UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
AMENDMENT NO. 1
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998
Commission File Number 0-9314
ACCESS PHARMACEUTICALS, INC.
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(Exact name of registrant as specified in its charter)
Delaware 83-0221517
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(State of Incorporation) (I.R.S. Employer I.D. No.)
2600 Stemmons Frwy, Suite 176, Dallas, TX 75207
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(Address of principal executive offices)
Telephone Number (214) 905-5100
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports) and (2) has been subject to such filing
requirement for the past 90 days.
Yes X No
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common stock outstanding as
of August 14, 1998 3,426,695 shares, $0.01 par value
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PART II -- OTHER INFORMATION
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
Exhibits: 3.8 Certificate of Amendment of Certificate of
Incorporation filed June 18, 1998
(previously filed)
10.13 Agreement between Access Pharmaceuticals, Inc. and
Block Drug Company, Inc.
(Confidential Treatment Requested)
10.14 Sales Agency Agreement (previously filed)
10.15 Registration Rights Agreement (previously filed)
27.1 Financial Data Schedule (previously filed)
Reports on Form 8-K: None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Amendment No. 1 to be signed on its behalf
by the undersigned, thereunto duly authorized.
ACCESS PHARMACEUTICALS, INC.
Date: December 4, 1998 By: /s/ Kerry P. Gray
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Kerry P. Gray
President and Chief Executive Officer
(Principal Executive Officer)
Date: December 4, 1998 By: /s/ Stephen B. Thompson
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Stephen B. Thompson
Chief Financial Officer
(Principal Financial and Accounting Officer)
AGREEMENT
BETWEEN
ACCESS PHARMACEUTICALS, INC.
AND
BLOCK DRUG COMPANY, INC
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ARTICLE 1 DEFINITIONS 1
1.1 Access 1
1.2 Access Know-How 2
1.3 Access Net Sales 2
1.4 Affiliate 3
1.5 Amlexanox 3
1.6 Block 3
1.7 Block-Chemex Agreement 3
1.8 Block Know-How 4
1.9 Block Net Sales 4
1.10 Dermatological Use 5
1.11 Effective Date 5
1.12 First Sale 5
1.13 Formulation 5
1.14 Improvement 5
1.15 Improvement Patent 5
1.16 Licensed Patents 5
1.17 Notice 6
1.18 Product 6
1.19 Revenue 6
1.20 Sublicense Net Sales 8
1.21 Takeda 8
1.22 Takeda License Agreement 8
1.23 Takeda Sublicensed Patents 8
1.24 Takeda Supply Agreement 9
1.25 Term 9
1.26 Territory 9
ARTICLE 2 GRANT 9
2.1 Grant 9
ARTICLE 3 ACCESS ROYALTIES 10
3.1 Royalty Rate for Direct Sales by Access 10
3.2 Royalty Rate in all Other Instances 10
3.3 No Offset on Other Royalties 10
ARTICLE 4 ADDITIONAL OBLIGATIONS OF THE PARTIES 11
4.1 Access to Pay Registration Fees and Costs 11
4.2 Access to Pay Takeda Royalties to Block 11
4.3 Advance Notice of Studies 11
4.4 Access to Provide Data 11
ARTICLE 5 ACCESS PAYMENT TERMS 12
5.1 Quarterly payments 12
5.2 Set-Off for Registration Fees 12
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ARTICLE 6 IMPROVEMENTS 13
6.1 Improvements by Access 13
6.2 Advance Notice of Studies 13
6.3 Access to Provide Data 13
6.4 Access to Pay Registration Fees and Costs 13
6.5 Access to Pay Takeda Royalties to Block 14
ARTICLE 7 ACCESS IMPROVEMENT ROYALTIES 14
7.1 Royalties from Access to Block 14
7.2 Royalties in Other Instances 14
7.3 Royalty Reduction 14
ARTICLE 8 BLOCK IMPROVEMENT RIGHTS AND OBLIGATIONS 15
8.1 Grant of Rights to Block 15
8.2 Royalties from Block to Access 15
8.3 Set-Off for Advance or Other Royalties 15
8.4 Block Royalty Reports 15
ARTICLE 9 TERM AND TERMINATION 16
9.1 Term 16
9.2 Termination for Breach 17
9.3 Rights to Survive 17
9.4 Reversion and Termination for Failure to Pay
Takeda License Fees 18
9.5 Termination by Takeda 18
ARTICLE 10 WARRANTIES 18
10.1 Exploitation of Licensed Rights 18
10.2 Access Indemnity 19
10.3 Block Indemnity 19
10.4 Obligations Regarding Patent Infringement 20
10.5 Claims by Third Parties 22
10.6 No Restrictions on Product 22
10.7 Power to Enter Into Agreement 22
10.8 No Other Warranties or Representations 23
ARTICLE 11 MISCELLANEOUS 23
11.1 New Jersey Law Applies 23
11.2 Alternative Dispute Resolution 23
11.3 No Agency or Employment 26
11.4 Notice 26
11.5 Severability 28
11.6 Entire Agreement/Merger 28
11.7 Amendment 28
11.8 Counterparts 29
11.9 No Waiver of Rights 29
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11.10 Force Majeure 29
11.11 Further Assurances 29
11.12 Audit Rights 29
11.13 Binding Effect 30
11.14 No Strict Construction 30
11.15 Consent Not Unreasonably Withheld or Delayed 30
11.16 Bankruptcy 31
11.17 Assignment 31
11.18 Taxes 31
11.19 Cooperation on Publicity 31
11.20 Costs of Agreement 32
11.21 Headings for Convenience Only 32
11.22 Independent Contractor 32
11.23 No Finder's Fee 33
11.24 Notification of Infringement 33
11.25 References 33
11.26 Singular and Plural 33
11.27 Successors and Assigns 33
11.28 Validity and Severability 34
11.29 Waiver 34
11.30 Takeda Agreement Controlling 34
ARTICLE 12 TAKEDA CONSENT 35
12.1 Takeda Approval 35
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This Agreement, dated this 5th day of March, 1998, is by and between
Block Drug Company, Inc., 257 Cornelison Avenue, Jersey City, New Jersey
07302 ("Block") and Access Pharmaceuticals, Inc., 2600 Stemmons Freeway,
Suite 176, Dallas, Texas 75207 ("Access").
WHEREAS Block has certain rights in and to a topical product for
treating aphthous ulcers containing amlexanox;
WHEREAS Access wishes to develop such product itself in various
countries and to seek partners in various countries to develop such product;
NOW THEREFORE, in consideration of the following mutual
promises and obligations and intending to be legally bound, the parties agree
as follows:
ARTICLE 1 DEFINITIONS
1.1 Access: means Access Pharmaceuticals, Inc. The term
"Access" shall, as required by the circumstances, also mean and include any
company or business entity that controls or is controlled by, either directly or
indirectly, Access Pharmaceuticals, Inc., its officers, agents and employees or
any partnership or joint venture in which Access Pharmaceuticals, Inc. is a
participant or any company or business entity that is under common control
with Access Pharmaceuticals, Inc. The term "control" means the power to
direct the affairs of such entity by
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reason of ownership of at least fifty percent (50%) of such entity by voting
stock, equity interest, contract or otherwise.
1.2 Access Know-How: means (a) any and all information in the
possession of Access at any time during the Term of this Agreement which
Access has the right to license or sublicense relating to the physical and
chemical analysis and stability of the Product, its clinical effects and
indications for use, and (b) any and all information in the possession of Access
as of the date of execution of this Agreement which Access the right to license
or sublicense relating to the method of use, packaging, formulation, or method
of administration of the Product that, at the time it is communicated to Block,
was not rightfully in Block's possession and was not common general
knowledge. Information relating to Takeda's process of manufacture of
amlexanox shall be excluded from the scope of Access Know-How.
1.3 Access Net Sales: For purposes of determining compensation
to Block for direct sales of Access under Paragraph 3.1 and Paragraph 7.1 of
this Agreement, "Access Net Sales" means gross revenues received by Access
on the sale of any Product less (a) trade discounts actually allowed; and (b)
when borne by Access in connection with the sale, transportation and handling
charges; sales, use and excise taxes; import duties, tariffs or other
governmental charges; and credits for claim or allowances, retroactive price
reductions, refunds, returns, and recalls. There shall not be any imputed gross
revenue for samples, free goods or other marketing programs whereby the
Product is given away to induce sales thereof. For purposes of determining
Net Sales, a sale shall be deemed to have occurred when the sale is invoiced
or
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when the Product is delivered, whichever occurs first. In the case of the
transfer or sale of Product by Access to an Affiliate or distributor of Access
for sales by such Affiliate or distributor, Net Sales shall be based upon the
greater of the total invoice price charged by Access to such Affiliate or
distributor or the total invoice price charged by such Affiliate or distributor
to its customers. Net Sales for countries outside the U.S. shall be calculated
by converting to U.S. currency using the exchange rate in effect on the last
business day of each month as published in the Wall Street Journal.
1.4 Affiliate: means any corporation or business entity controlled by,
controlling, or under common control with Access or Block, respectively. For
this purpose, "control" shall mean the direct or indirect beneficial ownership
of at least fifty percent (50%) of the voting stock, or at least a fifty percent
(50%) interest in the income of such corporation or other business entity, or
such other relationship as, in fact, constitutes actual control.
1.5 Amlexanox: means 2 - amino - 7 - isopropyl - 5 - oxo - 5H - [1]
benzopyrano - [2,3 - b] - pyridine - 3 - carboxylic acid (Takeda Code No.
AA-673).
1.6 Block: means Block Drug Company, Inc.
1.7 Block-Chemex Agreement: means that asset purchase and royalty
agreement between Block Drug Company, Inc. and Chemex Pharmaceuticals,
Inc., dated as of June 7, 1995.
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1.8 Block Know-How: means (a) any and all information in the
possession of Block at any time during the Term of this Agreement which
Block has the right to license or sublicense relating to the physical and
chemical analysis and stability of the Product, its clinical effects and
indications for use, and (b) any and all information in the possession of Block
as of the date of execution of this Agreement which Block the right to license
or sublicense relating to the method of use, packaging, formulation, or method
of administration of the Product that, at the time it is communicated to Access,
was not rightfully in the possession of Access and was not common general
knowledge. Information relating to Takeda's process of manufacture of
Amlexanox shall be excluded from the scope of Block Know-How.
1.9 Block Net Sales: means gross revenues received by Block on the
sale of any Product less (a) trade discounts actually allowed; and (b) when
borne by Block in connection with the sale, transportation and handling
charges; sales, use and excise taxes; import duties, tariffs or other
governmental charges; and credits for claim or allowances, retroactive price
reductions, refunds, returns, and recalls. There shall not be any imputed gross
revenue for samples, free goods or other marketing programs whereby the
Product is given away to induce sales thereof. For purposes of determining
Net Sales, a sale shall be deemed to have occurred when the sale is invoiced
or when the Product if delivered, whichever occurs first. In the base of the
transfer or sale of Product by Block to an Affiliate or distributor of Block for
sales by such Affiliate or distributor, Net Sales shall be based upon the
greater of the total invoice price charged by
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Block to such Affiliate or distributor or the total invoice price charged by
such Affiliate or distributor to its customers.
1.10 Dermatological Use: means all uses for the treatment of diseases
and disorders of the integument including, but not limited to, therapeutic,
prophylactic and immunological uses. For the purposes of this definition,
integument is skin and its appendages, including hair, hair follicles, sebaceous
glands, sweat glands, nails, and component and migratory cells of the skin.
1.11 Effective Date: means the date first set forth above.
1.12 First Sale: means the date on the first invoice to any customer
purchasing a Product or an Improvement on a country by country basis after
the Effective Date of this Agreement.
1.13 Formulation: means the topical formulation containing
Amlexanox attached hereto as Exhibit A.
1.14 Improvement: means all inventions, developments or
improvements, whether or not patentable, originated or acquired by either
party hereto that relate to the Product.
1.15 Improvement Patent: means any patent or patent application
covering any Improvement.
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1.16 Licensed Patents: means all patents and applications set forth in
Exhibit B to this Agreement and all Takeda Sublicensed Patents.
1.17 Notice: shall have the meaning set forth in Paragraph 11.4
hereof. "Notify" shall mean to provide Notice in accordance with Paragraph
11.4 hereof.
1.18 Product: means the Formulation and any topical formulation
containing Amlexanox for Dermatological Use, excluding any formulation for
treatment of the cause or symptoms of oral mucositis, covered by any claim
or any Licensed Patent in any country, whether or not granted.
1.19 Revenue: for purposes of determine compensation to Block for
sales to or by a sublicensee or other party of Access under Paragraph 3.2 and
Paragraph 7.2 of this Agreement, "Revenue" means the net profits received
by Access for the sale of the Products by Access or by any third party. As
used herein, "net profits" shall mean:
(a) the full amount of any nonrecurring or nonperiodic payments made
to Access by any third party as full or partial payment for any rights granted
to such third party relating to any Product or Improvement including, but not
limited to, milestone payments and reimbursement for fees expended to obtain
permission from any governmental authority to make, use or sell a Product or
Improvement (unless such fees have not been deducted under Paragraph 5.2
or 7.3 of this Agreement;
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(b) the full amount of any royalties, including advance royalties, or
other periodic or recurring payments, paid to Access by any third party as full
or partial payment for any rights granted to such third party relating to any
Product or Improvement;
(c ) the full fair market value of any non-monetary consideration paid
to Access by any third party as full or partial payment for any rights granted
to such third party relating to any Product or Improvement; and
(d) the net consideration received by Access for sales of any Product
or Improvement to any third party for resale. As used herein, "net
consideration" means the gross consideration received by Access for sales of
any Product or Improvement less either: (1) if Access manufactures such
Product or Improvement, Access' direct and indirect manufacturing costs
incurred in making such Product or Improvement, recorded on Access' books
in accordance with generally accepted principles; or (2) if Access has such
Product or Improvement made by a third party, Access' out-of-pocket
payments to such third party for such Product or Improvement. All
manufacturing costs and out-of-pocket payments are subject to audit by Block.
This audit right is in addition to and separate from Block's audit right
pursuant to Paragraph 11.12. Any royalties paid by Access to Block under this
Agreement or any other agreement and royalties paid be Access to any other
party for sales hereunder may also be deducted from gross consideration;
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(e) net profits shall not include any royalties or other payments made
by Block to Access under any provision of this Agreement, or any other
agreement.
1.20 Sublicensee Net Sales: means gross revenues received by the
sublicensee on the sale of any Product less (a) trade discounts actually
allowed; and (b) when borne by the sublicensee in connection with the sale,
transportation and handling charges; sales, use and excise taxes; import duties,
tariffs or other governmental charges; and credits for claim or allowances,
retroactive price reductions, refunds, returns, and recalls. There shall not be
any imputed gross revenue for samples, free goods or other marketing
programs whereby the Product is given away to induce sales thereof. For
purposes of determining Net Sales, a sale shall be deemed to have occurred
when the sale is invoiced or when the Product is delivered, whichever occurs
first. In the case of the transfer or sale of Product by the sublicensee to an
Affiliate or distributor of the sublicensee for sales by such Affiliate or
distributor, Net Sales shall be based upon the greater of the total invoice
price charged by the sublicensee to such Affiliate or distributor or the total
invoice price charged by such Affiliate or distributor to its customers.
1.21 Takeda: means Takeda Chemical Industries, Ltd., a Japanese
corporation and all parents, subsidiaries and affiliates thereof.
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1.22 Takeda License Agreement: means that agreement between
Chemex and Takeda dated November 12, 1987 regarding licensing of patent
rights from Takeda to Chemex. A copy of that agreement is set forth in
Exhibit C to this Agreement.
1.23 Takeda Sublicensed Patents: means any and all patent
applications and patents now or hereafter owned or controlled by Takeda in the
Territory relating to the Product, including any and all patents issuing or
maturing from such patent applications, or any reissue application, divisions
extensions, Improvements, and continuations-in-part thereof. Such current
Takeda Patents and patent applications in the Territory are listed in Exhibit D
to this Agreement.
1.24 Takeda Supply Agreement: means that agreement between
Chemex and Takeda dated November 12, 1987 regarding supply of material
from Takeda to Chemex. A copy of that agreement is set forth in Exhibit E
to this Agreement.
1.25 Term: means the term of this Agreement, as set forth in Article
9 hereof.
1.26 Territory: means all countries in the world in which Block has
been granted rights by Takeda except the United States of America and Israel.
Block has not been granted rights in Japan and other countries.
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ARTICLE 2 GRANT
2.1 Grant: Block hereby grants Access the exclusive right under the
Licensed Patents and the Block Know-How to make, use, have made and sell
or have sold any Product within the Territory during the Term, including the
right to make or have made outside the Territory for sale in the Territory.
The rights granted hereunder, however, are subject to the rights granted to
Block by Takeda as set forth in the Takeda License Agreement and the Takeda
Supply Agreement. Access agrees to be bound by the royalty provisions in
such agreements, as amended from time to time. Access shall have the right
to sublicense the rights granted hereunder within the Territory at its sole
discretion subject to approval by Takeda.
ARTICLE 3 ACCESS ROYALTIES
3.1 Royalty Rate for Direct Sales by Access: On a country by country
basis, if Access sells a Product directly to retail pharmacies or other
dispensaries, then Access shall pay to Block a royalty of * of Access
Net Sales of such Product in such country.
3.2 Royalty Rate in all Other Instances: For any consideration
received by Access for sales to or by a sublicensee or other party other than
as set forth in Paragraph 3.1, Access shall pay Block * of any
Revenue received by Access on any Product.
* - Confidential portions have been omitted and are on file separately with the
Commission
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3.3 No Offset on Other Royalties: No payment received by Block
from Access in accordance with Paragraphs 3.1 or 3.2 shall reduce or offset
any amounts paid as an advance royalty in the Block-Chemex Agreement. No
Access Net Sales of any Product or any sales by any party resulting in any
Revenue under Paragraph 3.2 shall be considered as any form of sale covered
by the Block-Chemex Agreement.
ARTICLE 4 ADDITIONAL OBLIGATIONS OF THE PARTIES
4.1 Access to Pay Registration Fees and Costs: Access or its
sublicensees shall pay all registration fees, clinical evaluation costs and any
other costs associated with obtaining approval to market any Product within
any country in the Territory.
4.2 Access to Pay Takeda Royalties to Block: Access shall pay all
royalties due to Takeda for sales of Products within the Territory directly to
Block, and Block shall be solely responsible for remitting all such payments
due to Takeda for sales of Product within the Territory under the terms of the
Takeda License Agreement.
4.3 Advance Notice of Studies: Access shall provide Block with no
less than sixty (60) days' advance written Notice of the commencement of any
study or other sponsored research relating to any Product. Access shall not
proceed with any study or other sponsored research without the written
approval of Block, which shall not be unreasonably withheld or delayed.
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4.4 Access to Provide Data: Access shall supply Block, without
compensation, with all clinical and other technical and scientific data that it
develops relating to any Product. Block may use this data at its discretion for
any purpose, including, but not limited to, filing of such data with regulatory
authorities outside the Territory for any purpose. Information pertaining to
side effects resulting from any use of Amlexanox in any type of application
will be exchanged by both parties hereto on an emergent basis, whenever such
information is obtained.
ARTICLE 5 ACCESS PAYMENT TERMS
5.1 Quarterly payments: Within thirty (30) days of the end of each
calendar quarter, commencing with the first full calendar quarter following the
Effective Date, Access shall submit to Block a written report setting forth the
Access Net Sales for such quarter and the calculation of the royalty payment
due Block for such quarter, provided however that the first such quarterly
report shall include Net Sales from the Effective Date to the end of the first
full calendar quarter. Access shall, with said written quarterly reports, pay
to Block the royalty amount due as indicated in said reports. In the event that
Access sublicenses a third party hereunder, the written report and payment to
Block shall be due within thirty (30) days of receipt of such third party
royalty report, which third party royalty report shall be due not later than
thirty (30) days after the end of each calendar quarter. The report from
Access to Block shall contain a copy of any such sublicensee royalty report.
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5.2 Set-Off for Registration Fees: On a country basis, Access shall
be entitled to reduce the amounts paid to Block in any quarterly payment by
up to * for all out-of-pocket expenses incurred under Paragraph 4.1,
up to an aggregate total off-set for all quarterly payments on Access Net Sales
of any Product or Revenue for any Product of * . Any reduction made
in any quarterly payment as a result of this Paragraph 5.2 shall be
accompanied by a written report setting forth the basis for such reduction.
ARTICLE 6 IMPROVEMENTS
6.1 Improvements by Access: Access may develop and register any
Improvement in the Territory. Access may not develop or register any
Improvement for the treatment of the cause or symptoms of oral mucositis
under the terms of this Agreement.
6.2 Advance Notice of Studies: Access shall provide Block with no
less than sixty (60) days' advance written Notice of the commencement of any
study or other sponsored research relating to any Improvement. Access shall
not proceed with any such study or other sponsored research without the
written approval of Block, which shall not be unreasonably withheld or
delayed.
6.3 Access to Provide Data: Access shall supply Block, without
compensation, with all clinical and other technical and scientific data that it
develops relating to any Improvement.
* - Confidential portions have been omitted and are on file separately with the
Commission
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Block may use this data at its discretion for any purpose, including filing such
data with regulatory authorities outside the Territory for any purpose.
6.4 Access to Pay Registration Fees and Costs: Access shall pay for
all registration fees, clinical evaluation costs and any other costs associated
with obtaining approval for it to market any Improvement within any country
within the Territory.
6.5 Access to Pay Takeda Royalties to Block: Access shall pay all
royalties due to Takeda for sales of Improvements within the Territory directly
to Block, and Block shall be solely responsible for remitting all such payments
due to Takeda for sales of any Improvement within the Territory under the
terms of the Takeda License Agreement.
ARTICLE 7 ACCESS IMPROVEMENT ROYALTIES
7.1 Royalties from Access to Block: On a country by country basis,
if Access sells any Improvement directly to retail pharmacies or other
dispensaries, then Access shall pay to Block a royalty of * of Access
Net Sales on such Improvement in such country. Payment shall be made in
accordance with the procedures set out in Paragraph 5.1.
7.2 Royalties in Other Instances: For any consideration received by
Access for sales to or by a sublicensee or other party other than as set forth
in Paragraph 7.1, Access shall pay
* - Confidential portions have been omitted and are on file separately with the
Commission
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Block * of any Revenue received by Access on any Improvement.
Payment shall be made in accordance with the procedures set out in Paragraph
5.1.
7.3 Royalty Reduction: On a country by country basis, Access shall
be entitled to reduce the amounts paid to Block in any quarterly payment by
up to * for the * out-of-pocket expenses incurred under
Paragraph 6.4 to develop and register the Improvement in such country up to
an aggregate total off-set of * of all such costs in such country. Any
reduction made in any quarterly payment as a result of this Paragraph shall be
accompanied by a written report setting forth the basis for such reduction.
ARTICLE 8 BLOCK IMPROVEMENT RIGHTS AND OBLIGATIONS
8.1 Grant of Rights to Block: Access hereby grants Block the
exclusive right under any Improvement Patent, if any, and Access Know-How,
if any, now existing or subsequently developed, to make, use, have made and
sell any Improvement outside the Territory during the Term, including, but not
limited to, the right to make or have made the Improvement, or any part
thereof, within the Territory for sale outside the Territory. Block shall have
the right to sublicense the rights granted hereunder outside the Territory at
its sole discretion.
8.2 Royalties from Block to Access: On a country by country basis,
Block shall pay Access a royalty of * of Block Net Sales or any
Sublicensee Net Sales (of any Block sublicensee) of any Improvement outside
the Territory.
* - Confidential portions have been omitted and are on file separately with the
Commission
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8.3 Set-Off for Advance or Other Royalties: Block shall be entitled
to offset any royalties otherwise due under Paragraph 8.2 by * . In no
event shall Block be required to pay royalties to Access under both the Block-
Chemex Agreement and Paragraph 8.2 of this Agreement for Block Net Sales
hereunder.
8.4 Block Royalty Reports: Within thirty (30) days of the end of each
calendar quarter, commencing with the first full calendar quarter following the
First Sale of any Improvement by Block or a Block sublicensee outside the
Territory, Block shall submit to Access a written report setting forth the Block
Net Sales for such quarter and the calculation of the royalty payment due
Access for such quarter including any setoff under Paragraph 8.2, provided
however, that the first such quarterly report shall include Block Net Sales from
the date of First Sale to the end of the first full calendar quarter. Block
shall, with said written quarterly report, pay to Access the royalty amount due
as indicated in said report. In the event that Block sublicenses a third party
hereunder, the written report and payment to Access shall be due within thirty
(30) days of receipt of such third party royalty report, which third party
royalty report shall be due no later than thirty (30) days after the end of each
calendar quarter. The report from Block to Access shall contain a copy of any
such sublicensee royalty report.
* - Confidential portions have been omitted and are on file separately with the
Commission
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ARTICLE 9 TERM AND TERMINATION
9.1 Term: The Term of this Agreement for any Product commences
on the Effective Date hereof and ends, on a country by country basis upon the
later of ten (10) years from the date of First Sale of a Product in such
country or the expiration, lapse, termination or unappealed or unappealable
determination of invalidity, unenforceability or nonallowability of the last
Licensed Patent in each country, if any. The Term for Improvements shall
commence on the Effective Date and shall end, on a country-by-country basis,
upon the later of ten (10) years from the date of First Sale of an Improvement
in such country or the expiration, lapse, termination or unappealed or
unappealable determination of invalidity, unenforceability or nonallowability
of the last Licensed Patent, if any, or Improvement Patent, if any, in each
country. In no event, however, shall the duty to pay royalties under this
Agreement for either party extend beyond twenty (20) after the Effective Date.
Royalties payable to Takeda under the Takeda License Agreement shall not be
affected by any provision of this Paragraph.
At the conclusion of the Term, each party shall have a fully paid-up
worldwide nonexclusive license with respect to any Licensed Patent,
Improvement Patent, Block Know-How and Access Know-How, and no further
payments shall be made or required under this Agreement.
9.2 Termination for Breach: Either party may terminate this
Agreement on sixty (60) days' written Notice to the other if the other is in
default or breach of any material provision,
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provided, however, that if the party receiving such Notice cures or diligently
commences to cure the breach or default within such sixty (60) day period,
this Agreement shall continue in full force and effect. If such default or
breach of a material provision is a failure to pay any amount due and owing
hereunder, the terminating party may terminate this Agreement on thirty (30)
days' written Notice. If, however, the party receiving such Notice cures such
default or breach within such thirty-(30) day period, this Agreement shall
continue in full force and effect. Failure to terminate this Agreement for any
default or breach shall not constitute a waiver by the aggrieved party of its
right to terminate the Agreement for any other default or breach.
9.3 Rights to Survive: Termination shall not affect the rights of the
parties accruing up to the effective date of termination and thereafter as to
provisions which expressly survive termination.
9.4 Reversion and Termination for Failure to Pay Takeda License
Fees: If Access fails to make any payment to Block under Paragraph 4.2 or
Paragraph 6.5, then all rights granted to Access in this Agreement shall revert
to Block thirty (30) days after Notice to Access from Block of such failure to
pay. If Access makes all payments to Block required under Paragraphs 4.2
and 6.5 and any other required payments hereunder as set forth in such Notice
within the thirty (30) days, then such rights shall not revert to Block.
18
<PAGE>
9.5 Termination by Takeda: If the Takeda License Agreement or the
Takeda Supply Agreement is terminated or canceled by Takeda or by operation
of the Takeda License Agreement or the Takeda Supply Agreement for any
reason, this Agreement shall also terminate, effective as of the date of
termination of such agreement. Provide, however, Block shall give Access
Notice at least thirty (30) days prior to any such termination, and Access shall
have the right to cure any breach that is the cause of any termination. Block
shall use its reasonable commercial efforts to keep the Takeda License
Agreement and the Takeda Supply Agreement in effect during the Term of this
Agreement.
ARTICLE 10 WARRANTIES
10.1 Exploitation of Licensed Rights: Block makes no warranty or
representation that the use of any products, the practice of the Licensed
Patents, or the use of any trademark will result in the successful promotion,
marketing or sale of the Products. Access makes no warranty or
representation that the use of any Improvements, the practice of the
Improvements, or the use of any trademark will result in the successful
promotion, marketing or sale of the Improvements.
10.2 Access Indemnity: Access shall indemnify and hold Block
harmless against any and all liability, damage, loss, cost or expense (including
attorney's fees and expenses), hereinafter "Damages," resulting from any third
party claim made or suit brought against Block to the extent that such claim
or suit (i) is caused by Access' negligence or willful misconduct;
19
<PAGE>
(ii) is caused by Access' breach of any of the representations or warranties set
forth herein; or (iii) is caused by Access' breach of this Agreement. As the
parties intend fully indemnification, all costs, expenses and fees, including
attorney's fees and disbursements, incurred in enforcing this Paragraph 10.2
shall also be reimbursed. Upon filing of any such claim or suit, Block shall
immediately Notify Access thereof and shall permit Access at its cost to handle
and control such claim or suit. Block shall have the right to participate in
the defense of such claim or suit at its own expense.
10.3 Block Indemnity: Block shall indemnify and hold Access
harmless against any and all liability, damage, loss, cost or expense (including
attorneys' fees and expenses), hereinafter "Damages," resulting from any third
party claim made or suit brought against Access to the extent that such claim
or suit (i) is caused by Block's negligence or willful misconduct; (ii) is
caused by Block's breach of any of the representations and warranties set
forth herein; or (iii) is caused by Block's breach of this Agreement. As the
parties intend full indemnification, all costs, expenses and fees, including
attorneys' fees and disbursements, incurred in enforcing this Paragraph 10.3
shall also be reimbursed. Upon filing of any such claim or suit, Access shall
immediately Notify Block thereof and shall permit Block at its cost to handle
and control such claim or suit. Access shall have the right to participate in
the defense of such claim or suit at its own expense.
10.4 Obligations Regarding Patent Infringement: In the event of
alleged infringement of one or more patents licensed hereunder by a third
party:
20
<PAGE>
(a) each party shall Notify the other of any perceived or threatened
infringement of the Takeda patents by any third party as such party becomes
aware of such perceived or threatened infringement. Block shall Notify
Takeda of any such perceived or threatened infringement, and all actions with
respect to the Takeda Sublicensed Patents will be governed by Paragraph 12.1
of the Takeda Agreement;
(b) In the event of infringement of any patent owned or licensed by
Block and licensed under this Agreement, the party discovering the
infringement shall Notify the other party of such infringement. Block shall
have sixty (60) days from the date of such Notice to Notify Access of its
decision to enforce or not to enforce the patent. If Block elects not to
enforce such patent within such sixty (60) day period, then Access may, at its
option, enforce such patent. In the event of any legal action seeking to
enforce any patent owned by Block, both Access and Block may be named as party
plaintiff. No settlement, consent judgement or other voluntary final
disposition of such suit may be entered into by Block without the consent of
Access, which consent shall not be unreasonably withheld or delayed.
(d) In the event of infringement of any patent owned by Access and
licensed under this Agreement, the party discovering the infringement shall
Notify the other party of such infringement. Access shall have sixty (60) days
from the date of such Notice to Notify Block of its decision to enforce or not
to enforce the patent. If Access elects not to enforce such patent within such
sixty (60) day period, then Block may, at its option, enforce such patent. In
21
<PAGE>
the event of any legal action seeking to enforce any patent owned by Access,
both Access and Block may be named as party plaintiff. No settlement,
consent judgment or other voluntary final disposition of such suit may be
entered into by Block without the consent of Access, which consent shall not
be unreasonably withheld or delayed.
(e) In the event of any lawsuit against a third party hereunder, the
parties agree to cooperate with each other in all respects relating to the
lawsuit. Damages or any amount received in settlement of claims of
infringement, shall be apportioned as follows: (1) the party that actively
asserted the patent or patents found to be infringed or were covered by any
settlement of claims shall first be reimbursed for * of its out-of-pocket
expenses, including attorneys' fees, expended in actively asserting such patent
or patents; (2) out of the remainder, the party that did not actively assert
such patent or patents shall be reimbursed for * of its out-of-pocket
expenses, including attorneys' fees, expended in such lawsuit; and (3) the
party that actively asserted such patent or patents shall then receive any
remaining funds from such damage award or settlement. If both parties
actively asserted such patent or patents, then the parties will divide funds
from such damage award or settlement as follows: each party shall receive *
of its out-of-pocket expenses, including attorneys' fees, expended in such
lawsuit and the parties shall share any remaining funds equally. If the funds
from such damage award or settlement are not sufficient to compensate both
parties for * of their expenses, then the funds
* - Confidential portions have been omitted and are on file separately with the
Commission
22
<PAGE>
shall be divided in a ratio equal to the ratio of the out-of-pocket expenses,
including attorneys' fees, of each party.
10.5 Claims by Third Parties: In the event a party to this Agreement
is sued or threatened with suit by a third party and such action pertains to the
Products, the party being threatened shall give prompt Notice to the other
party. The parties agree to confer together in such event and consult with one
another with respect to the action to be taken.
10.6 No Restrictions on Product: Each party represents to the other
that it has no knowledge of violations of any law or regulation or restrictions
on the ability to make, use or sell the Product, other than ordinary
restrictions imposed in countries in which governmental approval is required,
but has not yet been obtained, to market in such countries and other than
restrictions imposed by the Takeda License Agreement and the Takeda Supply
Agreement.
10.7 Power to Enter Into Agreement: Each party represents that it has
no knowledge of any impediment to it entering into this Agreement except for
the required consent by Takeda to the Agreement.
10.8 No Other Warranties or Representations: Nothing in this
Agreement shall be construed as (a) a warranty or representation by Block or
Access as to the validity or scope of any patent; (b) a warranty or
representation that anything made, used, sold, or otherwise disposed of under
any license granted in this agreement is or will be free from infringement of
23
<PAGE>
patents of third parties; (c) an obligation to bring or prosecute actions or
suits against third parties for infringement; or (d) conferring a right to use
in advertising, publicity or otherwise any trademark or tradename of Block.
Neither party makes any representation, extends any warranties of any
kind, either express or implied, or assumes any responsibilities whatever with
respect to use, sale, or other disposition by and party of any Product or
Improvement.
ARTICLE 11 MISCELLANSOUS
11.1 New Jersey Law Applies: This Agreement shall be interpreted
and construed in accordance with the laws of the State of New Jersey.
11.2 Alternative Dispute Resolution: All disputes relating to or
arising out of this Agreement or its subject matter shall be resolved by the
parties as set forth in this Paragraph 11.2 (a) In the event of a dispute,
Notice of a demand for a meeting of the parties to discuss and settle
a dispute ("Notice of meeting") may be given by either Party. Such
Notice shall be in writing and shall set a date no more than (10)
business days from the date of the Notice of Meeting on which the
parties shall meet during normal business hours at a mutually acceptable
place. If within five (5) days after the date of the meeting the parties
have not resolved their dispute(s), then the parties shall proceed as
provided below. Notwithstanding anything in this
24
<PAGE>
Paragraph 11.2 to the contrary, either party may seek equitable and injunctive
relief in any state or federal court in which jurisdiction and venue are proper.
(b) Any dispute not resolved within five (5) days after the meeting
shall be resolved by means of alternative dispute resolution, as provided in the
New Jersey Alternative Procedure for Dispute Resolution Act, N.J.S.A.
2A:23A-1 et seq. (the "Act"). Other than as set forth herein to the contrary,
the parties expressly waive the right to resolve all claims, disputes and issues
arising out of or relating to this Agreement by means of traditional litigation,
including the right to appeal, except as provided in the Act. Except as
otherwise provided in this Agreement, the Act shall govern the procedures and
methods for any ADR Proceeding. No punitive damages may be awarded in
any litigation or ADR proceeding.
(c) Notice of a demand for resolution of a dispute under the Act (a
"Notice of Dispute") given by either party shall be in writing specifying the
issue or issues in dispute.
(d) Within fifteen (15) days after a Notice of Dispute is given, each
party shall select two (2) prospective umpires from among (i) any retired judge
of the federal courts or state appellate courts of New Jersey or New York; (ii)
any retired managing partner of a law firm with no less than twenty-five (25)
partners; or (iii) such other person with such qualifications upon which the
parties agree. The umpires shall be free from bias and conflict of interest
with respect to either party and shall be in a position to immediately hear the
dispute and render a prompt resolution, but in no event later than six (6)
months from the date of the Notice of
25
<PAGE>
Dispute. Within fifteen (15) days after each party has selected its prospective
umpires, the parties shall agree to one (1) umpire from among the four (4)
prospective umpires to hear the dispute. In the event that the parties do not
agree on an umpire, the prospective umpires shall name the umpire.
The proceeding for the alternative resolution of a dispute (the "ADR
Proceeding") shall be held at a location with the State of New Jersey or New
York as selected by the umpire and shall commence no later than forty (40)
days after the Notice of Dispute is given.
The fees payable to the umpire shall be the usual hourly rate of such
umpire for consulting or dispute resolution services. All fees and expenses
associated with the ADR Proceeding incurred by the parties, including the
umpire fees, attorneys' fees and disbursements, shall be paid by the party
against whom the decision is rendered.
11.3 No Agency or Employment: Neither Block nor Access is to be
considered the agent or employee of the other for any purpose, and neither
party has the right or authority to enter into any contracts or assume
obligations for the other or to give any warranty or make any representation
on behalf of the other party except where and to the extent specifically
authorized in writing to do so.
11.4 Notice: Every notice or other communication required or
contemplated by this Agreement by either party shall be in writing.
26
<PAGE>
(a) Every notice or other communication required or contemplated by
this Agreement by either party shall be delivered to the other party by either:
personal delivery; or facsimile; or certified or registered mail, postage
prepaid, addressed to the party for whom such notice was intended; or by
overnight courier.
(b) Notice delivered in person shall be deemed to have been delivered
upon receipt by the party to whom such notice was sent.
(c ) Notice delivered by facsimile shall be deemed to have been
delivered at noon on the first business day after the date on which the
facsimile was sent.
(d) Notice by certified mail shall be deemed to have been delivered
on the date it is officially recorded as delivered to the intended recipient by
return receipt or equivalent, and in the absence of such record of delivery, the
effective date shall be presumed to have been the fifth (5th) business day after
it was deposited in the mail.
(e) Notice delivered by overnight courier shall be deemed to have
been delivered upon receipt by the party to whom such notice was sent.
(f) Unless Access receives notice to the contrary, all notices
directed to Block shall be sent to the attention of:
27
<PAGE>
John E. Peters, Esq.
Senior Vice President and
General Counsel
Block Drug Corporation
257 Cornelison Avenue
Jersey City, New Jersey 07302
Fax (201) 333-3585
(g) Unless Block receives notice to the contrary, all notices directed
to Access shall be sent to the attention of:
Kerry P. Gray
President and Chief Executive Officer
Access Pharmaceuticals, Inc.
2600 Stemmons Freeway, Suite 176
Dallas, Texas 75207
Fax: (214) 905-5101
11.5 Severability: Whenever possible, each section, subsection,
provision or condition of this Agreement shall be interpreted in such manner
as to be effective and valid under applicable law, but if any section,
subsection, provision or condition of this Agreement should be prohibited or
invalid under applicable law, such section, subsection, provision or condition
shall be considered separate and severable from this Agreement to the extent
of such prohibition or invalidity without invalidating the remaining sections,
subsections, provisions and conditions of this Agreement.
11.6 Entire Agreement/Merger: This Agreement sets forth the entire
agreement between the parties hereto pertaining to the subject matter hereof
and supersedes all negotiations,
28
<PAGE>
preliminary agreements, memoranda or letters of proposal or intent,
discussions and understandings of the parties hereto in connection with the
subject matter hereof. All discussions between the parties have been merged
into this Agreement, and neither party shall be bound by any definition,
condition, understanding, representation, warranty, covenant or provision other
than as expressly stated in or contemplated by this Agreement or as
subsequently shall be set forth in writing and executed by a duly authorized
representative of the party to be bound thereby.
11.7 Amendment: No amendment, change or modification of any of
the terms, provisions or conditions of this Agreement shall be effective unless
made in writing and signed on behalf of the parties hereto by their duly
authorized representatives.
11.8 Counterparts: This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original document, but
all such separate counterparts shall constitute only one and the same
instrument.
11.9 No Waiver of Rights: No waiver of any term, provision, or
condition of this Agreement, whether by conduct or otherwise, in any one or
more instances, shall be deemed to be or construed as a further or continuing
waiver of any such term, provision, or condition of this Agreement.
29
<PAGE>
11.10 Force Majeure: Neither party shall be liable hereunder to the
other party nor shall be in breach for failure to deliver, provided failure to
deliver is no greater than the delay in time caused by circumstances beyond
control for either party, including but not limited to acts of God, fires,
floods, riots, wars, civil disturbances, sabotage, accidents, labor disputes,
shortages, government actions (including but not limited to priorities,
requisitions, allocations and price adjustment restrictions) and inability to
obtain material, equipment, labor or transportation.
11.11 Further Assurances: The parties hereto shall each perform such
acts, execute and deliver such instruments and documents and do all such other
things as may be reasonably necessary to accomplish the transactions
contemplated in this Agreement.
11.12 Audit Rights: Each party shall keep books and records in
sufficient detail to permit the other to verify items including, but not limited
to, Access Revenue, Access Net Sales or Block Net Sales. Each party shall
have the right, upon reasonable Notice and during normal business hours, but
in no event more frequently than once during any twelve (12) month period or
more than two (2) years after the close of any party's fiscal year, to audit, or
have audited by a Certified Public Accountant, the relevant books and accounts
to verify the accuracy of the reported Net Sales and Access Revenue. In the
event such audit reveals that the audited party has mis-reported information by
more than * , that party, in addition to paying or reimbursing any
additional amounts due, shall pay the reasonable costs associated with such
audit. The parties shall maintain the results of any such audit in
* - Confidential portions have been omitted and are on file separately with the
Commission
30
<PAGE>
confidence. All records pertaining to any payment shall be maintained for not
less than five (5) years after the year of payment hereunder.
11.13 Binding Effect: This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective permitted
successors and assigns.
11.14 No Strict Construction: This Agreement has been prepared
jointly and shall not be strictly construed against either party.
11.15 Consent Not Unreasonably Withheld or Delayed: Whenever
provision is made in this Agreement for either party to secure the consent or
approval of the other, such consent or approval shall not unreasonably be
withheld or delayed, and whenever in this Agreement provisions made for one
party to object to or disapprove a matter, such objection or disapproval shall
not unreasonably be exercised.
11.16 Bankruptcy: At least thirty (30) days prior to filing a petition
in bankruptcy, each party must inform the other of its intention to file the
petition or of a third party's written Notice of its intention to file a
voluntary or an involuntary petition in bankruptcy.
11.17 Assignment: Block may assign this Agreement to any parent,
affiliate, subsidiary or entity in common control without the consent of
Access. Block may also assign this agreement to a third party, either alone
or as part of an agreement to dispose of all or a
31
<PAGE>
substantial part of its assets or business. In the event of an assignment, the
assignee shall have the identical rights granted to Block hereunder. Block may
assign this agreement to a third party as part of an agreement to dispose of a
substantial part of its business without the consent of Access. If Block wishes
to assign this agreement alone to a third party, however, such assignment shall
not take place without Access' written consent. If Access wishes to assign this
agreement, such assignment shall not take place without the written consent of
Block and Takeda.
11.18 Taxes: All taxes levied on account of royalties accruing under
this Agreement shall be paid by the receiving party. If laws or regulations
require withholding of taxes, the taxes will be deducted by the paying party
from remittable royalty payments and will be paid by the paying party to the
proper taxing authority. Proof of payment shall be sent to the receiving party
within sixty (60) days following payment.
11.19 Cooperation on Publicity: Access and Block shall not, except
as required by law and in interviews between professional sales representatives
and a potential prescribers of a Product or Improvement, use each other's
name in any manner, or issue any public statement disclosing the existence of,
or relating to, this Agreement or any of the activities conducted hereunder,
without the other party's prior written permission. To the extent this
Agreement triggers, in the opinion of counsel, an obligation for a party to file
a report with the SEC on Form 8-K, such party shall either (1) not file a copy
of this Agreement or (2) request SEC approval for the deletion of certain
confidential information identified jointly by parties and
32
<PAGE>
then file a redacted version of this Agreement. Access shall not publish, or
allow to be published, any manuscript, article, report or other form of oral or
written presentation regarding Amlexanox without the express written approval
of Block.
11.20 Costs of Agreement: The parties hereto shall each bear their
own costs and expenses (including attorneys' fees) incurred in connection with
the negotiation and preparation of this Agreement and consummation of the
transactions contemplated hereby.
11.21 Headings For Convenience Only: The titles, headings or
captions and paragraphs in this Agreement do not define, limit, extend, explain
or describe the scope or extent of this Agreement or any of its terms or
conditions and therefore shall not be considered in the interpretation,
construction or application of this Agreement.
11.22 Independent Contractor: Each party is an independent
contractor with respect to the other, and is not an agent, partner, joint
venture, or employer of the other. Neither party shall have any responsibility
for the hiring, termination, compensation or benefits of the other party's
employees. No employees or representatives of either party shall have any
authority to bind or obligate the other party for any sum or in any manner
whatsoever, or to create or impose any contractual or other liability on the
other party without said party's authorized written approval.
33
<PAGE>
11.23 No Finder's Fee: The parties acknowledge that no "finder" has
been involved in bringing the parties together and that no compensation is due
to any third party(s) as a result of the execution of this Agreement.
11.24 Notification of Infringement: Each party shall promptly Notify
the other party of any infringement or misappropriation based upon or arising
from any of the intellectual property that is the subject of this agreement.
11.25 References: All references herein to articles, sections,
paragraphs and attachments shall be to articles, sections, paragraphs and
attachments of this Agreement.
11.26 Singular and Plural: The use herein of the singular form shall
also denote the plural form, and the use herein of the plural form shall denote
the singular form as in each case the context may require.
11.27 Successors and Assigns: This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and assigns permitted under this Agreement.
11.28 Validity and Severability: Whenever possible, each clause,
subclause, provision or condition of this Agreement shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
clause, subclause, provision or condition of this Agreement
34
<PAGE>
should be prohibited or invalid under applicable law, such clause, subclause,
provision or condition shall be considered separate and severable from this
Agreement to the extent of such prohibition or invalidity without invalidating
the remaining clauses, subclauses, provisions and conditions of this
Agreement.
11.29 Waiver: No waiver of any term, provision, or condition of this
Agreement, whether by conduct or otherwise, in any one or more instances,
shall be deemed to be or construed as a further or continuing waiver of any
such term, provision, or condition of this Agreement.
11.30 Takeda Agreement Controlling: This Agreement is subject to
the Takeda License Agreement and the Takeda Supply Agreement. To the
extent that any term of this Agreement is inconsistent with either the Takeda
License Agreement or the Takeda Supply Agreement, such term shall be
controlled by and subject to the terms of the Takeda License Agreement and
the Takeda Supply Agreement.
ARTICLE 12 TAKEDA CONSENT
12.1 Takeda Approval: This Agreement shall be binding on the
parties but not become effective until receipt by Block of written approval
from Takeda for Block to enter into this Agreement. If Takeda disapproves
this Agreement or fails to approve the Agreement within six (6) months of the
Effective Date, then this Agreement shall be void in its entirety.
35
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duty executed as of the day and year first above written.
ACCESS PHARMACEUTICALS, INC. BLOCK DRUG COMPANY, INC.
By: /s/ Kerry P. Gray By: /s/ Arthur J. Looney
--------------------------- -----------------------------
Kerry P. Gray Arthur J. Looney
Name Printed Name Printed
President and CEO Vice-President / General Manager
------------------- --------------------------------
Title Title
May 7, 1998 May 12, 1998
------------ -------------
Date Date
36
<PAGE>
EXHIBIT A
APHTHASOL FORMUALTION
<PAGE>
AMLEXANOX 5% ORAL PASTE FORMULA
FORMULA #B0960
*
* - Confidential portions have been omitted and are on file separately with
the Commission
<PAGE>
EXHIBIT B
PATENTS & APPLICATIONS
<PAGE>
Amlexanox List
- --------------
Title(s) Country Patent or Application Number
Methods of Treating Aphthous Ulcers and Other
Mucocutaneous Disorders with Amlexanox
U.S. 5,362,737
Mouth Ulcer Treatment for Muco Cutaneous Disorders
By Mediator Release, or 5-Lipogenase Inhibitor
Leucotiene or Platelet Activating Factor
Antagonist Polymeric Paste Administration
U.S. App. 682347
Canada 2065496
EPO 518798
Japan 5097706
<PAGE>
EXHIBIT C
TAKEDA LICENSE AGREEMENT
<PAGE>
LICENSE AGREEMENT
-----------------
This is an Agreement, effective the 12 day of November, 1987 (the "Effective
Date"), by and between TAKEDA CHEMICAL INDUSTRIES, LTD. (hereinafter referred
to as "Takeda", a corporation existing under the laws of Japan and having a
place of business at 27 Doshomachi 2-Chome, Higashiku, Osaka, Japan, and
CHEMEX PHARMACEUTICALS, INC. (hereinafter referred to as "Chemex"), a Wyoming
corporation having a place of business at 1401 Seventeenth Street, Suite 850,
Denver, Colorado 80202, U.S.A.
RECITALS
WHEREAS, Takeda has developed the Compounds (as hereinafter defined) and is
the owner of certain patents related thereto;
WHEREAS, Takeda and Chemex have entered into a Confidential Disclosure
Agreement dated March 24, 1987, pursuant to which Takeda has provided certain
data and information to Chemex with respect to the Compounds;
WHEREAS, Chemex has advised Takeda of Chemex's interest in developing one
or both of the Compounds as Preparations in the Territory (as hereinafter
defined respectively); and
WHEREAS, the parties now desire to enter into an agreement under which
Chemex will work toward the development of one or both of the Compounds and
toward the development of data and information for the governmental
authorities in the
<PAGE>
Territory, with the object of obtaining their approvals of
the marketing in the Territory of one or more Preparations, which shall
include one or both of the Compounds.
NOW, THEREFORE, in consideration of the foregoing premises and of the
mutual covenants, terms and conditions set forth herein, the sufficiency of
which as consideration is hereby acknowledged by each of the parties hereto,
and intending to be legally bound. Takeda and Chemex hereby agree as follows:
ARTICLE 1
DEFINITIONS
As used in this Agreement, the following terms shall have the following
respective meanings:
1.1 "Affiliate" shall mean and include any corporation or business entity
controlled by, controlling, or under common control with Takeda or Chemex,
respectively. For this purpose "control" shall mean the direct or indirect
beneficial ownership of at least 50% of the voting stock, or at least a 50%
interest in the income of such corporation or other business entity, or such
other relationship as, in fact, constitute actual control.
1.2 "Chemex Patents" shall mean any and all United States or foreign
patent applications and patents now or hereafter owned or controlled by Chemex
in any country of the world relating to the Compounds and/or Preparations,
including any and all patents issuing or maturing from such patent applications,
or any reissue applications, divisions,
2
<PAGE>
continuations, extensions, improvements and continuations-in-part thereof.
1.3 "Compounds" shall mean and include:
(1)the chemical compound identified as Amlexanox (r-INN) having the
chemical name: 2-Amino-7-isopropyl-5-oxo-5H-(1)benzopyrano-(2,3-b)-pyridine-3-
carboxylic Acid (Takeda Code No.: AA-673), and
(2)the chemical compound having the chemical name: (RS)-2-Methoxy-3-
(Octadecylcarbamoyloxy)propyl 2-(3-thiazolio)ethyl phosphate (Takeda Code No.:
CV-3988).
1.4 "Dermatological Use" shall mean all uses for treatment of disease and
disorders of the integument including, but not limited to, therapeutic,
prophylactic and immunological uses. For the purposes of this definition,
integument is skin and its appendages, including hair, hair follicles,
sebaceous glands, sweat glands, nails, and component and migratory cells of
the skin.
1.5 "Designee" shall mean a party who Takeda reasonably believes is
competent and capable of performing in place of Takeda under this Agreement.
1.6 "DMF" shall mean the Drug Master Files, filed with or intended to be
filed with the FDA or HPB for the purpose of chemical and physical
characterization of the Compounds or Preparations.
1.7 "FDA" shall mean the United States Food and Drug Administration.
3
<PAGE>
1.8 "HPB" shall mean the Health Protection Branch, Department of National
Health and Welfare of Canada.
1.9 "Improvements" shall mean and include all inventions, developments or
improvements, whether or not patentable, originated or acquired by Takeda or
Chemex, respectively, that relate to the Compounds for topical Dermatological
Use and/or the Preparations.
1.10 "IND" shall mean and include (1) Notice of Claimed Investigational
Exemption for a New Drug filed with or intended to be filed with the FDA for
the purpose of initiating clinical trials of the Preparations in the United
States, and (2) the corresponding application in Canada, filed with or
intended to be filed with the HPB for the purpose of initiating clinical
trials of the Preparations in Canada.
1.11 "NDA" shall mean a New Drug Application, filed with or intended to be
filed with the FDA for the approval of such agency of the marketing of the
Preparations in the United States.
1.12 "NDS" shall mean a New Drug Submission, filed with or intended to be
filed with the HPB for the approval of such agency of the marketing of the
Preparations in Canada.
1.13 "Net Sales" shall mean gross revenues received by the seller on the
sale of one or more of the Preparations less (i) trade discounts actually
allowed and (ii) when borne by the seller in connection with the sale,
transportation and handling charges; sales, use and excise taxes; import
duties, tariffs or
4
<PAGE>
other governmental charges; and credits for claims or allowances, retroactive
price reductions, refunds, returns, and recalls. There shall not be any imputed
gross revenue for samples, free goods or other marketing programs whereby the
Preparations are given away to induce sales thereof. For purposes of
determining Net Sales, a sale shall be deemed to have occurred when the sale
is invoiced or when the product is delivered, whichever occurs first. In the
case of the transfer or sale of the Preparations by the seller to an Affiliate
or distributor of the seller for sales by such Affiliate or distributor, Net
Sales shall be based upon the greater of the total invoice price charged by
the seller to such Affiliate or distributor or the total invoice price charged
by such Affiliate or distributor to its customers.
1.14 "Preparations" shall mean and be limited to topical preparations for
the Dermatological Use containing one or both of the Compounds as active
ingredients.
1.15 "Takeda Patents" shall mean any and all patent applications and
patents now or hereafter owned or controlled by Takeda in the Territory
relating to the Compounds and/or Preparations, including any and all patents
issuing or maturing from such patent applications, or any reissue applications,
divisions, continuations, extensions, improvements and continuations-in-part
thereof. Such current Takeda Patents and patent applications in the Territory
are listed in attached Schedule A to this Agreement.
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1.16 "Technology and Know-How" shall mean and include (1) any and all
information in the possession of either party hereto at any time during the
terms of this Agreement which such party has the right to license or
sublicense relating to the physical and chemical analysis and stability of the
Compounds and Preparations, their clinical effects and indications for use, and
their pharmacological, toxicological and pathological study and (2) any and all
information in the possession of either party as of the date of execution of
this Agreement which such party has the right to license or sublicense relating
to method of use, packaging, formulation, method of administration of the
Preparations; provided, however, that information relating to Takeda's process
of manufacture of the Compounds shall be excluded from the scope of the
Technology and Know-How.
1.17 "Territory" shall mean Canada and the United States of America, and
its territories and possessions, including Puerto Rico.
ARTICLE II
GRANT OF LICENSE
2.1 Takeda hereby grants to Chemex and Chemex hereby accepts a semi-
exclusive license (exclusive except for TAP, as hereinafter defined) in the
Territory under the Takeda Patents and the Takeda Technology and Know-How to
produce, have produced for it, to manufacture, have manufactured for it, to
use and/or to sell one or more of the Preparations, either separately or in
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combination with other products, with the right to grant one sublicense as
provided in Section 2.3 ("License"). Nothing in this Section 2.1 shall be
construed to permit Chemex to manufacture the Compounds without the prior
written approval of Takeda.
2.2 Further to the License, Takeda shall be entitled to grant to Takeda-
Abbott Research and Development ("R&D(P)"), an Illinois general partnership
having a place of business at 1400 Sheridan Road, North Chicago, Illinois
60064, a semi-exclusive license (exclusive except for Chemex or, in Chemex's
place, its sublicensee) under the Takeda and Chemex Patents and Technology and
Know-How to manufacture, have manufactured for it and/or sell one or more of
the Preparations in the Territory. Chemex hereby agrees that R&D(P) shall be
entitled to grant an exclusive license under the Takeda and Chemex Patents
and Technology and Know-How to market and sell one or more of the Preparations
in the Territory to either TAP Pharmaceuticals ("TAP"), an Illinois general
partnership having a place of business at 1400 Sheridan Road, North Chicago,
Illinois 60064, or TAP Pharmaceuticals, Inc. ("TAP, Inc.") if it succeeds to
the business of TAP within the next two years. Takeda shall be entitled to
sublicense any one Affiliate of Takeda in place of TAP only with the prior
written consent of Chemex, which consent shall not be unreasonably withheld.
For the purposes of this Agreement, R&D(P), TAP and TAP, Inc. shall all be
referred to collectively as "TAP". As far as the Dermatological Use is
concerned, Takeda shall be entitled
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to supply TAP, or any Affiliate of Takeda in place of TAP, with one or both of
the Compounds for use only in the Preparations and/or with one or more of the
Preparations under such license.
It is understood that TAP shall be entitled to have Abbott Laboratories,
Limited, a Canadian corporation having a place of business at Montreal,
Quebec, distribute and sell the Preparations in Canada.
2.3 Chemex shall be entitled to grant to a third party approved by Takeda
beforehand one royalty-bearing semi-exclusive sublicense, in place of Chemex,
in each country of the Territory (exclusive except for TAP) under the Takeda
and Chemex Patents and Technology and Know-How to produce, have produced for
it, manufacture, have manufactured for it, to use and/or to sell one or more
of the Preparations, either separately or in combination with other products.
Takeda shall not withhold such approval unreasonably.
It is understood that Chemex shall be entitled to have one-third party
market, distribute and sell the Preparations in Canada.
ARTICLE III
FDA FILINGS
3.1 Chemex intends to develop formulations of the Preparations and to file
with the FDA and with the HPB, at its own expense, an IND for one or more of the
Preparations. If warranted, in Chemex's sole discretion, Chemex intends to carry
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out the necessary tests and obtain the necessary data with respect to the
Preparations for the purpose of filing one or more NDAs and NDSes for the
marketing and sale of the Preparations.
3.2 Chemex shall file, at its own expense, an NDA with the FDA in
connection with at least one of the Preparations within five (5) years from
the Effective Date or at such other time as shall be agreed upon by both
parties. Such time period shall not include any period of time in which
Chemex is unable to carry on its activities in preparation for filing an NDA
due to a force majeure. In the event that Chemex fails to file an NDA within
such period, the License shall become nonexclusive.
3.3 Chemex will bear final responsibility for any NDA and NDS programs
and all related pre-clinical, toxicological, pharmacological, pharmaceutical,
biochemical, chemical and clinical studies. Chemex shall also bear final
responsibility for all contacts with the FDA and the HPB and other regulatory
agencies in the Territory regarding any NDA and NDS programs and related
studies.
3.4 In the event that Takeda or its Designee manufactures and supplies
Chemex with the Compounds and/or the Preparations, Takeda shall file or shall
cause such Designee to file with the FDA the DMF therefor, and with the HPB,
the corresponding files, and shall allow Chemex to refer to the files in its
IND(s), NDA(s) and NDS(es).
3.5 In the event that an NDA or an NDS for one or more of the Preparations
is approved by the FDA or the HPB, Chemex
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shall market each approved Preparation in the United States or Canada,
respectively, within six (6) months after the date of the NDA or NDS approval
or at a later date as shall be agreed upon by both parties. Such time period
shall be extended by an amount of time equal to any delay in timely
performance caused by a force majeure.
3.6 If Chemex determines, in its bona fide judgement, that development of
one or both Compounds is not technically or commercially feasible or is
otherwise impossible because of infringement of third party patents,
operation of law or force majeure. Chemex may discontinue the development of
such Compound and its corresponding Preparation at any time or stage, in
which event Chemex shall promptly so notify Takeda, reporting, in reasonable
detail, to Takeda its reasons for such discontinuance. Chemex shall lose as
to such Compound and its corresponding Preparation any rights vested in
Chemex under this Agreement. Chemex shall return to Takeda any unused sample
of such Compound together with all related Takeda Technology and Know-
How previously furnished to Chemex by Takeda in writing.
ARTICLE IV
DISCLOSURE REQUIREMENTS
4.1 Takeda shall provide Chemex with all the material information that
is, in Takeda's reasonable judgment after consultation with Chemex, necessary
for the development of the Preparations by Chemex in accordance with the
procedures
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described in this Agreement. Such material information shall include at least
the information listed in Appendix A to this Agreement.
4.2 Takeda and Chemex shall each select an employee who shall act as its
technical correspondent in transmitting technical information and arranging
for other assistance necessary to fully exploit the Compounds. Each party
shall indicate promptly to the other, in writing, the name of its technical
correspondent. The technical correspondent of each party shall cooperatively
work out a practical plan to keep each party informed about the other's
current and planned activities relating to the use, practice, development,
production and sale of the Compounds and Preparations. Chemex and Takeda
shall meet at least semi-annually to exchange information on the status and
progress of their respective development programs. Takeda shall use its
reasonable efforts to provide Chemex on at least an annual basis with
summaries of the scientific and medical data relating to the Compounds and/or
Preparations generated by any of its licensees of the Compounds. Information
pertaining to side effects resulting from any use of the Compounds in all types
of applications will be exchanged by both parties hereto on an emergent basis,
whether such information was obtained before any approval of an NDA or NDS or
thereafter.
4.3 The technical correspondent of each party shall be responsible for
answering all reasonable technical inquiries received from the technical
correspondent of the other party
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relating to the Compounds and the Preparations and shall provide the other
party, to the extent requested, with copies of the pertinent technical
information of the providing party, including, to the extent applicable and
necessary, test reports and other technical reports and manuals, lists of
ingredients and their proportions in compositions of matter, and quality
control procedures.
4.4 Takeda agrees to cooperate with Chemex and shall provide to Chemex on
a timely basis, at Takeda's expense and to the extent available to Takeda, all
descriptions, data, specifications and any other information that may be
required by the FDA or the HPB in connection with the Chemex IND(s), NDA(s)
and NDS(es), including such material as may be required regarding Takeda's
facilities for the manufacture, packaging, storage and shipping into the
Territory of any of the Preparations.
4.5 Chemex shall provide to Takeda a summary of the data, including the
formulation of the Preparations, obtained from the development and tests
conducted by Chemex with regard to the Compounds and the Preparations. Chemex
shall also provide Takeda with copies of the IND(s), DMF(s), NDA(s), NDS(es)
and post-marketing surveillance reports that Chemex files with the FDA or the
HPB in connection with the Preparations.
4.6 In the event that Chemex files one or more United States or foreign
patent applications relating to the utilization of the Compounds for
Dermatological Use, including any and all reissue, divisional, continuation,
continuation-in-part,
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extension and improvement applications, Chemex shall provide Takeda with a
copy of such application(s) within one (1) month from the filing thereof and,
on a timely basis, with any and all subsequent communications relating
thereto, to and from the government agencies considering the applications.
4.7 All information exchanged by Takeda and Chemex shall be in English.
Furthermore, all such information that is designated as confidential by
Takeda shall be maintained in confidence by Chemex. Takeda is entitled to use
or cause its licensees of the Compounds to use any such material for its or
their own purposes in connection with the development of, and obtaining
regulatory approval for, any of the Compounds and Preparations outside the
Territory. Studies done in support of marketing and not required under Chemex's
NDA(s) or NDS(es), including clinical and preclinical studies and market
research, shall not be made available to TAP unless the parties hereto
otherwise agree.
ARTICLE V
PATENTS
5.1 In the event that an employee, employees or contract worker of Takeda
alone or jointly makes an invention or discovery relating to the Compounds
and/or Preparations that is assignable or is assigned to Takeda, such
invention or discovery of Takeda and the corresponding patent rights
throughout the world shall be the property of Takeda. Except for future
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Improvements, which are provided for in Article VI, if Chemex deems such
invention or discovery necessary for its marketing of the Preparations in the
Territory or Takeda obtains United States or Canadian patent(s) therefor,
Chemex shall have the right to a license thereunder, and Takeda shall grant
to Chemex such a license with regard to the Preparations upon reasonable
terms to be then negotiated, which terms shall not be significantly different
from the terms contained herein and shall otherwise be comparable to the
terms offered to any other party for Dermatological Use.
5.2 In the event that an employee, employees or contract worker of Takeda
jointly with one or more Chemex employees makes an invention or discovery
relating to the Compounds and/or Preparations, such invention or discovery
and the corresponding patent rights throughout the world shall be the joint
property of Takeda and Chemex, with Takeda and Chemex each possessing an
undivided one-half interest in such invention or discovery and in the
corresponding patent rights and with Takeda possessing the unrestricted
exclusive right (with right to sublicense) to manufacture, to have manufactured
for it, to use, to sell and to license any invention covered by any claim or
any patent that may issue under the terms of this Section 5.2; provided,
however, that Chemex shall, at its option, have a semi-exclusive right
(exclusive except for TAP), with a right to sublicense in Takeda's place
Takeda's interest, in any such
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invention in the Territory upon terms and conditions consistent with this
Agreement.
5.3 In the event that an employee, employees or contract worker of Chemex
alone or jointly makes an invention or discovery relating to the Compounds
and/or Preparations that is assignable or is assigned to Chemex, such
invention or discovery of Chemex and the corresponding patent rights shall be
the property of Chemex, and Chemex shall offer Takeda a semi-exclusive
license thereunder (exclusive except for Chemex) with a right to sublicense
TAP, or any one Affiliate of Takeda in its place, subject to the prior
approval of Chemex, in the Territory and an exclusive license outside the
Territory with the right to sublicense such patent(s).
ARTICLE VI
FUTURE IMPROVEMENTS
Until the termination of this Agreement, Takeda and Chemex shall promptly
provide each other with information relative to Improvements. Each party
hereto hereby grants to the other the option to include within the terms and
conditions of this Agreement any such Improvements. Such right may be
exercised by the optionee without the payment of any fee by giving written
notice to the optionor within ninety (90) days of receipt of notice of
existence of such Improvements.
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ARTICLE VII
PAYMENTS
7.1 Chemex agrees to pay to Takeda, as an initial payment for the
License, a license fee of (i) $20,000 on each Compound within thirty (30) day
after the Effective Date and (ii) $20,000 on each Compound within thirty (30)
days after each anniversary of the Effective Date. Chemex shall be entitled
to deduct from such license fee any United States income tax withheld and
remitted to the United States Government by Chemex on account of license fee
payments or royalties accruing to Takeda under this Agreement. In the event
that Chemex discontinues its development of any Compound and its corresponding
Preparation pursuant to Section 3.6, Chemex shall have no further obligation
to pay the license fee on such Compound. License fee payment that have been
made shall offset future royalties due to Takeda pursuant to Section 7.2 on
a Compound-by-Compound basis but shall not be refundable to Chemex for any
reason. The amount of any license fee payments that is not used to offset
royalties in any year may be carried forward and used to offset royalties
in succeeding years until the amount of the license fee payments is fully used.
7.2 In consideration for the License granted under this Agreement and
in recognition of the expenditure of monies, time and effort by Chemex to
develop one or more of the Preparations, including the filing of IND(s),
NDA(s) and NDS(es), and the carrying out of the tests and obtaining the data
required
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by the FDA or HPB in order to obtain the approved NDA(s) or NDS(es), the
parties hereto agree that Chemex shall pay to Takeda royalties at the times
and in the manner hereinafter set forth:
(1)In the event that Takeda does not grant a license to TAP pursuant
to Section 2.2 hereof, a royalty of * on Chemex's Net Sales up
to * and * on its Net Sales over * .
(2)In the event that Takeda grants a license to TAP pursuant to
Section 2.2 hereof, * on Chemex's Net Sales up to *
and * on its Net Sales over * . Such payments shall be subject
to the provisions of this Agreement, including, but not limited to,
Article XII. For the purposes of this Article VII, "Chemex's Net Sales"
shall mean and include the Net Sales of either Chemex or its sublicensee
and those of its distributors, if any.
7.3 The royalties under Section 7.2 shall be payable on Chemex's Net
Sales on a Preparation-by-Preparation and and country-by-country basis until
the last to expire of the Takeda Patents with regard to the respective
Preparation and/or the Compound contained therein or until the expiration of
ten (10) years from the date of Chemex's first commercial sale of the
respective Preparation in the respective country of the Territory,
whichever occurs last.
7.4 In the event that an unlicensed entity or entities shall market one
or both of the Compounds for Dermatological Use
* - Confidential portions have been omitted and are on file separately with
the Commission
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in the Territory and a substantial erosion in Chemex's sales of the
Preparations occurs, the parties hereto shall negotiate a reasonable
reduction of the royalty rate in good faith.
7.5 In the event that Takeda markets or licenses any third party to
market in any country of the world other than Japan one or more of the
Preparations successfully developed by Chemex, and such marketing is made
possible in such country based in whole or in part upon the Chemex Technology
and Know-How, including formulation know-how, provided by Chemex to Takeda
pursuant to Article IV of this Agreement, then Takeda shall pay to Chemex
* on Net Sales in such country on a Preparation-by-Preparation
basis for the use of such information for a period of ten (10) years from the
date of Takeda's or its sublicensees' first commercial sale of such
Preparation(s) in such country. No royalties shall be due for the use of
such information in Japan.
7.6 In the event that pursuant to Section 5.2 or 5.3, Chemex grants
Takeda an exclusive license outside the Territory, Takeda shall pay Chemex
on a Preparation-by-Preparation and country-by-country basis * on
Takeda's Net Sales up to * and * on its Net Sales over *
for the life of the valid Chemex Patents covering the respective Preparation
in each country. No royalties shall be due for the use of such patents in
Japan. Moreover, such license shall be royalty-free to TAP in the Territory.
* - Confidential portions have been omitted and are on file separetely with
the Commission
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7.7 In the event that one or more of the Preparations is sold in a combination
package containing other items, Net Sales, for purposes of royalty payments on
the combination package, shall be calculated by multiplying the Net Sales of
that combination by the fraction A/(A+B) where A is the gross selling price of
the Preparation(s) sold separately and B is the gross selling price of the
other items sold separately. Royalty payments pursuant to this Agreement shall
be made only on that portion of Net Sales attributable to the Preparation(s).
In the event that either of the items in such a combination package are not
sold separately, the gross sales price of such item for the purposes of
determining Net Sales subject to royalty payments shall be mutually agreed
upon by the parties acting in good faith.
ARTICLE VIII
REPORTS AND RECORDS
8.1 Takeda and Chemex shall keep complete, true and proper records of
their sales of the Preparations in sufficient detail to enable royalties
payable on Net Sales accurately to be determined. All such records shall be
preserved and maintained for a period of five (5) years after the calendar
half-year to which the record applies. Payments of earned royalties shall be
made no more than sixty (60) days after the end of each calendar half-year for
the sale of all Preparations sold during the immediately preceding calendar
half-year. Such payments shall be
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accompanied by a statement showing Net Sales and such other particulars as are
necessary or which may be reasonably requested by the recipient for an account
of the royalties payable pursuant to this Agreement. Payment of the amount of
royalties due shall accompany such statement, which shall be deemed true and
correct unless objected to in writing by the recipient no later than thirty
(30) days after receipt thereof. All payments shall be in United States
dollars.
8.2 Each party shall have the right for a period of two (2) years after
receiving any royalty report and giving written notice of objection to
appoint an independent certified public accountant, at its expense, who is
acceptable to the other party, and who shall have access to that party's
records during reasonable business hours for the purpose of verifying the
royalties payable under this Agreement, but this right may not be exercised
more than once in any calendar year, and the accountant shall disclose only
information relating solely to the accuracy of the royalty report and the
royalty payments made in accordance with this Agreement.
ARTICLE IX
WARRANTIES, REPRESENTATIONS AND COVENANTS
9.1 Takeda and Chemex each represents and warrants to the other that they
have full power and authority to enter into this Agreement and to carry out the
transactions contemplated hereby.
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9.2 Takeda represents and warrants to Chemex that Takeda is the owner of
and has all right, title and interest to the Takeda Patents that are listed in
Schedule A hereto, free and clear of all liens and encumbrances, and that
Takeda has the right to license Chemex as intended by the terms of this
Agreement. Takeda further represents to Chemex that, to the best of Takeda's
knowledge, Takeda has the right to provide to Chemex the material information
contained in Appendix A hereto for the purposes contemplated by this Agreement.
9.3 During the term of this Agreement, Chemex represents and warrants that
it shall use its best efforts to develop, market and promote the sale of one or
more Preparations.
9.4 Chemex represents and warrants to Takeda that it will not publish or
allow to be published any manuscript, article, report or other form of oral or
written presentation of the activities of Chemex contemplated by this Agreement,
except as provided in Section 16.4. This prohibition may be waived by Takeda
after review and approval of the material for publication or other presentation.
9.5 At the request of Takeda, Chemex shall introduce to TAP the
manufacturer that is making the Preparations to be marketed by Chemex. Chemex
shall make all reasonable effort to render or have such manufacturer or Chemex's
sublicensee, if any, render TAP the necessary cooperation in obtaining the NDA
and/or NDS approval necessary for the marketing of the Preparations so that
TAP may legally commence the sale of the Preparations in the
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Territory simultaneously with Chemex or its sublicensee, and give to the FDA on
behalf of TAP a letter of reference to the DMF, NDA and/or NDS for the
Preparation filed by Chemex, its manufacturer or sublicensee. Notwithstanding
the above expression of intent that Chemex, or its sublicensee, and TAP shall
commence the sale of the Preparations simultaneously in the Territory, the
parties hereto understand and agree that neither party will be required to
unduly or unnecessarily delay any aspect of filing for regulatory approval or
market launch in order to accommodate the objective of simultaneous sale.
9.6 Takeda and Chemex each represents and warrants that it shall impose
upon all is Affiliates, sublicensees, employees and subcontractors that it
causes to work on any aspect of the research and development, manufacturing
or other activities contemplated by this Agreement substantially the same
confidentiality obligations that it assumes hereunder.
9.7 Neither Takeda nor Chemex warrants the validity of its Patents or the
exclusivity of its Technology and Know-How or that the use by the other party
or by such party's sublicensees of such Patents or Technology and Know-How
will not infringe any third party patents.
9.8 Takeda represents that, as the result of the internal patent search
that it has made to date with regard to the countries of the Territory, it has
found no issued product patent held by third parties in the Territory which
might be infringed with regard to the import and use of the Compounds.
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Nothing in this Section 9.8 shall be construed to impose on Takeda any
liability or responsibility to Chemex with respect to any infringement of
patent property owned by third parties.
ARTICLE X
INDEMNIFICATION
10.1 Chemex agrees to indemnify, defend and hold harmless Takeda against
and in respect of any and all damages (including expectation, incidental and
consequential damages), losses (except lost profits), liabilities, judgments,
claims and expenses (including, without limitation, court costs and
reasonable fees of counsel, regardless of outcome) (collectively, "Losses")
resulting or arising from or incurred in connection with:
(a)any misrepresentation, breach of warranty or representation or
non-fulfillment or non-performance of any agreement, term or condition on the
part of Chemex hereunder or any misrepresentation in or omission from any
certificate, agreement or other instrument furnished or to be furnished to
Takeda in connection herewith;
(b)any use of the Compounds supplied by Takeda to Chemex or of the
Preparations manufactured therefrom and sold directly by Chemex; provided that,
Chemex shall have no obligation hereunder and Takeda shall indemnify Chemex
for Losses arising out of adulteration (as defined in the United States Food,
Drug and Cosmetic Act, as amended) of the
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Compounds and Preparations manufactured therefrom, caused solely as a result of
Takeda's negligence in the course of manufacture of the Compounds;
( c)any actions, suits, proceedings, claim, demands, assessments,
judgments, liabilities, costs or expenses incident to any of the foregoing.
10.2 Notwithstanding anything to the contrary in this Article X, neither
party shall be entitled to assert any claim or right of action against any
shareholder, director or officer of the other party for costs, damages or
losses incurred as a result of the other party's improper activities as set
forth in Section 10.1. Nothing in this Section 10.2 shall prevent such an
action in the event such a claim or right of action arises from the
unauthorized and improper activities of any such shareholder, director or
officer.
ARTICLE XI
TERM AND TERMINATION
11.1 Unless sooner terminated as provided herein, this Agreement shall
remain in effect on a Preparation-by-Preparation and country-by-country basis
for a term commencing on the Effective Date and terminating upon the
expiration of the last to expire of the Takeda Patents in the Territory with
regard to the respective Preparation and/or the Compound contained therein or
upon the expiration of ten (10) years from the date of the first
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commercial sale of the respective Preparation in the respective country of the
Territory, whichever occurs last ("Term").
11.2 Either Takeda or Chemex may terminate this Agreement immediately in
the event that:
(a)The other party fails in any material respect to perform any of
its obligations hereunder and fails to remedy such default or breach within
one hundred and twenty (120) days after receiving written notice thereof from
the first party; provided, however, that if the defaulting or breaching party
cures such default or breach within the one hundred and twenty (120) day
period referred to, this Agreement shall continue in full force and effect the
same as if such default or breach had not occurred; or
(b)The other party files a petition in bankruptcy or makes a general
assignment for the benefit of creditors or otherwise acknowledges insolvency or
is adjudged bankrupt, goes into or is placed into a process of complete
liquidation other than as part of a merger or reorganization, or has a
receiver appointed for its business and such receiver is not discharged within
one hundred and twenty (120) days after appointment; provided, however, that if
the legal action that constituted the breach is dismissed, the termination or
reversion shall be void as of the date of dismissal and of no further force
and effect. The parties shall thereafter have the same rights
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and obligations as they had immediately prior to such breach.
11.3 In the event that this Agreement is terminated by Takeda pursuant to
Section 11.2 or Chemex discontinues the development of any Preparation pursuant
to Section 3.6 or for any reason, Takeda shall be entitled to use, free of
charge, any and all data and information collected by Chemex in its
development of the Preparation(s), and if Chemex has filed INDs, NDAs and/or
NDSes on the Preparation(s), Takeda or its Designee shall be entitled to take
over the INDs, NDAs and/or NDSes free of charge and shall have the cooperation
of Chemex in that endeavor. Takeda shall be entitled to the use of any Chemex
Patents.
11.4 In the event that this Agreement is terminated by Chemex pursuant to
Section 11.2, the License shall vest in Chemex, and Chemex shall receive a fully
paid-up, royalty-free, semi-exclusive License (exclusive except for TAP and
Takeda). Takeda shall also cooperate with Chemex or its sublicensee, in its
place, and provide such technical assistance as is necessary in setting up a
manufacturing process that will operate at a commercially viable production
rate. The parties hereto shall negotiate in good faith the terms for such
cooperation and technical assistance when such necessity arises.
11.5 The right of either party to terminate this Agreement as provided in
this Article XI shall not be affected in any way by its waiver of or failure to
take action with respect to any previous breach or default.
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11.6 In the event of termination of this Agreement for any reason
whatsoever, all rights and obligations under it shall terminate except as
specifically provided herein and except the obligation to make reports, to
pay all sums accrued under this Agreement and to maintain confidentiality
pursuant to Article XIV.
11.7 Upon the termination of this Agreement and any license granted under
it for any reason other than Chemex's failure to cure a material breach of this
Agreement, Chemex shall have the right for one (1) year to dispose of the
Compounds and Preparations then on hand by sale, processing such Compounds
into one or more Preparations and completing all orders for such Preparations,
or otherwise. Royalties shall be paid to Takeda with respect to such orders as
though this Agreement had not been terminated.
11.8 The provisions of Section 9.4. Section 9.6 and Article XIV shall
survive the termination or expiration of this Agreement and shall remain in
full force and effect for ten (10) years thereafter. The remaining provisions
of Article IX and the provisions of Articles X and XV shall survive such
termination or expiration and shall remain in full force and effect for an
indefinite period.
11.9 The License granted to Chemex pursuant to Section 2.1 and any licenses
granted by either party to the other during the Term pursuant to the provisions
of Article V and Sections 7.5 and 7.6 shall survive the Term and, after the
expiration of the
27
<PAGE>
respective periods for royalty payments as set forth herein, such licenses
shall be available to Chemex and Takeda on a paid-up, royalty-free
nonexclusive basis.
11.10 Takeda's right to use information previously furnished by Chemex
pursuant to the provisions of Article IV shall survive the Term.
11.11 In the event that this Agreement is terminated by either party
pursuant to Section 11.2, such termination shall be deemed to be a material
breach terminating that certain Supply Agreement between the parties hereto
of even date herewith, pursuant to Section 11.3 thereof.
ARTICLE XII
PATENTS INFRINGEMENT
12.1 Takeda and Chemex shall each give immediate written notice to the
other of any infringement or threatened infringement of the Takeda or Chemex
Patents by third parties as may come to its knowledge. In the event of any
infringement or in the event of any application being made for revocation of
any of such Patents, the owner of such Patents may at its determination take
all actions or proceedings that may be necessary, at its own costs, to
restrain the infringement or defend the revocation, as the case may be, and
shall have the reasonable cooperation of the other party in that endeavor. If
the owner of such Patents does not want to take any such action or start any
such proceedings within thirty (30) days of being so notified, both parties
shall
28
<PAGE>
consult on how to cope with such situation, with the intention of taking all
reasonable steps to protect their Patents.
12.2 If, in exercising its rights under this Agreement, Chemex is accused of
infringing a product patent owned by a third party with regard to any of the
Compounds, Takeda shall use its best efforts to obtain rights for Chemex
under the third party patent. If in obtaining such rights from such third
party Takeda is required to make any payment, the amount of such payment to
the date of infringement settlement shall be shared between Chemex and the
party holding a semi-exclusive license from Takeda pursuant to Section
2.2 on a pro rata basis, according to the cumulative Net Sales of each from
the date of the respective party's first commercial sale to the date of such
payment. Any additional royalty payments to such third party thereafter shall
be shared equally by increasing the royalty rates payable by Chemex and the
party holding a semi-exclusive license from Takeda pursuant to Section 2.2 by
an equal percentage rate.
12.3 If, in exercising its rights under this Agreement, Takeda is accused
of infringing a product patent owned by a third party with regard to any of
the Preparations, Chemex shall use its best efforts to obtain rights for
Takeda under the third party patent. If in obtaining such rights from such
third party Chemex is required to make any payment, the amount of such payment
to the date of infringement settlement shall be shared between Chemex and the
party holding a semi-exclusive license
29
<PAGE>
from Takeda pursuant to Section 2.2 on a pro-rata basis, according to the
cumulative Net Sales of each from the date of the respective party's first
commercial sale to the date of such payment. Any additional royalty payments
to such third party thereafter shall be shared equally by increasing the
royalty rates payable by Chemex and the party holding a semi-exclusive license
from Takeda pursuant to Section 2.2 by an equal percentage rate.
12.4 If the costs imposed on either party pursuant to Sections 12.2 and
12.3 are excessive in that party's judgment, such party may terminate this
Agreement forthwith.
ARTICLE XIII
PRODUCT MANUFACTURING
Chemex shall purchase from Takeda or its Designee Chemex's entire
requirements in the Territory for the Compounds for use in the manufacture of
the Preparations, and Takeda agrees to supply or have its Designee supply the
Compounds to Chemex in accordance with Chemex's commercial orders for the term
of this Agreement under the terms and conditions of that certain Supply
Agreement of even date herewith
ARTICLE XIV
CONFIDENTIALTY
14.1 Chemex shall keep in confidence and shall not disclose to any third
party the Takeda Technology and Know-How.
30
<PAGE>
14.2 Chemex shall use the Takeda Technology and Know-How only for the
purposes contemplated in this Agreement.
14.3 Takeda shall keep in confidence the Chemex Patent specifications
disclosed by Chemex to Takeda pursuant to Section 4.6 and the formulation know-
how of the Preparations disclosed by Chemex to Takeda pursuant to Articles IV
and VI and shall use the same only for the purposes contemplated in this
Agreement.
14.4 The foregoing restrictions shall not apply to any portion of the
Takeda and Chemex Technology and Know-How:
(a) which is now or hereafter becomes disclosed in published papers,
literature or patents;
(b) which the receiving party can prove was in its possession prior to
disclosure by the transmitting party; or
(c) which is hereafter disclosed to the receiving party by a third party
having no obligation of confidentiality to the transmitting party.
14.5 Notwithstanding anything to the contrary in Section 14.1, either party
shall be permitted to disclose confidential information, as reasonably
necessary, to regulatory and other government agencies in support of
applications to market and distribute the Preparations, and to its
sublicensees, employees and subcontractors in the manufacture, use,
marketing, distribution and sale of the Preparation, so long as it imposes
31
<PAGE>
upon them substantially the same confidentiality obligations that it assumes
under this Agreement.
ARTICLE XV
ARBITRATION
Any dispute or differences of interpretation concerning this Agreement that
cannot be settled by mutual accord between the parties shall be settled by
arbitration in Denver, if initiated by Takeda, or in Osaka, if initiated by
Chemex, in accordance with the rules then obtaining of the International
Chamber of Commerce, except as otherwise provided herein. The dispute or
differences shall be referred to a single arbitrator, if the parties agree upon
one, or otherwise to three arbitrator, one to be appointed by each party and a
third arbitrator to be appointed by the first named arbitrators in writing; and
if either party shall refuse or neglect to appoint an arbitrator within thirty
(30) days after the other party shall have appointed an arbitrator and shall
have served a written notice upon the first mentioned party requiring such
party to make such appointment, then the arbitrator first appointed shall, at
the request of the party appointing him, proceed to hear and determine the
matters in difference as if he were a single arbitrator appointed by both
parties for the purposes, and the award or determination that shall be made
by the arbitrator shall be final and binding upon the parties hereto. The
decision of a majority of the arbitrators will be final and binding upon the
32
<PAGE>
parties hereto. The arbitrator or the arbitrators shall make their award in
accordance with and based upon all the provisions of this Agreement and
judgment upon the award rendered may be entered in any court having
jurisdiction. The expense of the arbitration shall be shared equally between
the parties.
ARTICLE XVI
MISCELLANEOUS PROVISIONS
16.1 Force Majeure. Neither party shall be liable for failure to perform or
delay in performing with respect to any provision of this Agreement to the
extent performance in the customary manner shall be prevented, hindered or
delayed in whole or in part by transportation conditions, strikes, riots,
earthquakes, floods, or other acts of God, compliance with an act or request
of a governmental authority or persons purporting to act with governmental
authority (including but not limited to, orders or actions in response to
shortages of fuel or other energy sources, or of raw materials), labor
difficulty (whether or not involving its own employees) or any other event
that is not reasonably within such party's control.
16.2 Assignability. Without the prior written approval of the other party
hereto, neither party may assign this Agreement or transfer its interest or
any party thereof to any of its Affiliates or to any third party.
16.3 Independent Contractor. This Agreement shall not create an agency,
partnership, joint venture or employer/employee
33
<PAGE>
relationship. Takeda and Chemex each hereby agrees not to represent itself in
any of such capacities in any manner whatsoever. The sole relationship
established by this Agreement is that of an independent contractor, and
nothing hereunder shall be construed to give either party the power or
authority to act for, represent, bind, or commit the other party or any
of its Affiliates.
16.4 Publicity. Either party may publicize the existence of this
Agreement, but neither party may disclose the terms of this Agreement
without the prior written approval of the other party hereto. Chemex
understands that Takeda may find it necessary to disclose the terms of this
Agreement to TAP, Abbott Laboratories, or other Takeda licensees of the
Compounds; Chemex agrees to permit such disclosure. Chemex shall not
use the name of Takeda or of any scientists affiliated with Takeda, in any
manner without its prior written approval, except that either party may make
such disclosures without written approval if required to do so by local,
state or federal law or regulation. An opinion of an independent legal
counsel that such disclosure is required shall constitute adequate basis for
such disclosure. A party relying upon an opinion of counsel shall
provide the other party with prompt notice of its intention to do so.
16.5 Notice. Any notice expressly provided for under this Agreement shall
be in writing, sent by first class airmail, overnight mail, Telex or telecopy,
addressed as set forth below:
34
<PAGE>
For notice to Takeda:
Takeda Chemical Industries, Ltd.
27 Doshomachi 2 Chome
Higashiku, Osaka
Telecopy: 011-81-6-204-2244
Telex: J63404
Attention:Manager, Planning Department,
New Product Planning and
Development Division
For notice to Chemex:
Chemex Pharmaceuticals, Inc.
1401 Seventeenth Street, Suite 850
Denver, Colorado 80202
Telecopy: (303) 298-0332
Telex: 53005
Attention: President
16.6 Severability. Should any part or provision of this Agreement be held
unenforceable or in conflict with the applicable laws or regulations of any
jurisdiction, the invalid or unenforceable part or provisions shall be
replaced with a provision that accomplishes, to the extent possible, the
original business purpose of such part or provision in a valid and enforceable
manner, and the remainder of this Agreement shall remain binding upon the
parties hereto.
16.7 Captions. The captions of this Agreement are solely for convenience of
reference and shall not affect its interpretation.
16.8 Entire Agreement. This Agreement and the Exhibits hereto represent the
entire Agreement between the parties and as such supersedes all previous
negotiations, agreements, representations, understandings and commitments with
35
<PAGE>
respect to the subject matter hereof. No release, discharge, change or
modification of this Agreement shall be effective unless made in writing and
executed by authorized representatives of each of the parties hereto.
16.9 Waiver. The failure of Takeda or Chemex to exercise or enforce any
right granted in this Agreement or obligation arising thereunder shall not be
deemed to be a waiver of such right or obligation or operate to bar the
exercise or enforcement thereof at any time thereafter.
16.10 Governing Law. The rights and obligations of the parties under this
Agreement shall be governed by and construed in accordance with the laws of
the State of New York, United States of America.
36
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the day and year first above
written.
"Chemex" "Takeda"
CHEMEX PHARMACEUTICALS, INC. TAKEDA CHEMICAL INDUSTRIES, LTD.
By: /s/ E. Neiss By: /s/ Masao Uchibayashi
------------ ----------------------
Dr. Edward S. Neiss Dr. Masao Uchibayashi
President and Chief Operating Managing Director and
Officer General Manager
International Division
By: /s/ Y. Takahashi
------------------
Yoshinao Takahashi, M.D.
Director and General
Manager,
New Product Planning &
Development Division
37
<PAGE>
SCHEDULE A
TAKEDA PATENTS
1. AA-673
Country Application No. Patent No. Expiration
(Filing Date) (Issue Date) Date
- -------------- ---------------- ---------------- ----------------
U.S.A. 881237 4143042 Mar. 6, 1996
(Feb. 27, 1987) (Mar. 6, 1799)
U.S.A. 970105 4255576 Mar. 10, 1998
(Dec. 18, 1978) (Mar. 10, 1981)
U.S.A. 177550 4299963 Nov. 10, 1998
(Aug. 13, 1980) (Nov. 10, 1981)
Canada 297785 1087188 Oct. 7, 1997
(Feb. 27, 1978) (Oct. 7, 1980)
2. CV-3988
(1) Takeda's Case 1000 (Compound)
Country Application No. Patent No. Expiration
(Filing Date) (Issue Date) Date
- -------------- ---------------- ---------------- ----------------
U.S.A. 237970 4408052 Oct. 4, 2000
(Oct. 4, 1983)
U.S.A. 513617 4565865 Jan. 21, 2003
(Jan. 21, 1986)
Canada 371856 1152068 Aug. 16, 2000
(Aug. 16, 1983)
(2) Takeda's Case 1182 (Anti-PAF use)
Country Application No. Patent No. Expiration
(Filing Date) (Issue Date) Date
- -------------- ---------------- ---------------- ---------------
U.S.A. PCT/JP83/00289 45282824 (Apr.15, 2003)
614024 (Apr. 15, 1986)
Canada 461429
(Aug. 21, 1984)
<PAGE>
MEMORANDUM OF AMENDMENT
-----------------------
(LICENSE AGREEMENT)
In connection with the License Agreement ("License Agreement") on AA-673 and
CV-3988 as of November 12, 1987, as amended, between Takeda Chemical
Industries, Ltd. ("Takeda") and Chemex Pharmaceuticals, Inc. who has assigned
the License Agreement to Block/Chemex, G.P. ("Block/Chemex"), Takeda and
Block/Chemex hereby agree as follows:
1. Section 1.17 of the License Agreement shall be amended to read as follows:
1.7 "Territory" shall mean Canada, United States of America and its
territories and possessions, including Puerto Rico, Australia, New Zealand,
Republic of South Africa, Russian Federation, West European countries and
South American countries, the exact names of the latter two of which will be
confirmed by separate letter.
2. In accordance with the amendment of the definition of the Territory set
forth in above Item 1, references to the United States and Canada in the
License Agreement shall be deemed to include other countries in the Territory.
For instance, "IND" shall be deemed to include applications in the Territory
filed governmental agencies for the purpose of initiating clinical trials of
the Preparation and "NDA" and/or "NDS" shall be deemed to include applications
for approval of governmental authorities prior to the marketing of the
preparation in the Territory.
3. Schedule A attached to the License Agreement shall be replaced by Schedule
A attached to this Memorandum.
<PAGE>
4. Takeda hereby waives its rights to grant to TAP a semi-exclusive license
and to sublicense its Affiliates in place of TAP set forth in Section 2.2 of
the License Agreement.
5. Section 2.1 of the License Agreement shall be amended to read as follows:
2.1 Takeda hereby grants to Chemex and Chemex hereby accepts an exclusive
license in the Territory under the Takeda Patents and the Takeda Technology
and Know-How to produce, have produced for it, to manufacture, have
manufactured for it, to use and/or to sell one or more of the Preparations,
either separately or in combination with other products, with the right to
grant sublicense as provided in Section 2.3 ("License"). Nothing in this
Section 2.1 shall be construed to permit Chemex to manufacture the Compounds
without the prior written approval of Takeda.
6. Section 2.3 of the License Agreement shall be amended to read as follows:
2.3 Chemex shall be entitled to grant to a third party approved by Takeda
beforehand royalty-bearing sublicense in the Territory under the Takeda and
Chemex Patents and Technology and Know-How to produce, have produced for it,
manufacture, have manufactured for it, to use and/or to sell one or more of
the Preparations, either separately or in combination with other products.
Takeda shall not withhold such approval unreasonably.
7. This Memorandum shall be effective as of August 1, 1994.
<PAGE>
Takeda and Block/Chemex have caused this Memorandum to be signed in duplicate
by their duly authorized officers.
TAKEDA CHEMICAL INDUSTRIES, LTD.
/s/ K. Murakami
- ------------------------
Name:Kenkichi Murakami
Title:Member of the Board
General Manager
International Division
Pharmaceutical Group
Date: October 14, 1994
BLOCK/CHEMEX, G.P.
/s/ H. McDade, Jr.
- ----------------------------
Name:Herbert H. McDade, Jr.
Title:President & CEO of Chemex
Date:October 25, 1994
BLOCK DRUG COMPANY, INC.
/s/ J. Peters
- ---------------------
Name:John E. Peters
Title:Senior Vice President-
General Counsel & Secretary
Date:October 26, 1994
<PAGE>
EXHIBIT D
TAKEDA SUBLICENSED PATENTS
<PAGE>
SCHEDULE A
TAKEDA PATENTS
AA-673
Country Application No. Patent No. Expiration
(Filing Date) (issue Date) Date
- -------------- ---------------- ---------------- ----------------
U.S.A. 881237 4143042 Mar. 06, 1996
(Feb. 27, 1978) (Mar. 06, 1979)
U.S.A. 970105 4255576 Mar. 10, 1998
(Dec. 18, 1978) (Mar. 10, 1981)
U.S.A. 177580 4299963 Nov. 10, 1998
(Aug. 13, 1980) (Nov. 10, 1981)
Canada 297785 1087188 Oct. 07, 1997
(Feb. 27, 1978) (Oct. 07, 1980)
Austria A1499-78 360535 Jun. 14, 1998
(Mar. 02, 1978) (Nov. 28, 1980)
Belgium 0-185734 864647 Mar. 07, 1998
(Mar. 07, 1978) (Sep. 07, 1978)
Switzerland 2486-78 634322 Mar. 07, 1998
(Mar. 07, 1978) (Jan. 16, 1983)
Germany P2809720.3 2809720 Mar. 07, 1998
(Mar. 07, 1978) (Jan. 16, 1992)
Denmark 924-78 156661 Mar. 01, 1998
(Mar. 01, 1978) (Feb. 05, 1990)
Spain 468.042 468042 Oct. 20, 1998
(Mar. 08, 1978) (Oct. 20, 1978)
France 7806538 7806538 Mar. 07, 1998
(Mar. 07, 1978) (Oct. 06, 1980)
U.K. 8518-78 1597024 Mar. 02, 1998
(Mar. 03, 1978) (Nov. 04, 1981)
U.K. 7930850 1597025 Mar. 02, 1998
(Sep. 05, 1979) (Nov. 04, 1981)
Italy 20957A-78 1109830 Mar. 07, 1998
(Mar. 07, 1978) (Dec. 23, 1985)
Netherlands 7802526 188645 Mar. 08, 1998
(Mar. 08, 1978) (Jul. 17, 1992)
<PAGE>
Country Application No. Patent No. Expiration
(Filing Date) (issue date) Date
- -------------- ---------------- ---------------- ---------------
Norway 780777 149737 Mar. 07, 1998
(Mar. 07, 1978) (Jun. 29, 1984)
Russia 2587760 812178 Mar. 06, 1998
(Mar. 06, 1978) (Mar. 07, 1981)
Sweden 7802609-3 7802609-3 Mar. 07, 1998
(Mar. 07, 1978) (Sep. 19, 1985)
<PAGE>
Exhibit E
Supply Agreement
<PAGE>
SUPPLY AGREEMENT
----------------
This is an Agreement, effective the 12 day of November, 1987 (the
"Effective Date"), by and between TAKEDA CHEMICAL INDUSTRIES,
LTD., (hereinafter referred to as "Takeda"), a corporation existing under the
laws of Japan and having a place of business at 27 Doshomachi 2-Chome,
Higashiku, Osaka, Japan and CHEMEX PHARMACEUTICALS, INC.
(hereafter referred to as "Chemex"), a Wyoming corporation having a place of
business at 1401 Seventeenth Street, Suite 850, Denver, Colorado 80202,
U.S.A.
RECITALS
----------
WHEREAS, Takeda and Chemex have entered into that certain
License Agreement of even date herewith (the "License Agreement"), pursuant
to which Takeda granted to Chemex a semi-exclusive license (the "License")
to manufacture, use and/or sell the Preparations (as hereinafter defined):
WHEREAS, Chemex desires to purchase from Takeda its entire
requirements of the Compounds (as hereinafter defined) for use in the
manufacture of the Preparations; and
WHEREAS, Takeda is willing to supply the Compounds to
Chemex upon the terms and conditions contained herein;
NOW, THEREFORE, in consideration of the foregoing
premises and of the mutual covenants, terms and conditions set forth herein,
the sufficiency of which as consideration is hereby
<PAGE>
acknowledged by each of the partners hereto, and intending to be legally
bound. Takeda and Chemex hereby agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement. the following terms shall have the
following respective meanings:
1.1 "Affiliate" shall mean and include any corporation or
business entity controlled by, controlling, or under common control with
Takeda or Chemex, respectively. For this purpose "control" shall mean the
direct or indirect beneficial ownership of at least 50% of the voting stock, or
at least a 50% interest in the income of such corporation or other business
entity, or such other relationship as, in fact, constitutes actual control.
1.2 "Compounds" shall mean and include:
(1) the chemical compound identified as Amlexanox
(r-INN) having the chemical name: 2-Amino-7-isopropyl-5-oxo-5H-
[1]benzopyrano-[2,3-b]-pyridine-3-carboxylic Acid (Takeda Code No.: AA-
673), and
(2) the chemical compound having the chemical
name: (RS)-2-Methoxy-3-(Octadecylcarbamoyloxy)propyl 2-(3-thiazolio)ethyl
phosphate (Takeda Code No.: CV-3988).
1.3 "Dermatological Use" shall mean all uses for treatment
of diseases and disorders of the integument including, but not limited to,
therapeutic, prophylactic and immunological uses. For the purposes of this
definition, integument is skin
2
<PAGE>
and its appendages, including hair, hair follicles, sebaceous glands, sweat
glands, nails, and component and migratory cells of the skin.
1.4 "Designee" shall mean a party who Takeda reasonably
believes is competent and capable of performing in place of Takeda under this
Agreement.
1.5 "FDA" shall mean the United States Food and Drug
Administration.
1.6 "Preparations" shall mean and be limited to topical
preparations for the Dermatological Use containing one or both of the
Compounds as active ingredients.
1.7 "Territory" shall mean Canada and the United States of
America and its territories and possessions, including Puerto Rico.
ARTICLE II
PURCHASE AND SUPPLY
2.1 Chemex shall purchase from Takeda or its Designee
Chemex's entire requirements in the Territory for the Compounds for the use
in the manufacture of the Preparations, or the Preparations if Takeda
manufactures them for any third party in the Territory. Takeda agrees to
supply or have its Designee supply the Compounds in accordance with
Chemex's commercial orders as far as Takeda manufactures or to have its
Designee manufacture the Compounds in accordance with all applicable
current FDA approved Good Manufacturing Practices standards.
3
<PAGE>
2.2 Chemex shall not, directly or indirectly, export the
Compounds or the Preparation outside the Territory.
2.3 With the exception of either Takeda-Abbott Research and
Development or TAP Pharmaceuticals (or TAP Pharmaceuticals, Inc. if it
succeeds to the business of TAP Pharmaceuticals within two years from the
Effective Date) (hereinafter collectively referred to as "TAP"), both Illinois
general partnerships having a place of business at 1400 Sheridan Road, North
Chicago, Illinois 60064. Takeda shall not supply any third party with one or
both of the Compounds for Dermatological Use of Preparations in the
Territory so long as the License is semi-exclusive with regard to such
Compound or Preparation in the Territory.
2.4 In the event that Chemex discontinues the development
of any Compound, such Compound and its corresponding Preparation shall be
excluded from the scope of this Agreement and Takeda shall be released from
its obligation under Section 2.3 as far as such Compound and its corresponding
Preparation are concerned.
ARTICLE III
ESTIMATE AND ORDER
3.1 During the term of this Agreement, at least one hundred
and eighty (180) days prior to the start of each calendar quarter, Chemex shall
provide Takeda with a written estimate of the amount of the Compounds that
Chemex will require during such
4
<PAGE>
quarter and during each of the next three (3) quarters. No such estimate shall
constitute a firm purchase order by Chemex.
3.2 Chemex shall enter its firm order with Takeda for
purchase of the Compounds at least ninety (90) days in advance of the
requested delivery date.
3.3 Chemex shall purchase from Takeda in any calendar year
not less than sixty percent (60%) of the sum of the estimates, as revised in
each succeeding estimate, for the four (4) quarters comprising such calendar
year. Takeda shall supply Chemex with up to, but shall not be required to
supply more than, one hundred and fifty percent (150%) of the sum of such
revised quarterly estimates.
ARTICLE IV
PRICE AND PAYMENT
4.1 The price for each of the Compounds to be purchased
under this Agreement shall be separately agreed upon in good faith between
the parties hereto.
4.2 Takeda shall use its best efforts to supply Chemex with
the Compounds and/or the Preparations, if TAP is so supplied, at a reasonable
price. If Takeda cannot supply Chemex with the Compounds at such price,
both parties shall negotiate in good faith an alternative method of procuring
the Compounds, including allowing Chemex or its sublicensee, in its place, to
manufacture the Compounds in the Territory for its use. In such case, Takeda
shall cooperate with Chemex or its sublicensee, in
5
its place, and provide such technical assistance as is necessary in setting up a
manufacturing process that will operate at a commercially viable production
rate. The parties hereto shall negotiate in good faith the terms for such
cooperation and technical assistance when such necessity arises.
4.3 If Takeda gives TAP more favorable pricing terms with
respect to the Compounds or Preparations for Dermatological Use, Chemex
shall be entitled to elect such more favorable terms.
4.4 Takeda will invoice Chemex upon delivery of the
Compounds. Payments for the supplies of the Compounds to be delivered by
Takeda shall be made by Chemex to Takeda in Japanese yen or any other
currency that may be agreed upon between the parties, prior to each shipment
by check or any other mode of remittance upon which the parties may agree.
4.5 Takeda shall provide Chemex with samples of the
Compounds in reasonable quantities and at Takeda's expense for use during
the development of the corresponding Preparation.
ARTICLE V
TITLE AND RISK OF LOSS
Unless otherwise agreed upon, title and risk of loss to the
Compounds and/or Preparations supplied hereunder shall pass to Chemex upon
delivery to the carrier designated by Chemex at an international airport in
Osaka or Narita or such other place as the parties may agree upon.
6
<PAGE>
ARTICLE VI
SHIPMENT AND TESTING
6.1 Takeda shall ship the Compounds and/or the Preparations
ordered by Chemex in accordance with its directions. The Compounds and/or
the Preparations normally will be delivered to the carrier designated by
Chemex at an international airport in Osaka or Narita or such other place as
the parties may agree upon together with a certificate of analysis, the form of
which shall be separately agreed upon between the parties hereto. Takeda shall
number each lot of Compounds and/or Preparations shipped for future
production reference and quality control protocols, including analysis results.
6.2 Takeda agrees to exercise all reasonable and necessary
efforts to satisfy the delivery requirements of Chemex and to insure timely
delivery of the Compounds.
6.3 Chemex shall perform all analytical testing within sixty
(60) days after the delivery of the Compounds under Section 6.1. Such testing
shall be in accordance with the method of assay to be separately agreed upon
between the parties in good faith at the earliest possible date. If the
Compounds supplied by Takeda under this Agreement are found not to
conform to the specifications thereof, Chemex shall notify Takeda of such
nonconformity no later than ninety (90) days after receipt thereof and Takeda
shall, at its option, either replace such Compounds with new Compounds at no
additional charge or cost to Chemex, delivered at Chemex's premises, or
credit Chemex for the
7
<PAGE>
purchase and delivery of the Compounds at Chemex's premises. Chemex shall
bear the duties to be imposed upon the import of the new Compounds to be
exchanged with the original Compounds not conforming to the specifications in
case the duties imposed upon the import of the original Compounds are legally
redeemable.
ARTICLE VII
WARRANTIES AND REPRESENTATIONS
7.1 Takeda and Chemex each represents and warrants to the
other that they have full power and authority to enter into this Agreement and
to carry out the transactions contemplated hereby.
7.2 Takeda represents and warrants that the Compounds
supplied by Takeda hereunder shall conform to specifications to be separately
agreed upon between the parties in good faith at the earliest possible date.
7.3 Except for the warranties undertaken by Takeda under
this Article VII, Takeda makes no other warranty of any kind, express or
implied, arising by law or otherwise, including, but not limited to, the implied
warranty of merchantability, any implied warranty arising from course of
performance, course of dealing or usage or trade, and any implied warranty of
fitness for particular purpose, safety or effectiveness of the Compounds, or
adequacy of warning as to risks.
8
<PAGE>
ARTICLE VIII
RESPONSIBILITY AND INDEMNIFICATION
8.1 Chemex shall be responsible for:
(a) the labeling utilized on and in connection with the
Preparations sold by Chemex;
(b) the proper storage and handling of the
Compounds after delivery by Takeda hereunder; and
(c) the proper manufacture and marketing of the
Preparations in due compliance with all applicable laws and regulations in the
Territory.
8.2 Chemex agrees to indemnify, defend and hold harmless
Takeda against and in respect of any and all damage (including expectation,
incidental and consequential damages), losses (except lost profits),
liabilities, judgments, claims and expenses (including, without limitation,
court costs and reasonable fees of counsel, regardless of outcome)
(collectively, "Losses") resulting or arising from or incurred in connection
with any use of the Compounds supplied by Takeda to Chemex or of the
Preparations manufactured therefrom and sold directly by Chemex; provided
that, Chemex shall have no obligation hereunder and Takeda shall indemnify
Chemex for Losses arising out of adulteration (as defined in the United
States Food, Drug and Cosmetic Act, as amended) of the Compounds and
Preparations manufactured therefrom, caused solely as a result of Takeda's
negligence in the course of manufacture of the Compounds or of the Preparations
manufactured from such adulterated Compounds.
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8.3 Notwithstanding anything to the contrary in this Article
VIII, neither party shall be entitled to assert any claim or right of action
against any shareholder, director or officer of the other party for costs,
damages or losses incurred as a result of the other party's improper activities
as set forth in this Article VIII. Nothing in this Section 8.3 shall prevent
such an action in the event that such a claim or right of action arises from the
unauthorized and improper activities of any such shareholder, director or
officer.
8.4 In the event that any portion of this hold harmless and
indemnity provision becomes or is held invalid, it is agreed that the remaining
portions of this hold harmless and indemnity provision shall remain valid and
binding and continue in full legal force and effect.
ARTICLE IX
OBLIGATION OF CHEMEX TO WARN PHYSICIANS
Chemex shall, by means of circulars provided and enclosed with
the Preparations or otherwise delivered, provide warning and advice for use of
the Preparations, including Product Description, Clinical Pharmacology,
Indication and Usage, Contra-indications, Warnings, Precautions, Adverse
Reactions, and How Supplied, as required by the governmental authorities in
the Territory. Chemex shall exercise due diligence in revising the circulars as
appropriate.
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ARTICLE X
CONFIDENTIALITY
10.1 All information disclosed by Takeda to Chemex under
this Agreement shall be kept by Chemex in confidence. Such restrictions shall
not apply to any such information (i) which is, or subsequently may become,
within the knowledge of the general public by means of published papers,
literature or patents, without the fault of Chemex, (ii) which may already be
known to Chemex at the time of the receipt thereof from Takeda as shown by
documents, (iii) which may be proved to have been developed by Chemex
independently and wholly without resort to the proprietary information of
Takeda as shown by documents, (iv) which may subsequently be rightfully
obtained from sources other than Takeda that have no obligation of
confidentiality to Takeda, or (v) in any case, more than ten years after the
expiration of the term or earlier termination of this Agreement.
10.2 Notwithstanding anything to the contrary in Section 10.1,
Chemex shall be permitted to disclose confidential information, as reasonably
necessary, to regulatory and other government agencies in support of
applications to market and distribute the Preparations, and to its sublicensees,
employees and subcontractors in the manufacture, use, marketing, distribution
and sale of the Preparations, so long as it imposes upon them substantially the
same confidentiality obligations that it assumes under this Agreement.
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ARTICLE XI
TERM AND TERMINATION
11.1 Unless sooner terminated or extended as provided herein,
this Agreement shall come into force on the Effective Date and shall remain in
effect on a Compound-by-Compound and country-by-country basis for ten (10)
years from the date of the first commercial sale of the respective Compound's
corresponding Preparation in the respective country of the Territory. This
Agreement shall be renewed thereafter for a period of five (5) years at
Chemex's option to be exercised no later than six (6) months prior to the
expiration date of the original period. The option period shall be automatically
extended thereafter for additional period of one year unless either party hereto
notifies the other party, not later than six (6) months prior to the expiration
date of the option period or of any additional renewal period, of its intention
to terminate this Agreement on the expiration date.
11.2 Upon the termination of this Agreement by Chemex
pursuant to Section 11.3, Takeda shall cooperate with Chemex or its
sublicensee, in its place, and provide such technical assistance as is necessary
in setting up a manufacturing process that will operate at a commercially
viable production rate. The parties hereto shall negotiate in good faith the
terms for such cooperation and technical assistance when such necessity arises.
11.3 Either Takeda or Chemex may terminate this Agreement
immediately in the event that:
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(a) The other party fails in any material respect to
perform any of its obligations hereunder and fails to remedy such default or
breach within one hundred and twenty (120) days after receiving written notice
thereof from the first party; provided, however, that if the defaulting or
breaching party cures such default or breach within the one hundred and
twenty (120) day period referred to, this Agreement shall continue in full force
and effect the same as if such default or breach had not occurred; or
(b) The other party files a petition in bankruptcy or
makes a general assignment for the benefit of creditors or otherwise
acknowledges insolvency or is adjudged bankrupt, goes into or is placed into a
process of complete liquidation other than as part of a merger or
reorganization, or has a receiver appointed for its business and such receiver
is not discharged within one hundred and twenty (120) days after appointment;
provided, however, that if the legal action that constituted the breach is
dismissed, the termination or reversion shall be void as of the date of the
dismissal and of no further force and effect. The parties shall thereafter have
the same rights and obligations as they had immediately prior to such breach.
11.4 In the event that this Agreement is terminated by either
party pursuant to Section 11.3, such party may elect to treat such termination
as a material breach terminating that
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certain License Agreement between the parties hereto of even data herewith,
pursuant to Section 11.2 thereof.
11.5 The right of either party to terminate this Agreement as
provided in this Article XI shall not be affected in any way by its waiver of or
failure to take action with respect to any previous breach or default.
11.6 In the event of termination of this Agreement for any
reason whatsoever, all rights and obligations under it shall terminate except as
specifically provided herein.
ARTICLE XII
ARBITRATION
Any dispute or differences of interpretation concerning this
Agreement that cannot be settled by mutual accord between the parties shall be
settled by arbitration in Denver, if initiated by Takeda, or in Osaka, if
initiated by Chemex, in accordance with the rules then obtaining of the
International Chamber of Commerce, except as otherwise provided herein. The
dispute or differences shall be referred to a single arbitrator if the parties
agree upon one, or otherwise to three arbitrators, one to be appointed by each
party and a third arbitrator to be appointed by the first named arbitrators in
writing; and if either party shall refuse or neglect to appoint an arbitrator
within thirty (30) days after the other party shall have appointed an
arbitrator and shall have served a written notice upon the first mentioned
party requiring such party to make such
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appointment, then the arbitrator first appointed shall, at the request of the
party appointing him, proceed to hear and determine the matters in difference
as if he were a single arbitrator appointed by both parties for the purposes,
and the award or determination that shall be made by the arbitrator shall be
final and binding upon the parties hereto. The decision of a majority of the
arbitrators will be final and binding upon the parties hereto. The arbitrator
or the arbitrators shall make their award in accordance with and based upon
all the provisions of this Agreement and judgement upon the award rendered
may be entered in any court having jurisdiction. The expense of the
arbitration shall be shared equally between the parties.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
<PAGE>
13.1 Force Majeure. Neither party shall be liable for the
failure to perform or delay in performing with respect to any provision of this
Agreement to the extent performance in the customary manner shall be
prevented, hindered, or delayed in whole or in part by transportation
conditions, strikes, riots, earthquakes, floods, or other acts of God,
compliance with an act or request of a governmental authority or persons
purporting to act with governmental authority (including but not limited to,
orders or actions in response to shortages of fuel or other energy sources, or
of raw materials), labor difficulty (whether or not involving its own
employees) or any other event that is not reasonably within such party's
control.
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13.2 Assignability. Without the prior written approval of the
other party hereto, neither party may assign this Agreement or transfer its
interest or any part thereof to any of its Affiliates or to any third party.
13.3 Survival. The provisions of Article X shall survive the
termination or expiration of this Agreement and shall remain in full force and
effect for ten (10) years thereafter. The provisions of Articles VII, VIII and
XII shall survive such termination or expiration and shall remain in full force
and effect for an indefinite period.
13.4 Independent Contractor. This Agreement shall not create
an agency, partnership, joint venture or employer/employee relationship.
Takeda and Chemex each hereby agree not to represent itself in any of such
capacities in any manner whatsoever. The sole relationship established by this
Agreement is that of an independent contractor, and nothing hereunder shall be
construed to give either party the power or authority to act for, represent,
bind, or commit the other party or any of its Affiliates.
13.5 Publicity. Either party may publicize the existence of this
Agreement, but neither party may disclose the terms of this Agreement without
the prior written approval of the other party hereto. Chemex understands that
Takeda may find it necessary to disclose the terms of this Agreement to TAP,
Abbott Laboratories, or other Takeda licensees of the Compounds; Chemex
agrees to permit such disclosure. Chemex shall not use the name
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of Takeda or any scientist affiliated with Takeda, in any manner without its
prior written approval, except that either party may take such disclosures
without written approval if required to do so by local, state or federal law or
regulation. An opinion of an independent legal counsel that such disclosure is
required shall constitute an adequate basis for such disclosure. A party relying
upon an opinion of counsel shall provide the other party with prompt notice of
its intention to do so.
13.6 Notice. Any notice expressly provided for under this
Agreement shall be in writing, sent by first class airmail, overnight mail,
telex or telecopy, addressed as set forth below. For notice to Takeda:
Takeda Chemical Industries, Ltd.
27 Doshomachi 2-Chome
Higashiku, Osaka
Telecopy: 011-81-6-204-2244
Telex: J63404
Attention: General Manager
International Division
For notice to Chemex:
Chemex Pharmaceuticals, Inc.
1401 Seventeenth Street, Suite 850
Denver, Colorado 80202
Telecopy: (303) 298-0332
Telex: 53005
Attention: President
13.7 Severability. Should any part or provision of this
Agreement be held unenforceable or in conflict with the applicable laws or
regulations of any jurisdiction, the invalid or unenforceable part or provisions
shall be replaced with a provision that accomplishes, to the extent possible,
the original
17
business purpose of such part or provision in a valid and enforceable manner,
and the remainder of this Agreement shall remain binding upon the parties
hereto.
13.8 Captions. The captions of this Agreement are solely for
convenience of reference and shall not affect its interpretation.
13.9 Entire Agreement. This Agreement represents the entire
Agreement between the parties with regard to the supply of the Compounds
and as such supersedes all previous negotiations, agreements, representations,
understandings and commitments with respect thereto. No release, discharge,
change or modification of this Agreement shall be effective unless made in
writing and executed by authorized representatives of each of the parties
hereto.
13.10 Waiver. The failure of Takeda or Chemex to exercise or
enforce any right granted in this Agreement or obligation arising thereunder
shall not be deemed to be a waiver of such right or obligation or operate to
bar the exercise or enforcement thereof at any time thereafter.
13.11 Governing Law. The rights and obligations of the
parties under this Agreement shall be governed by and construed in accordance
with the laws of the State of New York, Untied States of America.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duty authorized offices as of the day and
year first above written.
"Takeda"
TAKEDA CHEMICAL INDUSTRIES, LTD.
By: /s/ Masao Uchibayashi
--------------------------
Dr .Masao Uchibayashi
Managing Director and
General Manager
International Division
"Chemex"
CHEMEX PHARMACEUTICALS, INC.
By: /s/ E. Neiss
--------------------------
Dr. Edward S. Neiss
President and Chief
Operating Officer
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SUPPLY AGREEMENT
INDEX
Page
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Article I -Definitions 2
Article II -Purchase and Supply 3
Article III -Estimate and Order 4
Article IV -Price and Payment 5
Article V -Title and Risk of Loss 6
Article VI -Shipment and Testing 7
Article VII -Warranties and Representations 8
Article VIII -Responsibility and Indemnification 9
Article IX -Obligation of Chemex to Warn Physicians 10
Article X -Confidentiality 11
Article XI -Term and Termination 12
Article XII -Arbitration 14
Article XIII -Miscellaneous Provisions 15
