SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
APRIL 23, 1998
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(Date of Report)
ENTROPIN, INC.
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(Exact Name of Registrant as specified in its charter)
Colorado 33-23693 84-1090424
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(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
45926 OASIS STREET, INDIO, CA 92201
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(Address of principal executive offices including zip code)
(760) 775-8333
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(Registrant's telephone number including area code)
N/A
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
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On April 18, 1998, the Registrant entered into an agreement with
Western Center for Clinical Studies, Inc., a California corporation
experienced in managing pharmaceuticals which are at an early stage of
development and providing assistance to companies in the process of taking
pharmaceutical products to the U.S. Food and Drug Administration ("FDA")
and through the approval process (the "Agreement"). WCCS has developed a
business plan and will provide an experienced management team with the
intent of developing the Company's product, Esterom(R), to be able to be
used commercially. The Agreement is for a term of 33 months. Officers of
WCCS presently serve in the following positions in the Company: Daniel L.
Azarnoff, President; Lois Rezler, Vice President of Science and Regulatory
Affairs; and, Roy S. Azarnoff, Chief Operating Officer. WCCS will arrange
for and oversee necessary studies and clinical trials of Esterom(R), form
and utilize the services of a Scientific and Medical Advisory Board for the
Company, and develop a distribution plan and identify and propose strategic
partners and/or distributors for the Company's product. All work performed
by WCCS will be provided by employees of WCCS, the Company's subcontractor.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
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(c) The following exhibits are filed with this report:
Exhibit 10.12 Agreement dated April 18, 1998 by and between the
Registrant and the Western Center for Clinical
Studies, Inc.
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SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by
the undersigned, thereunto duly authorized.
Date: April 23, 1998
ENTROPIN, INC.
By /s/ WELLINGTON A. EWEN
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Wellington A. Ewen
Chief Financial Officer
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EXHIBIT 10.12
AGREEMENT
AGREEMENT entered into on April 6, 1998 between Western Center for
Clinical Studies, Inc. ("WCCS"), a California corporation, and Entropin,
Inc. ("Entropin"), a Colorado corporation.
PRELIMINARY STATEMENT
Entropin is a Colorado corporation with its principal place of
business at 45-926 Oasis Street, Indio, California 92201. Entropin is an
ethical pharmaceutical company which is engaged in the trade or business of
developing, producing, and marketing drug products. Entropin's primary
drug, Esterom(R), is being investigated under the IND No. 37,301.
WCCS is a California corporation with its principal place of business
at 8619 Reseda Blvd., Suite 202, Northridge, California 91324. WCCS has
experience in managing pharmaceuticals which are at an early stage of
development. In particular, WCCS has experience in providing assistance to
companies in the process of taking pharmaceutical products to the FDA and
through the IND and NDA stages of development in a timely and cost-efficient
manner.
Entropin desires that WCCS assist it in obtaining FDA approval for
Esterom(R) and/or Esterom Related Products and in developing a business
plan and an experienced management team to bring Esterom(R) and/or Esterom
Related Products to commercialization; WCCS desires to provide such
assistance to Entropin.
ACCORDINGLY, Entropin and WCCS agree as follows:
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ARTICLE I
DEFINITIONS
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As used in this Agreement, each of the following terms has the meaning
set forth thereafter, such meaning to be equally applicable to both the
singular and plural forms of the terms defined.
1.1 "Agreement" means this Agreement, together with all schedules and
exhibits referred to herein, now or hereafter signed by WCCS and Entropin
(all of which are incorporated for all purposes in this document by such
reference), as the same may be modified, amended, or supplemented from time
to time.
1.2 "Board of Directors" means the Board of Directors of Entropin.
1.3 "Budget" means the costs and expenses set forth in Exhibit A,
attached hereto, which Entropin agrees to pay for performance by WCCS of
the Scope of Work pursuant to the terms and conditions of this Agreement.
1.4 "Confidentiality Agreement" means the agreement attached hereto as
Exhibit B which sets forth the terms and conditions pursuant to which WCCS
may have access to Confidential Information (as defined in such Agreement)
of Entropin.
1.5 "Esterom(R)" means the product employed in Entropin's Phase II
studies which contains benzoylecgonine, ecgonine, ecgonidine and their
2-hydroxypropyl esters. "Esterom Related Compounds" means the compounds of
formulas and the pharmaceutical compositions containing those compounds, or
mixtures thereof, identified and/or claimed under Entropin's Licensed
Patents.
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1.6 "FDA" means the United States Food and Drug Administration.
1.7 "IND" means an Investigational New Drug application filed with the
FDA.
1.8 "NDA" means a New Drug Application filed with the FDA.
1.9 "Scope of Work" means the obligations undertaken by WCCS pursuant
to the terms and conditions of this Agreement and as described in Exhibit
C, attached hereto.
1.10 "Time Line" means the designated dates set forth on Exhibit D,
attached hereto, by which WCCS shall perform its obligations required by
the Scope of Work.
1.11 "Table of Organization" means the Table of Organization Relating
to the WCCS Agreement. The Table of Organization, Exhibit E, defines the
functional relationship between and among the Board, Directors, and
Officers of the Company as related to the WCCS Agreement.
ARTICLE II
TERM OF AGREEMENT
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This Agreement shall be for a term of thirty-three (33) months
commencing as of April 6, 1998 and ending on January 5, 2001; provided,
however, that either party shall have the right to terminate this Agreement
prior to such date as set forth in Article VII of this Agreement. This
time period shall be known as the ("Term").
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ARTICLE III
OBLIGATIONS OF WCCS AND ENTROPIN
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3.1 PERFORMANCE OF SCOPE OF WORK: Subject to the provisions of
Articles V and VII of this Agreement, WCCS shall perform the services set
forth within the Scope of Work, specifically including, but not limited to:
(i) provide the expertise to take Esterom(R) to the FDA and through the IND
and NDA stages; (ii) arrange for and oversee necessary studies and clinical
trials for Esterom(R), (iii) create an eminent Scientific and Medical
Advisory Board for the Esterom(R) and/or Esterom Related Products; (iv)
advise Entropin concerning appropriate monitoring and procedures applicable
to Entropin's monitoring its manufacturing contract with Mallinkrodt and
contracts with any successor or secondary manufacturers; (v) develop an
Esterom(R) and/or Esterom Related Products distribution plan and identify
and propose strategic partners and/or distributors; (vi) introduce
contacts to Entropin to provide Entropin commercial opportunities to
network within the pharmaceutical community; and (vii) identify vendors for
Esterom(R) and/or Esterom Related Products development services within the
Scope of Work and advise Entropin in its negotiations with such vendors.
WCCS shall continuously and expeditiously perform all activities
necessary and prudent to assure that WCCS's obligations under this
Agreement are completed by WCCS within the Time Line and that the costs and
expenses to Entropin for such performance do not exceed the Budget.
However, should an unavoidable situation arise, such as an unforeseeable
third-party change causing delay or extra cost, WCCS shall give Entropin
immediate notice in writing. Upon receipt of such notice, Entropin and
WCCS will negotiate in good faith to modify the Budget and reschedule the
events of the Time Line. In the event Entropin and WCCS are unable to
agree on a modification within thirty (30) days after receipt of the notice
by Entropin, Entropin or WCCS may terminate this Agreement and such
termination shall for all purposes be deemed a termination under paragraph
5.1 of this Agreement.
3.2 TITLES: To facilitate the performance by WCCS of the services
required within the Scope of Work, Entropin shall, during the Term: (i)
nominate Daniel L. Azarnoff, M.D., to be
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elected president of Entropin and a member of the Board of Directors; (ii)
nominate Roy S. Azarnoff, Ph.D., to be elected chief operating officer of
Entropin; and (iii) nominate Lois Rezler, Ph.D., to be elected vice-president
of science and regulatory affairs of Entropin. Notwithstanding
the foregoing sentence, WCCS understands and agrees that one of its
obligations under the Scope of Work is to assist Entropin in its search for
a president. Accordingly, at such time as a person is selected to fill
that position on a full time basis, the representative of WCCS acting in
that capacity shall immediately submit his resignation to the Board of
Directors. If, as of the termination date of this Agreement by expiration
of the stated Term or otherwise, Roy. S. Azarnoff, Daniel L. Azarnoff or
Lois Rezler are serving as an officer or director of Entropin, each of such
individuals so serving shall, effective as of the termination date of this
Agreement, submit his and/or her resignation from all such positions to the
Board of Directors.
Functional relations among and between each of the WCCS officers of
Entropin is set forth in the "Table of Organization Relating to the WCCS
Agreement" and is attached as Exhibit E.
3.3 CONFLICT OF INTEREST: Entropin acknowledges that Daniel L.
Azarnoff, M.D. in his role as director and officer of Entropin may have a
conflict of interest in causing Entropin to perform certain transactions or
work contemplated on behalf of Entropin in this Agreement. WCCS and Daniel
L. Azarnoff, M.D. represent to Entropin that they are not now aware of any
such conflict of interest. Dr. Daniel L. Azarnoff, M.D. and WCCS shall
immediately advise the Board of Directors of any conflict of interest he
may have from time to time and the Board of Directors shall promptly
consider any request for a waiver of that conflict and shall not
unreasonably withhold its approval of the waiver.
3.4 TIME COMMITMENTS: Unless otherwise agreed to in writing by
Entropin, Lois Rezler, Ph.D. and Roy S. Azarnoff, Ph.D. shall, during the
Term, devote substantially all of their time during a normal work week to
the performance of the activities necessary and prudent to assure that
WCCS's obligations under this Agreement are completed within the Time Line.
Entropin agrees that if Lois Rezler, Ph.D. and Roy S. Azarnoff, Ph.D. each
devote at least 30 hours per
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week to their duties under this Agreement and all the additional hours
necessary to complete the Scope of Work within the Time Line as provided
within this Agreement, that will constitute compliance with the
requirements of the preceding sentence. Further, Daniel L. Azarnoff, M.D.,
shall devote such time as may be required, but not less than one full work
day each week during the Term, to assure that the WCCS's obligations under
this Agreement are completed within the Time Line.
3.5 WCCS PERSONNEL: Except as stated in paragraph 3.2 of this
Agreement, all personnel necessary for WCCS to perform the Scope of Work
shall be employees of WCCS and not of Entropin. Payment for the services
of all such employees and/or independent contractors of WCCS, including all
state and federal tax obligations required by applicable laws and
regulations, shall be solely the responsibility and liability of WCCS and
Entropin shall have no responsibility or liability therefore.
3.6 CONFIDENTIALITY AGREEMENT: WCCS and Entropin shall execute and
deliver the Confidentially Agreement, Exhibit B, to the other and shall be
bound by its terms and conditions.
3.7 REPORTS: WCCS shall keep Entropin fully informed of all activities
undertaken by it for the benefit of Entropin and its progress in completing
its obligations under this Agreement. In that regard, WCCS shall provide
Entropin with written monthly reports setting forth its progress relative
to the Scope of Work, Time Line and Budget. Entropin shall keep WCCS fully
informed regarding its efforts to raise additional funds, in keeping with
Article 5.1. WCCS shall not disclose to any third party any non-public
information relating to the financial condition of Entropin or its efforts
to raise additional funds and neither it nor any of its assigns shall at
any time buy or sell any shares of stock of Entropin based on any such non-
public financial information.
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3.8 ENTROPIN OBLIGATIONS:
a. Entropin agrees to cooperate with WCCS and its officers,
directors, agents, representatives, employees, consultants, vendors,
contractors and attorneys in the performance of this Agreement.
b. Entropin will ensure that all public relations materials, news
releases, presentations or other information disseminated to the public
which refer to the officers, employees or Scope of Work of WCCS, or to
matters relating to the Food and Drug Administration, will be presented to
WCCS for review prior to release.
ARTICLE IV
COMPENSATION TO WCCS
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Subject to Article V of this Agreement, as full and complete
compensation for all services to be performed by WCCS pursuant to this
Agreement, Entropin shall pay to WCCS the following:
4.1 PAYMENTS: Entropin shall make payment for management fees to WCCS
in the aggregate amount of Eight Hundred Eighty Thousand Four Hundred
Dollars ($880,400.00) as set forth in Exhibit A. The first such payment
shall be made concurrently with the execution of this Agreement by
authorized representatives of WCCS and Entropin and shall be in the amount
of Forty Thousand Dollars ($40,000.00). Thereafter, payments shall be made
to WCCS as set forth in Exhibit A.
4.2 STOCK OPTIONS: Entropin agrees to grant WCCS or its assignees
stock options to purchase up to an aggregate of four hundred fifty thousand
(450,000) shares of Entropin common
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stock, par value $.001 per share, upon the following terms and conditions
and such other usual and customary terms and conditions as shall be set
forth in the Option Agreement:
a. OPTION GRANTS: Entropin shall grant WCCS or its assignees
options to purchase four hundred fifty thousand (450,000) shares of
Entropin common stock within thirty (30) days after execution of this
Agreement.
b. OPTION TERM: The term of each option shall be for five (5)
years from the date of its grant.
c. OPTION PRICE: The price per share that the options granted to
WCCS or its assignees may be exercised shall be one dollar and fifty cents
($1.50).
d. EXERCISE DATES: Subject to Article V of this Agreement, WCCS
or its assignees may exercise the options granted to it under this
Agreement according to the following schedule:
September 5, 1998 75,000 shares
April 5, 1999 75,000 shares
April 5, 2000 150,000 shares
January 5, 2001 150,000 shares
The first date on which an option is granted under this Agreement may be
exercised is hereinafter referred to as the "Exercise Date."
e. RESTRICTED STOCK: WCCS understands that the shares purchased
by exercising the options are restricted securities within the meaning of
Rule 144 of the General Rules and Regulations under the Securities Act of
1933, as Amended ("Act"), and applicable state statutes.
WCCS further understands that (i) an appropriate restrictive legend (or
legends) will be placed on the certificates issued in replacement or
exchange therefor and that (ii) Entropin will cause its stock transfer
records to note such restrictions. Because the shares are "restricted" as
defined under Rule 144, WCCS understands that they must be held for a
minimum of one year following their purchase. Thereafter, the shares may
be sold only in the amounts and the manner specified in Rule 144 unless
first registered under the Act and any applicable state securities laws or
unless
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the availability of an exemption from such registration requirement is
established to the satisfaction of Entropin.
f. ASSIGNMENT: Entropin agrees that WCCS may assign its stock
options, in whole or in part, to such persons or entities as it may choose
in its sole discretion. In consideration for the right to assign options
which may be granted to it under this Agreement, WCCS represents and
warrants to Entropin that it shall advise in writing all of its assignees
of the restrictions set forth in paragraph 4.2e above prior to making this
assignment. Any such assignment by WCCS shall only be made pursuant to a
Form of Assignment approved by Entropin.
g. STOCK AGREEMENT: It is recognized by both parties that
Entropin's present stock plan and future plan has no bearing on this
Agreement.
ARTICLE V
ADJUSTMENTS
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5.1 FAILURE OF ENTROPIN TO RAISE ADDITIONAL FUNDS: Entropin has
advised WCCS that it is necessary for Entropin to raise additional funds to
enable it to fulfill its financial obligations contemplated by this
Agreement. Entropin agrees to make a good faith effort to obtain such
funds. In the event Entropin is unable to raise additional funds for the
purpose of paying its obligations as required by the Budget on terms and
conditions acceptable to the Board of Directors by January 1, 1999,
Entropin shall have the right to terminate this Agreement by giving WCCS
sixty (60) days written notice of its intent to terminate. Notwithstanding
any other provisions of this Agreement, upon termination under this
paragraph 5.1, Entropin shall have the following obligations to WCCS and no
other, at law or in equity:
a. CASH PAYMENT: Entropin shall make a cash payment to WCCS in
the amount of three months' management fee as set forth in the Budget in
Exhibit A. This payment shall be
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made on the effective date of the termination under this paragraph 5.1 and
is in lieu of any payments otherwise payable to WCCS under paragraph 4.1
from and after such termination date.
b. STOCK OPTIONS: WCCS may, as of the effective date of the
termination under this paragraph 5.1, exercise options granted to it on the
terms and conditions provided under paragraph 4.2 of this Agreement but
adjusted in number and as to the Exercise Date by this paragraph 5.1.b.
The number of shares covered by the option granted upon the execution of
this Agreement which may be immediately exercised by application of this
paragraph shall be determined by multiplying twelve thousand five hundred
(12,500) by the number of full calendar months elapsed after the starting
date of this Agreement. All other options shall be canceled and no further
options shall be granted.
5.2 TERMINATION UNDER ARTICLE VII: Except as provided in this
paragraph 5.2, termination of this Agreement for any reason under Article
VII shall not release either party from any liability that, at the time of
the effective date of such termination, has already accrued to the other
party or is attributable to a period prior to such termination. Neither
shall such termination preclude either party from pursuing any rights and
remedies it may have hereunder, at law, or in equity with respect to any
breach of this Agreement. Notwithstanding the two immediately preceding
sentences, as of the effective date of termination, WCCS shall have no
obligation to continue to perform any of its obligations required by this
Agreement. Further, upon termination of this Agreement under the
provisions of Article VII, WCCS or its assignees shall retain the right to
purchase only a certain number of the shares reserved by the options
granted under paragraph 4.2a to be determined by multiplying twelve
thousand five hundred (12,500) shares by the number of full calendar months
elapsed after April 6, 1998 to the date the notice to terminate was given.
This amount represents the difference between those option already
exercised and those earned up to the date of notice of termination. All
outstanding options granted to WCCS under paragraph 4.2a which are not
retained pursuant to the immediately preceding sentence shall be canceled
as of the effective date of termination. The dates on which the retained
shares may be purchased are dates set forth under paragraph 4.2e.
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ARTICLE VI
DIRECTORS AND OFFICERS LIABILITY INSURANCE
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During the Term, Entropin shall maintain directors and officers insurance
in the aggregate amount of not less than Three Million Dollars
($3,000,000.00). Such directors and officers insurance policy shall be a
claims made policy. If at any time the directors and officers insurance
policy required hereby is not in effect, none of WCCS personnel, Daniel L.
Azarnoff, M.D., Roy S. Azarnoff, Ph.D., or Lois Rezler, Ph.D., shall have
any obligation or duty to perform any services for Entropin in their
capacity as an officer or director as contemplated by paragraph 3.2 of this
Agreement. Entropin agrees to maintain "tail" insurance covering Drs.
Azarnoff and Rezler for not less than six (6) years after the termination
of this Agreement.
ARTICLE VII
TERMINATION
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7.1 DEATH: If Roy S. Azarnoff, Ph.D., Daniel L. Azarnoff, M.D., or
Lois Rezler, Ph.D., die during the Term, WCCS shall have ninety (90) days
after such death to have under an employment contract an individual
acceptable to Entropin to fill the position vacated by the deceased. If
WCCS does not have under an employment contract an individual acceptable to
Entropin within such ninety (90) day period, Entropin shall have the option
to terminate this Agreement effective as of the end of the ninety (90) day
period.
7.2 DISABILITY: If during the Term, Roy S. Azarnoff, Ph.D., Daniel L.
Azarnoff, M.D., or Lois Rezler, Ph.D., shall become physically or mentally
disabled, whether totally or partially, so that he is unable substantially
to perform his services hereunder for (i) a period of four consecutive
weeks, or (ii) for shorter periods aggregating eight weeks, during any
twelve-month period, Entropin may at any time after the last day of the
four consecutive weeks of disability or
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the day on which the shorter periods of disability shall have equaled an
aggregate of eight weeks, by written notice to WCCS, terminate this
Agreement; provided, however, WCCS shall have ninety (90) days from the
date of the notice to have under an employment contract an individual
acceptable to Entropin to fill the position held by the disabled
individual. If WCCS does not have under an employment contract an
individual acceptable to Entropin within such ninety (90) day period,
Entropin shall have the option to terminate this Agreement effective as of
the end of the ninety (90) day period.
7.3 MALFEASANCE: In the event Roy S. Azarnoff, Ph.D., Daniel L.
Azarnoff, M.D., or Lois Rezler, Ph.D. are convicted of any felony, or
lesser crime or offense involving the property of Entropin or engaged in
willful misconduct, which would make his continued association, directly or
indirectly, with Entropin prejudicial to the best interests of Entropin,
Entropin may at any time by written notice to WCCS terminate this
Agreement.
7.4 BREACH: Either party may terminate this Agreement in the event
there has been a breach by the other party of its representations in this
Agreement or in the event the other party shall have materially breached or
defaulted in the performance of any of its obligations hereunder, and such
default shall have continued for sixty (60) days after the written notice
thereof was provided to the breaching party by the non-breaching party
specifying the particulars of the breach. Any termination shall become
effective at the end of such sixty (60) day period unless the breaching
party (or any other party on its behalf) has cured any such breach or
default prior to the expiration of the sixty (60) day period.
7.5 BANKRUPTCY: If voluntary or involuntary proceedings by or against
Entropin or WCCS are instituted in bankruptcy under any insolvency law, or
a receiver or custodian is appointed for such party, or proceedings are
instituted by or against such party for corporate reorganization or the
dissolution of such party, which proceedings, if involuntary, shall not
have been dismissed within sixty (60) days after the date of filing, or if
such party makes an assignment for the benefit of creditors, or
substantially all of the assets of such party are seized or attached and
not released
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within sixty (60) days thereafter, the other party may immediately
terminate this Agreement, effective upon notice of such termination.
7.6 AGREEMENT: The Agreement may be terminated by mutual written
consent of Entropin and WCCS.
ARTICLE VIII
WCCS OBLIGATION TO LEVEL OF COMMITMENT
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WCCS, on its behalf and behalf of its employees, agrees that it is
committed to the performance of this Agreement and to the transactions
contemplated herein and it will not allow any other business, contract or
agreement to prevent WCCS's performance of this Agreement in accordance
with its terms. WCCS agrees to notify Entropin in writing of opportunities
for appropriate new drugs WCCS has identified which Entropin may be able to
develop.
ARTICLE IX
REPRESENTATIONS OF ENTROPIN
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9.1 ORGANIZATION: Entropin (a) is a corporation duly organized,
validly existing, and in good standing under the laws of the State of
Colorado, (b) has the requisite power and authority to own, lease and
operate its properties and to conduct its business as it is presently being
conducted, and (c) has qualified to do business as a foreign corporation in
each jurisdiction, if any, in which its property or business requires such
qualification.
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9.2 AUTHORITY AND ENFORCEABILITY: Consummation of this Agreement will
not constitute or result in a breach or default of any provision of any
charter, bylaw, indenture, mortgage, lease agreement, or any order,
judgment, or decree to which any property of Entropin is subject, or by
which Entropin is bound, except for breaches or defaults which, in the
aggregate, would not have a material effect on Entropin's properties,
business operations, or financial condition. This Agreement has been duly
and validly executed and delivered by Entropin and (assuming that this
Agreement constitutes a valid and binding obligation of WCCS) constitutes
a valid and binding obligation of Entropin enforceable against it in
accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws from
time to time in effect relating to the rights and remedies of creditors
generally or by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
9.3 CONSENTS AND APPROVALS: The execution and delivery of this
Agreement and the consummation of the transactions contemplated by this
Agreement have been duly and validly authorized by all necessary corporate
action on the part of Entropin and no other corporate proceedings on the
part of Entropin are necessary to authorize the execution and delivery of
this Agreement or to consummate the transactions contemplated by this
Agreement.
9.4 REPRESENTATIONS:
a. To the best of Entropin's knowledge and belief, there is no
litigation or claim and no threatened litigation or claim, nor does
Entropin know of any basis for any such litigation or claim, that would
prevent or hinder the performance of the transactions or work contemplated
hereby;
b. Entropin, to the best of its knowledge and belief, has good,
valid and marketable title to all of its assets, including particularly
Esterom(R);
c. Entropin, to the best of its knowledge and belief, holds a
valid and fully
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enforceable patent issued by the United States Patent Office for Esterom(R)
and the claims covered by such patent permit the full exploitation of
Esterom(R) as contemplated by the plans and proposals presented by WCCS to
Entropin; no claims have been asserted by any person or party to the use of
Esterom(R) or challenging or questioning the validity or effectiveness of
the patent and, therefore and to the best of Entropin's knowledge, there is
no valid basis for any such claim;
d. Entropin, to the best of its knowledge and belief, the use of
the patent for Esterom(R) would not infringe on the rights of any other
person;
e. Entropin, to the best of its knowledge and belief, is not in
violation in any material respect with any agreement, order, judgment, law
or regulation applicable to it, including particularly securities laws and
regulations, and it has obtained all governmental permits or licenses
required to conduct its business;
f. Entropin, to the best of its knowledge and belief, knows of no
situation, fact or condition that would prevent or hinder the full
performance of this Agreement and the transactions and work contemplated
hereby;
g. Entropin, to the best of its knowledge and belief, all
applications, documents and other material, whether oral or written,
presented by Entropin, its officers, directors, representatives, attorneys
and agents to the FDA are complete and accurate to the best of their
knowledge and do not contain any false or misleading statement or any basis
for assertion by the FDA that the information is not full, complete and
accurate or contains any false or misleading statement.
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ARTICLE X
REPRESENTATIONS OF WCCS
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10.1 ORGANIZATION: WCCS (i) is a corporation duly organized, validly
existing, and in good standing under the laws of the State of California,
(ii) has the requisite power and authority to own, lease and operate its
properties and to conduct its business as it is presently being conducted,
and (iii) has qualified to do business as a foreign corporation in
jurisdiction, if any, in which its property or business requires such
qualification.
10.2 AUTHORITY AND ENFORCEABILITY: Consummation of this Agreement will
not constitute or result in a breach or default of any provision of any
charter, bylaw, indenture, mortgage, lease agreement, or any order,
judgment, or decree to which any property of WCCS is subject, or by which
WCCS is bound, except for breaches or defaults which, in the aggregate,
would not have a material adverse effect on WCCS's properties, business
operations, or financial condition. This Agreement has been duly and
validly executed and delivered by WCCS and (assuming that this Agreement
constitutes a valid and binding obligation of Entropin) constitutes a valid
and binding obligation of WCCS enforceable against it in accordance with
its terms, except as enforcement be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws from time to time in effect
relating to the rights and remedies of creditors generally or by general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
10.3 CONSENTS AND APPROVALS: The execution and delivery of this
Agreement and the consummation of the transactions contemplated by this
Agreement have been duly and validly authorized by all necessary corporate
action on the part of WCCS and no other corporate proceedings on the part
of WCCS are necessary to authorize the execution and delivery of this
Agreement or to consummate the transactions contemplated by this Agreement.
PAGE 16 of 21
<PAGE>
10.4 PERFORMANCE: WCCS represents to Entropin that its officers and
employees have the expertise, experience and scientific, regulatory and
business affiliations to perform all the obligations undertaken by it under
this Agreement, specifically including but not limited to: (i) to provide
the expertise required to take Esterom(R) to the FDA and through the IND
and NDA stages; (ii) arrange for and oversee necessary studies and clinical
trials for Esterom(R); (iii) create an eminent Scientific and Medical
Advisory Board for the Esterom(R) and/or Esterom Related Products; (iv)
develop an Esterom(R) and/or Esterom Related Products distribution plan and
identify and propose strategic partners and/or distributors; and (v)
introduce contacts to Entropin to provide Entropin commercial opportunities
to network within the pharmaceutical community.
10.5 ANCILLARY AGREEMENTS: None of WCCS, its officers, director or
shareholders has any undisclosed agreement or understanding, actual or
contingent, of any kind or nature whatsoever, with any officer, director or
shareholder of Entropin, or any other person, corporation, partnership,
other entity or organization relating to (i) this Agreement or the
consummation of the transactions contemplated by this Agreement, (ii) the
present or future ownership, whether directly, indirectly, actual,
beneficial or contingent, of the common stock of Entropin, or (iii) the
present or future management of Entropin. Further, no brokerage fee,
finder's fee or similar type fees of any kind or nature have been agreed to
or have or will be paid to any person, corporation, partnership, or other
entity or organization in connection with or arising out of the negotiation
and execution of this Agreement.
ARTICLE XI
ARBITRATION
-----------
Any controversy or claim arising out of or relating to this Agreement,
or breach thereof, shall be settled by arbitration. The arbitration shall
be administered by the Los Angeles, California office of the American
Arbitration Association in accordance with the then current Commercial
Arbitration Rules of the American Arbitration Association. Such
arbitration proceedings shall be
Page 17 of 21
<PAGE>
conducted in Los Angeles, California or such other location as the parties
may agree. The dispute will be heard by a panel of three arbitrators, each
with a familiarity with pharmaceutical manufacturing and/or pharmaceutical
research and development. One arbitrator shall be appointed by each of the
parties and the third appointed by the other two arbitrators. The
determination of the arbitrators shall be conclusive and binding upon both
parties. The parties acknowledge and agree that any arbitration judgment
may be enforced against either or both of them in a court of competent
jurisdiction. The arbitrators' award as to the payment of the costs of
arbitration shall be binding upon the parties. The prevailing party in any
arbitration conducted in accordance with this paragraph will be entitled to
attorneys' fees and costs.
ARTICLE XII
MISCELLANEOUS
-------------
12.1 NOTICES: All notices, requests, consents, and other
communications, required or permitted to be given hereunder, shall be in
writing and shall be deemed to have been duly given if delivered personally
or sent by prepaid telegram, or mailed first-class, postage prepaid, by
registered or certified mail (notices sent by telegram or mailed shall be
deemed to have been given on the date sent), as follows (or to such other
addresses as either party shall designate by notice in writing to the other
in accordance herewith):
(a) if to WCCS: Lois Rezler, Ph.D.
Western Center for Clinical Studies, Inc.
8619 Reseda Boulevard, Suite 202
Northridge, California 91324
(b) if to ENTROPIN: Higgins D. Bailey, Ed.D.
Entropin, Inc.
45-926 Oasis Street
Indio, California 92201
Page 18 of 21
<PAGE>
12.2 ARTICLE AND SECTIONS HEADINGS: The article and section headings
of this Agreement are inserted for convenience of reference and shall not
be considered a part of this Agreement or used in its interpretation.
12.3 RULES OF CONSTRUCTION: For all purposes of this Agreement, unless
the context shall otherwise indicate; (i) all pronouns and any variations
thereof shall be deemed to refer to the masculine, feminine, neuter,
singular or plural, as the identity of the person, firm, or corporation,
may require; (ii) plurals of defined terms shall include the singular;
(iii) the words "hereof" and "herein" shall be construed to refer to the
entirety of this Agreement and not restricted to the particular Article,
Section, subsection, or paragraph in which they occur; and (iv) Entropin
and WCCS will be deemed to have participated in the negotiation and
drafting of this Agreement.
12.4 SEVERABILITY: If any one or more phrases, sentences, clauses, or
paragraphs of this Agreement shall be held invalid or unenforceable by a
court of competent jurisdiction, such holding shall not invalidate or
render unenforceable any other portions of this Agreement, or any part
thereof.
12.5 EXECUTION IN COUNTERPARTS: This Agreement may be executed in any
number of counterparts, each of which shall for all purposes be deemed to
be an original, and all of which are identical.
12.6 APPLICABLE LAW: This Agreement shall be governed in all respects,
including validity, interpretation and effect, by the laws of the State of
Colorado regardless of the laws that might otherwise govern under
applicable principles of conflicts of laws.
12.7 PRIOR AGREEMENTS: This Agreement constitutes the entire Agreement
and cancels and supersedes all prior agreements and undertakings, oral or
written, among or between the parties hereto relating to the subject matter
of this Agreement. This Agreement is solely for the benefit
Page 19 of 21
<PAGE>
of Entropin and WCCS and does not confer on any other entity or person any
rights or remedies under this Agreement.
12.8. AMENDMENTS: This Agreement may not be amended, supplemented or
discharged except by accepted performance or by an instrument in writing
signed by both Entropin and WCCS.
12.9 WAIVER: Entropin or WCCS may waive performance by the other
party of any of the covenants or agreements, or satisfaction of any of the
conditions, contained in this Agreement. Any agreement on the part of
Entropin or WCCS to any such waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party.
12.10 ASSIGNMENT: Except as otherwise provided in this Agreement,
neither this Agreement nor any of the rights, interests or obligations
under this Agreement shall be assigned by either Entropin or WCCS (whether
by operation of law or otherwise) without the prior written consent of the
other party. Subject to the preceding sentence, this Agreement shall be
binding upon and inure to the benefit of the parties hereto, their heirs
and assigns.
(SEE NEXT PAGE FOR THE SIGNATURE PAGE WHICH IS A PART OF THIS AGREEMENT)
Page 20 of 21
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
ENTROPIN, INC.
Witness:/s/ Alice Rivera Date: April 18, 1998
-------------------------- ----------------------------
By:/s/ Higgins D. Bailey Date: April 18, 1998
------------------------------- ----------------------------
WESTERN CENTER FOR CLINICAL STUDIES, INC.
Witness:/s/ Alice Rivera Date: April 18, 1998
-------------------------- ----------------------------
By:/s/ Lois Rezler Date: April 18, 1998
------------------------------- ----------------------------
Page 21 of 21
<PAGE>
EXHIBIT A
---------
BUDGET
------
CONFIDENTIAL INFORMATION OMITTED
<PAGE>
EXHIBIT B
---------
CONFIDENTIALITY AGREEMENT
-------------------------
<PAGE>
CONFIDENTIALITY AGREEMENT
This Confidentiality Agreement is Exhibit B to the Agreement
("Agreement") dated April 18, 1998 between Entropin, Inc., a California
corporation ("Entropin"), and Western Center For Clinical Studies, Inc., a
California corporation ("WCCS").
Preliminary Statement
---------------------
WCCS and Entropin realize that in the course of performing their
respective obligations contemplated by the Agreement, each may disclose
Confidential Information to the other party.
WCCS and Entropin each acknowledge and confirm to the other that
Confidential Information is a valuable business asset, that maintaining the
confidentiality and secrecy of the Confidential Information is of the
utmost importance to both parties, and that any disclosure of Confidential
Information would diminish the value the Confidential Information.
ACCORDINGLY, in consideration of the mutual execution of the
Agreement, WCCS and Entropin agree as follows:
ARTICLE I
Definitions
-----------
As used in this Confidentiality Agreement, each of the following terms
have the meaning set forth thereafter, such meaning to be equally
applicable to both the singular and plural forms of the terms defined.
1.1 "Assets" means all right, title, and interest, throughout the
world, in and to Esterom(R), Esterom Related Compounds, Entropin's
Confidential Information, Entropin's Licensed Patents, and Technical
Information created, discovered, or developed by Entropin or in which
property rights have been assigned or may in the future be assigned or
otherwise conveyed to Entropin including,
<PAGE>
but not limited to, all enhancements and modifications thereto (regardless
of the state of development). The Term Assets shall also include any and
all other pharmaceutical products or pharmaceutical related products
developed by Entropin in the future or by WCCS, either solely or jointly
with others while providing services to Entropin or with the personnel,
materials or facilities of Entropin and all personal property relating to
any of the foregoing, including, without limitation, all know-how, designs,
data, processes, techniques, methods, concepts or formulations necessary
for the practical utilization, recreation or understanding of any of the of
the foregoing. In addition, the term Assets shall include all licenses,
permits, authorizations, and other approvals from any domestic (federal,
state or local) or foreign governmental, public or self-regulatory body or
authority, or from any private party, pertaining to Esterom(R), Esterom
Related Compounds and the foregoing.
1.2 "Entropin's Confidential Information" means information, including
but not limited to Technical Information, Entropin's Prior Technical
Knowledge, all information relating to the business of Entropin, including
without limitation, information regarding Entropin's objectives,
technology, manufacturing facilities, materials, marketing plans,
strategies, forecasts and assumptions, competitive analyses, new products,
and budgets.
1.3 "Entropin's Licensed Patents" means U.S. Patent Numbers:
5,376,667; 5,559,123; 5,525,613; 4,469,700; 4,512,996; 5,556,663;
5,663,345, and any divisional, continuing, and continuation-in-part patents
therefrom the later issue as United States Patents.
1.4 "Entropin Prior Technical Knowledge" refers to knowledge derived
from services conducted at the Medical University of South Carolina
("MUSC") or the Pharmaceutical Development Center, Department of
Pharmaceutical Sciences, The Medical University of South
2
<PAGE>
Carolina ("PDC") under the New Products Development Agreement. Those
services included but are not limited to:
(a) Research leading to the stabilization of the manufacturing
process of Esterom(R);
(b) Research leading to reproducing Esterom(R) to establish its
formulation;
(c) Manufacturing Esterom(R) for animal studies;
(d) Supervising Phase I Clinical Studies (toxicity) in human
beings using Esterom(R);
(e) Supervising the Phase II Clinical Studies of Esterom(R)
(toxicity and efficacy) at MUSC;
(f) Completing preliminary research on Esterom(R) and Esterom
Related Products; and
(g) Developing an assay for benzoyl ecgonine and ecgonine for
the purposes of indicating the stability of Esterom(R) using
a GC/MS analytical method as well as an HPCL method for
benzoylecgonine.
A list and the location of the documentation arising from such
services, which documentation constitutes the tangible manifestation of the
"Entropin's Prior Technical Knowledge", is located at Entropin's corporate
headquarters in Indio, California or at the offices of the law firm, Fish
and Neave.
1.5 "Esterom(R)" means the product employed in Entropin's Phase II
studies which contains benxoylecgonine, ecgonine, ecgonidine, and their
2-hydroxypropyl esters. "Esterom Related Compounds" means compounds of
formulas and the pharmaceutical compositions
3
<PAGE>
containing those compounds, or mixtures thereof, identified and/or claimed
under Entropin's Licensed Patents.
1.6 "Technical Information" means technical data, know-how,
specifications, methods of manufacture, and other information or
assistance, including, but not limited to, formulas, patents, compilations,
programs, devices, methods, techniques, and processes.
1.7 "WCCS's Confidential Information" means information marked by WCCS
as proprietary information of WCCS and which is communicated by WCCS to
Entropin as proprietary information.
ARTICLE II
Non-Disclosure and Ownership of Assets
--------------------------------------
2.1 WCCS represents and warrants to Entropin that it will not, during
the Term or after the termination of the Agreement at the end of the stated
Term or otherwise, in whole or in part, use, disclose or otherwise permit
any person, firm, corporation, association, or other entity access to, or
grant or convey any knowledge concerning the Assets. Further, WCCS shall
not, during or after the termination of the Agreement, sell, license, or
otherwise exploit any products of Entropin for its own benefit or for the
benefit of any person, firm, corporation, association or other entity which
embody in whole or in part any of the Assets.
2.2 Upon termination of the Agreement, WCCS shall return to Entropin
all of Entropin's Confidential Information and all materials relating to
such information including any documentation, records, notes, data, or
reference materials, which in any way relate to the Assets, including any
and all copies of any of the foregoing.
4
<PAGE>
2.3 WCCS shall not publish or disclose to any third party the results
of any work carried out by it under the Agreement without the prior written
consent of Entropin.
2.4 Entropin represents and warrants to WCCS that it will not, during
the Term or after the termination of the Agreement at the end of the stated
Term or otherwise, in whole or in part, use, disclose, or otherwise permit
any person, firm, corporation, association, or other entity access to, or
grant or convey any knowledge concerning WCCS's Confidential Information.
2.5 Upon termination of the Agreement, Entropin shall return to WCCS
all of WCCS's Confidential Information and all materials relating to such
information including any documentation, records, notes, data, or reference
materials, which in any way relate to WCCS's Confidential Information,
including any and all copies of any of the foregoing.
2.6 The restrictions of this Confidentiality Agreement relating to
public disclosure of Entropin's Confidential Information and WCCS's
Confidential Information shall not apply to information which:
(a) Is in the public domain;
(b) Comes into the public domain through no fault of the
recipient;
(c) Is known to the recipient at the time of disclosure; or
(d) Becomes known to the recipient subsequent to the disclosure
as a result of a non-confidential disclosure by a third
party with a right to disclose the information.
2.7 WCCS hereby acknowledges that all Assets are the sole property of
Entropin and that WCCS has not acquired any interest in the Assets either
under the Agreement or under this Confidentiality Agreement.
5
<PAGE>
ARTICLE III
MISCELLANEOUS
-------------
3.1 NOTICES. All notices, requests, consents and other communications,
required or permitted to be given hereunder, shall be in writing and shall
be deemed to have been duly given if delivered personally or sent by
prepaid telegram, or mailed first-class, postage prepaid, by registered or
certified mail (notices sent by telegram or mailed shall be deemed to have
been given on the date sent), as follows (or to such other addresses as
either party shall designate by notice in writing to the other in
accordance herewith):
(a) If to WCCS: Lois Rezler, PhD.
Western Center for Clinical
Studies, Inc.
8619 Reseda Boulevard, Suite 202
Northridge, California 91324
(b) If to ENTROPIN: Higgins D. Bailey, Ed.D.
Entropin, Inc.
45926 Oasis Street
Indio, California 92201
3.2 ARTICLE AND SECTIONS HEADINGS. The article and section headings
of this Agreement are inserted for convenience of reference and shall not
be considered a part of this Agreement or used in its interpretation.
3.3 RULES OF CONSTRUCTION. For all purposes of this Agreement, unless
the context shall otherwise indicate: (1) all pronouns and any variations
thereof shall be deemed to refer to the masculine, feminine, neuter,
singular or plural, as the identity of the person, firm, or corporation,
may require; (2) plurals of defined terms shall include the singular; and
(3) the words "hereof" and
6
<PAGE>
"herein" shall be construed to refer to the entirety of this Agreement and
not restricted to the particular Article, Section, subsection, or paragraph
in which they occur.
3.4 SEVERABILITY. If any one or more phrases, sentences, clauses, or
paragraphs of this Agreement shall be held invalid or unenforceable by any
court of competent jurisdiction, such holding shall not invalidate or
render unenforceable any other portions of this Agreement, or any part
thereof.
3.5 EXECUTION IN COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall for all purposes be deemed to
be an original, and all of which are identical.
3.6 APPLICABLE LAW. This Agreement shall be governed in all respects,
including validity, interpretation and effect, by the laws of the State of
California regardless of the laws that might otherwise govern under
applicable principles of conflicts of laws.
3.7 PRIOR AGREEMENTS. This Agreement constitutes the entire Agreement
and cancels and supersedes all prior agreements and underakings, oral or
written, among or between the parties hereto relating to the subject matter
of this Agreement. This Agreement is solely for the benefit of Entropin
and WCCS and does not confer on any other entity or person any rights or
remedies under this Agreement.
3.8 AMENDMENTS. This Agreement may not be amended, supplemented or
discharged except by accepted performance or by an instrument in writing
signed by both Entropin and WCCS.
3.9 WAIVER. Entropin or WCCS may waive performance by the other party
of any of the covenants or agreements, or satisfaction of any of the
conditions, contained in this Agreement. Any
7
<PAGE>
agreement on the part of Entropin or WCCS to any such waiver shall be valid
only if set forth in an instrument in writing signed on behalf of such
party.
3.10 ARBITRATION. Any controversy or claim arising out of or relating
to this Confidentiality Agreement, or breach thereof, shall be settled by
arbitration. The arbitration shall be administered by the Los Angeles,
California office of the American Arbitration Association in accordance
with the then current Commercial Arbitration Rules of the American
Arbitration Association. Such arbitration proceedings shall be conducted
in Los Angeles, California or such other location as the parties may agree.
The dispute will be heard by a panel of three arbitrators, each with a
familiarity with pharmaceutical manufacturing and/or pharmaceutical
research and development. One arbitrator shall be appointed by each of the
parties and the third appointed by the other two arbitrators. The
determination of the arbitrators shall be conclusive and binding upon both
parties. The parties acknowledge and agree that any arbitration judgment
may be enforced against either or both of them in a court of competent
jurisdiction. The arbitrators' award as to the payment of the costs of
arbitration shall be binding upon the parties.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
ENTROPIN, INC.
Witness:
/s/ ALICE RIVERA By: /s/ HIGGINS D. BAILEY
- -------------------------- -------------------------------
"WCCS"
WESTERN CENTER FOR CLINICAL
STUDIES
8
<PAGE>
Witness:
/s/ ALICE RIVERA By: /s/ LOIS REZLER
- -------------------------- -------------------------------
9
<PAGE>
EXHIBIT C
---------
SCOPE OF WORK
-------------
CONFIDENTIAL INFORMATION OMITTED
<PAGE>
EXHIBIT D
---------
TIME LINE
---------
Milestones, Tasks, and Sub Tasks
--------------------------------
CONFIDENTIAL INFORMATION OMITTED
<PAGE>
EXHIBIT E
---------
TABLE OF ORGANIZATION
----------------------
<PAGE>
Entropin, Incorporated
TABLE OF ORGANIZATION
---------------------
RELATING TO THE WCCS AGREEMENT
------------------------------
Board of Directors Business
------------------ --------------- Advisory
Chairman* Committee
/
/
/
Chief Executive Chief Financial
Officer** ---------------- Officer
/
/
/
Science/Medical
Advisory Board ----------- President
/
/
-------------------------------
/ /
Chief Operating Vice President
Officer Science and
/ Regulatory Affairs
/
/
Administrative / Clinical
Assistant --------------- Research
/ Assistant
/
/
/
Document
Control
Assistant
* The Chairman will serve as Interim CEO until one is selected.
** A search is being conducted to select a CEO.
