UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
----------
Amendment #1
General Form for Registration of Securities
of Small Business Issuers under Section 12(b) or (g)
of the Securities Exchange Act of 1934
FAIRCHILD INTERNATIONAL CORPORATION
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(Name of Small Business Issuer in its Charter)
Nevada 91-1880015
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(State or other jurisdiction of (IRS Employer Identification Number)
Incorporation or Organization)
Suite 600, 596 Hornby Street, Vancouver, B.C. Canada V6C 1A4
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(Address of Principal Executive Offices) (Zip Code)
(604) 646-5614
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(Issuer's Telephone Number)
Securities to be registered under Section 12(b) of the Act: None
Securities to be registered under Section 12(g) of the Act:
Common Stock, $.001 par value
-----------------------------
(Title of Class)
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Table of Contents
Part I
Item 1. Description of Business....................................... 3
Item 2. Management's Discussion and Analysis or Plan of Operation 7
Item 3. Description of Property 8
Item 4. Security Ownership of Certain Beneficial Owners and Management 8
Item 5. Directors, Executive Officers, Promoters and Control Persons 9
Item 6. Executive Compensation 10
Item 7. Certain Relationships and Related Transactions 11
Item 8. Description of Securities 11
Part II
Item 1. Market Price of and Dividends on the Registrant's Common Equity
and Other Shareholder Matters 13
Item 2. Legal Proceedings 14
Item 3. Changes in and Disagreements with Accountants 14
Item 4. Recent Sales of Unregistered Securities 14
Item 5. Indemnification of Directors and Officers 15
Part F/S
Financial Statements 16
Part III
Item 1. Index to Exhibits
Item 2. Description of Exhibits
Signatures
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PART I
To simplify the language in this Registration Statement, Fairchild International
Corp. is referred to herein as "the Company" or "We."
Item 1. Description of Business
Business Development.
We were incorporated in Nevada on June 20, 1997 as Goanna Resources, Inc. by Mr.
David Stadnyk to pursue potential opportunities in the mining business in
Australia. Mr. Stadnyk resigned from his positions with the Company, and
enlisted our current management to pursue our current plan of business, when it
became apparent that such mining opportunities would not come to fruition.
Toward this end, on June 24, 1999, we changed our name to Fairchild
International Corporation. Mr. Stadnyk was later retained as a consultant to the
Company, because of his familiarity with Praxis and our carbohydrate chemistry
plan of business and his business contacts.
On February 15, 1999, we reverse split our stock on a one (1) share for twenty
(20) share basis to reduce the number of shares outstanding. We originally
planned to seek financing subsequent to the reverse split, which would have
placed additional shares of our common stock in the market. After the reverse
split, our common stock became volatile. Our shareholders expressed concern that
our stock price was too high for an OTCBB stock. As a result, on September 13,
1999, we forward split our stock on a ten (10) share for one (1) share basis to
adjust for the effects of our February 15, 1999 reverse stock split. Unless
indicated otherwise, all statements herein reflect both of these stock splits.
We have not been involved in any bankruptcy, receivership or similar proceeding.
We have not been involved in any material reclassification, merger, or purchase
or sale of a significant amount of assets not in the ordinary course of
business.
Business of Issuer.
We have operational losses and no revenues. We are registering our common stock
on a voluntary basis under Section 12(g) of the Exchange Act in order to comply
with the recently enacted Over the Counter Bulletin Board ("OTCBB") listing
requirements. From June 19, 1997 to February 25, 1999, we were engaged in the
mining business. We are no longer engaged in the mining business. We plan to
develop a website marketing various anti-aging and nutritional products such as
vitamin supplements and homeopathic arthritis and skin care products. Our
website is in the developmental stages and is not yet operational.
We have obtained the domain names, youthfulyou.com and healthypharmacy.com. We
plan to offer products through the healthypharmacy.com site. We have not yet
determined our intended use for the youthfulyou.com site. We plan to contract
with Netcom Canada to connect our web site to the Internet. We have contracted
with Zappworx Visual Management to develop and maintain our web site. We
launched our website as a "work in progress" on November 1, 1999 and expect to
have our web site operational by early 2000. At that time, we plan to take
orders via our website; however, there is no assurance that we will develop that
capability or be operational at that time.
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Web site shoppers will be able to browse our site and place their secured orders
on line. We plan to process orders by online credit card or cyber cash systems.
We have not secured contracts with providers of credit card or cyber cash
systems. Upon credit approval, we will arrange for delivery of the ordered
products via courier service such as Federal Express or United Parcel Service.
To date, we have not entered into agreements for the shipment of our products
with any courier services. Customers will be able to place orders seven days a
week, twenty-four hours a day to be delivered to their specified destination.
We will attempt to offer our products at prices competitive with other shopper
websites. Initially, we anticipate approximately 5-10 products in our online
catalogue format with new product lines being added as web traffic and sales
increase. We have under development a skin care product line for which we are
currently seeking a manufacturer. In addition, we have entered into an agreement
with Praxis Pharmaceuticals, Inc. ("Praxis") to develop and sell their
anti-wrinkle formula. Further, we are in discussions with a third party seeking
to acquire our deep-wrinkle formula. As of the date of this registration
statement, we have not reached a formal agreement with any third party to
sublicense our formulas.
We intend to sell our products to male and female consumers over the age of 35.
We have not agreed to a marketing alliance with any company at this time. We
intend to use both traditional and non-traditional means of advertising. We
anticipate that our primary source of advertising will be the Internet. We also
plan to advertise through e-mail distribution. We have not entered into formal
contracts with search engines or other potential advertising or marketing
outlets.
Status of any Publicly Announced New Product.
We have under development a line of health care and anti-aging products. We are
currently seeking a manufacturer to produce our products.
Competitive Business Conditions.
The online retail industry is highly competitive with respect to price, service,
quality and Internet marketing. There are numerous, well-established, large
competitors in the online industry with comprehensive web sites, possessing
substantial financial, marketing, personnel and other resources. In contrast,
our company is in the developmental stages and lacks such resources. There can
be no assurance that we will be able to respond to various competitive factors
affecting our business. We plan to attempt to gain a competitive advantage over
our competitors by working directly with wholesalers enabling us to to obtain
and pass on to a diverse consumer base quality products at competitively lower
prices.
Anti-aging, nutritional and dietary supplement markets are highly competitive.
The development of online product catalogs will involve an ever-changing and
evolving process. We will attempt to competitively price products on our
website, provide superior quality products, and achieve success through
efficient customer service and effective marketability strategies. We are
limited, however, by among other factors, the developmental character of our
company, the unpredictability and uncertainty of our future revenues and the
intensely competitive nature of the anti-aging and vitamin product industry in
which established companies and new entrants may have a distinct competitive
advantage. There are many well-established competitors with substantially
greater financial revenues. Many of these competitors have been in existence for
substantially longer periods of time than we
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have and may be better established in the market where we plan to operate.
Further, they may have sufficient revenue streams to engage in extensive
advertising and promotional campaigns far in excess of our marketing
capabilities. Our competition cannot be determined with any certainty because
certain data is not available from private competitors. Accordingly, our
competition is difficult to assess with any preciseness, and there is no
guarantee that we will be able to compete in the industry, within which we
operate. As such, our operations may be adversely effected.
Manufacturing. We do not currently manufacture any products, and we will rely on
third-party manufacturers. We are in the process of locating a manufacturer to
produce our products.
Raw Materials and Suppliers.
We anticipate that the principal suppliers of our products will be wholesale
distributors, who generally act as suppliers to retail stores. We plan to enter
contract negotiations with several distributors of health care and anti-aging
products. A delay in establishing suppliers or distributors could have an
adverse effect on our revenues and cash flow. In the event that we are unable to
locate manufacturers of anti-aging products or if any manufacturer that we
depend upon in the future ceases operations or cannot continue to manufacture
our retail products our business could be adversely affected.
Herbal supplements and anti-aging products contain ingredients that are
harvested by and obtained from third-party suppliers. Some of these ingredients
are harvested internationally, only once per year or on a seasonal basis. An
unexpected interruption of supply, such as a harvest failure, could cause our
operations to be adversely affected.
We do not have contracts with any suppliers, entities or persons committing
suppliers to provide the materials required for the production of anti-aging
products. There can be no assurance that suppliers will provide the raw
materials needed for anti-aging products in the quantities requested or at a
price that our manufacturers are willing to pay. In the past five years, natural
vitamin E, beta-carotene and melatonin have been subject to unusual price
fluctuations as a result of supply shortages and/or increased demand. Because we
do not control the actual production of these raw materials, it is also subject
to delays caused by interruption in production of materials based on conditions
not within our control. Such conditions include job actions or strikes by
employees of suppliers, weather, crop conditions, transportation interruptions,
natural disasters or other catastrophic events. Our manufacturers' inability to
obtain adequate supplies of raw materials for anti-aging products at favorable
prices, or at all, as a result of any of the foregoing factors or otherwise,
could have a material adverse effect on our business.
Dependence on Certain Customers.
As of the date of this registration we have not developed a customer base. We do
not believe that we will be dependent upon any single customer once we have
developed a customer base; however, there can be no assurance that we will not
become dependent upon one or a few customers.
Intellectual Property.
Although many of the products that we intend to sell will rely upon proprietary
technology, we do not own any registered patents, trademarks, copyrights or
franchises. Other than the Praxis
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Pharmaceuticals, Inc. (hereinafter "Praxis") agreement discussed below, we are
not a party to any royalty agreement or other agreement providing for
proprietary interests.
Praxis Licensing Agreement. Through contacts of our consultant and promoter, Mr.
Stadnyk, our management became acquainted with Praxis, a company which is
developing an anti-wrinkle cream. We entered into a Research, Development, and
Licensing Agreement with Praxis on May 11, 1999 (effective as of September 30,
1999), to obtain an exclusive, worldwide license to make, use and sell
pharmaceutical products and processes relating to arthritis and dermal wrinkles.
We feel this agreement will complement our product line.
We have agreed to pay $250,000 and issue 2,600,000 shares of our common stock,
as consideration for the worldwide license. We made an initial payment to of
$62,500 to Praxis on October 1, 1999. Three installments of $50,000 are due
quarterly, commencing on January 1, 2000 or completion of the first milestone
set forth in the agreement. A final payment of $37,500 is due on the latter of
October 1, 2000 or completion of the final milestone set forth in the agreement.
We have agreed to pay Praxis a 35% royalty of the net proceeds earned from sales
of the licensed products or the granting of a sub-license, less the $250,000
referred to above and any other costs of development, manufacturing, production,
marketing and selling.
We expect to add dermal wrinkle and arthritis products to our product line,
through execution of this agreement. In exchange for our cash and equity
consideration, Praxis has agreed to conduct certain research projects, secure
proprietary protection on their anti-wrinkle and arthritis compounds and to
provide us with the exclusive right to make, market and sell such products for a
perpetual period beginning September 30, 1999. Praxis' performance is based upon
certain milestones set forth in this agreement. Mr. Stadnyk's contact, Dr.
Cowden, will perform the work with seven scientists under Dr. Cowden's
employment. Praxis must complete product trials and solidify patent protection,
before we market these products. Praxis has assured us that our total product
development budget will not exceed $250,000.
Government Approvals.
We are currently, not subject to direct regulation by any government agency,
other than regulations applicable to businesses generally and regulations
applicable to commerce on the Internet. However, due to the increasing
popularity and use of the Internet, it is possible that a number of laws and
regulations may be adopted with respect to the Internet, covering issues such as
user privacy, pricing, and characteristics and quality of products and services.
Furthermore, the growth and development of the market for Internet commerce may
prompt calls for more stringent consumer protection laws that may impose
additional burdens on those companies conducting business over the Internet. The
adoption of any additional laws or regulations may decrease the growth of the
Internet, which, in turn, could decrease the demand for our Internet products
and increase our cost of doing business or otherwise have an adverse effect on
our business, results of operations and financial condition. Moreover, the
applicability to the Internet of existing laws in various jurisdictions
governing issues such as sales tax, libel and personal privacy is uncertain and
may take years to resolve.
In addition, as our service becomes available over the Internet in multiple
states and if we begin to sell to numerous consumers residing in various states,
such jurisdictions may claim that we are required to
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qualify to do business as a foreign corporation in each such state and foreign
country. Our failure to qualify as a foreign corporation in a jurisdiction where
it is required to do so could subject our business to taxes and penalties for
failure to qualify. Any such existing or new legislation or regulation,
including state sales tax, or the application of laws or regulations from
jurisdictions whose laws do not currently apply to our business, could have a
material adverse effect on our business, results of operations and financial
condition.
Our manufacturers are subject to extensive and rigorous governmental regulation
concerning the protection of the environment and the quality of manufacturing.
Federal, state and local regulatory agencies actively enforce these regulations
and conduct periodic inspections to determine compliance with such government
regulations. The Food and Drug Administration (the "FDA") enforces regulations
regarding the quality of manufacturing, Good Manufacturing Practices ("GMP"),
through periodic surveillances and audits. In particular, the FDA regulates the
safety, manufacturing, labeling and distribution of cosmetics, dietary
supplements, including vitamins, minerals and herbs, food additives, food
supplements, over-the-counter drugs and prescription drugs, medical devices and
cosmetics. We anticipate that the FDA will promulgate GMP, which are specific to
dietary supplements and require at least some of the quality control provisions
contained in the GMPs for drugs. GMP regulation would require supplements to be
prepared, packaged and held in compliance with such rules, and may require
similar quality control provisions contained in the GMP regulation for drugs.
There is no assurance that, if the FDA adopts GMP regulations specific to
dietary supplements, manufacturers of anti-aging products will be able to comply
with such GMP rules upon promulgation or without incurring material expenses to
do so.
In addition, the Federal Trade Commission (hereinafter the "FTC") has
overlapping jurisdiction with the FDA to regulate the labeling, promotion and
advertising of dietary supplements, over the counter drugs, cosmetics and foods.
Failure to comply with applicable regulatory requirements may result in fines,
suspension of approvals, cessation of distribution, product recalls and criminal
prosecution, any of which would have a material adverse effect on us if other
manufacturers could not be arranged within a reasonable time.
Changes in existing regulations, the interpretation thereof or adoption of new
regulations could impose costly new procedures for compliance. Such new
procedures could prevent us from obtaining or affect the timing of additional
regulatory approvals. The FTC and state and local authorities regulate the
advertising of over-the-counter drugs and cosmetics. The Federal Food, Drug and
Cosmetic Act, as amended (the "Food and Drug Act"), and the regulations
promulgated thereunder, and other federal and state statutes and regulations,
govern, among other things, the testing, manufacture, safety, effectiveness,
labeling, composition storage, record keeping, approval, advertising and
promotion of our products.
In general, products falling within the FDA's definition of "new drugs" require
pre-market approval by the FDA while products falling within the FDA's
definition of "cosmetics" do not require pre-market approval. We feel that
anti-aging products, fall within the FDA's definition of "cosmetics" and
therefore do not require pre-market approval. There can be no assurance,
however, that the FDA will concur in this view. In the event that we fail to
comply with applicable regulations with respect to any products, we may be
required to change our labeling, formulation or possibly cease manufacture
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and marketing of such products. The FDA may require post-marketing testing and
surveillance to monitor the record of our products and continued compliance with
regulatory requirements. The FDA also may require the submission of any lot of a
product for inspection and may restrict the release of any lot that does not
comply with FDA standards, or may otherwise order the suspension of manufacture,
recall or seizure if a non-compliant product is discovered. Product approvals
may be withdrawn if compliance with regulatory standards is not maintained or if
problems concerning safety or efficacy of a product are discovered following
approval.
We may also be subject to foreign regulatory authorities governing testing or
sales of certain of our products. Despite the fact that FDA approval may be
obtained, approval of a product by the comparable regulatory authorities of
foreign countries must be obtained in certain cases prior to the commencement of
marketing of the product in those countries. There can be no assurance that any
product developed or marketed by us will be approved by the FDA or any foreign
regulatory authority.
Research and Development.
In our past two fiscal years, we have spent approximately $112,500 on product
research and development. We do not anticipate that this cost will be borne
directly by the customers; however, there can be no such assurances.
Compliance with Environmental Laws.
Other than environmental laws to which corporations may generally be subject, we
do not believe that we are subject to any environmental law compliance. If such
compliance should become necessary, we do not believe expenses associated with
such compliance would be material to our operations.
Employees.
As of the date of this registration statement, we have three (3) total and one
(1) full-time employee. None of our employees are members of a union. We believe
that our relationship with our employees is favorable. We do not intend to add
additional employees in the next twelve months.
Item 2. Plan of Operation
THE FOLLOWING DISCUSSION AND ANALYSIS SHOULD BE READ IN CONJUNCTION WITH THE
FINANCIAL STATEMENTS APPEARING ELSEWHERE IN THIS REGISTRATION STATEMENT.
We eventually plan to develop specialized e-commerce sites on the Internet. Over
the next twelve months, we plan to focus on development of an Internet portal
for alternative health care products. We hope that this site will offer products
of our Company, as well as those of other companies. In addition, we plan to
offer information on related topics on the website.
In the past, we have relied upon funding from our officer and director, Mr.
Stadnyk. We borrowed approximately $44,000 from Mr. Stadnyk during our
development stage, $40,000 of which has been repaid. We are currently unable to
satisfy our cash requirements without the financial support of our President,
Byron Cox, or his designee. We anticipate that we will meet our cash
requirements for the next twelve months through Mr. Cox's financial support,
even though Mr. Cox has not supplied funds
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to the Company in the past. Currently, we have no commitment for funding from
our past or present officers and directors or any other party. Eventually, we
will need to raise additional funds, if we plan to implement an advertising and
marketing plan to advance our website. We have not yet determined how we plan to
obtain these additional funds.
In 1999, we raised cash proceeds of $475,000 from the sale of our common stock
to business associates and friends of the issuer. The proceeds are to be used to
implement our new plan of business. At the time of sale, the proceeds were not
earmarked for the Praxis licensing agreement.
Since we have entered into an agreement with Praxis for research and
development, we will encounter significant research and development expenses
over the next twelve months. In addition to the terms of the Praxis agreement,
we may seek to conduct other research and development, which would result in
expenses beyond those outlined in the agreement with Praxis.
Since we outsource most of our operations, we do not anticipate establishing our
own manufacturing facilities over the next twelve months. Beyond this time
frame, we plan to make a decision with regard to purchase or sale of any plant
and significant equipment in the long term after products are introduced to the
public through our website, if ever.
As conditions dictate, we will engage additional employees. We do not plan to
make any significant changes in the number of employees over the next twelve
months.
Item 3. Description of Property
We currently occupy space at Suite 600, 596 Hornby Street, Vancouver, B.C.
Canada V6C 1A4. This property is approximately 250 square feet and is occupied
by us on a proportional cost basis on a month-to-month basis. We feel that we
will be able to occupy these premises or obtain other adequate space if
necessary.
Item 4. Security Ownership of Certain Beneficial Owners and Management
The table below sets forth information with respect to the beneficial ownership
of the Common Stock by (a) each person known by the Company to be the beneficial
owner of five percent or more of the outstanding common stock, and (b) all
executive officers and directors individually and as a group, as of January 25,
2000. Unless otherwise indicated, the Company believes that the beneficial owner
has sole voting and investment power over such shares.
Security Ownership of Certain Beneficial Owners.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Title of Class Name & Address of Beneficial Owner Number of Beneficially Percentage
Owner Owned Shares Ownership of Class
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Winston Cabell 737,000 6.7%
28 Royalist Road
Mosman NSW 9083 WA 6000
Australia
- -------------------------------------------------------------------------------------------------------------------
Common David Lane 757,000 6.9%
1632 McPherson Drive
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
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<TABLE>
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Port Coquetlam, B.C. Canada
- -------------------------------------------------------------------------------------------------------------------
Common Dr. Brett Charlton 2,600,000 23.7%
Dr. William Cowden
Mr. David Stadnyk
Praxis Pharmaceuticals, Inc.
595 Hornby Street, Suite 600
Vancouver, BC Canada
- -------------------------------------------------------------------------------------------------------------------
Common David Stadnyk 2,375,000(1) 19.8%
595 Hornby Street, Ste. 600
Vancouver, B.C. Canada
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) This amount includes options to purchase 500,000 shares of our common
stock at $0.05 per share and options to purchase an additional 500,000
shares of our common stock at $0.15 per share. These options will expire
in March 2000.
Security Ownership of Management.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Title Name & Address of Beneficial Number of Beneficially Percentage
Owner Owned Shares Ownership of Class
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
President Director Byron Cox 200,000 Common 1.8%
595 Hornby St., Ste. 600
Vancouver, B.C. Canada
- -------------------------------------------------------------------------------------------------------------
All Officers 1 person 200,000 Common 1.8%
& Directors
- -------------------------------------------------------------------------------------------------------------
</TABLE>
Change in Control.
There are no arrangements, which may result in a change in control of the
Company.
Item 5. Directors, Executive Officers, Promoters and Control Persons
Directors and Executive Officers.
The following sets forth the names and ages of the Company's officers and
directors. The shareholders elect the directors of the Company annually, and the
officers are appointed annually by the board of directors.
Name Age Position Term of Office
- --------------------------------------------------------------------------------
Byron Cox 62 President, Director Annual
Byron Cox
Mr. Cox has served as President and Director of the Company since March 12,
1999. From 1992 to the present, Mr. Cox has worked at Alexander-Cox & Company,
Vancouver, B.C., as the company's President, where he provides investment
advisory services specializing in raising capital and investing in emerging
growth companies, as well as developing investor relations programs,
particularly on
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American Stock Exchanges. Mr. Cox holds a B.A. from the University of Toronto, a
Diploma in Business Administration (Marketing) from Ryerson Polytechnic
Institute and a certificate in Strategic Marketing Management from the Harvard
Business School. He holds professional accreditation in the American Public
Relations Society, as well as the Canadian Public Relations Society.
Significant Employees.
There are no employees not mentioned above who are expected to make a
significant contribution to the business.
Family Relationships.
There are no family relationships among directors, executive officers, or
persons nominated for such positions.
Involvement in Certain Legal Proceedings.
In October of 1997, a bankruptcy receiving order was made against Record
Publishing, Inc. (Estate No: 25-060808) in Canada. Mr. Cox was an officer of
this Company at the time of the bankruptcy.
Other than the aforementioned, there have been no bankruptcies, criminal
proceedings, or other legal proceedings during the past five years which would
be material to the evaluation of the ability or integrity of any director,
executive officer, any person nominated for such positions, any control person
or any promoter of the Company.
Item 6. Executive Compensation
The following table present, for the fiscal years ended December 31, 1999, the
compensation paid by the Company to the Company's chief executive officer.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
Name and Year Salary Bonus Other Annual Restricted Securities LTIP Other
Principle ($) ($) Compensation Stock Award(s) Underlying Payouts ($)
Position ($) ($) Options (#) ($)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Byron Cox, 1997 0 0 0 0 0 0 0
President 1998 0 0 0 0 0 0 0
1999 $28,000 0 0 0 0 0 0
- --------------------------------------------------------------------------------------------------------
</TABLE>
Item 7. Certain Relationships and Related Transactions
Certain Transactions.
Stadnyk Consulting Agreement. On March 15, 1999, we entered into a consulting
agreement with David Stadnyk who was our prior Director, President and Secretary
and who is a beneficial owner of our common stock, for services as a public
relations and business consultant. We paid a retainer of $25,000 and issued
500,000 shares of our stock to him as compensation for these services. In
addition, we granted him the option to purchase 500,000 shares of our common
stock at $0.05 per share and the option to purchase an additional 500,000 shares
of our common stock at $0.15 per share. These options are exercisable for a
period of one year from the date of the agreement. Further, the agreement
provides that, should we obtain listing on the NASDAQ small-cap market,
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Mr. Stadnyk would have a period of two years from the date of such listing to
exercise an option to purchase 5% of the outstanding common stock of the Company
at $0.50 per share. The agreement is for a period of twelve months. Other than
the aforementioned, we do not intend to enter into any transactions with our
beneficial owners.
Praxis Licensing Agreement. On May 11, 1999 we entered into an agreement with
Praxis, effective September 30, 1999, to acquire an exclusive license to make,
use and sell pharmaceutical products and processes relating to arthritis and
dermal wrinkles. We have agreed to pay approximately $250,000 for research on
the products and issue 2,600,000 common shares of our common stock in
consideration for the license. We paid an initial payment of $62,500 on October
1, 1999, which is to be followed by three quarterly installments of $50,000,
commencing January 1, 2000 and a final payment of $37,500 on October 1, 2000. We
will pay Praxis a royalty of 35% of the net proceeds earned from sales of
products sold under the terms of this agreement. David Stadnyk is an Officer and
Director of Praxis Pharmaceuticals, Inc.
Parents
We are not a subsidiary of any parent company.
Item 8. Description of Securities
Common Stock.
In General. We are authorized to issue 50,000,000 shares of common stock, par
value $0.001 per share, of which 10,988,170 shares were issued and outstanding
as of January 25, 2000. All of the issued and outstanding common stock is fully
paid and non-assessable.
Voting. Each share of our common stock designated at issuance to have voting
rights would entitle the holder thereof to one vote in the election of directors
and in all other matters upon which stockholders are entitled to vote. The
holders of shares of common stock do not have cumulative voting rights, which
means that the holders of more than 50% of the outstanding voting shares in an
election of directors can elect all of the directors to be elected, if they so
choose. In such event, the holders of the remaining shares will not be able to
elect any of our directors.
Dividends. Each share of common stock entitles the holder thereof to receive
cash dividends, as the Board of Directors may declare from funds legally
available therefore. However, we do not intend to declare any dividend on our
common stock in the foreseeable future.
Rights. There are no preemptive rights with respect to our common stock. Upon
liquidation, dissolution or winding up of the affairs of the Company, and after
payment of creditors, the assets legally available for distribution will be
divided ratably on a share-for-share basis among the holders of the outstanding
shares of common stock, after giving preference to any preferred shares
outstanding. The Board of Directors reserves the right to fix or determine the
designations, rights, preferences or other variations on each class of capital
stock of the Company.
Preferred Stock.
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In General. We have authorized 1,000,000 shares of preferred stock, par value
$0.01. As of January 25, 2000, there were no preferred shares issued and
outstanding.
Voting. Each share of our preferred stock designated at issuance to have voting
rights would entitle the holder thereof to one vote in the election of directors
and in all other matters upon which stockholders are entitled to vote. The
holders of shares of preferred stock do not have cumulative voting rights, which
means that the holders of more than 50% of the outstanding voting shares in an
election of directors can elect all of the directors to be elected, if they so
choose. In such event, the holders of the remaining shares will not be able to
elect any of our directors.
Dividends. Each share of preferred stock entitles the holder thereof to receive
cash dividends as the Board of Directors may declare from funds legally
available therefor. However, we do not intend to declare any dividend on our
common stock in the foreseeable future.
Rights. There are no preemptive rights with respect to the preferred stock. Upon
liquidation, dissolution or winding up of the affairs of the Company, and after
payment of creditors, the assets legally available for distribution will be
divided ratably on a share-for-share basis among the holders of the outstanding
shares of preferred stock, before giving preference to any common shares
outstanding. The Board of Directors reserves the right to fix or determine the
designations, rights, preferences or other variations on each class of capital
stock of the Company.
Debt Securities
We currently have no debt securities outstanding.
13
<PAGE>
PART II
Item 1. Market Price of and Dividends on the Registrant's Common Equity and
Other Shareholder Matters
Market Information.
Our common stock is traded on the NASDAQ Over the Counter Bulletin Board
("OTCBB") under the symbol FRCD. There is no active trading market for the
common stock. The following bid quotations have been reported for the period
beginning July 8, 1998, our initial quotation date, and ended September 30,
1999:
Bid Quotations
Period High Low
- ------ ---- ---
July 8 - September 30, 1998 $3/4 $1/4
October 1 - December 31, 1998 $9/16 $0.05
January 1 - March 31, 1999 $0.40 $0.13
April 1 - April 15, 1999 $0.80 $0.26
April 15, 1999 -> Reverse split 1:20 **** ****
April 16 - June 30, 1999 $16.00 $6 7/8
July 1 - September 13, 1999 $9.00 $2 3/8
September 13, 1999 -> Forward Split 10:1 **** ****
September 14 - September 30, 1999 $7/16 $7/16
October 1 - December 31, 1999 $0.59 $0.05
Such quotations reflect inter-dealer prices, without retail mark-up, markdown or
commission. Such quotes are not necessarily representative of actual
transactions or of the value of our securities and are, in all likelihood, not
based upon any recognized criteria of securities valuation as used in the
investment banking community.
The Company has been advised that approximately 11 member firms of the NASD are
currently acting as market makers for the common stock. There is no assurance
that an active trading market will develop which will provide liquidity for the
Company's existing shareholders or for persons who may acquire common stock
through the exercise of warrants.
Holders.
As of January 25, 2000, there were approximately 57 holders of record of our
10,988,170 shares of common stock outstanding. Of these 10,988,170 shares,
4,958,490 are restricted securities within the meaning of Rule 144(a)(3)
promulgated under the Securities Act of 1933, as amended, because such shares
were issued and sold by the Company in private transactions not involving a
public offering. Certain of the shares of common stock are held in "street" name
and may, therefore, be held by several beneficial owners. Our transfer agent is
American Securities Transfer & Trust, Inc. located at 12039 West Alameda
Parkway, Lakewood, CO 80228.
14
<PAGE>
No prediction can be made as to the effect, if any, that future sales of shares
of common stock or the availability of common stock for future sale will have on
the market price of the common stock prevailing from time-to-time. Sales of
substantial amounts of common stock on the public market could adversely affect
the prevailing market price of the common stock.
Dividends.
We have not paid a cash dividend on the common stock since inception. The
payment of dividends may be made at the discretion of our Board of Directors and
will depend upon, among other things, our operations, our capital requirements
and our overall financial condition. As of the date of this registration
statement, we have no intention to declare dividends.
Item 2. Legal Proceedings
We are currently unaware of any pending legal proceeding or any proceeding
contemplated by a governmental authority in which we may be involved.
Item 3. Changes In and Disagreements With Accountants
We have not had any resignation or dismissal of our principal independent
accountants. As of the date of this registration statement, Steele & Co.,
located in Vancouver, British Columbia, serve as our independent accountants and
have prepared the audited statements included as exhibits hereto.
Item 4. Recent Sales of Unregistered Securities.
On June 20, 1997, we sold 2,500,000 shares of our common stock to the public for
$50,000.00. On August 7, 1997, we sold 128,250 shares of our common stock to the
public for $51,300.00. On August 15, 1997, we sold 41,611 shares of our common
stock to the public for $41,611.00.
On August 31, 1998, we issued 508,312 shares of our common stock to several
parties rendering Business Consulting Services valued at $173,657.50 to the
Company . On October 20, 1998, we issued 150,000 shares of our common stock for
$15,000.00 consideration from Jewett Finance. On December 10, 1998, we issued
250,000 shares of common stock to Stockbroker Relations, Inc. for Public
Relations Services valued at $56,000.00. On December 10, 1998 we also issued
650,000 options to purchase our common stock to Stockbroker Relations, Inc. at
prices above market in exchange for public relations services.
On March 15, 1999, we sold 3,000,000 shares of our common stock to the public
for $150,000.00. On March 15, 1999, we issued 500,000 shares of our common stock
to David Stadnyk for Business Consulting Services valued at $25,000.00. We also
issued 100,000 options to purchase our common stock at prices above market to
David Stadnyk as consideration for Business Consulting Services to be rendered.
On April 1, 1999, we sold 1,000,000 shares of our common stock to the public for
$300,000.00.
We relied upon Rule 504 of Regulation D for the above issuances of our common
stock. These securities were issued without a restrictive legend. We relied upon
the following facts in determining that Rule 504 was available: (a) We were not
subject to the reporting requirements of Section 13 or 15 (d) of the Exchange
Act; (b) we were not a development stage Company without a specific
15
<PAGE>
business plan nor a company whose business plan was to merge with an
unidentified private entity; (c) the aggregate offering price within any twelve
months did not exceed $1,000,000. No commissions were paid in these offerings.
Additionally, on August 5, 1997 we issued 200,000 shares of our common stock to
Stephen Payne and 110,000 shares to Vern Strange for the acquisition of real
property valued at $310,000. These shares were issued with a restrictive legend
and were issued pursuant to Section 4(2) of the Securities Act of 1933. The
stock issue was recorded at $0.02 per share.
In October 1999, we issued 2,600,000 shares of our common stock to Praxis, Inc.
pursuant to the terms of our May 11, 1999 agreement with them for research,
development and licensing. These shares were issued pursuant to section 4(2) of
the Securities Act of 1933.
Item 5. Indemnification of Directors and Officers
Section 78.7502 of the NRS provides that Nevada corporations may limit, through
indemnification, the personal liability of their directors or officers in
actions, claims or proceedings brought against such person by reason of that
person's current or former status as an officer or director of the corporation.
Indemnification of directors or officers is available if the person acted in
good faith and in a manner the person reasonably believed was, at least, not
opposed to the best interests of the corporation. In the event of a criminal
action or proceeding, indemnification is not available if the person had
reasonable cause to believe their action was unlawful.
Further, in an action brought by the corporation or in the right of the
corporation, if the person, after exhaustion of all appeals, is found to be
liable to the corporation, or if the person makes payment to the corporation in
settlement of the action, indemnification is available only to the extent a
court of competent jurisdiction determines the person is fairly and reasonably
entitled to indemnification. Such discretionary indemnification is available
only as authorized on a case-by-case basis by: (1) the stockholders; (2) a
majority of a quorum of the board of directors consisting of members of the
board who were not parties to the action, suit or proceeding; (3) if a majority
of a quorum of the Board of Directors consisting of members of the Board who
were not parties to the action, suit or proceeding so orders, by independent
legal counsel in a written opinion; or (4) if a quorum of the Board of Directors
consisting of members of the Board who were not parties to the action cannot be
obtained, by independent legal counsel in a written opinion.
To the extent that a director or officer of a corporation is successful in
defending against an action, suit or proceeding brought against that person as a
result of their current or former status as an officer or director, the
corporation must indemnify the person against all expenses actually and
reasonably incurred by the person in connection with their defense. Nevada law
also allows Nevada corporations to advance expenses of officers and directors
incurred in defending a civil or criminal action as they are incurred, upon
receipt of an undertaking by or on behalf of the director or officer to repay
such expenses if it is ultimately determined by a court of competent
jurisdiction that such officer or director is not entitled to be indemnified by
the corporation because such officer or director did not act in good faith and
in a manner reasonably believed to be in or not opposed to the best interests of
the corporation.
16
<PAGE>
Section 78.751 of the NRS provides that any indemnification provided for by NRS
78.7502 (by court order or otherwise) shall not be deemed exclusive of any other
rights to which the indemnified party may be entitled and that the scope of
indemnification shall continue as to directors or officers who have ceased to
hold such positions and to their heirs, executors and administrators.
Section 78.752 of the NRS allows corporations to provide insurance, or other
financial arrangements such as a program of self-insurance, for their directors
or officers. Such insurance may provide coverage for any liability asserted
against the person and liability and expenses incurred by the person in their
capacity as a director or officer or arising out of their status as such,
whether or not the corporation has the authority to indemnify the person against
such liability and expenses. However, no financial arrangement made under
Section 78.752 may provide protection for a person adjudged by a court of
competent jurisdiction, after exhaustion of all appeals there from, to be liable
for intentional misconduct, fraud or a knowing violation of law, except with
respect to the advancement of expenses or indemnification ordered by a court.
Our By-laws provide for the indemnification of its directors and officers to the
maximum extent provided by law. It is the position of the Securities and
Exchange Commission and certain state securities administrators that any attempt
to limit the liability of persons controlling an issuer under the federal
securities laws or state securities laws is contrary to public policy and
therefore unenforceable.
17
<PAGE>
PART F/S
18
<PAGE>
FAIRCHILD INTERNATIONAL CORPORATION
(FORMERLY GOANNA RESOURCES INC.)
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
DECEMBER 31, 1998
(EXPRESSED IN U.S. DOLLARS)
<PAGE>
[LETTERHEAD OF STEELE & CO.
CHARTERED ACCOUNTANTS]
INDEPENDENT AUDITORS' REPORT
To the Shareholders of
Fairchild International Corporation
(formerly Goanna Resources Inc.)
We have audited the accompanying balance sheets of Fairchild International
Corporation (formerly Goanna Resources Inc.) (a development stage company) as of
December 31, 1998 and 1997 and the related statements of operations and deficit,
changes in stockholders' equity and cash flow for the periods then ended and
cumulative to December 31, 1998. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our 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.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Fairchild International
Corporation (formerly Goanna Resources Inc.) as at December 31, 1998 and 1997
and the results of its operations and its cash flow for the periods then ended
and cumulative to December 31, 1998 in conformity with U.S. generally accepted
accounting principles consistently applied.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has suffered losses from operations, has a net
capital deficiency and there is no revenue stream from operations. As a result,
there is substantial doubt about the Company's ability to continue as a going
concern. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
Vancouver, Canada /s/ Steele & Co.
October 8, 1999 CHARTERED ACCOUNTANTS
<PAGE>
FAIRCHILD INTERNATIONAL CORPORATION
(FORMERLY GOANNA RESOURCES INC.)
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
DECEMBER 31, 1998 AND 1997
(EXPRESSED IN U.S. DOLLARS)
1998 1997
---- ----
ASSETS
CURRENT
CASH $ 595 $ 68,115
========= =========
LIABILITIES
CURRENT
ACCOUNTS PAYABLE $ 7,350 $ 4,922
OWING TO RELATED PARTIES (NOTE 4) 55,752 44,744
--------- ---------
63,102 49,666
--------- ---------
COMMITMENTS (NOTE 7)
STOCKHOLDERS' EQUITY (DEFICIENCY)
SHARE CAPITAL (NOTE 5)
AUTHORIZED
50,000,000 COMMON SHARES WITH A PAR VALUE OF
$0.001 PER SHARE
1,000,000 PREFERRED SHARES WITH A PAR VALUE
OF $0.01 PER SHARE
ISSUED 7,776,347 COMMON SHARES - 388,817
POST-CONSOLIDATED COMMON SHARES
(1997 - 5,620,000 - 281,000 POST-
CONSOLIDATED COMMON SHARES) 393,769 56,200
SHARE SUBSCRIPTIONS -- 92,911
DEFICIT ACCUMULATED DURING
THE DEVELOPMENT STAGE (456,276) (130,662)
--------- ---------
TOTAL STOCKHOLDERS' EQUITY (DEFICIENCY) (62,507) 18,449
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 595 $ 68,115
========= =========
APPROVED BY THE DIRECTORS
- -------------------------
- -------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
<PAGE>
FAIRCHILD INTERNATIONAL CORPORATION
(FORMERLY GOANNA RESOURCES INC.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS AND DEFICIT
FOR THE YEAR ENDED DECEMBER 31, 1998
AND THE PERIOD FROM JUNE 20, 1997 (DATE OF INCORPORATION)
TO DECEMBER 31, 1997
(EXPRESSED IN U.S. DOLLARS)
CUMULATIVE
TO PERIODS ENDED
DECEMBER 31 DECEMBER 31
1998 1998 1997
---- ----------------------
ADMINISTRATION EXPENSES
ADVERTISING $ 9,008 $ 5,517 $ 3,491
BANK CHARGES AND FOREIGN EXCHANGE 10,129 9,631 498
CONSULTING 23,876 7,194 16,682
OFFICE, RENT AND SECRETARIAL 6,683 2,891 3,792
PROFESSIONAL FEES 24,310 12,964 11,346
PROMOTION 212,374 198,038 14,336
RELATED PARTY ADMINISTRATION
CHARGES 45,986 32,349 13,637
SHAREHOLDER INFORMATION 10,459 2,255 8,204
TELEPHONE AND UTILITIES 1,341 849 492
TRANSFER AGENT FEES 4,158 3,366 792
TRAVEL 8,325 4,264 4,061
-------- -------- --------
356,649 279,318 77,331
MINERAL INTERESTS AND
EXPLORATION COSTS 99,627 46,296 53,331
-------- -------- --------
NET LOSS FOR THE PERIOD (NOTE 6) $456,276 325,614 130,662
========
DEFICIT BEGINNING OF THE PERIOD 130,662 --
-------- --------
DEFICIT END OF THE PERIOD $456,276 $130,662
======== ========
BASIC LOSS PER SHARE $ 0.05 $ 0.02
======== ========
CONSOLIDATED LOSS PER SHARE (NOTE 5) $ 0.10 $ 0.05
======== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
<PAGE>
FAIRCHILD INTERNATIONAL CORPORATION
(FORMERLY GOANNA RESOURCES INC.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1998
AND THE PERIOD FROM JUNE 20, 1997 (DATE OF INCORPORATION)
TO DECEMBER 31, 1997
(EXPRESSED IN U.S. DOLLARS)
<TABLE>
<CAPTION>
COMMON SHARES
-------------------------- TOTAL
CAPITAL IN STOCK-
EXCESS OF HOLDERS'
SHARES AMOUNT PAR VALUE DEFICIT EQUITY
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
COMMON SHARES
ISSUED FOR CASH
@ $0.01/SHARE 5,000,000 $ 5,000 $ 45,000 $ -- $ 50,000
ISSUED FOR MINERAL
INTERESTS
@ $0.01/SHARE 620,000 620 5,580 -- 6,200
ISSUED FOR CASH
@ $0.20/SHARE 256,500 257 51,043 -- 51,300
@ $0.50/SHARE 83,222 83 41,528 -- 41,611
---------- ---------- ---------- ---------- ----------
5,959,722 5,960 143,151 149,111
NET LOSS FOR THE
PERIOD ENDED
DECEMBER 31, 1997 -- -- -- (130,662) (130,662)
---------- ---------- ---------- ---------- ----------
SHAREHOLDERS'
EQUITY AT
DECEMBER 31, 1997 5,959,722 5,960 143,151 (130,662) 18,449
COMMON SHARES
ISSUED FOR CASH
@ $0.05/SHARE 300,000 300 14,700 -- 15,000
@ $0.11/SHARE 454,545 455 49,545 -- 50,000
ISSUED FOR
SERVICES
@ $0.112/SHARE 500,000 500 55,500 -- 56,000
@ $0.22/SHARE 562,080 562 123,096 -- 123,658
---------- ---------- ---------- ---------- ----------
7,776,347 7,777 385,992 (130,662) 263,107
NET LOSS FOR THE
YEAR ENDED
DECEMBER 31, 1998 -- -- -- (325,614) (325,614)
---------- ---------- ---------- ---------- ----------
7,776,347 $ 7,777 $ 385,992 $ (456,276) $ (62,507)
========== ========== ========== ========== ==========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
<PAGE>
FAIRCHILD INTERNATIONAL CORPORATION
(FORMERLY GOANNA RESOURCES INC.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOW
FOR THE YEAR ENDED DECEMBER 31, 1998
AND THE PERIOD FROM JUNE 20, 1997 (DATE OF INCORPORATION)
TO DECEMBER 31, 1997
(EXPRESSED IN U.S. DOLLARS)
<TABLE>
<CAPTION>
CUMULATIVE
TO PERIODS ENDED
DECEMBER 31 DECEMBER 31
1998 1998 1997
---- ------------------------
<S> <C> <C> <C>
CASH PROVIDED (USED) BY
OPERATING ACTIVITIES
NET LOSS FOR THE PERIOD $(456,276) $(325,614) $(130,662)
ITEM NOT AFFECTING CASH FLOW
ISSUE OF SHARES FOR SERVICES
AND MINERAL INTERESTS 185,858 179,658 6,200
CHANGE IN NON-CASH OPERATING ITEM
ACCOUNTS PAYABLE 7,350 2,428 4,922
--------- --------- ---------
(263,068) (143,528) (119,540)
--------- --------- ---------
FINANCING ACTIVITIES
OWING TO RELATED PARTIES 55,752 11,008 44,744
SHARE CAPITAL ISSUED
FOR CASH 207,911 157,911 50,000
SHARE SUBSCRIPTIONS -- (92,911) 92,911
--------- --------- ---------
263,663 76,008 187,655
--------- --------- ---------
CHANGE IN CASH FOR THE PERIOD $ 595 (67,520) 68,115
=========
CASH BEGINNING OF THE PERIOD 68,115 --
--------- ---------
CASH END OF THE PERIOD $ 595 $ 68,115
========= =========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
<PAGE>
FAIRCHILD INTERNATIONAL CORPORATION
(FORMERLY GOANNA RESOURCES INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1998
(EXPRESSED IN U.S. DOLLARS)
1. ACCOUNTING POLICIES
a. Incorporation and Basis of Presentation
The Company was incorporated in the State of Nevada, U.S.A. on June
20, 1997. These financial statements have been prepared in
accordance with accounting principles and practices generally
accepted in the United States.
b. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial
statements and accompanying disclosures. Although these estimates
are based on management's best knowledge of current events and
actions the Company may undertake in the future, actual results
ultimately may differ from the estimates.
c. Foreign Currency
Transactions in foreign currency are translated at rates prevailing
on the dates of the transactions. Monetary assets and liabilities
denominated in foreign currencies have been translated into U.S.
dollars at the rate of exchange prevailing at the year end. Exchange
gains and losses from foreign currency translation adjustments are
included in current costs.
d. Income Taxes
The Company has incurred operating losses and resource-related
expenditures which are available for tax credit carry-forward. No
certainty exists whether it is more likely than not that some
portion of these amounts will be realized by a reduction of future
taxes payable and no deferred tax asset has been recognized.
e. Uncertainty Due to Year 2000 Issue
The Year 2000 Issue arises because many computerized systems may
recognize the year 2000 as some other date, resulting in errors when
information using year 2000 dates is processed. The effects of the
Year 2000 Issue may be experienced before, on or after January 1,
2000, and, if not addressed, the impact on operations and financial
reporting may range from minor errors to significant systems failure
which could affect an entity's ability to conduct normal business
operations. It is not possible to be certain that all aspects of the
Year 2000 Issue affecting the Company, including those related to
the efforts of customers, suppliers, or other third parties, will be
fully resolved.
<PAGE>
FAIRCHILD INTERNATIONAL CORPORATION
(FORMERLY GOANNA RESOURCES INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1998
(EXPRESSED IN U.S. DOLLARS)
2. GOING CONCERN CONSIDERATIONS
As at December 31, 1998, the Company had not reached a level of operations
which would finance day to day activities. These financial statements have
been prepared on the assumption that the Company is a going concern,
meaning it will continue in operation for the foreseeable future and will
be able to realize assets and discharge liabilities in the ordinary course
of operations. Different basis of measurement may be appropriate when a
company is not expected to continue operations for the foreseeable future.
The Company's continuation as a going concern is dependent upon its
ability to attain profitable operations and generate funds therefrom
and/or raise equity capital or borrowings from third parties and related
parties sufficient to meet current and future obligations. The Company
suffered losses from operations of $325,614 and $130,662 for the periods
ended December 31, 1998 and 1997 and had a net capital deficiency of
$62,507 at December 31, 1998.
3. MINERAL INTERESTS
The Company acquired rights to prospecting licenses in Western Australia
under agreements entered into with the registered holders of the
interests. Subsequent to the year end, the Company abandoned its rights to
the prospecting licenses by not making the required payments and share
issuances. The Company has no further rights or obligations relating to
these property licences.
4. OWING TO RELATED PARTIES
The Company shares office facilities and has common management and
directorships with a number of public and private corporate related
parties. The Company is charged for office rentals and administrative
services on a proportional cost basis. Administration expenses of $21,879
(1997 - $13,637) were paid to a company controlled by a director and
administrative fees of $10,470 (1997 - $Nil) were paid to a director.
Management believes that the methods of cost allocations and resultant
costs are reasonable. Accounts with companies with common management and
directorships, management and directors are unsecured with no fixed terms
of interest or repayment.
5. SHARE CAPITAL
a. Authorized
50,000,000 common shares with a par value of $0.001 per share
1,000,000 preferred shares with a par value of $0.01 per share
<PAGE>
FAIRCHILD INTERNATIONAL CORPORATION
(FORMERLY GOANNA RESOURCES INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1998
(EXPRESSED IN U.S. DOLLARS)
5. SHARE CAPITAL (CONTINUED)
<TABLE>
<CAPTION>
b. Common Shares Issued Shares Consideration
--------- -------------
<S> <C> <C>
For cash at a value of $0.01 per share 5,000,000 $ 50,000
For mineral interests at a value of $0.01 per share 620,000 6,200
--------- ---------
Balance at December 31, 1997 5,620,000 56,200
For cash at a value of $0.05 per share 300,000 15,000
For cash at a value of $0.11 per share 454,545 50,000
For cash at a value of $0.20 per share 256,500 51,300
For cash at a value of $0.50 per share 83,222 41,611
For services at a value of $0.112 per share 500,000 56,000
For services at a value of $0.22 per share 562,080 123,658
--------- ---------
Balance at December 31, 1998 7,776,347 $ 393,769
========= =========
Subsequent Consolidation 388,817 $ 393,769
========= =========
</TABLE>
c. Subsequent Event
On March 15, 1999, the Company completed a consolidation of common
shares by the issue of 1 new share for 20 old shares. On May 28,
1999, the name of the Company was changed to Fairchild International
Corporation.
Subsequent to the year end, the Company issued post-consolidation
shares as follows.
300,000 shares at $0.50 per share
100,000 shares at $3.00 per share
50,000 shares at $0.50 per share for services
6. INCOME TAXES
The Company has incurred operating losses of approximately $357,000 and
resource related expenditures of approximately $99,000 which are available
to reduce future years' taxable income. No future benefits have been
recognized in the accounts. The availability of these losses is as
follows:
Until 2004 $ 77,000
Until 2005 $280,000
Indefinitely against resource related income $ 99,000
<PAGE>
FAIRCHILD INTERNATIONAL CORPORATION
(FORMERLY GOANNA RESOURCES INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1998
(EXPRESSED IN U.S. DOLLARS)
7. COMMITMENTS - PHARMACEUTICAL RESEARCH AND DEVELOPMENT AGREEMENTS
The Company has entered into an agreement, effective September 30, 1999,
to acquire an exclusive license to make, use and sell pharmaceutical
products and processes relating to arthritis and dermal wrinkles. The
Company has agreed to pay $250,000 for research on the products and issue
260,000 common shares in consideration for the license. An initial payment
of $62,500 (paid) is due on closing, followed by three quarterly
instalments of $50,000, commencing January 1, 2000 and a final payment of
$37,500 on October 1, 2000. The agreement is with a company formerly under
common management.
<PAGE>
FAIRCHILD INTERNATIONAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
(EXPRESSED IN U.S. DOLLARS)
UNAUDITED - SEE COMPILATION REPORT
<PAGE>
[LETTERHEAD OF STEELE & CO.
CHARTERED ACCOUNTANTS]
COMPILATION REPORT
We have compiled the accompanying balance sheet of Fairchild International
Corporation as at September 30, 1999, and the related statements of operations
and deficit and cash flow for the period then ended.
A compilation is limited to presenting, in the form of financial statements,
information that is the representation of management. We have not audited or
reviewed the accompanying financial statements and, accordingly, do not express
an opinion or any other form of assurance on them.
Management has elected to omit substantially all of the disclosures required by
generally accepted accounting principles. If the omitted disclosures were
included in the financial statements, they might influence the user's
conclusions about the company's financial position, results of operations, and
cash flows. Accordingly, these financial statements are not designed for those
who are not informed about such matters.
Vancouver, Canada /s/ Steele & Co.
November 15, 1999 (with revisions to January 13, 2000) CHARTERED ACCOUNTANTS
<PAGE>
FAIRCHILD INTERNATIONAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
SEPTEMBER 30, 1999
(EXPRESSED IN U.S. DOLLARS)
1999
----
ASSETS
CURRENT
CASH $ 173,181
=========
LIABILITIES
CURRENT
ACCOUNTS PAYABLE $ 13,226
OWING TO RELATED PARTIES 66,184
---------
79,410
---------
STOCKHOLDERS' EQUITY
SHARE CAPITAL
AUTHORIZED
50,000,000 COMMON SHARES WITH A PAR VALUE
OF $0.001 PER SHARE
1,000,000 PREFERRED SHARES WITH A PAR VALUE
OF $0.01 PER SHARE
ISSUED AND FULLY PAID (NOTE 2)
8,388,170 COMMON SHARES 868,769
DEFICIT ACCUMULATED DURING THE
DEVELOPMENT STAGE (774,998)
---------
TOTAL STOCKHOLDERS' EQUITY 93,771
---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 173,181
=========
APPROVED BY THE DIRECTORS
- -------------------------
- -------------------------
UNAUDITED - SEE COMPILATION REPORT
<PAGE>
FAIRCHILD INTERNATIONAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS AND DEFICIT
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(EXPRESSED IN U.S. DOLLARS)
CUMULATIVE
TO PERIODS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1999 1999 1998
---- ---- ----
EXPENSES
ADVERTISING $ 9,008 $ -- $ --
BANK CHARGES AND EXCHANGE 12,439 2,310 2,125
CONSULTING 49,540 25,664 14,460
RESEARCH AND DEVELOPMENT 96,500 96,500 --
OFFICE AND SECRETARIAL 18,727 12,044 1,326
PROMOTION AND TRAVEL 318,095 97,396 133,061
PROFESSIONAL FEES 57,264 32,954 7,963
RELATED PARTY
ADMINISTRATION CHARGES 88,678 42,692 19,477
RENT
SHAREHOLDER INFORMATION 14,558 4,099 2,255
TELEPHONE 2,996 1,655 848
TRANSFER AGENT FEES 7,566 3,408 2,516
-------- -------- --------
675,371 318,722 184,031
MINERAL INTERESTS AND
EXPLORATION COSTS 99,627 -- 26,264
-------- -------- --------
NET LOSS FOR THE PERIOD $774,998 318,722 210,295
========
DEFICIT BEGINNING OF THE PERIOD 456,276 130,662
-------- --------
DEFICIT END OF THE PERIOD $774,998 $340,957
======== ========
BASIC LOSS PER SHARE $ 0.05 $ 0.07
======== ========
UNAUDITED - SEE COMPILATION REPORT
<PAGE>
FAIRCHILD INTERNATIONAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOW
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(EXPRESSED IN U.S. DOLLARS)
<TABLE>
<CAPTION>
CUMULATIVE
TO PERIODS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1999 1999 1998
---- ---- ----
<S> <C> <C> <C>
CASH PROVIDED (USED) BY
OPERATING ACTIVITIES
NET LOSS FOR THE PERIOD $(774,998) $(318,722) $(210,295)
ITEM NOT AFFECTING CASH FLOW
ISSUE OF SHARES FOR SERVICES
AND MINERAL INTEREST 210,858 25,000 123,658
CHANGE IN NON-CASH
OPERATING ITEM
ACCOUNTS PAYABLE 13,226 5,876 1,325
--------- --------- ---------
(550,914) (287,846) (85,312)
--------- --------- ---------
FINANCING ACTIVITIES
OWING TO RELATED PARTIES 66,184 10,432 17,497
SHARE CAPITAL ISSUED FOR CASH 657,911 450,000 142,911
SHARE SUBSCRIPTIONS -- -- (92,911)
--------- --------- ---------
724,095 460,432 67,497
--------- --------- ---------
CHANGE IN CASH FOR THE PERIOD $ 173,181 172,586 (17,815)
=========
CASH BEGINNING OF THE PERIOD 595 68,115
--------- ---------
CASH END OF THE PERIOD $ 173,181 $ 50,300
========= =========
</TABLE>
UNAUDITED - SEE COMPILATION REPORT
<PAGE>
FAIRCHILD INTERNATIONAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
1. ACCOUNTING POLICES AND NOTES
The accounting policies followed by the Company are unchanged from those
outlined in the audited financial statements for the year ended December
31, 1998. The notes to the financial statements at December 31, 1998
substantially apply to the interim financial statements at September 30,
1999 and are not repeated here. All adjustments have been made which, in
the opinion of management, are necessary in order to make these financial
statements not misleading.
2. SHARE CAPITAL
<TABLE>
<CAPTION>
SHARES CONSIDERATION
------ -------------
<S> <C> <C>
Common shares issued and fully paid
Balance at December 31, 1998 7,776,347 $ 393,769
========== ==========
Consolidated on a 1 new share for
20 old shares basis 388,817 $ 393,769
Issued during the period
For cash
@ $0.50 per share 300,000 150,000
@ $.3.00 per share 100,000 300,000
For services
@ $0.50 per share 50,000 25,000
---------- ----------
838,817 $ 868,769
========== ==========
Split on a 10 new share for 1 old share basis and
balance at September 30, 1999 8,388,170 $ 868,769
========== ==========
</TABLE>
On September 13, 1999, the common shares were split on a 10 new shares for
1 old share basis.
UNAUDITED - SEE COMPILATION REPORT
<PAGE>
FAIRCHILD INTERNATIONAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
3. COMMITMENT
a. Pharmaceutical Research and Development
The Company has entered into Research, Development and License
Agreements, effective September 30, 1999, to acquire an exclusive
license to make, use and sell pharmaceutical products and processes
relating to arthritis and dermal wrinkles. The Company has agreed to
pay $250,000 by October 1, 2000 for research on the products and
issue 2,600,000 post-split common shares in consideration for the
license. The shares will be issued at a nominal value of $0.01 per
share and are subject to regulatory restrictions relating to their
saleability. A net revenue royalty of 35% will be payable by the
Company on revenue for licensed products. The agreement is with a
company formerly under common management.
b. Consulting Agreement
The Company has entered into a consulting agreement for public
relations services for a twelve month period to March 15, 2000. The
Company has agreed to pay $25,000, issue 500,000 shares (50,000
pre-split) of common stock and has granted options to acquire,
within one year, 500,000 shares at $0.05 per share and 500,000
shares at $.15 per share. The compensation has been recorded as an
expense at the assigned value of the shares when issued. The options
will be recorded as share issues at the agreement price when
exercised. An additional option has been granted to acquire up to 5%
of the outstanding shares of the Company when the shares qualify for
the NASDAQ small cap over the counter public trading at $0.50 per
share for a period of two years from the date of the listing.
UNAUDITED - SEE COMPILATION REPORT
<PAGE>
EXHIBIT INDEX
EXHBIT # ITEM PAGE
Ex. 3.1 Articles of Incorporation
(as filed in the November 30,1999 filing of the Form 10-SB)
Ex. 3.2 Bylaws
(as filed in the November 30,1999 filing of the Form 10-SB)
Ex. 4 Share Certificate
(as filed in the November 30,1999 filing of the Form 10-SB)
Ex. 10 Material Contracts - Praxis Pharmaceuticals, Inc.
Ex. 27 Financial Data Schedule
(as filed in the November 30,1999 filing of the Form 10-SB)
19
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
FAIRCHILD INTERNATIONAL CORP.
Dated: 2/1/00 By: /s/ Byron Cox
----------------------------------------
Byron Cox, President and Director
20
EXHIBIT 10
RESEARCH, DEVELOPMENT AND LICENCE AGREEMENT DATED MAY 11, 1999 BETWEEN
PRAXIS PHARMACEUTICALS, INC. AND FAIRCHILD INTERNATIONAL INC.
RESEARCH, DEVELOPMENT AND LICENCE AGREEMENT DATED THE 11TH DAY OF MAY,
1999
BETWEEN:
PRAXIS PHARMACEUTICALS, INC.,
a body corporate incorporated pursuant to the laws of the State of Utah, one of
the United States of America and having an office at ANUTECH Court, North Road,
in the City of Canberra, ACT, Australia ("Praxis")
- and -
FAIRCHILD INTERNATIONAL INC.,
a body corporate incorporated pursuant to the laws of the Province of British
Columbia, Canada and having an office at Suite 600, 595 Hornby Street, City of
Vancouver, British Columbia, Canada ("FAIRCHILD")
WHEREAS:
A. The Australian National University is the owner of certain patents related to
the invention entitled "Phosphosugar-based anti-inflammatory and/or
immunosuppressive drugs" and certain patent applications related to an invention
entitled "Novel phosphosugars and phosphosugar-containing compounds having
anti-inflammatory activity" which are described in more detail herein;
B. ANUTECH PTY Ltd. ("Anutech"), the commercialization company of the Australian
National University, has entered into an agreement as agent for and on behalf of
the Australian National University with Praxis pursuant to which Praxis has been
granted an exclusive licence for the use of the inventions described above in
specified areas of application;
C. Praxis has and intends to continue to conduct research and development
related to the above described inventions;
D. Praxis wishes to obtain funding from FAIRCHILD to conduct research in the
area of arthritis and dermal wrinkles and related to the above inventions;
E. FAIRCHILD wishes to obtain an exclusive, world-wide licence to make, use and
sell products and processes developed by Praxis relating to arthritis and dermal
wrinkles;
NOW THEREFORE, in consideration of the mutual terms and conditions contained
herein, the parties hereto agree as follows:
PART I - DEFINITIONS AND INTERPRETATION
SECTION 1 - DEFINITIONS
In this Agreement, including this Section, the following defined terms have the
meanings indicated:
(a) "Anutech Licence Agreements" means the agreement entered into
between Anutech and Praxis dated 27th October, 1997, a copy of which
is attached hereto as Schedule "D";
21
<PAGE>
(b) "Closing Date" means September 30th, 1999
(c) "Confidential Information" means confidential or proprietary
information, trade secrets, know-how and technical information
related to the inventions claimed pursuant to the Patents and any
other information disclosed in confidence by Praxis to FAIRCHILD or
by FAIRCHILD to Praxis;
(d) "Field of Use" means arthritis and dermal wrinkles;
(e) "Intellectual Property" means any and all methods, devices,
techniques, discoveries, inventions (whether or not patentable),
know-how, ideas, processes, trade secrets and other proprietary
information, including any patent right, copyright, trade secret or
similar right;
(f) "Licensed Patent Applications" means:
(i) the patent applications relating to the invention entitled
"Novel phosphosugars and phosphosugar-containing compounds
having anti-inflammatory activity", including United State
Patent Application No. 08/953305, Australian Application No.
41866/97 and any patent applications filed now or in the
future in any country which disclose and claim the same
inventions or the priority of Australian Provisional
Application PO 3098/96, filed October 18, 1996; and
(ii) all patent applications related to the New Intellectual
Property;
(g) "Licensed Patents" means:
(i) the patents described on Schedule "A" hereto;
(ii) all patents issued out of the Patent Applications;
(iii) any patents issued in any country disclosing and claiming the
same inventions as those claimed in the patents referred to in
clauses (i) and (ii) hereof; and
(iv) all divisions, re-issues, re-examinations, continuations,
renewals and extensions of the foregoing;
(h) "Licensed Product" means any product the manufacture or use of which
is covered by a Valid Claim;
(i) "Licensed Technology" means:
(i) the inventions disclosed and claimed in the Licensed Patent
Applications and Licensed Patents;
(ii) any additional Intellectual Property related to the inventions
referred to in clause (i), their description, use, or
application; and
(iii) all Confidential Information in any way related to the
inventions referred to in clause (i) hereof and the
Intellectual Property referred to in clause (ii) hereof;
(j) "Net Revenue" means all consideration received by FAIRCHILD:
22
<PAGE>
(i) for the sale or other disposition of Licensed Products; and
(ii) pursuant to the terms of any sublicences granted by FAIRCHILD
in accordance with Section 11(3); less the following:
(A) all costs incurred by FAIRCHILD in the development of
Licensed Products, including, without limitation,
payments made by FAIRCHILD to Praxis pursuant to Section
8, costs and expenses incurred by FAIRCHILD pursuant to
Section 13 and expenses incurred by FAIRCHILD in
connection with obtaining Regulatory Approvals,
including those referred to in Section 17;
(B) all costs of direct materials, labour and overhead
expenses required in the manufacture and production of
Licensed Products;
(C) costs incurred by FAIRCHILD in connection with the
marketing, selling and distribution of Licensed
Products;
(D) any tax or government charge (other than an income tax)
levied on the sale, transportation or delivery of
Licensed Product;
(E) trade and quantity discounts or rebates actually allowed
and taken; and
(F) credits or allowances given or made for rejection or
return of previously sold Licensed Products;
(k) "New Intellectual Property" means Intellectual Property that is
developed by Praxis during the conduct of the Research Projects
performed by Praxis in accordance with Section 8;
(l) "Regulatory Approval" means any approvals, licenses, registrations
or authorizations of any relevant authority having jurisdiction
necessary for the development, use, importation, packaging,
marketing, distribution, sale, storage and transportation of the
Licensed Products;
(m) "Research Projects" means the Research and Development Projects
relating to dermal wrinkles and arthritis conducted in accordance
with Section 8;
(n) "Shares" means shares in the capital stock of FAIRCHILD described as
Class A Common and having the rights set out on Schedule "B" hereto;
(o) "Valid Claim" means a claim of any issued and unexpired Licensed
Patent which claim has not been held unenforceable, unpatentable or
invalid by a decision of a court or government body of competent
jurisdiction, unappealable or unappealed within the time allowed for
appeal, which has not been rendered unenforceable through disclaimer
or otherwise, and which has not been lost through an interference
proceeding or by abandonment.
SECTION 2 - GOVERNING LAW AND JURISDICTION
This Agreement shall be governed by and interpreted in accordance with the laws
in force in the Province of British Columbia. The parties hereby submit to the
jurisdiction of the Courts of British Columbia.
23
<PAGE>
SECTION 3 - CURRENCY
All monetary units, except as expressly stated otherwise in this Agreement, are
in United States dollars.
SECTION 4 - AFFILIATES
For the purpose of this Agreement, a company is an Affiliate of a party if:
(a) the party owns or controls, directly or indirectly, 50% or more of
the voting stock of that company;
(b) the party owns or controls, directly or indirectly, sufficient
voting stock in that company to elect a majority of the directors of
that company;
(c) that company owns or controls, directly or indirectly, 50% or more
of the voting stock of the party;
(d) that company owns or controls, directly or indirectly, sufficient
voting stock in the party to elect a majority of the directors of
the party;
(e) an organization owns or controls, directly or indirectly, 50% or
more of the voting stock of the party and that company; or
(f) an organizations owns or controls, directly or indirectly,
sufficient voting stock in the party and the company to elect a
majority of the directors of the party and that company.
SECTION 5 - SCHEDULES
The following Schedules are incorporated into and form part of this Agreement:
Schedule "A" - Patents
Schedule "B" - Share Rights
Schedule "C" - Research Projects
Schedule "D" - Anutech Licence
PART II - PURCHASE AND SALE OF SHARES
SECTION 6 - SUBSCRIPTION AND PURCHASE
(1) In consideration for the licensing rights to the Praxis Intellectual
Property, FAIRCHILD hereby agrees to transfer, on or before the Closing
Date, 260,000 pre-split shares or 2.6 million post-split shares of
Fairchild International Inc. to Praxis, and guarantees that the Shares
will be issued as fully paid up and non-accessible Shares; that the Shares
be allotted and that a certificate for the Shares be issued to Praxis.
(2) Praxis shall certify as at the Closing Date that the following
representations and warranties are correct:
(a) Praxis is engaged primarily in the business of developing a unique
panel of natural carbohydrate based compounds and exploiting
commercial applications of such;
(b) there are no material lawsuits against Praxis, or its directors or
officers that are related to the business of Praxis, nor, to the
best of the knowledge of Praxis and its directors and officers are
any being contemplated;
24
<PAGE>
(c) Praxis is current in all taxes owed, including payroll taxes, and on
all debts, accounts payable and leases;
(d) Praxis has provided copies of its most recent financial statements
to FAIRCHILD and the information contained in such financial
statements is complete and accurately reflects Praxis' situation,
financial and otherwise;
(e) a copy of every material executed lease, licence, partnership or
collaboration agreement (whether technical, marketing, manufacturing
or other) stockholder agreement, loan agreement, employment
agreement, purchase and sale agreement has been provided to
FAIRCHILD;
(f) a comprehensive listing and description of all Intellectual Property
in the name of Praxis or obtained by Praxis through licensing has
been provided to FAIRCHILD as have copies of file wrappers for all
Licensed Patent Applications and there are no existing or potential
patent disputes of which Praxis is aware or for which Praxis has not
provided full and complete disclosure to FAIRCHILD;
(g) a complete and current listing of Praxis' capital structure and the
terms and conditions associated therewith has been provided to
FAIRCHILD, including a list of all shareholders, options, Warrants,
puts and other instruments that may affect FAIRCHILD's equity
position after shareholdings are fully diluted;
(h) there are no material written or oral agreements with any other
person or corporation pursuant to which Praxis or it directors or
officers have agreed to do anything beyond the requirements of the
formal written contracts referred to in clause (e);
(i) the transfer of the Shares to Praxis contemplated by this Agreement
will not constitute a breach of any contract or commitment to which
FAIRCHILD is a party;
(j) Praxis has filed all necessary tax returns;
(k) this Agreement has been duly authorized, executed and delivered by
Praxis and is a legal, valid and binding obligations of Praxis
enforceable by FAIRCHILD in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency and other laws
affecting the rights of creditors generally;
(l) the execution and delivery of this Agreement by Praxis and the
completion of the transactions herein will not result in a breach or
violation of any of the provisions of any obligation of Praxis under
any contract to which Praxis may be a party; any judgment, decree,
order or award of any court, governmental body or arbitrator having
jurisdiction over Praxis; or any applicable law, statute, ordinance,
regulation or rule;
(m) the issue of the Shares to Praxis is in compliance with the
constating documents of FAIRCHILD; and
(n) Praxis is not a non-resident of Canada within the meaning of Section
116 of the Income Tax Act (Canada).
(3) If at any time prior to the Closing Date:
(a) Praxis shall have failed to comply with any term or condition
contained herein;
25
<PAGE>
(b) any representations and warranties set out in Section 6(2) is
incorrect in any material respect;
(c) there is any material default under debts owed by Praxis which
default has not been cured within any applicable grace period; or
(d) any material final judgments are rendered against Praxis;
FAIRCHILD may terminate this Agreement upon written notice to Praxis.
(4) All registration and recording fees payable to third parties in connection
with the closing of the transactions outlined in this Section 6 shall be
borne by Praxis.
SECTION 7 - PURCHASE OF ADDITIONAL SHARES
Praxis shall not purchase any Shares in addition to those to which Praxis is
entitled pursuant to Section 6 unless such purchase is made in conjunction with
or pursuant to an agreement between Praxis and FAIRCHILD for the acquisition by
Praxis of voting control of FAIRCHILD.
PART III - RESEARCH AND DEVELOPMENT
SECTION 8 - RESEARCH PROJECTS
(1) Praxis shall conduct the Research Projects and perform all work described
in Schedule "C".
(2) Praxis shall commence work on October 1st, 1999 and shall use reasonable
efforts to complete the Research Projects in accordance with the work
schedule included as part of Schedule "C".
(3) The Research Projects shall be performed by Praxis in a thorough and
diligent manner in accordance with Good Laboratory Practices and normal
professional standards.
(4) Praxis shall report to FAIRCHILD at the times and in the manner set forth
in Schedule "C".
(5) FAIRCHILD shall pay to Praxis the total sum of $250,000.00 USD, after
deduction for any loans to the company, payable as an initial payment of
$62,500 USD and then in three equal quarterly instalments of $50,000 USD
payable on the first day of each month commencing on January 1st, 2000 and
a single, and final, quarterly payment of $37,500 USD on October 1st,
2000, such payments to be exclusive of any taxes, whether municipal,
provincial, federal or Goods and Services. The funds paid by FAIRCHILD to
Praxis pursuant to this Section 8 shall only be used by Praxis for the
conduct of the Research Projects and shall only be expended in accordance
with the budget included as part of Schedule "C", unless Praxis obtains
prior written authorization from FAIRCHILD.
(6) FAIRCHILD and Praxis shall, not less than once every three (3) months,
review and evaluate progress on the Research Projects. Following such
reviews milestones as set out in Schedule C may be revised as and when
needed by mutual agreement between FAIRCHILD and Praxis.
(7) Praxis shall use reasonable efforts to ensure that the technology used in
the Research Projects does not infringe on any patents or proprietary
rights of other persons.
SECTION 9 - RECORDS AND CONFIDENTIALITY
(1) Praxis shall maintain complete and accurate records of the activities
conducted and results obtained pursuant to the Research Projects, all in
accordance with good scientific practice. Upon
26
<PAGE>
written request from FAIRCHILD, Praxis shall provide copies of any such
records to FAIRCHILD.
(2) Praxis shall keep full, accurate and complete records of books of account
relating to financial aspects of the Research Projects. FAIRCHILD, or a
designate of FAIRCHILD, may from time to time upon reasonable prior
written notice to Praxis examine, audit or have examined or audited the
records and books of account of Praxis.
(3) All data, reports, plans, records, logs and other information relating to
the Research Projects shall be treated by Praxis and FAIRCHILD as the
confidential property of both parties and both parties shall use all
reasonable efforts to ensure that such information is kept strictly
confidential during the term of this Agreement and for a period of ten
(10) years thereafter. Nothing herein shall prevent Praxis from using,
disclosing or authorizing disclosure of information:
(a) which is or becomes part of the public domain through no act or
failure on the part of Praxis;
(b) which was in Praxis' possession prior to its development pursuant to
the Research Projects or prior to receipt or acquisition from
FAIRCHILD;
(c) which is disclosed to Praxis by a third party without a covenant of
confidentiality, provided that such third party is, to the knowledge
of Praxis, under no obligation of confidentiality with respect to
the information; or
(d) with the prior written authorization of FAIRCHILD.
SECTION 10 - OWNERSHIP OF NEW INTELLECTUAL PROPERTY
(1) New Intellectual Property shall promptly be disclosed by Praxis to
FAIRCHILD and thereafter shall be included as part of the Licensed
Technology and licensed to FAIRCHILD pursuant to Section 11.
(2) All expenses connected with preparing, filing, prosecuting, obtaining,
maintaining and enforcing intellectual property rights related to the New
Intellectual Property shall be borne by FAIRCHILD.
PART IV - LICENCE
SECTION 11 - GRANT
(1) Praxis hereby grants to FAIRCHILD an exclusive, world-wide sublicence
under the Licensed Patent Applications and Licensed Patents, and an
exclusive, world-wide sublicence under the New Intellectual Property, to
use the Licensed Technology and to make, use and sell any products,
compounds, compound uses, processes, applications, methods or procedures
within the Field of Use.
(2) FAIRCHILD shall be entitled to grant further sublicences of the rights
granted by Praxis to FAIRCHILD pursuant to Section 11(1) hereof. FAIRCHILD
shall advise Praxis in writing of any and all sublicences granted by
FAIRCHILD in accordance with this Section 11(3) and shall provide Praxis
with the following information:
(a) name of the sublicencee;
(b) the amount of any licence fee or royalties payable by the
sublicencee; and
27
<PAGE>
(c) such further information as may be reasonably requested by Praxis.
(3) FAIRCHILD may assign this Agreement to an Affiliate of FAIRCHILD or may
transfer or assign the rights and obligations of FAIRCHILD pursuant to
Parts III, IV or V, or any combination thereof, to an Affiliate of
FAIRCHILD.
FAIRCHILD shall advise Praxis in writing of any such transfer or
assignment.
Notwithstanding any such transfer or assignment, FAIRCHILD shall at all
times remain liable to Praxis for the performance of the obligations set
out herein, including the obligation to pay to Praxis a share of Net
Revenue in accordance with Section 12.
SECTION 12 - REVENUE
(1) Net Revenue shall be apportioned between the parties and FAIRCHILD shall
pay to Praxis an amount equal to thirty five percent (35%) of Net Revenue
of Praxis products for so long as there are Valid Claims.
(2) All payments required to be made pursuant to Section 12(1) shall be made
according to Section 8(5).
SECTION 13 - RECORDS AND REPORTS
(1) FAIRCHILD shall keep full, accurate and complete records and books of
account relating to Net Revenue and any amounts payable by FAIRCHILD to
Praxis pursuant to Section 12 hereof.
(2) All payments made by FAIRCHILD to Praxis pursuant to Section 12 shall be
accompanied by a report providing such information as is reasonably
required by Praxis to determine an accurate determination of the amounts
payable by FAIRCHILD to Praxis in accordance with Section 12.
(3) Praxis may from time to time, upon reasonable prior notice to FAIRCHILD
have the records and books of account maintained by FAIRCHILD in
accordance with Section 13(1) hereof audited or examined by a duly
authorized independent chartered accountant to ascertain the accuracy of
the payments made. All costs of any audit, examination or report shall be
payable by Praxis, unless the report discloses an underpayment of five
(5%) percent or more, in which case the cost of the audit, examination or
report shall be payable by FAIRCHILD.
SECTION 14 - PROTECTION, ENFORCEMENT AND INFRINGEMENTS
(1) Praxis shall permit FAIRCHILD to control and direct (including the
selection of patent agents or patent attorneys) the preparation, filing
and prosecution of all patent applications the subject of this Agreement
included within the Field of Use of the Licensed Technology, including the
New Intellectual Property.
Without limiting the generality of the foregoing, Praxis shall, upon
FAIRCHILD's request and at FAIRCHILD's cost and expense, file and
prosecute patent applications to protect the Licensed Technology in any
country that a patent application has not been filed. FAIRCHILD shall
consult with Praxis on the content of all patent applications and related
filings. Praxis shall bear all costs related to the preparation, filing,
prosecution and maintenance with respect to the Licensed Patents described
on Schedule "A", the Licensed Patent Applications described in Section
1(g)(i) and any other patents or Licensed Patent Applications that
disclose and claim the same
28
<PAGE>
inventions. FAIRCHILD shall pay all costs of preparing, filing,
prosecuting and maintaining all Licensed Patent Applications and Licensed
Patents related to the New Intellectual Property.
(2) If either party believes that any Licensed Patents are being infringed by
another person, that party shall promptly notify the other party and shall
provide any evidence of infringement which is reasonably available.
FAIRCHILD shall have the first right and option, but not the obligation,
to bring an action for infringement, at FAIRCHILD's sole cost and expense,
against the alleged infringer. If FAIRCHILD elects to take such action,
the conduct of the action shall be entirely under the direction and
control of FAIRCHILD. If FAIRCHILD exercises the rights contained herein,
FAIRCHILD may name Praxis as a party plaintiff in such action, suit or
proceeding, if reasonably necessary under the circumstances, provided that
FAIRCHILD shall indemnify and hold Praxis and Anutech harmless from any
costs or expenses incurred in connection with such action, suit or
proceeding. Any damages or sums recovered by FAIRCHILD in any such action,
suit or proceeding, or any settlement thereof, shall be retained by
FAIRCHILD, but, to the extent that the recovery reflects lost sales of
Licensed Products, the net amount after deducting expenses incurred by
FAIRCHILD, shall be included as part of Net Revenue.
(3) If FAIRCHILD elects not to pursue an action for infringement, whether
alone or jointly with Praxis, Praxis shall have the right and option, but
not the obligation, at Praxis's sole cost and expense, to bring the action
for infringement against the alleged infringer. Any damages or sums
recovered by Praxis in such action, suit or proceeding, or any settlement
thereof, shall be retained by Praxis, but, to the extent that the recovery
reflects lost sales of Licensed Products, Praxis shall pay to FAIRCHILD
one-half of the net amount after deducting expenses incurred by Praxis.
(4) The parties shall cooperate in defending any impeachment, interference or
infringement action, suit or proceeding brought against either Praxis or
FAIRCHILD related to the Licensed Technology.
(5) The parties shall not take any actions that may be reasonably known to
compromise the position of the other party with respect to legal
proceedings commenced or to be commenced or being defended by the other
party.
(6) The parties shall render all reasonable assistance, including providing
all documents in their possession and any witnesses as are or may be
required in the conduct of any proceedings referred to herein. If any
party renders such assistance at the request of another party, the
requesting party shall reimburse the assisting party for expenses incurred
to render such assistance.
SECTION 15 - WARRANTIES, INDEMNITIES AND INSURANCE
(1) Praxis represents and Warrants to FAIRCHILD that, as of the Closing Date:
(a) Praxis owns or has valid and enforceable licenses of the Licensed
Technology free and clear of all liens, charges, security interests
and encumbrances, licences and other restrictions;
(b) the Anutech Licence Agreement is in full force and effect, unamended
and that neither Praxis nor Anutech are in default of any of the
terms and conditions contained therein;
(c) to the best of Praxis's knowledge and belief, the practicing of the
Licensed Technology will not infringe the rights of any other
person; and
(d) to the best of Praxis's knowledge and belief, it is not aware of any
activities or conduct of any other person that would constitute
infringement of the Licensed Technology.
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(2) The parties shall assume and be liable for their own losses, damages and
expenses of any nature whatsoever which they may suffer, sustain, pay or
incur by reason of any matter or thing arising out of, or in any way
related to this Agreement, except for such losses, costs, damages and
expenses as are the result of the wilful breach of any term herein by the
other party or the wilful or negligent acts or omissions of the other
party.
(3) Each party shall indemnify and hold harmless the other party, its
employees and agents, from and against any and all claims, demands and
costs whatsoever that may arise out of, directly or indirectly, the
indemnifying party's performance of this Agreement or that of the
indemnifying party's employees or agents. Such indemnifications shall
survive this Agreement.
(4) Praxis shall, at its own expense and without limiting its liabilities
herein, maintain comprehensive or commercial general liability insurance
with an insurer in an amount not less than $1,000,000.00 per occurrence
(annual general aggregate, if any, not less than $2,000,000.00), insuring
against bodily injury, personal injury and property damage, including loss
of use thereof. Such insurance shall include blanket contractual
liability.
(5) From the date that any Product arising out of the the Licenced Technology
is first applied for therapeutic human use (and for the term or
foreseeable term of the human use) FAIRCHILD undertakes to hold product
liability insurance to the value of at least $10,000,000.00. Such policies
shall name Praxis as additional insureds and shall be purchased from a
reputable insurer. Certificates evidencing the coverage shall be provided
to Praxis.
SECTION 17 - REGULATORY APPROVALS
(1) FAIRCHILD shall use reasonable efforts to obtain Regulatory Approvals.
(2) Praxis shall assist FAIRCHILD in obtaining Regulatory Approvals in the
various countries by providing such information and data as may be in the
possession of Praxis necessary for or of assistance in obtaining any
Regulatory Approvals. FAIRCHILD shall be responsible for all regulatory,
agency, filing, inspection and other fees and expenses and charges
incurred in connection with obtaining any Regulatory Approvals pursuant to
Section 17(1).
(3) Praxis shall ensure that all information and data generated by Praxis that
is related to the Clinical Trials or would be of any assistance to
FAIRCHILD in obtaining Regulatory Approvals shall be maintained in a form
suitable for submission to regulatory authorities and shall at all times
be kept secure and confidential.
PART VI - GENERAL
SECTION 18 - TERM AND TERMINATION
(1) The term of this Agreement shall expire on the expiration of the last
Licensed Patent. Upon the expiration of this Agreement, FAIRCHILD's
licence pursuant to Section 11 shall become a fully paid-up, perpetual
licence.
(2) This Agreement may be terminated at any time upon the mutual agreement of
the parties.
(3) If:
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(a) either party has breached any of its obligations pursuant to this
Agreement and fails to remedy such breach or to commence and
diligently pursue reasonable steps to remedy such breach within
sixty (60) days after notice in writing from the other party;
(b) either party becomes bankrupt or insolvent or takes the benefit of
any statute for bankrupt or insolvent debtors or makes any proposal,
assignment or arrangement with its creditors, or any steps are taken
or proceedings commenced by any person for the dissolution, winding
up or termination of either parties existence or the liquidation of
its assets; or
(c) a trustee, receiver, receiver manager or like person is appointed
with respect to the business or assets of a party; the party in
default may terminate this Agreement by giving written notice to the
party in default.
(4) If Praxis is in default of any of its obligations related to the
performance of the Research Projects, and has failed to remedy such breach
within sixty (60) days after notice in writing from FAIRCHILD, FAIRCHILD
may terminate the Research Projects immediately upon written notice to
Praxis. If FAIRCHILD terminates the Research Projects in accordance with
this Section 18(4):
(a) FAIRCHILD shall reimburse Praxis for costs and expenses incurred in
accordance with the budget included as part of Schedule "C" to the
date of termination;
(b) FAIRCHILD shall have no further obligation with respect to the
conduct of the Research Projects or any costs and expenses related
thereto;
(c) notwithstanding the termination of the Research Project, all New
Intellectual Property developed prior to the date of termination
shall be disclosed by Praxis to FAIRCHILD and shall be included as
part of the Licensed Technology and licensed to FAIRCHILD pursuant
to Section 11; and
(d) FAIRCHILD shall have the right to complete the Research Project, or
any part thereof at its own cost and expense and any results;
improvements to Intellectual Property sublicenced from Praxis under
the terms of this Agreement; new patents and patent applications
arising from this shall be deemed to be New Intellectual Property.
(5) The following sections shall survive termination of this Agreement: 1, 2,
3, 4, 5, 9 and 15.
SECTION 19 - PUBLICITY
(1) A copy of all public announcements and press releases which either party
intends to release or make regarding products or technology covered by the
licence shall be provided to the other party prior to being released or
made.
Any public announcement or news release that names, refers to or in any
way identifies both parties shall be approved by both parties prior to
being released or made. Each party shall respond to a request for approval
within five (5) working days of receipt of the copy and the approval of
each party shall not be unreasonably withheld.
(2) If either party is prevented from complying with Section 19(1) as a result
of the requirements of a Securities Commission or other regulatory body,
the party shall not be considered to be in breach of this Agreement, but
shall use reasonable efforts to consult with and keep the other party
informed.
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(3) The parties shall not use each other's name in any advertising material
without the prior written consent of the other party, which consent may be
arbitrarily withheld.
(4) Subject to subsection (3), FAIRCHILD shall be responsible for and have
control of labelling of Licensed Products.
SECTION 20 - COMPLIANCE WITH LAWS
The parties shall observe and comply with all applicable laws, ordinances, codes
and regulations of Government agencies, including Federal, Provincial, Municipal
and local governing bodies having jurisdiction.
SECTION 21 - RELATIONSHIP
Nothing in this Agreement shall be construed as:
(a) constituting either party as the agent, employee or representative
of the other party; or
(b) creating a partnership or as imposing upon either party any
partnership duty, obligation or liability to the other party.
SECTION 22 - NOTICES
All notices or other communications required or permitted to be given hereunder
shall be in writing and shall be sent to the following addresses or such other
addresses as the relevant party may notify from time to time:
TO: William B Cowden, CEO
Praxis Pharmaceuticals Inc.
GPO Box 1978
Canberra, ACT, Australia 2601
Facsimile: 61 2 6279 9758
TO: Byron Cox
FAIRCHILD INTERNATIONAL Inc.
#600 - 595 Hornby Street
Vancouver, British Columbia V6C 1A4
Facsimile: (604) 646-5649
Notices sent by prepaid registered mail shall be deemed to be received by the
addressee on the 7th day (excluding Saturdays, Sundays, statutory holidays and
any period of postal disruption) following the mailing thereof. Notices
personally served or transmitted by facsimile shall be deemed received when
actually delivered or transmitted, provided such delivery shall be made during
normal business hours.
SECTION 23 - ASSIGNMENT
Except as expressly permitted pursuant to Section 11, the parties shall not
assign this Agreement or any part thereof, or any rights hereunder without the
prior written consent of the other party, such consent not to be unreasonably
withheld.
SECTION 24 - FURTHER ASSURANCES
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The parties shall with reasonable diligence take all action, do all things,
attend or cause their representatives to attend all meetings and execute all
further documents, agreements and assurances as may be required from time to
time in order to carry out the terms and conditions of this Agreement in
accordance with their true intent.
SECTION 25 - SETTLEMENT OF DISPUTES
(1) If there is any dispute or disagreement related to or arising out of this
Agreement (the "Disagreement") the parties shall refer the Disagreement
for resolution to their respective Chief Executive Officers, or their
nominees.
(2) If the Disagreement is not resolved pursuant to Section 25(1) within
thirty (30) days (or such longer period as agreed upon between the
parties), a mediator shall be appointed by the parties who shall assist
the parties in resolving the Disagreement.
(3) If the Disagreement is not resolved under Section 25(2) within thirty (30)
days (or such longer period as agreed upon between the parties) either
party may refer the Disagreement to be resolved by arbitration conducted
as follows:
(a) either party may require arbitration by giving written notice to
arbitrate to the other party, which written notice shall identify
the nature of the Disagreement;
(b) if the parties are able to agree upon a single arbitrator, the
arbitration shall be conducted before the single arbitrator;
(c) if the parties have been unable to agree upon the selection of a
single arbitrator within two (2) weeks after receipt of the notice
requiring arbitration, each party shall within one (1) further week,
by notice in writing given to the other party, nominate one neutral
arbitrator. If either party fails to nominate an arbitrator in
accordance with this clause, the arbitrator so nominated shall
proceed to conduct the arbitration alone. If both parties nominate
neutral arbitrators in accordance with this clause, the two
arbitrators so nominated shall nominate a third arbitrator within
one (1) week of their nomination;
(d) the arbitrator or arbitrators shall immediately proceed to hear and
determine the Disagreement. The parties agree that it is important
that all Disagreements be resolved promptly and the parties
therefore agree that the arbitration shall be required to be
conducted expeditiously and that the final disposition shall be
accomplished within two (2) weeks. The parties shall ensure that the
arbitrator or arbitrators upon accepting the nomination shall agree
that the arbitrator has time available for the timely handling of
the arbitration in order to achieve final disposition within two (2)
weeks;
(e) the decision of the arbitrator or arbitrators shall be rendered in
writing, without reasons and shall be promptly served upon both
parties. If the arbitration is being conducted before a panel of
three arbitrators, the decision of any two of the three arbitrators
shall be decision of the arbitration panel. The decision of the
arbitrator or arbitrators shall be binding upon the parties;
(f) in the event of the death, resignation, incapacity, neglect or
refusal to act of any arbitrator, and if the neglect or refusal
continues for a period of five (5) days after notice in writing of
such has been given by either party, another arbitrator shall be
nominated to replace the arbitrator by the person who has originally
nominated that arbitrator;
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(g) the costs of the arbitration shall be in the discretion of the
arbitrators, and shall be borne by the parties in accordance with
the decision of the arbitrators;
SECTION 26 - ENUREMENT
This Agreement shall enure to the benefit of and be binding upon the parties
hereto and their respective successors and permitted assigns.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the day
and year first above written.
PRAXIS PHARMACEUTICALS, INC.
Per: /S/ BRETT CHARLTON (PRESIDENT)
FAIRCHILD INTERNATIONAL INC.
Per: /S/ BYRON COX
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SCHEDULE A
LICENSED PATENTS
PHOSPHOSUGAR-BASED ANTI-INFLAMMATORY AND/OR IMMUNOSUPPRESSIVE DRUGS
International Application No. PCT/AU89/00350
Inventors - William Cowden, Christopher Parish, David Willenborg
Priority date - 18 August 1988
International filing date - 18 August 1989
ANUTECH reference 140
COUNTRY APPLICATION NO. PATENT NO. STATUS
Australia 41875/89 627500 granted
Europe 89909685.3 0429522 granted
Japan 509079/89 examination requested
USA 988001 5506210* granted - 9 April 1996
NOVEL PHOSPHOSUGARS AND PHOSPHOSUGAR-CONTAINING COMPOUNDS HAVING
ANTIINFLAMMATORY ACTIVITY
Inventors - William Cowden, Christopher Parish, David Willenborg
Priority date - 18 October 1996
ANUTECH reference 278
COUNTRY APPLICATION NO. PATENT NO. STATUS
Australia PO3098/96 INT on 18 October 1997
Australia 41866/97 examination requested
USA 08/953305 examination requested
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SCHEDULE D
PRAXIS PHARMACEUTICALS INC.
and
ANUTECH PTY LIMITED
----------------------
LICENCE AGREEMENT
----------------------
PRAXIS Pharmaceuticals Inc.
GPO Box 1978
Canberra, ACT 2601
Australia
Tel: (02) 6249 2939
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Fax: (02) 6279 9758
TABLE OF CONTENTS
1. DEFINITIONS AND INTERPRETATION......................................... 1
2. GRANT OF LICENCE....................................................... 4
3. LICENCE CONSIDERATION.................................................. 4
4. LICENCE TERM........................................................... 4
5. PERFORMANCE OF PRAXIS.................................................. 4
6. RIGHT TO SUBLICENSE.................................................... 5
7. GST.................................................................... 5
8. OWNERSHIP.............................................................. 6
9. PROTECTION OF PATENTS.................................................. 6
10. INFRINGEMENT AND ENFORCEMENT OF PATENTS................................ 7
11. REPORTS, PAYMENTS AND ACCOUNTING....................................... 7
12. CONFIDENTIALITY........................................................ 8
13. PUBLICATION............................................................ 9
14. USE OF NAME............................................................ 9
15. INDEMNITY AND INSURANCE................................................ 9
16. WARRANTIES............................................................. 10
17. ASSIGNMENT, TRANSFER................................................... 11
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18. TERMINATION............................................................ 11
19. MISCELLANEOUS PROVISIONS............................................... 12
20. TERMINATION OF LICENCE AND RESEARCH & DEVELOPMENT AGREEMENT............ 15
21. SCHEDULE 1 - ANU Intellectual Property................................. 17
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THIS AGREEMENT IS MADE ON THE 14TH DAY OF OCTOBER 1999 BETWEEN:
ANUTECH PTY LIMITED, ACN 008 548 650 with its registered office at ANUTECH
Court, Cnr Barry Drive and Daley Road, Acton, Australian Capital Territory,
Australia 2601 ("ANUTECH").
AND:
PRAXIS PHARMACEUTICALS INC., a company incorporated in Utah with its office at
Suite 600, 595 Hornby Street, Vancouver, BC, Canada ("Praxis").
RECITALS:
A. Praxis was incorporated on 20 June 1997 with the intention that it raise
capital, acquire intellectual property and research, develop and
commercialise pharmaceuticals.
B. ANU possesses intellectual property in the area of phosphosugars and their
analogues as anti-inflammatory agents.
C. Praxis wishes to license the ANU intellectual property in order to
undertake further research and development and commercialisation of the
intellectual property.
D. In accordance with the terms and conditions set forth in this agreement,
ANUTECH is willing to grant such a licence to Praxis with its term
dependant on Praxis achieving research and commercialisation milestones.
E. ANUTECH is the commercial subsidiary of the ANU and regularly provides
services to its clients by engaging the services of the ANU.
IT IS AGREED AS FOLLOWS:
DEFINITIONS AND INTERPRETATION
1.1 In this Agreement, unless there is something inconsistent with the
context, the following terms and expressions shall have the following
meanings:
"AFFILIATE" means, in relation to a person, the person's related bodies
corporate (within the meaning of the Corporations Law), entities who are
partners or joint venturers of or trustees for the person or with whom the
person is acting in concert and the directors agents, officers and
employees of the person or any of those related bodies corporate or
entities.
"ANU INTELLECTUAL PROPERTY" means the following intellectual property
owned by the ANU:
(a) Intellectual Property in relation to phosphosugars and their
anti-inflammatory activity; and
(b) the patents and patent applications set out in Schedule 1, including
all divisions, continuations, continuations-in-part, renewals,
extensions and additions thereof.
"COMMENCEMENT DATE" means the day of 1999.
"CONFIDENTIAL INFORMATION" means any information whether written, oral,
electronic or in any other form which is disclosed by a party or its
representatives, is claimed as confidential to itself and which relates to
the ANU Intellectual Property, Research, Results,
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Products, Agreement and business of the parties. It includes all copies
and notes generated from the disclosure but does not include information
which:
(a) is in the public domain at the time of disclosure;
(b) becomes a part of the public domain after disclosure, otherwise than
as a result of any unauthorised activity and/or omission on the part
of the recipient;
(c) the recipient can prove is already in its own possession at the time
of disclosure and which was not acquired from the other party
directly or indirectly;
(d) is rightfully acquired from a third party who did not obtain it
under an obligation of confidentiality; or
(e) is legally required to be disclosed - the party required to make
disclosure shall notify the other to allow that party to assert
whatever exclusions are available.
"DOLLAR", "DOLLAR" OR "$" means Australian dollars unless otherwise
indicated.
"FIELD" means the use of phosphosugars as neutriceuticals, complementary
medicines or cosmetics for the treatment of any applicable condition and
expressly excludes:
(a) the use of phosphosugars as ethical therapeutics; and
(b) topical application for wound care; and
(c) use of fructose-1,6-diphosphate, administered non-topically, for the
treatment or prophylaxis of ischaemic disorders in humans, which
includes transplantation and immunosuppression.
"GST" means a tax on goods and services as defined by Commonwealth
legislation.
"INTELLECTUAL PROPERTY" shall mean all intellectual property rights and
includes:
(a) Trade Marks: means any trade mark or trade name whether registered
or not under, or by reference to which, a product or service is
known;
(b) Patents: meaning any patents or patent applications including all
divisions, continuations, renewals, extensions and patents of
addition thereof which have been or are in the future filed and
granted as a patent;
(c) Copyright subsisting in any form or manner whether written or stored
in any form (whether visible or not) including without limitation
brochures, design logos, insignia, computer programs, software,
firmware and hardware;
(d) Designs (whether or not registered); and
(e) Know-How: meaning the unpatented, technical information, processes,
formulae, technical and technological documentation, reports,
computer programs, biological materials, procedures or methods, all
current and accumulated knowledge, skills and experience.
"NET SALES" means:
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(a) for an arms length sale of any Product means the gross amount
invoiced by Praxis, or its Affiliates less the following:
(i) transport and insurance related charges actually allowed and
taken;
(ii) trade, quantity or cash discounts or rebates actually allowed
and taken;
(iii) credits or allowances given or made on account of price
adjustments, recalls or destruction requested or made by an
appropriate government agency; and
(iv) any tax (excluding income tax), excise or other government
charge upon or measured by the sale, transportation, delivery
or use of the Product which is actually incurred by the
seller.
(b) for a non-arms length sale, means the highest of the most recent Net
Sales at which Praxis, its Affiliates, its subsidiaries, joint
venturers licensees or agents has sold similar quantities of
Products in an arms length sale.
"PRODUCTS" means any matter, article or thing which incorporates or arises
from the whole or partial use of ANU Intellectual Property or Results.
"RESULTS" means all Intellectual Property, materials (including
substances, compounds, biological material, products, samples and devices)
in whatever form and information however known or recorded (including
trade secrets, processes, techniques, designs, plans, data, test results,
findings, evaluations and reports) generated as a result of any
exploitation of or in any connection with any research and development
conducted at the ANU within the Field.
"SUBLICENSE FEES" means all payments to Praxis in consideration for rights
to the ANU Intellectual Property, Results and Products pursuant to a
sublicence, assignment, joint venture, strategic alliance or other
arrangement.
Sublicence Fees shall not include:
(a) fees for research and development undertaken by Praxis including for
example preclinical research and clinical studies; nor
(b) the royalty percentage above that is required to be paid by Praxis
pursuant to clause 3 (License Consideration).
1.2 In this Agreement unless the contrary intention appears:
(a) a reference to a clause, schedule, attachment, annexure or appendix
is a reference to a clause of or schedule, attachment, annexure or
appendix to this Agreement and references to this Agreement include
any recital, schedule annexure, attachment, or appendix;
(b) a reference to this Agreement or another instrument includes any
variation or replacement of either of them;
(c) a reference to a statute, ordinance, code or other law includes
regulations and other instruments under it and consolidations,
amendments, re-enactments or replacements of any of them;
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(d) the singular includes the plural and vice versa;
(e) if a period of time is specified and dates from a given day or the
day of an act or event, it is to be calculated exclusive of that
day;
(f) if an event must occur on a stipulated day which is not a business
day, then the stipulated day will be taken to be the next business
day;
(g) headings are inserted for convenience and do not affect the
interpretation of this Agreement;
(h) words importing any one gender shall mean and include masculine,
feminine and/or neuter where appropriate;
(i) words importing natural persons shall (where appropriate) mean and
include corporations and unincorporated associations and vice versa;
(j) schedules and attachments form part of and are incorporated in this
Agreement.
(k) no provision of this Agreement will be construed adversely to a
party solely on the ground that the party was responsible for the
preparation of this agreement or that provision; and
(l) an expression importing a natural person includes any company,
partnership, joint venture, association, corporation or other body
corporate and any government, governmental, administrative, judicial
or semi-governmental agency or body.
1.3 For the avoidance of doubt the recitals to this Agreement shall form part
of this Agreement and in the event of any inconsistency between the
recitals and the other provisions of this Agreement the other provisions
of this Agreement shall prevail.
GRANT OF LICENCE
1.4 ANUTECH grants to Praxis an exclusive, worldwide licence to use and
exploit the ANU Intellectual Property and Results within the Field,
including the right to sublicense pursuant to clause 6 (Right to
Sublicense).
LICENCE CONSIDERATION
1.5 In consideration for the grant of the licence Praxis will pay to ANUTECH:
a) a 4% royalty on Net Sales of Products by Praxis;
b) 50% of all royalty income on Net Sales of Products received from
sublicensees;
c) 15% of all Sublicence Fees.
d) ANUTECH shall maintain the right to hold 300,000 shares issued to
ANUTECH 31 March 1999. These shares will be held in escrow for a
period of 12 months from the date of issue.
1.6 The obligation in clause 3.1 survives the termination of the licence in
clause 2.1 or this Agreement.
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LICENCE TERM
1.7 The Licence in clause 2.1 commences upon the Commencement Date and ends on
the expiration of the last to expire of the patents covered by this
Agreement, unless otherwise earlier terminated pursuant to clause 5
(Performance of Praxis) or clause 18 (Termination).
PERFORMANCE OF PRAXIS
1.8 If Praxis fails to comply with the following performance milestones,
ANUTECH has at its election the right to terminate this Agreement in
accordance with clause 18(Termination).
1.9 Commercialisation milestones
a) Praxis shall use best efforts to commercialise the ANU Intellectual
Property and Results by undertaking an ongoing and active research,
developmental, manufacturing, marketing, licensing or capital
raising program, as appropriate, directed toward the exploitation of
the ANU Intellectual Property and Results within the Field.
b) Part of these best efforts includes Praxis providing to ANUTECH as
soon as practicable a business plan (and any updates thereafter)
which addresses Praxis's capacities, objectives and strategies for
such a commercialisation program.
c) Praxis shall also provide ANUTECH with an annual written report (on
the anniversary of the Commencement Date) on its progress towards
achieving these commercialisation milestones.
RIGHT TO SUBLICENSE
1.10 ANUTECH grants to Praxis the right to sublicence ANU Intellectual Property
and Results within the Field, subject to:
a) the prior written approval of ANUTECH which shall not be
unreasonably withheld;
b) the sublicensee being bound to similar terms as contained in this
Agreement; and
c) the royalty and Sublicence Fee stream provided for in clause 3
(Licence Consideration) are reserved.
GST
1.11 The parties acknowledge that this Agreement, including all pricing and
compensation terms, whether by way of reimbursement, indemnity or
otherwise has been drafted without taking into account the effect, if any,
of GST. The following principles apply when determining the amount
(including royalties) payable (the Payment) for any rights, services, or
any other thing granted or supplied pursuant to this Agreement.
1.12 If GST is payable in relation to the granting of rights, supply of
services or any other thing, the Payment will be the consideration
specified herein plus GST (if any).
1.13 If the Payment is determined by reference to any cost, expense or
liability incurred by a party (the Payee), the reference to cost, expense
or liability means the actual amount incurred by the Payee less the amount
of any GST input tax credit the Payee is entitled to claim in respect
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of that cost, expense or liability. The Payee will be assumed to be
entitled to claim full input tax credits unless it demonstrates that its
entitlement is otherwise prior to the date on which the Payment must be
made.
1.14 If the Payment is a reimbursement or indemnification of a loss determined
(including a percentage of sales revenue) by reference to revenue received
and costs incurred, the revenue will be the revenue earned net of GST and
the costs will be determined in accordance with clause 7.3.
1.15 If a party sets off an amount otherwise payable under this Agreement, the
principles set out above shall be applied to calculate the amount to be
set off as if that amount had been paid.
1.16 Each party agrees to do all things, including providing invoices or other
documentation containing stipulated information, that may be necessary or
desirable to enable or assist the other party to claim any credit, set
off, rebate or refund in relation to any GST included in any payment made
under this Agreement.
OWNERSHIP
1.17 The following shall be owned by the ANU and licensed to Praxis pursuant to
the terms of this Agreement:
a) improvements to ANU Intellectual Property ; and
b) new patents and patent applications arising from the use of ANU
Intellectual Property.
PROTECTION OF PATENTS
1.18 With respect to the existing ANU Intellectual Property patents and patent
applications:
a) the parties shall cooperate in the prosecution and maintenance of
the patents and patent applications with the relevant patent
offices;
b) from the Commencement Date, one third of any past and future costs
and expenses incurred in their filing, maintenance and renewal shall
be borne by Praxis;
c) Praxis may select the countries in which patent applications are to
be filed in the name of the ANU; and
d) if Praxis decides not to request patent protection for an invention
in any country, ANU may file or maintain at its own cost patent
applications which Praxis has declined to file or maintain, and such
patent applications or granted patents shall lie outside the
provision of this Agreement.
1.19 With respect to any new patentable inventions arising from the Results and
use of ANU Intellectual Property:
a) Praxis may request ANUTECH to file and prosecute a patent
application, in ANU's name, for the invention or agree to treat the
invention as a trade secret;
b) the parties shall cooperate in the prosecution and maintenance of
the patents and patent applications with the relevant patent
offices;
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c) all costs and expenses incurred in filing, maintaining and renewing
the patents and patent applications shall be borne by Praxis;
d) Praxis may select the countries in which patent applications are to
be filed in the name of the ANU; and
e) if Praxis decides not to request patent protection for an invention
in any country, ANU may file or maintain at its own cost patent
applications which Praxis has declined to file or maintain, and such
patent applications or granted patents shall lie outside the
provision of this Agreement.
INFRINGEMENT AND ENFORCEMENT OF PATENTS
1.20 Infringement
In the event of any patent, the subject of this Agreement, being infringed
Praxis may at its own cost and in its own name litigate such infringement
and may settle or compromise such litigation in such a manner as Praxis
shall determine provided that Praxis shall consult with ANUTECH in good
faith in relation to those proceedings.
1.21 Enforcement
In the event that litigation is taken or threatened by a third party
against any rights associated with any patents the subject of this
Agreement, the parties shall consult in good faith and use their best
endeavours mutually to determine the manner in which these proceedings are
to be defended or resisted and to act accordingly provided always that the
parties shall first seek the opinion of counsel experienced in such
matters.
1.22 In any litigation, ANUTECH shall cooperate with Praxis in making available
all relevant records, papers, information and the like which may be
relevant and in its possession.
1.23 Nothing herein shall preclude ANUTECH from defending or pursuing any such
actions.
REPORTS, PAYMENTS AND ACCOUNTING
1.24 Within 30 days after the first day of January, April, July and October of
each year, Praxis shall provide to ANUTECH a true and accurate royalty
report. This royalty report will cover payments due under clause 3
(Licence Consideration) and specify:
a) the total quantity of Products sold or provided by it and by its
sublicensees;
b) the Net Sales price at which the Products were sold or provided;
c) the calculation of the royalty due;
d) the total royalties so calculated and due to ANUTECH; and
e) the amount of Sublicence Fees and the royalty due.
1.25 For the term of this Agreement and simultaneous with the delivery of each
such royalty report, Praxis shall pay to ANUTECH the royalty and any other
payments due under this Agreement for the period covered by such report.
45
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Praxis shall be responsible for all payments that are due to ANUTECH but
have not been paid by Praxis' sublicensees to Praxis.
1.26 All payments hereunder by Praxis shall be payable in Australian Dollars.
1.27 During the term of this Agreement, Praxis shall keep complete and accurate
records of its and its sublicensees sales of Products and Sublicence Fees
in sufficient detail to enable compliance with its obligations under this
Agreement to be verified.
1.28 Praxis shall permit ANUTECH or its representatives, at ANUTECH's expense,
to periodically examine its books, ledgers and records during business
hours and with 48 hours notice for the purpose of and to the extent
necessary to ensure that Praxis has complied, and is complying, with its
obligations under this Agreement.
1.29 In the event that the difference between the amount of royalty due and the
amount of royalty actually paid exceeds 5% then Praxis shall pay the
amount of the underpayment plus the cost of such examination.
1.30 If Praxis fails to pay ANUTECH an amount due under this Agreement, Praxis
shall upon notification pay to ANUTECH the amount owing together with
interest, such interest to be at the rate applicable to overdrafts charged
by the Commonwealth Bank of Australia at the date of payment, calculated
daily from the due date or the date the shortfall in payment was
effective, as the case may be. The payment of such interest shall not
preclude ANUTECH from exercising any other rights it may have because any
payment is overdue.
CONFIDENTIALITY
1.31 The parties acknowledge that the Confidential Information is valuable to
the party in question and each party undertakes to keep the Confidential
Information secret and to protect and preserve the confidential nature and
secrecy of the Confidential Information.
1.32 The recipient of Confidential Information must:
1.33 keep it confidential;
1.34 use it only for the purposes of the Agreement;
1.35 not disclose it to any person other than:
(a) to those of the recipient's employees or legal advisers who have a
need to know and who have first been directed and have undertaken
orally or in writing to keep it confidential; or
(b) to other people, such as contractors, visitors and agents who have a
need to know and who have agreed in writing to keep it confidential
in accordance with this Agreement
1.36 not copy it or any part of it other than as strictly necessary for the
purposes of this Agreement and must mark any such copy "Confidential";
1.37 promptly comply with any request by the discloser to return or destroy any
or all copies of Confidential Information; and
1.38 implement security practices against any unauthorised copying, use or
disclosure of the Confidential Information.
46
<PAGE>
1.39 Each party shall take:
a) reasonable efforts to ensure that any person who has access to
Confidential Information does not make any unauthorised use,
reproduction or disclosure of that information; and
b) reasonable steps to enforce the confidentiality obligations imposed
or required to be imposed by this agreement, including diligently
prosecuting at its cost any breach or threatened breach of such
confidentiality obligations by a person to whom it has disclosed
Confidential Information and, where appropriate, making applications
for interim or interlocutory relief.
1.40 The provisions of this clause 12 shall continue to have effect for a
period of four (4) years after termination or expiry of this Agreement.
1.41 Upon the termination or expiry of this agreement the recipient of
Confidential Information shall deliver (or with the discloser's prior
consent, destroy or erase) to the discloser all material forms of
Confidential Information in its or its representatives possession, power
or control. The return of Confidential Information under this clause does
not release either party or their representatives from their
confidentiality obligations under this clause.
PUBLICATION
1.42 If ANUTECH or its employees or agents wish to publish or otherwise
disclose any information contained in the ANU Intellectual Property or
Results, other than in accordance with clause 12 (Confidentiality),
including by way of written disclosure or any oral disclosure at any
seminar, lecture or other meeting ("Publication"), the following
procedures shall be observed:
(a) ANUTECH shall submit the Publication to Praxis 30 days prior to
disclosure;
(b) within the 30 day period Praxis will consider whether to agree to
the Publication and shall advise ANUTECH what part (if any) of the
information it does not wish published;
(c) if Praxis does not advise ANUTECH within the 30 day period that it
objects to the Publication it shall be deemed to have consented to
the Publication;
(d) if Praxis does advise ANUTECH of its objection then the information
in question will not be published:
(i) until the date upon which the complete Australian
specification in relation thereto becomes open to public
inspection at the Australian Patents Office; and
(ii) in the case of information which is not patentable or which it
is not proposed to patent, for so long as further confidential
research or development work or potential or actual commercial
exploitation is being actively pursued in relation thereto but
in any case not to exceed 2 years;
(e) where appropriate, ANUTECH will make proper acknowledgment of
Praxis.
USE OF NAME
47
<PAGE>
1.43 Any proposed use of a party's name by the other in any published material
(including prospectus information) must be approved by the other party in
writing prior to release of that published material.
INDEMNITY AND INSURANCE
1.44 Praxis hereby agrees to defend, indemnify and hold harmless ANUTECH, ANU
and their employees from and against any and all demands, claims,
liabilities, damages, costs and expenses which may be brought against or
incurred by ANUTECH, ANU and their employees as a result of the use to
which Praxis or its sublicensees make of the ANU Intellectual Property,
Results and Products the subject of the licence granted in this Agreement,
other than to the extent (if any) that the same are caused solely by the
gross negligence of ANUTECH, ANU or of any of their employees.
The indemnity above shall also apply to actions that may arise out of the
capital raising that Praxis undertakes for the purposes of this Agreement.
1.45 From the date that any Product arising out of the ANU Intellectual
Property is first applied for human use (and for the term or foreseeable
term of the human use) Praxis undertakes to hold product liability
insurance to the value of at least $5,000,000.00 .
1.46 Praxis shall at all times maintain in full force and effect general
liability insurance with limits of not less than $5,000,000.00.
1.47 Such policies shall name ANUTECH and the ANU as additional insureds and
shall be purchased from a reputable insurer. Certificates evidencing the
coverage shall be provided to ANUTECH.
WARRANTIES
1.48 Right to enter Agreement
Each Party hereby warrants to the other that it has the full right, power,
authority and liberty to enter into this Agreement and to perform all of
its respective duties and obligations hereunder. Each party warrants to
the other that it is not under any other duty or obligation which is
contrary to or inconsistent with any of its duties and obligations
hereunder.
1.49 No contrary agreements
Each party hereby warrants to the other that it will not enter into any
agreement, arrangement or understanding with any third party which is
contrary to or inconsistent with any of that party's rights, duties and
obligations under this Agreement.
1.50 Status of ANUTECH
ANUTECH warrants and covenants that it enters into this Agreement as agent
for and on behalf of ANU having full power and authority so to do, and
with the express consent of ANU, to the intent that each and every of the
warranties, covenants, terms and conditions of this Agreement are given by
and bind both ANUTECH in its own right and ANU.
1.51 Due diligence
Praxis warrants that it has undertaken a due diligence examination of the
ANU Intellectual Property licensed in this agreement and warrants that it
satisfied itself as to ANU's rights to
48
<PAGE>
and the validity of the ANU Intellectual Property, in particular the
patents and patent applications set out in Schedule 1.
1.52 ANU Intellectual Property
To the best of its knowledge ANUTECH warrants and covenants that in
respect of ANU Intellectual Property either:
(a) ANU is the sole legal and beneficial owner; or
(b) ANU has such rights to the ANU Intellectual Property, as will enable
ANUTECH to perform its obligations under this Agreement.
ANUTECH makes no warranty as to whether the US Patent 5520926 (and
corresponding international patents or applications) in the name of
British Technology Group Limited infringes the ANU Intellectual
Property.
1.53 Results achieving purpose
ANUTECH makes no representations or warranties as to the accuracy or
completeness of the Results generated by ANUTECH, or their capability to
achieve a particular purpose.
1.54 Fundamental Terms
Each party acknowledges that the warranties contained in this clause 16
(Warranties) are fundamental terms of this Agreement.
ASSIGNMENT, TRANSFER
1.55 This Agreement may not be assigned or otherwise transferred by Praxis
without the prior written consent of ANUTECH. An assignment is deemed to
include a change in greater than 50% beneficial ownership of shares in
Praxis with the exception of such a change in share holding in Praxis
through capital raising.
1.56 Any permitted assignee shall assume all obligations of its assignor under
this Agreement.
1.57 No assignment shall relieve Praxis of responsibility for the performance
of any accrued obligation(s) which Praxis then has hereunder.
TERMINATION
1.58 A party may terminate this Agreement upon 30 days written notice to the
other party on the occurrence of any of the following by the other party:
a) upon or after the bankruptcy, insolvency, dissolution or winding up
of such party (other than dissolution or winding up for the purposes
of reconstruction or amalgamation); or
b) the failure of such party to comply with its obligations under this
agreement, if such default is not cured (if capable of being cured)
within 30 days of the party not in default giving notice of the
default; or
c) if the representations and warranties made under this Agreement
prove inaccurate or false in any material respect.
49
<PAGE>
1.59 Without limiting clause 18.1 (b), ANUTECH may terminate this Agreement
upon 30 days written notice to Praxis in the event Praxis:
a) fails to make any payment which is due and payable pursuant to this
Agreement and such payment remains unpaid for more than 30 days; or
b) fails to achieve any of the performance milestones in accordance
with clause 5 and is demonstrated not to be making best efforts in
attempting to achieve these milestones and such default is not cured
(if capable of being cured) within 90 days of ANUTECH giving notice
of the default.
1.60 The provisions of this clause 18 and clauses 3.1 (Licence Consideration)
12 (Confidentiality), 11 (Reports, Payments and Accounting), 15 (Indemnity
and Insurance, 19.12 (Governing Law) and 19.9 (Dispute Resolution) shall
continue in full force and effect notwithstanding the termination, any
alterations or additions to the other provisions of this Agreement.
1.61 Upon termination of this Agreement and except as otherwise expressly
provided:
a) any rights or obligations of a party which may have arisen or
accrued prior to termination shall not be affected;
b) all licences granted to Praxis under the terms of this Agreement
shall terminate and Praxis shall cease its exploitation of the
relevant intellectual property other than provided for in clause
18.4 (d);
c) Praxis shall promptly pay to ANUTECH any amounts due under the terms
of this Agreement including royalties and Sublicence Fees which have
accrued as of the date of termination;
d) Praxis may sell all inventory of the Product that it may have on
hand at the date of termination provided that it pays royalties as
provided in this Agreement.
1.62 If any party terminates the Agreement and sublicensees are not then in
default under the terms of their sublicence agreements hereunder, ANUTECH
shall have the right (but not the obligation) to assume and continue
sublicence agreements with payments thereunder being made by the
sublicensees directly to ANUTECH without any further obligations on the
part of Praxis with respect thereto.
1.63 Waiver by either party of any breach (or a succession of breaches) of any
one or more of the provisions of this Agreement shall not deprive such
party of any right to terminate this Agreement pursuant to the terms of
this clause 18 upon the occasion of any subsequent breach.
MISCELLANEOUS PROVISIONS
1.64 Binding obligations
The duties and obligations imposed and the benefits conferred by this
Agreement are to be binding upon and to enure to the parties and to their
respective successors and permitted assigns.
1.65 Other instruments
Each party shall prepare and execute such other instruments and documents
and do such other acts and things as may be necessary or desirable to
ensure each party has such rights
50
<PAGE>
and interest as are contemplated for it by this Agreement or as may be
necessary or desirable to give full effect to the provisions of this
Agreement.
1.66 Whole Agreement
This Agreement combines the whole understanding of the Parties relating to
its subject matter and it supersedes and cancels any and all agreements,
understandings or commitments made by the same Parties with respect to the
same subject matter. Any purported representations, warranties or other
promises of the Parties not recorded in it are of no effect.
1.67 Amendment
The variation or waiver of a provision of this Agreement or a Party's
consent to a departure from a provision by another Party, will be
ineffective unless in writing executed by the Parties. The requirements
concerning variation or waiver apply to this clause itself.
1.68 No waiver
No waiver by either party of any breach (or a succession of breaches) of
any one or more of the provisions of this Agreement by the other party
shall be deemed to be a waiver of any subsequent breach of the same or any
other provision.
1.69 Illegality
If any provision of this Agreement shall be construed so as to be illegal
or invalid the legality or the validity of any other provision shall not
be affected thereby. Any legal or invalid provisions shall be severable
and all other provisions shall remain in full force and effect.
1.70 Notices
A party notifying or giving notice under this Agreement must notify
(a) in writing;
(b) addressed to the address of the recipients specified below or as
altered by notice given in accordance with this clause; and
(c) delivered by hand, facsimile, registered mail or post.
A notice shall be deemed received:
(a) if hand delivered on the date of delivery
(b) if sent by facsimile on generation of an acknowledgment that the
transmission has been successfully completed,
(c) if sent by registered mail on acknowledgment of receipt by or on
behalf of the recipient
(d) if dispatched by post, after 5 days including day of posting.
If a notice is received on a day other than a business day or after 4.30
pm on a business day, then it is deemed received on the next business day.
51
<PAGE>
Notice addresses
ANUTECH Pty Ltd Praxis Pharmaceuticals Inc.
GPO Box 4 GPO Box 1978
CANBERRA ACT 2601 Canberra ACT 2601
Or
ANUTECH Court Suite 600, 595 Hornby Street,
Cnr. Barry Drive and Daley Road Vancouver, BC, Canada
ACTION ACT 2601
Facsimile 02 6257 1433 Facsimile: 1 (604)646 5649
52
<PAGE>
1.71 Force Majeure
No party shall be responsible or liable to any other party for, nor shall
this Agreement be terminated as a result of any party's failure to perform
any of its obligations hereunder, with the exception of payment of monies
due and owing, if such failure results from circumstances beyond the
control of such party, including, without limitation, requisition by any
government authority or the effect of any statute, ordinance or
governmental order or regulations, wars, strikes, lockouts, riots,
epidemic disease, act of god, civil commotion, fire, earthquake, storm,
failure of public utilities, common carriers or suppliers, or any other
circumstances, whether or not similar to the above causes. The parties
shall use reasonable efforts to avoid or remove any such causes and shall
resume performance under this Agreement as soon as feasible whenever such
cause is removed; provided however that the foregoing shall not be
construed to require a party to settle any labour dispute or to commence,
continue or settle any litigation.
If after six months the force majeure continues, the Parties must meet in
good faith to discuss the situation and endeavour to achieve a mutually
satisfactory resolution of the problem.
1.72 Dispute resolution
If a dispute arises between the Parties out of or relating to this
Agreement (the "Dispute"), any Party seeking to resolve the Dispute must
do so strictly in accordance with the provisions of this clause.
Compliance with this clause is a condition precedent to seeking relief in
any court or tribunal in respect of the Dispute.
A Party seeking to resolve the Dispute must notify the existence and
nature of the Dispute to the other Party ("the Notification"). Upon
receipt of a Notification the Parties must refer resolution of the Dispute
to their respective chief executive officers or their nominees.
If the Dispute has not been resolved within thirty (30) days of receipt of
the Notification then any Party may refer the Dispute to the Australian
Commercial Dispute Centre Limited ("ACDC") for mediation. The parties must
negotiate in good faith, and in accordance with the Conciliation Rules of
ACDC, to resolve the Dispute.
If the Dispute has not been resolved within sixty (60) days of referral to
ACDC either Party is free to initiate proceedings in a court.
1.73 Stamp Duty
All stamp duty levied upon this agreement shall be paid by Praxis.
1.74 Costs
Each Party agrees to bear its own legal and other costs and expenses in
connection with the preparation and execution of this Agreement and of
other related documentation.
1.75 Governing law
This Agreement shall be construed in accordance with and governed by the
laws of the Australian Capital Territory, Australia, and the parties
hereby submit themselves to the jurisdiction of the courts in and of that
Territory.
53
<PAGE>
TERMINATION OF LICENCE AND RESEARCH & DEVELOPMENT AGREEMENT
1.76 The parties entered into a Licence and Research & Development Agreement
dated 27 October 1997 and an Addendum to the Licence and Research &
Development Agreement dated 8 October 1998 ("Licence and R&D Agreement").
1.77 The parties have agreed to end the Licence and R&D Agreement by mutual
agreement with effect from the Commencement Date of this Agreement.
1.78 With effect from the Commencement Date of this Agreement:
(a) the parties agree that the Licence and R&D Agreement is terminated;
and
(b) each party permanently releases each other party from any actions,
suits, causes of action, arbitration, debts, dues, costs, claims,
demands, verdicts and judgments, either at law or in equity or
arising under statute ("Claims") which but for their entry into this
termination, they or any of them have or may have against each other
arising from or in connection with the early termination of the
Licence and R&D Agreement.
1.79 Each party must:
(a) use its best efforts to do all things necessary or desirable to give
full effect to this termination; and
(b) refrain from doing anything that might hinder performance of this
termination.
IN WITNESS: this Agreement shall be duly executed and shall commence from
the Commencement Date:-
The COMMON SEAL of )
PRAXIS PHARMACEUTICALS INC )
was hereunto affixed in accordance )
with its constitution in the presence of: )
/S/ BRETT CHARLTON /S/ W.B. COWDEN
Director/Secretary Director
BRETT CHARLTON W.B. COWDEN
Name Name
The COMMON SEAL of )
ANUTECH PTY LIMITED )
was hereunto affixed in accordance )
with its constitution in the presence of: )
/S/ T. SARTESCHI /S/ JOHN D. BELL
Director/Secretary Director
T. SARTESCHI JOHN D. BELL
COMPANY SECRETARY MANAGING DIRECTOR
Name Name
54
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