EXCLUSIVE LICENSING AGREEMENT FOR CERTAIN ASSETS OF
SMLX, INC., AND ANY SUBSIDIARY THEREOF INTO WHICH
SUCH ASSETS ARE TRANSFERRED OR PLACED AND
PURCHASE OPTION AGREEMENT
This agreement dated as of the 13th day of April, 1999, among VECTOR
MEDICAL TECHNOLOGIES, INC., a Florida corporation (hereinafter "VECTOR"), and
SMLX, INC., a Florida corporation (hereinafter "SMLX"), and made for the
purpose of setting forth the parties various rights and responsibilities in
regard to each other and, specifically but not exclusively as to the Assets
(defined, infra), of SMLX, and the parties acknowldging good and sufficient
consideration therefor agree as follows:
1. The effective date of this Agreement shall be the date as above
listed (agreement date), and this agreement does and shall supercede any and
all prior agreements of the parties.
2. The intent of the parties and of this agreement is that by the
execution hereof SMLX grants to VECTOR an exclusive license, subject to the
payment of royalties, as to certain assets of SMLX and any subsidiary thereof,
whether said subsidiary currently exists or is hereafter formed or created.
3. Assets of SMLX is defined to mean and comprise certain assets and
property of SMLX, including but not limited to proprietary technical know-how,
technical information, data, techniques, ideas, and other information (whether
or not patentable) processes, inventions, discoveries, trademarks,
technologies, brands, intellectual and industrial property, databases, FDA
submissions and approvals, patents, inventors certificates, patent
applications and issuances, products, and any and all other future and current
discoveries directed or managed by SMLX or any subsidiary thereof for such
technologies possessed or acquired by same for the transdermal delivery of
high molecular weight drugs and other natural and synthetic materials. In
addition, Assets shall comprise the above in existence at the time of this
Agreement as well as matters and materials coming into existence for the
duration of this agreement and for any period during which VECTOR pays
royalties.
4. SMLX warrants that there are no pending legal actions that have not
been disclosed to VECTOR against it and it is aware of no matter or incident
giving rise to liability that may effect the value of the Assets.
5. The parties agree that within ten (10) days of receipt of the first
monthly $75,000.00 installment due hereunder (see paragraph 6.g., infra), SMLX
shall transfer any and all Assets as described in paragraph 3, supra, to a
newly-formed subsidiary to be wholly owned (100%) by SMLX. SMLX shall provide
VECTOR with a copy of the Articles of Incorporation and the instrument(s) of
transfer of the assets forthwith.
6. As and for royalties for the exclusive license granted in regard to
the Assets by SMLX to VECTOR, VECTOR shall pay royalties as follows:
a. In regard to that portion of the Assets covered by or is the
subject of a patent held entirely by SMLX or its wholly-owned subsidiary,
VECTOR shall pay to SMLX a royalty of four per cent (4%) of its net sales or
other net revenues derived from said portion of the Assets.
b. In regard to that portion of the Assets that is not covered or is
not the subject of a patent held entirely by SMLX or its wholly-owned
subsidiary, VECTOR shall pay to SMLX a royalty of three per cent (3%) of its
net sales or other net revenues derived from said portion of the Assets.
c. Net sales is herein defined as gross sales less returns or
recalls and allowances and shall be predicated upon payments actually received
and not upon orders taken or accounts receivable.
d. Royalty payments shall be due from VECTOR to SMLX quarterly
within forty-five (45) days from the end of any calendar quarter for which
royalties are payable.
e. This license is exclusive to VECTOR and may be assigned by it
upon the same terms.
f. This exclusive license shall, at VECTOR's option, continue for a
period of ten (10) years from the agreement date.
g. VECTOR shall pay SMLX non-refundable advances against future
royalties to be used solely by SMLX or its wholly-owned subsidiary for the
purpose of providing "Feasibility Studies" for development of technologies to
supplement and enhance the Assets. Feasibility Studies shall be as defined in
addendum "A" attached hereto and which is incorporated herein. Said
non-fundable advances against future royalties may be paid for a period of
four (4) years from the date of agreement date, subject to the option to
purchase, described infra. Payments in connection with this sub-paragraph
shall amount to at least $900,000.00 per year, and, notwithstanding the
parties' agreement to pay royalties on a quarterly basis (see paragraph 5.c.,
supra), said advances shall be paid in monthly installments of at least
$75,000.00. Furthermore, in regard to the advances during the initial
four-year period, the parties shall meet at least ninety (90) days prior to
the beginning of each calendar year to consider the ongoing feasibility of the
relationship and to determine the appropriate amount of non-refundable
advances to be made by VECTOR to SMLX in the coming twelve month period and to
agree upon projects and procedures to be funded. Finally, SMLX acknowledges
receipt of an initial non-refundable advance against future royalties paid by
VECTOR on January 21, 1999 in the amount of $75,000.00.
7. In the event that VECTOR fails to make its payments in connection
herewith, said failure to make payments shall not constitute a default
hereunder until such time as SMLX notifies VECTOR in writing of the failure to
receive payment and the expiration of twenty (20) days from the giving of
said notice. If within said twenty days VECTOR fails to cure the non-payment,
this Agreement shall be deemed null and void and the exclusive license and
option granted hereunder terminated without further obligation or liability of
one party to the other.
8. VECTOR, at its sole option, may declare any further obligation or
performance under this agreement null and void in the event that adverse
reactions to the technologies comprising the Assets occur in patients or
should efficacy not qualify for submission to the FDA for subsequent approval.
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In this occurrence, VECTOR shall have no liability to SMLX beyond amounts
already paid (non-refundable advances against future royalties) and assets
shall revert to SMLX, free and clear.
9. SMLX grants and vends for good and valuable consideration an option
to purchase one hundred per cent (100%) of the Assets, including any
subsidiary corporation or entity of SMLX created pursuant to this Agreement,
which option shall expire four (4) years from the date hereof. VECTOR shall
not exercise this option prior to the first anniversary following the
agreement date. The purchase price to be paid for the Assets, including any
subsidiary corporation or entity, shall be determined by the U.S. Dollar
amount of gross sales attributable to the Assets in the preceding twelve-month
period:
GROSS SALES (Millions) PURCHASE PRICE (Millions)
$0-$19.9 million $3.6 million
$20.0-$49.9 million $4.6 million
$50.0-$99.9 million $5.6 million
$100.0-or more million $6.6 million
VECTOR may elect to pay all or a portion of the purchase price as above
in either U.S. Dollars or the equivalent value in shares of VECTOR common
stock at such time as VECTOR registered and tradeable common stock is traded
on either the NASDAQ, American Stock Exchange or New York Stock Exchange.
However, in the event that VECTOR's stock price is less than $5.00 per share,
no more than one-half of the purchase price shall be paid in VECTOR stock.
Additionally, VECTOR shall be credited toward the purchase price with all sums
paid pursuant to or acknowledged in this Agreement. Notwithstanding the
outright purchase as described herein, VECTOR shall continue to pay royalties
in accordance with paragraph 6.a. and 6.b. in regard to the net profits
derived from the sale of actual products that came into existence (as opposed
to being in development or otherwise being part of the Assets acquired), and
which were actually being sold at the time of the purchase, for the balance of
the ten-year period running from the agreement date. In all other respects,
the obligation to pay royalties shall cease due to VECTOR's having acquired
the assets
In regard to the payments contemplated in paragraph 6.f., in the event
that VECTOR exercises its option hereunder, no further advances against future
royalties shall be paid.
Should VECTOR elect not to exercise its option and not purchase the
Assets, including any subsidiary corporation or entity of SMLX created
pursuant to this Agreement, VECTOR shall nevertheless be entitled to
continuation of the exclusive licensing portion of this Agreement for the
remainder of the ten-year period contemplated herein and all the rights and
obligations attendant to same.
10. The parties shall hold their Agreement and relationship in
confidence, and this confidentiality may not be abrogated by one party without
the written permission of the other. This confidentiality shall extend to the
Assets.
11. This Agreement sets forth and constitutes the entire agreement among
the parties with respect to the subject matter of this Agreement, and
supersedes any and all prior agreements, understandings, promises and
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representations made by either party to the other concerning the subject
matter and the terms applicable to this Agreement. This Agreement may not be
released, discharged, amended or modified in any manner except by an
instrument in writing signed by all parties.
12. The invalidity or unenforceability of one or more provisions of this
Agreement shall not affect the validity or enforceability of any of the other
provisions of this Agreement, and this Agreement shall be construed in all
respects as if such invalid or unenforceable provisions were omitted.
13. This Agreement shall be deemed to have been entered into and shall be
construed and enforced in accordance with the laws of the State of Florida,
and venue of any action arising out of this Agreement shall be Palm Beach
County, Florida. Prior to initiating any court action between them, the
parties agree to mediate any dispute. "Dispute" means any controversy or claim
between the parties. It includes controversies or claims that are related
directly or indirectly to this Agreement, any contract or any product, whether
based on contract, statute, tort, fraud, fraudulent inducement,
misrepresentation, or other legal or equitable theory, whenever arising or
initiated, between the parties. Said mediation shall be conducted by a
mutually selected mediator or, at the option of either party, by the American
Arbitration Association ("AAA"). The cost of mediation shall be borne equally
by the parties, unless otherwise agreed by them. Should such mediation be
unsuccessful and court action be instituted or brought, the prevailing party
in any action brought pursuant to the enforcement of this Agreement shall be
entitled to an award of reasonable attorneys fees and costs, inclusive of any
appeal.
14. The failure of any party to insist, in any one or more instances,
upon the performance of any of the terms, covenants or conditions of this
Agreement and to exercise any right under it, shall not be construed as a
waiver or relinquishment of the future performance of any such terms,
covenants or conditions or the future exercise of such right, but the
obligations of the other party with respect to such future performance shall
continue in full force and effect.
15. Any notice or other communication required or permitted to be made or
given to any party pursuant to this Agreement shall be in writing and shall be
sent to each party as follows:
VECTOR MEDICAL SMLX, INC.
TECHNOLOGIES, INC. 000 Xxxxx Xxxxxxxxx
0000 Xxxxx Xxxxxxx Xxxxxxx Xxxxxxxxxx, XX 00000
Xxxxx 000
Xxxx Xxxxx, XX 00000
or to such other address as it shall designate by written notice, similarly
given, to each other party, and shall be deemed given on the earlier of: (a)
physical delivery to a party; and (b) 5 days after mailing by prepaid first
class or express mail.
16. This Agreement may be executed in any number of counterparts, each of
which shall be an original, but such counterparts shall together constitute
but one and the same instrument.
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IN WITNESS, the parties have caused this Agreement to be executed by
their authorized officers as of the day and year first above written.
VECTOR MEDICAL SMLX TECHNOLOGIES, INC.
TECHNOLOGIES, INC.
By:/s/ Xxx Xxxxxxxxxx By:/s/ Xxxxx X. Xxxxx
President President
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ADDENDUM "A"
SMLX will provide as part of the license fee the basic developmental research
(Feasibility Study) for the selected target drug or substance that will be
proposed for the transdermal delivery system technology of the company. A
finite number of active materials, can be studied under this agreement at any
given time and will be mutually agreed to in advance. If additional studies
are requested it is at Vector's expense. This Feasibility Study will consist
of the following areas:
1. Preliminary computer search analysis of the drug or product to determine
(if possible) its chemistry, bio-distribution, metabolic fate, patient
history, therapeutic use, safety, FDA status, and/or any other available
literature references that would be of assistance in designing the proper
protocols for the goal.
2. Preliminary patent search to determine if there may be an I P or
infringement problem
3. Design the preliminary testing protocols in concert with Vector. This
would include such determinations as target dosage, time parameters, delivery
rates, test species and pass-fail goals.
4. Design the specific test protocol from the above and outline the test
evaluation methods to be used; i.e., the lab tests and methods.
5. Validate the test (lab) procedures to be used in above.
6. Manufacture the test patches or application system using the drug active.
7. Validate the manufacture of the above using GMP methods.
8. Assist in the supervising of the testing protocol implementation.
9. Supervise the laboratory evaluation (bench chemistry).
10. Assist Vector in the data review and evaluation.
11. Provide Vector a small quantity (up to 100 pieces) of product samples.
The goal of the feasibility study is to allow Vector to make a preliminary
decision as to the potential viability of the selected active material for
pursuit as a marketable product and to enter into some form of "clinical
trial".
The additional required equipment, animals, human patients, specialized
laboratory instruments, etc., not currently available at SMLX for any testing
for the above Feasibility Study is not included in the licensing fee and will
be funded as needed and as agreed to by Vector. SMLX will not be the PI on any
testing involving human subjects nor will any human testing be done at any
SMLX facility in the USA. Any testing required on animals covered by the USDA
Animal Welfare Act will be an expense of Vector whether done at SMLX or
elsewhere. If any SMLX facility is required to be modified for said animal
testing to meet with governmental regulations this will be an additional
expense of Vector and not part of the license fee.
Preparation of FDA or similar documentation will be at Vector's expense and is
not part of the Feasibility Study phase. SMLX will fully cooperate in the
preparation of these documents on a time reimbursable basis.
The results of the Feasibility Study are the property of SMLX until such time
as Vector has completed its obligations under the contract.
All technology including the Feasibility Studies will become the sole and
exclusive property of Vector upon the completion of the contractual
obligations of Vector.
