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Exhibit 10.(lxvii)
Viragen, Inc. 000 XX 00xx Xxxxxx Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000-0000
000.000.XXXX FAX 000.000.0000
xxx.xxxxxxx.xxx
March 23, 1998
VIA FACSIMILE: 000-000-0000
VIA INTERNATIONAL FEDERAL EXPRESS
Managing Director-Southern Health SDN.BHD
00 Xxxxx X. Xxxxxx
Xxx. 00X
Xxxxx Xxxxxx
MALAYSIA 50250
Dear Sir:
Thank you for your fax of January 5, 1998. This Letter of Agreement sets forth
the material terms and conditions to be contained in a Manufacturing and
Distribution License Agreement (the "Master License") by, between and among
Viragen, Inc., ("Viragen"), Viragen Technology, Inc. ("VTI") and Southern Health
SDN.BHD ("Southern"). The parties agree to use their best efforts to complete
the Master License in good faith as soon as is reasonably practicable, execute
confidentiality agreements and agree to incorporate, among other things, the
terms and conditions set forth herein:
1. GRANT OF OPTION
Viragen, through its wholly owned subsidiary, VTI ("the Licensor") hereby agrees
to grant to Southern an exclusive Option to purchase the Master License for the
countries listed below (the "Option"). This Option shall become effective and in
full force and effect upon Southern's execution of this Letter of Agreement and
payment to the Licensor of the non-refundable Option amount of TWO HUNDRED
THOUSAND U.S. DOLLARS (US$200,000) which shall be received by the Licensor in
cleared funds no later than April 3, 1998. In the event the parties do not
consummate the Master License for any reason prior to the expiration date, the
Licensor shall forthwith refund one-half of the Option amount (ONE HUNDRED
THOUSAND U.S. DOLLARS) (US$100,000) and, in that event, no party hereto shall
have any claim upon the other party.
2. OPTION TERM AND TERRITORIES
The Option shall extend until September 30, 1998, 5:00 p.m., EST (the
"Expiration Date") and shall be exclusive as to the following countries:
Malaysia, Indonesia, Philippines, Thailand, Taiwan, Korea, Singapore, Australia
and New Zealand, hereinafter referred to as "the Territory".
* The information redacted herefrom is the subject of a Confidentiality
Request submitted to the Securities and Exchange Commission.
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3. MASTER LICENSE FEE, TERM AND ROYALTY
Upon execution of the Master License and simultaneously therewith, Southern
shall pay in cleared funds to the Licensor the Master License Fee in the amount
of TWENTY MILLION U.S. DOLLARS (US$20,000,000) on or before the Option's
Expiration Date. Southern and/or its SUBLICENCEES shall additionally pay to the
Licensor a continuing Royalty of TWELVE PERCENT (12%) of gross revenues derived
by Southern or by or through its SUBLICENSEES from the sale of the Licensor's
natural alpha interferon product ("THE LICENSED PRODUCT"). Such Royalty shall be
paid to the Licensor by Southern and/or its SUBLICENSEES in U.S. dollars by wire
transfer by the fifteenth (15th) day of each month which amount shall represent
the preceding month's Royalty. Costs related to bank charges, wire transfers or
currency transactions and any taxes on Royalty payments shall be borne by
Southern which shall also stand liable for timely and accurate Royalty
collections from its SUBLICENSEES and payment thereof to the Licensor. The
Licensor shall have the right to access all books and records and appoint a
certified public accounting firm, or comparable, at the Licensor's expense, to
review Master Licensee's or subLicensee's books, records and inventory
facilities and equipment at any time during normal business hours by giving five
(5) days written notice. The term of the Master License shall extend for a
period of TWENTY-FIVE (25) YEARS from the date of its execution.
4. MASTER LICENSE KEY PROVISIONS AND TERM
OBLIGATIONS OF SOUTHERN. Among other provisions, the Master License shall
provide that Southern shall manufacture and distribute THE LICENSED PRODUCT in
accordance with all applicable laws, rules and regulations promulgated by the
appropriate regulatory agencies within the Territory in accordance with current
Good Manufacturing Practices (cGMP) as promulgated by the United Kingdom's
Medicine Control Agency ("MCA") or the United States' Food and Drug
Administration ("FDA") or comparable Tier I Country's regulatory agency.
Southern shall commence the building of at least one (1) manufacturing facility
at Southern's cost within two (2) years from the date of grant of the Master
License and such facility shall be built and operated in compliance with the
Licensor's specifications. Southern's manufacturing facility shall reach
commercial production levels within four (4) years from the date of execution of
the Master License. Southern agrees to follow all of the Licensor's
manufacturing procedures, including the Licensor's Standard Operating Practices
(SOPs), Protocols and Procedures. Southern shall cause to appear on or within
all advertising, instructional, informational, promotional or display material
either bearing or incorporating THE LICENSED PRODUCT, all required legal notices
pursuant to international copyright, trademark and patents laws and/or
regulatory requirements and/or as required from time to time by the Licensor.
Southern agrees that it shall, at its cost, register such patent, copyright,
trademark and/or service xxxx in the appropriate class, in the name of the
Licensor within the Territory.
Southern shall be responsible for arranging for and collecting human white blood
cells ("xxxxx xxxxx") from qualified blood collection agencies within the
Territory according to the Licensor's specifications. Southern has been advised
that between 1 million to 2 million xxxxx xxxxx (human white blood cell
collections or "leukocytes") are needed to support one (1) manufacturing
facility for THE LICENSED PRODUCT which is forecast to produce about
US$100,000,000 in annual gross retail
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sales assuming a [ * ] price per one million international units and comparable
manufacturing costs as experienced in Scotland and other commercial factors. The
cost of manufacturing one million international units can range between [ * ] to
[ * ]. Additionally, Southern shall have the exclusive right to distribute THE
LICENSED PRODUCT as defined in the Master License, within its Territory in
accordance with the rules, laws and regulations established by each
jurisdiction.
Southern recognizes that THE LICENSED PRODUCT is technically classified as an
experimental drug until clinical trials have been completed and the drug
approved for commercialization by the regulatory authorities either in the
United Kingdom, United States or other Tier I country. Southern may elect to
obtain regulatory or governmental approval within its Territory for the use of
THE LICENSED PRODUCT for any disease state at Southern's cost including, costs
relating to clinical trials that it may wish to undertake in its own behalf
within the Territory.
Southern may sublicense to qualified third parties within the Territory in
accordance with the terms and conditions contained in the Master License which
shall require the reasonable consent of the Licensor, in which event Southern
shall retain any and all sublicense fees derived therefrom. Southern shall
maintain complete control of all of the Licensor's proprietary manufacturing
technology and shall not disclose or transfer to any subLicensee or any third
party whomsoever any of the Licensor's Standard Operating Practices, Protocols
and Procedures and Confidential Information. Southern will operate any and all
manufacturing facilities within its Territory in compliance with the Licensor's
specifications.
Southern shall be responsible for the costs of policing and enforcing the
licensed patents, trade secret rights and sublicense agreements in the
Territory, including the costs of any patent prosecution or license
registration.
OBLIGATIONS OF THE LICENSOR. The Licensor shall provide Southern with the
"know-how and show-how" as to the Licensed Patent Rights, the Licensed
Manufacturing Protocols, Procedures and Processes and all related Confidential
Information and Data (which shall include information relating to the
manufacturing equipment). The Licensor shall disclose its proprietary
manufacturing technology to Southern (which shall include the training of
Southern's designated manufacturing personnel on site) at no additional cost to
Southern. The Licensor shall also provide continuing consultative and support
services as reasonably required exclusively to Southern for a period of two (2)
years from the date of execution of the Master License at no additional cost to
Southern except travel, room and board expenses for the Licensor's related
personnel. Further, the Licensor shall provide to Southern all clinical trial
protocols which it may have developed from time to time for specific disease
states for testing THE LICENSED PRODUCT so that Southern may elect to execute
clinical trials within its Territory.
5. PROVIDING THE LICENSED PRODUCT TO SOUTHERN
The Licensor shall use its best efforts in order to obtain THE LICENSED PRODUCT
from its manufacturing facility in Edinburgh, Scotland, at the earliest
opportunity. Any obligation to supply THE LICENSED PRODUCT to Southern shall
terminate at such time as Southern's first manufacturing facility becomes
operational. In this regard, a separate agreement would necessarily be
negotiated between Southern and Viragen (Europe) Ltd., ("VERP"), which would
provide for a preferred
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discounted price to Southern and would be subject to all laws, rules and
regulations of the United Kingdom. All Royalty payments arising from the sale of
THE LICENSED PRODUCT within the Territory from VERP-produced product will be
waived.
6. PROHIBITION AGAINST USE OF CORPORATE NAME, TRADENAMES, SERVICE MARKS AND
COPYRIGHTS
Southern shall be prohibited from using the words "Viragen" and/or OMNIFERON in
any form and in any way.
7. INSURANCE AND INDEMNITY
Southern shall fully indemnify Viragen and the Licensor against any and all
claims, damages, and losses including attorney fees and other costs arising in
connection with or in relation to the Master License or any actions taken
pursuant to it, and shall obtain sufficient insurance in forms and amounts
acceptable to the Licensor and Viragen to cover such liabilities.
8. GOVERNING LAW
This agreement shall be governed by and interpreted in accordance with the laws
of the State of Florida, U.S.A., and shall be enforceable in Florida courts
except for provisions pertaining to conflicts of laws.
9. INVESTMENT BANKING FEE
The Licensor agrees to pay an investment banking fee of SIX PERCENT (6%) of the
Master License Fee or ONE MILLION TWO HUNDRED THOUSAND U.S. DOLLARS
(US$1,200,000) to HPC Corporate Services upon receipt by the Licensor of the
Master License Fee in cleared funds on or before September 30, 1998 and receipt
of a fully executed Master License.
10. ASSIGNMENT OF MASTER LICENSE AND TERRITORIAL RESTRICTION
Southern has advised the Licensor that it intends to assign the Master License
to a newly-formed company, VIRAGEN ASIA (MALAYSIA) PLC. ("VASIA") which
assignment is contingent upon VASIA being listed on the Malaysian Stock Exchange
and/or Australian Stock Exchange (ASX) and being capitalized in the sum of not
less than FIFTY MILLION U.S. DOLLARS (US$50,000,000). The Licensor hereby agrees
to such assignment subject to the Licensor conducting reasonable due diligence
relating to both Southern and VASIA as long as Southern complies with paragraph
6 above. Southern, its assignees, nominees, designees, subsidiaries, joint
venturers, licensees and sublicensees and any and all entities which benefit
from THE LICENSED PRODUCT shall warrant and ensure that THE LICENSED PRODUCT
will not be manufactured, sold or distributed outside of the Territory.
By signing in the space provided below, the signatories represent that they have
the express authority to bind their respective entities.
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Yours very truly
ACCEPTED AND AGREED TO AS OF
THE ____DAY OF MARCH 23, 1998
VIRAGEN, INC. and SOUTHERN HEALTH SDN.HND
VIRAGEN TECHNOLOGY, INC.
BY: /s/ XXXXXX XXXXX, PRES. BY: /s/ XXXXX XXXXXX
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Xxxxxx Xxxxx, President Xxxxx Xxxxxx, Director (Title)
GS:js
cc: Management Committee
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