10.2 AMENDED AND RESTATED JOINT VENTURE AGREEMENT, DATED AS OF NOVEMBER 4.
1998, AND AS AMENDED THROUGH JULY 31, 1999.
AMENDED AND RESTATED
LIMITED LIABILITY C OMPANY
OPERATING AGREEMENT
OF
BIOMEDICAL DIAGNOSTICS, LLC
SCHEDULE "A"
DESCRIPTION OF MANAGEMENT SERVICES
1. Review existing corporate objectives, strategies and utilization of
resources. Develop present, implement and maintain an operational
business plan which sets out:
o Objectives of BioLabs
o Strategies for achieving objectives;
o Timeframe for meeting objectives, milestones;
o Resources required;
o Allocation and utilization of resources; and
o Other matters consistent with and operational business plan.
2. Keep the Board of Directors apprised of corporate developments and
activities:
o Performance compared to the operational business plan;
o Economic, industry and business matters that may impact
BioLabs; and
o Other matters of relevance.
3. Build orginization (eg. facilities, personnel, contract research
organizations, collaborations, strategic alliances etc.) to
successfully carry out the operational business plan.
4. Ensure expenditures are in accordance with approved budgets and the
adequate funding is maintained.
5. Provide policy and executive direction to Bilabs.
6. Initiate and manage progects (eg. acquisitions, collaborations,
research programs etc.) to provide new product, technologies and other
growth opportunities for BioLabs.
7. Keep investors, brokers, analysts and others apprised of developments
and activities of Biolabs.
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| AMENDED AND RESTATED |
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| LIMITED LIABILITY COMPANY |
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| OPERATING AGREEMENT |
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| BIOMEDICAL DIAGNOSTICS, LLC |
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| Dated as of |
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| November 4, 1998 |
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
ARTICLE 11
ORGANIZATION
2.1 Forination
2.2 Name
2.3 Purpose
2.4 Duration
2.5 Registered Office and Resident Agend
2.6 Conflicts of Interest
ARTICLE III
BOOKS, RECORDS AND ACCOUNTING
3.1 Books and Records
3.2 Fiscal Year; Accounting
3.3 Reports
3.4 Member's Accounts
3.5 Sale or Exchange of Interest
ARTICLE IV
CAPITAL CONTRIBUTIONS; PARTICIPATING PERCENTAGES
4.1 Capital Contributions; Participating Percentages
4.1.1 General
4.1.2 BioLabs Contributions
4.1.3 Biotheraples Contributions
4.2 Additional Commitments
4.2.1 BioLabs
4.2.2 Biotherapies
4.3 Additional Contributions
ARTICLE V
DISTRIBUTIONS
5.1 Amount and Time of Distributions
5.2 Distributions of Operating Cash Flow
5.3 Distributions of Capital Proceeds
5.4 Return of Capital
5.5 Distribution of Assets
5.6 Restricted Distributions
ARTICLE VI
PROFITS AND LOSSES
6.1 Profit and Loss Allocations
6.1.1 Profit Allocation
6.1.2 Loss Allocations
6.2 Liquidation
ARTICLE VII
DISPOSITION OF MEMBERSHIP INTERESTS
7.1 General
7.2 Permitted Dispositions
7.2.1 Assignment of Distributions
7.2.2 Transfer of Membership Interest
ARTICLE VIII
MEETINGS OF MEMBERS
8.1 Voting
8.2 Required Vote
8.3 Meetings
8.4 Consent
ARTICLE IX
MANAGEMENT
9.1 Management of Business
9.2 General Powers of Managers
9.3 Limitations
9.4 Standard of Care; Liability
9.5 Vacancies
9.6 Place of Meeting
9.7 Regular Meetings
9.8 Special Meetings
9.9 Notice
9.10 Meetings by Communications Facilities
9.11 Manager Action; Quorum
9.12 Adjournment
9.13 Action Without a Meeting
9.14 Removal
9.15 Confidentiality and Covenant Not to Compete
ARTICLE X
OFFICERS
10.1 General
10.2 Tenn of Office, Resignation and Removal
10.3 Superior Responsibility
10.4 Customary Rules
10.5 President
ARTICLE XI
PRODUCT DEVELOPMENT
11.1 Development Committee
11.2 Preparation of Development Plan and Budget
ARTICLE XII
REGULATORY APPROVALS
12.1 Regulatory Approvals
12.2 Responsibility for Books and Records
12.3 Notice of Findings
12.4 Recall
ARTICLE XIII
INFRINGEMENT CLAIMS
13.1 Infringement Claims
ARTICLE XIV
REPRESENTATIONS AND WARRANTIES
14.1 Representations and Warranties of Blotherapies
14.1.1 Corporate Status
14.1.2 Corporate Authority
14.1.3 No Default
14.1.4 Third Party Consents
14.1.5 No Court Orders
14.1.6 No Regulatory Consents
14.1.7 Litigation
14.1.8 Title to License
14.1.9 Biotherapies Shares
14.1.10 No Additional Common Shares
14.1.11 No Transfer Restrictions
14.1.12 Not Insolvent
14.1.13 Compliance with Law
14.1.14 Year 2000 Compliance
14.2 Representations and Warranties of BioLabs
14.2.1 Corporate Status
14.2.2 Corporate Authority
14.2.3 No Default
14.2.4 Third Party Consents
14.2.5 No Court Orders
14.2.6 No Regulatory Consents
14.2.7 Litigation
14.2.8 BioLabs Shares
14.2.9 No Transfer Restrictions
14.2.10 Not Insolvent
ARTICLE XV
EXCULPATION OF LIABILITY; INDEMNIFICATION
15.1 Exculpation of Liability
15.2 Indemnification
ARTICLE XVI
DISPUTE RESOLUTION
16.1 Dispute Resolution
ARTICLE XVII
MISCELLANEOUS PROVISIONS
17.1 Terrns
17.2 Article Headings
17.3 Counterparts
17.4 Entire Agreement
17.5 Severability
17.6 Amendment
17.7 Notices
17.8 Binding Effect
17.9 Governing Law
17.10 No Third Party Rights
17.11 Time is of Essence
17.12 Other Actions
17.13 Accounting Terrns
17.14 Statutory References
17.15 Corporate Entity
17.16 Business Day
17.17 Drafting
17.18 Waiver
17.19 Sharing of Information
APPENDIX A
SCHEDULE"A
SCHEDULE"B
SCHEDULE"C
RESTATED
OPERATING AGREEMENT
FOR
BIOMEDICAL DIAGNOSTICS, LLC
A Michigan Limited Liability Company
THIS RESTATED OPERATING AGREEMENT (the "Agreement"), dated August 6, 1999,
and is made effective as of November 4, 1998 (the "Effective Date"), among
Biotherapies Incorporated, a Michigan corporation with offices located at 0000
Xxxxxxxx Xxxx, Xxx Xxxxx, Xxxxxxxx 00000 ("Biotherapies"), BioLabs Inc., a New
York corporation with offices located c/o Xxxxxxx X. Xxxx, One Xxx Xxxxxxx Xxxx,
Xxxxx000, Xxxxx Xxx&, Xxx Xxxx 00000 ("BioLabs"), and Biomedical Diagnostics,
LLC, a Michigan limited liability company.
ARTICLE I
DEFINITIONS
For purposes of this Agreement, the definitions set forth in Appendix A to
this Agreement and the definitions set forth in this Article I apply.
"Act" means the Michigan Limited Liability Company Act, being Act No. 23,
Public Acts of 1993, as may be amended.
"Additional Contribution" means a Member's obligation to make Capital
Contributions in accordance with the provisions of Section 4.3 of this Agreement
which are in addition to the initial Capital Contributions set forth in Section
4.1 of this Agreement.
"Additional Products" means any potential diagnostic assay identified,
developed or obtained by Biotherapies after the Effective Date and at any time
while Blotherapies is a Member of the Company.
"Admission Agreement" means the agreement executed by any new Member or by
any assignee of any membership interest whereby the new Member agrees to be
bound by the terms and conditions of this Agreement, the Articles and any other
applicable laws or bylaws.
"Affiliate" means a Person that directly, or indirectly through one or more
intermediaries, Controls, or is Controlled by, or is under common Control with,
the Person in question, including without limitation, directors and principal
officers any corporation or managers of any company..
1
"Approvals" means any and all licenses, leases, permits, consents or other
authorizations, including, without limitation, all approvals required by any
relevant Regulatory Authority for the Development, Manufacturing and Marketing
of any product in one or more countries.
"Articles" means the Articles of Organization filed by the Company with the
Department of Commerce of the State of Michigan, as may be amended.
"Capital Contribution" means, with respect to any Member, the amount of
money contributed by that Member to the Company and, if property other than
money is contributed, the initial Gross Asset Value of such property, net of
liabilities assumed or taken subject to by the Company.
"Code" means the Internal Revenue Code of 1986 (4 successor thereto), as
amended from time to time.
"Company" means Biomedical Diagnostics, LLC, a Michigan limited liability
company.
"Contract" means any agreement, indenture, contract, lease, deed of trust,
license, option, instrument or other commitment, whether written or oral.
"Control," "Controls" or "Controlled" means: (1) the right to exercise,
directly or indirectly, a majority of the votes that may be put at a meeting of
the entity; or (11) the right to elect or appoint directly or indirectly a
majority of the directors of the entity or other persons who have the night to
manage or supervise the management of the affairs and business of the entity; or
(Iii) the ownership, directly or beneficially, of more than 50% of the equity of
the entity.
"Development" means with respect to any product, all work carried Out to
develop the product, including without limitation, worked performed in
accordance with a Development Program, and non-clinical and clinical studies
required to obtain health regulatory Approvals for all countries in the world
determined to be necessary or desirable by the Managers and all subsequent work
required to maintain or defend such Approvals.
"Development Plan" means the plan approved by the Managers for all
Development of a product, which will include each Development Program approved
by the Managers, estimates of all Development expenses of all such activity
through to commercialization contemplated by this Agreement, and all other items
deemed appropriate by the Managers.
"Development Program" means a program developed by a Project Team and
approved by the Managers for the Development of a product and will include a
budget, tasks and timelmes.
"License" means the license granted by the University of Michigan to
Biotherapies for the exclusive use of Mammastatin technology, as more
particularly described in the License Agreement
2
between The University of Michigan and Biotherapies, dated March 29, 1996, and
attached as Schedule "A" to this Agreement.
"Mammastatin" means a protein produced by the normal mammary gland (breast)
in humans that controls the growth of breast cancer cells, as more fully
described under the discussion of "Technology" contained in the License.
"Mammastatin Serum Assay" means a clinical assay system using the
production of antiMammastatin monoclonal antibodies to assist in the screening
of human patients with a high risk for breast cancer and in the diagnosis of the
presence of breast cancer, as more fully described in Schedule "B" to this
Agreement.
" Manager(s)" means a person or persons designated i~rom time to time by
the Members of the Company by appropriate resolution to manage the Company as
provided in the Articles or in this Agreement.
"Manufacturing" means with respect to any product, all work carried out to
manufacture the product, including without limitation, work performed in
accordance with a Manufacturing Program, all work required to meet good
manufacturing practices and other regulations to obtain regulatory Approvals for
all countries in the world determined to be necessary or desirable by the
Managers and all subsequent work required to maintain or defend such Approvals.
"Manufacturing Plan" means the plan approved by the Managers for all
Manufacturing of a product, which will include each Manufacturing Program
approved of by the Managers, estimates of all Manufacturing expenses of all such
activity, and all other items deemed appropriate by the Managers.
"Manufacturing Program" means a program developed by a Project Team and
approved of by the Managers for the Manufacturing of a product and will include
a budget, tasks an timelines.
"Marketing" means with respect to any product, all work carried out to
market the product, including without limitation, work perforined in accordance
with a Marketing Program, all work required to meet all relevant regulations to
obtain Approvals to market and distribute a product in all countries of the
world deten-nined to be necessary or desirable by the Managers.
"Marketing Plan" means the plan approved by the Managers for all Marketing
of a product, which will include each Marketing Program approved by the
Managers, estimates of all preMarketing and Marketing expenses, and all other
items deemed appropriate by the Managers.
"Marketing Program" means a program developed by a Project Team and
approved of by the Managers for the Marketing of a product and will include a
budget, tasks an timelines.
3
"Member(s)" collectively refers to the individuals and entities who have an
ownership interest in the Company and who either execute this Agreement or who
shall hereafter be admitted as members of the Company and have executed an
Admission Agreement. The term "Member" as used herein shall mean any individual
or entity who is one of the Members of the Company.
"Milestone" means the date that the Company first receives in the aggregate
(not to be calculatedon any particular peni odic basis) $100,000 in gross
revenue of anytypederived from any sale or license of the Marnmastatin Serum
Assay and has completed the diagnostic clinical trials for some form of the
Marnmastatin Serum Assay in the United States.
"Officer(s)" means a person or persons designated from time to time by the
Managers of the Company, pursuant to Article X of this Agreement, to operate the
Company as provided in this Agreement. 1)
"Participating Percentage" ineans the percentage ownership interest of each
Member in the Company as set forth in this Agreement.
"Performance Criteria" means theobligation ofthe Companyto: (i) complete
clinical trials and obtain all necessary regulatory Approvals for Manufacturing
the Marnmastatin Serum Assay in the United States on or before May 1, 2000; (11)
obtain all necessary regulatory Approvals for Marketing the Mammastatin Serum
Assay in the United States on or before November 1, 2000; (iii) begin Marketing
the Mammastatin Serum Assay in the United States on or before November 1, 2001;
and (iv) obtain gross sales revenue from sales of the Mammastatin Serum Assay
equal to or exceeding $ 1,000,000 on or before November 1, 2002. By written
agreement of all Members, the Performance Criteria may be waived.
"Person" includes an individual, a firm, a corporation, a limited liability
company, a syndicate, a partnership, a trust, an association, a joint venture,
an incorporated organization or another entity.
"Program Coordinator" means a Person appointed by the Managers to develop
aparticular product for the Company.
"Project Team"means Persons appointed by the Managers or applicable Program
Coordinator to cooperation in the development of a particular product for the
Company.
"Proprietary Information" means all information, knowledge or data of an
intellectual, technical, scientific or industrial nature in which the disclosing
party has a proprietary or ownership interest or has a legal duty to protect,
including, without limitation, technical data, drawings, photographs,
specifications, standards, manuals, reports, formulas, compilations, processes,
information, lists, trade secrets, computer software, programs, devices,
concepts, inventions, designs, methods, technical infori-nation, unique
combinations of separate items that individually may or may not be generally
known, and items provided or disclosed to the disclosing party by third parties
4
subject to restrictions on use or disclosure, whether oral or written, furnished
by the disclosing party to the receiving party or any of its representatives,
whether furnished or prepared before or after the date of this Agreement, and
includes all analysis, compilations, data, studies, reports or other documents
prepared by the receiving party based upon or including any such infort-nation,
data or knowledge furnished by the disclosing party.
" Regulations" means the pronouncements, as amended from time to time, or
their successor pronouncements, which clarify, interpret and apply the
provisions of the Code, and which are designated as "Treasury Regulations" by
the United States Department of the Treasury.
"Regulatory Authority" means any regulatory authority or government
regulating of all or a portion of the Development, Manufactuning and Marketing
of any product in a country. ARTICLE 11 ORGANIZATION
2.1 Formation. The Company has been organized as a Michigan limited
liability company under and pursuant to the Act by the filing of the Articles
with the Department of Commerce of the State of Michigan. The Members shall
cause the Articles to be filed upon execution of tills Agreement.
2.2 Name. The name of the Company shall be Biomedical Diagnostics, LLC. The
Company may also conduct its business under one or more assumed names.
2.3 Purpose. The primary purposes of the Company are to develop,
manufacture, market, sell and distribute the Marnmastatin Serum Assay on an
exclusive worldwide basis, and other diagnostic tools. The Company shall have
all the powers necessary or convenient to effect any purpose for which it is
fornled, including all powers granted by the Act.
2.4 Duration. The Company shall continue in existence until its dissolution
as provided under this Section 2.4.
2.4.1 For purposes of this Agreement, "Termination Event" shall include:
(a) The expiration of the period fixed in the Articles as the duration
of the Company;
(b) The dissolution of the Company in accordance with the Act;
(c) (1) The breach by any Member of a material provision of this
Agreement (other than the failure to make any initial Capital Contribution due
under Section 4.1 of this Agreement or any payment to Biotheraples under Section
4.2 of this Agreement); (ii) such breach or failure remains unremedied for 30
consecutive days after notice in wniting thereof is given
5
to the Member in breach; and (ill) written notice of termination from the other
Member, which will be effective upon receipt;
(d) (i) The dissolution of Biotherapies or BioLabs, or the appointment
of a receiver or receiver-manager of any part of the property or business of
Biotherapies or BioLabs, or the making of an assignment, proposal, or
arrangement by Biotherapies or BioLabs for the benefit of creditors, or the
filing of a petition in bankruptcy against Blotherapies or BioLabs, or the
commencement of any proceedings under any bankruptcy or insolvency laws in
respect of Blotherapies or BioLabs, or if Biotherapies or BioLabs discontinues
its business; (ii) the failure of such event to be cured within 180 days of its
occurrence; and (111) written notice of termination from the other Member, which
will be effective upon receipt; or
(e) (1) The failure by the Company to meet one orinore of the
Performance Criteria; (il) the written notice by Biotherapies or BioLabs to the
other Members terminating this Agreement; and (Iii) the expiration of 60 days
after the written notice of termination and the failure of the Company to
complete the Performance Criteria which had not been met prior to the date of
the tennination notice provided under (11) above.
2.4.2 Upon a Termination Event, Blotherapies and BioLabs shall mutually agree
(pursuant to good faith business negotiations) in writing which of Blotherapies
or BioLabs shall purchase the entire membership interest in the Company of the
other Member and shall mutually agree in writing to the terms of such purchase.
If Blotherapies and BioLabs cannot mutually agree in writing to the transfer of
one of the Member's membership interest as provided above within 90 days after a
Termination Event, then the Company shall dissolve and its assets shall be
distributed as provided in Section 6.2 of this Agreement.
2.4.3 As used in the Subsection 2.4.3, the term "BioLabs Payments" means the
Capital Contributions due from BloLabs under Subsection 4.1.2 of this Agreement,
and the payments to Biotherapies due from BioLabs under Subsection 4.2.1 of this
Agreement. If BioLabs falls to make when due any one or more of the BioLabs
Payments, then without any further action on the part of Biotherapies, BioLabs
or the Company, the Participating Percentage of BioLabs shall automatically be
reduced to the percentage which is equal to: (1) the aggregate amount all
BioLabs Payments made by BloLabs, divided by (11) $10,000,000. If the
Participating Percentage of BioLabs is reduced under this Subsection 2.4.3, and
on or before the date occurring 180 days after the due date of any BioLabs
Payment which was not made, BioLabs makes such BioLabs Payment, then the
Participating Percentage of BioLabs shall be immediately and without any further
action on the part of Biotherapies, BioLabs or the Company, be increased to an
amount equal to: (i) the aggregate amount all BioLabs Payments made by BioLabs,
divided by (ii) $10,000,000. Notwithstanding anything contained in this
Subsection 2.4.3 to the contrary and subject to Section 4.3, in no event shall
the Participating Percentage of BioLabs be increased to more than fifty percent
(50%) pursuant to this Subsection 2.4.3.
6
2.5 Registered Office and Resident Agent. The registered office and
resident agent, each as required under the Act, of the Company shall be as
designated in the initial Articles or any amendment thereof The registered
office and/or resident agent may be changed from time to time. Any such change
shall be made in accordance with the Act. If the resident agent shall ever
resign, the Company shall promptly appoint a successor.
2.6 Conflicts of Interest.
2.6.1 Unless otherwise expressly provided in this Agreement, nothing
herein shall be construed to prevent any Member or a Manager, or any
entity in which such person may have an interest, from dealing with the
Company in the following circumstances: (a) with the consent of the
Members or (b) if (i) the compensation paid or promised for such goods
or services is reasonable and is paid only for goods aild services
actually furnished to the Company, (ii) the goods or services to be
furnished shall be reasonable for and necessary to the Company, (Ili)
the terms for the furnishing of such goods or services shall be at
least as favorable to the Company as would be attainable in an
anns-length transaction; and (iv) all compensation paid is disclosed to
all Members. The burden of proving reasonableness with respect to
transactions described in Subsection 2.6. 1 (b) above shall be upon the
Member or Manager receiving the payment.
2.6.2 The Members may have other business interests and may engage in
other activities in addition to those relating to the Company. The
other business interests and activities of the Members may be of any
nature or description and may be engaged in independently or with other
Members. Neither the Company nor any Member shall have any right, by
virtue of this Agreement or the Company created hereby, in or to such
other ventures or activities of a Member or to the income or proceeds
derived therefrom, and the pursuit of such ventures, even if
competitive with the business of the Company, other than as to any
action related to the Marnmastatin Serum Assay, shall not be deemed
wrongful or improper.
ARTICLE III
BOOKS, RECORDS AND ACCOUNTING
3.1 Books and Records. The Company shall maintain complete and accurate
books and records of the Company's business and affairs as required by the Act,
or reasonably required by Biotherapies or BioLabs, and such books and records
shall be kept at the Company's registered office. The Company shall also
maintain at its offices a list of the names and addresses of all Members, which
any Member or his or her designated representative may inspect during business
hours upon reasonable notice to the Company. Any Manager may have complete
access at any reasonable time without notice to such books and records to review
them and to take extracts.
7
3.2 Fiscal Year; Accounting. The Company's fiscal year shall be the
calendar year. The accounting methods and principles to be followed by the
Company shall be selected by the Managers.
3.3 Reports. The Managers shall provide reports concerning the
financial condition and results of operation of the Company and the Capital
Accounts of the Members to the Members in the time, manner and form as the
Managers deten-nine. Such reports shall be provided at least quarterly within 60
days after the end of each quarter or 90 days after the end of each calender
year, and shall include a statement of each Member's share of profits, other
items of income, gain, loss, deduction and credit, and such other information as
Biotherapies or BioLabs reasonably requests.
3.4 Member's Accounts. Separate Capital Accounts for each Member shall
be maintained by the Company. Each Member's Capital Account shall refleit the
Member's capital contributions and increases for the Member's share of any net
income or gain of the Company. Each Member's Capital Account shall also reflect
decreases for distributions made to the Member and the Member's share of any
losses and deductions of the Company. All Capital Accounts shall reflect, and
shall be maintained in accordance with, the provisions of Appendix A to this
Agreement which is incorporated into this Agreement by this reference.
3.5 Sale or Exchange of Interest. In the event of a permitted sale or
exchange of some or all of a Member's interest in the Company, the Capital
Account of the transferring Member shall become the Capital Account of the
assignee, to the extent it relates to the portion of the interest transferred.
ARTICLE IV
CAPITAL CONTRIBUTIONS; PARTICIPATING PERCENTAGES
4.1 Capital Contributions; Participating Percentages
4.1.1 General. By the execution of this Agreement, Biotherapies and
BioLabs each agree to make the Capital Contributions set forth in this
Section 4. L The initial Participating Percentage of Biotherapies is
50% and the initial Participating Percentage of Biol-abs is 50%. The
Participating Percentage of Blol-abs may be reduced pursuant to the
provisions of Subsection 2.4.3 of this Agreement if and when such
provisions apply. Any additional Member (other than an assignee of a
membership interest who has been admitted as a Member) shall make the
capital contribution set forth in an Admission Agreement. No interest
shall accrue on any capital contribution and no Member shall have any
right to withdraw or to be repaid any capital contribution except as
provided in this Agreement.
8
4.1.2 BioLabs Contributions. BioLabs shall make the following Capital
Contributions:
(a) $500,000 to be paid to the Company within 90 days after the Effective
Date to be used by the Company exclusively for the design and development of a
laboratory for the testing and manufacturing of anti - Mammastatin monoclonal
and other antibodies used for the Mammastatin Serum Assay; and
(b) $ 1,000,000 to be paid to the Company on or before August 9, 1999, to
be used by the Company exclusively for the ongoing development and support of a
laboratory for the testing and manufacturing of anti - M ammastatin monoclonal
and other antibodies used for the Marnmastatin Serum Assay.
4.1.3 Biotherapies Contributions. As a Capital Cont~bution to the Company,
Blotherapies hereby grants to the Company an exclusive, nonassignable,
nonsublicensable, royalty free, worldwide sublicense to use all of
Blotherapies'right, title and interest under the License for the Development,
Manufacturing, Marketing and sale of the Marnmastatin Serum Assay in accordance
with the terms of this Agreement (the "Company License"); provided that if this
Agreement has been terminated pursuant to Section 2.4. 1 (e) of this Agreement,
then the Company License shall automatically, and without any action by any
Manager or Member, be void and of no effect. The Company shall own and shall
have all rights, including all Proprietary Infon-nation, in all Improvements (as
defined below) to the Marnmastatin Serum Assay which are conceived and reduced
to practice exclusively by the Company's personnel orby third party personnel
working on the Company's behalf. For purposes of this Section 4.1.3, the terni
"Improvements" means: (i) any alteration, modification, or enhancement to the
Mammastatin Serum Assay which improves the effectiveness, efficiency,
perfon-xxxxx or other attribute of, or otherwise relates to, Mammastatin Serum
Assay, or any element thereof, or (ii) any new product or material which
performs substantially the same function as the Mammastatin Serum Assay but does
so through a different method or process.
The Company hereby agrees to pay to The University of Michigan four percent
(4%) of the Net Sales (as defined under the License) of the Company for all
Products (as defined under the License).
For all purposes tinder this Agreement, the value of the Company License
shall be deemed to be $1,500,000.
4.2 Additional Commitments.
4.2.1 BioLabs. In addition to making the Capital Contributions described in
Section 4.1 of this Agreement, BioLabs covenants and agrees that it will, as
long as BioLabs remains a Member of the Company:
(a) Use reasonable commercial efforts to seek approval from the
shareholders or board of directors of BioLabs, as required, for the immediate
appointment of Xx. Xxxx Xxxxx Xx. to the scientific advisory board of BioLabs;
9
(b) Pay the amount of $500,000 to Biotherapies as follows: (1) $10,000 upon
execution of this Agreement, and (ii) $490,000 within 60 days after tile
Effective Date to be used for the development of products utilizing the
Mammastatin technology;
(c) Pay an additional $500,000 to Biotherapies on or before April 15, 1999,
to be used for the ongoing development of products utilizing the Marnmastatin
technology;
(d) Pay an additional $500,000 to Biotherapies on or before August 9, 1999,
to be exclusively used for the ongoing development of products utilizing the
Marnmastatin technology;
(e) Pay an additional $ 1,000,000 to Biotherapies (to be exclusively used
for the ongoing development of products utilizing the Mammastatin# technology)
within 60 days after completion by the Company of diagnostic clinical trials for
some form of the Mammastatin Serum Assay in the United States;
(f) Pay an additional $ 1,000,000 to Biotherapies (to be exclusively used
for the ongoing development of products utilizing the Marnmastatin technology)
within 30 days after the date that the Company first achieves the Milestone;
(g) Take any and all actions reasonably necessary to cause each of tile
representations and warranties made by it under this Agreement, Including
without limitation, the representations and warranties set forth in Article XIV
of this Agreement, to remain true during the term of this Agreement;
(h) Use commercially reasonable efforts to secure the quotation of shares
of Biolabs' common stock on either the OTC Bulletin Board or the Nasdaq SmallCap
Market as soon as practicable; and
(i) Within 14 days of the date that the Company first achieves tile
Milestone, issue to Biotherapies voting shares of the common stock of BioLabs
constituting 5% of the total outstanding shares of all types on a fully diluted
basis (i.e., taking into account all options, convertible debt, issued shares,
or the like, whether vested or unvested, exercised or unexercised), such shares
to be issued in accordance with all relevant securities and other laws, and
subject to all applicable state and federal trading restnictions. All shares
issued to Biotherapies under this Subsection 4.2. 1 (1) shall have, at the sole
discretion of Biotherapies, the same voting, distribution, preference and other
rights as any other shares, options, convertible debt, or the like, held by any
shareholder of BioLabs. Upon issuance of any BioLabs' shares to Biotherapies
under this Subsection 4.2.1 (1), Biotherapies shall execute a mutually agreeable
written stock subscription agreement containing standard reasonable
representations to be made by Biotherapies as required for such share issuance
to comply with applicable securities laws. All stock certificates issued to
Biotherapies shall contain a
10
standard reasonable legend as to the restricted nature of the shares under
applicable securities laws.
4.2.2 Biotherapies. In addition to the Capital Contributions described in
Section 4.1 of this Agreement, Biotherapies covenants and agrees that it will,
as long as Biotherapies remains a Member of the Company:
(a) Promptly notify BioLabs in writing of any opportunities for the
development or commercialization of any Additional Product with an intention
that should BioLabs be interested, the Members may negotiate a mutually agreed
new alliance or similar arrangement with respect to such Additional Product;
(b) Use reasonable commercial efforts to sA approval from the shareholders
of Biotherapies for the immediate appointment of Dr. Xxx Xxxxx, or one other
BioLabs nominee reasonably acceptable to Biotheraples, to the board of directors
of Biotherapies;
(c) Take any and all actions reasonably necessary to cause each of the
representations and warranties made by it under this Agreement, including
without limitation, the representations and warranties set forth in Article XIV
of this Agreement, to remain true during the ten-n of this Agreement;
(d) Continue to take such action and make such payments as are necessary at
its own expense to maintain the License and all other Proprietary Information
relevant to the Marnmastatin Serum Assay that it holds, if any, in good
standing;
(e) Use its best efforts to obtain, within 60 days of the Effective Date,
an opinion from Biotherapies' intellectual property attorney as to the validity
and exclusivity of the License and such other matters requested by the attorney
for BioLabs, in a form satisfactory to BioLabs' attorney acting reasonably (this
requirement is declared to be for the exclusive benefit of BioLabs);
(f) Obtain directors and officers liability insurance with a minimum of
$2,000,000 in coverage for Dr. Xxx Xxxxx in connection with his director
capacity at Blothereapies; and
(g) From the Effective Date through December 17, 1998, Biotherapies shall
give to BioLabs written notice of a proposed sale or disposition of any shares
of stock of Biotherapies the main purpose of which is to fund the development,
manufacture, marketing or sale of any Additional Product, which notice (the
"Financing Notice") shall contain the following: (i) a certificate on the part
of Biotherapies stating that a bona fide offer has been received by Biotherapies
or that Biotherapies intends to offer its stock for sale to any Person; (ii) the
number or amount of Biotherapies' stock which is subject to the offer (the
"Offered Stock"); (iii) the name of the Person from whom Biotherapies has
received such offer, if applicable; (iv) the date on which the proposed sale is
to take place; (v) the price per share
11
at which the Offered Stock is proposed to be sold; and (vi) the terms upon which
payment for the Offered Stock are to be made. Biotherapies hereby grants BioLabs
a night of first refusal effective from the Effective Date through December 17,
1998 (a "Financing Offer"), to purchase the Offered Stock at the price and under
the terms set forth in the Financing Notice; provided that such right of first
refusal shall only apply to a proposed sale or disposition of any shares of
stock of Biotherapies the main purpose of which is to fund the development,
manufacture, marketing or sale of any Additional Product; provided further that
any Financing Offer shall be void to the extent that BioLabs would own, on a
fully diluted basis (i.e., taking into account all options, convertible debt,
issued shares, or the like, whether vested or unvested, exercised or
unexercised), more than 20% of the total issued and outstanding shares, on a
fully diluted basis, of Blotherapies after exercising such right of first
refusal.
Any Financing Offer will be open for acceptance in whole or in part by
BioLabs for a period of 30 days from the date of receipt of the Financing Notice
by BioLabs (the "Offer Period"). To the degree that BioLabs does not accept the
Financing Offer within the Offer Period, Biotherapies may accept and complete a
financing on the same terins and conditions as set out in the Financing Offer
within 90 days from the expiration of the Offer Period; otherwise Biotherapies
must again comply with the provisions of this Section 4.2.2(g). If BioLabs
accepts the Financing Offer in whole or in part within the Offer Period by
providing notice in writing to Blotherapies, then Blotherapies will be bound to
enter into an agreement with BioLabs on the terms and conditions of the
Financing Offer as applicable with respect to that portion of the Financing
Offer accepted.
Biotherapies shall not sell any of the Offered Stock to any Person other
than BioLabs unless and until Blotherapies has provided the Financing Notice to
BioLabs and the Offered Period has expired. After providing BioLabs with a
Financing Notice, Blotherapies shall not solicit or accept any other offer to
purchase its stock unless and until the earlier of- (i) the expiration of the
90-day period referred above without Biotherapies completing a financing in
accordance with the terins of the Financing Offer; (ii) Biotherapies has
completed a financing in accordance with the terms of the Financing Offer; or
(iii) Biotherapies has terminated any financing contemplated under the Financing
Offer.
Notwithstanding anything in this Section 4.2.2 (g) to the contrary, the
Financing Offer shall apply to all transactions occurring on or after December
18, 1998, solely if no contract, agreement or arrangement between Biotherapies
and any third party (including, without limitation, any purchaser of Offered
Stock, investment banker, stock broker, sales agent, or similar party) restricts
or prohibits (in any manner) such Financing Offer. In each such case,
Biotherapies shall provide BioLabs with a Financing Notice as otherwise provided
above.
4.3 Additional Contributions. In addition to the initial Capital
Contributions made under Section 4.1 of this Agreement, the Managers may
determine (in accordance with the provisions of Section 9.11 of this Agreement)
from time to time that additional capital is needed to enable the
12
Company to conduct its business and affairs. Each Member shall be obligated to
make any Additional Contribution in addition to any unfulfilled Capital
Contribution. Any Member who has made that Member's Capital Contribution and any
prior Additional Contribution, shall have the right, but not the obligation, to
make the Additional Contributions of any Member that does not make its
Additional Contribution within 60 days after the date that each Additional
Contribution was due as specified by the Managers, or if no such date was
specified, then within 6 months after the date that the Managers first voted for
the subject Additional Contribution. Any Member making such extra Additional
Contribution shall do so according to that Member's Participating Percentage in
relation to all other Members' Participating Percentages who elect to make an
extra Additional Contribution pursuant to this provision. The Participating
Percentage of any Member making an extra Additional Contribution pursuant to
this Section 4.3 shall increase in proportion to such extra Additional
Contribution. The Participating Percentage of any Member on whose behalf an
extra Additional Contribution was made shall decrease in proportion to
suchiextra Additional Contribution. Any change of a Participating Percentage
pursuant to this Section 4.3 shall be made based upon the aggregate value of all
capital contributions made by each Member (without regard to any payments made
by any Member, or the obligations of any Member, under Section 4.2 of this
Agreement) prior to the date of the applicable Additional Contribution, in
proportion to the amount of the applicable Additional Contribution. By way of
example only, if all of the Members contributed an amount equal to $3,000,000 in
the aggregate prior to the date of an Additional Contribution, and a particular
Member has made prior capital contributions equal to $1,500,000 and such Member
makes an Additional Contribution equal to S 1,000,000, then such Member's
Participating Percentage shall be increased to 62.5%.
ARTICLE V
DISTRIBUTIONS
5.1 Amount and Time of Distributions. "Operating Cash Flow" means the gross
cash proceeds from the Company's operations less the portion thereof used to pay
or establish reserves for Company expenses and fees, principal and interest
payments on Company debt (including loans from any Member and Manager to the
Company), capital improvements, replacements and contingencies, all determined
by the Managers. Operating Cash Flow shall not be reduced by depreciation,
amortization, or other similar non-cash allowances, and shall be increased by
any reductions in reserve which, when previously established, reduced Operating
Cash Flow. Distributions of Operating Cash Flow shall be made from time to time
at the discretion of the Managers, but no less frequently than once each
calendar quarter, in the order and priorities set forth in Section 5.2 of this
Agreement. "Capital Proceeds" of the Company means the net cash proceeds from
all sales, dispositions and refinancings of the Company's property, less any
portion thereof used to make principal and interest payments on Company debt or
established reserves, as detennined by the Managers in their sole discretion.
Capital Proceeds shall be increased by any reductions or reserves which, when
previously established, reduced Capital Proceeds. Distributions of Capital
Proceeds shall be made from time to time in the discretion of the Manager, but
no less frequently than quarterly, in the order and pniority set forth in
Section 5.3 of this Agreement.
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5.2 Distributions of Operating Cash Flow. Operating Cash Flow and any other
available cash proceeds that are not Capital Proceeds shall be distributed from
time to time among the Members pro rata based on their Participating
Percentages.
5.3 Distributions of Capital Proceeds. Capital Proceeds shall be
distributed in the following order and priority:
5.3.1 First, distributions shall be made to each Member, pro rata based on
the unreturned Capital Contributions of each Member, until each such Member
has received aggregate distributions pursuant to this Section 5.3.1 equal
to such Member's Capital Contributions.
5.3.2 Second, distributions shall be made to the')Members, pro rata based
on their Participating Percentages.
5.4 Return of Capital. No Member shall be entitled to the return of, or
interest on, that Member's Capital Contributions except as provided herein.
5.5 Distribution of Assets. If the Company at any time distributes any of
its assets in-kind to any Member, the Capital Account of each Member shall be
adjusted to account for that Member's allocable share (as determined below) of
the net profits or net losses that would have been realized by the Company had
it sold the assets that were distributed at their respective fair market values
immediately prior to their distnibution.
5.6 Restricted Distributions. Notwithstanding any provision to the contrary
contained in this Agreement, the Company shall not make any distribution to any
Member on account of such Member's Interest if such distribution would violate
Section 307 of the Act.
ARTICLE VI
PROFITS AND LOSSES
6.1 Profit and Loss Allocations.
6.1.1 Profit Allocation. Except as may be required by the Code, the
Regulations, or this Agreement, and after taking into account the
provisions of Appendix A to this Agreement, Profit (as defined in Appendix
A) for any Fiscal Year shall be allocated as follows: (a) First, Profit
shall be allocated to the Members pro rata based on the Losses (as defined
in Appendix A) allocated to each Member in previous Fiscal Years pursuant
to Section 6.1.2(b), until each Member has been allocated amount of Profits
pursuant to this Section in the current and previous Fiscal Years equal to
the Losses allocated to that Member in previous Fiscal Years pursuant to
Section 6.1.2(b) of this Agreement; and (b) thereafter, Profit shall be
allocated to the Members pro rata based on their Participating Percentages.
14
6.1.2 Loss Allocations. Except as may be required by the Code, the
Regulations, or this Agreement, and after taking into account the
provisions of Appendix A to this Agreement, Loss for any Fiscal Year shall
be allocated as follows: (a) First, Loss shall be allocated to the Members
pro ratabased on theirProfit Account balances until each Member's Profit
Account balance is reduced to zero; and (b) thereafter, Loss shall be a]
located to the Members pro rata based on their Capital Contributions.
6.2 Liquidation. Upon the dissolution of the Company, the Company shall
cease to carry on its business, except insofar as may be necessary for the
winding up of its business, but its separate existence shall continue until a
Certificate of Dissolution has been filed as required by the Act. Upon
dissolution of the Company, the business and affairs of the Company shall be
wound up and the Company liquidated as rapidly as business circumstances pednit.
The Members shall agree on the appointment of a liquidating trustee (who may or
may not be a Member). The assets (other than Proprietary Information owned by
the Company) of the Company shall be liquidated and the proceeds thereof shall
be distnibuted (to the extent permitted by applicable law) in the following
order: (a) first, to creditors; (b) second, for reserves reasonably required to
provide for liabilities (contingent or otherwise) of the Company; (c) third, to
the Members on account of positive Capital Account balances; (d) fourth, pro
rata to Members based on Participating Percentages. Notwithstanding the
foregoing, upon and after the dissolution of the Company, Blol-abs and
Blotherapies shall have joint ownership of all Proprietary Inforl-nation, and
any and all goodwill associated therewith, that was owned by the Company upon
the date of dissolution, and may exercise all applicable rights of such
ownership in the Proprietary Information.
ARTICLE VII
DISPOSITION OF MEMBERSHIP INTERESTS
7.1 General. Every sale, assignment, transfer, exchange, mortgage, pledge,
grant, hypothecation or other disposition of any membership interest shall be
made only upon compliance with this Article. No membership interest shall be
disposed of if. (a) the disposition would not comply with all applicable state
and federal securities laws and regulations; or (b) the assignee of the
membership interest falls to execute an Admission Agreement and to provide the
Company with the inforl-nation and other agreements that the Managers may
require in connection with such a disposition. Any attempted disposition of a
membership interest in violation of this Article is void.
7.2 Permitted Dispositions.
7.2.1 Assignment of Distributions. A Member may assign such Member's right
to receive distributions from the Company in whole or in part. The
assignment of such right does not entitle the assignee to participate in
the management and affairs of the Company or to become a Member. Such
assignee is only entitled to receive, to the extent assigned, the
distributions the assigning Member would otherwise be entitled.
15
7.2.2 Transfer of Membership Interest. Subject to the provisions of Section
7.1 of this Agreement, a Member may dispose or encumber its membership
interest in the Company in whole or in part only in accordance with the
terms and conditions of this Subsection 7.2.2. After a permitted
disposition of a membership interest and compliance with the provisions of
this Article VII, the substitute Member has, to the extent assigned, all of
the rights and powers, and is subject to all of the restrictions and
liabilities of a Member. If any Member receives abona fide offer for the
sale, assignment (otherthan as provided in Subsection 7.2.1 of this
Agreement), transfer, exchange, mortgage, pledge, grant, hypothecation or
other disposition of all or any portion of such Member's membership
interest in the Company, then the disposing Member (the "Selling Member")
shall give to all other Members (the "NonSelling Members") at least 30 days
written notice of the proposed transaction containing all of the following
(the "Transfer Notice"): (1) a certificdte on the part of the Selling
Member stating that a bona fide offer has been received by the Selling
Member for the proposed transaction; (ii) a complete description of the
proposed transaction, including without limitation, the percentage interest
of the Company subject to the proposed transaction (the "Offered Company
Interest"); (Ili) the name of the Person from whom the Selling Member has
received such offer (the "Proposed Buyer"); (lv) the date on which the
proposed transaction is to take place; (v) the price or consideration
involved with the proposed transaction; and (vi) the terms upon which
consideration for the Offered Company Interest are to be made. The Selling
Member hereby grants to each Non-Selling Member a right of first refusal (a
"Transfer Offer") to purchase the Offered Company Interest (or otherwise
complete the proposed transaction in lieu of the Proposed Buyer) at the
price and under the terms set forth in the Transfer Notice.
Any Transfer Offer will be open for acceptance in whole or in part by
each Non-Selling Member for a period of 30 days from the date of receipt of
the Transfer Notice by each NonSelling Member (the "Transfer Offer
Period"). To the degree that the Non-Selling Members do not accept the
Transfer Offer within the Transfer Offer Period, the Selling Member may
accept and complete the transaction on the same terins and conditions as
set out in the Transfer Offer within 90 days from the expiration of the
Transfer Offer Period; otherwise the Selling Member must again comply with
the provisions of this Section 7.2.2. If a NonSelling Member accepts the
Transfer Offer in whole or in part within the Transfer Offer Period by
providing notice in writing to the Selling Member, then the Selling Member
will be bound to enter into an agreement with each such Non-Selling Member
on the terms and conditions of the Transfer Offer as applicable with
respect to that portion of the Transfer Offer accepted. If more than one
Non-Selling Member accepts the Transfer Offer, then each accepting
Non-Selling Member shall complete the Transfer Offer on a pro rata basis
based upon the Participating Percentage of each accepting Non-Selling
Member.
16
ARTICLE VIII
MEETINGS OF MEMBERS
8.1 Voting. All Members shall be entitled to vote on any matter submitted
to a vote of the Members. Notwithstanding anything contained in this Agreement
to the contrary, the Members shall have the right to vote on the matters
identified in Section 9.3 of this Agreement.
8.2 Required Vote. Unless a greater vote is required by the Act, the
Articles or this Agreement, the affirmative vote or consent of Members entitled
to vote or consent on such matter assuring a majority in interest of the
Participating Percentages is required to take or approve any action requiring a
Member vote.
8.3 Meetings. A meeting of Members for any propeOpurpose or purposes may be
called at any time by the Managers or the holders of at least 10% of the
Participating Percentages of all Members. The Company shall deliver or mail
written notice stating the date, time, place and purposes of any meeting to each
Member entitled to vote at the meeting. Such notice shall be given not less than
10 and not more than 60 days before the date of the meeting. All meetings of
Members shall be presided over by a Chairperson who shall be a Manager so
designated by the Managers.
8.3.1 Location. Company meetings will be held at a location in the United
States mutually agreed to by all Members.
8.4 Consent. Any action which, by law, may be taken at a meeting of the
Members may be taken without a meeting if authorized by a writing signed by all
of the Members. Any written consent under this Section 8.4 may be executed in
several counterparts, each of which will be deemed an original but all of which
will constitute one and the same. Any signature to such consent may be made by
facsimile transmission or other means of delivering a written message. Each
written consent under this Section 8.4 will have the same force and effect as an
action of the Members voted at a meeting of the Members duly called and
constituted, held on the date specified on the consent or, if no date is so
specified, on the date of the signature of the last Member to execute the
consent.
ARTICLE IX
MANAGEMENT
9.1 Management of Business. The Company shall be managed by 4 Managers. The
terms, duties, compensation and benefits, if any, of the Managers shall be
determined by the Members and by this Agreement. Biotherapies shall appoint 2
Managers, and BioLabs shall appoint 2 Managers. Each Manager shall have one
vote regardless of the Participating Percentage of any Manager or of any Member
who appointed such Manager. Each Member may from time to time on not less than
48 hours written notice to each of the other Members, remove one or both of the
Managers appointed by such Member, and replace such Manager(s) at its sole
discretion. Each Member may on less than
17
48 hours written notice to each of the other Members, appoint one or more
alternate Manager(s), any of whom may attend and act as a Manager in absence of
the previously designated Manager for the term specified in the notice
appointing the alternate Manager.
9.2 General Powers of Managers. Except as may otherwise be provided in this
Agreement, the ordinary and usual decisions concerning the business and affairs
of the Company shall be made by the Managers. The Managers have the power, on
behalf of the Company, to do all things necessary or convenient to carry out the
business and affairs of the Company, including without limitation, the power to:
(a) Approve the Development Plan, Manufacturing Plan and Marketing
Plan for the Marnmastatin Serum Assay or any other product, and approve
revisions to such plans;
(b) Approve all annual operating budgets, capital plans, long-range
plans and other plans, forecasts and projections for each Development
Program, Manufacturing Program and Marketing Program presented to the
Manager by the Project Team;
(c) Review the progress of each Development Program, Manufacturing
Program and Marketing Program on a calendar quarterly basis;
(d) Make, amend and repeal from time to time rules and procedures,
not inconsistent with the provisions of this Agreement, to regulate the
business and affairs of the Company;
(e) Approve the fiscal and financial policies of the Company
established by the President;
(f) Establish accounting procedures and accounting policies
applicable to the Company;
(g) Purchase, lease or otherwise acquire any real or personal
property;
(h) Sell, convey, mortgage, grant a security interest in, pledge,
lease, exchange or otherwise dispose of, or encumber any real or personal
property;
(i) Open one or more depository accounts and make deposits into and
checks and withdrawals against such accounts in any amount;
(j) Borrow money, incur liabilities, and other obligations;
(k) Enter into any and all agreements and execute any and all
contracts, documents and instruments;
18
(1) Create Officer positions, engage the Officers of the Company,
define their respective duties other than as specifically provided in this
Agreement, and establish their compensation or remuneration;
(m) Establish pension plans, trusts, profit sharing plans and other
benefit and incentive plans for Members, employees and agents of the
Company;
(n) Participate with others in partnerships, joint ventures and other
associations and strategic alliances; and
(o) Carry out such other duties as the Members from time to time
direct.
9.3 Limitations. Notwithstanding the foregoing and) any other provision
contained in this Agreement to the contrary, no act shall be taken, sum
expended, decision made, obligation incurred or power exercised by any Manager
on behalf of the Company except by vote of the Members holding a majority of the
Participating Percentages of all of the Members with respect to: (a) the sale of
all or substantially all of the assets and property of the Company; (b) any
mortgage, grant of security interest, pledge or encumbrance upon all or
substantially all of the assets and property of the Company; (c) any
consolidation, merger or amalgamation of the Company; (d) any amendment or
restatement of the Articles or this Agreement; (e) the commission of any act
which would make it impossible for the Company to carry on its ordinary business
and affairs; (0 any capital expenditures, leases of Company property or other
commitments having a capital value of, or otherwise exceeding, $250,000; (g) any
loans by the Company or a subsidiary to a Member or an Affiliate or any
shareholders of such persons or their respective relatives; (h) any contracts
between the Company or a subsidiary and a Member or an Affiliate or any
shareholders of such persons or their respective relatives; (1) any transaction
out of the ordinary course of business of the Company (provided that a
transaction shall not be deemed to be out of the ordinary course of business
solely because it occurs infrequently); 0) distribution of any of the Company's
assets, in-kind or otherwise, to a Member or an Affiliate; (k) any employment by
the Company or a subsidiary of any shareholder of a Member or an Affiliate or
their respective relatives; (1) waiver or appointment of an auditor; (in) the
issuance of any additional membership interest; or (n) any act that would
contravene any provision of the Articles or this Agreement or the Act.
9.4 Standard of Care; Liability. Every Manager shall discharge his or her
duties as a Manager in good faith, with the care an ordinarily prudent person in
a like position would exercise under similar circumstances, and in a manner he
or she reasonably believes to be in the best interests of the Company. A Manager
shall not be liable for any monetary damages to the Company for any breach of
such duties except for receipt of a financial benefit to which the Manager is
not entitled; voting for or assenting to a distribution to Members in violation
of this Agreement or the Act; or a knowing violation of the law.
9.5 Vacancies. Any Manager vacancy shall be filled by the Member, in its
sole discretion, who appointed (under Section 9.1 of this Agreement) the Manager
who created the vacancy.
19
9.6 Place of Meeting. Meetings of the Managers shall be held at any place
(other than in Canada) within or without the State of Michigan which has been
designated from time to time by resolution of the Managers or by written consent
of all Managers.
9.7 Regular Meetings. Regular meetings of the Managers shall be held at
such time as the Managers may from time to time designate. Notice of all such
regular Manager meetings shall be given as provided under Section 9.9 of this
Agreement.
9.8 Special Meetings. In addition to regular meetings, a special Manager
meeting may be called for any purpose or purposes at any time by any Manager by
providing written notice of such meeting to the President. A special meeting may
also be called for any purpose or purposes at any time by the President. Special
meetings of the Managers with be held at a location determined by a majority of
the Managers (whether formally or informally obtained), or, failing such
selection, at the location of the previous Manager meeting. Notice of all such
special Manager meetings shall be given as provided under Section 9.9 of this
Agreement.
9.9 Notice. The President, or his appointee, will furnish each Manager with
at least 7 days notice of each regular meeting and at least 48 hours notice of
each special meeting of the Managers. Notices will be in writing and will set
forth those matters which the Manager calling the meeting, or the President if
the President called the meeting, instructs. Notices will be either delivered
personally or transmitted by facsimile transmission addressed to each appointee
at the facsimile number given by the appointee to the President. Notice of an
adjourned meeting of the Managers is not required to be given if the time and
place thereof is announced at the original meeting. Notice of any meeting of the
Managers may at any time be waived by any appointee.
9.10 Meetings by Communications Facilities. A meeting of the Managers may
be held where one or more Managers participates by means of such communications
facilities as permit all persons participating in the meeting to hear each
other, and any Manager so participating will be deemed to have been present at
that meeting.
9.11 Manager Action; Quorum. A majority of the duly elected Managers shall
be necessary to constitute a quorum for the transaction of business, except to
adjourn as hereinafter provided. Every act or decision done or made by a
majority of the Managers present at a meeting duly held at which a quorum is
present shall be regarded as the act of the Managers unless a greater majority
is expressly required by law, the Articles of Organization or by this Agreement.
ANY TIE VOTE BY THE MANAGERS SHALL BE DECIDED SOLELY BY THE PRESIDENT (OR OTHER
APPOINTEE) OF BIOTHERAPIES IN HIS OR HER SOLE DISCRETION.
9.12 Adjournment. A quorum of the Managers may adjourn any Manager's
meeting to meet again at a stated day and hour; provided, however, that in the
absence of a quorum, a majority of the Managers present at any Manager's
meeting, either regular or special, may adjourn such meeting until the time
fixed for the next regular or special Managers meeting.
20
9.13 Action Without a Meeting. Any action which, by law, may be taken at a
meeting of the Managers may be taken without a meeting if authorized by a
writing signed by all of the Managers. Any written consent under this Section
9.13 may be executed in several counterparts, each of which will be deemed an
original but all of which will constitute one and the same. Any signature to
such consent may be made by facsimile transmission or other means of delivering
a written message. Each written consent under this Section 9.13 will have the
same force and effect as an action of the Managers voted at a regular or special
meeting of the Managers duly called and constituted, held on the date specified
on the consent or, if no date is so specified, on the date of the signature of
the last Manager to execute the consent.
9.14 Removal. Subject to Section 9.1 of this Agreement, Managers may be
removed for cause upon an affirmative vote of a majority in interest of the
Participating Percentages of the Members entitled to vote or consent on such
matter.
9.15 Confidentiality and Covenant Not to Compete. Upon appointment, each
Member shall cause each appointed Manager, and the Company shall cause each
Officer, to execute a confidentiality and non-competition agreement in a form
reasonably satisfactory to the Members. Additionally, upon execution of this
Agreement, Xx. Xxxx X. Xxxxx Xx. and Dr. Xxx Xxxxx shall execute a
confidentiality and non-competition agreement in a form reasonably satisfactory
to the Members.
ARTICLE X
OFFICERS
10.1 General. Except as may otherwise be provided in this Agreement, the
day to day operation of the business and affairs of the Company shall be
conducted by the Officers. All Officers shall be appointed by, and shall serve
at the will of, the Managers. The Officer positions shall include a President
and any other Officer(s) positions as established by the Managers from time
to time. Each Officer shall have the rights and duties specified in this
Agreement or by the Managers if not contrary to the terms of this Agreement.
10.2 Term of Office, Resignation and Removal. An Officer shall hold office
for the term for which elected or appointed and until the Officer's successor is
elected or appointed and qualified, or until the Officer's resignation or
removal. An Officer may resign by written notice to the President, or if the
President is not available, or if the resigning Officer is the President, to all
of the Managers. The resignation shall be effective upon its receipt by a person
as above provided, or at a subsequent time specified in the notice of
resignation. An Officer may be removed by the Managers with or without cause and
with or without notice. The removal of an Officer shall be without prejudice to
the Officer's contract rights, if any. The election or appointment of an Officer
does not of itself create contract rights. An Officer may be suspended by the
President, pending action by the Managers.
21
10.3 Superior Responsibility. Unless otherwise provided by the Managers,
all Officers shall act under the direction of the President.
10.4 Customary Rules. To the extent the powers and duties of the several
Officers are not provided from time to time by resolution or other directive of
the Managers, the Officers shall have all powers and shall discharge the duties
customarily and usually held and performed by like officers of corporations or
companies similar in organization and business purposes to the Company.
10.5 President. Except to the extent that powers and duties are reserved to
the Members or Managers under this Agreement, the President shall be the chief
executive and administrative officer of the Company having all authorities
normally associated therewith and has the power, on behalf of the Company, to do
all things necessary or convenient to carry out the day to day operation of the
business and affairs of the Company, including without limitation, the power to:
(a) Approve objectives and schedules for each Development Program,
Manufacturing Program and Marketing Program set by the Project Team and any
variations, amendments, suspensions or deletions thereto that may be
recommended by the Project Team;
(b) Approve the composition of and staffing levels for the Project
Team, including the appointment of the Program Coordinator;
(c) Give general direction and guidance to each Project Team;
(d) Subject to the approval of the Managers, establish fiscal and
financial policies of the Company.
(e) On behalf of the Company and the Members, coordinate and operate
an adverse event reporting system;
(f) Purchase, lease or otherwise acquire any property other than real
property as long as such transaction does not obligate the Company to pay
or assume liability more than $50,000;
(g) Sell, convey, lease, exchange or otherwise dispose (other than by
mortgage, grant of a security interest, pledge, or other encumbrance) any
property other than real property;
(h) Open one or more depository accounts and make deposits into and
checks and withdrawals against such accounts, however the Managers must
approve any check or withdrawal over $50,000;
(i) Borrow money, incur liabilities, and other obligations of $50,000
or less;
22
j) Enter into any and all agreements and execute any and all
contracts, documents and instruments as long as such transaction does not
obligate the Company to pay or assume liability more than $50,000;
(k) Engage employees and agents (other than Officers of the Company),
define their respective duties, and establish their compensation or
remuneration;
(1) Obtain insurance covering the business and affairs of the Company
and its property and on the lives and well being of its Member employees
and agents;
(m) Commence, prosecute or defend any proceeding in the Company's
name;
(n) Carry out such other duties as the Managersirom time to time
direct.
For all purposes under this Section 10.5, all related transactions shall be
combined to determine if any $50,000 threshold has been met.
ARTICLE XI
PRODUCT DEVELOPMENT
11.1 Development Committee. The Company shall undertake the Development of
the Mammastatin Serum Assay, and any other product as the Managers from time to
time determine, pursuant to the terms of this Agreement.
11.2 Preparation of Development Plan and Budget. Within 75 days before the
commencement of each calendar year, commencing with the 1999 calendar year, the
Managers will consider and approve annually the Development Plan for each
product of the Company (including, without limitation, the Mammastatin Serum
Assay) or annual revision thereto and a budget for all planned Development
expenses on a calendar year basis. The budget will designate expenditures listed
in such budget as either discretionary or required items. The Development Plan
will set forth in reasonable detail, for the following calendar year, all
anticipated Development Programs and any non-routine activities which the
Managers anticipate with respect to Development.
ARTICLE XII
REGULATORY APPROVALS
12.1 Regulatory Approvals. In respect of any products, the Company shall
make submissions required to obtain health registration approvals in each
country which the Managers determine is commercially desirable, and all
subsequent submissions required to maintain or defend such approvals or
amendments or supplements thereto in countries as the Managers will determine
is commercially desirable.
23
12.2 Responsibility for Books and Records. In respect of each product, all
involved parties will maintain adequate books and records as required by the
applicable boards of health and will comply with all applicable laws and
regulations. Without limiting the generality of the foregoing, the Company and
the Managers shall comply and have all contractors comply with current good
manufacturing practice, good clinical practice, and good laboratory practice
regulations which are in force or are hereafter adopted by any relevant
Regulatory Authorities.
12.3 Notice of Findings. Each Member and each Manager shall promptly notify
all other Members and Managers in writing and on a timely basis, of any
significant unusual physiochemical, pharmacological, toxicological or
pharmacokinetic finding from experiments and/or clinical studies with each
product.
12.4 Recall. The Members and Managers will immediately contact each other
in the event that any party has reason to believe that the recall of a product
may be necessary. The Members and the Managers will fully cooperate and will,
through the Managers, resolve any issues with respect to the recall of any such
product including without limitation, the necessity of declaring the recall, the
manner in which the recall should be conducted and the duration of the recall.
ARTICLE XIII
INFRINGEMENT CLAIMS
13.1 Infringement Claims.
13.1.1 If at anytime during the term of this Agreement, any Manager or
Member believes that a third party is infringing, or is threatening to
infringe, any patent or other Proprietary Information owned by the Company
or relating to any product developed, distributed, marketed or sold by the
Company, including without limitation, the Marnmastatin Serum Assay, or any
element thereof, then the Company shall initiate and maintain, at its sole
expense, an action against such third party to cease its infringement, or
threatened infringement, and to recover any and all damages, costs, and
expenses arising out of the third party's infringement or threatened
infringement.
13.1.2 If the Company falls or refuses to initiate and maintain an action
referred to in Subsection 13.1.1 above, then BioLabs or Biotherapies may,
in its own name and in the Company's name, initiate and maintain the
action, in which case BioLabs or Biotherapies, as applicable, will retain
sole control over the prosecution and settlement of such action, shall
retain the full amount of any and all damages, costs and/or expenses
recovered in such action. In such case, BioLabs or Biotherapies, as
applicable, shall be entitled to reimbursement by the Company for all costs
and expenses of such action in excess of the recovery in such action. The
Company and each Member and Manager shall provide all
24
reasonable assistance, as well as all necessary authority to BioLabs or
Biotherapies, as applicable, to carry out such action.
ARTICLE XIV
REPRESENTATIONS AND WARRANTIES
14.1 Representations and Warranties of Biotherapies. Biotherapies hereby
represents and warrants to BioLabs that each of the statements set forth below
is true and correct in all respects. Such representations, warranties, covenants
and agreements constitute a material inducement to BioLabs to enter into this
Agreement and to consummate the other transactions contemplated by this
Agreement.
14.1.1 Corporate Status. Biotherapies is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Michigan, and has all necessary corporate powers to own its assets, and
carry on its business as now owned and operated.
14.1.2 Corporate Authority. The execution and delivery of this Agreement
and the consummation by Biotherapies of the transactions described herein
have been duly authorized, and no further corporate action or authorization
is necessary in connection therewith.
14.1.3 No Default. The consummation by Biotherapies of the transactions
contemplated herein will not result in or constitute: (1) a breach of any
term or condition of this Agreement, (ii) a default or an event that, with
notice or lapse of time or both, would constitute a default, breach or
violation of the constituent documents of Biotherapies or any license,
promissory note or other agreement, instrument or arrangement to which
Biotherapies is a party, or (iii) an event that would pennit any party to
terminate an agreement or to accelerate the maturity of any obligation of
Biotherapies.
14.1.4 Third Party Consents. There is no requirement under any Contract to
which Biotherapies is a party to give any notice to or to obtain the
consent or approval of, any party to such Contract relating to the
consummation of the transactions contemplated by this Agreement.
14.1.5 No Court Orders. No court orders have been made against Biotherapies
and the execution and delivery of this Agreement by Biotherapies does not,
and the consummation of the transactions contemplated herein will not,
breach the terms of any order of any court.
14.1.6 No Regulatory Consents. There is no requirement to make any filing
with, give any notice to or to obtain any license, permit, certificate,
registration, authorization, consent or approval of, any governmental or
regulatory authority as a condition to the lawful consummation of the
transactions contemplated by this Agreement.
25
14.1.7 Litigation. Other than as disclosed to BioLabs, there is no litigation or
administrative or govenuriental proceeding or inquiry pending or to the
knowledge of Biotherapies threatened against or relating to Biotherapies nor
does Blotherapies know of or have reasonable grounds for believing that there is
any basis for any action, proceeding, or inquiry.
14.1.8 Title to License. Biotherapies has all ownership and/or license rights
necessary to perform its obligations and grant the Company License contained in
this Agreement, and the License is in good standing in all material respects.
14.1.9 Biotherapies Shares. Blotherapies has authorized capital consisting of
1,440,000 shares which are divided into two (2) classes, 1,430,0A class A common
shares, and 10,000 series A preferred shares. There are 912,060 class A common
shares issued, outstanding, and fully paid, and 10,000 series A preferred shares
issued, outstanding, and fully paid.
14.1.10 No Additional Common Shares. Except as set out in Schedule "C" hereto or
as made pursuant to this Agreement, no person now has any agreement or other
contract for the acquisition, purchase, subscription, allotment or issuance of
any common shares in Biotherapies.
14.1.11 No Transfer Restrictions. No shareholder agreement or other contracts
are in effect which affect transferability of the Biotherapies' common shares
currently traded and outstanding.
14.1.12 Not Insolvent. Blotherapies is neither an "Insolvent person" nor a
"bankrupt" as each such term is defined under the U.S. Bankruptcy Code.
14.1.13 Compliance with Law. Biotherapies is in material compliance with all
relevant federal, state, municipal and local laws, statutes, ordinances, bylaws
and regulations, and orders, directives and decisions rendered by any Regulatory
Authority with respect to Mammastatin and the License.
14.1.14 Year 2000 Compliance. Any and all computer systems or other technology
used by Biotherapies is Year 2000 Compliant. For the purposes of this Section,
"Year 2000 Compliant" means a product or service that is able to accurately
process, provide and receive date data (including, but not limited to,
calculating, comparing and sequencing) from, into, and between the twentieth and
twenty-first centuries (including leap year calculations) provided that all
products (e.g. hardware, software, middleware and firmware) which interconnect
with, or which are used in combination with, that product and service, are Year
2000 Compliant and are capable of properly exchanging date data, and provided
that no unauthorized modifications or additions are made to the product or
service.
26
14.2 Representations and Warranties of BioLabs. BjoLabs hereby represents and
warrants to Biotherapies that each of the statements set forth below is true and
correct in all respects. Such representations, warranties, covenants and
agreements constitute a material inducement to Biotherapies to enter into this
Agreement and to consummate the other transactions contemplated by this
Agreement.
14.2.1 Corporate Status. BioLabs is a corporation duly organized, validly
existing and in good standing under the laws of the State of New York, and
has all necessary corporate powers to own its assets, and carry on its
business as now owned and operated.
14.2.2 Corporate Authority. The execution and delivery of this Agreement
and the consummation by BioLabs of the transactions described herein have
been duly authorized, and no further corporate action or authorization is
neJessary in connection therewith.
14.2.3 No Default. The consummation by Biol-abs of the transactions
contemplated herein will not result in or constitute: (1) a breach of any
term or condition of this Agreement, (ii) a default or an event that, with
notice or lapse of time or both, would constitute a default, breach or
violation of the constituent documents of Biol-abs or any license,
promissory note or other agreement, instrument or arrangement to which
BioLabs is a party, or (iii) an event that would permit any party to
ten-ninate an agreement or to accelerate the maturity of any obligation of
BioLabs.
14.2.4 Third Party Consents. There is no requirement under any Contract to
which BioLabs is a party to give any notice to or to obtain the consent or
approval of, any party to such Contract relating to the consummation of the
transactions contemplated by this Agreement.
14.2.5 No Court Orders. No court orders have been made against BioLabs and
the execution and delivery of this Agreement by BioLabs does not, and the
consummation of the transactions contemplated herein will not, breach the
ternis of any order of any court.
14.2.6 No Regulatory Consents. There is no requirement to make any filing
with, give any notice to or to obtain any license, permit, certificate,
registration, authorization, consent or approval of, any governmental or
regulatory authority as a condition to the lawful consummation of the
transactions contemplated by this Agreement.
14.2.7 Litigation. There is no litigation or administrative or governmental
proceeding or inquiry pending or to the knowledge of BioLabs threatened
against or relating to BioLabs nor does BioLabs know of or have reasonable
grounds for believing that there is any basis for any action, proceeding,
or inquiry.
14.2.8 BioLabs Shares. BioLabs has an authorized capital consisting of
200,000,000 shares broken into two classes, 100,000,000 common shares and
100,000,000 preferred shares, of
27
which 8,119,036 common shares and 1,285,838 Class A Convertible Preferred
Shares are currently issued and outstanding and are fully paid and
non-assessable. BioLabs has all necessary authority to issue shares of its
stock to Biotherapies in accordance with the provisions of Subsection 4.2.
1 (i) of this Agreement.
14.2.9 No Transfer Restrictions. No shareholder agreement or other
contracts are in effect which affect transferability of the Biol-abs'
common shares currently traded and outstanding.
14.2.10 Not Insolvent. BioLabs is neither an "insolvent person" nor a
"bankrupt" as each such term is defined under the U.S. Bankruptcy Code.
ARTICLE XV
EXCULPATION OF LIABILITY; INDlkMNIFICATION
15.1 Exculpation of Liability. Unless otherwise provided by law or
expressly assumed, a person who is a Member or Manager, or both, shall not be
liable to any other Member, any Manager, the Company, or any third party for the
acts, debts or liabilities of the Company.
15.2 Indemnification. Except as otherwise provided in this Article, the
Company shall indemnify and hold harmless any Manager and may indemnify and hold
harmless any employee or agent of the Company who was or is a party or is
threatened to be made a party to a threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative, or investigative, and
whether formal or informal, other than an action by or in the night of the
Company, by reason of the fact that such person is or was a Manager, employee or
agent of the Company against expenses, including attorneys' fees, judgments,
penalties, fines and amounts paid in settlement actually and reasonably incurred
by such person in connection with the action, suit or proceeding, if the person
acted in good faith, with the care an ordinarily prudent person in a like
position would exercise under similar circumstances, and in a manner that such
person reasonably believed to be in the best interests of the Company and with
respect to a criminal action or proceeding, if such person had no reasonable
cause to believe such person's conduct was unlawful. To the extent that a
Manager, employee or agent of the Company has been successful on the merits or
otherwise in defense of an action, suit or proceeding or in defense of any
claim, issue or other matter in the action, suit or proceeding, such person
shall be indemnified against actual and reasonable expenses, including
attomeys'fees, incurred by such person in connection with the action, suit or
proceeding and any action, suit or proceeding brought to enforce the mandatory
indemnification provided herein. Any indemnification permitted under this
Article, unless ordered by a court, shall be made by the Company only as
authonized in the specific case upon a deten,nination that the indemnification
is proper under the circumstances because the person to be indemnified has met
the applicable standard of conduct and upon an evaluation of the reasonableness
of expenses and amounts paid in settlement. This determination and evaluation
shall be made by a vote of the Members holding a majority of the total
Participating Percentages of all Members who are not parties or threatened to be
made parties to the action, suit or proceeding. Notwithstanding the foregoing to
the contrary, no indemnification shall be provided to any Manager, employee or
28
agent of the Company for or in connection with the receipt of a financial
benefit to which such person is not entitled, voting for or assenting to a
distribution to Members in violation of this Agreement or the Act, or a knowing
violation of law.
ARTICLE XVI
DISPUTE RESOLUTION
16.1 Dispute Resolution. If a controversy, claim or dispute arises out of,
or relating to, this Agreement (as may be amended), or the interpretation or
application of the tenris of this Agreement, or any breach of this Agreement
(the "Dispute"), the Members agree to use their best efforts to resolve the
Dispute through good faith business negotiations, which shall be a condition
precedent to the institution of any mediation or litigation. The Party cliiming
the Dispute shall give written notice of the Dispute to each of the other
Members containing sufficient detail to provide them with sufficient notice as
to the Dispute. The good faith business negotiations must take place for at
least 30 days after the written notice of the Dispute is provided (the
"Negotiation Period"). If the Dispute is not resolved during the Negotiation
Period, then the Members shall submit the Dispute to nonbinding mediation to be
conducted in Ann Arbor, Michigan, by an independent qualified professional
selected by mutual agreement. The fee of such professional shall be borne by the
Company or equally by all Members, as agreed by the Members. If the Members
cannot agree upon one independent qualified professional to mediate the Dispute
within 30 days after the expiration of the Negotiation Period, then each Members
shall select one independent qualified professional and the independent
qualified professionals so selected shall select an alternative independent
qualified professional who shall solely mediate the Dispute. The mediation shall
be non-binding on the Members or the Company. Forinal litigation proceedings can
be commenced in a court of competent junsdiction solely in the State of
Washington by any Member if the mediation process does not result in a
resolution of the Dispute as determined in the sole discretion of such Member,
or if the mediation is not completed within 120 days after the expiration of the
Negotiation Period.
ARTICLE XVII
MISCELLANEOUS PROVISIONS
17.1 Terms. Nouns and pronouns will be deemed to refer to the masculine,
feminine, neuter, singular and plural, as the identity of the person or persons,
firm or corporation may in the context require.
17.2 Article Headings. The Article headings contained in this Agreement
have been inserted only as a matter of convenience and for reference, and in no
way shall be construed to define, limit or describe the scope or intent of any
provision of this Agreement.
17.3 Counterparts. This Agreement may be executed in several counterparts,
each of which will be deemed an original but all of which will constitute one
and the same. This Agreement
29
may be executed by the parties and transmitted by facsimile transmission and if
so executed and transmitted this Agreement will be for all purposes as effective
as if the parties had delivered an executed original Agreement.
17.4 Entire Agreement. This Agreement constitutes the entire agreement
among the parties hereto and contains all of the agreements among said parties
with respect to the subject matter hereof. This Agreement supersedes any and all
other agreements, either oral or written, between said parties with respect to
the subject matter hereof The documents attached to this Agreement and referred
to herein are hereby incorporated into and made a part of this Agreement, but
the contractual effect of such documents will be determined and limited entirely
by the references to such documents contained in the main body of this
Agreement.
17.5 Severability. The invalidity or unenforceabili~ of any particular
provision of this Agreement shall not affect the other provisions of this
Agreement, and this Agreement shall be construed in all respects as if such
invalid or unenforceable provisions were omitted.
17.6 Amendment. This Agreement may be amended or revoked at any time by a
written agreement executed by all of the parties to this Agreement. No change or
modification to this Agreement shall be valid unless in writing and signed by
all of the parties to this Agreement.
17.7 Notices. Any notice required or pennitted to be given hereunder will
be in writing and may be delivered in person, by fax or by other recorded
communication addressed to the respective parties at their address set forth on
page one to this Agreement or such changed address or fax number as may be given
by a party to the others by such written notice. Any such notice will be
considered to have been given when personally delivered, or upon receipt of
acknowledgment of receipt if sent by fax or other recorded communication. Any
party may change its address or fax number for the purposes of this Section 17.7
by giving the other party written notice of the new address or fax number in the
manner set forth above.
17.8 BindingEffect. Subject to the provisions of this Agreement relating to
transferability, this Agreement will be binding upon and shall inure to the
benefit of the parties, and their respective distributees, successors and
assigns.
17.9 Governing Law. This Agreement is being executed and delivered in the
State of Michigan and shall be governed by, construed and enforced in accordance
with the laws of the State of Michigan.
17.10 No Third Party Rights. This Agreement is intended to create
enforceable rights between the parties hereto only, and creates no rights in, or
obligations to, any other Persons whatsoever.
17.11 Time is of Essence. Time is of the essence in the performance of each
and every obligation herein imposed.
30
17.12 Other Actions. Each of the Members will use its reasonable best
efforts to, and shall with reasonable diligence, take all action and to do all
things necessary in order to consummate and make effective the transactions
contemplated by this Agreement, including without limitation, executing and
delivering or otherwise providing such further documents, instruments or
information required by any party as reasonably necessary or desirable to effect
the purpose and intent of this Agreement and to carry out its provisions.
17.13 Accounting Terms. All accounting terms not otherwise defined have the
meanings assigned to them in accordance with United States generally accepted
accounting principles.
17.14 Statutory References. Any reference to a statute includes and is a
reference to such statute and to the regulations made pursuant thereto, with all
Aendments made thereto and in force from time to time, and to any statute or
regulations that may be passed which has the effect of supplementing or
superseding such statute or such regulations.
17.15 Corporate Entity. Any reference to a corporate entity includes and is
also a reference to any corporate entity that is a successor to such entity.
17.16 Business Day. Any action to be taken pursuant to this Agreement on a
day which is not a business day will be taken on the next succeeding business
day.
17.17 Drafting. Each party to this Agreement has cooperated in the drafting
and preparation of this Agreement. Thus, in any construction to be made of this
Agreement, the same will not be construed against any party.
17.18 Waiver. No provision of this Agreement will be deemed to be waived
unless such waiver is in writing. Any waiver of any default by any party hereto
in the observance or of the perfon-xxxxx of any part of this Agreement will not
extend to or be taken in any manner to affect any other default.
17.19 Sharing of Information. Biotherapies and BioLabs will make available
and disclose to each other all information known by either party concerning the
Mammastatin Serum Assay as of the date of this Agreement and at any time
thereafter. All discoveries or inventions made by Biotherapies in the Additional
Products will be promptly disclosed to BioLabs. Biotherapies and BioLabs will
provide to the Company all raw data in original forin or a photocopy thereof for
any and all work carried out in the course of the Development of the Mammastatin
Serum Assay as reasonably requested by the other party.
31
17.12 Other Actions. Each of the Members will use its reasonable best
efforts to, and shall with reasonable diligence, take all action and to do all
things necessary in order to consummate and make effective the transactions
contemplated by this Agreement, including without limitation, executing and
delivering or otherwise providing such further documents, instruments or
information required by any party as reasonably necessary or desirable to effect
the purpose and intent of this Agreement and to carry out its provisions.
17.13 Accounting Terms. All accounting ternis not otherwise defined have
the meanings assigned to them in accordance with United States generally
accepted accounting principles.
17.14 Statutory References. Any reference to a statute includes and is a
reference to such statute and to the regulations made pursuant thereto, with all
af6endments made thereto and in force from time to time, and to any statute or
regulations that may be passed which has the effect of supplementing or
superseding such statute or such regulations.
17.15 Corporate Entity. Any reference to a corporate entity includes and is
also a reference to any corporate entity that is a successor to such entity.
17.16 Business Day. Any action to be taken pursuant to this Agreement on a
day which is not a business day will be taken on the next succeeding business
day.
17.17 Drafting. Each party to this Agreement has cooperated in the drafling
and preparation of this Agreement. Thus, in any construction to be made of this
Agreement, the same will not be construed against any party.
17.18 Waiver. No provision of this Agreement will be deemed to be waived
unless such waiver is in writing. Any waiver of any default by any party hereto
in the observance or of the perfon-xxxxx of any part of this Agreement will not
extend to or be taken in any manner to affect any other default.
17.19 Sharing of Information. Blotherapies and BioLabs will make available
and disclose to each other all information known by either party concerning the
Mammastatin Serum Assay as of the date of this Agreement and at any time
thereafter. All discoveries or inventions made by Blotherapies in the Additional
Products will be promptly disclosed to BioLabs. Biotherapies and BioLabs will
provide to the Company all raw data in original form or a photocopy thereof for
any and all work carried out in the course of the Development of the Mammastatin
Serum Assay as reasonably requested by the other party.
31
17.20 Costs. Except as otherwise provided herein, each Member will be
responsible for and will pay all taxes, costs, expenses and legal or other fees
incurred by it in connection with the negotiations, settlement and execution of
this Agreement and all matters related thereto and will indemnify and hold
harmless the other Members from and against any and all liabilities or claims in
respect to any such expenses, costs or fees.
ACCEPTED AND AGREED:
"THE COMPANY" "MEMBERS"
Biotherapies Incorporated
a Michigan corporation
By: /s/ Xxxxx X. Xxxxxxx By: /s/ Xxxxxx X. Xxxxxxx
------------------------------ ------------------------------
Xxxxx X. Xxxxxxx Xxxxxx X. Xxxxxxx
Its: President Its: President
By: /s/ Xxxx Xxxxxxx XxXxxxxxx By: /s/ Xxxx Xxxxxxx XxXxxxxxx
------------------------------ ------------------------------
Xxxx Xxxxxxx XxXxxxxxx Xxxx Xxxxxxx XxXxxxxxx
Its: Manager Its: President
32
APPENDIX A
1. Adjustment to Allocations. It is the intention of the Members that
Profit or Loss for each Fiscal Year will be allocated to the Members by Section
6.1 of this Agreement in such a manner that would cause each Member's Adjusted
Capital Account Balance at the end of such Fiscal Year to equal the amount that
would be distributed to such Member upon a hypothetical liquidation of the
Company at the end of such Fiscal Year. In deten-nining the amounts
distributable to the Members u on a h othetical li uidation it shall be presumed
that (i) all of the Company's assets would be sold at their Gross Asset Value,
(ii) payments to any holder on any nonrecourse debt would be limited to the
Gross Asset Value of the assets secured by repayment of such debt, and (Ili) all
distributions to the Members will be made solely in accordance with Section 6.2
of this Agreement. If, upon the advice of the accounting firm retained to
prepare the income tax returns of the Company, it is determined that the
intention set forth in this Section I o~Appendix A is not being met by the
allocations of Section 6.1 of this Agreement, the Manager shall have the
discretion and authority to make such allocations of Profit or Loss, or items of
income, gain, loss or deduction, compni sing such Profit or Loss as necessary to
achieve the intentions set forth herein.
2. Special Allocations.
(a) Company Minimum Gain Chargeback. Notwithstanding any other provision of
this Agreement, if there is a net decrease in Minimum Gain during any Fiscal
Year, each Member shall be specially allocated items of Company income and gain
for such year (and, if necessary, for subsequent years) in an amount equal to
the portion of that Member's share of the net decrease in Minimum Gain during
such year that is allocable to the disposition of any Company assets subject to
one or more nonrecourse liabilities of the Company. The items to be so allocated
shall be determined in accordance with Regulation Section 1.704-20)(2)(1). Any
Member's share of any net decrease in Minimum Gain shall be determined in
accordance with Regulation Section 1.704-2(g). This Section is intended to
comply with the minimum gain chargeback requirement in the Regulations and shall
be interpreted consistently therewith.
(b) Nonrecourse Deductions. Nonrecourse deductions for any Fiscal Year
shall be allocated to the Members in accordance with their Sharing Ratios. For
purposes of this Section, "nonrecourse deductions" shall have the meaning set
forth in Section 1.704-2(b)(1) of the Regulations. The amount of nonrecourse
deductions for a Fiscal Year shall equal the excess, if any, of the net
increase, if any, in the amount of Minimum Gain during that Fiscal Year over the
aggregate amount of any distributions during that Fiscal Year of proceeds of a
nonrecourse liability (as that term is defined in Regulation Section
1.704-2(b)(3)) that are allocable to an increase in Minimum Gain, determined
according to the provisions of Regulation Section 1.704-2(d).
(c) Member Minimum Gain Chargeback. Notwithstanding any other provision of
this Agreement except Section 2(a) of Appendix A, if there is a net decrease in
Member Minimum Gain attributable to Member Nonrecourse Debt during any Fiscal
Year, each Member who has a share of the Member Minimum Gain attributable to
such Member Nonrecourse Debt shall be specially
Page 1 of 7
allocated items of Company income and gain for such year (and, if necessary,
subsequent years) in an amount equal to the portion of such Member's share of
the net decrease of Member Minimum Gain attributable to such Member Nonrecourse
Debt that is allocable to the disposition of any Company assets subject to such
Member Nonrecourse Debt. The items to be so allocated shall be determined in
accordance with Regulation Section 1.704-20)(2)(ii). Any Member's share of the
net decrease in Member Minimum Gain shall be determined in accordance with
Regulation Section 1.704-2(i)(5). This Section is intended to comply with the
minimum gain chargeback requirements in the Regulations and shall be interpreted
consistently therewith.
(d) Member Nonrecourse Deductions. Any Member nonrecourse deductions for
any Fiscal Year shall be specially allocated to the Member who bears economic
risk of loss with respect to the Member Nonrecourse Debt to which such Member
nonrecourse deductions are attributable in accordance with Regulation Section
1.704-2(1). For piji-poses of this Section, "Member nonrecourse deductions" has
the same meaning as "partner nonrecourse deduction" in Regulation Section
1.704-2(i)(1). The amount of Member nonrecourse deductions with respect to a
Member Nonrecourse Debt for a Fiscal Year equals the excess, if any, of the net
increase, if any, in the amount of Member Minimum Gain attributable to such
Member Nonrecourse Debt during that Fiscal Year over the aggregate amount of any
distributions during that Fiscal Year to the Member that bears the economic risk
of loss for such Member Nonrecourse Debt to the extent such distributions are
from the proceeds of such Member Nonrecourse Debt and are allocable to an
increase in Member Minimum Gain attributable to such Member Nonrecourse Debt,
deten-nined in accordance with Section 1.704-2(i)(1).
(e) Qualified Income Offset. In the event any Member unexpectedly receives
any adjustment, allocation or distribution described in Regulation paragraph
(4), (5) or (6) of Section 1.704-1(b)(2)(ii)(d), items of Company income and
gain shall be specially allocated to the Members in an amount and manner
sufficient to eliminate, to the extent required by the Regulations, the Adjusted
Capital Account Deficit of that Member as quickly as possible.
(f) Gross Income Allocation. In the event that any Member has a deficit
Capital Account at the end of any Company Fiscal Year that is in excess of the
sum of (1) the amount that such Member is obligated to restore and (ii) the
amount that the Member is deemed to be obligated to restore pursuant to the
penultimate sentence of Regulation Sections 1.704-2(g)(1) and (1)(5), that
Member shall be specially allocated items of Company income and gain in the
amount of such excess as quickly as possible, provided that an allocation
pursuant to this Section 2(f) of Appendix A shall be made only if and to the
extent that such Member would have a deficit Capital Account in excess of such
sum after all other allocations provided for in this Appendix A have been made
as if Sections 2(e) and 2(f) of Appendix A were not in the Agreement.
(g) Allocation In the Event of Section 754 Election. To the extent an
adjustment to the adjusted tax basis of any Company asset pursuant to Code
Section 734(b) or Code Section 743(b) is required, pursuant to Regulation
Section 1.704-1(b)(2)(iv)(m), to be taken into account in deten-nining Capital
Accounts, the amount of that adjustment to the Capital Accounts shall be treated
Page 2 of 7
as an item of gain (if the adjustment increases the basis of the asset) or loss
(if the adjustment decreases the basis of the asset), then that gain or loss
shall be specially allocated to the Members in the manner consistent with the
manner in which their Capital Accounts are required to be adjusted pursuant to
that Regulation.
3. Curative Allocations.
(a) Regulatory Allocations. The allocations set forth in Section 2 of this
Appendix ("Regulatory Allocations") are intended to comply with certain
requirements of Regulations Section 1.704- 1 (b) and 1.704- 2. The Regulatory
Allocations may not be consistent with the manner in which the Members intend to
divide distributions. Accordingly, the Managers are authorized to divide
allocations of Profits, Losses and other items among the Members so as to
prevent the Regulatory Allocations from distorting the manner in which Company
Atributions are required to be divided among the Members pursuant to this
Agreement. In general, the Members anticipate that this will be accomplished by
specially allocating Profits and Losses and items of income, gain, loss and
deduction among the Members so that the net amount of the Regulatory Allocations
and such special allocations to each Member is zero. The Manager will have
complete discretion to accomplish this result in any reasonable manner.
(b) Recharacterization of Fees or Distributions. In the event that a
guaranteed payment to a Member is ultimately recharacterized as a distribution
for federal income tax purposes (as the result of an audit of the Company's
return or otherwise) and if such recharacterization has the effect of
disallowing a deduction or reducing the adjusted basis of any asset of the
Company, then an amount of Company gross income equal to such disallowance or
reduction shall be allocated to the recipient of such payment. In the event that
a distribution to a Member is ultimately recharacterized as a guaranteed payment
for federal income tax purposes (as a result of an audit of the Company's return
or otherwise), and if any such recharacterization gives rise to a deduction,
such deduction shall be allocated to the recipient of the distribution.
4. Special Tax Allocations.
(a) Contributed Property. In accordance with Code Section 704(c) and the
Regulations thereunder, income, gain, loss and deduction with respect to any
property contributed to the Company shall, solely for tax purposes, be allocated
among the Members in any permissible manner so that a contributing Member, to
the maximum extent possible, recognizes the variation, if any, between the
Adjusted Basis and the initial Gross Asset Value of the property contributed by
that Member.
(b) Adjusted Property. In the event the Gross Asset Value of any Company
asset is adjusted pursuant to subsection (b) of the definition of Gross Asset
Value, subsequent allocations of income, gain, loss and deduction with respect
to that asset shall take into account any variation between the Gross Asset
Value of that asset before such adjustment and its Gross Asset Value after such
adjustment in the same manner as the variation between Adjusted Basis and Gross
Asset Value
Page 3 of 7
is taken into account under Section 4(a) of Appendix A with respect to
contributed property, and such variation shall be allocated in accordance with
the principles of Regulation Section 1.704l(b)(2)(iv)(f), and the
Members'capital accounts shall be adjusted in accordance with Regulation Section
1.704-1(b)(2)(iv)(g).
(c) Recapture of Deductions and Credits. If any "recapture" of deductions
or credits previously claimed by the Company is required under the Code upon the
sale or other taxable disposition of any Company property, those recaptured
deductions or credits shall, to the extent possible, be allocated to the Members
pro rata in the same manner that the deductions and credits giving rise to the
recapture items were originally allocated using the "first-in, first-out" method
of accounting; provided, however, that this Section 4(c) of Appendix A shall
only affect the characterization of income allocated among the Members for tax
purposes.
(d) Discretion of the Manager. Any elections or other decisions relating to
the allocations under this Section 4 of Appendix A shall be made by the Manager
in any manner that reasonably reflects the purpose and intention of this
Agreement. Allocations pursuant to this Section 4 of Appendix A are solely for
purposes of federal, state and local taxes and shall not affect or in any way be
taken into account in computing any Member's Capital Account or share of
Profits, Losses, other items or distributions pursuant to any provision of
below.
this Agreement.
5. Knowledge to Tax Consequences. The Members are aware of the income tax
consequences of the allocations made by this Appendix A and the economic impact
of the allocations on the amounts receivable by them under the Agreement. The
Members hereby agree to be bound by the provisions of this Appendix A in
reporting their share of Company income and loss for income tax purposes.
6. Definitions. As used in this Agreement, the following terins have the
meanings set forth
(a) "Adjusted Basis" has the meaning given such term in Section 1011 of the
Code.
(b) "Adjusted Capital Account Balance" means that amount with respect to
any Member equal to the balance of such Member's Capital Account at the end of
the Fiscal Year after increasing the balance on such Member's Capital Account by
any amount which the Member is deemed to be obligated to restore pursuant to the
penultimate sentence of Regulation Sections 1.704-2(g)(1) and (i)(5).
(c) "Adjusted Capital Account Deficit" means with respect to any Member,
the deficit balance, if any, in that Member's Capital Account as of the end of
the relevant Fiscal Year, after given effect to the following adjustments: (i)
credit to that Capital Account the amount by which that Member is obligated to
restore or is deemed to be obligated to restore pursuant to the penultimate
sentence of Regulation Sections 1.704-2(g)(1) and (i)(5), and (11) debit to that
Capital Account the items described in paragraphs (4), (5) and (6) in Section
1.704- 1 (b)(2)(10(d) of the Regulations. This
Page 4 of 7
definition of Adjusted Capital Account Deficit is intended to comply with the
provisions of Section 1.704- 1(b)(2)(ii)(d) of the Regulations and shall be
interpreted consistently therewith.
(d) "Capital Account" means the accounting record of each Member's capital
interest in the Company. There shall be credited to each Member's Capital
Account (a) the amount of any contribution of cash by that Member, (b) the Gross
Asset Value of property contributed by that Member, (c) that Members allocable
share of Profits and any items in the nature of income or gain are specially
allocated to that Member (not including allocations pursuant to Section 4 of
Appendix A) and (d) the amount of any Company liabilities that the Member
assumes or takes subject to under Code Section 752. There shall be debited
against each Member's Capital Account (i) the amount of all distributions of
cash to that Member unless a distribution to the Member is a loan or is deemed a
payment under Code Section 707(c), (ii) the Gross Asset Value of property
distributed to that Member by the Company, (ill) that Member's allocable share
6f Losses and any items in the nature of expenses or losses which are specially
allocated to that Member (not including allocations pursuant to Section 4 of
Appendix A), and (lv) the amount of any liabilities of that Member that the
Company assumes or takes subject to under Code Section 752. The transferee of
all or a portion of an Interest shall succeed to that portion of the transferor
Member's Capital Account that is allocable to the portion of the Interest
transferred. This definition of Capital Account and the other provisions herein
relating to the maintenance of Capital Accounts are intended to comply with
Regulation Sections 1.704-1(b) and 1.704-2 and shall be interpreted and applied
in a manner consistent with those Regulation Sections. In the event the Managers
determine that it is prudent to modify the manner in which the Capital Accounts,
or any debits or credits thereto (including, without limitation, debits or
credits relating to liabilities that are secured by contributed or distributed
property or which are assumed by the Company or the Members), are computed in
order to comply with those Regulations, the Managers may make such modification.
The Managers shall also make any appropriate modifications in the event
unanticipated events might otherwise cause this Agreement not to comply with
Regulation Sections 1. 704-1 (b) and 1. 704-2.
(e) "Depreciation" means, for each Fiscal Year or other period, an amount
equal to the depreciation, amortization or other cost recovery deduction
allowable with respect to an asset for that year or other period, except that if
the Gross Asset Value of an asset differs from its adjusted basis for federal
income taxpurposes atthebeginning of the Fiscal Year or other period,
Depreciation shall be an amount whichbears the same ratio to that different
Gross Asset Value (as originally computed) as the federal income tax
depreciation, amortization, or other cost recovery deduction for that Fiscal
Year or other period bears to the adjusted tax basis (as originally computed);
provided, however, that if the federal income tax depreciation, amortization or
other cost recovery deduction for the applicable year or period is zero,
Depreciation shall be determined with reference to the Gross Asset Value (as
originally computed) using any reasonable method selected by the Manager.
(f) "Fiscal Year" means the year on which the accounting and federal income
tax records of the Company are kept.
Page 5 of 7
(g) "Gross Asset Value" means with respect to any Company asset, the
asset's Adjusted Basis, except as follows:
(i) the initial Gross Asset Value of any asset contributed by a Member
to the Company shall be the gross fair market value of that asset, as detennined
by the contributing Member and the non-contributing Members;
(ii) the Gross Asset Value of all Company assets shall be adjusted to
equal their respective gross fair market values, as determined by the Manager,
as of the date upon which any of the following occurs: (A) the acquisition of an
additional interest in the Company after the Effective Date by any new or
existing Member, in exchange for more than a de minimis Capital Contribution or
the distribution by the Company to a Member of more than a de minimis amount of
Company property as consideration for an interest in the Company, if the Manager
detennines that such adjustment is necessary or appropriate to reflect the
relative economic interest of the Members of the Company; and (B) the
liquidation of the Company within the meaning of Regulation Section 1.7041
(b)(2)(ii)(g);
(iii) the Gross Asset Value of any Company asset distributed to any
Member shall be the gross fair market value of that asset on the date of
distribution, as determined by the Member receiving that distribution and the
other Member; and
(iv) if an election under Code Section 754 has been made, the Gross
Asset Value of Company assets shall be increased (or decreased) to reflect any
adjustments to the adjusted basis of the assets pursuant to Code Section 734(b)
or Code Section 743(b), but only to the extent that those adjustments are taken
into account in detennining Capital Accounts pursuant to Regulation Section
1.704- 1 (b)(2)(iv)(m) and Section 2(g) of Appendix A; provided, however, that
Gross Asset Value shall not be adjusted pursuant to this subsection (iv) to the
extent that the Manager determines that an adjustment pursuant to subsection
(11) hereof is necessary or appropriate in connection with a transaction that
would otherwise result in an adjustment pursuant to this subsection (iv).
If the Gross Asset Value of an asset has been determined or adjusted hereby,
that Gross Asset Value shall thereafter be detennined by taking into account all
adjustments for Depreciation, if any, taken with respect to that asset for
purposes of computing Profits and Losses.
(h) "Member Minimum Gain" means an amount, with respect to each Member
Nonrecourse Debt, equal to the Minimum Gain that would result if such Member
Nonrecourse Debt were treated as a nonrecourse liability, deten-nined in
accordance with Regulation Section 1. 704-2(1).
(i) "Member Nonrecourse Debt" has the same meaning as "partner
nonrecourse debt" as set forth in Regulation Section 1.704-2(b)(4).
j) "Minimum Gain" has the meaning given such term in Regulation Section
1.704-2(d).
Page 6 of 7
(k) "Profit Account" means the accounting record of each Member's
Interest in such Member's share of Profit. Each Member's Profit Account shall be
increased by any Profit allocated to that Member pursuant to Section 6.1 of this
Agreement and shall be reduced by any Loss allocated to such Member pursuant to
Section 6.1 of this Agreement and by any distributions to such Member pursuant
to Sections 6.2 of this Agreement. The transferee of all or a portion of an
Interest shall succeed to that portion of the transferor Member's Profit Account
as allocable to the portion of the Interest transferred.
(1) "Profits" and "Losses" means, for each Fiscal Year or other
period, an amount equal to the Company's taxable income or loss for that year or
period, determined in accordance with Code Section 703(a) (for this purpose, all
items of income, gain, loss or deduction required to be stated separately
pursuant to Code Section 703(a)(1) shall be included in taxable income or loss),
with the following adjustments: i
(i) any income of the Company exempt from federal income tax not
otherwise taken into account in computing Profits or Losses shall be added to
that taxable income or loss;
(ii) any expenditures of the Company described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to
Regulation Section 1.704- l(b)(2)(iv)(0, shall be subtracted from that taxable
income or loss;
(iii) in the event the Gross Asset Value of any Company asset is
adjusted as required by subsections (iij or (iii) of the definition of Gross
Asset Value, the amount of that adjustment so'all be taken into account as gain
or loss from the disposition of that asset (assuming the asset was disposed of
just prior to the adjustment) for purposes of computing Profits or Losses in the
Fiscal Year of adjustment;
(iv) gain or loss resulting from any disposition of Company
property with respect to which gain or loss is recognized for federal income tax
purposes shall be computed by reference to the Gross Asset Value of the property
disposed of, notwithstanding that the Adjusted Basis of that property may differ
from its Gross Asset Value;
(i) in lieu of the depreciation, amortization and other cost
recovery deductions taken into account in computing the taxable income or loss,
there shall be taken into account the Depreciation for the Fiscal Year or other
period; and
(vi) any items of income, gain, loss or deduction that are
specially allocated shall not be taken into account in computing Profits or
Losses.
Page 7 of 7
LICENSE AGREEMENT
MICHIGAN FILE 379/380/1061 TECHNOLOGY
This is an Agreement between Biotherapies, Inc., a corporation incorporated in
the State of Michigan, with offices located at 0000 Xxxxx Xxxxx, Xxxxx 0, Xxx
Xxxxx, XX 00000 ("BIOTHERAPIES"), and the Regents of the University of Michigan,
a constitutional corporation of the State of Michigan ("MICHIGAN"). This
Agreement is effective as of the date executed by both BIOTHERAPIES and MICHIGAN
(the "Effective Date"). BIOTHERAPIES and MICHIGAN agree as follows:
1. BACKGROUND.
1.1 MICHIGAN has developed rights, including potential patent rights, in the
"TECHNOLOGY" that is d9fined below.
1.2 Xx. Xxxx X. Xxxxx, Xx., is a shareholder of BIOTHERAPIES and a current or
former employee of MICHIGAN, and has contributed to the creation of the
TECHNOLOGY. He has elected and has agreed to receive rewards for
commercialization of the TECHNOLOGY direczly through the operation of
and/or his ownersh-i D 4 nterests in BIOTHERkPIES rather than through zhe
royalty distriou::ion policy of MICHIGAN.
1.3 BIOTHERAPIES desires to obtain, and MICHIGAN, consistent with its mission
of education and research, desires to grant a license of the 7ECHNOLOGY on
the terms and condition S herein.
2. DEFINITIONS.
2.1 "TECHNOLOGY", as used in this Agreement, shall mean the biological
materials which are listed on the atzached Exhibit A which is hereby
incorporated into this Agreement, and all 4nforma-ion, manufacturing
techniques, data, designs or concepts (whether or not such specific
information, manufacturing techniques, data, designs, or concepts are or
become -publicly known or available) covering (--*) the human mammary cell
growth inhibitor protein known as mammastatin, the aene encodin.-, such
protein, and methods of making and using same, all as developed by
MICHIGAN's employees Xxxx X. Xxxxx, Xxx Xxxxx and Xxxxxx Xxxx as described
in MICHIGAN's Technology Management Office File No. 380 entitled "Human
Mammary 'Cell Growth Inhibitor Protein," and F41e No. 1061 entitled
"Mammastatin - A Mammary Cell Growth inhib`tor;11 and (ii) monoclonal
antibodies directed against the protein known as mammastatin, and methods
of making and using same, all as developed by MICHIGAN's employees Xxxx X.
Xxxxx, Xxx Xxxxx, Xxxxxx Xxxx, and Xxxx Xxxxxxxx as described in MICHIGAN's
Technology Management Office File No. 379 entitled "Monoclonal Ant- bodies
to Human Mammary Cell Growth Inhibitor." TECHNO11OGY shall also include all
invent-ions and
1
discoveries in which MICHIGAN acquires ownership pursuant to Article 9
below.
2.2 "Parties", in singular or plural usage as required by the context, shall
mean BIOTHERAPIES and/or MICHIGAN.
2.3 "Affiliate(s)" shall mean any individual, corporation, partnership,
proprietorship or other entity controiled by, controlling, or under common
control with BIOTHERAPIES through equity ownership, ability to elect
directors, or by virtue of a majority of overlapping directors, and shall
include any individual, corporation, oartnershiv, proprietorship or other
entity directly or ind"recty owning, owned by or under common ownership
with BIOTHEPAPIES to the extent of fifty percent (50%) or more of the
voting shares, including shares owned beneficially b such party.
2.4 "Sublicensee(s)" shall mean any person or entizy, except an Affiliate,
sublicensed by BIOTHERAPIES under this Agreement to make, have made, use,
market or sell Produc~s.
2.5 "Licensed Patenz(s)" shall mean all patents and patent applications, as
well as all foreign ecruivalenz pate_= appli- cations and Pazent
Cooperation Trear~y filings, and all patents issuing nherefrom, in which
MTCHIGAN has or acquires a property inte-rest, and (i) which cover an
inven~ion included in the TECHNOLOGY, or (ii) which are included in this
definition by operation of Paragraph 9.3 of this Agreement.
2.6 "Valid Claim(s)" means any claim(s) in an unexpired patent or pending in a
patent anolication included within the Licensed Patents which has not been
held unenforceable, unpatentable, or inva-lid by a decision of a court or
other ao-,.rernmental agency of compezent jurisdiction, unappealable or
unappealed within the time allowed for av-,)eal, and which has no-- been
admitted to be invalid or unenforceable through, reissue or disclaimer. IF
4 n any country -here should be two or more such decisions conflicting with
respec-- to the valid_`ty of: the same claim, the decision of the li~gher
or highesz tribunal shall thereafter control; however, should the tribunals
be of equal rank, then the decision or decisions upholding the c-~aim shall
prevail when the conflictina decisions are equal in number, and the
majority of decisions shall prevail when the conflicting deciS4ons are
unequal in number.
2.7 "Product(s)" shall mean: (i) any goods or serv4ces whose manufacture, use
or sale in any country would, ~Dut for this Agreement, comprise an
infringement, includ-na cont-ributory infringement, of one or more Valid
Claims; as well as (ii) any good or services incorporating, or the
manufacture, use or sale of which utilizes TECHNOLOGY.
2.8 "Net Sales" shall mean the sum, over the term of this Agreement, of all
amounts received and all other consideration received (or, when in a form
other than cash or its ecruivalent, the fair market value thereof when
received) by BIOTHERAPIES and its Affiliates from persons or entities due
to or by reason of the sale, distribution or use of Products, less the
following deductions and offsets, but only to the extent such sums are
otherwise included in the computation o-f Net Sales, or are paid by
BIOTHERAPIES and not otherwise reimbursed: refunds, rebates, replacements
or credits actually allowed and taken by purchasers for return of Products;
customary trade, quantity and cash discounts actually allowed and taken;
excise, value-added, and sales taxes actually paid by BIOTHERAPIES for
Products; and shipping and handling charges actually paid by B70THERAPIES -
or Products.
2.9 "Gross Sublicensing Revenues" shall mean all amounts received and all other
consideration received (or, when in a form other than cash or its
equ~valenz, the fair market value thereof': when received) by BTOTHERAPIES
and its AL"'iliates pursuant to any sublicense to a Sublicensee, and also
pursuant to any -_,se, distribut-ion, or sar--le of ?_-oduc:_-s where such
amounts or other consilderation are not includei in Net Sales.
2.10 "Rovalty Quarter(s)" shall mean the three-month ne--iods ending on -the
last day of March, June, Sepzember and December of each year.
2.11 "First CommerC4a~ Sale" shall mean the first sale of any Product by
BIO-7-HERAPIES or an Affilia:.e or Sublicensee. --------
3. GRANT OF LICENSE.
3.1 M_-CHIGAN hereby grants to B 7 OTHERAPIES the exclusive, worldwide license
under the Licensed Patents to make, have made, use, market and sell
Products; with the right to xxxxx sublicenses to kffiliates and
Sublicensees subject to the terms and nrovisions of A_-zicle 8 below.
3.2 MICHIGAN hereby grants to BIOTHERIAPIES the worl6wide right t practice the
TECHNOLOGY to make, have made, use, market and/or sell Prod"ucts. During
the term of this Agreement MICHIGAN covenan-:s not to enter into any
agreement allowing any other party -:o commercially pract--ce the
TECHNOLOGY to make, have made, use, markec and/or sell Products.
3.3 MICHIGAN reserves the right to practice the TECHNOLOGY and the Licensed
Patents solely for research and education purposes.
3
3.4 MICHIGAN further reserves the right to grant to the U.S. Government a
nonexclusive, irrevocable, royalty-free license or licenses, with the right
to sublicense, to all patent applications and resulting patents included in
the TECHNOLOGY and the Licensed Patents, to the extent that such granz of
license(s) is or may be required by research funding agreements between the
University and the U.S. Government relating to the TECHNOLOGY or the
Licensed Patents.
4. CONSIDERATION.
4.1 BIOTHERAPIES shall pay MICHIGAN, with respect to each Royalty Quarter, a
royalty equal ~o:
(i) four percent (4%) of Net Sales o~ BIOTHERAPIES and Affiliate(s) for
all Products defined under Subparagraph 2.7 (i) above; and
(ii) one and one-half percen: (1.5%) of Net Sales of BIOTHERAP7ES and
Affililate(s) for all other Products.
4.2 BT0THEP_kPIES shall also pay MICHIGAN., with respect to each Royalty
Quarter, a royalr-v eaual to fifteen percent (15%) of Gross Sublicens_`ng
---- Revenues.
4.3 The obligation to pay MICH7,-_kN a royalty under --4s Arz`c-le 4 is imposed
only once wir-h respect to the same unit of Product ,regardless of the
number of Valid Claims or Licensed Patents covering the sane; howevef, for
purposes of determination of payments due hereunder, whenever the term
"Product" may app1j, to a property during var-'o-cus stages of manufacture,
use or sale, Net Sales, as otherwise defined, shall be der 4 ved from the
sale, distribution or use of such Produ.ct by BIOTHERAPIES or Affiliates a~
-.he s~age of its highest invoiced value to unrelated third parties.
4.4 As further cons iderat ion for this License Agreement and as reimbursement
for paten~ expenses related to Licensed Patents previously incurred by
MICHIGAN, BIOTHERAPIES shall pay to MICHIGAN the total sum of: $34,590.00,
in payments as follows:
(1) $15,000.00 shall accrue on December 31, 1996, an& shall be paid by
BIOTHERAPT7S according to Paragraph 6.1; and
(2) $13,918.00 shall accrue as of December 31 of each of the calendar
years 1997, 1998, 1999, 2000, and 2001, and shall be paid by
SIOTHERAPIES according to Paragraph 6.1.
4
5. REPORTS.
5.1 Within thirty (30) days after the close of each Royalty Quarter during the
term of this Agreement (including the close of any Royalty Quarter
immediately following any termination of zhis Agreement), BIOTHERAPIES
shall report to MICHIGAN all rovalties accruing to MICHIGAN during such
Royalty Quarter. Such quarterly reports shall indicate for each Royalty
Q---.a---L-er the gross sales and Net Sales of Products by BIOTHERAPIES and
Affiliates; such reports shall also indicate the source and amount of all
Gross Sublicensing Revenues (including, where such information is provided
to BIOTHERAPIES or Affiliates, the aross sales and net sales of Products by
Sublicensees) and any other revenues with respect to which paymenz~s are
due, and the a-mount of such payments, as well as the various calculations
us~d to arrive at said amounts, including the quantity. ption (nomenclature
and type designation), country of manufacture and country of sale of
Products. In case no payment is due -for any such period, BIOTHER-kPIES
shall so report.
5.2 BIOTHERAPIES covenants that: it will promptly establish and '~fi re and
consistenzly employ a syszeip. of specific nomenclature designations for
Products so that various types can be identified and segregated, where
necessary; BIOTHERAPIES, Affiliates and SubJ4 ~censees shall consistently
employ such system when rendering invoices thereon and henceforth agree to
inform MICT-=3_kN, or its auditors, when requested as to the details
concern--'na such nomencla7:ure system as wel-, as to all additions there:o
and changes therein.
5.3 BIOTHERAPIES sh-all keep, and shall reauire ~ts Affiliates and Sublicensees
tc keep, true and accurate records and books of account cont-ain-'ng data
reasonably required for the comouzation and verifica:iion or oavments to-be
made as C7 - provided by this Agreemenz, whi h records and books shall be
open for inspec:--'on upon reasonable notice dur--'-ig business hours by
eithe-- MICHIGAN auditor(s) or an inaepenaen certified accoun--ant selected
by MICHIGAN, for the ourr)ose of veri-fying the amount of payments due and
pavable. said right of inspection w--'--l exist for six (6) years from the
date of filing of the report for the Royalty Quarter :c wh~ch such records
and books of account relate in support thereof, and this recruiremen: and
riaht of inspection shal.1 survive any termination of ~__-.is Agreement.
MICHIGAN shall be responsible for all expenses of such inspection, except
that if such inspection reveals an underpayment of royalties to MICHIGAN in
excess of ten percent (10%), then said inspection shall be at BIOTHERAPIES
s expense and such underpayment shall become immediately due and payab'-e
to MICHIGAN.
5.4 The reports provided for hereunder shall be certified by an authorized
representative of BIOTHERAPIES to be correct to the best of BIOTHERAPIES's
knowledge and information.
6. TIMES AIND-CURRENCIES OF PA ENTS.
6.1 ?ayments accrued during each Royalty Quarter s-all be due and payable in
Ann Arbor, Michigan on the date eac cruarterly report is due (as provided
in Paragraph 5.1), shall be .Lncluded with such report and shall be paid in
United States dollars. BIOTHERAPIES agrees to make all payments due
hereunder to M7 CHIGAN by check made Dayable tc "The Regents of The
University oil Michigan, " and sent by prepaid, certified or registered
mail, return receipt requested, to the address for notices set forth in
Article 21 herein.
6.2 on all amounts outstanding and payable i to MICHICAN, interest shall accrue
on an annualized basis from the date such amounts are due and payable at
two percentage points above the prime lending rate as established by the
C-,ase ~Ianhattan Bank, N.A., in New York City, New York, or at such -ower
rate as may be required !Dy law.
6.3 Where Net Sales are generated or Gross Sublicensing Revenues are received
in -f:oreign currency, such foreig~- cur--ency shall be converted inzo its
equivalent in Un~ ' xxx Sta:~es dcllars at the exchange raze of such
currency as reported (or erroneously reported, as subsequently
co_rrecte-_~~) ir. the Wall Streez Journa- on the last business day of the
Roya__Zy Quarter during which such payments are received' by BIOTHERAPIES
or Af-filiates (or 4f not reported on that date, as quoted by the Chase
Manhattan Bank, N.A., in New York City, New York)
6.4 Except as provided in the definitio.- of Nez'SaLes, =11 --- I_Oyp~ty
payments to MICHIGAN under this Agreemenz shall be ------------------
wIthout deduction for sales, use, excise, -personai property or other
similar ta~:es or other duties imposed on s~_lch --------- payments by :~he
government of any country or any poLitical sub.d4V4s~on thereoz; and any
and all such taxes or shall be assumed by and paid b,,,- BIOTIHERAPIES.
------
7. COMMERCIALIZATION
7.2 s understoo- zna-- BIOTHERAP7ES has --he resp:)ns---jlity to do ai approv s
necessary for any government a-Is to that manu-facture and/or sell
Products, except as o--'---__-wise specifically provided herein W4th xxxxxx
to Li-nse_,,~ 'Patents.
BIOTHERAPIES aarees to use its best efforts to 6eve--op Products, obtain
any government approvals necessary, and manufacture and sell Product S 4 n
an expeditious manner; and to effectively expLoit, market and manufactu-re
in suf~ficient
quantities to meet anticipated customer demand and to make the benefits of
the Products reasonably available to the public.
7.3 BIOTHERAPIES shall also achieve milestones according to the schedule set
out below.
The following m4-lestones apply to this Paragraph 7-3:
(1) "Milestone 10 shall be demonstration by BIOTHERAPIES (to MICHIGAN's
reasonable satisfaction) of the completion of equity investment
financing or research -ffunding agreements providing BIO."HERAPIES
with a tozal of at least four hundred thousand dollars ($400,000.00)
in private, cash (non-debt) equity investment and cash Lundina -zor
BIOTHERAPIES research;
(2) "Milestone 2" shall be demonstration by '-5--OTHERAPIES (to MICHIGAN's
reasonable satisfaction) of the commencement of preclinical animal
trials for develoiDment of a therapeutic Product, and the commencement
of clinical trials for a diagnostic Product;
(3) "Milestone 3" shall be demonstration bv (to MIC~-'IGAK's reasonable
satisfaccior) of the f"i'ling of an FDA IND for the commencement of
human Cl4rical trials for a theraneutic Product, and -final
sub.-.1'ssion to the FDA of all teszi data reauired for aovernmen7_al
approval of the sale of a diagnostic Product;
(4) "Milestone 4." shall be demonstration by E10THEPLAPIES (to MICHIGAN's
-reasonable satisfaction) of the commencement of FDA Phase I clinical
trials for a therapeutic Product, and final approval by the FDA of the
public sale of a diagnostic Product; and
(5) "Milestone 5" shall be demonstrat:4 on by BIOTHERAPIES (to MICHIGAN's
reasonable satisfaction) of the commencement o.f FDA Phase III
clinical trials ---- for a theraoeutic Product.
The following ~s the milestone achievement schedule. BIOTHERAPIES shall achieve
demonstration of the milestones by -the dates set out below, and, upon any
failure to do so, MICH7GAN may az Jts option terminate ~his-Agreement and the
license rights conveyed herein:
(1) Milestone 1: December 31, 1996;
(2) Milestone 2: January 31, 1-997;
(3) Milestone
(4) Milestone 4:
(5) Milestone 5: December 31, 2002.
7.4 BIOTHERAPIES agrees to substantially manufacture or have manufactured all
Products in the United States.
7.5 BIOTHERAPIES agrees that it will maintain a principal business office
within the State of Michigan for at least five (5) years following the
Effective Date, and that it will, where commercially reasonable, make
reasonable attempts to establish any Product production facilities and
research facilities of BILOTHERAPIES in MICHIGAN.
7.6 Within fifteen (15) days after the First Commercial Sale, BIOTHERAPIES
shall report by written letter to MICHIGAN the date and general terms of
that sale. j
8. SUBLICENSING.
8.1 BIOTHERAPIES shall have the exclusive right to grant sublicenses to -4ts
rights under Article 3 above to Affiliates and Sublicensees, to make, have
made, use, market and sell Products.
8.2 BIOTHERAPIES shall notify MICHIGAN of every sublicense agreement and each
amendment thereto, within thirty (30) days after their execution, and
indicate the name of the Sublicensee or Affiliate, the terr-tory of the
sublicense, the scope of the sublicense, and the nature, timing and amounts
of all ---*:ees and royalties --o be paid thereunder.
8.3 Any sublicense granted by BIOTHERAPIES under this Article 8 shall provide
for its termination upon termination of this Agreement, provided, however,
that a sublicense granted to any Sublicensee may permit such Sublicensee,
by written notice to MICHIGAN within sixty (60) days of the Sublicensee's
receipt of written notice of such termination, to elect to continue its
sublicense. No such election will be valid unless (i) the sublicense
conforms to the requirements of this Article 8, and (ii) the Sublicensee
agrees in writing at the time of election to assume in respect to MICHTGAN
all of the obligations (including obligations for payment) contained in its
sublicense agreement with BIOTHERAPIES.
8.4 All sublicenses shall be consistent with the terms and conditions of this
Agreement, and shall contain acknowledgements by the Sublicensee or
Affiliate of MICHIGAN's rights in the TECHNOLOGY and Licensed Patents, and
the disclaimer of warranty and limitation on MICHIGAN's liability, as
provided by Artic,:e 12 below. All sublicenses shall also contain
provisions under which the Sublicensee or Affiliate accepts duties to keep
records; to avoid improper
representations or responsibilities; to defend, hold harmless, and
indemnify MICHIGAN; to control export; to restrict the use of MICHIGAN's
name; and to properly xxxx Products with patent notices; which duties shall
be at least equ4valent to those accepted by BIOTHERAPIES in Paragraphs 5.3,
12.4 and 13.1, and Articles 17, 19 and 20, respectively, herein.
8.5 All sublicenses shall provide for each Sublicensee or Affiliate to pay
taxes due, if any, in the same manner as set out in Paragraph 6.4 above, or
shall provide that the Sublicensee or Affiliate will be responsible for
such taxes should the sublicense be assigned to MICHIGAN.
8.6 All sublicenses shall provide the right for BIOTHERAPIES to assIgn its
rights under the sublicensi to MICHIGAN.
9. OWNERSHIP OF T CTUAL PROPERTY.
9.1 BIOTHERAPIES acknowledges MICHIGAN's ownership interest in all Licensed
Patents as defined in Paragraph 2.5 (i) above.
9.2 MICHIGAN employees might be engaged as employees or consultants to
BIOTHERAPTES or Affiliates during the time of the--'r employment with
MICHIGAN. Where any material invention (whether or not zatentable),
discovery or computer software is conceived, reduced to practice or
developed 6y deve-lopers/invenzors acting as emp-,oyees of or consultants
to BIOTHERAPIES or Affiliates, and persons concurrently employed by
MICHIGAN constitute part or all of that group of developers/inventors, then
BIOTHERAPIES shall disclose to MIC147GAN full details of the nature of the
invention, discovery or computer software, the circumstances of its
concept-ion, reduction to Dractice and/or development, and the persons
const-izi_:ting the group of developers/Inventors.
9.3 BIOTHERAPIES acknowledges that MICHIGAN employees have certa4n obligations
to MICHIGAN with respect to any invenzion, discovery or computer software
which is conceived, reduced to practice or developed in whole or in part
with the use of MICHIGAN ]"unds, facilities or equipment, as part of
research sponsored at MICHIGAN ' or in the course of the performance of
d-,--ties for MICHIGAN. These obligations ------ include duties to disclose
and assign such inventions, discoveries and computer software to MICHIGAN.
Such --- obligations of M:CHIGAN emplo ees a Agreement.
10. PATENT APPLICATIONS AND MAINTENANCE.
10.1 BIOTHERAPIES may administer the filing, prosecution and maintenance of T
'censed Patents, including fore4gn filings and Patent Coooeration Treaty
filings, provided that: (i)
9
all such filing, prosecution and maintenance shall be at BIOTHERAPIES's
sole expense, and BIOTHERAPIES shall directly pay all associated third
party fees, including attorney fees and patent office fees; (ii) MICHIGAN
shall have the right to review and comment upon all aspects of such filing,
prosecution and maintenance, and BIOTHERAPIES shall provide MICHIGAN with
copies of all documen--s relating thereto -n sufficient time to allow such
review and comment by MICHIGAN, and BIOTHERAPIES shall otherwise endeavor
to provide MICHIGAN with a meaningFul opportunity to participate fully in
a--, aspects of such filing, prosecution and maintenance; and (iii) all
such filing, prosecution and maintenance shall be handled through an agent
or attorney engaged by BIOTHERA-PIES (and acknowledging BIOTHERAPIES as the
sole Party responsible for expenses) , reasonably accept- able to MICHIGAN,
which agent or attorney shall be required to treat BIOTHERAPIES and
MICHIGAN as its joint cl-ient in such Atters.
10.2 If BIOTHERAPIES decides to refrain from or zo cease prosecuting or
maintaining any of Licensed Patents, B701HERAPIES shall notify M7CHIGAN
promptly and in suff`c~ent ---------- time to permit MICHIGAN 'In its sole
discretion to continue ---- such prosecution or main-enance. If MICHIGAN
decides to so continue, then those Patent aDz:) -1.41. cations and natents
shall thereafter be deemed no:~ included in the definitions c -
"TECHNOLOGY" and "Licensed Patents" herein; except that r)rior to such
continuance, MICHIGAN shall notify BIOTHEP-kPIES its decision zo so
continue and in good faith offer to allow BIOTHERAPIES to agree ~c
reimbursement of all expenses incurred by M7C-~:7GAN for such continuance,
and if such agreement is promptly made then those patents and patent
applications shall rema-'n included as part of "TECHNOLOGY" and "Licensed
Patents" herein.
11. INFRINGEMENT
11.1 During the term of this Agreement, BIOTHERAP77S shall have the first option
to police the T icensed Patents and -Oroducts against infringement by other
parties. This right to police includes defending any action for declaratory
judgmen-_ of nonin-7-ringemen- or invalidity; and prosecuting, defendin--
or settling all infringement and declaratory judgment actions at its
exnense and, through counsel of its selection, except that any such
settlement shall only be made with the advice and consent of MICIZIGAN.
MICHIGAN shall provide r easonable assistance to B-_-OTHERA:--'_-E'S with
resDect to suc-In actions, provided BIOTHERAPIES shall reimburse MICHIG_kN
for out-of pocket expenses incurred 2n connectJon with any such as S4
stance rendered at BIOTHERAPIES's request or reasonably requIred by
M!C_:;IGAN. .7- the event BIOTHERAPIES elects to institute any such actlon
or suit, MICHIGAN agrees to be named as a nominal party therein. MICHIGAN
retains 'the right
10
to participate, with counsel of its own choosing, in any action under this
Paragraph 11.1.
11.2 In the event that BIOTHERAPIES shall institute an action for infringement
of a Licensed Patent or defend a declaratory judgment or other action with
respect to a Licensed- Patent, any portion of any resulting settlement
paymenzs or damages awarded which is received by BIOTHERAPIES, less
3IOTHERAPIES's actual outside attorney fees and xxxxx direct, out-of-pocket
litigation expenses, including expenses due MICHIGAN for its participation
in said litigation as provided under Paragraph 11.1 (not to include any
compensaton paid to employees of BIOTHERAPIES or Affiliates) paid and
u'n_-ecovered by BIOTHERAPIES, shall be paid 85% to BIOTHERAPIES and 15% to
MICHIGAN.
11.3 In the event that BIOTHERAPIES fails tt take action to xxxxx any alleged
infringement of a Licensed Patent within s'xty (60) days of a request by
MICHIGAN to do so (or within such shorter period which might be required to
preserve ::he legal rights of MICHIGAN under the laws of any relevant
covernment or political subdivision thereof), then MICHIGAN shall have !:he
right to take such act~on (including prosecuticn cf a suit) at its ex-oense
and BIOTHERAPIES shall use reasonable ef"Xxxxx to cooperate in such act~on,
a: BIOTHEPLAPT7S'S expense. in the event MICHIGAN elects zo insci~:ute anv
such action or suit--, BIOTHE~Lkp7ES agrees to be named as a nominal party
therein. MICHI&kN shall have full au~_hority to settle on such terms as
MICHIGAN shall determine, except :ih,at MICHIGAN shall not reach any
settlemen~ wherebv it 1-- 'censes a third party under any Licensed Patents
without the consent of BIOTHERAPIES, which consent can be withheld for any
reason. MTC_rTIGAN shall retain one hundred percent (100%) of any recovery
or se_:~tlement under this Paragraph 11.3, a--.'-e-payment to
B-0-HEERAPILES (such payment not to excee-~ the recovery or settlement
amounts actually received bv MICL:i"17AN) of any unrecovere3 expenses paid
by BIOTHERAPIES at MICHIGAN's recr-,est to third parties in furtherance o`:
such act.on.
11.4 BIOTHERAPTES shall PrO.-nDtlY notify MICHIGANY-in writing in 6etail of zhe
-;, b% a third party of iscover-y of any allegation infringement resulting
Efrom the practice of License-_~ Patents, and of the in4tiation of any
legal action by BIOTHERZ~.P:ES or bv anv third party with regard to any
allegec~ infringement or noninfringement. BIOTHERAPIES shall in a zimel7y
manner keep MICHIGAN, in-Formed and provide copies to MICHIGAN of al!
documents reaardincy all such proceedings or actions instituted by
BIOTHERA-PIES.
11
12. NO WARRANTIES, -LIMITATION ON MICHIGAN's LIABILITY.
12.1 MICHIGAN, includina its fellows, officers, employees and agents, makes no
representations or warranties that any Licensed Patent is or will be held
valid, or that the manufacture, use, sale or other distribution of any
Products will not in-fringe upon any patent or other rights not vested in
MICHIGAN.
12.2 MICHIGAN, 7NCLUDING ITS FELLOWS, OFFICERS, EMPLOYEES AND AGENTS, MAKES NO
REPRESENTATIONS, EXTENDS NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR
IMPLIED, INCLUDING BUT NOT LIMITED TO THE :MPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, AND ASSUMES NO
RESPONSIBILIT7ES WHATEVER WITH RESPECT TO DES7GN, DEVELOPMENT, MANUFACTURE,
USE, SALE OR OTHER DISPOSITION BY BIOTHERAPIES, AFFILIATES OR SUBLIC43NSEES
OF PRODUCTS.
12.3 THE ENTIRE RISK AS TO PERFORMANCE OF PRODUCTS IS ASSUMED BY BIOTHERAPIES,
AFFILIATES AND SUBLICENSEES. In no event shall MICHIGAN , 4 ncluding its
fellows, officers, employees and agents, be responsible or liable for any
direct, indirecz , special, incidental, or consequential damages, or lost
profits or xxxxx xxxxxx--*c loss or damage, to B--OTHERAP7ES, Af'f'iliates,
Sublicensees or any other individual or entity regardless of -7--gal
theory. -he above lim4tations on 11'ability apply even though MICHIGAN, its
fellows, officers, employees or agents may have been advised of the
possibility o-": such damage.
12.4 BIOTHERAPIES shall noz, and shall require that its Affiliates and
Sublicensees do not, make any statements, repres entat ions or warranties
or accept any liabilities or resDonsibilit4es whatsoever to or with regard
to any person or entity which are inconsistent wi-:h any disclaimer or
limitation included in th~s Article '~2.
13. INDEMNITY INSURANCE,
13.1 B-LOTFERAPIES shall defend, indemnif::y and hold harmless and shall require
i~s Affiliates and Sublicensees to defend, indemnify and ; hc-- Id harmless
MICHIGAN, izs fellows, officers, employees and agents, for and against any
and all claims, demands, damages, losses, and expenses of any na--ure
(including atto--neys' fees and other litigation expenses) resulting from,
but no-- limited to, death, perscnal injury, illness, prope--zv damage,
economic loss or proaucts liability arising from or --'n connection W4th,
any o--" the --':ollow~ncr:
(1) Any manufac7ure, use, sale or other disposizion by BIOTHERAP7ES,
Affiliates, Sublicensees or zrans'lerees of Products;
12
(2) The direct or indirect use by any person of Products made, used, sold
or otherwise distributed by BIOTHERAPIES, Affiliates or Sublicensees;
(3) The use by BIOTHERAPIES, Affiliates or Sublicensees of any invention
or computer software related to the TECHNOLOGY or the Licensed
Patents.
13.2 MICHIGAN shall ]oe entitled to participate at -4-zs option and expense
through counsel of its ow-n selection, and may join in any legal actions
related to any such claims, demands, damages, losses and expenses under
Paragraph 13.1 above.
13.3 Prior to any distribution of any Product by BIOTHERAPIES or an Affiliate
(including any distribution -for clinical trials) , BIOTHERAPIES shall
purchase and maintain in effect a policy of product liability insurance.
Prio-1- 7.o any distribution of any Product by a Sublitensee (including any
distribution fcr clinical trials) , BIOTHERAPIES shall require that the
Sublicensee purchase and maintain in effect a policy of r)roduct liab-`lity
insu--ance. Each such insurance policy shall provide reasonable coverage
for all claims with respect to any Products manufactured, sold, licensed cr
other-wise distributed by zIOTHERAPIES and Af---- "xxxx-Xxx -- or, 4n the
case of a Sublicensee's policy, by said Sublicensee -- and shall specify
MICHIGAN, including - its fellows, officers and employees, as an additionai
insured. BIOTH7-P-k-ITES shal' urnish certificate(s) of such insurance ro
MICHIGAN, upon recruest.
14. TERM;--AND TERMINATION.
14.1 Upon any termination of this Agreement, and except as Provided herein -:o
the contrary, all rights and obligations of the Parties hereunder shall
cease, except as follows:
(1) Obligations to pay royalties and other su:-Ps acc-ruing hereunder uD to the
day of such termination;
(2) MICHIGAN's rights to inspect books and records as described - ~n Article 5,
and B7071HERAPIES'z obligations to keep such records for the required time;
(3) Obligations to hold harm~ess, defend and MICHIGAN under Article 1.3;
(4) Any cause off action or claim of BIOTHER_kp-ES or MIC-;~7.IGAN accrued or
to accrue because of any breac-- or de-fault by the other ?-=rty hereunder;
(5) The genera-- rights, obligations, and understandings of Articles 2, 12, 17,
19, 20, 26 and 29; and
13
(6) All other terms, provisions, representations, rights and obligations
contained in this Agreement that by their sense and context are
intended to survive until performance thereof by either or both
Parties.
14.2 This Agreement will become effective on its Effective Date and, unless
terminated under another, specific provision of this Agreement, will remain
in effect until and terminate uDon the latter of (i) the last to expire of
Licensed Patents, (ii) the tenth anniversary date of the Effective Date or
(iii) the seventh anniversary date of the date of the F 4 rst Commercial
Sale.
14.3 if BiOTHERAPIES shall at any time default in the payment of any royalty or
the making of any report hereunder, or shall make any false report, or if
either Party shall commit any material breach of any covenant or pr~mise
herein contained, and shall fail to remedy any such default, breach or
report within thirty (30) days after written notice thereof by the other
Party specifying such default, then that other Party may, at its ontion,
terminate this Agreement and the license righ~s granted herein by notice in
writing to such effect. Any such termination shall be without prejudice to
either Party's other legal rights for breach of this Agreement.
14.4 E-70TFERAPIES may terminate this Agreement by giving MICHIGAN a notice of
--ermination, which shall include a statement of the reasons, whatever they
may be, for such termination and the termination date established by
BIOTHERAPIES, which date S_ ~Iall not be sooner than ninety (90) days after
the date of the notice. Such notice shall be deemed by the Parties to be
final and, immediately upon receipt of such no'ce of L termination,
MICHIGAN shall have the right to enter into agreements with others for the
manufacture, sale, and/or use Of Products. LU_La1_\T_M_F.UT.
15. ASSIGNMENT
Due to the unique relationship between the Parties, th 4S Agreement sha-1-1
not be assignable by either Party L. t-wizhou- the pr, - written consent of
the other Party. Any a temot to a 11 be void from assign this Agreement
withou~- such consent sh the beginning. MICH7GA_N shal' not unreasonably
withhold consent for 310T_HEPAP1-'ES to assign -his Agreemen-" to a
purchaser of all or substantially all Of BIOTHERAPIES's business. No
assignment shall be effective unless and until the intended assignee agrees
in writing to accep:: all of the terms and condi~- ions of this Agreement.
Further, B70THERAPIES shall refrain from pledging any of -he license rights
grante6 in this Agreement as security for any creditor.
14
19. USE OF MICHIGAN'S NAME.
BIOTHERAPIES agrees to refrain from using and to require Affiliates and
Sublicensees to refrain from using the name of MICHIGAN in publicity or
advertising without the prior written approval of MICHIGAN. Reports in
scientific literature and presentations of joint research and development
work are not considered publicity.
20. PRODUCT MARKING.
BIOTHERAPIES agrees to xxxx, and to require Affiliates and Sublicensees to
xxxx, Products with the appropriate patent notice as approved by MICHIGAN
(when appropriate), such approval not to be unreasonably withh1ld.
21. ND-ZME3.
Any notice, request, report or payment required or permitted to be given or
made under this Agreement by either Party shall be given by sending such
notice by certified or registered mail, return receipt requested, to the
address set forth below or such other address as such Party shall have
specified by written notice given in conform4ty herewith. Any notice not so
given shall not be valid unless and until actually received, and any notice
given in accordance with the provisions of this Paragraph shall be e--
;:fective when mailed.
To MICHIGAN: The University of Michigan
Technology Management Office
Wolverine Tower, Room 2071
0000 X. Xxxxx Xxxxxx
Xxx Xxxxx, X! 48109-1280
Attn: File Nc. 379/380/1061
To BIOTHERAPIES: Biotherapies, Inc.
0000 Xxxxx Xxxxx, Xxxxx 0
Xxx Xxxxx, XX 00000
Attn: Xx. Xxxx X. Xxxxx, Xx.
22. INVALIDT Y.
In the event that any term, provision, or covenant o-F this Agreement shall be
determined by a court of competent jurisdiction to be invalid, illegal or
unenforceable, that term will be curtailed, limited or deleted, but only to the
extent necessary to remove such invalidity, illegality or unenforceability, and
the remaining terms, proV4 sions and covenants shall not in any way be affected
or impaired thereby.
16
29. JURISDICTION AND FORUM.
The Parties hereby consent to the jurisdiction of the courts of the
State of Michigan over any dispute concerning this Agreement or the
relationship between the Parties. Should BIOTHERAPIES bring any claim,
demand or other action against MICHIGAN, its fellows, officers,
employees or agents, arising out of this Agreement or the relationship
between the Parties, BIOTHERAPIES agrees to bring said action only in
the Michigan Court of Claims.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement in duplicate
originals by their duly authorized officers or representatives.
FOR BIOTHERAPIES, INC. FOR THE REGENTS OF THE
UNIVERSITY OF MICHIGAN
By By
--------------------------- ---------------------------
(authorized representitive) (authorized representative)
Typed Name Xxxx X. Xxxxx Xx. Typed Name Xxxxxx X. Xxxx
------------------------- ---------------------------
Title President Title Director,
Technology Management Office
--------------------------- ---------------------------
Date 3/26/96 Date 3-29-96
--------------------------- ---------------------------
UNIVERSITY OF MICHIGAN/BIOTHERAPIES LICENSE AGREEMENT (379/380/1061) OF
----------------
EXHIBIT A: BAILMENT OF BIOLOGICAL MATERIALS TO BIOTH-ERAPIES
The following description of biological materials ("MATERIALS11) is hereby
included as part of the definition of "TECHNOLOGY" in the License Agreement to
which this Exhibit A is attached, and the following terms are hereby
incorporated into and made a part of the License Agreement. BIOTI~MRAPIES
acknowledges that it currently has samples of MATERIALS in its possession.
"Derivatives" as used herein shall mean any progeny, sequences, clones, or
molecules replicated or derived from MATERIALS by BIOTHERAPIES, and products and
processes which would not have been made or developed but for BIOTHERAPIES's
access to MATERIALS.
The transfer of Materials to BIOTHERAPIES under this Exhibit A represents a
bailment by MICHIGAN, and ownership of the MATERIALS is not transferred to
BIOTHERAPIES. Upon an% termination of the License Agreement, BIOTHERAPIES shall
at MICHIGAN's discretion either destroy all remaining MATERIALS and Derivatives
(and certify such destruction to MICHIGAN's reasonable satisfaction), or return
them to MICHIGAN; except that upon ter-mmation of the License Agreement
according to its Paragraph 14.2, all MATERIALS shall be deemed assigned to
BIOTHERAPIES by MICHIGAN as of the termination date.
BIOTHERAPIES will use MATERLkLS and Derivatives only for the pActice of the
rights g-ranted to BIOTHERAPIES under the License Agreement.
BIOTHERAPIES will use MATERIALS and Derivatives only in compliance with all
applicable laws and regulations (including the NIH Recombinant DNA Guidelines,
where applicable). MATERIALS ARE NOT FOR USE IN HUMANS, except as authorized
under applicable laws and regulations.
BIOTHERAPIES shall not transfer MATERIALS and Derivatives to any other party,
except those of its Affiliates and Sublicensees who agree in writing to be bound
by the terms of this Exhibit A; and vdio also ag- ree in writing to return all
remaining MATERIALS and Derivatives to BIOTHERAPIES upon any te=ination of the
License Agreement (for their de5-ruction or return to MICHIGAN), unless assigned
to BIOTHERAPIES by MICHIGAN.
BICITHERAPIES assw-nes all resoonsibility for the safe use and handling of
MATERIALS and Derivatives, and will defend, indemnify and hold harmless
MICHIGAN, its employees, officers, fellows and agents against any and all claims
arising from BIOTHERAPIES's and its transferees' acceptance, use, storage,
handling, or disposal of MATERIALS and Derivatives.
MICHTGAN makes no representation that MATERIALS supplied by it or the methods
used in makinc, MATERIALS are free from liabilin, ior patent infringement.
BIOTHERAPIES acknowledges that MATERIALS are a part of the TECf-INOLOGY under
the License Agreement, and that all terms pertau-~ng to the TECHNOLOGY in the
License Agreement thus apply to MATERIALS, including all disclaimers of
warranties and requirements of defense and indemnity by BIOTHERAPIES. NOTE THAT
PURSUANT TO THE LICENSE AGREEMENT ALL TECHNOLOGY, INCLUDING MATERIALS, IS
PRO\"TDED WITHOUT WARRANTY OF MERCI-LAI\-TABILIT-Y OR FIT-NESS FOR A PARTICULAR
PURPOSE OR USE OR AN"XXXXXX WARRANTY, EXPRESSED OR IMPLIED.
DESCRIPTTON OF BIOLOGICAL MATERIALS:
hybridoma 7G6 mouse and the monoclonal antibodies produced by the hybridoma
hybridoma 3C6 mouse and the monoclonal antibodies produced by the hybridoma
hybridoma 6B8 mouse and the monoclonal antibodies produced by the hybridoma
pMammA DNA clone
THE UNIVERSITY OF MICHIGAN
Xxxxxx Triinmer
Biotherapies Incorporated
0000 Xxxxxxxx Xxxx
Xxx Xxxxx, XX 00000
Dear Xxx:
SCHEDULE"B"
MAMMASTATIN SERUM ASSAY
The Mammastatin Serum Assay is a quantitative assay used for measuring
mammastatin in biological samples composed of monoclonal antibody against
mammastatin and marnmastatin protein standards. The serum assay may contain, in
addition, components of a "Kit" which would allow antibody based detection of
the mammastatin protein. Components of the Kit could include but not be limited
to: anti- mammastatin monoclonal antibody, marnmastatin protein , second
antibody to detect anti-mammastatin monoclonal antibody, substrates to develop
color from the assay, membrane to immobilize serum proteins, an apparatus to
perforrn the ~j ot, a scanner to read the blot, and a software program and
computer to interpret the blot.
The assay is performed by applying a sample (serum or other fluid) and
control protein (mammastatin protein in solution, human serum with known
amounts of mammastatin, or sorne otlier liquid containing marnmastatin of known
amounts) to a membrane using a dot-blot apparatus and suction. The membrane is
then incubated with anti-mammastatin antibody, washed and then incubated with a
second (detecting) antibody which is labeled by enzymatic means. The membrane
is then washed and developed with a substrate solution. Samples containing
mammastatin will show a colored reaction where the intensity of color is
proportional to the amount of marnmastatin in the sample. The developed
membrane is then analyzed by desktop scanner and interpreted using appropriate
software.
The assay may be modified to utilize additional anti -mammastatin
antibodies and different fon-nats. The Assay may be ELISA, or EIA based but
will, in any of its forms remain an antibody based system for measuring the
quantity of marnmastatin protein in a liquid. In all cases marnmastatin is
defined as a human derived protein with fon-ris of 53, 49 and 44 kD which is
growth inhibitory for breast cell, phosphorylated, and produced by nonnal human
mammary cells.
SCHEDULE"C"
1. 26,250 common shares being held for the Directors of Biotherapies under
stock option agreements.
2. Biotherapies intends to Implement an employee stock option plan setting
aside a total of 5% of the total outstanding shares of Biotheraples for the
employees.
3. Biotherapies intends to grant an option to Xxxxxx X. Xxxxxxx, President of
Blotherapies, to purchase 10% of the total outstanding shares of
Biotherapies upon meeting certain conditions.
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