EXHIBIT 10.2
CO-DEVELOPMENT AGREEMENT
This Agreement, effective on March 25th, 2003 (the "Effective Date"),
is by and between DMI BioSciences, Inc., having a place of business at 3601
South Clarkson Street, Suite 420, Englewood, Colorado 80110 USA, and its
Affiliates (collectively referred to herein as "DMI") and Enhance Lifesciences,
Inc., having a place of business at One Rockefeller Plaza, Suite 1600, New York,
New York 10020, and its Affiliates (collectively referred to herein as
"ENHANCE").
WHEREAS, DMI has Intellectual Property rights relating to the use of
DMI 9742 for therapeutic treatment of dermatological conditions and diseases in
humans, including by topical application of DMI 9742 to the skin;
WHEREAS, ENHANCE and DMI want to jointly research, develop and
commercialize products comprising or utilizing DMI 9742 for therapeutic
treatment of dermatological conditions and diseases in humans by topical
application to the skin;
WHEREAS, ENHANCE has expertise and strategic relationships which may
facilitate the development and commercialization of topical products comprising
or utilizing DMI 9742 for therapeutic treatment of dermatological conditions and
diseases in humans by topical application to the skin; and
WHEREAS, DMI and ENHANCE signed a Term Sheet on November 29, 2002,
setting forth certain agreed terms to be included in this Agreement.
NOW THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth below, the parties agree as follows.
Article 1. Definitions
As used herein, the following capitalized terms have the meanings set
forth below:
1.1 "Affiliate" means any corporation, firm, partnership or other
entity that, directly or indirectly, is controlled by DMI
BioSciences, Inc. or Enhance Lifesciences, Inc. For the
purposes of this Agreement, "controlled" means possession of
the power to direct, or cause the direction of, the management
and policies of a corporation, firm, partnership, or other
entity, whether through the ownership of equity, status as a
general partner, by contract or otherwise.
1.2 "Calendar Quarter" means each three (3)-month period ending on
the last day of March, June, September and December of a given
year.
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1.3 "Clinical Trials" means all human clinical trials conducted
with a Product, including Phase 1 through Phase 4 human
clinical trials.
1.4 "Clinical Trials Plan" means a comprehensive plan for
performing Clinical Trials and obtaining Regulatory Approval
of Product(s) in the Territory which includes a budget, a
schedule of deadlines and time periods for accomplishing all
necessary activities, procedures for ensuring compliance with
all regulatory and quality guidelines and requirements, and
all other relevant information.
1.5 "Commercial Sales" means sales of each Product in the
Territory by either party to Third Parties in bona fide
arms-length transactions.
1.6 "Commercially Reasonable And Diligent Efforts" means, with
respect to research, development and commercialization of a
Product, a party's use of best efforts and resources
consistent with the exercise of prudent scientific and
business judgment, as applied to other pharmaceutical products
of similar potential, market size and competitive environment.
1.7 "Commercialization Plan" means a comprehensive plan for the
commercialization of Product(s) in the Territory which
includes a budget, a schedule of deadlines and time periods
for accomplishing all necessary activities (including a
deadline for the First Commercial Sale of Product(s) that have
received Regulatory Approval), marketing plans, descriptions
of promotional activities, sales objectives, branding
strategies, and all other relevant information.
1.8 "Development And Marketing Plan" means a Development And
Marketing Plan prepared and amended from time to time by the
Steering Committee as described in Article 3. Each Development
And Marketing Plan will be a comprehensive plan for developing
and commercializing Product(s) selected by the Steering
Committee for the Field in the Territory and will include a
Clinical Trials Plan, a Commercialization Plan, and a budget
and schedule for all other necessary or desirable activities.
1.9 "DMI" means DMI BioSciences, Inc. and its Affiliates. DMI is
also referred to herein as a "party". Collectively, DMI and
ENHANCE are sometimes referred to as the "parties".
1.10 "DMI 9742" means Phosvitin which is partially or completely
dephosphorylated.
1.11 "Drug Approval Application" means an application for
Regulatory Approval required for commercial sales of a
Product, such as an NDA.
1.12 "Effective Date" is the date first written above.
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1.13 "ENHANCE" means Enhance Lifesciences, Inc. and its Affiliates.
ENHANCE is also referred to herein as a "party". Collectively,
DMI and ENHANCE are sometimes referred to as the "parties".
1.14 "FDA" means the United States Food and Drug Administration.
1.15 "Field" means the use of Product(s) to treat human
dermatological conditions and diseases by topical application
to the skin.
1.16 "First Commercial Sale" means the first sale of each Product
in a country of the Territory following Regulatory Approval of
the Product in that country, or if no such Regulatory Approval
or similar marketing approval is required, the date upon which
each Product is first commercially available in a country.
1.17 "GCP" means the E6 Guideline for Good Clinical Practice of the
ICH.
1.18 "GLP" means the current Good Laboratory Practice regulations
promulgated by the FDA, published at Part 58 of Title 21 of
the United States Code of Federal Regulations, as amended from
time to time, and such equivalent regulations or standards of
countries outside the United States as may be applicable to
activities conducted hereunder.
1.19 "GMP" means the current Good Manufacturing Practice
regulations promulgated by the FDA, published at Part 210 et
seq. and Parts 600-610 of Title 21 of the United States Code
of Federal Regulations, as amended from time to time, and such
equivalent regulations or standards of countries outside the
United States as may be applicable to activities conducted
hereunder.
1.20 "ICH" means International Conference on Harmonisation of
Technical Requirements for Registration of Pharmaceuticals for
Human Use.
1.21 "IND" means an Investigational New Drug Application satisfying
the requirements of Part 312 of Title 21 of the United States
Code of Federal Regulations filed with the FDA to commence
human clinical testing of any Product in the United States or
any similar filing with a regulatory authority of another
country to commence human clinical testing of any Product in
that country.
1.22 "Indication" means a human disease or condition, an important
manifestation of a human disease or condition, or a symptom
associated with a human disease or condition for which use of
a Product is indicated, as would be identified in the
Product's label under applicable FDA regulations or the
foreign equivalent thereof.
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1.23 "Indirect Costs" means all of the costs incurred in performing
those activities necessary for specific Clinical Trial(s) to
take place, such as all costs of procurement or manufacture of
Product(s), formulation and analytical studies, preclinical
safety assessments, and preparation of documentation required
by regulatory authorities.
1.24 "Intellectual Property" means: (i) inventions, know-how, trade
secrets, other Proprietary Information, works of authorship,
and trademarks and other designations of origin; (ii) all
rights and privileges therein throughout the world; and (iii)
all physical embodiments thereof.
1.25 "Major Market Countries" means United States, France, Germany,
Italy, Spain and United Kingdom.
1.26 "NDA" means a New Drug Application satisfying the requirements
of Title 21 of the United States Code of Federal Regulations
filed with the FDA to obtain Regulatory Approval for a Product
in the United States or any similar filing with a regulatory
authority of another country to market any Product in that
country.
1.27 "Net Sales" means gross amounts invoiced for Commercial Sales
of Product(s) less actually allowed rebates, normal trade
discounts, credits and refunds for returned goods granted to
customers, transportation and insurance costs incidental to
the Commercial Sales of Product(s) as well as sales taxes and
excise taxes paid or absorbed on such sales.
1.28 "Overhead" means costs incurred by a party, or for its
account, which are attributable to a party's supervision,
services, occupancy costs, corporate bonus, and its payroll,
information systems, human relations or purchasing functions
and which are allocated based on space occupied, headcount or
other activity-based method consistently applied by the party.
1.29 "Phase 1 Trial" means a human clinical trial in any country
that is conducted to initially evaluate the safety and/or
pharmacological effect of a Product in human subjects or that
would otherwise satisfy the requirements of Part 312 of Title
21 of the United States Code of Federal Regulations or its
foreign equivalent.
1.30 "Phase 2 Trial" means a human clinical trial in any country
that is conducted to initially evaluate the effectiveness of a
Product for a particular Indication in patients with the
Indication or that would otherwise satisfy the requirements of
Part 312 of Title 21 of the United States Code of Federal
Regulations or its foreign equivalent.
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1.31 "Phase 2a Trial" means a limited Phase 2 Trial typically
conducted in up to 50 patients to demonstrate the
effectiveness of a Product for a human Indication.
1.32 "Phase 2b Trial" means a Phase 2 Trial, the results of which,
alone or in combination with the results of the Phase 2a
Trial, would demonstrate the effectiveness of a Product for a
particular Indication in patients with the Indication or that
would otherwise satisfy the requirements of Part 312 of Title
21 of the United States Code of Federal Regulations or its
foreign equivalent.
1.33 "Phase 3 Trial" means a controlled human clinical trial in any
country, the results of which could be used to establish
safety and efficacy of a Product as a basis for a marketing
approval application submitted to the FDA, or that would
otherwise satisfy the requirements of Part 312 of Title 21 of
the United States Code of Federal Regulations or its foreign
equivalent.
1.34 "Phase 4 Trial" means a human clinical trial in any country
initiated after Regulatory Approval in that country within the
approved product labeling.
1.35 "Phosvitin" means that phosphorylated protein found in egg
yolks.
1.36 "Preclinical Studies" means, with respect to a Product, (i)
synthesis and formulation, (ii) physical and chemical
properties, (iii) IN VITRO activity, (iv) IN VIVO activity in
animals, (v) metabolism, absorption and pharmacokinetics data
from animal studies, (vi) limited toxicology data, and (vii)
similar studies that are typically performed before first
administration of a Product to humans.
1.37 "Prime Rate" means that prime interest rate specified in the
Wall Street Journal, New York Edition, for the date specified.
1.38 "Product(s)" means product(s) comprising or utilizing DMI 9742
which are used for therapeutic treatment of human
dermatological conditions and diseases by topical application
of the product(s) to the skin.
1.39 "Proprietary Information" means all business and technical
information of a confidential and proprietary nature,
including ideas, inventions, discoveries, trade secrets,
know-how, protocols, research plans, development plans,
compilations, methods, techniques, processes, data, test
results, formulas, formulations, computer programs, reports,
other works of authorship, business plans, sales forecasts,
marketing information, pricing and financial information,
customer lists, branding strategy, and planned or pending
acquisitions and divestitures, and all physical embodiments
thereof, including disks, computers, software, printouts,
laboratory notebooks, writings, notes, documentation, records,
reports, sketches, plans, memoranda, compilations,
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devices, prototypes, instruments, blueprints, diagrams,
specifications, operating instructions, written descriptions,
photographs, videos, chemicals, biological materials,
compositions, lists, invention disclosures, and patent
applications.
1.40 "Reasonable Overhead" has the meaning given in Subsection (d)
of Section 11.1.
1.41 "Research Plan" means a Research Plan prepared and amended
from time to time by the Steering Committee as described in
Article 3. Each Research Plan will be a comprehensive plan for
performing the Research Program and will include a listing and
prioritization of projects, objectives and goals, a budget, a
schedule of deadlines and time periods for accomplishing all
necessary activities, procedures for ensuring compliance with
all regulatory and quality guidelines and requirements, and
all other relevant information.
1.42 "Research Program" means that Research Program described in
Article 4.
1.43 "Regulatory Approval" means all approvals, licenses,
registrations and authorizations by the appropriate government
entity or entities in a country or region (such as the
European Union) necessary for the commercial sale of a Product
in that country or region, including where applicable,
approval of labeling, pricing, reimbursements and
manufacturing. "Regulatory Approval" in the United States
shall mean final approval of an NDA pursuant to Part 314 of
Title 21 of the United States Code of Federal Regulations
permitting marketing of the Product in interstate commerce of
the United States. "Regulatory Approval" in the European Union
shall mean final approval of a Marketing Authorization
Application pursuant Council Directive 75/319/EEC, as amended,
or Council Regulation 2309/93/EEC, as amended.
1.44 "Steering Committee" means the Steering Committee described in
Article 3.
1.45 "Territory" means the world.
1.46 "Third Party" means an entity other than DMI or ENHANCE. A
Third Party may be an individual, corporation, firm,
partnership or other entity.
1.47 "USA" or "United States" shall mean the United States Of
America, its possessions, territories, and protectorates
(including the Commonwealth of Puerto Rico), and the District
Of Columbia.
Article 2. Scope And Goals Of The Development
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2.1 It is the intent of DMI and ENHANCE to jointly research,
develop and commercialize Product(s) for the Field within the
Territory, as more particularly set forth herein. It is a
priority of the parties to develop and commercialize
Product(s) for the Field within the Major Market Countries.
Therefore, DMI and ENHANCE agree, pursuant and subject to the
terms of this Agreement, to cooperate with, and provide
reasonable support for, each other in researching and
developing Product(s), with the goal of obtaining Regulatory
Approval for Product(s) as soon as reasonably practicable for
commercial marketing and sale in the Major Market Countries
and then in other countries of the Territory, including
especially Japan.
Article 3. Steering Committee
3.1 The parties hereby establish a Steering Committee to manage,
direct, supervise and coordinate, in accordance with the terms
of this Agreement, all of the activities contemplated by this
Agreement, including the research, development, Preclinical
Studies, Clinical Trials, and commercialization of Product(s)
for the Field within the Territory. In particular, but without
limitation, the responsibilities of the Steering Committee
will include:
(a) Preparation and approval of Research Plans for the
Research Program and modifications of these plans as
necessary or desirable, but no less than annually.
(b) Preparation and approval of Development And Marketing
Plans for Product(s) and modifications of these plans
as necessary or desirable, but no less than annually.
(c) Selection and approval of Product(s) for Preclinical
Studies and Clinical Trials.
(d) Approval of the protocols for all Preclinical Studies
and Clinical Trials and approval of the Indication(s)
for all Product(s) selected for Clinical Trials.
(e) Ensuring the existence and quality of Standard
Operating Procedures (SOPs) for compliance with
standards of good practice in all areas of a
Product's development and commercialization (E.G.,
GLP, GCP, GMP, etc.).
(f) Coordination of the manufacture and supply of the
Product(s), the regulatory filings, marketing,
post-approval development studies and all other
activities necessary or desirable for the research,
development and commercialization of the Product(s).
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(g) Facilitate the exchange of information and the
cooperation and coordination between the parties as
they exercise their respective rights and meet their
respective obligations under this Agreement.
(h) Develop a publication strategy within the guidelines
established in Section 22.2.
(i) Establish sub-committees as appropriate to facilitate
progress, coordination and cooperation in key areas.
(j) Designate one of the parties or another entity to
prepare and maintain necessary budgets and other
financial records.
(k) Establish the overhead amounts as provided in
Subsection (d) of Section 11.1.
(l) Perform such other functions as appropriate to
further the purposes of this Agreement.
3.2 The Steering Committee will be composed of an equal number of
representatives of each party who shall be appointed, and may
be replaced at any time, by such party on written notice to
the other party in accordance with this Agreement. Initially,
the Steering Committee will be composed of two representatives
of each party, but the number of representatives may be any
number subsequently agreed to by the Steering Committee. The
representatives will, preferably, be individuals with
expertise in basic research, pre-clinical research, clinical
research, manufacturing, regulatory filings, marketing and
post-approval development, as applicable to the stage of the
development or commercialization of the Product(s). Any member
of the Steering Committee may designate a substitute to attend
and perform the functions of the member at any meeting of the
Steering Committee. Each party shall designate one of its
representatives to be one of the Co-Chairpersons of the
Steering committee. Within forty-five (45) days after the
Effective Date, each party will notify the other of the
identity of its two initial representatives and of its
Co-Chairperson.
3.3 The Steering Committee will meet within sixty (60) days after
the Effective Date and at least once each Calendar Quarter
thereafter or at any other frequency agreed to by the Steering
Committee. The time and location of the initial meeting shall
be determined by the Co-Chairpersons, and the time and
location of subsequent meetings shall be established by the
Steering Committee. Meetings may be held in person or by means
of a telephone or video conference. The Co-Chairpersons shall
send notices and agendas for each meeting to all of the
members of the Steering Committee. Each party will alternately
be responsible for preparing and delivering to the members of
the Steering Committee, within thirty (30) days after the date
of each meeting,
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minutes of such meeting setting forth all decisions of the
Steering Committee and including a report on the progress of
work performed.
3.4 Within one hundred and twenty (120) days after the Effective
Date, the Steering Committee will prepare a Research Plan for
the Research Program. The Research Plan will be revised and
amended at least annually.
3.5 Within seven (7) months after the Effective Date, the Steering
Committee will prepare a Development And Marketing Plan for
the Clinical Trials of Product(s) selected by the Steering
Committee and for the development and commercialization of
such Product(s) for the Field within the Territory. The
Development and Marketing Plan will be revised and amended at
least annually.
3.6 The objective of the Steering Committee will be to reach
agreement by consensus on all matters. In the event that the
representatives do not reach consensus with respect to any
matter, a vote will be taken. Each member will have one vote.
All major decisions about the development and
commercialization of the Product(s) shall be made by majority
vote. In the event of a tie vote, the matter will be resolved
as provided in Article 24.
Article 4. Research Program
4.1 DMI shall be responsible for conducting all basic and
preclinical research and development of Product(s)
(collectively referred to herein as the "Research Program") in
accordance with the Research Plan as adopted and amended from
time to time by the Steering Committee.
4.2 In particular, DMI shall be responsible for conducting all
Preclinical Studies of Product(s) selected by the Steering
Committee (including formulation of Product(s) and animal
testing) in accordance with the Research Plan as adopted and
amended from time to time by the Steering Committee.
Article 5. Clinical Trials
5.1 DMI shall be responsible for conducting Phase 1 Trials of any
Product(s) selected by the Steering Committee. The Phase 1
Trials shall be conducted in accordance with the Development
And Marketing Plan for the Product(s) as adopted and amended
from time to time by the Steering Committee, and the Phase 1
Trials shall be designed and conducted so that the results can
be used in connection with obtaining Regulatory Approval of
the Product(s) in at least the Major Market Countries.
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5.2 DMI shall be responsible for conducting Phase 2 Trials or
Phase 2a and Phase 2b Trials of any Product(s) selected by the
Steering Committee. The Phase 2 Trials or the Phase 2a and
Phase 2b Trials shall be conducted in accordance with the
Development And Marketing Plan for the Product(s) as adopted
and amended from time to time by the Steering Committee, and
the Phase 2 Trials or Phase 2a and Phase 2b Trials shall be
designed and conducted so that the results can be used in
connection with obtaining Regulatory Approval of the
Product(s) in at least the Major Market Countries.
5.3 ENHANCE shall be responsible for conducting Phase 3 Trials of
any Product(s) selected by the Steering Committee and shall be
responsible for taking the steps necessary, and performing the
additional work required, to obtain Regulatory Approval to
market any such Product(s) for the Field in at least the Major
Market Countries in accordance with the Development And
Marketing Plan for the Product(s) as adopted and amended from
time to time by the Steering Committee.
5.4 ENHANCE shall be responsible for conducting Phase 4 Trials, if
any, for Product(s) in accordance with the Development And
Marketing Plan for the Product(s) as adopted and amended from
time to time by the Steering Committee.
Article 6. Regulatory Filings
6.1 Prior to submitting any IND or other Drug Approval
Application, the parties shall consult with each other
regarding the scope and general content of such IND or Drug
Approval Application. Each party shall have the right to
review and comment on all INDs and Drug Approval Applications
prior to filing in accordance with specific time lines or
other arrangements agreed upon by the Steering Committee, and
such comments will be given all due consideration by the other
party.
6.2 Regulatory documents for each filing will be owned and
centralized and held at the offices of the party primarily
responsible for such filing, but will be made available to the
other party for use in accordance with this Agreement. No
party shall have the right to transfer title or otherwise
attempt in any manner to dispose of any INDs or Drug Approval
Applications or otherwise impair the other party's rights in
such INDs or Drug Approval Applications without the written
consent of the other party.
6.3 Each party, at its own expense, or initiation shall have the
right to obtain a copy of any regulatory filing, including
INDs and other Drug Approval Applications, from the owner, and
each party shall have the right to cross reference in any
regulatory document, the INDs and other Drug Approval
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Applications of the other party for the purpose of conducting
Clinical Trials and seeking Regulatory Approvals.
6.4 The party primarily responsible for conducting a Clinical
Trial shall be primarily responsible for conducting meetings
and discussions and routine telephone communications with the
regulatory authority related to the Clinical Trial. All
parties may participate in all substantive discussions and
meetings with regulatory authorities. The party not primarily
responsible for conducting the Clinical Trial will send only a
reasonable number of representatives to any such discussion or
meeting.
6.5 The parties shall cooperate in good faith with respect to the
conduct of any inspections by any regulatory authority of a
party's site and facilities related to a Product, and each
party shall, at a minimum, be given the opportunity to attend
the summary, or wrap up, meeting related to the Product with
such regulatory authority at the conclusion of such site
inspection. The party whose site or facilities are being
inspected shall consider the attendance of the other party at
the inspections, but shall not be obligated to accept the
other party's attendance at such inspections if such
attendance would result in the disclosure to other party of
confidential information or trade secrets unrelated to
Product(s).
6.6 To the extent either party receives written or material oral
communications from a regulatory authority relating to a
Product or a Clinical Trial, the party receiving such
communication shall notify the other party and provide a copy
of any written communication as soon as reasonably
practicable.
6.7 The party primarily responsible for a Clinical Trial shall be
responsible for the prompt reporting of adverse reactions (as
defined by the World Health Organization) directly or
indirectly attributable to the use of the Product being used
in the Clinical Trial to the regulatory authority in
compliance with applicable law. After Regulatory Approval of a
Product, ENHANCE shall be responsible for the prompt reporting
of any adverse reactions directly or indirectly attributable
to the use of the Product to the appropriate regulatory
authorities in compliance with applicable law. Each party
shall immediately inform the other party of any adverse drug
reactions of which it becomes aware.
Article 7. Commercialization Of Products
7.1 After Regulatory Approval, ENHANCE shall be responsible for
commercializing Product(s) for the Field in at least the Major
Market Countries in accordance with the Development And
Marketing Plan for the Product(s) as adopted and amended from
time to time by the Steering Committee.
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Article 8. Manufacture And Supply Of Product(s)
8.1 DMI shall be responsible for the manufacture and supply of all
DMI 9742 and all Product(s) for all purposes, including for
all research, development, Preclinical Studies, Clinical
Trials and Commercial Sales.
8.2 ENHANCE agrees to purchase all its requirements of DMI 9742
and Product(s) from DMI on reasonable terms and conditions to
be negotiated, including a reasonable price for the DMI 9742
and/or Product(s) which is the actual cost of the DMI 9742
and/or Product(s) plus a reasonable profit.
Article 9. Obligations And Responsibilities Of Both Parties
9.1 Each party agrees to use Commercially Reasonable And Diligent
Efforts to research, develop and commercialize Product(s) for
the Field within the Territory, with priority being given to
the development and commercialization of Product(s) in the
Major Market Countries.
9.2 Each party shall be responsible for adherence to, and
compliance with, all applicable laws, regulatory guidelines
and requirements, and quality standards for the research,
development, manufacturing, Preclinical Studies and Clinical
Trials it performs and for Sales of Product(s) made by it.
9.3 Each party agrees to make available to the other party all
information produced or obtained by it as a result of
performing its obligations and responsibilities under this
Agreement, including all data, results and other information
from any research, Preclinical Study and/or Clinical Trial
conducted by it.
9.4 Each party shall mark all Product(s) sold by it, and shall
cause any entity authorized by it to sell Product(s) to mark
all Product(s) sold by that entity, with the applicable patent
number(s) in accordance with the requirements of applicable
laws and regulations in the country or countries of
manufacture and sale.
Article 10. License Fee
10.1 ENHANCE agrees to pay DMI a non-refundable payment of $30,000
due either (i) one hundred and twenty (120) days after the
Effective Date or (ii) three (3) days after ENHANCE's closing
of its current financing, whichever is earlier. ENHANCE also
agrees to pay DMI interest at the rate of 5.75% per annum on
this payment from the Effective Date until paid.
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Article 11. Funding Of Research, Development,
Preclinical Studies And Phase 1
And Phase 2 Clinical Trials Of Product(s)
11.1 ENHANCE agrees to make the following payments to DMI:
(a) Payment of all costs for the Research Program,
including the costs of all Preclinical Studies and
all of the costs of the manufacture or purchase of
Product(s), plus Reasonable Overhead determined as
set forth in Subsection (d) of this Section 11.1.
(b) Payment of all costs for Phase 1 Trials of
Product(s), including Indirect Costs, plus Reasonable
Overhead determined as set forth in Subsection (d) of
this Section 11.1.
(c) Payment of all costs for Phase 2 Trials or Phase 2a
and 2b Trials of Product(s), including Indirect
Costs, plus Reasonable Overhead determined as set
forth in Subsection (d) of this Section 11.1.
(d) Reasonable Overhead, as a percentage of total costs,
shall be established by the Steering Committee
independently for each activity for each year during
which the activity will be performed. Factors to be
considered by the Steering Committee in establishing
the Reasonable Overhead include the type of activity,
the stage of the activity (E.G., whether the activity
is just beginning or is near completion), whether it
is the first time that DMI has performed the
activity, a realistic and reasonable assessment of
the commitment of personnel and facilities that DMI
must make to the activity at each stage, etc.
However, in no event will the Reasonable Overhead be
less than DMI's actual Overhead plus 5% of total
costs. If the Reasonable Overhead established by the
Steering Committee and paid to DMI as provided in
Subsection (e) of this Section 11.1 is less than
DMI's actual Overhead plus 5% of total costs, the
deficiency will be paid to DMI as provided in
Subsection (e) of this Section 11.1.
(e) Payments (a), (b) and (c) shall be made on a periodic
basis to be determined by the Steering Committee, but
no less than quarterly. Each such payment shall be
that amount budgeted by the Steering Committee for
the upcoming period for activities (a), (b) and (c),
including the appropriate Reasonable Overhead, and
each such payment shall be made at least fifteen (15)
days prior to the commencement of the upcoming
period. Any overage will be credited toward the
payment for the next period. Any deficiency shall be
added to the payment for the next period or shall be
paid sooner if requested by DMI, in which case the
payment of the deficiency will be made within fifteen
(15) after being requested by DMI.
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(f) DMI shall keep such records, books and accounts
showing its use of the payments specified in
Subsections (a), (b) and (c) of this Section 11.1 as
the Steering Committee may require.
Article 12. Milestone Payments
12.1 ENHANCE agrees to pay DMI a non-refundable payment of $70,000
due three (3) days after commencement of the first Clinical
Trial of any Product. "Commencement" of a Clinical Trial shall
mean the first date on which the Clinical Trial may legally be
commenced.
12.2 ENHANCE agrees to pay DMI a non-refundable payment of $250,000
due fifteen (15) days after completion of the first Phase 1
Trial of any Product. "Completion" of a Phase 1 Trial shall
mean the date on which DMI provides ENHANCE with the first
report of the results of the Phase 1 Trial.
12.3 ENHANCE agrees to pay DMI a non-refundable payment of $500,000
due thirty (30) days after completion of the first Phase 2
Trial of any Product. "Completion" of a Phase 2 Trial shall
mean the date on which DMI provides ENHANCE with the first
report of the results of the Phase 2 Trial. In the case where
a Phase 2a Trial and a Phase 2b Trial are conducted instead of
a Phase 2 Trial, "completion" of the Phase 2a Trial and Phase
2b Trial shall mean the date on which DMI provides ENHANCE
with the first report of the results of the Phase 2b Trial.
12.4 ENHANCE agrees to pay DMI a non-refundable payment of
$1,000,000 due thirty (30) days after the date of the filing
of the first NDA in the United States or an equivalent Drug
Approval Application in another country of the Territory for
any Product.
12.5 ENHANCE agrees to pay DMI a non-refundable payment of
$2,000,000 due thirty (30) days after the day on which ENHANCE
receives official notification of the first Regulatory
Approval of any Product in any country of the Territory.
12.6 ENHANCE agrees to pay DMI a non-refundable payment of
$5,000,000 due thirty (30) days after the end of the Calendar
Quarter in which the cumulative amount of Net Sales of all
Products in the Territory of $100,000,000 is first achieved.
12.7 ENHANCE agrees to pay DMI a non-refundable payment of
$25,000,000 due thirty (30) days after the end of the Calendar
Quarter in which the
14
cumulative amount of Net Sales of all Products anywhere in the
Territory of $500,000,000 is first achieved.
12.8 ENHANCE agrees to pay DMI a non-refundable payment of
$50,000,000 due thirty (30) days after the end of the Calendar
Quarter in which the cumulative amount of Net Sales of all
Products anywhere in the Territory of $1,000,000,000 is first
achieved.
Article 13. Sharing Of Payments From Licensees And Sublicensees
13.1 ENHANCE and DMI will share equally all payments received from
licensees and/or sublicensees, including licensing fees,
sublicensing fees, milestone payments and royalties. Payments
of an equal share (I.E., 50%) of a payment received from
licensees and/or sublicensees shall be made no later than
thirty (30) days after its receipt.
Article 14. Royalties
14.1 ENHANCE shall pay DMI royalties on Net Sales made in each
Calendar Quarter. Payments of royalties shall be due on or
before thirty (30) days after the last day of each Calendar
Quarter in which there are Net Sales.
14.2 The royalty rate for a particular Calendar Quarter will be
based on the cumulative Net Sales that have been made by
ENHANCE of all Product(s) in the Territory from the First
Commercial Sale until the end of the Calendar Quarter for
which royalties are being paid as shown in the following
table:
- ------------------------------------------------ -------------------------------
AMOUNT OF CUMULATIVE NET SALES ROYALTY RATE
- ------------------------------------------------ -------------------------------
Net Sales up to $50,000,000 5% of Net Sales
Net Sales of $50,000,000 - $500,000,000 7.5% of Net Sales
Net Sales over $500,000,000 10% of Net Sales
- ------------------------------------------------ -------------------------------
14.3 These royalty rates will be reduced by an amount to be
negotiated, but not to exceed 25%, if it becomes necessary for
ENHANCE to acquire or license the Intellectual Property of one
or more Third Parties in order to be able to market Product(s)
for the Field in the Territory, but only for those countries
and those time periods for which acquisition or license of
Third Party Intellectual Property is necessary.
Article 15. Payments, Reports, Records And Audits
15
15.1 All payments required by this Agreement shall be made by wire
transfer in United States dollars to the credit of such bank
account as may be designated by the receiving party to paying
party in writing. Any payment which falls due on a date which
is a Saturday, Sunday or a legal holiday in the United States
may be made on the next succeeding day which is not a
Saturday, Sunday or legal holiday.
15.2 In the case of any delay in any of the payments required by
Articles 10-14 and 18, interest at 2% over the Prime Rate,
assessed from the first day after the payment was due until
the date the payment is received, shall be due.
15.3 Each party shall be responsible for paying any and all taxes
levied on account of the payments it receives.
15.4 Each party shall furnish or cause to be furnished to the other
party on a quarterly basis a written report or reports
covering each Calendar Quarter (each such Calendar Quarter
being sometimes referred to herein as a "reporting period") in
which Net Sales are made and/or in which payments are received
from licensees or sublicensees showing (i) Commercial Sales of
each Product in the Territory during the reporting period,
(ii) dispositions of Product(s) other than by sale for cash,
(iii) calculation of Net Sales for each Product for the
Calendar Quarter and of cumulative Net Sales of all Product(s)
since the First Commercial Sale, (iv) calculation of royalties
for each Product during the reporting period, (v) payments
received from licensees and sublicensees during the reporting
period, including, for royalty payments, a report from the
licensees and/or sublicensees showing the calculation of their
royalties, (vi) the exchange rates used in converting into
dollars from the currencies in which Net Sales were made or
payments from licensees and sublicensees were received, and
(vii) any other information necessary to establish the
accuracy and completeness of the payments. Reports shall be
due thirty (30) days after the end of each Calendar Quarter in
which Net Sales are made and/or in which payments are received
from licensees or sublicensees. If a party does not make Net
Sales or receive payments from licensees or sublicensees in a
Calendar Quarter, then that party will so notify the other
party.
15.5 Each party shall keep accurate and consistent records and
books of account containing regular entries relating to
Commercial Sales of Product(s), which records shall contain
all information necessary for the computation of Net Sales and
royalties. Such records shall be available for examination
from time to time, including for a period of three (3) years
after termination of this Agreement, by representatives of the
other party for the purpose of verifying the accuracy of the
quarterly reports required by Section 15.4 and Net Sales and
royalties computations. Such examination shall be made during
normal business hours with prior notice. Any such
representative shall be entitled to make copies and extracts
from such books and records. Each party shall fully
16
cooperate with such examination and inspection and shall give
any explanations that reasonably may be requested.
15.6 Upon the written request of a party ("requesting party"), and
not more than once in each calendar year, the other party
("audited party") will permit an independent certified public
accounting firm of recognized standing selected by the
requesting party and reasonably acceptable to the audited
party to have access during normal business hours to those
records of the audited party that may be necessary to verify
the accuracy of the quarterly reports required by Section 15.4
and calculations of Net Sales and royalties for any year
ending no more than 36 months prior to the date of such
request.
(a) The accounting firm will disclose to the requesting
party only whether the quarterly reports and Net
Sales and royalty calculations are correct or
incorrect, the specific details concerning any
discrepancies, and the corrected amount of Net Sales
and/or royalties. No other information will be
provided to the requesting party.
(b) If the requesting party's independent accounting firm
determines that royalties have been overpaid, the
requesting party will repay the audited party the
overage on the same date that the requesting party
delivers to the audited party such accounting firm's
written report. If the requesting party's independent
accounting firm determines that royalties have been
underpaid, the audited party will pay the amount of
the additional royalties plus interest assessed at 2%
over the Prime Rate from the time(s) the payment(s)
was(were) originally due. If DMI is the requesting
party and its independent accounting firm determines
that Net Sales have under-calculated resulting in a
delay in the payment of a milestone payment required
by Article 12, ENHANCE will pay the amount of the
milestone payment plus interest assessed at 2% over
the Prime Rate from the time the payment was
originally due. The payment of the additional
royalties and interest or of the milestone payment
and interest will be due no later than fifteen (15)
days after the date on which the requesting party
delivers to the audited party such accounting firm's
written report.
(c) The fees charged by the accounting firm will be paid
by the requesting party, provided that, if the audit
determines that the additional royalties payable by
the audited party to the requesting party for such
period exceed 5% of the royalties actually paid, then
the audited party will pay the reasonable fees and
expenses charged by such accounting firm. Similarly,
if an audit by DMI determines that ENHANCE
under-calculated Net Sales by 5% or more resulting in
a delay in the payment of a milestone payment, then
ENHANCE will pay the reasonable fees and expenses
charged by such accounting firm.
17
15.7 Each party will treat all financial information of the other
party subject to review under this Article 15 as Proprietary
Information in accordance with Article 21 hereof and will
cause its accounting firm to enter into an acceptable
confidentiality agreement obligating such accounting firm to
retain all such financial information in confidence pursuant
to the confidentiality and non-use provisions of Article 21.
Article 16. Intellectual Property
16.1 As of the Effective Date, DMI is the sole and exclusive owner
of Intellectual Property covering or relating to the topical
application of DMI 9742 to treat human dermatological diseases
and conditions, including the patent application listed in
Appendix A attached hereto and the inventions described in it.
DMI shall remain the owner of this Intellectual Property.
16.2 DMI shall also be the sole and exclusive owner of all
Intellectual Property concerning or relating to the treatment
of dermatological diseases and conditions, DMI 9742 and/or
Product(s) which is conceived, created, discovered, produced
or developed by either party and/or by assignees, licensees,
sublicensees, consultants and/or Third-Party contractors of
either party or both parties during the term of this
Agreement, including all Intellectual Property which is
conceived, created, discovered, produced or developed as a
result of the Research Program.
16.3 ENHANCE agrees to make prompt written disclosure to DMI of all
Intellectual Property concerning or relating to treatment of
dermatological diseases and conditions, DMI 9742 and/or
Product(s) which is conceived, created, discovered, produced
or developed by it, its sublicensees, its consultants and/or
its Third-Party contractors during the term of this Agreement.
16.4 ENHANCE agrees to require its sublicensees, consultants and
Third-Party contractors to assign to ENHANCE all Intellectual
Property concerning or relating to treatment of dermatological
diseases and conditions, DMI 9742 and/or Product(s) which is
conceived, created, discovered, produced or developed by any
of them during the term of the sublicense, consultant's
agreement or Third-Party contract
16.5 ENHANCE agrees to, and does hereby, assign to DMI all of its
right, title and interest in and to all Intellectual Property
concerning or relating to treatment of dermatological diseases
and conditions, DMI 9742 and/or Product(s) which is conceived,
created, discovered, produced or developed by it, its
sublicensees, consultants and/or its Third-Party contractors
during the term of this Agreement.
18
16.6 ENHANCE will assist DMI in every proper way to obtain,
maintain and enforce United States and foreign proprietary
rights relating to any and all Intellectual Property now or
hereafter owned by DMI which concerns or relates to treatment
of dermatological diseases and conditions, DMI 9742 and/or
Product(s). To that end, ENHANCE will:
(a) Execute, verify and deliver such documents and
perform such other acts (including providing evidence
and witnesses within its control and appearing as a
witness) as DMI may reasonably request for use in
applying for, obtaining, perfecting, evidencing,
sustaining and enforcing such proprietary rights.
(b) Where the assignment of proprietary rights to DMI is
provided for herein, execute, verify and deliver
assignments of such proprietary rights to DMI or its
designee.
(c) In the event DMI is unable for any reason, after
reasonable effort, to secure ENHANCE's signature on
any document needed in connection with the actions
specified in this Article 16, ENHANCE hereby
irrevocably designates and appoints DMI and its duly
authorized officers and agents as its agent and
attorney-in-fact, to act for and on ENHANCE's behalf
to execute, verify and file any such documents and to
do all other lawfully permitted acts to further the
purposes of this Article 16 with the same legal force
and effect as if executed by ENHANCE.
16.7 DMI will take all necessary steps to obtain and maintain
protection for all Intellectual Property now or hereafter
owned by it, and DMI shall be responsible for, and shall bear
all the costs of, obtaining and maintaining protection for its
Intellectual Property.
16.8 DMI shall keep ENHANCE advised as to all developments and
shall provide ENHANCE with all materials sufficiently in
advance to allow ENHANCE to review and provide input on any
proposed filing prior to its filing, which input shall be
considered in good faith and included where reasonably
possible by DMI. Notwithstanding the foregoing, DMI shall have
the right to take such actions as are reasonably necessary, in
its good faith judgment, to preserve all rights in its
Intellectual Property, and DMI shall notify ENHANCE as soon as
possible after taking any such action.
16.9 DMI will abandon Intellectual Property or any rights therein,
only after notice to ENHANCE at least thirty (30) days in
advance and only after giving ENHANCE an opportunity to assume
responsibility for obtaining and/or maintaining the
Intellectual Property protection proposed to be abandoned.
19
Article 17. License Grant to ENHANCE
17.1 DMI hereby grants to ENHANCE an exclusive license of all
Intellectual Property now or hereafter owned by it concerning
or relating to the treatment of dermatological diseases and
conditions, DMI 9742 and/or Product(s) to make, have made,
use, sell, offer for sale, market, commercialize, import and
export Product(s) to the extent necessary for ENHANCE to
perform its responsibilities and obligations in connection
with the development and commercialization of Product(s) for
the Field within the Territory pursuant to the terms of this
Agreement. The licensed Intellectual Property includes,
without limitation, the U.S. provisional patent application
listed in Appendix A attached hereto, all U.S. nonprovisional
patent applications corresponding to the provisional
application listed in Appendix A and all divisions,
continuations, continuations-in-part, and substitutions
thereof, all PCT applications corresponding to the provisional
application listed in Appendix A and any national patent
applications corresponding to any such PCT applications, any
patents issuing from any of these patent applications anywhere
in the world, any extensions or reissues of such patents, and
the inventions described in any and all such patent
applications and patents.
17.2 ENHANCE shall have the right to assign its rights to Third
Parties with the approval of DMI in all or part of the
Territory, provided the assignee agrees to assume all of
ENHANCE's obligations and responsibilities under this
Agreement in all, or the assignee's part, of the Territory.
Article 18. Retention Of Rights By DMI
18.1 DMI retains all rights in its Intellectual Property not
expressly granted to ENHANCE in Article 17.
18.2 In addition, DMI shall have the right, but not the
responsibility or obligation, to market Product(s) for the
Field within the Territory ("Co-Marketing Rights").
(a) These Co-Marketing Rights shall include the right to
make, have made, use, sell, offer for sale,
commercialize, import and export Product(s) to the
extent necessary for DMI to be able to market
Product(s) for the Field within the Territory.
(b) If DMI does market Products for the Field within the
Territory, DMI agrees to pay ENHANCE royalties on Net
Sales made in each Calendar Quarter.
20
(i) Payments of royalties shall be due on or
before thirty (30) days after the last day
of each Calendar Quarter in which there are
Net Sales.
(ii) The royalty rate for a particular Calendar
Quarter will be based on the cumulative Net
Sales that have been made by DMI of all
Product(s) in the Territory from the First
Commercial Sale by DMI until the end of the
Calendar Quarter for which royalties are
being paid as shown in the following table:
- ------------------------------------------------- ------------------------------
AMOUNT OF CUMULATIVE NET SALES ROYALTY RATE
- ------------------------------------------------- ------------------------------
Net Sales up to $50,000,000 5% of Net Sales
Net Sales of $50,000,000 - $500,000,000 7.5% of Net Sales
Net Sales over $500,000,000 10% of Net Sales
- ------------------------------------------------- ------------------------------
(iii) These royalty rates will be reduced by an
amount to be negotiated, but not to exceed
25%, if it becomes necessary for DMI to
acquire or license the Intellectual Property
of one or more Third Parties in order to be
able to market Product(s) for the Field in
the Territory, but only for those countries
and those time periods for which acquisition
or license of Third Party Intellectual
Property is necessary.
18.3 DMI shall have the right to assign its rights to Third Parties
with the approval of ENHANCE in all or part of the Territory,
provided the assignee agrees to assume all of DMI's
obligations and responsibilities under this Agreement in all,
or the assignee's part, of the Territory.
Article 19. Licenses And Sublicenses Of Third Parties
19.1 DMI shall have the right to license its rights to Third
Parties in all or part of the Territory with the approval of
ENHANCE.
19.2 ENHANCE shall have the right to sublicense its rights to Third
Parties in all or part of the Territory with the approval of
DMI.
19.3 If the parties desire that a single licensee/sublicensee shall
be responsible for the development and commercialization of
Product(s) for the Field in all or a part of the Territory,
the parties will jointly select the licensee/sublicensee. DMI
agrees to license its rights, and ENHANCE agrees to sublicense
its rights, to any such licensee/sublicensee as necessary.
21
Article 20. Third-Party Contractors
20.1 The parties may individually or jointly enter into written
contracts with Third Parties to perform activities required of
them under the terms of this Agreement or in furtherance of
the goals of this Agreement, including, without limitation,
Third-Party manufacturers, consultants, clinical investigators
and contract research organizations.
20.2 Any such Third-Party contractors must agree to adhere to all
applicable laws, regulatory guidelines and requirements, and
quality standards for the research, development, manufacture,
Preclinical Studies, Clinical Trials and/or other work it
performs and must agree to use only qualified personnel to
perform the work which is the subject of the Third-Party
contract.
20.3 All Third-Party contractors must also agree to be bound by
confidentiality and nonuse provisions which are substantially
the same as those contained in Article 21.
20.4 All Third-Party contractors must further agree to assign any
Intellectual Property conceived, created, discovered, produced
or developed as a result of the Third Party's performance
under the contract to the party with whom the contract is
made.
20.5 All Third-Party contracts for the manufacture and/or supply of
Product(s) or for the performance of Preclinical Studies or
Clinical Trials must be approved in advance by the Steering
Committee.
20.6 Third-Party contracts are distinguished herein from licenses
and sublicenses because no payments are made by the
Third-Party contractors to DMI and/or ENHANCE pursuant to the
terms of the Third-Party contract.
Article 21. Confidentiality
21.1 Each party agrees to treat and maintain any of the other
party's Proprietary Information which is in its possession,
which comes into its possession during the term of this
Agreement, or which is conceived, created, discovered,
produced, developed or obtained by the other party as a result
of performance under this Agreement, in confidence, and agrees
not to disclose any such Proprietary Information to anyone and
to not use any such Proprietary Information, except for the
purposes of performing its obligations under this Agreement.
Notwithstanding the foregoing, each party may disclose the
other party's Proprietary Information to its employees,
consultants, agents, and Third-Party contractors, or as is
deemed necessary for any purpose set forth in, or relating to,
this Agreement, provided that any recipients are bound by like
duties of confidentiality, nondisclosure and
22
nonuse as contained herein. Further, each party may disclose
and use the other party's Proprietary Information with the
written consent of the other party.
21.2 This Agreement supersedes the confidentiality agreement
between the parties dated November 13, 2002, but only insofar
as such confidentiality agreement relates to the subject
matter of this Agreement. All Proprietary Information
exchanged between the parties under such confidentiality
agreement relating to the subject matter of this Agreement
shall be deemed Proprietary Information hereunder and shall be
subject to the terms of this Agreement.
21.3 Notwithstanding the foregoing, each party may disclose the
existence and content of this Agreement and other agreements
between the parties to advisors, agents, consultants,
investors, and Third-Party contactors who agree to be bound by
like duties of confidentiality, nondisclosure and nonuse as
contained herein.
21.4 Nothing contained herein shall in any way restrict or impair
the right of either party to use, disclose, or otherwise deal
with the other party's Proprietary Information which the party
claiming waiver can demonstrate by written records:
(a) is or becomes generally known to the public through
no fault of the party;
(b) was known to it prior to the time of disclosure by
the other party;
(c) was independently developed by it;
(d) was lawfully obtained without restrictions from a
Third Party who has authority to make such
disclosure; or
(e) which the party is required to disclose pursuant to
applicable law or pursuant to a requirement,
subpoena, order or other request of a court, agency
or other governmental entity, including required
disclosures to a governmental entity or agency in
connection with seeking any governmental or
regulatory approval; in such case, the party shall
notify the other party prior to such disclosure so as
to give the other party an opportunity to protest the
disclosure.
Article 22. Publicity, Publications And Presentations
22.1 The parties agree that the public announcement of the
execution of this Agreement shall be in the form of a press
release to be agreed on by the parties before or on the
Effective Date and, thereafter, each party shall be entitled
to make or publish any public statement consistent with the
contents
23
thereof. Thereafter, the parties will jointly discuss and
agree on any statement to the public regarding this Agreement,
the transactions contemplated herein, or clinical, regulatory
and commercial developments relating to the Product(s),
subject in each case to disclosure otherwise required by law
or regulation as determined in good faith by each party. When
a party wishes to make a public statement, it will notify the
other party and give the other party at least three (3)
business days to review and comment on such statement, and the
parties will discuss and agree on the final content of the
statement. If a party is not legally able to give notice as
required by the previous sentence, it will furnish the other
party with a copy of its disclosure as soon as practicable
after the making thereof. The parties acknowledge the
importance of supporting each other's efforts to publicly
disclose results and significant developments regarding
Product(s). The principles to be observed in such public
disclosures will be accuracy, the confidentiality requirements
of Article 21, compliance with regulatory agency regulations
and guidelines, the advantage a competitor may gain from any
public statements under this Subsection 22.1, and the
standards and customs in the pharmaceutical industry for such
disclosures by companies comparable to DMI and ENHANCE.
22.2 DMI and ENHANCE each acknowledge the other party's interest in
publishing certain of the results of the work performed
pursuant to the terms of this Agreement and in making
presentations at scientific meetings to (i) obtain recognition
within the scientific community, (ii) advance the state of
scientific knowledge, and (iii) promote the Product(s). Both
parties also recognize their mutual interest in obtaining
valid patent rights for any inventions concerning or relating
to treatment of dermatological diseases and conditions, DMI
9742 and/or Product(s) and in protecting the confidentiality
of their Proprietary Information.
(a) Consequently, if either party desires to publish or
present the results of the work performed pursuant to
the terms of this Agreement, the
publishing/presenting party shall provide the
nonpublishing/nonpresenting party and the Steering
Committee with a draft manuscript of the proposed
publication or presentation.
(b) The nonpublishing/nonpresenting party and the
Steering Committee shall have thirty (30) days from
receipt of the draft manuscript to review it.
(c) The publishing/presenting party agrees to delete any
information identified by the
nonpublishing/nonpresenting party as its Proprietary
Information upon written request of the
nonpublishing/nonpresenting party received within the
thirty-day review period.
(d) The publishing/presenting party also agrees to delete
any information identified by the Steering Committee
as Proprietary Information, the
24
deletion of which is necessary for the protection of
the commercial interests of the parties, upon written
request of the Steering Committee received within the
thirty-day review period.
(e) If the Steering Committee objects in writing within
the thirty-day review period to the publication or
presentation as being inconsistent with the
publication strategy established by the Steering
Committee pursuant to Section 3.1, then the
publishing/presenting party and the Steering
Committee will discuss in good faith possible
modifications of, or delays in, the publication or
presentation. The publishing/presenting party shall
have the right to proceed with the publication or
presentation if an agreement with the Steering
Committee about the proposed modifications or delays
cannot be reached within thirty days after receipt of
the written objection.
(f) Finally, in the event that the
nonpublishing/nonpresenting party or the Steering
Committee determines that the manuscript describes
patentable subject matter, the
nonpublishing/nonpresenting party and/or the Steering
Committee shall so notify the publishing/presenting
party in writing within the thirty-day review period.
Upon receipt of this notification, the
publishing/presenting party will delay publication of
the manuscript or the presentation of the information
contained in the manuscript for a period of ninety
(90) days from the date of receipt of the written
notice.
Article 23. Representations, Warranties And Disclaimer
23.1 DMI represents and warrants that it has the right and
authority to enter into, and perform its obligations under,
this Agreement and that there are no outstanding grants,
licenses, encumbrances or agreements, either written, oral or
implied, inconsistent with this Agreement, or which this
Agreement, or performance hereunder, would violate, breach,
conflict with, or cause a default.
23.2 DMI represents and warrants that it is the sole and exclusive
owner of the patent application listed in Appendix A.
23.3 DMI further represents and warrants that it has the full right
and authority to grant ENHANCE all of the rights granted
hereunder.
23.4 ENHANCE represents and warrants that it has the right and
authority to enter into, and perform its obligations under,
this Agreement and that there are no outstanding grants,
licenses, encumbrances or agreements, either written, oral or
implied, inconsistent with this Agreement, or which this
Agreement, or performance hereunder, would violate, breach,
conflict with, or cause a default.
25
23.5 EXCEPT AS EXPRESSLY SET FORTH IN THIS ARTICLE 23, DMI DOES NOT
MAKE ANY EXPRESS OR IMPLIED WARRANTIES, STATUTORY OR
OTHERWISE, CONCERNING THE INTELLECTUAL PROPERTY OR PROPRIETARY
INFORMATION IT CURRENTLY OWNS AND WHICH IT IS LICENSING TO
ENHANCE HEREUNDER. SPECIFICALLY, WITHOUT LIMITING THE
GENERALITY OF THE FOREGOING, DMI MAKES NO EXPRESS OR IMPLIED
WARRANTY OF MERCHANTABILITY, FITNESS (FOR A PARTICULAR PURPOSE
OR OTHERWISE), QUALITY OR USEFULNESS OF ITS INTELLECTUAL
PROPERTY OR PROPRIETARY INFORMATION. DMI DOES NOT WARRANT THE
ACCURACY OF ANY INFORMATION INCLUDED WITHIN THE INTELLECTUAL
PROPERTY OR PROPRIETARY INFORMATION OR THAT ANY PATENTS
ISSUING FROM ITS PATENT APPLICATIONS WILL BE FREE FROM CLAIMS
OF INFRINGEMENT BY THIRD PARTIES OR ANY OTHER RIGHTS OF THIRD
PARTIES. UNDER NO CIRCUMSTANCE SHALL EITHER PARTY BE LIABLE TO
THE OTHER PARTY OR ANY THIRD PARTY FOR ANY INCIDENTAL OR
CONSEQUENTIAL DAMAGES IN TORT, CONTRACT, STRICT LIABILITY OR
OTHERWISE INCURRED BY THE OTHER PARTY OR ANY THIRD PARTY.
Article 24. Defense Of Third-Party Claims
24.1 With respect to claims or suits by Third Parties resulting
from, or arising out of, the performance of this Agreement,
the parties hereto agree as follows:
(a) Each party shall have the right to control the
defense or settlement of any claim or suit that may
be brought against it with counsel of its own
choosing and at its own expense.
(b) Each party agrees to inform the other party as soon
as practicable of any such claim or suit and to keep
the other party informed about the claim or suit
until resolved.
(c) Each party agrees to cooperate with the other party
to the extent necessary with respect to defending
against any such claim or suit. All of the
cooperating party's expenses shall be paid for, or
reimbursed by, the other party.
(d) Each party agrees that it will not settle any claim
or suit brought against it without the input of the
other party, which input will be considered in good
faith.
26
24.2 Notwithstanding the foregoing, a party seeking indemnification
from the other party must proceed as provided in the
indemnification provisions of Article 26.
Article 25. Infringement Or Misappropriation By Third Parties
25.1 Each party will inform the other as soon as possible upon
learning of any infringement or misappropriation by any Third
Party of any Intellectual Property currently or hereafter
owned by DMI.
25.2 DMI shall have the first option to proceed against such Third
Party. ENHANCE agrees that it will permit the use of its name
in any litigation suit, will sign all necessary papers, will
take all rightful oaths, and will do whatever else may be
necessary to assist DMI in proceeding against the Third Party.
All costs, expenses and disbursements of proceeding against
such Third Party shall be borne by DMI, including
reimbursement of expenses incurred by ENHANCE as a result of
assisting DMI in proceeding against the Third Party. DMI shall
keep ENHANCE fully informed of all such proceedings. DMI shall
not settle any such proceeding without the input of ENHANCE,
which input will be considered in good faith. In the event
that DMI is successful in proceeding against the Third Party,
all monies recovered by DMI for infringement or
misappropriation by way of settlement or order of court shall
be treated as follows. If it has not already done so, DMI
shall deduct and reimburse ENHANCE the attorneys fees,
disbursements and costs expended by ENHANCE in the conduct of
proceeding against the Third Party. Next, DMI shall deduct and
retain the attorneys' fees, disbursements and costs expended
by DMI in the conduct of proceeding against the Third Party.
Any monies remaining after such deduction shall be divided as
follows: 75% to DMI and 25% to ENHANCE.
25.3 In the event that DMI elects not to proceed, ENHANCE shall
have the right to proceed against the Third Party. DMI agrees
that it will permit the use of its name in any litigation
suit, will sign all necessary papers, will take all rightful
oaths, and will do whatever else may be necessary to assist
ENHANCE in proceeding against the Third Party. All costs,
expenses and disbursements of proceeding against such Third
Party shall be borne by ENHANCE, including reimbursement of
expenses incurred by DMI as a result of assisting ENHANCE in
proceeding against the Third Party. ENHANCE shall keep DMI
fully informed of all such proceedings. ENHANCE shall not
settle any such proceeding without the input of DMI, which
input will be considered in good faith. In the event that
ENHANCE is successful in proceeding against the Third Party,
all monies recovered by ENHANCE for infringement or
misappropriation by way of settlement or order of court shall
be treated as follows. If it has not already done so, ENHANCE
shall deduct and reimburse DMI the attorneys fees,
27
disbursements and costs expended by DMI in the conduct of
proceeding against the Third Party. Next, ENHANCE shall deduct
and retain the attorneys fees, disbursements and costs
expended by ENHANCE in the conduct of proceeding against the
Third Party. Any monies remaining after such deduction shall
be divided as follows: 75% to ENHANCE and 25% to DMI.
Article 26. Indemnification
26.1 ENHANCE hereby agrees to indemnify, defend and hold harmless
DMI, its officers, directors, employees, consultants and
agents from and against any and all liabilities, claims,
demands, actions, suits, damages, costs, expenses (including
reasonable attorneys' fees), or judgments (collectively
"Damages") arising out of, based upon, resulting from, or
presented or brought on account of, a material breach of this
Agreement by ENHANCE, except to the extent that such Damages
arise out of, are based upon or result from (i) a material
breach of the Agreement by DMI or (ii) the negligence or
willful misconduct of DMI.
26.2 DMI hereby agrees to indemnify, defend and hold harmless
ENHANCE, its officers, directors, employees, consultants and
agents, from and against any liabilities, claims, demands,
actions, suits, damages, costs, expenses (including reasonable
attorneys' fees), or judgments (collectively "Damages")
arising out of, based upon, resulting from, or presented or
brought on account of, a material breach of this Agreement by
DMI, except to the extent that such Damages arise out of, are
based upon or result from (i) a material breach of the
Agreement by ENHANCE or (ii) the negligence or willful
misconduct of ENHANCE.
26.3 ENHANCE hereby agrees to indemnify, defend and hold harmless
DMI, its officers, directors, employees, consultants and
agents, from and against any liabilities, claims, demands,
suits, actions, damages, costs, expense (including reasonable
attorneys' fees), or judgments (collectively "Damages")
arising out of, based upon, resulting from, or presented or
brought on account of, any injuries, losses or damages
sustained by any person or property in consequence of any act
or omission of ENHANCE, except to the extent that such Damages
arise out of, are based upon or result from (i) a material
breach of the Agreement by DMI or (ii) the negligence or
willful misconduct of DMI.
26.4 DMI hereby agrees to indemnify, defend and hold harmless
ENHANCE, its officers, directors, employees, consultants and
agents, from and against any liabilities, claims, demands,
suits, actions, damages, costs, expense (including reasonable
attorneys' fees), or judgments (collectively "Damages")
arising out of, based upon, resulting from, or presented or
brought on account of, any injuries, losses or damages
sustained by any person or property in
28
consequence of any act or omission of DMI, except to the
extent that such Damages arise out of, are based upon or
result from (i) a material breach of the Agreement by ENHANCE
or (ii) the negligence or willful misconduct of ENHANCE.
26.5 A party entitled to indemnification under this Article 26 (the
"Indemnified Party") shall promptly notify the party
potentially responsible for such indemnification (the
"Indemnifying Party") upon becoming aware of any claim or
claims asserted or threatened against such Indemnified Party
which could give rise to a right of indemnification under this
Agreement; provided, however, that the failure to give such
notice shall not relieve the Indemnifying Party of its
indemnity obligation hereunder, except to the extent that such
failure substantially prejudices its rights hereunder.
26.6 The Indemnifying Party shall have the right to defend, at its
sole cost and expense, such claim by all appropriate
proceedings, which proceedings shall be prosecuted diligently
by the Indemnifying Party to a final conclusion or settled at
the discretion of the Indemnifying Party; provided, however,
that the Indemnifying Party may not enter into any compromise
or settlement unless the Indemnified Party consents thereto,
which consent shall not be unreasonably withheld, conditioned
or delayed.
26.7 The Indemnified Party may participate in, but not control, the
defense or settlement of any claim controlled by the
Indemnifying Party pursuant to this Article 26 and shall bear
its own costs and expenses with respect to such participation;
provided, however, that the Indemnifying Party shall bear such
costs and expenses if counsel for the Indemnifying Party shall
have reasonably determined that such counsel may not properly
represent both the Indemnifying Party and the Indemnified
Party.
26.8 If the Indemnifying Party fails to notify the Indemnified
Party within twenty (20) days after receipt of notice of a
claim in accordance with Section 26.5 hereof that it elects to
defend the Indemnified Party pursuant to this Article 26, or
if the Indemnifying Party elects to defend the Indemnified
Party but fails to prosecute or settle the claim diligently
and promptly, then the Indemnified Party shall have the right
to defend, at the sole cost and expense of the Indemnifying
Party, the claim by all appropriate proceedings, which
proceedings shall be promptly and vigorously prosecuted by the
Indemnified Party to a final conclusion or settlement;
provided, however, that in no event shall the Indemnifying
Party be required to indemnify the Indemnified Party for any
amount paid or payable by the Indemnified Party in the
settlement of any such claim agreed to without the consent of
the Indemnifying Party, which consent shall not be
unreasonably withheld, conditioned or delayed.
Article 27. Insurance
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27.1 DMI and ENHANCE will obtain and maintain (i) general liability
insurance in comprehensive form in an appropriate amount,
which shall cover no less than the following risks: bodily
injury, personal injury, liability, property damage and
products liability, and (ii) such other types of insurance
considered to be reasonable and prudent given the types of
risks involved in research, development, pre-commercialization
and commercialization of pharmaceuticals, and the liability
limits on any such insurance shall be reasonable for the risks
involved. Each party shall obtain and maintain such coverage
with Third Party commercial insurance carriers rated A or
better. Each party shall name the other party as an additional
insured on the above-described policies and shall provide the
other party with copies of the endorsement to such insurance
policies naming the other party as an additional insured. Each
party shall instruct its insurance carriers providing such
coverage to notify the other party in writing of any material
change in coverage provided by such policies.
Article 28. Term And Termination
28.1 Unless terminated sooner as provided below, this Agreement
will continue in full force and effect until the later of (i)
such time after the First Commercial Sale when no commercial
Sales of any Product(s) for the Field have been made anywhere
in the Territory for a period of one (1) year by either party
or by any licensees, sublicensees and/or assignees of one or
both parties, (ii) one (1) year after the termination of all
licenses and sublicenses pursuant to Article 19, or (iii)
fifty (50) years from the Effective Date.
28.2 The parties may at any time terminate this Agreement, in part
or in its entirety, by mutual written agreement.
28.3 In the event of a breach or default in respect of any of the
terms of this Agreement by either party, the other party shall
give notice in writing, specifying in detail the nature of the
breach or default. If the alleged breach or default is not
cured within sixty (60) days after receipt of this notice, the
party giving notice shall have the right to immediately
terminate this Agreement by giving a second written notice to
the breaching party.
28.4 In the event of either party experiencing financial
difficulty, that party shall immediately notify the other
party to that effect. The party so notified shall have the
right to terminate this Agreement within thirty (30) days of
said notification. A party shall be considered as having
financial difficulties by:
(a) that party's commencement of a voluntary case under
any applicable bankruptcy code or statute, or by its
authorizing, by appropriate proceedings, the
commencement of such a voluntary case;
30
(b) that party's failing to receive dismissal of any
involuntary case under any applicable bankruptcy code
or statute (wherein the other party is not a party to
the case) within sixty (60) days after initiation of
such action or petition;
(c) that party's seeking relief as a debtor under any
applicable law of any jurisdiction relating to the
liquidation or reorganization of debtors or to the
modification or alteration of the rights of
creditors, or by consenting to or acquiescing in such
relief;
(d) the entry of an order by a court of competent
jurisdiction finding it to be bankrupt or insolvent,
or ordering or approving its liquidation,
reorganization, or any modification or alteration of
the rights of its creditors, or assuming custody of,
or appointing a receiver or other custodian for, all
or a substantial part of its property or assets; or
(e) that party's making an assignment for the benefit of,
or entering into a composition with, its creditors,
or appointing or consenting to the appointment of a
receiver or other custodian for all or a substantial
part of its property.
28.5 Upon termination of this Agreement for any reason:
(a) All rights and licenses granted to ENHANCE hereunder
shall revert to DMI, except that ENHANCE shall have
the right to sell any Product(s) in inventory as
provided in Subsection (b) of this Section 28.5.
(b) ENHANCE shall cease all activities with respect to
the Product(s), including all making (by ENHANCE
and/or by Third Parties for ENHANCE), using, selling,
offering for sale, marketing, commercializing,
importing and exporting of Product(s).
Notwithstanding the foregoing, ENHANCE shall have the
right to sell any Product(s) in inventory, provided
ENHANCE makes the payments and reports required by
Articles 12-15.
(c) If requested by DMI, ENHANCE shall (i) make its
personnel and other resources reasonably available to
DMI for a reasonable period of time, not to exceed
six (6) months from the date of termination, to
effect an orderly transition of responsibilities and
(ii) provide and assign to DMI all clinical data,
INDs, Drug Approval Applications, Regulatory
Approvals, and all other regulatory documentation
covering the Product(s) that ENHANCE may have
developed in its activities under this Agreement. If
termination of the Agreement occurred because of a
breach by ENHANCE, then ENHANCE will be responsible
for all of the costs of performing these obligations.
If termination of the
31
Agreement occurred because of a breach by DMI, then
DMI will be responsible for all of the costs of
performing these obligations. Otherwise, the parties
will share the costs.
(d) ENHANCE's sublicense(s) of its rights pursuant to
Sections 19.2 and 19.3 above (referred to herein as
"Article 19 Sublicense(s)") shall be transferred to
DMI. The Article 19 Sublicense(s) will remain in full
force and effect so long as the sublicensee(s)
perform(s) the obligations of the Article 19
Sublicense(s), and DMI shall have all of the rights
and benefits of the Article 19 Sublicenses (including
the right to receive 100% of all payments due under
the Article 19 Sublicenses) and shall be responsible
for performing all of the obligations required of
ENHANCE by the Article 19 Sublicenses. ENHANCE will
execute such documents as may be requested by DMI to
attest to the transfer to DMI of all Article 19
Sublicenses and rights therein.
28.6 Upon termination of this Agreement for any reason, nothing
herein shall be construed to release either party from any
obligation matured prior to the effective date of such
termination, and neither party waives any rights it may have
to remedies arising out of the termination or breach of
surviving obligations.
Article 29. Dispute Resolution
29.1 In the event of any controversy or claim arising out of or
relating to any provision of this Agreement or the
collaborative effort contemplated hereby, the parties shall
initially refer such dispute to the Steering Committee.
29.2 Failing resolution by the Steering Committee of any
controversy or claim within thirty (30) days after such
referral, the matter shall be referred to the Chief Executive
Officers of DMI BioSciences, Inc. and Enhance Lifesciences,
Inc. Any controversy or claim arising in the Steering
Committee or any matter about which the Steering Committee is
deadlocked shall also be referred to the Chief Executive
Officers of DMI BioSciences, Inc. and Enhance Lifesciences,
Inc.
29.3 The Chief Executive Officers of DMI BioSciences, Inc. and
Enhance Lifesciences, Inc. shall, as soon as practicable,
attempt in good faith to resolve any controversy or claim
referred to them. If such controversy or claim is not resolved
within thirty (30) days after referral to the Chief Executive
Officers of DMI BioSciences, Inc. and Enhance Lifesciences,
Inc., either party shall be free to notify the Chief Executive
Officers of DMI BioSciences, Inc. and Enhance Lifesciences,
Inc. that it wishes the matter to be referred to non-binding
mediation.
32
29.4 The non-binding mediation will proceed as follows. The
controversy or claim shall be presented to a single mediator.
The single mediator shall be chosen by the Chief Executive
Officers of DMI BioSciences, Inc. and Enhance Lifesciences,
Inc. within ten (10) days after receiving the notification
specified in Subsection 29.3. The single mediator shall be an
individual with experience and qualifications suitable to the
controversy or claim in dispute. If the Chief Executive
Officers of DMI BioSciences, Inc. and Enhance Lifesciences,
Inc. cannot agree on a single mediator, they shall each
appoint a mediator within ten (10) days after receiving the
notification specified in Subsection 29.3, and these two
mediators shall chose the single mediator within ten (10) days
after being appointed. The single mediator will conduct a
hearing within thirty (30) days after being chosen. The
hearing will be held at a time and place agreed to between the
parties and the mediator and will last no longer than eight
(8) hours. At the hearing, each party will each have no more
than four (4) hours to present evidence, witnesses and
arguments, to present a proposed remedy, and to answer the
questions of the mediator. Copies of all documents to be
relied on by a party shall be provided to the mediator and the
other party at least three (3) business days prior to the
hearing. The mediator will notify the parties of his/her
non-binding decision no later than three (3) business days
after the hearing.
29.5 If either party elects not to accept the non-binding decision
of the mediator, that party shall be free to initiate legal
proceedings in a court of competent jurisdiction in New York.
29.6 This Agreement shall be governed by, and its provisions
construed and enforced in accordance with, the law of the
State of New York. Both parties agree to submit to the
jurisdiction of all New York courts, including federal courts,
and to waive any and all rights under the law of any
jurisdiction to object on any basis to jurisdiction or venue
within New York.
Article 30. Miscellaneous
30.1 All payments, notices, reports, exchanges of information and
other communications between the parties required by this
Agreement shall be sent to the addresses set out below, or to
such other addresses as may be designated by one party to the
other by notice pursuant hereto, by (i) prepaid, certified air
mail (which shall be deemed received by the other party on the
fifth business day following deposit in the mails), (ii)
facsimile transmission or other electronic means of
communication (which shall be deemed received when
transmitted), with confirmation by first class letter, postage
prepaid, or (iii) an express courier service, such as FedEx,
DHL, Airborne or similar delivery service, with capabilities
of tracking packages and/or letter delivery and providing
verification of receipt (in the even of the use of such a
service, receipt shall be on the date actually received, as
verified by such delivery service).
33
If to DMI:
DMI BioSciences Inc.
3601 South Clarkson Street, Suite 420
Englewood, Colorado, USA 80110
Attention: Mr. Bruce G. Miller
If to ENHANCE:
Enhance Lifesciences, Inc.
One Rockefeller Plaza, Suite 1600
New York, New York 10020
Attention: Mr. Chris Every
30.2 No party to this Agreement shall be liable for failure to
perform on its part any provision or part of this Agreement
when such failure is due to fire, flood, strike or other
industrial disturbance, unavoidable accident, war, embargo,
inability to obtain materials, transportation controls,
governmental actions, or other causes beyond the control of
such party, but only for the period of delay imposed by such
cause.
30.3 For purposes of this Agreement, "business day" means a day on
which the banks in the United States are generally open to
conduct their regular banking business.
30.4 Should any part or provision of this Agreement be held
unenforceable or in conflict with the law, the validity of the
remaining parts or provisions shall not be affected by such
holding.
30.5 The failure of either party to enforce, at any time and for
any period of time, a provision of this Agreement is not, and
shall not be construed to be, a waiver of any such provision
or of the right of such party to subsequently enforce each and
every such provision.
30.6 This Agreement constitutes the entire agreement and
understanding between the parties with respect to the subject
matter hereof, and supersedes and replaces all prior
negotiations, understandings and agreements, whether written
or oral, including the Term Sheet executed November 29, 2002
and the confidentiality agreement between the parties dated
November 13, 2002, in part as provided in Subsection 16.2
hereof.
30.7 All amendments and modifications of this Agreement shall be in
writing and executed by both parties.
30.8 Each party will obtain any government approval required in its
country of domicile to enable this Agreement to become
effective, or to enable any payment
34
hereunder to be made, or any other obligation hereunder to be
observed or performed. Each party will keep the other informed
of progress in obtaining any such governmental approval and
will cooperate with the other party in any such efforts.
30.9 This Agreement is made subject to any restrictions concerning
the export of materials and technology from the United States
which may be imposed upon or related to either party to this
Agreement from time to time by the Government of the United
States. Neither party will export, directly or indirectly, any
Proprietary Information, Intellectual Property, or Product(s)
or other materials utilizing such technology to any countries
for which the United States Government or any agency thereof
at the time of export requires an export license or other
governmental approval, without first obtaining the written
consent to do so from the Department of Commerce or other
agency of the United States Government when required by
applicable statute or regulation.
30.10 This Agreement may be assigned by either party only with the
prior written consent of the other party, which consent will
not be unreasonably withheld, and provided the assignee agrees
to perform fully all of the responsibilities and obligations
of the assignor hereunder. Any purported assignment in
contravention of this Section 30.10 shall, at the option of
the non-assigning party, be null and void and of no effect. No
assignment shall release either party from responsibility for
performance of any accrued obligation of such party hereunder.
30.11 This Agreement shall be binding upon and inure to the benefit
of the parties, their respective officers and directors, and
the permitted assignees of either party.
30.12 This Agreement may be executed in any number of counterparts,
each of which will be deemed to be an original, and all of
which together shall be deemed to be one and the same
instrument. Further, telefax signatures shall be binding.
30.13 Nothing contained herein shall be deemed to create an agency,
joint venture, amalgamation, partnership or similar
relationship between DMI and ENHANCE.
30.15 This Agreement does not confer, and shall not be construed as
conferring, on either party, or any other entity, any
proprietary right or license in or to the other party's
Proprietary Information or Intellectual Property, except as
expressly provided in this Agreement.
30.16 Ambiguities, if any, in this Agreement shall not be construed
against any party, irrespective of which party may be deemed
to have authored the ambiguous provision.
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30.17 The Article headings are for convenience only and will not be
deemed to affect in any way the language of the provisions to
which they refer.
IN WITNESS HEREOF, each party hereto acknowledges that the
representative named below has authority to execute this Agreement on behalf of
the respective party to form a legally binding contract and has caused this
Agreement to be duly executed on its behalf.
DMI BioSciences, Inc. Enhance Lifesciences, Inc.
By: /s/ Bruce G. Miller By: /s/ Christopher Every
---------------------------- --------------------------
Name: Bruce G. Miller Name: Christopher Every
Title: President and CEO Title: Chief Executive Officer
Date: March 25, 2003 Date: March 25, 2003
36
APPENDIX A
- -------------------------- ---------------------------- ------------------------
APPLICATION NUMBER TITLE AND INVENTOR COUNTRY AND FILING DATE
- -------------------------- ---------------------------- ------------------------
60/______ (provisional Treatment Of Inflammation; USA; filed November 27,
application) David Bar-Or 2002
- -------------------------- ---------------------------- ------------------------
37