5% AMLEXANOX PASTE LICENSING AGREEMENT

TABLE OF CONTENTS
ARTICLE	PAGE NO
1. Definitions	1-5
2. Grant of License	6
3. Technology & Know-how, Transfer & Research	7-8
4. Strakan Development & Diligence	8-9
5. Patent Rights	10
6. Royalties & Milestone Payments	11-13
7. Manufacturing & Strakan's Gross Margin	14
8. Regulatory Responsibilities	14-17
9. Minimum Sales Obligations	18-19
10. Confidentiality	19-21
11. Third Party Infringement Claims	22-23
12. Patent Enforcement & Litigation	23-26
13. U.S. Export Control & Government Licenses	26
14. Product Liability & Indemnification	27-28
15. Warranties & Representations	28-29
16. Term & Termination	30-34
17. Force Majeure	34-35
18. Notices35-36	37-38
19. Dispute Resolution	38-39
20. Assignment	39-41
21. Miscellaneous Provisions	41
22. Signature Page
Appendix A-Binding Letter of Intent Appendix B-Patents Appendix C-Markets Appendix D-Clinical Trials Insurance Appendix E-Block License Agreement

08/11/98

THIS license agreement (hereinafter "LICENSE") dated as of August 13, 1998 is made between Access Pharmaceuticals, Inc. (hereinafter "ACCESS"); a corporation duly formed and existing under the laws of the State of Delaware, having a place of business at 2600 Stemmons Freeway, Suite 176, Dallas, TX ###-###-####; and Strakan Ltd. (hereinafter "STRAKAN"); a company duly formed and existing under the laws of England and Wales (Registered No. 3504711) whose registered office is at 45 Queen Anne Street, London W1M 9FA, England, United Kingdom:

WITNESSETH:

WHEREAS, ACCESS has certain rights in and to a topical product containing DRUG SUBSTANCE, for the FIELD for certain world-wide markets excluding the United States, Japan and Israel pursuant to the BLOCK LICENSE AGREEMENT; and

WHEREAS, ACCESS wishes the topical product containing the DRUG SUBSTANCE for the FIELD to be sold in such countries upon regulatory approval for their commercialization; and

WHEREAS, the PARTIES agree that their objectives with respect to the PRODUCT, as aforesaid, can best be realized through the appointment of STRAKAN as ACCESS' exclusive licensee for the PRODUCT in the TERRITORY; and

WHEREAS, ACCESS is willing to grant said license to STRAKAN; and

WHEREAS, the terms of the BINDING LETTER OF INTENT are superseded by this LICENSE.

NOW, THEREFORE, ACCESS and STRAKAN, in consideration of the mutual covenants contained herein, the sufficiency thereof is accepted and acknowledged, agree as follows:

When used in this LICENSE, the following terms shall have the meanings set out below, unless the context requires otherwise. The singular shall be interpreted as including the plural and vice versa, unless the context clearly indicates otherwise.

 

 

 

 

3.4	Future Research -Upon the EFFECTIVE DATE, STRAKAN agrees that any research conducted by ACCESS on PRODUCT at STRAKAN's written request shall be paid by STRAKAN. Any resulting patents shall be treated in accord with Article 5.1.

STRAKAN will promptly notify ACCESS of the filings of all applications for APPROVAL and EUROPEAN COMMUNITY APPROVAL under Article 4.1.

 

4.4	STRAKAN's Responsibility-STRAKAN, after discussion with ACCESS, shall be responsible for the planning, design and execution of the regulatory strategy and commercialization of the PRODUCT for the TERRITORY after the EFFECTIVE DATE.

LICENSE, manufacture, market, sell or distribute a competing product to the PRODUCT in the TERRITORY.

Except as provided in Section 5.1, ACCESS confirms that present and subsequent PATENT costs associated with the PATENTS in the TERRITORY have been and will be funded.

Any new or improved TECHNOLOGY or KNOW-HOW (and any subsequently filed PATENT applications or PATENTS covering any such invention or improvement) resulting from the efforts of ACCESS or the PRODUCT OWNER, or from the joint efforts of ACCESS and STRAKAN, shall be the exclusive property of ACCESS and PRODUCT OWNER to the extent permitted by applicable law.

These payments are to be made in accord with Article 6.2.

    6.2  Quarterly Royalty Reports and Payments - STRAKAN shall pay all sums due under

Article 6.1 in United States Dollars. The NET SALES for each country of the TERRITORY shall be converted into United States Dollars at the relevant U.S. Dollar spot exchange rate in the London Financial Times at the end of the calendar quarter. Within sixty (60) days after the close of each calendar quarter, STRAKAN shall submit a written report on the NET SALES for the TERRITORY in sufficient detail to enable a calculation of the royalty due in accord with Article 6.1 and payment of the royalty (if any) due shall be made by wire transfer to a bank account designated in writing by ACCESS. Prior to commercialization STRAKAN shall provide one written biannual report and quarterly oral reports from the EFFECTIVE DATE at the close of each calendar quarter. Once commercialization has begun, then STRAKAN must provide quarterly written reports as soon as reasonably possible after the close of each calendar quarter, providing an estimate of the NET SALES prior to the royalty payment report.

    6.3 Books of Account - STRAKAN and its sub-licensees shall maintain true and complete books of account containing an accurate record of all data necessary for the proper computation of royalty payments due under this LICENSE. Such records shall be maintained for at least five (5) years after the date of the pertinent royalty payment. 

However, if ACCESS still requires further information, STRAKAN shall promptly provide that information, if such information is reasonably available.

6.6

Late Payments-Any payments due under Article 6.1 and/or Article 6.7 not remitted or deposited by the due date shall bear interest at the current prime rate plus two percent (2%) established by a leading New York Bank, such as Citibank, as published in the Wall Street Journal. Should STRAKAN fail to make any payment within (90) days from its due date, then ACCESS shall have the right to terminate this LICENSE under Article 16.5 upon fifteen (15) working days written notice to STRAKAN to allow cure.

6.7	Milestone Payments-STRAKAN will pay ACCESS milestone payments totaling Three Hundred Thousand United States Dollars ($300,000) for sales of PRODUCT by STRAKAN or its sub-licensee in the TERRITORY in three (3) installments as follows:

6.8	Sub-license Agreements-STRAKAN shall promptly provide ACCESS with copies of all sublicense agreements and all amendments thereto.

listed in Appendix C. Notwithstanding the above, STRAKAN will not be responsible for obtaining price and/or reimbursement approval outside the TERRITORY. Accordingly, STRAKAN shall diligently prepare from the FDA dossier provided by ACCESS and submit an application for EUROPEAN COMMUNITY APPROVAL, following the grant of APPROVAL in the United Kingdom. Upon request, STRAKAN shall provide ACCESS with a copy of the formatted EUROPEAN COMMUNITY APPROVAL dossier and shall notify ACCESS of the date of filing the application. STRAKAN will consult with ACCESS on any material requests of the regulatory authority in a particular European Community country listed in Appendix C that if accepted would result in the grant of EUROPEAN COMMUNITY APPROVAL in a particular European Community country listed in Appendix C on a different basis to that as set out in the application for EUROPEAN COMMUNITY APPROVAL. STRAKAN shall pay any application fee levied in respect of the EUROPEAN COMMUNITY APPROVAL. Outside the TERRITORY, ACCESS' licensees will have the right to access the EUROPEAN COMMUNITY APPROVAL dossier for registration purposes from STRAKAN at the licensee's expense. STRAKAN will be reimbursed by ACCESS' licensees for all reasonable costs involved in transferring the EUROPEAN COMMUNITY APPROVAL dossier. For the avoidance of doubt, STRAKAN shall not be deemed to be in breach of its obligations above in the event that during the Mutual Recognition Procedure to obtain EUROPEAN COMMUNITY APPROVAL a particular European Community Country listed in Appendix C refuses to grant such approval on health, safety, efficacy or other grounds beyond STRAKAN's control or ability to remedy.

8.2	EUROPEAN COMMUNITY APPROVAL Date - STRAKAN shall notify ACCESS forthwith of the date upon which EUROPEAN COMMUNITY APPROVAL is granted within each European Community country listed in Appendix C.

 

 

9.1	Minimum Sales Obligations-STRAKAN shall adhere to the following minimum unit volume sales obligations if there is PATENT protection and/or MARKET EXCLUSIVITY position on the PRODUCT in the TERRITORY:

*Year 1   50,000 5gm tubes

Year 2   93,000 5gm tubes

Year 3  134,000 5gm tubes

Year 4  157,000 5gm tubes

Year 5  180,000 5gm tubes

Years 6-10  180,000 5gm tubes per year

as described above, terminate the Agreement. For the avoidance of doubt, if STRAKAN agrees to make up the royalty shortfall for failing to meet its minimum sales obligations

for two consecutive Years, ACCESS shall have no right to terminate the LICENSE or appoint another licensee. If STRAKAN fails to meet its minimum sales obligations for three consecutive Years, ACCESS after consultation with STRAKAN will have the right to terminate the LICENSE. For the avoidance of doubt, STRAKAN shall not be deemed to be in breach of its minimum sales obligations due to material disruptions in the supply of DRUG SUBSTANCE and/or PRODUCT for reasons beyond STRAKAN's reasonable control.

10.1

Each PARTY shall use good faith efforts to retain in confidence and not disclose to any THIRD PARTY each other’s CONFIDENTIAL INFORMATION disclosed pursuant to the terms of this LICENSE. Such “good faith efforts” shall mean the same degree of care, but no less than a reasonable degree of care, as the receiving PARTY uses to protect its own confidential information of a like nature.

10.2 Excepted from the obligation of confidence under Article 10.1 is that information which:

    

(c)  is required by law or by court order to be disclosed by the receiving PARTY in

which case the receiving PARTY will use good faith efforts to limit such disclosure to that required by law and to maintain the confidentiality of the disclosed information to the extent possible; or

(d)  must be necessarily disclosed to REGULATORY AUTHORITIES by STRAKAN

when applying for APPROVAL or EUROPEAN COMMUNITY APPROVAL;

(e)  is released from confidentiality in writing by the disclosing PARTY.

For the purpose of Article 10.1, a specific item of TECHNOLOGY shall not be deemed to be within the foregoing exceptions merely because it is embraced by more general information in the public domain, or in the possession of the receiving PARTY. In addition, any combination of features shall not be deemed to be within the foregoing exceptions merely because individual features are in the public domain or in the possession of the receiving PARTY, unless the combination itself and its principle of operation are in the public domain or in the possession of the receiving PARTY.

hereunder and to obtain APPROVAL and prepare for commercialization of PRODUCT, and to commercialize PRODUCT under this LICENSE, under written conditions of confidentiality at least as stringent as those set out in Articles 10.1, 10.2 and 10.3.

10.6	Survival of Confidentiality - Termination of this LICENSE for any reason shall not relieve the PARTIES of their obligations under this Article 10. The provisions of this Article 10 shall survive termination of this LICENSE for ten (10) years.

marketing or sale of PRODUCT by STRAKAN or its AFFILIATES in the FIELD in the TERRITORY. Specifically, STRAKAN and ACCESS shall mutually try to agree on:

If STRAKAN and ACCESS cannot mutually agree with regard to one or more of (a)-(d) above, the dispute shall be resolved in accord to Article 19.

11.3	Third Party License - The Parties shall use their good faith efforts (either individually or together) to negotiate any necessary agreement for royalty payment to THIRD PARTIES with a view to enabling the PRODUCT to be commercialized in the FIELD in the

TERRITORY. As of the EFFECTIVE DATE, ACCESS is not aware of the need for any such THIRD PARTY license.

ACCESS shall have the first right, at its own expense, to prosecute all litigation against a THIRD PARTY infringer who may be infringing a PATENT. STRAKAN shall provide all reasonable cooperation, including any necessary use of its name, required to prosecute such litigation. STRAKAN shall be consulted concerning the litigation. ACCESS will bear the cost and shall be entitled to any recovery obtained from such litigation, settlement or compromise thereof until recovery of all expenses for such litigation has been met. If ACCESS requests STRAKAN to participate, then ACCESS shall pay all of STRAKAN's reasonable expenses, including reasonable counsel fees. Any further recovery above such expenses of the PARTIES shall be mutually agreed upon based on the particular claim(s) in suit with an equitable division based on each of the PARTIES interests (e.g., PATENTS, PRODUCT).

 

At STRAKAN's request, ACCESS shall cooperate with STRAKAN in such litigation, including joining in said litigation. ACCESS shall also cooperate, at STRAKAN's expense, including reasonable counsel fees, by way of providing access to evidence and witnesses available to ACCESS.

 

13.1

Compliance - STRAKAN agrees to comply with all applicable United States governmental regulations with respect to export of TECHNOLOGY and any PRODUCT in the TERRITORY. STRAKAN agrees not to export or re-export any TECHNOLOGY or PRODUCT received from ACCESS or the direct products of such TECHNOLOGY to any prohibited country listed in the U.S. Export Administration Regulations unless

properly authorized by the U.S. Government. STRAKAN shall be responsible for the acts of its AFFILIATES, contractors, consultants and sublicensee. STRAKAN assumes

all liability if it or its AFFILIATES or sublicensee fails to obtain any of the necessary licenses or commits any violations of the United States Export Laws or Regulations (15

C.F.R. §700 et seq.). STRAKAN shall indemnify ACCESS for such acts and for any breach of compliance.

14.1

Indemnity by ACCESS- ACCESS shall indemnify and hold STRAKAN, its AFFILIATES and sub-licensees, and their respective agents, directors, officers and employees harmless from and against any and all liabilities, claims, demands, damages, costs, expenses or money judgements (including reasonable attorneys’ fees and

expenses) incurred by or rendered against any of them for personal injury, sickness,

disease or death or property damage which directly arise out of :

 

 

 

    14.2 Indemnity by STRAKAN - STRAKAN shall indemnify and hold ACCESS and its AFFILIATES, and their respective agents, directors, officers, and employees harmless from and against any all liabilities, claims, demands, damages, costs, expenses or money judgements (including reasonable attorneys’ fees and expenses) incurred by or rendered against any of them for personal injury, sickness, disease or death or property damage which directly arise out of:

15.1 Belief of Accuracy -

15.2  STRAKAN Representations to ACCESS-

15.3

Insurance - STRAKAN will obtain an insurance policy for its operations for clinical trials and sales of PRODUCT prior to beginning such clinical trials or sale of PRODUCT in an amount typical in this industry to protect ACCESS from liability under STRAKAN's activities. Such insurance policy must be maintained for the term of this LICENSE and a copy of the policy provided to ACCESS and attached as Appendix D. Failure to obtain such insurance and supply a copy of the policy to ACCESS shall be deemed a breach under Article 16.4.

market within the European Union by STRAKAN (or other licensee of ACCESS, if any), provided that the identified KNOW-HOW remains secret and substantial for such ten-year (10) period. Thereafter, this LICENSE shall be automatically extended on a non-exclusive basis for successive one-year (1) periods unless terminated by either PARTY by written notice given at least one-hundred and eighty (180) days before the end of the initial term or any extension thereof.

APPROVAL on health, safety, efficacy or other grounds beyond STRAKAN's control or ability to rectify or remedy, ACCESS strictly in the following order shall (a) have the unilateral right (but not the obligation) to extend the time for obtaining APPROVAL and EUROPEAN COMMUNITY APPROVAL for the PRODUCT (b) after consultation with STRAKAN to be paid by STRAKAN a $100,000 financial penalty, the payment of which shall automatically extend the time to obtain APPROVAL and EUROPEAN COMMUNITY APPROVAL by twelve (12) months respectively or (c) shall have the right to terminate the LICENSE. For the avoidance of doubt, if STRAKAN makes payment to ACCESS of the $100,000 financial penalty under sub-article (b) then

ACCESS shall have no right to terminate the LICENSE hereunder in accordance with this Article 16.2 unless STRAKAN shall have failed to obtain the APPROVAL and EUROPEAN COMMUNITY APPROVAL for the PRODUCT as above within the twelve (12) month extension of time respectively.

Upon termination of the license in respect of such country, STRAKAN shall promptly supply to ACCESS all registration information for REGULATORY AUTHORITIES that is available to STRAKAN or its AFFILIATES for use by ACCESS, its AFFILIATES or sublicensees in such country without compensation to STRAKAN by ACCESS.

payment breaches) from the delivery of such notice in which to remedy or to undertake to remedy the same. In the case the defaulting PARTY shall fail to remedy the breach or to undertake to remedy the breach to the satisfaction of the PARTY not in breach, the PARTY not in breach shall have the right to terminate this LICENSE in whole or only terminate those rights and obligations relating to the particular breach by notice in writing

to the PARTY in default. Failure of a PARTY to exercise its rights under this Article 16.4 shall not be construed as a waiver as to future breaches whether or not they are similar.

(c)

other than in relation to selling its stock of supplies of the PRODUCT as aforesaid, make no further use of any kind of any and all TECHNOLOGY disclosed hereunder by ACCESS, except to the extent such information has become public knowledge other than through fault of STRAKAN, and make no further use of the surviving PATENTS; and

(d)

take all steps necessary and execute any instruments required to assign all the rights relative to any APPROVALS held by STRAKAN to ACCESS or to ACCESS' designee, and if such new APPROVALS are obtained by ACCESS or its designee, STRAKAN agrees to notify the REGULATORY AUTHORITIES to

transfer all those APPROVALS of PRODUCTS which are in the name of STRAKAN to ACCESS or its designee; and

(e)

assign to ACCESS any distributorships, PRODUCT manufacturing agreements and sublicense agreements, to the extent they are specific to the PRODUCT and are assignable and to the extent such agreements were previously agreed with ACCESS to survive termination of this LICENSE; or, at ACCESS' option,

terminate such agreements. ACCESS makes no commitment to maintain any of STRAKAN's sublicensee agreements upon termination of this LICENSE.

16.8

Survival of Certain Obligations - On termination of this LICENSE: the obligations of confidentiality set forth in Article 10 shall survive for the time stated therein; payments accrued and due under Article 6 shall survive termination; Export Control compliance set forth in Article 13 shall survive termination; the indemnification obligations set forth in Article 14 shall also survive termination as to all claims or actions arising from events which occurred before termination; and the dispute resolution set forth in Article 19 shall survive termination.

If either PARTY shall be delayed, hindered, interrupted in or prevented from the performance of any obligation hereunder by reason of force majeure (hereinafter referred to as "Force Majeure"), including earthquake, flood, famine or other act of God, fire, war (declared or undeclared), public disaster, riots, strike or labor differences, governmental enactment, rule or regulation or any other cause beyond such PARTY's reasonable control, such PARTY shall not be liable to the other therefor; and the time for performance of such obligation shall be extended for a period equal to the duration of the contingency which occasioned the delay, interruption or prevention. The PARTY invoking such Force Majeure rights under this Section must notify the other PARTY by registered letter setting forth the nature of the occurrence, its expected duration and how

that PARTY's performance is affected within a period of fifteen (15) days, from the first and the last day of the Force Majeure unless the Force Majeure renders such notification impossible in which case notification will be made as soon as possible. If the delay resulting from the Force Majeure exceeds six (6) months, the PARTIES commit to consult together in good faith to find an appropriate solution. The affected PARTY shall

resume the performance of its obligations as soon as practicable after the Force Majeure event ceases.

18.1

Official - Any notice, request or communication specifically provided for or permitted to be given under this LICENSE must be in writing and may be delivered by hand delivery, courier service, or facsimile transmission, provided that a hard copy of any facsimile transmission is sent by first class pre-paid post within twenty four (24) hours of such transmission, and shall be deemed effective as of the time of actual delivery thereof to the addressee. For purposes of notice the addresses of the PARTIES shall be as follows:

ACCESS:

Access Pharmaceuticals, Inc.

2600 Stemmons Freeway

Suite 176

Dallas, TX ###-###-####

Attention:  Kerry P. Gray

President & CEO

Telephone:   ###-###-####

Facsimile:   ###-###-####

With a copy to:

Bingham Dana LLP

150 Federal Street

Boston, MA 02110-1726

Attention:  John J. Concannon III

Telephone:   ###-###-####

Facsimile:   ###-###-####

STRAKAN:

Strakan Ltd.

Unit C, Melrose Station

Palma Place

Melrose

Scotland TD6 9PR

United Kingdom

Attention: Andrew McLean

Telephone: #-823836

Facsimile: #-823837

18.2	Each PARTY may change its address and its representatives for notice by the giving of notice thereof in the manner hereinafter provided.

19.1

Agreement to Arbitrate - The PARTIES will endeavor to settle amicably any dispute, which may arise out of this Agreement. Failing settlement within three (3) months of such dispute having arisen, any dispute shall be finally settled by arbitration on the initiation in writing of either PARTY, in accordance with the rules then in effect of the International Chamber of Commerce. The arbitration will be held in Dallas when it is initiated by STRAKAN and in London when it is initiated by ACCESS. The dispute or difference shall be referred to a single arbitrator, if the PARTIES agree upon one, or otherwise three (3) arbitrators, one to be appointed by each PARTY and the third to be appointed by the first two (2) arbitrators selected by the PARTIES. If a PARTY shall refuse or neglect to appoint an arbitrator within thirty (30) days after the other PARTY shall have served a written notice such other PARTY's choice and requesting that the

first-mentioned PARTY make its choice, then the arbitrator first appointed shall, at the request of the PARTY appointing him, proceed to hear and determine the matters in difference as if he were a single arbitrator appointed by both PARTIES.

19.5

Injunctive Relief - Each of the PARTIES hereto acknowledges and agrees that damages may not be an adequate remedy for any material breach or violation of this Agreement if such material breach or violation would cause immediate and irreparable harm (an "Irreparable Breach"). Accordingly, in the event of a threatened or ongoing Irreparable Breach, each PARTY hereto shall be entitled to seek, in any state or federal court in the State of Delaware, equitable relief of a kind appropriate in light of the nature of the ongoing threatened Irreparable Breach, which relief may include, without limitation, specific performance or injunctive relief; provided however, that if the PARTY bringing such action is unsuccessful in obtaining the relief sought, the moving PARTY shall pay

the non-moving PARTY's reasonable costs, including attorney's fees, incurred in connection with defending such action. Such remedies shall not be the PARTIES' exclusive remedies, but shall be in addition to all other remedies provided in this Agreement.

IN WITNESS WHEREOF, the PARTIES have duly executed duplicate originals of this LICENSE by their appropriate authorized representative.

ACCESS PHARMACEUTICALS, INC.  STRAKAN LTD

By: /s/ Kerry P. Gray      By:  /s/Andrew McLean

Name: Kerry P. Gray   Name: Andrew McLean    

Title: President & CEO   Title: Director of Legal Affairs

Date: -August 13, 1998         Date: -August 14, 1998

Austria    Italy

Belgium    Luxembourg   

Denmark    Netherlands

Finland    Portugal

France    Republic of Ireland

Germany    Spain

Greece    Sweden

United Kingdom