or entity which is a consultant of the
Company;
"Market Price" on any particular day means an average of daily high
and low board lot trading prices (with no discount) for the
immediately preceding five days on which trades occurred, on any
public market on which the shares of the company are traded;
"Option" means any option granted pursuant to the Plan;
"Optionee" means an Employee who has been granted an Option;
"Option Price" means the price at which Optioned Shares may be
subscribed for pursuant to an Option.
"Optioned Shares" means Shares which are the subject of an Option;
"Plan" means the Stock Option Incentive Plan as embodied herein and
as from time to time amended in accordance with the provisions
hereof;
"Shares" means Common Shares without par value in the capital of the
Company, as constituted at the effective date hereof;
<PAGE>
"Subsidiary" has the same meaning, with respect to the Company, as
that term has under the Quebec Companies Act .
2.1 The masculine gender shall include the feminine gender and singular
shall include the plural and vice versa.
3. SHARES SUBJECT TO THE PLAN
3.1 The aggregate number of Shares which may be issued in respect of
which Options may be granted, at any time, shall be 1,500,000 which number of
Shares shall include the balance of authorized and unissued Shares in respect of
which Options are outstanding at that time (or such number, class and kind of
shares which, in accordance with section 12 hereof, shall be substituted
therefor or into which they shall be altered) and the requisite number of Shares
shall from time to time be appropriated for the purposes of the Plan and
reserved and set aside for issue upon the due exercise of Options. If any Option
shall expire or terminate for any reason without having been exercised in full,
any Optioned Shares not subscribed for thereunder shall be available for further
Options.
3.2 The aggregate number of Shares in respect of which Options may be
granted, at any time to any one person, shall be that number of Shares which is
equal to 5% of the number of Shares of the Company which are issued and
outstanding at that time, (or such number, class and kind of shares which, in
accordance with section 12 hereof, shall be substituted therefor or into which
they shall be altered).
4. GRANT OF OPTIONS AND ADMINISTRATION OF THE PLAN
Subject only to the express provisions of the Plan, the Board shall have the
sole authority:
- - to determine, in its own discretion, each Employee to whom, and the
time or times at which, and the Option Price and term for which, an
Option shall be granted and the number of Optioned Shares to be
subject to the Option;
- - to determine and approve from time to time the form of Options, and
to authorize an officer or officers to execute and deliver any
Option on behalf of the Company;
- - to interpret the Plan and to amend the Plan;
- - to modify or cancel the vesting period established in respect of any
or all Options, notably in the case of a take-over bid of the
Company or other form of going pivate transaction;
- - to delegate its authority hereunder or any part thereof to the
remuneration committee of the Board; and
- - to make all other determinations and perform all such other actions
as the Board deems necessary or advisable to implement and
administer the Plan.
2
<PAGE>
4.2 In making any determinations under subsection 4.1, the Board may
take into account the nature of the services rendered by the Employee, his
present and potential contribution to the success of the Company and its
Subsidiaries and such other factors as to the Board in its discretion shall deem
applicable to carry out the purposes of the Plan. The Board may, in its
discretion, authorize the granting of additional Options to an Optionee before
an existing Option has terminated.
4.3 All decisions and interpretations of the Board respecting the Plan
or Options shall be binding and conclusive on the Company and on all Optionees
and their respective legal personal representatives and on all Employees.
5. TERM OF OPTIONS
5.1 No Option shall be for a term longer than ten years from the date of
the granting of the Option.
6. OPTION PRICE
6.1 The Option Price in any Option shall not be an amount less than the
Market Price of the Optionned Shares.
7. EXERCISE OF OPTIONS
7.1 Subject to the provisions of this section and sections 10 and 11
hereof and to any specific vesting period established by the Board at the time
of the grant, each Option shall be exercisable in whole at any time or in part
from time to time during the term thereof.
7.2 An Option may be exercised at the applicable times and in the
applicable amounts by giving to the Company written notice of exercise signed by
the Optionee specifying the number of Shares to be subscribed for and
accompanied by full payment for the Shares to be subscribed for in cash or by
cheque certified by a Canadian chartered bank.
7.3 Except as provided in sections 9, 10 and 11 hereof, no Option may be
exercised in whole or in part at any time unless at the time of such exercise
the Optionee is an Employee.
7.4 At any time the Board may, by notice in writing to all Optionees
under the Plan, require each Optionee to elect, within such period as the Board
shall prescribe, to subscribe and pay for all the Optioned Shares then remaining
unsubscribed for under his Option, or to accept termination of his Option in the
event of his failing within such period to so elect or to exercise his Option
and to subscribe and pay for all such remaining Optioned Shares.
3
<PAGE>
8. RIGHTS OF OPTIONEE
8.1 No Optionee shall have any of the rights of a member of the Company
with respect to any Optioned Shares until such Optioned Shares have been issued
to him upon exercise of the Option and full payment therefor has been made by
him to the Company.
9. NON-TRANSFERABILITY OF OPTIONS
No Option shall be assignable or transferable by an Optionee and any
purported assignment or transfer of an Option shall be void and
shall render the Option void, but if the employment or position of
an Optionee with the Company or any of its Subsidiaries, as the case
may be, is terminated by reason of his death, the Optionee's legal
personal representative or representatives may exercise the Option
in accordance with section 10.
10. DEATH OR RETIREMENT OF OPTIONEE
10.1 If the employment or position of an Optionee with the Company or any
of its Subsidiaries, as the case may be, is terminated by reason of his death at
any time during the term of an Option, then, until the earlier of the expiry
date of the Option specified at the time of its grant, or the date which is one
year from the death of the Optionee, the Option may be exercised by the
Optionee's legal personal representative or representatives as to such maximum
number of Optioned Shares which the Optionee would have otherwise been entitled
to exercise the Option in respect of at the date of his death.
10.2 If the employment or position of an Optionee with the Company or any
of its Subsidiaries, as the case may be, is terminated by reason of his
retirement in accordance with the Company's policies relating to retirement of
Employees at any time during the term of an Option, then, until the earlier of
the expiry date of the Option specified at the time of its grant, or the date
which is one year from the retirement of the Optionee, the Option may be
exercised by the Optionee or by the Optionee's legal personal representative or
representatives if the Optionee dies within the period so specified as to such
maximum number of Optioned Shares which the Optionee would have otherwise been
entitled to exercise the Option in respect of at the date of his retirement.
11. TERMINATION OF EMPLOYMENT OF OPTIONEE
11.1 If the employment or position of an Optionee with the Company or any
of its Subsidiaries, as the case may be, is terminated for any reason other than
as specified in section 10 or subsection 11.2, then, until the earlier of the
expiry date of the Option specified at the time of its grant, or the date which
is 90 days from the termination of employment of the Optionee, the Optionee may
exercise his Option in respect of the number of Optioned Shares which the
Optionee was entitled to subscribe and pay for under the Option on the date of
termination of his employment.
4
<PAGE>
11.2 If the employment or position of an Optionee with the Company or any
of its Subsidiaries, as the case may be, is terminated by the Company or any
Subsidiary for lawful cause, all of the rights of the Optionee under his Option
shall terminate and the Option shall become null and void effective immediately
upon such termination taking effect.
11.3 Nothing contained in the Plan or any Option shall confer on any
Optionee any right to, or guarantee of continued employment by the Company or
any Subsidiary, or in any way limit the right of the Company or a Subsidiary to
terminate the employment of the Optionee at any time.
12. CHANGES IN CAPITALIZATION OR NUMBER OF OUTSTANDING SHARES
12.1 If, and whenever, prior to the issuance by the Company of all the
Optioned Shares under an Option, the Shares are from time to time consolidated
into a lesser number of Shares or subdivided into a greater number of Shares,
the number of Optioned Shares remaining unissued under the Option shall be
decreased or increased proportionately, as the case may be, and the subscription
price to be paid by the Optionee for each such Share shall be adjusted
accordingly.
12.2 If from time to time any other change is made in the capital of the
Company or the Company amalgamates or combines, merges or consolidates with one
or more other companies or corporations (and the right so to do is hereby
expressly reserved by the Company) whether by way of arrangement, by exchange of
shares, or otherwise, in each such case each Option shall, unless the provisions
of paragraph 7.4 are made applicable, extend to and cover the number, class and
kind of shares or other obligations to which the holder of the Option would have
been entitled had the Option been fully exercised immediately prior to the date
such amalgamation, merger, combination or consolidation becomes effective and
the then prevailing subscription price of the Shares or other obligations so
covered shall be correspondingly adjusted if and to the extent that the Board
considers it to be equitable and appropriate.
12.3 Except as expressly provided in this section 12, the issue by the
Company of shares of any class, or of securities convertible into shares of any
class, for cash or property, or for labour or services, either upon direct sale
or upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, shall not affect, and no adjustment by reason thereof shall
be made with respect to, the number of Optioned Shares.
12.4 No Option shall in any way affect the right or power of the Company
or its members to make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the capital structure of the Company or its
business, or any amalgamation, combination, merger or consolidation of the
Company, or any issue of bonds debentures, shares with special rights and
restrictions ranking ahead of or affecting the shares or the rights thereof, or
the dissolution or liquidation of the Company, or any sale or transfer of all or
any part of its assets or business or
5
<PAGE>
any other corporate act or proceeding, whether of a similar character or
otherwise.
13. AMENDMENT AND TERMINATION OF THE PLAN
13.1 The Board may at any time terminate the Plan or make such amendments
to the Plan as it shall deem advisable provided that no such termination or
amendment shall adversely affect any outstanding Option except with the consent
of all affected Optionees.
14. RIGHT TO OPTIONS
14.1 Nothing contained herein or in any resolution adopted or hereafter
adopted by the Board or any action taken by the Board shall vest the right in
any person whomsoever to receive any Option. No person shall acquire any of the
rights of an Optionee unless and until a written Option, in form satisfactory to
the Board, shall have been duly executed on behalf of the Company and delivered
to the Optionee and executed and delivered by the Optionee to the Company. Any
agreement purporting to be an Option shall, to the extent it may be contrary to
the express provisions of the Plan, be unenforceable by the Optionee against the
Company.
15. REGULATORY AND STOCK EXCHANGE APPROVALS OR CONSENTS
15.1 The Plan and all Options are subject to all consents, receipts,
approvals or other authorization by any securities commission, administrative
agency, other governmental authority or stock exchange on which shares in the
capital of the Company are or may become listed, which are requisite to the Plan
and the granting of Options.
16. EFFECTIVE DATE OF THE PLAN
16.1 The Plan shall become effective when it has been approved by the
Board and all requisite consents, receipts, approvals or other authorizations
have been obtained and complied with.
6
NON-DISCLOSURE AND CONFIDENTIALITY AGREEMENT
This agreement is entered into as of February 23, 1999, between Sulzer
Orthopedics Biologics Inc. ("SOBI") and BIOSYNTECH LTD. ("BIOSYNTECH"). Mutually
SOBI and BIOSYNTECH are referred to as "The Parties".
Whereas, The Parties are willing to disclose information and provide access to
material they regard as confidential business information (hereafter called
"Company Information") to each other, and
Whereas, The Parties will receive Company Information in their evaluation of
possible future business relations and ongoing business, and
Now therefore, The Parties, acknowledging mutual consideration and intending to
be legally bound, agree as follows:
1. COMPANY INFORMATION
As used in this agreement, the term "Company Information" shall mean all
confidential or proprietary information and proprietary materials, including,
but not limited to: trade secrets, know-how, client lists, proposed trademarks,
patent applications, formulations, techniques, processes, inventions, ideas,
designs, formulae, methodology, data, reports, proteins, biological substances,
chemical substances and chemical compounds, including the compounds and
substances resulting from a variation of the proportion of their component
parts, computer software, computer software source codes, machinery, equipment,
all prior and future developments, enhancements and improvements to any of the
foregoing and information regarding sources of supply, business plans, patent
positioning and the existence, scope and activities regarding any research,
development, manufacturing, marketing or other projects of The Parties.
"Company Information" shall include, without limiting the preceding, a sample
(Arthroscopic Probe identified as ARTHRO-BST /Mechanical Tester identified as
MACH-1/ of polymeric compounds resulting from the incorporation of varying
proportions of component parts, each such compound having various
physico-chemical properties, identified as BST-GEL, BST-CARGEL or other
trademarks of BIOSYNTECH and bone-derived growth factor mixtures from Sulzer)
and related proprietary information provided by BIOSYNTECH or Sulzer to the
other Party.
2. DISCLOSURE OF COMPANY INFORMATION
The Parties shall not, except with the prior written consent of the other Party,
disclose to a third party, wholly or partly, Company Information disclosed by or
in any other manner obtained from the other Party or from the material of the
other Party to which access is granted, on or after they date first above
written .
<PAGE>
3. USE OR SALE
The Parties shall use the Company Information solely for the purpose of testing
and examining the Company Information to evaluate the possibility of executing
an agreement for the marketing, sale and distribution of Company Information or
products incorporating Company Information or other future business relations
between them. The Parties shall not use the other Party's Company Information
for any other purpose. In particular, but without limitation, The Parties shall
not use the other Party's Company Information for the direct or indirect benefit
of third parties or for consulting purposes, nor sell, lend, exchange or draw
profits from the Company Information of the other Party, in whole or in part.
4. REVERSE ENGINEERING
The Parties shall not make use of any reverse engineering processes or
techniques, or other similar means, to obtain additional information from the
Company Information disclosed or otherwise obtained from the other Party or from
the material of the other Party to which access is granted, on or after the date
first above written.
5. COPIES
The Parties shall not make any copies, images or other reproductions of the
Company Information disclosed by or otherwise obtained from the other Party.
6. PRECAUTIONS REGARDING THIRD PARTIES
The Parties shall hold the Company Information in strict confidence and shall
take all possible precautions to prevent the Company Information from being
disclosed or made available to third parties.
7. PRECAUTIONS REGARDING EMPLOYEES
The Parties shall take every possible precaution to ensure that only their
employees, contractors, directors and officers who have a strict and genuine
need to know have access to the Company Information.
8. LIMIT
The Parties' obligations under this agreement shall not apply to any information
required by law, regulation or court order to be disclosed to regulatory
authorities and other governmental bodies, or which The Parties can document was
available to the public or known to The Parties prior to the date first above
written. These obligations shall cease as to any information which the
disclosing Party can document thereafter became or becomes available to the
public otherwise than as a result of a disclosure by the disclosing Party or was
or is disclosed to the disclosing
<PAGE>
Party by a party unrelated to the disclosing Party that does not have a
non-disclosure obligation with respect to it.
If Company Information of the other Party is required to be disclosed by law,
regulation or court order to regulatory authorities or other governmental
bodies, The Party must promptly inform the other Party before disclosing such
Company Information so that the other Party may have a reasonable opportunity to
contest such requirement.
9. RETURN OF COMPANY INFORMATION
At any time, upon one Party's request, the other Party shall promptly redeliver
to the first Party the Company Information and all materials relating to or
involving Company Information of the first Party (whether prepared by the party
or otherwise), and will not retain any copies, extracts or other reproductions
in whole or in part regarding the Company Information. The redelivery of such
material shall not relieve The Parties of their confidentiality or other
obligations hereunder.
10. TERMINATION
The present agreement may be unilaterally terminated by either Party in the
event that the other Party becomes bankrupt or is judged to be insolvent by a
court of law or if either company makes any assignment for the benefit of its
creditors generally. It may also be terminated by written consent of The
Parties.
11. SURVIVAl
Termination of the present agreement, at any time and for any reason whatsoever
shall not extinguish its terms. The terms of this Non-Disclosure and
Confidentiality Agreement will survive for 5 years, for the benefit of The
Parties and their respective successors.
12. ENTIRE AGREEMENT
This agreement, including its Schedule, constitutes the entire agreement of The
Parties relating to the subject matter, supersedes all prior oral or written
understandings or agreements regarding that subject matter and may not be
amended, modified or cancelled except by a written instrument executed by The
Parties.
13. APPLICABLE LAW AND VENUE
This agreement shall be governed by and construed in accordance with the laws
applicable in the province of Quebec and the venue for any dispute arising from
this agreement shall be the courts of competent jurisdiction in the district of
Montreal, Quebec, Canada.
IN WITNESS THEREFORE, THE PARTIES have caused this agreement to be executed in
duplicate by their respective duly authorised representatives.
<PAGE>
Sulzer Orthopedics Biologics Inc. BIOSYNTECH LTD.
by /s/ illegible by /s/ illegible
- ---------------------------------- -----------------------------------
[name of representative and title] [name of representative and title]
PROJECT DEVELOPMENT SUKMIST VICE PRESIDENT R&D
date 3/2/99 date 3/1/99
------------------------------ -----------------------------------
MATERIAL TRANSFER AGREEMENT
This Material Transfer Agreement (together with its Exhibits referred to herein
as the "Agreement") governs the transfer of certain substances from time to time
from Biosyntech Limited having its place of business at 475, boul.
Armand-Frappier, Laval, QC Canada, H7V 4B3 to Sulzer Orthopedics ltd ("SULZER")
Ko. St 113980/Geb 540, CH-8404 Winterthur.
1. Background. SULZER desires to obtain samples of Biosyntech's proprietary
delivery vehicle described in Exhibits A (such delivery vehicle, excluding the
materials, together with its progeny, derivatives or improvements is referred to
herein as the "Vehicle") to evaluate the Vehicle's suitability in its models set
forth in Exhibit A. Biosyntech desires to obtain samples of the material
described in Exhibit B from SULZER for use in the research described in Exhibits
B under the terms and conditions of this Agreement. Such material, together with
its progeny, derivatives or improvements is referred to herein as "Material". As
part of the research described in Exhibits A, SULZER will incorporate the
Material into Biosyntech's Vehicle. The Vehicle containing the Material shall be
referred to herein as the Vehicle/Material Product. Additionally, SULZER may
desire to evaluate Vehicle/Material Product in accordance with Exhibits A. The
research set forth in Exhibits A and B shall be considered "Research" under this
Agreement. Biosyntech shall own all title and interest in and to the Vehicle.
2. The Vehicle and the research. Biosyntech will supply SULZER with such
quantities of the Vehicle as SULZER may reasonably request and as Biosyntech may
make available, in its sole discretion, from time to time. However, Biosyntech
shall be under no obligation to supply any Vehicle at any time and may cancel
the supply of Vehicle at any time without advance notice. Additionally,
Biosyntech will supply SULZER with such quantities of the Vehicle/Material
Product or other related materials as needed by SULZER in order to conduct the
Research set forth in Exhibits A hereto. SULZER will use the Vehicle/Material
Product and any product or process derived from the use of the Vehicle or the
Vehicle/Material Product, solely in its Research set forth in Exhibits A and for
no other purpose. The Research will be conducted solely by SULZER at its
research facilities or by a third party contractor at their facilities. None of
the Vehicle or Vehicle/Material Product will be transferred or sold to third
parties other than the aforesaid third party contractors. SULZER WILL NOT USE
THE VEHICLE OR VEHICLE/MATERIAL PRODUCT FOR TESTING IN OR TREATMENT OF HUMAN
SUBJECTS. SULZER acknowledges that the Vehicle and Vehicle/Material Product is
experimental and will comply with all laws and regulations applicable to its
handling and use. Any Vehicle remaining upon completion of the Research will be
returned to Biosyntech. Any Vehicle/Material Product remaining upon completion
of the Research will be destroyed by SULZER
3. The Material and the Research. Biosyntech acknowledges that SULZER has rights
to the Material. SULZER will supply with such quantities of the Material as
Biosyntech may reasonably request and as SULZER may make available, in its sole
discretion, from time to time. However, SULZER shall be under no obligation to
supply any Material at any time and may cancel the supply of Material at any
time without advance notice. Biosyntech will use the Material, the
Vehicle/Material Product and any product or process derived from the use of the
Material or the Vehicle/Material Product, solely in its Research set forth in
exhibits B and for no other purpose. The Material and the Vehicle/Material
Product will not be used by Biosyntech in research that is subject to consulting
or licensing obligations to other party, unless SULZER gives its prior, express
written permission. The Research will be conducted solely by Biosyntech at its
research facilities. None of the Material or Vehicle/Material Product will be
transferred or sold to third parties. Biosyntech WILL NOT USE THE MATERIAL OR
VEHICLE/MATERIAL PRODUCT FOR TESTING IN OR TREATMENT OF HUMAN SUBJECTS.
Biosyntech acknowledges that the Material and Vehicle/Material Product is
experimental and will comply with all laws and regulations applicable to
<PAGE>
its handling and use. Any Material remaining upon completion of the Research
will return to SULZER. Any Vehicle/Material Product remaining upon completion of
the Research will be destroyed by Biosyntech.
4. In Vivo Studies. If Biosyntech or SULZER is using the Vehicle/Material
Product for non-human in vivo studies, it will comply with all applicable
federal, state and local laws and regulations.
5. Inventions
5.1 Disclosures. Biosyntech will promptly and fully disclose in writing to
SULZER any and all inventions, (whether or not protectable under state, federal
or local laws) related to the Material, the Vehicle/Material Product or their
use, or developed using Material, or the Vehicle/Material Product which are
conceived and/or reduced to practice by Biosyntech, in the course of its
Research and SULZER will promptly and fully disclose in writing to Biosyntech
any and all inventions, (whether or not protectable under state, federal or
local laws) related to the Vehicle, the Vehicle/Material Product or their use,
or developed using the Vehicle, or the Vehicle/Material Product which are
conceived and/or reduced to practice by SULZER, in the course of its Research
(collectively, the "Invention(s)").
5.2 Rights. Except as provided herein, ownership of any Invention shall be
determined in accordance with the applicable intellectual property laws of the
CANADA. Notwithstanding any other provision contained in this Agreement (a)
Biosyntech shall solely own those Inventions that are directed to the Vehicle or
related to the use thereof, except in the combination with the use of the
Material and (b) SULZER shall solely own those Inventions that are directed to
Material or related to the use thereof, except in combination with the use of
the vehicle. Biosyntech and SULZER hereby agree that a party may not use
information from the Research to file a patent application without the prior
written consent of the other party on any Inventions that cover (i) the Vehicle
and the Material, (ii) the combination of the Vehicle and the use of the
Material, (iii) the combination of the Material and the use of the Vehicle, or
(iv) the combination of the use of the Vehicle and the Material ("Joint
Inventions"). Biosyntech represents and warrants that no other person has any
prior right to ownership of Joint Inventions or a prior right to acquire a
licence under such Joint Inventions by reason of any action or agreement by
Biosyntech.
5.3 Patent Applications. Subject to Section 5.2 any and all patent applications
necessary to protect the proprietary position of solely owned Inventions by
Biosyntech will be prepared, filled and maintained by Biosyntech with expenses
paid by Biosyntech. Subject to Section 5.2 any patent application necessary to
protect the proprietary position of solely owned Inventions by SULZER will be
prepared, filled and maintained by SULZER with expenses paid by SULZER. For any
and all patent applications on Joint Inventions, both Biosyntech and SULZER
agree to cooperate jointly at each such party's own expense in the preparation,
prosecution and/or maintenance of any patents or patent applications for a Joint
Invention.
5.4 Reports. At Biosyntech's request, SULZER will advise and update Biosyntech
on the progress and results of the Research subject to Section 7. At SULZER's
request, Biosyntech will advise and update SULZER on the progress and results of
the Research subject to Section 7.
6. No Licence. Biosyntech retains all rights and title in and to the Vehicle and
all related Biosyntech intellectual property rights, including without
limitation, any patents, patent applications, copyrights and copyright
applications, subject to the limited right of use granted to SULZER herein to
carry out the Research, and retains the right to have any Vehicle/Material
Products destroyed and any Vehicle returned to Biosyntech or disposed of upon
request. SULZER understands that no other right or license to the Vehicle, the
Vehicle/Material Products or to their use is granted or implied as a result of
<PAGE>
Biosyntech's sending the Vehicle or the Vehicle/Material Products to it. Nothing
contained in this Agreement shall restrict Biosyntech's right to disclose, use,
sell assign, transfer or distribute the Vehicle to any other entity for
commercial or non-commercial purposes. SULZER retains all right and title in and
to the Material and all related SULZER intellectual property rights, including
without limitation, any patents, patent applications, copyrights and copyright
applications, subject to the limited right of use granted to Biosyntech herein
to carry out Research, and retains the right to have any Vehicle/Material
Products destroyed and any Material returned to SULZER or disposed of upon
request. Biosyntech understands that no other right or license to the Material,
the Vehicle/Material Products or to their use is granted or implied as a result
of SULZER's sending the Material to it. Nothing contained in this Agreement
shall restrict SULZER's right to disclose, use, sell assign, transfer or
distribute the Material to any other entity for commercial or non commercial
purposes.
7. Confidentiality. Subject to Section 5.3 hereof, for a period of 5 years from
the date of this Agreement, neither party will disclose or publish the results
of the Research to third parties other than in confidence to its directors,
officers, employees, consultants, corporate partners or potential corporate
partners. With the exception of the results of the Research, any confidential or
proprietary information provided by Biosyntech to SULZER shall be considered
Biosyntech's Proprietary Information and for a period of five years from the
date of disclosure of any Biosyntech Proprietary Information hereunder, SULZER
agrees that it will hold in confidence and not disclose or make available to any
third party, any Biosyntech Proprietary Information disclosed to it by or on
behalf of Biosyntech, will not use such Biosyntech Proprietary Information for
any purpose other than as advised or directed by Biosyntech and will not exploit
such Biosyntech Proprietary Information for its own benefit or the benefit of
another without the prior written consent of Biosyntech. With the exception of
the results of the Research, any confidential or proprietary information
provided by SULZER to Biosyntech shall be considered SULZER Proprietary
Information and for a period of five years from the latest date of disclosure of
any SULZER Proprietary Information hereunder, Biosyntech agrees that it will
hold in confidence and not disclose or make available to any third party, any
SULZER Proprietary Information disclosed to it by or on behalf of SULZER, will
not use such SULZER Proprietary Information for any purpose other than as
advised or directed by SULZER, and will not exploit such SULZER Proprietary
Information for its own benefit or the benefit of another without the prior
written consent of SULZER. Biosyntech Proprietary Information and SULZER
Proprietary Information shall not include information which:
a) is known to the public at the time of disclosure by the disclosing party or
become so known through no wrongful act on the part of the receiving party, but
only after it becomes so publicly known;
b) is in the receiving party's possession at the time of disclosure by the
disclosing party, as evidenced by written records;
c) becomes known to the receiving party through disclosure by sources not under
an obligation to the disclosing party to maintain such information in confidence
as evidenced by written records;
d) is independently developed by or on behalf of the receiving party without
reference to or reliance on the Proprietary Information of the disclosing party,
as evidenced by written records.
8. NO WARRANTY. THE MATERIAL IS PROVIDED TO SULZER AS-IS AND WITHOUT WARRANTY,
EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY , TITLE OR FITNESS
FOR A PARTICULAR PURPOSE AND WITHOUT ANY REPRESENTATION OR WARRANTY THAT THE USE
OF THE VEHICLE WILL NOT INFRINGE ANY PATENT, OR OTHER RIGHTS. THE MATERIAL IS
PROVIDED TO BIOSYNTECH AS-IS AND WITHOUT WARRANTY, EXPRESS OR IMPLIED, INCLUDING
ANY WARRANTY OF MERCHANTABILITY, TITLE OR FITNESS FOR A PARTICULAR
<PAGE>
PURPOSE AND WITHOUT ANY REPRESENTATION OR WARRANTY THAT THE USE OF THE MATERIAL
WILL NOT INFRINGE ANY PATENT, OR OTHER RIGHTS.
9. Indemnification. To the extend permitted under governing law, Biosyntech will
indemnify and hold SULZER harmless from any claims or liability resulting from
Biosyntech's use, handling or storage of the Material or Vehicle/Material
Product, except insofar as such claims or liability result from SULZER's
negligence or wrongdoing subject to SULZER providing prompt written notice of
any such claim or liability and Biosyntech having the right to control the
defence and/or settlement of such claim; and to the extent SULZER has been
negligent or engaged in wrongdoing, SULZER shall indemnify Biosyntech to the
extent permitted under governing law subject to Biosyntech providing prompt
written notice of any such claim or liability and having the right to control
the defence and/or settlement of such claim. To the extent permitted under
governing law, SULZER will indemnify and hold Biosyntech harmless from any
claims or liability resulting from SULZER's use, handling or storage of the
Vehicle or Vehicle/Material Product except insofar as such claims or liability
result from Biosyntech's negligence or wrongdoing, subject to Biosyntech
providing prompt written notice of any such claim or liability and SULZER having
the right to control the defence and/or settlement of such claim; and to the
extent Biosyntech has been negligent or engaged in wrongdoing, Biosyntech shall
indemnify SULZER to the extent permitted under governing law subject to SULZER
providing prompt written notice of any such claim or liability and Biosyntech
having the right to control the defence and/or settlement of such claim.
10. Termination. Either party may terminate this Agreement on thirty (30) days
prior written notice to the other party. Upon termination, SULZER shall destroy
any Vehicle/Material Product, shall immediately return to Biosyntech all
Biosyntech Proprietary Information provided by Biosyntech, and all Vehicle and
all of SULZER's right to use the Vehicle and the Vehicle/Material Products shall
end. Upon termination, Biosyntech shall destroy any Vehicle/Material Products,
shall immediately return to SULZER all SULZER Proprietary Information provided
by SULZER, and all Material and all of Biosyntech's right to use the Material
and the Vehicle/Material Products shall end. Following termination, neither
party shall have any further obligation under this Agreement, except that
Section 5 through 10 shall survive termination.
11. Modifications. This Agreement supersedes all prior agreements, written or
oral, including the Confidential Disclosure Agreement dated __________ between
Biosyntech and SULZER related to the subject matter of this Agreement provided
that the obligations of confidentiality and non-use attaching to the Proprietary
Information disclosed under such Confidential Disclosure Agreement shall survive
its termination. This Agreement may not be modified, changed or discharged, in
whole or in part, except by an agreement in writing signed by the Biosyntech and
SULZER.
12. Third Partied. Biosyntech and SULZER hereby represent that the acceptance of
the Material and Vehicle in accordance with, and the performance of all the
terms of this Agreement do not and will not breach or conflict with any other
agreement or arrangement to which Biosyntech or SULZER is a party.
13. Bailment. It is the intent of the parties that the transfer of Material to
Biosyntech or the transfer of Vehicle to SULZER be considered a bailment, and
shall be considered neither a conditional nor an unconditional sale. Any monies
transferred in conjunction with the transfer of Material, Vehicle and
information shall be only to cover the costs associated with the transfer, and
shall not represent consideration for an exchange of title thereto.
14. Miscellaneous. This Agreement (a) may not be assigned or transferred by any
party without the prior written consent of the other party, except that
Biosyntech or SULZER may assign this Agreement to an affiliated SULZER or in
connection with the merger, consolidation or sale of all or
<PAGE>
substantially all of its assets and (b) shall be governed by and construed in
accordance with the laws of the Province of Quebec, Canada.
<PAGE>
IN WITNESS WHEREOF, Biosyntech and SULZER have caused this Agreement to be
executed in their properly and duly authorized afficers or representatives.
Biosyntech Limited
Name: /s/ Francois Binette, Ph.D.
---------------------------------
Title: Vice President, Research & Development
Date: January 10, 2000
Biosyntech Limited
475, boul. Armand-Frappier
Laval (QC) H7V 4B3
Canada
Phone: (450) 686-2437
Facsimile: (450) 686-8952
SULZER Orthopedics*
Name: /s/ Werner Miller Ph.D.
-------------------------------
Title: Director Biotech Dept.
Date: January 7, 2000
Sulzer Orthopedics Ltd
Ko. St 113980/Geb 540,
CH-8404 Winterthur
CONFIDENTIALITY AGREEMENT
This Agreement is entered into this day May 31, 1999, between
Biosyntech ("Biosyntech" or the "receiving party") located at 475, boul. Armand
Frappier, Montreal (Laval) QC, CANADA H7V 4B3 and Reprogenesis, Inc.
("Reprogenesis" or the "communicating party") located at 21 Erie Street,
Cambridge, MA 02139.
WHEREAS, Reprogenesis and Biosyntech, either directly or through their
agents, are engaged in discussions concerning Reprogenesis' programs for use by
Reprogenesis or its affiliates and consultants, or both, in its business
operations, potential business operations, facility management, research and
manufacturing or production (including but not limited to new products,
improvements to existing products, business strategies, processes, and
accessories) of tissue engineered applications (hereinafter, the "Project"); and
WHEREAS, during such discussions Reprogenesis has communicated or will
communicate, i.e., in writing, orally, electronically, or otherwise, to
Biosyntech, Confidential Information (as hereafter defined) considered by
Reprogenesis to be confidential or proprietary;
NOW, THEREFORE, in consideration of the mutual covenants herein, and
other good and valuable consideration, receipt of which is hereby acknowledged,
Reprogenesis and Biosyntech hereby agree as follows:
1. CONFIDENTIAL INFORMATION. As used herein "Confidential
Information" shall include any technical or nontechnical information, data,
reports, studies, findings, formulae, specifications, designs, drawings,
sketches, photographs, plans, samples, inventions, ideas, or other material of
any kind (collectively "Information") in written, oral, tangible, or
electronically or magnetically stored form in connection with the Project
communicated by Reprogenesis to Biosyntech which Reprogenesis considers to be
confidential or proprietary and which (a) is so marked if communicated in
written, tangible, or electronically or magnetically stored form and (b), if
communicated orally, is stated by the communicating party to be confidential or
proprietary at the time of communication.
2. CONFIDENTIAL TREATMENt. Biosyntech agrees not to disclose the
Confidential Information of Reprogenesis to any third party or use the
Confidential Information of Reprogenesis in any manner or for any purpose other
than in the course of activities relating to the Project, unless receiving party
can establish by written evidence that such Confidential Information:
(a) was known to the receiving party prior to disclosure hereunder by
the other
<PAGE>
party; or
(b) is at the time it is received or becomes available to the public
without restriction or limitation on use or disclosure through no fault or
omission attributable to the receiving party; or
(c) is rightfully obtained by the receiving party from third parties
which rightfully possess such information and are not under obligations of
confidentiality to the other party; or
(d) was independently derived by the receiving party in activities not
related to the Project and not as a result of any disclosure under this
Agreement.
Biosyntech only may divulge Confidential Information of Reprogenesis
only to its employees, agents and consultants (1) who have a need to know as
part of such Martyrs use of the Confidential Information hereunder in activities
related to the Project and (2) who are under appropriate confidentiality
restrictions. In the event that a court or governmental agency legally compels
Biosyntech to disclose communicated information, such as that associated with a
valid discovery request, Biosyntech shall promptly inform Reprogenesis of the
compelled disclosure, so that Reprogenesis may seek a protective order or other
remedy or waive compliance with this Agreement, or both. Nevertheless,
Biosyntech shall limit any compelled disclosure of Confidential Information to
that legally required.
3. NO OTHER RIGHTs. The Confidential Information will remain the
exclusive property of Reprogenesis and this Agreement shall not be construed to
grant the receiving party any license or other right regarding the Confidential
Information of Reprogenesis.
4. RETURN OF CONFIDENTIAL INFORMATION. Upon written request, the
receiving party will return to the communicating party all embodiments of
Information in each case containing or constituting Confidential Information of
the communicating party disclosed to it in connection with this Agreement,
except one copy of such embodiments of Information may be retained for the sole
purpose of determining the receiving party's continuing obligations under this
agreement.
5. TERM. This agreement shall become effective as of the date hereof
and be valid for two (2) years thereafter. Thereafter, this Agreement shall be
automatically extended for additional one (1 ) year terms, except that either
party may terminate this Agreement upon written notice thirty (30) days prior to
the end of the initial two (2) year term or any additional one (1) year term.
Nevertheless, the obligations of limited use and non-disclosure shall remain in
effect for three (3) years from the date of the termination of the initial term
or the final additional term(s), unless further extended by a subsequent written
agreement between the parties.
6. MISCELLANEOUS. This Agreement shall be governed by the laws of the
Commonwealth of Massachusetts. This Agreement sets forth the entire agreement
and understanding between the parties hereto as to the subject matter hereof and
has priority over all documents, verbal consents, or understanding made between
the parties with respect to the subject matter hereof. None of the terms of this
Agreement shall be amended or modified except pursuant to a written document
signed by the parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
Biosyntech, Inc.
/s/ Francois Binette, PHD 5/31/99
------------------------- -------
Francois Binette, PHD Date
Vice President R & D
Reprogenesis, Inc.
/s/ Daniel R. Omstead, Eng. ScD 6/2/99
------------------------------- -------
Daniel R. Omstead, Eng. ScD Date
EXECUTION COPY
MATERIAL TRANSFER AGREEMENT
THIS MATERIAL TRANSFER AGREEMENT, is made as of this 27th day of July, 1999 (the
"Effective Date") by and between Reprogenesis, Inc., 21 Erie Street, Cambridge,
MA 02139 ("Reprogenesis") and Biosyntech Ltd., 475 boul Armand Frappier,
Montreal (Laval) QC CANADA H7V4A7 ("Biosyntech").
1. Background. Reprogenesis has developed and produced certain Material
(defined below). Biosyntech has developed and produced certain
Encapsulating Material (defined below). Reprogenesis and Biosyntech are
intent on developing a product based on Reprogenesis' cells (the
"Material") and Biosyntech's gel (the "Encapsulating Material") for the
Application (the "Product"). Reprogenesis will provide Biosyntech with
a sample of its Material for the optimization of a formulation to
ensure a cell viability and tissue regeneration (Research as defined
below). Upon completion of the Research, Biosyntech will provide the
results of the test to Reprogenesis on a confidential basis.
2. Definitions.
2.1. "Application" means use of the Product for bulking and plastic
and reconstructive surgery applications.
2.2 "Confidential Information" includes, without limitation, any
scientific, technical, trade or business information given to
one party by the other which is treated by the party providing
such information as confidential or proprietary, whether or
not such information is labeled or identified as
"Confidential."
2.3 "Confidential Information" does not include information which
(a) was known to the receiving party at the time it was
disclosed, other than by previous disclosure by the disclosing
party, as evidenced by written records at the time of
disclosure; (b) is at the time of disclosure or later becomes
publicly known under circumstances involving no breach of this
Agreement, (c) is lawfully and in good faith made available to
the receiving party by a third party who did not derive it
from the disclosing party and who imposes no obligation of
confidence on the receiving party.
2.4 "Developments" include, without limitation, ideas, concepts,
discoveries, inventions, developments, know-how, trade
secrets, techniques, methodologies, modifications,
innovations, improvements, writings, documentation, data and
rights (whether or not protectible under state, federal, or
foreign patent, trademark, copyright or similar laws) that
incorporate the Material, that could not have been developed
without the use of the Material, or that require the use of
the Material, that are conceived, discovered, invented,
developed, created, made or reduced to practice by Biosyntech,
<PAGE>
alone or jointly with others, during the terms of the Research
or thereafter and which relate to the Application, other than
the Product.
2.5 "Encapsulating Material" means Biosyntech's polymer based gel
and any progeny and unmodified derivatives of the
Encapsulating Material.
2.6 "Material" means the material to be transferred from
Reprogenesis to Biosyntech, as described in Section 11 below
together with any refills of the Material and any progeny and
unmodified derivatives of the Material (including, without
limitation, expression products, subclones, sub-units or
fractionations).
2.7 "Other Available Material" means cultures of human and
non-human chondrocytes cells, of auricular or other origin,
available from third parties.
2.8 "Research" means Biosyntech's research, as described in
Section 11 below attached to this Agreement.
2.9 "Product" is defined as a cell/gel composition comprising the
Material and the Encapsulating Material.
2.10 "Biosyntech Product Intellectual Property" includes, without
limitation, ideas concepts, discoveries, inventions,
developments, know-how, trade secrets, techniques,
methodologies, modifications, innovations, improvements,
writings, documentation, data and rights (whether or not
protectible under state, federal, or foreign patent,
trademark, copyright or similar laws) that incorporate the
Material, that could not have been developed without the use
of the Material, or that require the use of the Material, that
are conceived, invented, developed, created, made or reduced
to practice by Biosyntech, during the term of the Research or
thereafter and which relate to a Product.
2.11 "Joint Product Intellectual Property" includes, without
limitation, ideas, concepts, discoveries, inventions,
developments, know-how, trade secrets, techniques,
methodologies, modifications, innovations, improvements,
writings, documentation, data and rights (whether or not
protectible under state, federal, or foreign patent,
trademark, copyright or similar laws) that incorporate the
Material, that could not have been developed without the use
of the Material, or that require the use of the Material, that
are conceived, discovered, invented, developed, created, made
or reduced to practice by Biosyntech, jointly with employees
of, or consultants to Reprogenesis, during the term of the
Research or thereafter and which relate to a Product.
2.12. "Background Rights" includes intellectual property and other
rights each party has prior to the effective date of this
Agreement.
-2-
<PAGE>
3. Delivery of Material.
3.1. Initial Sample. Reprogenesis will use commercially reasonable
efforts to provide Biosyntech with the Material described in
Section 11 below.
4. Use of Material. Biosyntech will use the Material only in connection
with the research outlined in Section 11.
5. Acknowledgment; No Warranty; Indemnification.
5.1. Acknowledgment. Biosyntech acknowledges that the Material is
experimental and will comply with all laws and regulations
applicable to its handling and use.
5.2. No Warranty. THE MATERIAL IS PROVIDED TO BIOSYNTECH WITHOUT
WARRANTY, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, AND
REPROGENESIS MAKES NO REPRESENTATION THAT BIOSYNTECH'S USE OF
THE MATERIAL WILL NOT INFRINGE ANY PATENT OR OTHER PROPRIETARY
RIGHT OF ANY THIRD PARTY.
5.3 Indemnification. To the extent allowable under applicable
laws, Biosyntech agrees to indemnify and hold Reprogenesis
harmless from any claims and liabilities which might arise
from Biosyntech's use of the Material, except for those
arising from the gross negligence or willful misconduct of
Reprogenesis.
6. Ownership and Grant of Rights to Reprogenesis.
6.1. Material. Reprogenesis has developed techniques and processes
to efficiently produce the Material over a substantial period
of time at substantial expense, and these techniques and
processes are of great importance to Reprogenesis' business.
Biosyntech acknowledges that Reprogenesis is and will at all
times remain the owner of the Material, and all Background
Rights relating thereto. Reprogenesis nonetheless acknowledges
the existence of Other Available Material obtained using
techniques and processes that may vary from its own.
6.2 Exceptions. The rights, obligations and immunities provided by
sections 6.3 to 6.4 do not apply to ideas, concepts,
discoveries, inventions, developments, knowhow, trade secrets,
techniques, methodologies, modifications, innovations,
improvements, writings, documentation, data and rights
(whether or not protectible under state, federal, or foreign
patent, trademark, copyright or similar laws) that (a)
incorporate or are developed solely using Other Available
Material, (b) were developed independently without having
resort to the Material, the Confidential Information of
Reprogenesis or the results of the Research, and (c) if less
than two (2) years expired
-3-
<PAGE>
from the termination or expiration of this Agreement, relate
to applications other than the Application.
6.3 License for Commercialization of Product and Developments.
Biosyntech hereby grants Reprogenesis a first and exclusive
option to negotiate a commercialization license under the
Biosyntech Product Intellectual Property, Biosyntech's rights
in Joint Product Intellectual Property and Intellectual
Property directed to Developments to make, have made, use,
sell, distribute or otherwise commercialize the Product and
any Developments, but only in respect of the Application.
Reprogenesis may exercise this option in writing at any time
within one hundred and twenty (120) days after receipt of
notice from Biosyntech disclosing the Product or any
Development. Upon exercise of this option by Reprogenesis, the
parties agree to negotiate in good faith to reach agreement on
terms reasonably acceptable to both parties for an exclusive,
worldwide license to all commercialization rights in the
Product and/or any Development for the Application. Such terms
shall include the provision for payment by Reprogenesis of a
reasonable royalty as objectively determined by reference to
agreements of similar or analogous import and further taking
into account the respective parties' contribution to the
Product and any Developments and the value of the
Encapsulating Material. If the parties do not reach agreement
on such license terms within one hundred and twenty (120) days
of receipt of the Reprogenesis notice of intent to exercise
the option (which period may be extended by agreement in
writing), or if Reprogenesis does not exercise its option in
the original one hundred and twenty (120) day period,
Biosyntech shall be free to offer licenses to third parties.
6.4 Patent Applications. Biosyntech shall promptly disclose to
Reprogenesis in writing any Biosyntech Product Intellectual
Property, Joint Product Intellectual Property or Developments.
Any patent applications considered necessary in the reasonable
legal and business judgment of Biosyntech and Reprogenesis to
protect the parties proprietary position in the jointly-owned
Development will be prepared and filed by Biosyntech, jointly
in its and Reprogenesis' names, with the expenses being borne
by Biosyntech. If Biosyntech elects not to file or maintain an
application or patent in any country, which application or
patent arises from the jointly-owned Developments, Biosyntech
shall promptly notify Reprogenesis, and Reprogenesis shall
have the right to file or maintain these applications or
patents, in its and Biosyntech's name, but at Reprogenesis'
expense.
7. Confidentiality.
7.1. Nondisclosure of Confidential Information. Except as provided
in Section 8 below, neither party will directly or indirectly
publish, disseminate or otherwise disclose, deliver or make
available to any third party any of the other party's
Confidential Information, other than in furtherance of this
Agreement. Either party may disclose
-4-
<PAGE>
Confidential Information to a governmental authority or by
order of a court of competent jurisdiction, provided that such
disclosure is subject to all applicable governmental or
judicial protection available for like material and reasonable
advance notice is given to the disclosing party.
7.2. Protection. Biosyntech will exercise all commercially
reasonable precautions to protect the integrity and
confidentiality of the Material. Biosyntech will not remove
the Material from its premises except to the extent necessary
to fulfill its obligations under this Agreement, and then only
with the prior written consent of Reprogenesis.
8. Publication.
8.1. Right to Publish; Review by Reprogenesis. Notwithstanding
Biosyntech's confidentiality obligations under Section 7
above, Biosyntech will have the right to publish and disclose
the results of the Research. In order to balance this right
with Reprogenesis' proprietary interests, Biosyntech will
submit for Reprogenesis' review manuscripts, abstracts or
presentations intended for publication or other public
disclosure at least sixty (60) days prior to the date of
submission for publication or of public disclosure.
Reprogenesis will use reasonable efforts to complete its
review promptly and will complete its review within sixty (60)
days of receipt of the submitted documents. Reprogenesis may
request that Biosyntech delete from its documents any
reference to Reprogenesis' Confidential Information. At the
end of this sixty (60) day period, Biosyntech will have the
right to publish the documents, as amended by Reprogenesis
solely to delete any reference to Reprogenesis' Confidential
Information and subject to Reprogenesis' rights under Section
8.2 below.
8.2. Opportunity to File Patent Applications. If, during its sixty
(60) day review period, Reprogenesis notifies Biosyntech that
it desires patent applications to be filed on any Developments
relating to the Applications disclosed or contained in the
documents, Biosyntech will defer publication or other
disclosure for a period, not to exceed ninety (90) days from
the date of submission to Reprogenesis, sufficient to permit
the filing of any desired patent applications.
9. Termination.
9.1. Termination for Cause. Either party may terminate this
Agreement for cause at any time upon thirty (30) days prior
written notice to the other parties. "Cause" means a material
breach by the other party of this Agreement where such breach,
if curable, is not remedied to the non-breaching party's
reasonable satisfaction within such thirty (30) day period.
-5-
<PAGE>
9.2. Termination by Either Party Without Cause. Either party may
terminate this Agreement at any time without cause upon not
less than sixty (60) days prior written notice to the other
parties.
9.3. Effect of Termination or Expiration. Upon termination or
expiration of this Agreement for any reason Biosyntech shall
return immediately to Reprogenesis its Confidential
Information and copies thereof, and any and all unused samples
of the Material, and all of Biosyntech's rights to use the
Material shall cease. Biosyntech shall also destroy all
samples of the Product in its possession. Following
termination or expiration, neither party shall have any
further obligations under this Agreement, except that Section
5 through 10 shall survive.
10. Miscellaneous.
10.1. Notice. All communications and notices from one party to the
others will be in writing and will be given by addressing the
same to the other at the address or facsimile number set forth
in this Agreement, or at such other address or facsimile
number as either may specify in writing to the other.
Communications and notices to Reprogenesis will be marked
"Attention: External Research Department." All notices will
become effective when deposited in the United States or
Canadian Mail with proper postage for first class registered
or certified mail prepaid, return receipt requested, or when
delivered personally, or, if promptly confirmed by mail as
provided above, when dispatched by facsimile.
10.2. Assignment. This Agreement, and the rights and obligations
hereunder, may not be assigned or transferred by any party
without the prior written consent of the other parties, except
that Reprogenesis may assign this Agreement to an affiliated
company or in connection with the merger, consolidation or
sale of all or substantially all of its assets.
10.3. Entire Agreement. This Agreement constitutes the entire
agreement of the parties with regard to its subject matter and
supersedes all previous written or oral representations,
agreements and understandings between Reprogenesis and
Biosyntech.
10.4. No Modifications. This Agreement may be changed only by a
writing signed by the parties.
10.5. Severability. In the event that any one or more of the
provisions contained in this Agreement shall, for any reason,
be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall
not affect any other provisions of this Agreement, and all
other provisions shall remain in full force and effect. If any
of the provisions of this Agreement is held to be excessively
broad, it
-6-
<PAGE>
shall be reformed and construed by limiting and reducing it so
as to be enforceable to the maximum extent permitted by law.
10.6. Applicable Law. This Agreement will in all events and for all
purposes be governed by, and construed in accordance with, the
law of The Commonwealth of Massachusetts without regard to any
choice of law principle that would dictate the application of
the law of another jurisdiction.
11. Definition of Material to be Supplied to Biosyntech and Biosyntech
Research. The material to be supplied to the Biosyntech consists of
Reprogenesis', cultures of human and non-human auricular derived
chondrocyte cells. Biosyntech is to conduct preliminary research to
determine whether the Material and the Encapsulating Material may
appropriately be combined for use in the Application and for the
optimization of a formulation to ensure a cell viability and tissue
regeneration. Cultures of human and non-human derived chondrocytes
shall only be used in in vitro experiments by the Biosyntech.
Biosyntech shall not use any of Reprogenesis' materials in in vivo
experiments.
12. Signature Page.
Biosyntech:
Francois Binette, PhD
Vice President, R&D
Biosyntech, LTD
475, boul Armanda Frappier
Montreal (Laval) QC
CANADA H7V4A7
/s/ Francois Binette, PhD 7/27/99
-------------------------------- ----------------------
Signature Date
Reprogenesis:
Dan Ousted, Eng. CD
President and CEO
Reprogenesis, Inc.
21 Erie Street
Cambridge, MA 02139
/s/ Dan Ousted, Eng. CD 7/22/99
------------------------------------ ----------------------
Signature
-7-
CONFIDENTIAL DISCLOSURE AGREEMENT
This Agreement is made by and between Ophidian Pharmaceuticals, Inc.
(hereinafter "OPHIDIAN"), a Delaware corporation with offices at 5445 East
Cheryl Parkway, Madison, WI., 53711 and Biosyntech Ltd., (hereinafter
"BIOSYNTECH") a Canadian corporation with offices at 475 Boulevard Armand
Frappier, Montreal (Laval) QC, CANADA H7V 4B3. This Agreement will confirm the
mutual interest of OPHIDIAN and BIOSYNTECH in sharing certain information and
providing for protection of that information. Each party shall disclose to the
other certain confidential business and technology information for the sole
purpose of evaluating a business relationship.
RECITALS
Each undersigned party, intending to be legally bound, understands that the
other party (the Disclosing Party) intends to disclose information relating to
the Disclosing Party's business so that the other party (the Receiving Party)
may evaluate such information on the following terms and conditions:
1. Following the full execution of this Agreement, each party will disclose to
the other party certain of its confidential, proprietary information, and
other Confidential Information, relating to pharmaceutical research,
development, manufacturing and marketing. Such Confidential Information may
include, but is not necessarily limited to, business concepts, market
analysis, technology, processes, data, materials, patent applications and
medical or other applications, except any portion thereof which:
(a) at the time of disclosure is in the public domain;
(b) after disclosure becomes part of the public domain, except by breach
of this Agreement;
(c) was in the possession of the recipient at the time of disclosure and
was not acquired, directly or indirectly, under an obligation of
confidentiality, as established by competent written evidence;
(d) was received by recipient from a third party who is not, directly or
indirectly, under an obligation for confidentiality to the Disclosing
Party with respect to such information;
(e) is required by a judicial or administrative agency of competent
jurisdiction to be disclosed, after maximum practicable notice by the
receiving party to the disclosing party; or,
(f) was developed by or for the Recipient independent of disclosure
hereunder as evidence by Recipient's written records.
2. The Receiving Party agrees not to use the Confidential Information provided
by the Disclosing Party for any purpose other than the evaluation of the
aforementioned business relationship.
3. The Receiving Party agrees to limit distribution of and access to
Confidential Information only to employees, officers, and directors within
the Receiving Party's immediate organization (and within any parent,
subsidiary or affiliated entity) and outside, third party consultants bound
by confidentiality requirements no less stringent than those contain within
this agreement, and then only to those individuals who have a legitimate
"need to know" for the above described evaluation purpose. Each party shall
take all reasonable steps to ensure that
<PAGE>
such employees, whether during or after their employment with the Receiving
party, shall keep the Disclosing Party's Confidential Information secret from
other entities.
4. Receipt and evaluation of information shall be limited to a one (1) year
period following the date of full execution of this Agreement, unless
extended by written agreement signed by the parties. Upon thirty (30) days
written notice to the other party, either party may terminate this
agreement; provided, however, that all obligations of nondisclosure and
non-use, as well as those provisions which by their nature should survive
termination, shall so survive for a period of three (3) years from the date
hereof.
5. The existence, terms, nature, or subject matter of this Agreement are
confidential and shall be treated as Confidential Information pursuant to
the terms of this Agreement.
6 Confidential Information received from the Disclosing Party and any
developments materially derived therefrom are and shall remain the sole
property of the Disclosing Party. Nothing herein shall be deemed to
constitute by implication or otherwise the license or grant to the
Receiving Party by the Disclosing party, except as anticipated for the
purpose of this Agreement, of any intellectual property right to or
interest in the Disclosing Party's information and/or any information,
technology and/or products materially derived or developed therefrom,
notwithstanding the exceptions set forth in Paragraph 1 herein. The
Receiving Party shall not use, develop, disclose to any third party, and/or
commercials e any of the foregoing without the Disclosing Party s written
consent. No agency or partnership relationship is created by this
Agreement; no warranties, right to use or fitness for any purpose or of any
other kind are made by either Disclosing Party; and it is understood that
neither party has any obligation to enter into any further agreements with
the other related to any business or any other matter.
7. Nothing in this Agreement shall be deemed, by implication or otherwise to
convey to the Receiving Party any rights under any patents, patents
application, copyrights, trademarks, trade secrets, inventions or any other
intellectual property in which the Disclosing Party has rights or
interests, nor shall this Agreement be deemed a commitment of any kind by
either the Receiving Party or the Disclosing Party to enter in to an future
agreement with the other.
8. Each Receiving Party shall exercise due care--not less than the care
accorded its own valuable Confidential Information--to prevent the
unauthorized disclosure of Confidential Information received from the
Disclosing Party hereunder, or its use for any purpose other than
evaluation and consultation with the Disclosing party.
9. Each party represents that it has the right to make disclosures under this
Agreement; that it will not disclose to the other any information
confidential to any third party; and that the terms of this Agreement are
not inconsistent with other contractual and/or other legal obligations it
may have, or with the policies of any institution with which it is
associated.
10. Upon termination of either mutual evaluations or business relations between
parties, or within thirty (30) days, if otherwise requested by either
parry, each Receiving Party shall, upon written return to the Disclosing
Party all written or other physical embodiments of Confidential Information
(including tangible materials, unless requested by the Disclosing Party to
properly destroy or dispose thereof), together with all full or partial
copies thereof, as shall then be in the Receiving Party's possession,
except that each party may retain one complete record copy of the other
party's Confidential Information for archival purposes and to assure
compliance with this Agreement.
11. This Agreement shall be governed and construed in accordance with the laws
of the State of Delaware, United States of America without regard to
principles of conflict of laws, and this original English language version
of the Agreement shall be controlling in all respects. In the event legal
action becomes necessary for the enforcement or interpretation of this
Agreement such action will be brought in the US District Court for the
Western District of Wisconsin, and the parties will submit to the venue and
jurisdiction of said courts.
12. No course of conduct or dealing between the parties shall act as a
modification or waiver of any provision of this Agreement, unless such
modification or waivers are- contained in writing and signed by duly
authorized representative of each party
Ophidian Pharmaceuticals, Inc. BIOSYNTECH LTD.
By: /s/ Douglas C. Stafford, Ph.D. By: /s/ Francois Binette
------------------------------ --------------------
Name: Douglas C. Stafford, Ph.D. Name: Francois Binette
Title: President and CEO Title: Vice President R&D
Date: 12 August 1999 Date: 8/16/99
------------------------------ ---------------------------
Biological Materials Transfer Agreement
This Agreement by and between OPHIDIAN PHARMACEUTICALS, INC. (hereinafter
OPHIDIAN), a Delaware corporation, having a principal address at 5445 East
Cheryl Parkway, Madison, WI 53711 and BIOSYNTECH LTD., (hereinafter
"BIOSYNTECH") a Canadian corporation with offices at 475 Boulevard Armand
Frappier, Montreal (Laval) QC, CANADA H7V 4B3 and shall govern the conditions of
transfer of materials and the confidential disclosure of proprietary information
to and from the aforementioned parties.
Whereas BIOSYNTECH and OPHIDIAN desire to receive certain Materials and
Information from the other party to this agreement for scientific and commercial
evaluation;
Whereas OPHIDIAN and BIOSYNTECH are willing to provide the Materials and
Information described herein;
Now, therefore OPHIDIAN and BIOSYNTECH agree as follows:
1. "Materials" shall mean proprietary original materials of the
respective parties;
2. "Information" shall mean, subject to paragraph 4 below, all
information relating to the Materials;
3 Materials shall remain the sole property of the party providing them.
The Providing Party shall retain all intellectual property rights in
Materials and Information. The Receiving Party shall not transfer
materials and materials derived from Materials to anyone other than
its employees. Only those employees of the Receiving Party with a
legitimate need for access will have access to Materials or
Information. Materials may not be transferred or taken by the
Receiving Party to another institution or company without the prior
written consent of the Providing Party. Materials will not be sold to
third parties and shall not be used for research, testing or treatment
involving human subjects or for making any clinical decisions relating
to human diagnosis or care.
4. Information generated during this material transfer and evaluation
shall be retained in confidence by both parties for three (3) years
and shall not be disclosed to third parties, unless the information:
a) at the time of disclosure is in the public domain; b) disclosure
becomes part of the public domain, except by breach of this Agreement;
c) was in the possession of the recipient of the information at the
time of disclosure as established by competent written evidence; d)
was received from a third party who is not, directly or indirectly,
under an obligation of confidentiality with respect to such
information; or e) is approved for public release by written
authorization of the other party to this agreement.
5 The Receiving Party agrees to use Materials or Information and the
results of Receiving Party's evaluation of Materials to; a) examine
the possibility of entering into a business relationship with the
Providing Party, and not for any other commercial purposes.
6. OPHIDIAN and BIOSYNTECH agree that nothing herein shall create or
imply any obligation to enter into any other agreement.
7. Information or materials received from the Providing Party and any
developments materially derived therefrom are and shall remain the
sole property of the Providing Party. Nothing herein shall be deemed
to constitute by implication or otherwise the license or grant to the
Receiving Party by the Providing Party of any intellectual property
right to or interest in the Providing Party's information and/or any
information, technology and/or products materially derived or
<PAGE>
developed therefrom, except as the parties may subsequently agree in
writing. The Receiving Party shall not use, develop, disclose to any
third party, and/or commercialize any of the foregoing without the
Providing Party's written consent. No agency or partnership
relationship is created by this Agreement; no warranties are made by
the Providing Party or right to use or fitness for any purpose or of
any other kind; and it is understood that neither party has any
obligation to enter into any further agreements with the other related
to any Technology or any other matter.
8. The Materials to be delivered by the Providing Party to the Receiving
Party are to be used in a safe manner and in accordance with all
applicable governmental rules and regulations. They are provided by
the Providing Party "AS IS." THE PROVIDING PARTY MAKES NO
REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY KIND, EITHER EXPRESS
OR IMPLIED, WITH RESPECT TO THE MATERIALS AND EXPRESSLY DISCLAIMS ALL
IMPLIED WARRANTIES OF MERCHANTABILITY AND OF FITNESS FOR A PARTICULAR
PURPOSE OR USE. THE PROVIDING PARTY DISCLAIMS ALL WARRANTIES OF NON
INFRINGEMENT WITH RESPECT TO ANY THIRD PARTY RIGHTS AND TITLE,
INCLUDING PATENT RIGHTS, IN THE MATERIALS.
9. Except to the extent specifically precluded by applicable federal or
state law, the Receiving Party agrees to defend, indemnify and hold
the Providing Party and its directors, trustees, appointees, employees
and agents harmless from any claims, liabilities, damages and losses
that might arise as a result of the Receiving Party use of the
Providing Party Materials or the Providing Party Information. Where
such indemnity is precluded, the Receiving Party assumes sole
responsibility for any claims, liabilities, damages and losses that
might arise as result of the Receiving Party use of the Materials.
10. Upon conclusion of the evaluation using the Providing Party Materials
or upon request by the Providing Party, the Receiving Party agrees to
discontinue use of the Providing Party Materials and will arrange for
the return to the Providing Party or for the lawful disposal of all
unused Providing Party Materials, as elected by the Providing Party.
11. This Agreement shall be governed and construed in accordance with the
laws of the State of Delaware without regard or giving effect to its
principles of conflict of laws. This Agreement constitutes the entire
agreement and understanding of the parties and supersedes any prior
agreements or understandings relating to the subject matter hereof
with the exception of the Confidentiality Agreement dated 12 August
1999 between the aforementioned parties. This agreement may not be
modified except by a written instrument signed by all parties. No
provision or benefit of this agreement may be waived, except by
Written instrument duly executed by the party or parties to be charged
therewith.
/S/ Francois Binette Date 8/16/99 /S/ Douglas C. Stafford Date: 8/12/99
-------------------- ------------ ----------------------- -------------
Francois Binette Douglas C. Stafford
Vice-President R&D President and CEO
Biosyntech Ltd. OPHIDIAN Pharmaceuticals, Inc.
475 Blvd. Armand-Frappier 5445 East Cheryl Parkway
LAVAL. QC. Madison, WI 53711
CANADA H70-4B3
MUTUAL CONFIDENTIALITY AND NON-DISCLOSURE AGREEMENT
THIS CONFIDENTIALITY AND NON-DISCLOSURE AGREEMENT (the "Agreement") is
entered into by and between VIRAGEN, INCORPORATED ("VIRAGEN"), a Florida
corporation, having a principal place of business at 865 S.W. 78th Avenue, Suite
100, Plantation, Florida 33324, and BIOSYNTECH LTD. ("BIOSYNTECH", having a
principal place of business at 475 Boulevard Armand Frappier, Laval QC, Canada
H7V 4b3.
WHEREAS, BIOSYNTECH is in the business of developing, manufacturing and
marketing the BST-GEL(TM) and BST-CARGEL(TM) advanced big-materials used in
drug, cell and gene delivery systems, big-engineered artificial tissues and
injectable self-forming implants; and
WHEREAS, VIRAGEN is in the business of manufacturing and clinical
development of biological response modifiers, including interferons; and
WHEREAS, VIRAGEN and BIOSYNTECH (the "Parties") are willing to disclose
to each other certain confidential information for the purpose of evaluating the
possibility of entering into a business relationship (which purpose is
hereinafter referred to as the "Purpose of this Agreement");
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the Parties agree as follows:
1. CONFIDENTIAL INFORMATION. The term "Confidential Information" as
used in this Agreement shall mean any and all non-public information disclosed
by one party (the "Disclosing Party") to the other party (the "Receiving Party")
in a written or tangible form (including fax transmissions, electronic mail, and
electronic media) clearly marked (or, in the case of electronic media, otherwise
clearly identified) as being confidential, and relating to the Purpose of this
Agreement. Confidential Information shall expressly include any and all
information derived from the foregoing Confidential Information.
2. CONFIDENTIALITY OBLIGATIONS. The Receiving Party shall keep the
Confidential Information in strict confidence, and shall not disclose it to any
person, fun or corporation, nor use the Confidential Information for any purpose
other than for the specific
-1-
<PAGE>
Purpose of this Agreement without the prior written consent of the Disclosing
Party. The Receiving Party shall protect and safeguard the Confidential
Information furnished by the Disclosing Party by using the same degree of care,
but no less than a reasonable degree of care, to prevent the unauthorized use,
dissemination or publication of the Confidential Information as the Receiving
Party uses to protect its own confidential or proprietary information of a like
nature. The Receiving Party shall limit the disclosure of the Confidential
Information to only such officers, employees or agents of the Receiving Party
who need to know such information in order to accomplish the Purpose of this
Agreement. The Receiving Party agrees that all such officers, agents and
employees shall be notified of the proprietary nature of the Confidential
Information
3. EXCEPTIONS. The obligations of confidentiality contained in
Paragraph 2 shall not apply to any information which:
(a) is proven by written evidence to have been known to the
Receiving Party at the time of disclosure; or
(b) is or becomes publicly known or available through no act or
fault of the Receiving Party; or
(c) is rightly received by the Receiving Party from a third party
who was authorized to disclose such information; or
(d) is proven by written evidence to have been independently
developed by the Receiving Party; or
(e) is approved for release by written authorization of the
Disclosing Party; or
(f) is disclosed by the Receiving Party pursuant to law or any
governmental or court order, provided that the Receiving Party shall first have
given notice to the Disclosing Party of such order and made a reasonable effort
to obtain a protective order.
4. DURATION. The obligations of confidentiality contained in Paragraph 2
shall extend for a period of five (5) years from the date of disclosure of such
information.
5. RETURN OF DOCUMENTS. Upon the written request of the Disclosing Party
at any time, the Receiving Party shall immediately return to the Disclosing
Party all written Confidential Information except for one copy for archival
purposes which will be kept by the General Counsel of the Receiving Party.
-2-
<PAGE>
6. RELATION BETWEEN PARTIES. At all times, Confidential Information shall
be and remain the property of the Disclosing Party. This Agreement does not
grant either party any express or implied rights under the other party's
patents, know-how, trade secrets, copyrights, trademarks or other intellectual
property rights or applications therefor. The Parties make no representation
that any type of business relation will be concluded between the Parties.
Nothing in this Agreement shall be deemed to create a partnership or joint
venture between the Parties.
7. MISCELLANEOUS. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida. This Agreement constitutes the
complete agreement of the Parties and supersedes all previous understandings,
agreements or representations, written or oral, between the Parties to this
Agreement. This Agreement may not be amended except by written instrument signed
by both Parties. In the event that any one or more of the provisions of this
Agreement is unenforceable, the enforceability of the remaining provisions shall
be unimpaired.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement in
duplicate on the date(s) set forth below.
BIOSYNTECH, LTD. VIRAGEN, INC.
By: /s/ Francois Binette By: /s/ Mel Rothberg
------------------------ --------------------
Name: Francois Binette Name: Mel Rothberg
Title: V.P. R&D Title: Executive V.P.
Date: 9/20/99 Date: 8/30/99
CONFIDENTIAL DISCLOSURE AGREEMENT
This agreement, effective as of October 26, 1999 between Biosyntech
Limited, having its place of business at 475, Boul. Armand-Frappier, Montreal
(Laval) QC Canada H7V 4B3("Company"), and Ontogeny, Inc., a Delaware corporation
having its place of business at 45 Moulton Street, Cambridge, MA 02138
("Ontogeny").
1. BACKGROUND. Company and Ontogeny intend to engage in discussions and
negotiations concerning the establishment of a business relationship between
them. In connection with such discussions and negotiations, it is anticipated
that Company may disclose or deliver to Ontogeny certain of its trade secrets or
confidential or proprietary information in the field of Gel-based delivery
systems (the "Company Field") and that Ontogeny may disclose or deliver to
Company certain of its trade secrets or confidential or proprietary information
in the field of growth/inducing factors (the "Ontogeny Field") for the purpose
of enabling the other party to evaluate the feasibility of such business
relationship. The parties have entered into this Agreement in order to assure
the confidentiality of such trade secrets and confidential or proprietary
information in accordance with the terms of this Agreement. As used in this
Agreement, the party disclosing Proprietary Information (as defined below) is
referred to as the "Disclosing Party"; the party receiving such Proprietary
Information is referred to as the "Recipient".
2. PROPRIETARY INFORMATION. As used in this Agreement, the term
"Company Proprietary Information" shall mean any and all information, data
specifications, techniques, formulae, manufacturing processes, and other
information in or concerning the Company Field disclosed in writing by Company
to Ontogeny (or if orally or visually disclosed, confirmed in writing within 30
days of such disclosure) and designated as confidential. As used in this
Agreement, the terms "Ontogeny Proprietary Information" shall mean any and all
information, data, specifications, techniques, formulae, manufacturing
processes, and any other information in or concerning the Ontogeny Field
disclosed in writing by Ontogeny to Company (or if orally or visually disclosed,
confirmed in writing within 30 days of such disclosure) and designated as
confidential. Company Proprietary Information and Ontogeny Proprietary
Information are collectively referred to herein as "Proprietary Information".
3. TERM. The provisions of this Agreement shall remain in force for
five years from the date of this Agreement. ----
4. DISCLOSURE OF PROPRIETARY INFORMATION. The Recipient shall hold in
confidence, and shall not disclose to any person outside its organization, any
Proprietary Information. The Recipient shall use such Proprietary Information
only for the purpose for which it was disclosed and shall not use or exploit
such Proprietary Information for its own benefit or the benefit of another
without the prior written consent of the Disclosing Party. The Recipient shall
disclose Proprietary Information received by it under this Agreement only to
persons within its organization who have a need to 'know such Proprietary
Information in the course of the performance of their duties and who are bound
to protect the confidentiality of such Proprietary Information.
5. LIMITATION ON OBLIGATIONS. The obligations of the Recipient
specified in Section 4 above shall not apply, and the Recipient shall have no
further obligations, with respect to any Proprietary Information to the extent
that such Proprietary Information:
<PAGE>
(a) is known to the public at the time of disclosure or becomes so
known through no wrongful act on the part of the Recipient, but only after it
becomes so publicly known;
(b) is in the Recipient's possession at the time of disclosure as
evidenced by written records;
(c) becomes known to the Recipient through disclosure by sources not
under an obligation to the disclosing party to maintain such information in
confidence; or
(d) is independently developed by or on behalf of the Recipient by an
individual or individuals not having received Proprietary Information hereunder;
Notwithstanding the above, the Recipient may disclose such Proprietary
Information as may be required to comply with applicable laws or governmental
regulations, provided that the Recipient provides notice to the Disclosing Party
of this request promptly prior to any disclosure to permit the Disclosing Party
to oppose such disclosure by appropriate legal action or to evaluate whether
means can be taken to provide such disclosure on a confidential basis.
6. NO LICENSe. It is understood that no right to a license, implied or
otherwise, under any patent or other rights now or hereafter owned or controlled
by the Disclosing Party, is granted to the Recipient by this Agreement and that
the disclosure of information does not grant any party any right in and to such
information.
7. RETURN OF DOCUMENTS. The Recipient shall, upon the request of the
Disclosing Party, return to the Disclosing Party all drawings, documents and
other tangible manifestations of Proprietary Information received by the
Recipient pursuant to this Agreement (and all copies and reproductions thereof),
except that the Recipient may retain one copy thereof solely for the purpose of
determining the extent of its obligations hereunder.
8. MISCELLANEOUS.
(a) This Agreement supersedes all prior agreements, written or oral,
between the Disclosing Party and the Recipient relating to the subject matter of
this Agreement. This Agreement may not be modif ed, changed or discharged, in
whole or in part, except by an agreement in writing signed by the Disclosing
Party and the Recipient.
(b) This Agreement will be binding upon and inure to the benefit of the
parties hereto and their respective heirs, successors and assigns.
(c) The obligations and rights of the parties under this Agreement
shall be governed by the internal laws of the Commonwealth of Massachusetts,
U.S.A., without reference to its conflict of laws rules.
(d) Each party acknowledges that disclosure of the Proprietary
Information of the other party or use of the Proprietary Information of the
other party contrary to the provisions of this Agreement is likely to cause
irreparable harm to the Disclosing Party for which damages at law may not be an
adequate remedy, and the Recipient agrees that the Disclosing Party shall be
entitled to injunctive relief to enjoin the
<PAGE>
breach of any provisions of this Agreement or to specifically enforce any of the
Recipient's obligations hereunder. Notwithstanding, but not in limitation of the
foregoing, the Recipient shall be responsible to the Disclosing Party for any
damages arising from the breach by the Recipient of any of the covenants and
obligations on its part to be observed or performed under this Agreement, in
addition to any and all other remedies available to the Disclosing Party at law
or in equity.
(e) The parties shall adhere to the U.S. Export Administration Laws and
Regulations and shall not export or re-export any technical data received from
any other party hereunder or the direct product of such technical data to any
proscribed country listed in the U.S. Export Administration Regulations unless
properly authorized by the U.S. Government.
EXECUTED as a sealed instrument as of the day and year first set forth
above.
BioSyntech Limited
By: /s/ Francois Binette
-------------------------
Francois Binette
Title: Vice President R&D
Ontogeny, Inc.
By: /s/ Raul Rodriguez
------------------------
Raul Rodriguez
Title: Senior V.P., Business Development
MATERIAL TRANSFER AGREEMENT
This Material Transfer Agreement (together with its Exhibits referred to herein
as the "Agreement") governs the transfer of certain substances from time to time
from Ontogeny, Inc., ("Ontogeny") to Biosyntech Limited having its place of
business at 475, bout, Armand-Frappier, Montreal (Laval) QC Canada H7V 4B3
("COMPANY").
1. BACKGROUND. Ontogeny desires to obtain samples of COMPANY's proprietary
delivery vehicle described in Exhibit A (such delivery vehicle, excluding
the Materials, together with its progeny, derivatives or improvements is
referred to herein as the "Vehicle") to evaluate the Vehicle's suitability
in its animal models set forth in Exhibit B. COMPANY desires to obtain
samples of the material described in Exhibit A from Ontogeny for use in the
research described in Exhibit A under the terms and conditions of this
Agreement. Such material, together with its progeny, derivatives or
improvements is referred to herein as "Material". As part of the research
described in Exhibit A, COMPANY will incorporate the Material into
COMPANY's Vehicle. The Vehicle containing the Material shall be referred to
herein as the Vehicle/Material Product. Additionally, Ontogeny may desire
to evaluate Vehicle/Material Product in accordance with Exhibit B. The
research set forth in Exhibits A and B shall be considered "Research" under
this Agreement. COMPANY shall own all title and interest in and to the
Vehicle.
2. THE MATERIAL AND THE RESEARCH. COMPANY acknowledges that Ontogeny has
rights to the Material. Ontogeny will supply COMPANY with such quantities
of the Material as COMPANY may reasonably request and as Ontogeny may make
available, in its sole discretion, from time to time. However, Ontogeny
shall be under no obligation to supply any Material at any time and may
cancel the supply of Material at any time without advance notice. COMPANY
will use the Material, the Vehicle/Material Product and any product or
process derived from the use of the Material or the Vehicle/Material
Product, solely in its Research set forth in Exhibit A and for no other
purpose. The Material and the Vehicle /Material Product will not be used by
COMPANY in research that is subject to consulting or licensing obligations
to another party, unless Ontogeny gives its prior, express written
permission. The Research will be conducted solely by COMPANY at its
research facilities. None of the Material or Vehicle/Material Product will
be transferred or sold to third parties. COMPANY WILL NOT USE THE MATERIAL
OR VEHICLE/MATERIAL PRODUCT FOR TESTING IN OR TREATMENT OF HUMAN SUBJECTS.
COMPANY acknowledges that the Material and Vehicle/Material Product is
experimental and will comply with all laws and regulations applicable to
its handling and use. Any Material remaining upon completion of the
Research will be returned to Ontogeny.
1
<PAGE>
Any Vehicle/Material Product remaining upon completion of the Research will
be destroyed by COMPANY.
3. THE VEHICLE AND THE RESEARCH. COMPANY will supply Ontogeny with such
quantities of the Vehicle as Ontogeny may reasonably request and as COMPANY
may make available, in its sole discretion, from time to time. However,
COMPANY shall be under no obligation to supply any Vehicle at any time and
may cancel the supply of Vehicle at any time without advance notice.
Additionally, COMPANY will supply Ontogeny with such quantities of the
Vehicle/Material Product or other related materials as needed by Ontogeny
in order to conduct the Research set forth in Exhibit B hereto. Ontogeny
will use the Vehicle, the Vehicle/Material Product and any product or
process derived from the use of the Vehicle or the Vehicle/Material
Product, solely in its Research set forth in Exhibit Band for no other
purpose. The Research will be conducted solely by Ontogeny at its research
facilities or by a third party contractor at their facilities. None of the
Vehicle or Vehicle/Material Product will be transferred or sold to third
parties other than the aforesaid third party contractors. ONTOGENY WILL NOT
USE THE VEHICLE OR VEHICLE/MATERIAL PRODUCT FOR TESTING IN OR TREATMENT OF
HUMAN SUBJECTS. COMPANY acknowledges that the Vehicle and Vehicle/Material
Product is experimental and will comply with all laws and regulations
applicable to its handling and use. Any Vehicle remaining upon completion
of the Research will be returned to COMPANY. Any Vehicle/Material Product
remaining upon completion of the Research will be destroyed by Ontogeny.
4. IN VIVA STUDIES. If COMPANY or Ontogeny is using the Vehicle/Material
Product for non-human in vivo studies, it will comply with all applicable
federal, state and local laws and regulations.
5. INVENTIONS.
5.1 DISCLOSURE. COMPANY will promptly and fully disclose in writing to Ontogeny
any and all inventions, (whether or not protectable under state, federal or
local laws) related to the Material, the Vehicle/Material Product or their
use, or developed using the Material, or the Vehicle/Material Product which
are conceived and/or reduced to practice by COMPANY, in the course of its
Research and Ontogeny will promptly and fully disclose in writing to
COMPANY any and all inventions, (whether or not protectable under state,
federal or local laws) related to the Vehicle, the Vehicle/Material Product
or their use, or developed using the Vehicle, or the Vehicle/Material
Product which are conceived and/or reduced to practice by Ontogeny, in the
course of its Research (collectively, the "Invention(s)").
5.2 RIGHTS.Except as provided herein, ownership of any Invention shall be
determined in accordance with the applicable intellectual property laws of
the United States of America. Notwithstanding any other provision contained
in this Agreement (a) Ontogeny shall solely own those Inventions
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<PAGE>
that are directed to Material or relate to the use thereof, except in
combination with the use of the Vehicle and (b) COMPANY shall solely own
those Inventions that are directed to the Vehicle or relate to the use
thereof, except in the combination with the use of the Material. Ontogeny
and Company hereby agree that a party may not use information from the
Research to file a patent application without the prior written consent of
the other party on any Inventions that cover (i) the Vehicle and the
Material, (ii) the combination of the Vehicle and the use of the Material;
(iii) the combination of the Material and the use of the Vehicle, or (iv)
the combination of the use of the Vehicle and the use of the Material
("Joint Inventions"). COMPANY represents and warrants that no other person
has any prior right to ownership of Joint Inventions or a prior right to
acquire a license under such Joint Inventions by reason of any action or
agreement by COMPANY, except as disclosed in the Agreement in Exhibit C.
5.3 PATENT APPLICATIONS. Subject to Section 5.2 any and all patent applications
necessary to protect the proprietary position of solely owned Inventions by
Ontogeny will be prepared, filed and maintained by Ontogeny with expenses
paid by Ontogeny. Subject to Section 5.2 any patent application necessary
to protect the proprietary position of solely owned Inventions by COMPANY
will be prepared, filed and maintained by COMPANY with expenses paid by
COMPANY. For any and all patent applications on Joint Inventions, both
Ontogeny and COMPANY agree to cooperate jointly at each such party's own
expense in the preparation, prosecution and/or maintenance of any patents
or patent applications for a Joint Invention.
5.4 REPORTS. At Ontogeny's request, COMPANY will advise and update Ontogeny on
the progress and results of the Research subject to Section 7. At COMPANY's
request, Ontogeny will advise and update COMPANY on the progress and
results of the Research subject to Section 7.
6. NO LICENSE. Ontogeny retains all rights and title in and to the Material
and all related Ontogeny intellectual property rights, including without
limitation, any patents, patent applications, copyrights and copyright
applications, subject to the limited right of use granted to COMPANY herein
to carry out the Research, and retains the right to have any
Vehicle/Material Products destroyed and any Material returned to Ontogeny
or disposed of upon request. COMPANY understands that no other right or
license to the Material, the Vehicle/Material Products or to their use is
granted or implied as a result of Ontogeny's sending the Material to it.
Nothing contained in this Agreement shall restrict Ontogeny's right to
disclose, use, sell, assign, transfer or distribute the Material to any
other entity for commercial or noncommercial purposes. COMPANY retains all
rights and title in and to the Vehicle and all related COMPANY intellectual
property rights, including without limitation, any patents, patent
applications, copyrights and copyright applications, subject to the limited
right of use granted to Ontogeny herein to carry out the Research, and
retains the right to have any Vehicle/Material Products destroyed and any
Vehicle returned to COMPANY or disposed of upon
3
<PAGE>
request. Ontogeny understands that no other right or license to the
Vehicle, the Vehicle/Material Products or to their use is granted or
implied as a result of COMPANY's sending the Vehicle or Vehicle/Material
Products to it. Nothing contained in this Agreement shall restrict COMPANY
's right to disclose, use, sell, assign, transfer or distribute the Vehicle
to any other entity for commercial or noncommercial purposes.
7. CONFIDENTIALITY. Subject to Section 5.3 hereof, for a period of 5 years
from the date of this Agreement, neither party will disclose or publish the
results of the Research to third parties other than in confidence to its
directors, officers, employees, consultants, corporate partners or
potential corporate partners. With the exception of the results of the
Research, any confidential or proprietary information provided by Ontogeny
to COMPANY shall be considered Ontogeny Proprietary Information and for a
period of five years from the latest date of disclosure of any Ontogeny
Proprietary Information hereunder, COMPANY agrees that it will hold in
confidence and not disclose or make available to any third party, any
Ontogeny Proprietary Information disclosed to it by or on behalf of
Ontogeny, will not use such Ontogeny Proprietary Information for any
purpose other than as advised or directed by Ontogeny, and will not exploit
such Ontogeny Proprietary Information for its own benefit or the benefit of
another without the prior written consent of Ontogeny. With the exception
of the results of the Research, any confidential or proprietary information
provided by COMPANY to Ontogeny shall be considered COMPANY Proprietary
Information and for a period of five years from the latest date of
disclosure of any COMPANY Proprietary Information hereunder, Ontogeny
agrees that it will hold in confidence and not disclose or make available
to any third party, any COMPANY Proprietary Information disclosed to it by
or on behalf of COMPANY, will not use such COMPANY Proprietary Information
for any purpose other than as advised or directed by COMPANY, and will not
exploit such COMPANY Proprietary Information for its own benefit or the
benefit of another without the prior written consent of COMPANY. Ontogeny
Proprietary Information and COMPANY Proprietary Information shall not
include information which:
(a) is known to the public at the time of disclosure by the disclosing
party or becomes so known through no wrongful act on the part of the
receiving party, but only after it becomes so publicly known:
(b) is in the receiving party's possession at the time of disclosure by
the disclosing party, as evidenced by written records;
(c) becomes known to the receiving party through disclosure by sources not
under an obligation to the disclosing party to maintain such
information in confidence as evidenced by written records;
5
<PAGE>
(d) independently developed by or on behalf of the receiving party without
reference to or reliance on the Proprietary Information of the
disclosing party, as evidenced by written records.
8. NO WARRANTY. THE MATERIAL IS PROVIDED TO COMPANY AS-IS AND WITHOUT
WARRANTY, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY,
TITLE OR FITNESS FOR A PARTICULAR PURPOSE AND WITHOUT ANY REPRESENTATION OR
WARRANTY THAT THE USE OF THE MATERIAL WILL NOT INFRINGE ANY PATENT, OR
OTHER RIGHTS. THE VEHICLE IS PROVIDED TO ONTOGENY AS-IS AND WITHOUT
WARRANTY, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY,
TITLE OR FITNESS FOR A PARTICULAR PURPOSE AND WITHOUT ANY REPRESENTATION OR
WARRANTY THAT THE USE OF THE VEHICLE WILL NOT INFRINGE ANY PATENT, OR OTHER
RIGHTS.
9. INDEMNIFICATION. To the extent permitted under governing law, COMPANY will
indemnify and hold Ontogeny harmless from any claims or liability resulting
from COMPANY's use, handling or storage of the Material or Vehicle/Material
Product, except insofar as such claims or liability result from Ontogeny's
negligence or wrongdoing subject to Ontogeny providing prompt written
notice of any such claim or liability and COMPANY having the right to
control the defense and/or settlement of such claim; and to the extent
Ontogeny has been negligent or engaged in wrongdoing, Ontogeny shall
indemnify COMPANY to the extent permitted under governing law subject to
COMPANY providing prompt written notice of any such claim or liability and
Ontogeny having the right to control the defense and/or settlement of such
claim. To the extent permitted under governing law, Ontogeny will indemnify
and hold COMPANY harmless from any claims or liability resulting from
Ontogeny's use, handling or storage of the Vehicle or Vehicle/Material
Product, except insofar as such claims or liability result from COMPANY's
negligence or wrongdoing, subject to COMPANY providing prompt written
notice of any such claim or liability and Ontogeny having the right to
control the defense and/or settlement of such claim; and to the extent
COMPANY has been negligent or engaged in wrongdoing, COMPANY shall
indemnify Ontogeny to the extent permitted under governing law subject to
Ontogeny providing prompt written notice of any such claim or liability and
COMPANY having the right to control the defense and/or settlement of such
claim.
10. TERMINATION. Either party may terminate this Agreement on thirty (30) days
prior written notice to the other party. Upon termination, COMPANY shall
destroy any Vehide/Material Products, shall immediately return to Ontogeny
all Ontogeny Proprietary Information provided by Ontogeny, and all Material
and all of COMPANY's right to use the Material and the Vehicle/Material
Products shall end. Upon termination, Ontogeny shall destroy any
Vehicle/Material Product, shall immediately return to
6
<PAGE>
COMPANY all COMPANY Proprietary Information provided by COMPANY, and all
Vehicle and all of Ontogeny's right to use the Vehicle and the
Vehicle/Material Products shall end. Following termination, neither party
shall have any further obligations under this Agreement, except that
Sections 5 through 10 shall survive termination.
11. MODIFICATIONS. This Agreement supersedes all prior agreements, written or
oral, including the Confidential Disclosure Agreement dated October 26,
1999 between COMPANY and Ontogeny relating to the subject matter of this
Agreement provided that the obligations of confidentiality and nonuse
attaching to the Proprietary Information disclosed under such Confidential
Disclosure Agreement shall survive its termination. This Agreement may not
be modified, changed or discharged, in whole or in part, except by an
agreement in writing signed by the COMPANY and Ontogeny.
12. THIRD PARTIES. The COMPANY and Ontogeny hereby represent that the
acceptance of the Material and Vehicle in accordance with, and the
performance of all the terms of this Agreement do not and will not breach
or conflict with any other agreement or arrangement to which the COMPANY or
Ontogeny is a party.
13. BAILMENT. It is the intent of the parties that the transfer of Material to
COMPANY or the transfer of Vehicle to Ontogeny be considered a bailment,
and shall be considered neither a conditional nor an unconditional sale.
Any monies transferred in conjunction with the transfer of Material,
Vehicle and information shall be only to cover the costs associated with
the transfer, and shall not represent consideration for an exchange of
title thereto.
14. MISCELLANEOUS. This Agreement (a) may not be assigned or transferred by any
party without the prior written consent of the other party, except that
Ontogeny or COMPANY may assign this Agreement to an affiliated company or
in connection with the merger, consolidation or sale of all or
substantially all of its assets and (b) shall be governed by and construed
in accordance with the laws of the Commonwealth of Massachusetts.
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<PAGE>
IN WITNESS WHEREOF, Ontogeny and COMPANY have caused this Agreement to be
executed in their names by their properly and duly authorized officers or
representatives.
Ontogeny, Inc.
Name: /s/ Raul Rodriguez
------------------
Raul Rodriguez
Title: Senior V.P., Business Development
Date: 12/03/99
Ontogeny, Inc.
45 Moulton Street
Cambridge, MA 02138
Phone: (617) 876-0086
Facsimile: (617) 876-0866
Biosyntech Limited
Name: /s/ Francois Binette
--------------------
Francois Binette
Title: Vice President R&D
Date: 12/03/99
Biosyntech
475, boul. Armand Frappier
Montreal (Laval) QC H7V 4B3
Canada
Phone: (450) 686-2437
Facsimile: (450) 686-8952
<PAGE>
Exhibit A
1. VEHICLE: Biosyntech's proprietary BST-gel delivery system
2. MATERIAL: Recombinant human hedgehog proteins. The research will focus on
the use of one chemically modified form of recombinant human hedgehog
(shin) protein. However, unmodified recombinant shh protein or other forms
of the shh protein obtained by chemical modification may also be used. The
related human recombinant Indian hedgehog (ihh) protein or its modified
forms may also be used.
3. RESEARCH BY COMPANY: The COMPANY will formulate the Vehicle/Material
Product. The COMPANY will assist in assessing the in vitro release kinetics
of Material from the Vehicle. The COMPANY will provide Ontogeny with
different formulations of the Vehicle/Material Product to be tested in
Ontogeny's in vitro and in viva assays.
Exhibit B
Research by Ontogeny: Ontogeny will test the Vehicle and the
Vehicle/Material in various in vitro and in vivo assays.
Exhibit C
(Please insert any prior right to ownership exceptions, as they pertain to
Section 5.2)
8
<PAGE>
ONTOGENY CORPORATE PROFILE
Company Ontogeny, Inc., founded in 1994 is a privately held biotechnology
Background company developing therapies to combat disorders associated with
loss of cell function, aging and degeneration. Some areas of
therapeutic focus are:
o neurological disorders: Alzheimer's and Parkinson's disease,
peripheral neuropathies
o orthopedic disorders: osteoarthritis, osteoporosis; and
cartilage/bone injuries
o dermatological disorders: skin cancer, wound healing and
hair growth
o diabetes: cell therapy for juvenile onset; factors/small
molecules for adult insulin dependent diabetes.
The company is developing drugs based on small molecules
that are key inducers of cell and tissue growth and
differentiation. The company has already identified and
possesses proprietary rights to an important family of
inducing molecules called the hedgehog family. Ontogeny is
developing several of these proteins into organ-specific
therapeutics intended to repair tissue and thereby restore
function to the damaged system of a patient's body. As the
aging population increases worldwide, the need for effective
and safe treatments for many degenerative disorders will
increase. Ontogeny intends to become a leader in developing
therapies for these degenerative disorders.
Developmental In the last ten years, access to the tools of molecular biology a
Biology and classical embryology has enabled developmental biology to
make great strides towards discovering and defining the
mechanisms and processes by which organisms develop. These
discoveries have positioned developmental biology to become an
integral component of drug discovery. The key control molecules
of development are called inducing molecules.
Ontogeny The determining molecules of development, inducing molecules, have
Technology recently been identified and have proven to be potent secreted
proteins that act at the level of the cell surface. Ontogeny has
sole proprietary rights to a number of the inducing molecules,
including an important group known as the hedgehog family. The
hedgehog family of molecules include the following.
o Sonic hedgehog plays a major role in the differentiation of
the central nervous system (CNS). Ontogeny has demonstrated
that sonic hedgehog has inductive, growth factor and
neuroprotective properties, which offer potential for
treating neurodegenerative disorders.
o Indian hedgehog is implicated in the development of bone
and cartilage and has the potential to treat orthopedic
disorders including osteoarthritis and osteoporosis.
o Desert hedgehog appears to play a role in normal nerve
signaling through its effect on the cells that support the
peripheral nerves. Ontogeny is exploring its use in
disorders where normal nerve signaling is damaged due to
chemotherapy-induced neuropathy, diabetic-induced
neuropathy, and multiple sclerosis, for example.
o Patched is critical for normal skin and hair formation.
Aberrant and excessive activation of its signaling pathway
can result in basal cell nevus syndrome and in basal cell
carcinoma (BCC). BCC, a skin cancer, results from excessive
exposure to sunlight and is the most common human cancer,
affecting more people than all other cancers combined.
Ontogeny Neurological Disorders. One of Ontogeny's lead programs is in
Programs the area of neurodegenerative disorders, such as Parkinson's
disease, Alzheimer's disease and peripheral neuropathies, where
the technical strategy is to restore normal function that has been
destroyed by disease. With a corporate partner, Ontogeny has made
key progress in moving toward the clinic with products to address
treatment for these diseases.
Orthopedic Disorders. Ontogeny's strategy focuses on the fact that
Indian hedgehog is implicated in normal development of bone and
cartilage. It has been demonstrated that Indian hedgehog can
stimulate and regulate bone formation. This important finding has
direct implications for potential pharmacological use in fracture
repair and implant fixation, and Ontogeny is proceeding to
preclinical work in these areas.
Dermatological Disorders. Congenital or acquired patched defects
commonly result in a skin cancer known as basal cell carcinoma
(BCC). BCC is the most common human cancer and affects one-quarter
to one-half of all Caucasians. Ontogeny is using insights gained
to screen for new chemical entities for the non-surgical treatment
of this common disorder.
Diabetes. In the areas of both juvenile and adult onset diabetes
Ontogeny's technical strategy is to use insights from
developmental biology to identify molecules and stem cells that
will restore insulin production.
<PAGE>
OntoScreen(TM)To identify inducing molecules, Ontogeny has devised a
developmental biology-based functional screening system. With the
OntoScreen screening system, researchers can sift through the vast
amount of sequence information being generated by the genome
project to identify sequences of therapeutic interest. This
screening system uses proprietary assays to identify new entities
that regulate the mechanisms of development and repair. The
automated system allows for medium-to-high throughput of materials
including genes, gene sequences, proteins and chemical entities to
rapidly identify those with therapeutic potential.
Ontogeny Ontogeny has raised approximately $70 million from private
Financial placements and upfront payments from collaborators. This total
History consists of proceeds from the founding round in August 1994, a
second round in January 1996, a mezzanine round in March 1997, and
most recently, the completion of a private placement in December
1998.
Ontogeny Ontogeny has collaboration with the following:
Alliances o Biogen. The principal focus of this recently extended and
expanded partnership is on developing products for
neurological disorders.
o Roche. This alliance is focused on developing a product for
local bone and cartilage disorders.
o Becton Dickinson and Ontogeny are focusing on a cell-based
therapy for diabetes.
o Genzyme Molecular Oncology is producing Serial Analysis of
Gene Expression (SAGE) libraries that enable Ontogeny to
analyze differential gene expression for product
identification.
o Tropix will perform ultra-high-throughput screening of large
combinatorial compound libraries for activity against
Ontogeny's unique biological targets.
o ComGenex and Oxford Asymmetry (OAI) provide Ontogeny with
access to diverse chemical products in their combinatorial
chemistry libraries. In addition, OAI will provide medicinal
chemistry services to optimize Ontogeny's therapeutic leads.
o Ontogeny has organized a consortium of academic
dermatological oncology centers for the development of leads
in the areas of skin cancer and skin and hair growth.
Participating are Stanford University, Brigham and Women's
Hospital in conjunction with the Dana-Farber Cancer
Institute, the University of California San Franciso and San
Francisco General Hospital.
Ontogeny Scientific Advisors Board
Team Douglas A. Melton, Ph.D., Chair, Harvard University
Philip A. Beachy, Ph.D., Johns Hopkins University School of Medicine
Anders Bjorklund, Ph.D., University of Lund
Helena Edlund, Ph.D., University of Umea
Thomas Edlund, Ph.D., University of Umea
Curt R. Freed, M.D., University of Colorado School of Medicine
Brigid Hogan, Ph.D., Vanderbilt Uniuersity
Philip Ingham, Ph.D., University of Sheffield
Thomas M. Jessell, Ph.D., Columbia University
Andrew McMahon, Ph.D., Haruard Uniuersity
Roel Nusse, Ph.D., Stanford University School of Medicine
Matthew P. Scott, Ph.D., Stanford University School of Medicine
Cliff Tabin, Ph.D., Haruard Medical School
Christopher V. E. Wright, Ph.D., Vanderbilt Uniuersity
Board of Directors
William W. Helman, Chair, Greylock Management
Christopher E. Bogan, Best Practices
Roger W. Brimblecombe, Ph.D., Vanguard Medica Limited
Thomas D. Ingolia, Ph.D., Ontogeny, Inc.
Edwin M. Kania, Jr., One Liberty Ventures
Ruth B. Kunath, Vulcan Northwest, Inc.
Douglas A. Melton, Ph.D., Haruard University
Doros Platika, M.D., Ontogeny, Inc.
W. Leigh Thompson, M.D., Ph.D., Profound Quality Resources Ltd.
Key Personnel
Doros Platika, M.D., President and Chief Executive Officer
Raul R. Rodriguez, Sr. Vice President, Business Development
Lee L. Rubin, Ph.D., Sr. Vice President, Research
George A Eldridge Vice President, Finance and Chief Financial Officer
Marlene A. Thayer Director, Human Resources
Cynthia G. Clayton, Mgr., Corporate Communications and Investor
Relations
November, 1999
MATERIAL TRANSFER AGREEMENT
This Material Transfer Agreement (together with its Exhibits referred to herein
as the "Agreement") governs the transfer of certain substances from time to time
from Biosyntech Limited having its place of business at 475, boul.
Armand-Frappier, Laval, QC Canada, H7V 4B3 to BIOMET Corporation ("BIOMET")
Airport Industrial Park, P.O. Box 587, Warsaw, IN 46581-0587.
1. Background. BIOMET desires to obtain samples of Biosyntech's proprietary
biomaterial described in Exhibits A (such biomaterial, together with its
progeny, derivatives or improvements is referred to herein as the "Biomaterial")
to evaluate the Biomaterial's suitability in its orthopaedic applications
research, referred herin as "research" set forth in Exhibit A.
2. The Biomaterial and the research. Biosyntech will supply BIOMET with such
quantities of the Biomaterial as BIOMET may reasonably request and as Biosyntech
may make available, in its sole discretion, from time to time. However,
Biosyntech shall be under no obligation to supply any Biomaterial at any time
and may cancel the supply of Biomaterial at any time without advance notice.
BIOMET will use the Biomaterial and any product or process derived from the use
of the Biomaterial solely in its Research set forth in Exhibits A and for no
other purpose. The Research will be conducted solely by BIOMET at its research
facilities or by a third party contractor at their facilities. None of the
Biomaterial will be transferred or sold to third parties other than the
aforesaid third party contractors. BIOMET WILL NOT USE THE BIOMATERIAL FOR
TESTING IN OR TREATMENT OF HUMAN SUBJECTS. BIOMET acknowledges that the
Biomaterial is experimental and will comply with all laws and regulations
applicable to its handling and use. Any Biomaterial remaining upon completion of
the Research will be returned to Biosyntech.
3. In Vivo Studies. If Biosyntech or BIOMET is using the Biomaterial for
non-human in vivo studies, it will comply with all applicable federal, state and
local laws and regulations.
4. Inventions
In the course of evaluation of the Biomaterial's suitability in its orthopaedic
applications research, inventions may be developed which may be patentable due
to the superior characteristics and properties of Biosyntech's product.
Therefore, the parties shall jointly own inventions that are either made by the
parties' employees or consultants jointly or inventions that are made solely by
Biomet's employees and consultants where the patentability of such inventions is
attributable in whole or in part to the use of Biosyntech's material.
At Biosyntech's request, BIOMET will advise and update Biosyntech on the
progress and results of the Research subject to Section 6.
5. No Licence. Biosyntech retains all rights and title in and to the Biomaterial
and all related Biosyntech intellectual property rights, including without
limitation, any patents, patent applications, copyrights and copyright
applications, subject to the limited right of use granted to BIOMET herein to
carry out the Research, and retains the right to have any Biomaterial destroyed
and any Biomaterial returned to Biosyntech or disposed of upon request. BIOMET
understands that no other right or license to the Biomaterial is granted or
implied as a result of Biosyntech's sending the Biomaterial to it. Nothing
contained in this Agreement shall restrict Biosyntech's right to disclose, use,
sell, assign, transfer or distribute the Biomaterial to any other entity for
commercial or non-commercial purposes. BIOMET retains all right and title in and
to the Instruments and all related BIOMET intellectual property rights,
including without limitation, any patents, patent applications, copyrights and
copyright applications. Nothing contained in this Agreement shall restrict
BIOMET's right to
<PAGE>
disclose, use, sell assign, transfer or distribute the Instruments to any other
entity for commercial or non commercial purposes.
6. Confidentiality. Subject to Section 4.3 hereof, for a period of 5 years from
the date of this Agreement, neither party will disclose or publish the results
of the Research to third parties other than in confidence to its directors,
officers, employees, consultants, corporate partners or potential corporate
partners. With the exception of the results of the Research, any confidential or
proprietary information provided by Biosyntech to BIOMET shall be considered
Biosyntech's Proprietary Information and for a period of five years from the
date of disclosure of any Biosyntech Proprietary Information hereunder, BIOMET
agrees that it will hold in confidence and not disclose or make available to any
third party, any Biosyntech Proprietary Information disclosed to it by or on
behalf of Biosyntech, will not use such Biosyntech Proprietary Information for
any purpose other than as advised or directed by Biosyntech and will not exploit
such Biosyntech Proprietary Information for its own benefit or the benefit of
another without the prior written consent of Biosyntech. With the exception of
the results of the Research, any confidential or proprietary information
provided by BIOMET to Biosyntech shall be considered BIOMET Proprietary
Information and for a period of five years from the latest date of disclosure of
any BIOMET Proprietary Information hereunder, Biosyntech agrees that it will
hold in confidence and not disclose or make available to any third party, any
BIOMET Proprietary Information disclosed to it by or on behalf of BIOMET, will
not use such BIOMET Proprietary Information for any purpose other than as
advised or directed by BIOMET, and will not exploit such BIOMET Proprietary
Information for its own benefit or the benefit of another without the prior
written consent of BIOMET. Biosyntech Proprietary Information and BIOMET
Proprietary Information shall not include information which:
a) is known to the public at the time of disclosure by the disclosing party or
become so known through no wrongful act on the part of the receiving party, but
only after it becomes so publicly known;
b) is in the receiving party's possession at the time of disclosure by the
disclosing party, as evidenced by written records;
c) becomes known to the receiving party through disclosure by sources not under
an obligation to the disclosing party to maintain such information in confidence
as evidenced by written records;
d) is independently developed by or on behalf of the receiving party without
reference to or reliance on the Proprietary Information of the disclosing party,
as evidenced by written records.
7. NO WARRANTY. THE BIOMATERIAL IS PROVIDED TO BIOMETAS-IS AND WITHOUT WARRANTY,
EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY , TITLE OR FITNESS
FOR A PARTICULAR PURPOSE AND WITHOUT ANY REPRESENTATION OR WARRANTY THAT THE USE
OF THE BIOMATERIAL WILL NOT INFRINGE ANY PATENT, OR OTHER RIGHTS.
8. Indemnification. To the extent permitted under governing law, BIOMET will
indemnify and hold Biosyntech harmless from any claims or liability resulting
from BIOMET's use, handling or storage of the Biomaterial except insofar as such
claims or liability result from Biosyntech's negligence or wrongdoing, subject
to Biosyntech providing prompt written notice of any such claim or liability and
BIOMET having the right to control the defence and/or settlement of such claim;
and to the extent Biosyntech has been negligent or engaged in wrongdoing,
Biosyntech shall indemnify BIOMET to the extent permitted under governing law
subject to BIOMET providing prompt written notice of any
<PAGE>
such claim or liability and Biosyntech having the right to control the defence
and/or settlement of such claim.
9. Termination. Either party may terminate this Agreement on thirty (30) days
prior written notice to the other party. Upon termination, BIOMET shall destroy
any Biomaterial, shall immediately return to Biosyntech all Biosyntech
Proprietary Information provided by Biosyntech, and all Biomaterial and all of
BIOMET's right to use the Biomaterial shall end. Following termination, neither
party shall have any further obligation under this Agreement, except that
Section 5 through 10 shall survive termination.
10. Modifications. This Agreement supersedes all prior agreements, written or
oral, including the Confidential Disclosure Agreement dated __________ between
Biosyntech and BIOMET related to the subject matter of this Agreement provided
that the obligations of confidentiality and non-use attaching to the Proprietary
Information disclosed under such Confidential Disclosure Agreement shall survive
its termination. This Agreement may not be modified, changed or discharged, in
whole or in part, except by an agreement in writing signed by the Biosyntech and
BIOMET.
11. Third Partie. Biosyntech and BIOMET hereby represent that the acceptance of
the Biomaterial in accordance with, and the performance of all the terms of this
Agreement do not and will not breach or conflict with any other agreement or
arrangement to which Biosyntech or BIOMET is a party.
12. Bailment. It is the intent of the parties that the transfer of Biomaterial
to BIOMET be considered a bailment, and shall be considered neither a
conditional nor an unconditional sale. Any monies transferred in conjunction
with the transfer Biomaterial and information shall be only to cover the costs
associated with the transfer, and shall not represent consideration for an
exchange of title thereto.
13. Miscellaneous. This Agreement (a) may not be assigned or transferred by any
party without the prior written consent of the other party, except that
Biosyntech or BIOMET may assign this Agreement to an affiliated BIOMET or in
connection with the merger, consolidation or sale of all or substantially all of
its assets and (b) shall be governed by and construed in accordance with the
laws of the Province of Quebec, Canada.
<PAGE>
IN WITNESS WHEREOF, Biosyntech and BIOMET have caused this Agreement to be
executed in their properly and duly authorized officers or representatives.
Biosyntech Limited
Name: /s/ Francois Binette
--------------------
Francois Binette
Title: Vice-President Research and Development
Date: __________________________________
Biosyntech Limited
475, boul. Armand-Frappier
Laval (QC) H7V 4B3
Canada
Phone: (450) 686-2437
Facsimile: (450) 686-8952
BIOMET Corporation*
Name: /s/
-----------------------------
Title: _____________________________
Date: ______________________________
Airport Industrial Park
P.O. Box 587
Warsaw, IN 46581-0587
Phone: (219) 267-6639
Facsimile: (219) 268-2742
SUBSIDIARY STATE OF INCORPORATION
- ---------- ----------------------
Bio Syntech Canada, Inc. Quebec, Canada
To Whom It May Concern: February 28, 2000
The firm of Barry L. Friedman, P.C., Certified Public Accountant
consents to the inclusion of their report of February 28, 2000 on the Financial
Statements of BIOSYNTECH, INC., (Formerly Dream Team International, Inc.), as of
December 31, 1999, in any filings that are necessary now or in the near future
with the U.S. Securities and Exchange Commission.
Very truly yours,
/s/ Barry L. Friedman
- ---------------------------
Barry L. Friedman
Certified Public Accountant
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<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S FORM 10-K FOR THE YEAR ENDED DECEMBER 28, 1999 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
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<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
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<COMMON> 22,500
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