exhibit_10-62.htm


    


     

    


     

     

    LICENSE
AND SUPPLY AGREEMENT

     

     

    


     

     

    


     

     

    Between

     

     

    


     

     

    


     

     

    CYTO
BIOTECH INC.

     

     

    


     

     

    &

     

     

    


     

     

    AMARILLO
BIOSCIENCES, INC.

     

     

    


     

     

    


     

     

    


     

     

    


     

     

    


     

     

    February
2009

     

     

    


     

     

    


     

     

    


     


    
      
        
           

          CYTOB-AMAR License  Supply
Agree 2-25-2009 redacted   Final Agreement


        

         


      

      
        1

        
          

        

      

      
         


      

    


     

    TABLE
OF CONTENTS

    

      
        	
                ARTICLE
      I:  DEFINITIONS

              	
                5

              
	 
      	 
      
	
                ARTICLE
      II: RESEARCH AND DEVELOPMENT

              	
                11

              
	 
      	 
      
	
                SECTION
      2.01.  AMAR OBLIGATIONS

              	
                11

              
	
                SECTION
      2.02.  CYTOB OBLIGATIONS

              	
                12

              
	
                SECTION
      2.03.  AVAILABILITY OF RESOURCES; COOPERATION

              	
                13

              
	
                SECTION
      2.04.  REPORTING OBLIGATIONS OF CYTOB

              	
                13

              
	 
      	 
      
	
                ARTICLE
      III: LICENSE

              	
                13

              
	 
      	 
      
	
                SECTION
      3.01.  LICENSE AND SUPPLY GRANT

              	
                13

              
	
                SECTION
      3.02.  RESTRICTIONS

              	
                14

              
	
                SECTION
      3.03.  RETAINED RIGHTS

              	
                14

              
	 
      	 
      
	
                ARTICLE
      IV: PAYMENTS

              	
                14

              
	 
      	 
      
	
                SECTION
      4.01.  INITIAL FEE

              	
                14

              
	
                SECTION
      4.02.  STOCK PURCHASE

              	
                14

              
	
                SECTION
      4.03.  MINIMUM YEARLY PURCHASE ORDER AND MINIMUM
      SALES

              	
                15

              
	
                SECTION
      4.04.  REPORTS

              	
                15

              
	
                SECTION
      4.05.  RECORDS AND AUDITS

              	
                15

              
	
                SECTION
      4.06.  EXCHANGE RATE; MANNER AND PLACE OF
PAYMENT

              	
                16

              
	
                SECTION
      4.07.  LATE PAYMENTS

              	
                16

              
	
                SECTION
      4.08.  TAXES

              	
                16

              
	
                SECTION
      4.09.  OTHER PAYMENTS

              	
                16

              
	 
      	 
      
	
                ARTICLE
      V: TERM AND TERMINATION

              	
                17

              
	 
      	 
      
	
                SECTION
      5.01.  TERM

              	
                17

              
	
                SECTION
      5.02.  TERMINATION BY CYTOB

              	
                17

              
	
                SECTION
      5.03.  TERMINATION BY AMAR

              	
                17

              
	
                SECTION
      5.04.  TERMINATION UPON CERTAIN EVENTS

              	
                18

              
	
                SECTION
      5.05.  REMEDIES

              	
                18

              
	
                SECTION
      5.06  EFFECT OF TERMINATION

              	
                18

              
	
                SECTION
      5.07.  BANKRUPTCY

              	
                19

              
	
                SECTION
      5.08.  CONTINUING OBLIGATIONS

              	
                19

              
	
                SECTION
      5.09.  RETURN OF CONFIDENTIAL INFORMATION

              	
                19

              
	 
      	 
      
	
                ARTICLE
      VI: SUPPLY, MANUFACTURE AND PURCHASE OF PRODUCT

              	
                19

              
	 
      	 
      
	
                SECTION
      6.01.  SUPPLY OF PRODUCT AND BULK INTERFERON

              	
                19

              
	
                SECTION
      6.02.  SUPPLY AND MANUFACTURING RIGHTS

              	
                20

              
	
                SECTION
      6.03.  QUALITY ASSURANCE

              	
                20

              
	
                SECTION
      6.04.  AMAR'S DUTIES

              	
                20

              
	
                SECTION
      6.05.  CYTOB'S DUTIES IF MANUFACTURING

              	
                21

              
	
                SECTION
      6.06.  FAILURE TO SUPPLY

              	
                21

              
	
                SECTION
      6.07.  ALLOCATION

              	
                22

              
	
                SECTION
      6.08.  RECORDS AND AUDITS

              	
                22

              
	 
      	 
      
	
                ARTICLE
      VII: PURCHASE AND SALE

              	
                23

              
	 
      	 
      
	
                SECTION
      7.01.  PURCHASE PRICE, PAYMENT, AND ROYALTY

              	
                23

              
	
                SECTION
      7.02.  LABELING AND ARTWORK

              	
                23

              
	
                SECTION
      7.03.  PURCHASE FORMS

              	
                24

              
	
                SECTION
      7.04.  CONFIRMATION

              	
                24

              
	
                SECTION
      7.05.  DELIVERY

              	
                24

              
	
                SECTION
      7.06.  FORECASTS AND ORDERS

              	
                24

              
	 
      	 
      
	
                ARTICLE
      VIII: WARRANTY, REJECTION AND INSPECTIONS

              	
                25

              
	 
      	 
      
	
                SECTION
      8.01.  AMAR WARRANTY

              	
                25

              
	
                SECTION
      8.02.  REJECTION OF PRODUCT FOR FAILURE TO CONFORM TO
      SPECIFICATIONS

              	
                25

              
	
                SECTION
      8.03.  CYTOB INSPECTIONS

              	
                26

              
	 
      	 
      
	
                ARTICLE
      IX: REGULATORY COMPLIANCE

              	
                26

              
	 
      	 
      
	
                SECTION
      9.01.  MAINTENANCE OF MARKETING AUTHORIZATIONS

              	
                26

              
	
                SECTION
      9.02.  ADVERSE DRUG EVENT REPORTING AND PHASE IV
      SURVEILLANCE

              	
                27

              
	
                SECTION
      9.03.  COMMERCIAL SALE TESTING AND REPORTING

              	
                27

              
	
                SECTION
      9.04.  ASSISTANCE

              	
                28

              
	
                SECTION
      9.05.  COMPLIANCE

              	
                28

              
	 
      	 
      
	
                ARTICLE
      X: REPRESENTATIONS, WARRANTIES AND COVENANTS

              	
                28

              
	 
      	 
      
	
                SECTION
      10.01. CORPORATE POWER

              	
                28

              
	
                SECTION
      10.02. DUE AUTHORIZATION

              	
                28

              
	
                SECTION
      10.03. BINDING OBLIGATION

              	
                28

              
	
                SECTION
      10.04. OWNERSHIP OF AMAR RIGHTS

              	
                29

              
	
                SECTION
      10.05. MATERIAL AGREEMENTS

              	
                29

              
	
                SECTION
      10.06. ADVERSE PROPERTIES

              	
                29

              
	
                SECTION
      10.07. PRESERVATION OF NAME AND REPUTATION

              	
                29

              
	
                SECTION
      10.08. DEBARMENT

              	
                30

              
	
                SECTION
      10.09. LIMITATION ON WARRANTIES

              	
                30

              
	
                SECTION
      10.10. LIMITATION OF LIABILITY

              	
                30

              
	 
      	 
      
	
                ARTICLE
      XI: PATENTS AND TRADEMARK

              	
                30

              
	 
      	 
      
	
                SECTION
      11.01.  FILING, MAINTENANCE AND PROTECTION OF
      PATENTS

              	
                30

              
	 
      	 
      
	
                ARTICLE
      XII: COVENANTS OF CYTOB AND AMAR

              	
                30

              
	 
      	 
      
	
                SECTION
      12.01. FURTHER ACTIONS

              	
                30

              
	
                SECTION
      12.02. EQUITABLE RELIEF

              	
                31

              
	 
      	 
      
	
                ARTICLE
      XIII: INDEMNIFICATION

              	
                31

              
	 
      	 
      
	
                SECTION
      13.01. CYTOB INDEMNIFIED BY AMAR

              	
                31

              
	
                SECTION
      13.02. AMAR INDEMNIFIED BY CYTOB

              	
                31

              
	
                SECTION
      13.03. PROMPT NOTICE REQUIRED

              	
                32

              
	
                SECTION
      13.04. INDEMNITOR MAY SETTLE

              	
                32

              
	 
      	 
      
	
                ARTICLE
      XIV: DISPUTE RESOLUTION

              	
                32

              
	 
      	 
      
	
                SECTION
      14.01. DISPUTES

              	
                32

              
	
                SECTION
      14.02. TRIAL WITHOUT JURY

              	
                33

              
	
                SECTION
      14.03. PERFORMANCE TO CONTINUE

              	
                33

              
	
                SECTION
      14.04. PROVISIONAL REMEDIES

              	
                33

              
	
                SECTION
      14.05. DETERMINATION OF PATENTS AND OTHER INTELLECTUAL
      PROPERTY

              	
                33

              
	 
      	 
      
	
                ARTICLE
      XV: CONFIDENTIALITY

              	
                33

              
	 
      	 
      
	
                SECTION
      15.01. CONFIDENTIALITY

              	
                33

              
	
                SECTION
      15.02. PUBLICITY REVIEW

              	
                34

              
	 
      	 
      
	
                ARTICLE
      XVI: MISCELLANEOUS

              	
                34

              
	 
      	 
      
	
                SECTION
      16.01. COMMERCIALLY REASONABLE EFFORTS

              	
                34

              
	
                SECTION
      16.02. CYTOPHARM

              	
                35

              
	
                SECTION
      16.03. BUMIMEDIC

              	
                35

              
	
                SECTION
      16.04. BIOVET

              	
                35

              
	
                SECTION
      16.05. NOTICES

              	
                35

              
	
                SECTION
      16.04. SEVERABILITY

              	
                36

              
	
                SECTION
      16.05. ENTIRE AGREEMENT/MERGER

              	
                36

              
	
                SECTION
      16.06. AMENDMENT

              	
                36

              
	
                SECTION
      16.07. COUNTERPARTS

              	
                36

              
	
                SECTION
      16.08. NO WAIVER OF RIGHTS

              	
                37

              
	
                SECTION
      16.09. FORCE MAJEURE

              	
                37

              
	
                SECTION
      16.10. FURTHER ASSURANCES

              	
                37

              
	
                SECTION
      16.11. ASSIGNMENT AND SUBLICENSE

              	
                37

              
	
                SECTION
      16.12. EXPENSES

              	
                37

              
	
                SECTION
      16.13. BINDING EFFECT

              	
                37

              
	
                SECTION
      16.14. GOVERNING LAW

              	
                38

              
	
                SECTION
      16.15. SURVIVAL OF REPRESENTATIONS AND WARRANTIES

              	
                38

              
	
                SECTION
      16.16. NO STRICT CONSTRUCTION

              	
                38

              
	
                SECTION
      16.17. INDEPENDENT CONTRACTORS

              	
                38        

              


      

       

      Exhibit I
- HBL License and Supply Agreement

       

      Exhibit
II - Specifications

       

      Exhibit III - Certificate of
Compliance

       

    

    
      
        

          
            
              
                 

                CYTOB-AMAR License  Supply
Agree 2-25-2009 redacted   Final Agreement


              

               


            

            
              2

              
                

              

            

            
               


            

          



      

    

     

    LICENSE
AND SUPPLY AGREEMENT

     

     

    This
License and Supply Agreement (“Agreement”) is made as of February 6, 2009 (the
“Effective Date”), by and between CytoBiotech, Inc. (CYTOB), a corporation,
having a principal place of business at 6F., No.6, Sec.1, Jhongshing
Rd.,Wugu Shiang, Taipei county 24872, Taiwan,  and Amarillo
Biosciences, Inc., a Texas corporation (“AMAR”), with its principal place of
business located at 4134 Business Park Drive, Amarillo, Texas 79110, USA. AMAR
and CYTOB are sometimes referred to collectively herein as the “Parties” and
individually as a “Party.”

     

     

    WHEREAS,
AMAR has substantial expertise in the oral use of human interferon alpha (“IFN”)
and have proprietary rights and Know-How in the field of formulation of oral
IFN;

     

     

    WHEREAS,
AMAR is willing to disclose to CYTOB the AMAR Know-How consisting of human
clinical data and all other data, including but not limited to, safety,
bioavailability, and clinical trial data necessary for CYTOB to obtain
regulatory approval for a product for the treatment of human diseases in the
Territory; and

     

     

    WHEREAS,
AMAR has an exclusive worldwide license (except Japan) to market and distribute
the oral formulation of Hayashibara (known as “HBL”) IFN, and desires to provide
HBL oral IFN to CYTOB on the terms and conditions herein set forth, and CYTOB
desires to obtain the right to perform clinical trials on, distribute and
market, HBL IFN on the terms and conditions herein set forth;

     

     

    WHEREAS,
AMAR owns certain proprietary information, intellectual property, Patents and
AMAR Know-How, and other rights relating to the use of low dose oral IFN for the
treatment or prevention of human and animal diseases;

     

     

    WHEREAS,
subject to the terms of this Agreement, AMAR desires to grant to CYTOB, and
CYTOB wishes to obtain from AMAR, an exclusive supply agreement and distribution
license, subject to existing rights, to such Know-How and related intellectual
property rights in the Territory in connection with the Product;
and

     

     

    WHEREAS,
AMAR is willing to grant such rights and licenses to CYTOB under the terms and
conditions hereinafter set forth.

     

     

    NOW,
THEREFORE, in consideration of the mutual promises, covenants and agreements
hereinafter set forth, the Parties mutually agree as follows:

     

     

    ARTICLE
I:

     

     

    DEFINITIONS

     

     

    (a) The
following terms as used in the Agreement shall, unless the context clearly
indicates to the contrary, have the meaning set forth below:

     

     

    “AMAR Know-How” means all
Know-How under the Control of AMAR as of the Effective Date and at any time
during the TERM related to (but not claimed under) the AMAR Patent Rights and
which is necessary or useful to develop, Manufacture and/or commercialize the
Product, including all information, reports, results, inventions, materials, and
any other 

     

    
      
         

      

      
        3

        
          

        

      

      
         
technical
and scientific data, specifications and formulae directly related to the
development, regulato­ry approval, Manufacture, testing, use, marketing
and/or sale of Product, including non-patentable Improvements, and any nonpublic
information relevant to the AMAR Patent Rights, including preclinical and
clinical data from AMAR's past, current or future studies, relating to safety or
bioavailability, or preclinical or clinical data relating to the use of HBL oral
IFN and/or IFN for the treatment or prevention of human
diseases.

    

     

     

    “AMAR Patent Rights” means all
Patent Rights that are under the Control of AMAR as of the Effective Date under
US patent laws’ protection, and at any time during the TERM that are necessary
or useful to the use, development, Manufacture, marketing, promotion,
distribution, sale and/or commercialization of the Product for use in the
treatment of the Licensed Indications, and Improvements thereto developed by or
on behalf of AMAR during the TERM.

     

     

    “AMAR Technology” means the
AMAR Patent Rights and the AMAR Know-How.

     

     

     “Affiliate” means any entity,
which directly or indirectly controls, is controlled by or is under common
control with either CYTOB or AMAR. The term “control” as used in the preceding
sentence means the power to direct or control the affairs of such entity, and
control shall be presumed where CYTOB or AMAR or their Affiliates (as the case
may be) own Fifty percent (50%) or more of the voting stock or other equity
interests of such entity.  CYTOB ownership in AMAR is excluded as an
Affiliate.

     

     

    “Applicable Laws” means all
applicable laws, rules, Regulations and guidelines within or without the
Territory that may apply to the marketing or sale of the Product in the
Territory or the performance of either Party's obligations under this Agreement
including laws, Regulations and guidelines governing the marketing, distribution
and sale of the Product in the Territory, to the extent applicable and relevant,
and including all cGMP or current Good Clinical Practices standards or
guidelines promulgated by the FDA or the Governmental Authorities and including
trade association guidelines. The laws are also under the designated
Territory.

     

     

    “Certificate of
Compliance” means the certificate of
compliance in the form attached hereto as Exhibit B or
otherwise requested by regulatory agencies in the Territory.

     

     

     “CFR” means the United States
Code of Federal Regulations.

     

     

               “DOH” means the Department of
Health in a country in the Territory.

     

     

    “cGMP”
means current good manufacturing practices as defined in 21 CFR § 110 et seq. and established under the Act and
applicable Regulations.

     

     

     “Confidential
Information” means any confidential information
(including Know-How) of a Party relating to any human interferon use, process,
method, compound, research project, work in process, future development,
scientific, engineering, Manufacturing, marketing, business plan, financial or
personnel matter relating to the disclosing Party, its present or future
product, sales, suppliers, customers, employees, investors or business, whether
in oral, written, graphic or electronic form. Confidential Information shall not
include any information, which the receiving Party can prove by competent
evidence:

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    (a) is now, or hereafter becomes, through no act or
failure to act on the part of the receiving Party, generally known or available
or accessible through public domains;

     

     

    (b) is known by the receiving Party at the time of
receiving such information, as evidenced by its written records maintained in
the ordinary course of business;

     

     

    (c) is hereafter furnished to the receiving Party by a
Third Party, as a matter of right and without restriction on
disclosure;

     

     

    (d) is independently developed by the receiving Party, as
evidenced by its written records, without knowledge of, and without the aid,
application or use of, the disclosing Party's Confidential Information;
or

     

     

    (e) is the subject of a written permission to disclose
provided by the disclosing Party.

     

     

    Any
Confidential Information will be marked as “Confidential & Proprietary
Information” at the foot or head of every page throughout the
documents.

     

     

    “Control” means the possession
of the ability to grant a license or sublicense as provided for herein without
violating the terms of any agreement or other arrangement with any Third
Party.

     

     

     “Existing License” means, the
HBL Agreement, attached into this document as Exhibit I.

     

     

    “FDA” means the United States
Food and Drug Administration.

     

     

    “First Commercial Sale” means
after obtaining the necessary Governmental Approval, the first sale for use,
consumption or resale of a Product by CYTOB, its Affiliates or its sublicensees
in the Territory (excluding any transactions for clinical trials). A sale to an
Affiliate shall not constitute a First Commercial Sale unless the Affiliate is
the end user of the Product.

     

     

    “GAAP” means United States
generally accepted accounting principles, consistently applied in accordance
with past practice.

     

     

    “IFRS” means International
Financial Reporting Standards.

     

     

    “Good Clinical Practices”
means good clinical practices as defined in 21 CFR § 50 et. seq. and § 312 et.
seq.

     

     

    “Governmental Approval” means
all permits, licenses and authorizations, including Marketing Authorizations,
required by any Governmental Authority in the Territory as a prerequisite to the
Manufacturing, packaging, marketing and selling of the Product.

     

     

    “Governmental Authority” means
any federal, state, local or other government, administrative or regulatory
agency, authority, body, commission, court, tribunal or similar entity,
including other entities in each country in the Territory responsible for the
regulation of medicinal products intended for human use.

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    “HBL” means Hayashibara
Biochemical Laboratories, Inc. of Okayama, Japan.

     

     

    “HBL Agreement” means the
Joint Development and Manufacturing/Supply Agreement by and between HBL and AMAR
dated as of March 13, 1992 (Exhibit Ia), as amended by the First Amendment to
Joint Development and Manufacturing/Supply Agreement dated as of January 17,
1996 (Exhibit Ib) and the Addendum to Manufacturing/Supply Agreements dated as
of May 10, 1996 (Exhibit Ic) and September 7, 2001 (Exhibit Id).

     

     

    “HBL IFN” means the cell
culture derived human lymphoblastoid IFN produced by HBL.

     

     

    “Improvements” means any and
all developments, inventions or discoveries in the Licensed Indication relating
to the AMAR Patent Rights developed by AMAR, or acquired by AMAR at any time
during the TERM and shall include developments intended to enhance the safety
and/or efficacy of the Product.

     

     

    “IFN” means human interferon
alpha.

     

     

     “Know-How” means all know-how,
trade secrets, inventions, data, processes, techniques, procedures,
compositions, devices, methods, formulas, protocols and information, whether or
not patentable, which are not generally publicly known, including, without
limitation, all chemical, biochemical, toxicological, and scientific research
information, whether in written, graphic or video form or any other form or
format, used to produce human interferon alpha and its oral
formulation.

     

     

    “Licensed Indications” means
all human and animal clinical indications.

     

     

    “Manufacture” or “Manufacturing Process” means
the storage, handling, production, processing and packaging of the Product, in
accordance with this Agreement and Applicable Laws.

     

     

    “Marketing Authorization”
means all necessary and appropriate regulatory approvals, including Pricing and
Reimbursement Approvals, where applicable, to put the Product on the market in
the Territory.

     

     

    “Material Agreements” means
the Existing License.

     

     

    “NDA” means a new drug
application, biological license application or establishment license
application, as applicable, and all amendments and supplements thereto, filed or
to be filed, with the FDA seeking authorization and approval to Manufacture,
package, ship and sell the Product as more fully described in the
Regulations.

     

     

    “Net Sales” means the invoice
amounts actually received for sales of the Product by CYTOB, its Affiliates or
sublicensees in a bona fide arm's length transaction, less the following items,
provided that they are bona fide transactions designed to optimize the sales of
Product (a) cash discounts and trade allowances actually granted, (b) rebates
and chargebacks required by Applicable Laws or made pursuant to agreements with
customers, (c) credits or allowances actually granted upon claims, damaged
goods, outdated goods, rejections or returns of such Product, including recalls,
(d) taxes, tariffs and similar obligations, duties or other governmental charges
(other than income taxes) levied on, absorbed or otherwise imposed on sales of
such Product in the Territory and shown separately on the invoice, (e) shipping
charges and (f) insurance costs related to shipping.

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    Components
of Net Sales shall be determined in the ordinary course of business in
accordance with historical practice and using the accrual method of accounting
in accordance with GAAP or IFRS, but shall not include any sales of the Product
for pre-clinical or clinical testing or for other than commercial
purposes.

     

     

    In the
event CYTOB transfers the Product to a Third Party in a bona fide arm's length
transaction, for consideration, in whole or in part, other than cash or to a
Third Party in other than a bona fide arm's length transaction, the Net Sales
price for such Product shall be deemed to be the standard invoice price then
being invoiced by CYTOB in an arms length transaction with similar customers for
similar amounts less the items set forth in (a) through (f) above.

     

     

    “Patent Rights” means all
rights related to human interferon alpha under patents and patent applications,
and any and all patents issuing there from (including utility, model and design
patents and certificates of invention), together with any and all substitutions,
extensions (including supplemental protection certificates), registrations,
confirmations, reissues, divisional, continuations, continuations-in-part,
re-examinations, renewals and foreign counterparts of the foregoing and all
Improvements, supplements, modifications or additions during the term.

     

     

    “Phase IV” means, as
applicable, a study or program designed to obtain additional safety or efficacy
data, detect new uses for a drug, or to determine effectiveness for labeled
indications under conditions of widespread usage, which is commenced after
Government Approval of the Product in the applicable country in the Territory or
any such study or program required by the FDA or other applicable Governmental
Authority.

     

     

     “Pricing and Reimbursement
Approvals” means any pricing and reimbursement approval, by government
agency in the Territory, that must be obtained before placing the Product on the
market in the Territory in which such approval is required.

     

     

    “Prime Rate of Interest” means
the prime rate of interest published from time to time in The Wall Street Journal as
the prime rate; provided, however that if The Wall Street Journal does
not publish the prime rate of interest, then the term “Prime Rate of Interest”
shall mean the rate of interest publicly announced by Bank of America, N.A., as
its prime rate, base rate, reference rate or the equivalent of such rate,
whether or not such bank makes loans to customers at, above, or below said
rate.

     

     

    “Product” means a formulation
or composition containing HBL IFN and designated, detailed, or labeled for oral
use in the treatment of the Licensed Indications.

     

     

    “Regulations” means
regulations, statutes, rules, guidelines and procedures promulgated by the FDA
or other governmental agency pursuant to the Act or other law, including without
limitation, those regulations currently contained in Title 21 of the
CFR.

     

     

    “SFDA” means the State Food
and Drug Administration of a country in the Territory.

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

    “Shipment” or “Shipped” means each
individual group of Product received by CYTOB from AMAR or its
agent.

     

     

    “Specifications” means the
specifications for the Product.  The initial Specifications are
attached hereto as Exhibit V.

     

     

    “Territory” Cambodia,
Indonesia, Philippines, Thailand, Vietnam and (subject to the existing license
and supply agreement with CytoPharm) China, Taiwan and Malaysia (see
Miscellaneous 16.02 and 16.03).

     

     

    “Third Party” means any entity
other than AMAR or CYTOB or an Affiliate of AMAR or CYTOB.

     

     

    Unit” means a single finished
dosage form of Product in the form designated by CYTOB, which initially, for
clinical supplies, shall consist of a 200 mg by weight, with up to
200  international units (IU) by activity, tablet or lozenge. Clinical
testing may result in a change in the optimal dose and require a new definition
of “Unit.”

     

     

    (b) Each of
the following terms is defined in the Section or under the defined term set
forth opposite such term below:

     

    


    


    AMAR Preamble

    ADE Section
9.02

    Agreement Preamble

    Clinical
Records Section 2.02(c)

    Disputed
Amount Section 5.03(a)

    DMF Section
2.02(b)

    Effective
Date Preamble

    Force
Majeure Section 16.10

    CYTOB Preamble

    Indemnitee Section
13.03

    Indemnitor Section
13.03

    Loss Section
13.01

    Parties Preamble

    Party Preamble

    Purchase
Price Section 7.01

    Representatives Section
15.01

    Milestone
Payments Section 4.02

    SEC Section
15.02

    SOP Section
9.02

    TERM Section
5.01

     

    (c) Interpretation. The section
headings contained in this Agreement are for reference purposes only and shall
not affect the meaning or interpretation of this Agreement. Except where the
context clearly requires to the contrary: (i) each reference in this Agreement
to a designated “Section” or “Exhibit” is to the corresponding Section or
Exhibit of or to this Agreement; (ii) instances of gender or entity-specific
usage (e.g., “his” “her” “its” “person” or “individual”) shall not be
interpreted to preclude the application of any provision of this Agreement to
any individual or entity; (iii) the word “or” shall not be applied in its
exclusive sense; (iv) “including” shall mean “including, without limitation”;
(v) references to laws, Regulations and other governmental rules, as well as to
contracts, agreements and other instruments, shall mean such rules and
instruments as in effect at the time of 

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

       

      determination
(taking into account any amendments thereto effective at such time without
regard to whether such amendments were enacted or adopted after the effective
date of this Agreement) and shall include all successor rules and instruments
thereto; (vi) references to “$” or “dollars” shall mean the lawful currency of
the United States; (vii) references to “Federal” or “federal” shall be to laws,
agencies or other attributes of the United States (and not to any State or
locality thereof); (viii) the meaning of the terms “domestic” and “foreign”
shall be determined by reference to the United States; (ix) references to “days”
shall mean calendar days; (x) references to months or years shall be to the
actual calendar months or years at issue (taking into account the actual number
of days in any such month or year); (xi) days, business days and times of day
shall be determined by reference to local time in Amarillo, Texas; and (xii) the
English language version of this Agreement shall govern all questions of
interpretation relating to this Agreement, notwithstanding that this Agreement
may have been translated into, and executed in, other
languages.

    

     

     

    ARTICLE II:

     

     

    RESEARCH
AND DEVELOPMENT

     

     

    Section 2.01.  AMAR
Obligations.

     

    (a) As soon
as reasonably practicable after the Effective Date, AMAR will make available all
AMAR Know-How to CYTOB for CYTOB's inspection and at CYTOB's request will
provide CYTOB with a copy of all AMAR Know-How in tangible form and a written
summary of all AMAR Know-How not in tangible form. In the event CYTOB request
that more than 1,000 pages be copied in connection with the foregoing, CYTOB
shall reimburse AMAR for AMAR’s actual out of pocket costs for making copies in
excess of 1,000 pages, CYTOB shall pay AMAR such amounts within 30 days
following CYTOB’s receipt of an invoice therefore accompanied by documentation
reasonably supporting such invoice.

     

     

    (b) AMAR
agrees to maintain, or ask HBL to maintain, the Drug Master File (“DMF”) for HBL
IFN up-to-date at all times during the TERM. AMAR shall cooperate fully with
CYTOB in order to obtain all the Marketing Authorizations, which now are or
later become necessary to develop, Manufacture, use, market or sell any Product.
Such cooperation shall include, but not be limited to, AMAR providing CYTOB with
the AMAR Know-How and AMAR appearing at and participating in meetings with
regulatory agencies at the reasonable request of CYTOB to assist CYTOB in
obtaining such Marketing Authorizations as are now required, or may in the
future be required to Manufacture, use, market or sell any Product. AMAR shall
execute, or ask third parties to execute, upon request by CYTOB, any and all
documents reasonably necessary to obtain such Marketing Authorizations. CYTOB
(with its written pre-approval) shall reimburse AMAR for any reasonable
out-of-pocket costs, including reasonable attorney's fees, employee salary and
travel expenses incurred by AMAR in connection with such
cooperation.  If CYTOB will not approve the reimbursement, then AMAR
shall not be required to perform the task.

     

    
      
         

      

      
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    (c) AMAR
shall provide to CYTOB or any sub-licensee of CYTOB, at CYTOB's request and,
unless otherwise set forth in this Agreement, CYTOB’s sole expense, with AMAR
Technology reasonably necessary to enable CYTOB or such sub-licensee to exercise
fully its rights and fulfill its obligations under this Agreement.

     

     

    (d) AMAR and
CYTOB will review the Patent Rights related to CYTOB’s activities in the
Territory.  Once the Parties agree to a strategy, CYTOB will make its
best efforts to maintain all necessary AMAR Technology in the Territory (see
Section 11.01).

     

     

    Section
2.02.  CYTOB Obligations.

     

    (a) CYTOB
will use commercially reasonable efforts to timely complete at the sole cost and
expense of CYTOB (i) clinical trials and
development of Product for the treatment of the Licensed Indications, (ii) animal toxicology and other pre-clinical
studies required for commercial launch of the Product, and
(iii) other tasks supporting
commercialization of the final formulation of the Product.

     

     

    (b) CYTOB
shall use commercially reasonable efforts to timely secure any and all
Governmental Approvals in the Territory and shall own and maintain all
Governmental Approvals and related information as provided herein. The Parties
agree and acknowledge that Governmental Approval for the Product will be sought
in the Territory.

     

     

    (c) CYTOB
shall maintain records in sufficient detail and in good scientific manner
appropriate for patent and regulatory purposes and shall properly reflect all
work done and results achieved in the performance of its duties hereunder
(including all data in the form required to be maintained under any Applicable
Laws), and any subsequent pre-clinical or clinical studies (the “Clinical
Records”). The Clinical Records generated in the Territory shall be owned by
CYTOB and shall be considered Confidential Information of CYTOB and
AMAR.  AMAR may request the Clinical Records, and CYTOB shall provide
the Clinical Records to AMAR.  These records include books, records,
reports, research notes, charts, graphs, comments, computations, analyses,
compilations, recordings, photographs, computer programs and documentation
thereof, computer information storage means, samples of materials and other
graphic or written data generated in connection with CYTOB's research and
development activities with respect to the Product, except for those records and
data prohibited to bring out of the Territory.

     

     

    (d) In the
event AMAR requests that more than 1,000 pages be copied in connection with the
foregoing, AMAR shall reimburse CYTOB for CYTOB’s actual out of pocket costs for
making copies in excess of 1,000 pages, AMAR shall pay CYTOB such amounts within
30 days following AMAR’s receipt of an invoice therefore accompanied by
documentation reasonably supporting such invoice.

     

     

    (e) AMAR has
the right, upon fifteen business days’ prior written notice to CYTOB, to review
the Clinical Records associated with human oral IFN upon request and during
normal business hours, and CYTOB shall, subject to Applicable Laws, provide AMAR
upon request with a copy of all requested Clinical Records, at AMAR’s cost, to
the extent reasonably required for the exercise of AMAR's rights under this Agreement. AMAR may use the Clinical Records and
the summaries thereof for commercial and regulatory approval purposes. If AMAR
wants to provide a non-governmental entity Third Party with the Clinical Records
or a summary thereof or use information contained in such records for a
commercial purpose, AMAR may do so as long as the non-governmental entity Third
Party agrees to the Confidentiality provisions of Section
15.01.

     

    
      
         

      

      
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    (f) Failure
of CYTOB to commercialize any Product in a country of the Territory within two
(2) years from the date of AMAR’s first FDA approval to treat a human or animal
disease shall cause that country to be deleted from the Territory.

     

     

    (g) Failure
of CYTOB to commercialize Product for a clinical indication within two (2) years
from the date of AMAR’s first FDA approval to treat a human or animal disease
shall cause that clinical indication to be deleted from the
Agreement.

     

     

    Section
2.03.  Availability of Resources; Cooperation.

     

    Each
Party shall maintain laboratories, offices and/or other facilities reasonably
necessary to carry out the activities to be performed by such Party hereunder.
Upon reasonable advance notice, each Party agrees to make its employees and
non-employee consultants reasonably available at their respective work locations
to consult with the other Party on issues arising during the collaboration and
in connection with any request from any Governmental Authority, including
regulatory, scientific, technical and clinical testing issues.  Such
meeting may be arranged through the internet or site visit. The meetings should
be arranged within 15 working days after the requests, where
feasible.

     

     

    Section 2.04.  Reporting Obligations of
CYTOB.

     

    On or
prior to December 31st of each year during the TERM of this Agreement CYTOB
shall provide AMAR with a report of ongoing development efforts, including a
report of efforts by CYTOB with respect to clinical testing, regulatory approval
efforts, marketing/sales strategy, and any other areas into which CYTOB's
reasonable business efforts in accordance with this paragraph may reasonably be
categorized. Such report shall be provided in English and shall be accompanied
by samples of labeling, instructions, promotional and other support materials,
if any, developed for CYTOB's sales force, patients, physicians, or other
outside parties.

     

     

    ARTICLE
III:

     

     

    LICENSE

     

     

    Section 3.01.  License and Supply
Grant.

     

    Subject
to the terms of this Agreement and the Existing Licenses, AMAR hereby grants to
CYTOB:

     

     

    (a) an
exclusive sublicense, with rights to sublicense (subject to Section 16.12),
under the AMAR Technology to use the AMAR Technology to market, advertise,
promote, Manufacture, offer for sale, sell, and distribute the Product in the
Territory; and

     

     

    (b) an
exclusive sublicense, with rights to sublicense (subject to Section 16.10),
under all rights granted to AMAR pursuant to the HBL Agreement to market,
advertise, promote, Manufacture, offer for sale, sell, and distribute the
Product in the Territory.

     

    
      
         

      

      
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    In addition to the purchase price of
Product, if CYTOB licenses the right to a third unrelated party (except for
those who are CYTOB’s subsidiaries), AMAR shall receive _____ percent (_____%)
of any license fee, option fee, or other payment, which CYTOB may receive for
the sublicense of rights under this Agreement to the sale and/or use of
Product.

     

     

    Section
3.02.  Restrictions. 

     

    CYTOB
shall have the right to use and sell Product only in the Territory and only for
use in the treatment of the Licensed Indications. CYTOB shall not seek
customers, establish any branch or maintain any distribution depot for Product
in any country outside the Territory. CYTOB shall not sell Product to any
customer in any country outside the Territory or to any customer in the
Territory if, to the knowledge of CYTOB, such customer intends to resell such
Product in any country outside the Territory.

     

     

    Section
3.03.  Retained Rights.

     

    AMAR
retains all rights other than as set forth in this Agreement to HBL IFN and IFN,
including without limitation, the right to test, develop, license, sublicense,
market, distribute or otherwise use IFN and HBL IFN for treatment of the
Licensed Indications outside the Territory.

     

     

    ARTICLE IV:

     

     

    PAYMENTS

     

     

    Section
4.01.  Initial Fee.

     

    On the
Effective Date, as an initial license fee, CYTOB shall pay to AMAR a sum equal
to _______________ US Dollars ($________).  This fee will be wired
into AMAR’s designated bank account within 5 days of the Effective Date. Failure
to make this initial payment shall cause the Agreement to be terminated and to
be of no further force or effect (except for Article XV). Upon receipt of the
initial license fee, AMAR shall provide CYTOB with all the existing regulatory
documents in AMAR’s possession that are needed to obtain government approval for
trials in a country in the Territory.  The documents include those
that submitted to FDA and SFDA for clinical trials.

     

     

    Section
4.02.  Stock Purchase.

     

    (a) On the
Effective Date, CYTOB shall purchase via a private placement three million
shares of common stock at $0.10 per share from AMAR for a total investment of
three hundred thousand ($300,000) dollars.  CYTOB shall be granted
three million warrants to purchase common stock in the next 3 years for twenty
cents ($0.20) per share.  The Stock shall be restricted under SEC Rule
144 and con not be sold for 6 months.  Since this is a Stock purchase,
the full amount of three hundred thousand dollars will be
delivered.  Stock purchase funds will be wired into AMAR’s designated
bank account on or before February 16, 2009. Failure to make this stock purchase
payment shall cause the Agreement to be terminated and to be of no further force
or effect (except for Article XV).

     

    
      
         

      

      
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    (b) Subject
in each case to AMAR’s Bylaws and Securities and Exchange Commission Rules and
Regulations (including those applicable to the solicitation of proxies for
annual and special meetings of shareholders), AMAR’s management shall, upon
completion of the stock purchase described herein above, take such steps as may
be required and lawfully permitted to elect a nominee of CYTOB to the Board of
Directors of AMAR; and to have such Director (or other nominee of CYTOB)
reelected at the next ensuing annual meeting of shareholders of
AMAR.

     

     

    Section
4.03. Minimum Yearly Purchase
Order and Minimum Sales.

    


    CYTOB shall meet or exceed the
following annual minimum total sales. If CYTOB does not achieve these levels,
AMAR will have the right to terminate the Agree­ment. Year 1 means the first
12 months after all approvals are obtained in one country in the
territory:

    Year
1                                                      $__________

    Year
2                                                      $__________

    Year 3 and
Beyond                               
$__________

     

    Section
4.04.  Reports. 

     

    CYTOB
shall furnish to AMAR a quarterly written report (in sufficient detail to
determine the relevant amounts and dates specified in this Section 4.05), which
report shall contain at a minimum (a) the number of lozenges sold; (b) the
calculation of Net Sales; (c) royalties payable in U.S. dollars, if any, which
shall have accrued hereunder based upon Net Sales; (d) withholding taxes, if
any, required by law to be deducted with respect to such sales; (e) the dates of
the First Commercial Sale of any Product; and (f) the exchange rates, if any,
used to determine the amount of United States dollars (collectively, the
“Royalty Statement”). Reports shall be due on the 45th day
following the close of each quarter.

     

     

    Section
4.05. Records and Audits.

     

    During
the TERM and for a period of two years thereafter or upon written notice to
CYTOB received prior to the expiration of such two year period as otherwise
required in order for AMAR to comply with Applicable Law, CYTOB shall keep
complete and accurate records in sufficient detail to permit AMAR to confirm the
completeness and accuracy of the information presented in each Royalty Statement
and all payments due hereunder. CYTOB shall permit an independent, certified
public accountant reasonably acceptable to CYTOB to audit and/or inspect those
records of CYTOB (including financial records) that relate to number of lozenges
sold and Net Sales for the sole purpose of verifying the completeness and
accuracy of the Royalty Statements and, the calculation of Minimum Royalties,
Net Sales and confirming royalty payments for the Product, during the preceding
calendar year. Such inspection shall be conducted during CYTOB’s normal business
hours, no more than once in any 12-month period and upon at least thirty (30)
days’ prior written notice by AMAR to CYTOB. If such accounting firm concludes
that such payments were underpaid during the periods reviewed by such
accountants, CYTOB shall pay AMAR the amount of any such underpayments, within
thirty (30) days of the date AMAR delivers to CYTOB such accounting firm's
report so concluding that such payments were underpaid.  If CYTOB
fails to remit the payment within thirty (30) days, interest at a rate equal to
the Prime Rate of Interest shall be imposed starting from the 31st
day.  If such accounting firm concludes that such payments were
overpaid during such period, AMAR shall pay to CYTOB the amount of any such
overpayments, without interest, within thirty (30) days of the date AMAR
delivers to CYTOB such accounting firm's report so concluding that such payments
were overpaid. If AMAR fails to remit payment within 30 days, interest at a rate
equal to the Prime Rate shall be imposed starting from the 31st
day.  Provisions in this Section 4.06 requiring either Party to pay
interest shall not prevent the other Party from immediately taking all actions
necessary to collect all amounts due, or to enforce any other remedy under this
Agreement.  AMAR shall bear the full cost of such audit unless such
audit discloses an underpayment by more than 5% of the amount due during such
period. In such case, CYTOB shall bear the full cost of such audit. CYTOB shall
provide AMAR a copy of the CYTOB audited financial statements with sufficient
detail to show the portion of revenue from oral interferon sales each year to be
delivered to AMAR within 3 months of the end of CYTOB’s fiscal
year.

     

    
      
         

      

      
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    Section
4.06.  Exchange Rate; Manner and Place of
Payment. 

     

    All
payments hereunder shall be payable in United States dollars. With respect to
each calendar quarter, whenever conversion of payments from any foreign currency
shall be required, such conversion shall be made at the rate of exchange
reported in The Wall Street Journal on the last business day of the applicable
calendar quarter. All payments owed under this Agreement shall be made by wire
transfer to a bank account designated in writing by AMAR, unless otherwise
specified in writing by AMAR.

     

     

    Section
4.07. Late Payments. 

     

    Unless
otherwise provided in this Agreement, upon the failure of CYTOB to pay any
amount due under this Agreement within fifteen (15) days after receipt of notice
by AMAR that such amount has become due and payable and has not been paid, CYTOB
shall pay interest to AMAR on such amount from the date such amount is due under
this Agreement at the rate of 12% per annum calculated on the number of days
such payment is delinquent.  Nothing in this Section 4.05 shall
relieve CYTOB of CYTOB’s obligation to make payments.

     

     

    Section
4.08.  Taxes.  

     

    All taxes
levied on account of the payments accruing to AMAR under this Agreement shall be
paid by AMAR for its own account, including taxes levied thereon as income to
AMAR. If provision is made in law or regulation for withholding, such tax shall
be deducted from the payment made by CYTOB, paid to the proper taxing authority
and a receipt of payment of the tax secured and promptly delivered to AMAR. 

     

     

    


     

    Section
4.09.  Other Payments

     

    Further
payments shall be made as provided in ARTICLE VII or elsewhere in this
agreement.

     

    
      
         

      

      
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    ARTICLE
V:

     

     

    TERM
AND TERMINATION

     

     

    Section
5.01. Term. 

     

    This
Agreement will take effect on the Effective Date and will remain in force
through February 28, 2024 (the “TERM”) after which it shall automatically be
renewed for successive periods of one year each, unless terminated earlier under
provisions of this Article V or if notice of termination is given by either
Party at least one hundred twenty (120) days prior to the December 31st
anniversary of any year after 2023.

     

     

    Section
5.02. Termination By CYTOB. 

     

    CYTOB may
terminate this Agreement by notice to AMAR as follows:

     

     

    (a) immediately,
if CYTOB reasonably determines based upon the clinical trials and after
consultation with AMAR that receipt of Governmental Approval for a Product is
unlikely, and/or

     

     

    (b) immediately,
if CYTOB reasonably determines based upon the market competition and after
consultation with AMAR that the profitability of the Product is
unlikely.

     

     

    Section
5.03.  Termination by AMAR.

     

    AMAR may
terminate this Agreement by written notice to CYTOB, upon any of the following
conditions:

     

     

    (a) if CYTOB
shall fail to make any payments to AMAR on the date on which such payments are
due hereunder and such failure continues for more than 10 days after CYTOB’s
receipt of notice of such failure to pay; or

     

     

    (b) if CYTOB
shall commit any material breach of the provisions of this Agreement other than
a breach set forth in subsections (a) above, provided that AMAR has first given
CYTOB notice specifying the details of the material breach, and CYTOB has not
cured such material breach, if such breach is capable of being cured within such
time period, within 45 days of the effective date of such notice;
or

     

     

    (c) if CYTOB
fails to launch and diligently market the product in the Territory within twelve
(12) months after obtaining all necessary government approvals.

     

     

    (d) if CYTOB
fails to use commercially reasonable efforts as required in Section 2.02
regarding at least one Licensed Human Indication, such failure shall be cause
for Termination of this Agreement.  For example, if CYTOB fails to
enroll patients in human clinical trials in one or more Clinical Indications
within two (2) years of the Effective Date, then the Agreement shall be
terminated.

     

     

    (e) anytime
after 2/28/2024 with or without cause upon 3 months prior written notice to
CYTOB, or,

     

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

     

    (f) if
the HBL Agreement is terminated, 120 days after such termination; provided,
however, in such event, ABI will use its best efforts both before and after
termination of the HBL Agreement to obtain a modification or extension of the
HBL Agreement, and if such efforts are unsuccessful, or if for any other reason
AMAR should no longer be able to supply CYTOB with Product as required by this
Agreement, CYTOB may thereafter attempt to negotiate and enter into an agreement
with HBL pursuant to which HBL will supply CYTOB with Product.

     

     

    Section
5.04.  Termination Upon Certain Events.


     

    This
Agreement may be terminated by the Party specified below immediately upon
written notice to the other Party of the occurrence of either of the following
events:

     

     

    (a) by either
Party upon a cessation of operations in the ordinary course of the other Party
or the institution by or against such Party as debtor of any proceeding (whether
voluntary or involuntary) in bankruptcy or for dissolution, liquidation,
reorganization, arrangement or the appointment of a receiver, trustee or
judicial administrator (or the equivalent thereof in the jurisdiction in
question) or any other proceeding under the law for the relief of debtors, if,
in the case of an involuntary proceeding, the same shall not have been dismissed
or stayed within 45 days after its institution; or

     

     

    (b) by either
Party if the other Party makes an assignment for the benefit of, or arrangement
with, its creditors or becomes unable to pay its debts as they become
due.

     

     

    (c) A Party's
failure to terminate this Agreement for any of the reasons specified in this
Section 5.04 shall not in any way be deemed a waiver of such Party's rights in
respect thereof or otherwise limit its rights to enforce the obligations
hereunder.

     

     

    Section
5.05.  Remedies. 

     

    All of
the non-breaching Party's remedies shall be cumulative, and the exercise of one
remedy hereunder by the non-defaulting Party shall not be deemed to be an
election of remedies. These remedies shall include the non-breaching Party's
right to sue for damages for such breach without terminating this
Agreement.

     

     

    Section
5.06. Effect of Termination. 

     

    In the
event of termination of this Agreement:

     

     

    (a) Neither
Party shall be discharged from any liability or obligation to the other Party
that became due or payable prior to the effective date of such
termination;

     

     

    (b) CYTOB
shall discontinue, and shall cause its Affiliates and sublicensees to
discontinue, the sale of the Product; CYTOB shall have a period of six months to
sell off its inventory of Product existing on the date of termination;
and

     

     

    (c) In the
event of termination by AMAR under Section 5.03, all duties of AMAR (other than
under Section 5.08) and all rights and duties of CYTOB (other than under
Sections 5.08, 2.02(c), 2.02(e), 2.04, 4.04 and 4.05) under this Agreement shall
immediately terminate without the necessity of any action being taken either by
AMAR or by CYTOB.

     

    
      
         

      

      
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    Section
5.07. Bankruptcy. 

     

    In the
event that AMAR as a debtor in possession, or a trustee in bankruptcy under the
U.S. Bankruptcy Code, rejects this Agreement or CYTOB’s right to continue the
licenses under this Agreement, CYTOB may elect to retain its license rights
under the Agreement by paying all applicable fees, and otherwise acting in
accordance with Section 365(n) of the U.S. Bankruptcy Code. Thereafter, neither
AMAR as debtor in possession, nor a trustee in bankruptcy, shall interfere with
the rights of CYTOB to use the AMAR Technology under this
Agreement.

     

     

    Section
5.08.  Continuing
Obligations.  

     

    Expiration
or termination of this Agreement shall not relieve the Parties of any obligation
accruing prior to such expiration or termination. Except as otherwise set forth
in this Agreement, the obligations and rights of the Parties under
Articles X, XIII, XIV (other than Section 14.03), and Sections 5.06-5.09,
and 12.02, and 15.01 (for the period set forth therein) shall survive expiration
or termination of this Agreement.

     

     

    Section
5.09. Return of Confidential Information.


     

    Except to
the extent necessary for CYTOB to exercise its rights to the AMAR Technology
under Section 5.07, within 30 days following the expiration or termination of
this Agreement, each Party shall return to the other Party, or destroy, upon the
written request of the other Party, any and all Confidential Information of the
other Party in its possession and upon a Party's request, such destruction (or
delivery) shall be confirmed in writing to such Party by a responsible officer
of the other Party. Notwithstanding the provisions of this Section 5.09, either
Party may retain one (1) copy of such Confidential Information for the sole
purpose of determining its continuing confidentiality obligation to the other
Party under this Agreement.

     

     

    ARTICLE VI:

     

     

    SUPPLY,
MANUFACTURE AND PURCHASE OF PRODUCT

     

     

    Section
6.01.  Supply of Product and Bulk
Interferon.

     

    Subject
to the terms of this Agreement, AMAR agrees to
ask HBL to Manufacture or cause to be Manufactured for, and sell exclusively to
CYTOB in the Territory, CYTOB’s total requirements for the Product in the
Territory on the terms and conditions set forth herein. AMAR shall provide Units
from HBL as directed in a forecast by CYTOB, at CYTOB’s sole discretion. CYTOB
may, at CYTOB’s sole expense, subcontract any part of the manufacturing of bulk
IFN into Product or packaging for the Product to Third Parties provided the
Product and the facilities used to package the Product continue to meet the
requirements set forth in this Agreement.
CYTOB will bear the cost of validation and necessary stability testing, and any
manufacturing setup costs or up front fees.

     

    
      
         

      

      
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    Section
6.02. Supply and Manufacturing Rights.

     

    (a)
During the TERM, CYTOB shall have the right to purchase Product from AMAR in
accordance with the terms of this Agreement.

     

     

    (b) If at
any time during the TERM AMAR shall have both (i) materially breached this
Agreement, and (ii) filed for protection under the bankruptcy laws of the United
States, CYTOB may thereafter attempt to negotiate and enter into an agreement
with HBL pursuant to which HBL will supply CYTOB with IFN.

     

     

    Section
6.03.  Quality Assurance.


     

    AMAR
shall ask HBL to Manufacture or cause to be Manufactured the Product in
accordance with the Specifications and this Agreement. CYTOB shall promptly
notify AMAR in writing of any changes required by a Governmental Authority in
the Specifications or CYTOB’s quality assurance procedures that would render
AMAR or its supplier unable to supply the Product in accordance with the terms
of this Agreement. The Parties agree to develop and execute an appropriate
action plan in such situation. Any additional costs or expenses shall be paid by
CYTOB.

     

     

    Section
6.04.  AMAR's Duties. 

     

    AMAR
agrees to ask HBL to furnish to CYTOB with every Shipment a written certificate
of analysis and Certificate of Compliance that confirms conformity of the
Product to the Specifications and this Agreement. CYTOB shall analyze each
Shipment promptly upon receipt in accordance with Section 8.02. In addition, AMAR shall as HBL
to:

     

     

    (a) provide CYTOB with written sampling and testing
procedures used by AMAR or its manufacturer to assure that the Product conforms
to the Specifications;

     

     

    (b) retain a sample of each batch of Product for a period
equal to the greater of (i) one year after the date of Manufacture of such
batch of Product or (ii) such period as required by Applicable Laws. Upon
the request of CYTOB, AMAR shall ask HBL to make such samples available to CYTOB
for inspection. The retained sample shall be sufficient in size to allow CYTOB
to perform tests to determine whether the Product meets the Specifications. AMAR
shall store the retained sample in accordance with the Specifications and
Applicable Law,

     

     

    (c) maintain records to ensure CYTOB’s ability to perform
a complete lot history via lot tracing of the Product,

     

     

    (d) keep on file all manufacturing records and analytical
results pertaining to the Manufacture of each batch of Product for a period
expiring not earlier than one year after the expiration date of the last lot of
the last batch of Product Manufactured and Shipped to CYTOB. AMAR shall make,
and shall cause any Third Party manufacturer to make, such records available to
CYTOB upon request,

     

     

    (e) provide
CYTOB with notice within 48 hours following AMAR's receipt of notification of
any scheduled inspection, and as soon as possible following AMAR's receipt of
notification of any unscheduled inspection, by any Governmental Authority of
AMAR's facilities, books or records, or of the facilities, books or records of
any subcontractor being utilized by AMAR to perform any portion or all of the
Manufacture or development of the Product. AMAR shall inform such Governmental
Authority that CYTOB may desire to be present at such inspection; provided that
CYTOB’s right to be present is subject to approval by such Governmental
Authority and subject to CYTOB being available at the time and date established
by such Governmental Authority and, with respect to any inspection of HBL's
facilities, HBL's consent to the presence of CYTOB at such inspection. AMAR
shall use reasonable efforts to secure a time and date for such inspection that
is reasonably acceptable to CYTOB; provided, however, that AMAR alone shall have
the right to make the final decision on all such matters;

     

    
      
         

      

      
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    (f) maintain
at its expense any and all licenses, permits and consents necessary or required
to perform its obligations under this Agreement; and

     

     

    (g) ensure
that all Products delivered, have a remaining shelf life from the time of
manufacture of not less than three years if refrigerated to at least 2-8 degrees
Centigrade or one year, if maintained at or below 25 degrees
centigrade.

     

     

    Section
6.05.  CYTOB's Duties if Manufacturing.

     

    CYTOB
agrees to furnish to AMAR with every Shipment a written certificate of analysis
and Certificate of Compliance that confirms conformity of the Product to the
Specifications and this Agreement. AMAR shall analyze each Shipment promptly
upon receipt in accordance with Section 8.02. In addition, CYTOB
shall:

     

     

    (a) provide
AMAR with written sampling and testing procedures used by CYTOB or its
manufacturer to assure that the Product conforms to the
Specifications;

     

     

    (b) retain a
sample of each batch of Product for a period equal to the greater of
(i) one year after the date of Manufacture of such batch of Product or
(ii) such period as required by Applicable Laws. Upon the request of AMAR,
CYTOB shall make such samples available to AMAR for inspection. The retained
sample shall be sufficient in size to allow AMAR to perform tests to determine
whether the Product meets the Specifications. CYTOB shall store the retained
sample in accordance with the Specifications and Applicable Law,

     

     

    (c) maintain
records to ensure AMAR’s ability to perform a complete lot history via lot
tracing of the Product,

     

     

    (d) keep on
file all manufacturing records and analytical results pertaining to the
Manufacture of each batch of Product for a period expiring not earlier than one
year after the expiration date of the last lot of the last batch of Product
Manufactured by CYTOB. CYTOB shall make, and shall cause any Third Party
manufacturer to make, such records available to AMAR upon request.

     

     

    Section
6.06.  Failure to Supply.

     

    AMAR
shall immediately notify CYTOB if AMAR or HBL is unable to fill any purchase
order placed by CYTOB pursuant to Section 7.06,
and advise CYTOB of the revised delivery date. CYTOB shall then have the option
of terminating the purchase order without obligation of payment or of accepting
the revised delivery date. If AMAR or HBL is unable to cure to CYTOB’s
reasonable satisfaction the circumstances giving rise to such failure within 15
business days after such notice, CYTOB shall not be obligated to purchase any
further Product from AMAR under the then existing forecasts.

     

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

     

    Notwithstanding the foregoing, AMAR shall not
be deemed to be unable to fill any order placed by CYTOB if AMAR's inability to fill any order arises as a result of HBL’s
inability to fill any order or a _____% or greater increase in CYTOB’s order
over CYTOB’s immediately prior forecast. For example, if CYTOB’s forecast for
the initial three-month period was for _____ Units and CYTOB’s forecast for the
second three-month period was for _____ Units, then, if after the time the
second three-month forecast becomes firm pursuant to Section 7.06(a), CYTOB
increased its orders, AMAR or HBL would not be deemed to be unable to supply
Product for any amount in excess of _____ Units for such three-month
period

     

     

    Section
6.07.  Allocation. 

     

    If AMAR
is unable to supply all of the requirements of the Product, and quantities
ordered by CYTOB in accordance with Section 7.06, then AMAR shall allocate the
resources available to it so that CYTOB receives at least its proportional share
of available supplies as determined based on reasonable forecasts (taking into
consideration past sales and sales performance against forecast) of
CYTOB.

     

     

    Section
6.08. Records and Audits.  

     

    During
the TERM and for a period of two years thereafter or such longer period as is
required in order for CYTOB to comply with Applicable Law, AMAR shall keep
complete and accurate records in sufficient detail to permit CYTOB to confirm
the completeness and accuracy of the information presented in each invoice sent
to CYTOB pursuant to this Agreement and all payments made by CYTOB relying on
such invoices hereunder. AMAR shall permit an independent, certified public
accountant reasonably acceptable to AMAR to audit and/or inspect those records
of AMAR (including financial records) that relate to such invoices for the sole
purpose of verifying the completeness and accuracy of such invoices during the
preceding calendar year. Such inspection shall be conducted during AMAR's normal
business hours, no more than once in any 12-month period and upon at least ten
days prior written notice by CYTOB to AMAR. If such accounting firm concludes
that such payments were overpaid during the periods reviewed by such
accountants, AMAR shall pay CYTOB the amount of any such overpayments, plus
interest at a rate equal to the Prime Rate of Interest, within 30 days of the
date CYTOB delivers to AMAR such accounting firm's report so concluding that
such payments were overpaid. CYTOB shall bear the full cost of such audit unless
such audit discloses an overpayment by more than 5% of the amount due during
such period. In such case, AMAR shall bear the full cost of such
audit.

     

    
      
         

      

      
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    ARTICLE VII:

     

     

    PURCHASE
AND SALE

     

     

    Section
7.01.  Purchase Price, Payment, and Royalty

     

    AMAR
shall sell, and CYTOB shall purchase Product for human health at a purchase
price equal to $_____ per Unit (up to 200 IU) plus a _____ percent (_____%)
royalty on Net Sales in human health. AMAR agrees to provide the Units in
foil-wrapped strips of ten (2x5 arrangement). CYTOB agrees to package the
Product as needed for commercial sales.  The price per Unit for
clinical testing will be negotiated in good faith, but the price will depend on
volume and packaging needed.  If CYTOB wants to manufacture bulk IFN
into their own finished Product with concentration of no more than _____ IU of
IFN and _____ mg of ACM per lozenge and for human use, CYTOB shall pay AMAR
$_____ per lozenge plus _____ percent (_____%) of Net
Sales.  Alternatively, for animal health, CYTOB may purchase bulk HBL
IFN at $_____ per million IU and anhydrous crystalline maltose for __________
dollars ($________) per kilogram and pay _____ percent (_____%) royalty on Net
Sales for animal health.  AMAR shall invoice CYTOB for all Product
manufactured for CYTOB, which invoice shall be accompanied by reasonable
documentation supporting the amounts set forth in the invoice, and payment shall
be made to AMAR in full before CYTOB takes physical possession of
Product.  After payment, CYTOB will take possession of the Product at
AMAR’s manufacturing facility and CYTOB will be responsible for all costs
related to transportation of the Product.  The purchase price for
Product shall be adjusted annually to reflect any increase in the US producer’s
price index, drugs and pharmaceuticals, subdivision code 063
plus.  The purchase price for Product, bulk HBL IFN and anhydrous
crystalline maltose shall be adjusted to reflect any third party manufacturer or
HBL price increases to AMAR.

     

     

    Section
7.02. Labeling and
Artwork.

     

    After
execution of this Agreement, AMAR shall review and comment on any labeling and
proposed changes to the labeling of the Product and shall be entitled to
participate in discussions with the Governmental Authorities concerning any
labeling or proposed labeling change so long as CYTOB is purchasing the Product
from AMAR. Notwithstanding the above, CYTOB shall make the final decision with
regard to any labeling or labeling revisions

     

     

    Both
Parties will approve all artwork developed for inclusion in the Product
packaging, including carton labels, package inserts, etc., which approval will
not be unreasonably withheld, conditioned or delayed by either Party. If CYTOB
wishes to institute changes in labeling artwork, both Parties will develop a
mutually acceptable implementation schedule. The actual cost of implementing
such change will be at CYTOB’s sole cost and expense, including any materials
made obsolete by CYTOB’s changes to the artwork. Neither Party shall alter,
change or in any way modify the artwork, which has previously been approved, for
any reason, without prior written authorization from the other Party, which
approval will not be unreasonably withheld, conditioned or delayed, and provided
that such approved artwork shall conform to all Applicable Laws.

     

     

    CytoB
shall provide to AMAR, for its review, all marketing plans, promotional and
other support materials developed for its sales force, producers, or other
outside parties.

     

    
      
         

      

      
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    Section
7.03.  Purchase
Forms.  

     

    Purchase
orders, purchase order releases, confirmations, acceptances and similar
documents submitted by a Party in conducting the activities contemplated under
this Agreement are for administrative purposes only and shall not add to or
modify the terms of the Agreement. To the extent of any conflict or
inconsistency between this Agreement and any such document, the terms of this
Agreement shall govern.

     

     

    Section
7.04.  Confirmation.


     

    AMAR
shall confirm each purchase order within ten business days from the date of
receipt of a purchase order and shall supply the Product within a maximum of 30
days from the date of acceptance of a purchase order, or later if so specified
in the purchase order. Failure of AMAR to confirm any purchase order shall not
relieve AMAR of its obligation to supply Product ordered by CYTOB in conformity
with this Agreement.

     

     

    Section
7.05.  Delivery.

     

    Delivery
for Product shall be at AMAR's or its subcontractor's facility, which is
currently located in Okayama, Japan, or such other location designated by AMAR
as CYTOB may agree to in writing. Product shall be delivered, not cleared for
export, to the carrier nominated by CYTOB at the designated location, and CYTOB,
or its designated carrier, shall be responsible for loading and shipping to any
country in the Territory. Title to any Product purchased by CYTOB shall pass to
CYTOB upon the earlier of (a) a common carrier accepting possession or control
of such Product, or (b) passage of such Product from the loading dock of AMAR's
or its subcontractor's facilities to CYTOB or its agent.

     

     

    Section
7.06.  Forecasts and
Orders.

     

    Not later
than six months after submission of the NDA for a Product or other applicable
regulatory filing, CYTOB will provide AMAR with a 12-month forecast of CYTOB’s
requirement of each Product, which forecast will include designation of whether
such Product shall be provided in bulk or Unit form, for which an NDA, or other
applicable regulatory filing, has been submitted, on a Product basis, as
follows:

     

     

    (a) During
the period commencing six months after submission of an NDA, or other applicable
regulatory filing, for a Product through the end of the fourth full calendar
quarter following the First Commercial Sale of that Product, the forecasts shall
be provided quarterly, no less than 45 days prior to the beginning of each
quarter. Said requirements will be based on standard production planning
parameters, including sales forecasts, sales demand forecasts, promotional
forecasts, inventory requirements, and the like. The first two quarters of the
12-month forecast will be stated in monthly requirements. AMAR will inform HBL
and ask HBL to stock a minimum amount of Product equal to the second two
quarters of the 12-month forecast.  The first three months of the
12-month forecast will be firm orders to purchase. The second three months will
be allowed to be flexed from the previous forecast by plus or minus
­­­­­_____% per month until fixed by the subsequent
forecast; provided that the aggregate adjustment from the quantity set forth in
the previous forecast for such three-month period shall not exceed _____% in
aggregate during that three-month period. For example, if CYTOB’s forecast for
the first three months was for _____ Units and its forecast for the second three
months was for _____ Units, the maximum number of Units CYTOB could order at the
time the second three-month period becomes fixed would be _____ Units (i.e.,
_____% of _____ Units plus the _____ Units originally forecast). The last two
quarters of any 12-month forecast will be an estimate and not
binding.

     

    
      
         

      

      
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    (b) Following
the end of the fourth full calendar quarter following the First Commercial Sale
of a Product, CYTOB will provide to AMAR a rolling 12-month forecast for each
Product with the first three months of the rolling 12-month forecast a firm
order to purchase. Each forecast under this subsection (ii) shall be provided
monthly, no less than 20 days prior to the beginning of each month. All orders
will be for full batch quantities.

     

     

    It is
understood that AMAR will not maintain Product inventory. Nothing in this
Agreement shall obligate AMAR to stock Product.

     

     

     CYTOB
agrees to purchase a sufficient amount of Product to enable CYTOB to carry
sufficient inventory to allow for fluctuations in sales demand so as to allow
AMAR reasonable lead-time to meet increased demand. AMAR will use commercially
reasonable efforts to meet any increase in demand in excess of the allowed
adjustment, but will not be obligated to do so. All forecasts will be made by
CYTOB to AMAR in good faith based upon standard commercial parameters. From time
to time after the Effective Date, the Parties shall consider whether, in light
of market demand, manufacturing capacity, inventory levels and other pertinent
factors, to revise the schedule for delivery of forecasts and, if appropriate,
negotiate in good faith to revise such schedule. 

     

     

    ARTICLE
VIII:

     

     

    WARRANTY,
REJECTION AND INSPECTIONS

     

     

    Section
8.01.  AMAR Warranty.

     

    AMAR
represents and warrants to CYTOB that the
Product delivered pursuant to this Agreement (a) shall comply with the Specifications and this Agreement and
conform to the certificate of analysis for each such Product; (b) are not adulterated or misbranded under
Applicable Laws; and (c) at the time of
Manufacture and Shipment to CYTOB, will be and are free from any failure or
defects.

     

     

    EXCEPT AS OTHERWISE SET FORTH HEREIN, AMAR
MAKES NO OTHER WARRANTIES OF ANY OTHER KIND, INCLUDING BUT NOT LIMITED TO ANY
WARRANTY OF MERCHANTABILITY OR FITNESS OF THE PRODUCT FOR ANY PURPOSE, AND AMAR
EXPRESSLY DISCLAIMS ANY SUCH OTHER WARRANTIES WITH RESPECT TO THE PRODUCT,
EITHER EXPRESSED OR IMPLIED.

     

     

    Section
8.02.  Rejection of
Product for Failure to Conform to Specifications. 

     

    CYTOB
shall have 45 days after the receipt of any Shipment to determine conformity of
the Shipment to the Specifications and/or Applicable Laws, except for hidden
defects. A “hidden defect” shall mean a defect in the Product not discovered by
CYTOB during its testing of the Product in accordance with generally accepted
industry testing procedures and which would not be a defect normally expected to
be discovered in accordance with such testing. If testing of such Shipment shows
a failure of the Shipment to meet the Specifications and/or Applicable Laws,
CYTOB may return the entire Shipment, or any portion thereof, to AMAR at AMAR's
expense within a reasonable time following the above described testing, provided
that notice of non-conformity is received by AMAR from CYTOB within 45 days of
CYTOB’s receipt of said Shipment. CYTOB shall have the right to request that
AMAR provide to CYTOB, within 30 days after such notice is received by it,
Product that meets the Specifications and Applicable Laws or to promptly provide
CYTOB with full credit for the Purchase Price paid by CYTOB for the returned
Product. In the case of a hidden defect, CYTOB shall have the right to request
that AMAR provide to CYTOB, within thirty (30) days after a notice concerning a
hidden defect is received by CYTOB, Product that meets the Specifications and
Applicable Laws or to promptly provide CYTOB with full credit for the Purchase
Price paid by CYTOB for the returned Product. In either case, the cost of
freight and handling to return or replace Product or shall be at the expense of
AMAR. If CYTOB does not notify AMAR of the non-conformity of the Product within
45 days of receipt of said Shipment, the Product shall be deemed to meet the
Specifications (including those related to 

     

    
      
         

      

      
        23

        
          

        

      

      
         

      

       

      packaging
of the Product) and Applicable Laws, except with respect to hidden defects.
Notwithstanding anything in this Agreement to the contrary, the Parties may
agree to a return of the Product or an adjustment in the Purchase Price in the
event of any failure or defect in the Product. Should there be a discrepancy
between CYTOB’s test results and the results of testing performed by AMAR, such
discrepancies shall be finally resolved by testing performed by an independent
Third Party mutually agreed upon by CYTOB and AMAR. The costs of such testing
shall be borne by the Party against whom the discrepancy is resolved. In the
event Product have been previously returned to AMAR and such independent Third
Party determines that the Product meets the Specifications, CYTOB shall be
responsible for all costs associated with the return.

    

     

     

    Section
8.03.  CYTOB Inspections.

     

    AMAR shall ask HBL upon reasonable (but
not less than fifteen (15) days) prior written notice by CYTOB and during normal
business hours to allow CYTOB to inspect and audit AMAR's facilities and the
facilities of HBL or other subcontractors of AMAR used to Manufacture the
Product, twice annually, to confirm that the such facilities and the equipment,
personnel and operating and testing procedures used by AMAR or such
subcontractors in the Manufacture, testing, storage and distribution of the
Product are in compliance with Applicable Laws and the Governmental Approvals;
provided that such inspection does not interfere with AMAR's or such
subcontractor's normal operations or cause AMAR or such subcontractor's to
violate or be in breach of any confidentiality agreements with any Third
Parties.

     

     

    ARTICLE IX:

     

     

    REGULATORY
COMPLIANCE

     

     

    Section
9.01. Maintenance of Marketing
Authorizations. 

     

    CYTOB
will own all Marketing Authorizations. CYTOB agrees, at its sole cost and
expense, to maintain the Marketing Authorizations including obtaining any
variations or renewals thereof, including all fees and licenses, including user
fees, related to the Manufacture of the Product by CYTOB. Each Party agrees that neither it nor its Affiliates or
permitted sublicensees will do anything to adversely affect a Marketing
Authorization.

     

    
      
         

      

      
        24

        
          

        

      

      
         

      

    

     

    Section
9.02. Adverse Drug Event Reporting
and Phase IV Surveillance.

     

    Each
Party, including its permitted sublicensees, shall advise the other Party, by
telephone or facsimile, immediately but in no event later than 24 hours after a
Party, or its sublicensees, becomes aware of any potentially serious or
unexpected adverse event (including adverse drug experiences, as defined in
Applicable Laws) involving the Product (each, an “ADE”). Such advising Party
shall provide the other Party with a written report delivered by confirmed
facsimile of any adverse reaction, stating the full facts known to such Party,
including customer name, address, telephone number, batch, lot and serial
numbers, and other information as required by Applicable Laws. During the TERM,
CYTOB shall have full responsibility for (i) monitoring such adverse reactions;
and (ii) data collection activities that occur between CYTOB and the patient or
medical professional, as appropriate, including any follow-up inquiries which
CYTOB or AMAR deem necessary or appropriate.

     

     

    In the
event either Party requires information, regarding adverse drug events with
respect to reports required to be filed by it in order to comply with Applicable
Laws, including obligations to report ADEs to the Governmental Authorities, each
Party agrees to provide such information to the other on a timely
basis.

     

     

    The
Parties agree to follow CYTOB’s standard operating procedure for reporting and
identifying adverse drug reactions (the “SOP”) in effect from time to time, a
copy of which CYTOB will provide to AMAR. In the event the SOP is modified or
amended during the TERM, CYTOB shall provide AMAR with copies of any such
modification or amendment to the SOP for AMAR's prior approval, which will not
be unreasonably withheld, conditioned or delayed, at least five business days
prior to such amendment taking effect. CYTOB shall designate a qualified person
under Applicable Laws to be responsible for ADE reporting in each country in the
Territory.

     

     

    If the
report of an ADE causes a Governmental Authority to request a labeling revision
as a result of an ADE or that a Phase IV surveillance program be conducted, then
the Parties shall promptly enter into discussions and shall mutually agree on
all of the material terms and conditions of such labeling revision or Phase IV
surveillance program; provided, however the costs of such labeling revision or
Phase IV surveillance program shall be paid by CYTOB. CYTOB shall have the
authority to make the final decision with regard to any labeling revisions
provided that CYTOB will consider, in making its decision, the effect any such
labeling revisions will have on the marketing and sale of the Product outside
the Territory. CYTOB agrees that should Applicable Laws require that any such
interim data and results from such Phase IV surveillance programs be prepared in
written form, CYTOB shall comply with such requirements and provide all such
information in writing to AMAR and the Governmental Authorities in accordance
with Applicable Laws. CYTOB further agrees that AMAR shall have the right to
incorporate, refer to and cross-reference such results and underlying data in
any regulatory filing or any other filing or requirement AMAR is required to
undertake with respect to the Product, if any.

     

     

    Section
9.03.  Commercial Sale
Testing and Reporting. 

     

    If, after
the date of First Commercial Sale in any country in the Territory, a
Governmental Authority requires (a) additional testing, modification or
communication related to approved indications of the Product or (b) CYTOB to
conduct a Phase IV study as a condition to receiving a Marketing Authorization,
then CYTOB shall design and implement any such testing, modification or
communication and the costs shall be paid by CYTOB.

     

    
      
         

      

      
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    Section
9.04. Assistance.


     

    Each
Party shall provide reasonable assistance to the other at the other's request,
in connection with their obligations pursuant to this Article IX, subject to
reimbursement of all of its out-of-pocket costs by the requesting
Party.

     

     

    Section
9.05.  Compliance.


     

    CYTOB
shall be responsible for compliance with Applicable Laws and the Governmental
Approvals relating to the design, possession, promotion, marketing, sale,
advertising and distribution of the Product and Units, including obtaining all
necessary permits, licenses and any other requirements relating to the import,
sale and distribution of the Product. AMAR shall be responsible for compliance
with Applicable Laws and Governmental Approvals relating to the Manufacture of
the Product, as applicable, and with cGMP relating to the Manufacture and
testing of the Product, as applicable. CYTOB and AMAR shall comply with all
Applicable Laws within the Territory as set forth in this Agreement, including
the provision of information by CYTOB and AMAR to each other necessary for AMAR
and CYTOB to comply with any applicable reporting requirements. Each Party shall
promptly notify the other Party of any comments, responses or notices received
from, or inspections by, the FDA, or other Governmental Authority, which relate
to or may impact the Product or the Manufacture of the Product or the sales and
marketing of the Product, and shall promptly inform the other Party of any
responses to such comments, responses, notices or inspections and the resolution
of any issue raised by the FDA or other Governmental
Authority.

     

     

    ARTICLE X:

     

     

    REPRESENTATIONS,
WARRANTIES AND COVENANTS

     

     

    Section
10.01. Corporate Power.

     

    Each
Party hereby represents and warrants that such Party is duly organized and
validly existing under the laws of the state of its incorporation and has full
corporate power and authority to enter into this Agreement and to carry out the
provisions hereof.

     

     

    Section
10.02. Due Authorization.  

     

    Each
Party hereby represents and warrants that such Party is duly authorized to
execute and deliver this Agreement and to perform its obligations
hereunder.

     

     

    Section
10.03. Binding Obligation. 

     

    Each
Party hereby represents and warrants that this Agreement is a legal and valid
obligation binding upon it and is enforceable in accordance with its terms. The
execution, delivery and performance of this Agreement by such Party does not
conflict with any agreement, instrument or understanding, oral or written, to
which it is a party or by which it may be bound, nor violate any law or
regulation of any court, governmental body or administrative or other agency
having authority over it.

     

    
      
         

      

      
        26

        
          

        

      

      
         

      

    

     

    Section
10.04. Ownership of AMAR Rights. 

     

    As of the
Effective Date, AMAR represents and warrants that (a) it has all right, title
and interest in and to HBL IFN and the AMAR Technology necessary to grant CYTOB
the license hereunder, except with respect to CYTOB, it has not granted any
license to any Third Party under the AMAR Technology (or any component thereof)
and is under no obligation to grant any such license, (b) there are no
outstanding liens, encumbrances, agreements or understanding of any kind, either
written, oral or implied, regarding either the AMAR Technology, any component
thereof or the rights of AMAR in and to HBL IFN pursuant to the HBL
Agreement.

     

     

    Section
10.05. Material Agreements. 

     

    AMAR
represents and warrants that:

     

     

    (a) each
Material Agreement is valid, binding, and enforceable in accordance with its
terms against AMAR and, to the knowledge of AMAR, each other party thereto, and
is in full force and effect.

     

     

    (b) AMAR has
performed in all material respects all obligations imposed on it under each
Material Agreement and neither AMAR nor to the knowledge of AMAR, any other
party to a Material Agreement is in material default under any Material
Agreement nor is there any event that with notice or lapse of time, or both,
would constitute a material default by AMAR, or, to the knowledge of AMAR, any
other party thereunder;

     

     

    (c) true and
complete copies of each Material Agreement, including any amendments thereto,
have been delivered to CYTOB or its counsel by AMAR,

     

     

    (d) the HBL
Agreement was duly and validly executed in accordance with Applicable Law and no
person is materially renegotiating any amount paid or payable under either
agreement or any material term or provision of the HBL Agreement.

     

     

    Section
10.06. Adverse Properties. 

     

    AMAR
represents and warrants that it knows of no adverse effects or other properties
that may raise objections from the FDA or other Governmental Authorities or may
affect the use, effectiveness or merchantability of the Product.

     

     

    Section
10.07. Preservation of Name and Reputation.


     

    During
the TERM, each of the Parties shall endeavor to preserve the good name and
reputation of the other Party and shall conduct itself in a manner as to
maintain the good name and reputation of the other Party.

     

    
      
         

      

      
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    Section
10.08. Debarment. 

     

    During
the TERM, neither of the Parties shall utilize any employee, representative,
agent, assistant or associate who has been debarred pursuant to the Act in
connection with any of the activities to be carried out under this
Agreement.

     

     

    Section
10.09. Limitation on Warranties. 

     

    Neither
Party makes any warranties, express or implied, concerning the success or
commercial utility of the Product.

     

     

    Section
10.10. Limitation of Liability. 

     

    EXCEPT
FOR WILLFUL MISCONDUCT, GROSS NEGLIGENCE, BREACHES BY A PARTY OF SECTION 15.01
OR INFRINGEMENT OF THIRD PARTY PROPRIETARY RIGHTS, NEITHER PARTY SHALL BE
ENTITLED TO RECOVER FROM THE OTHER PARTY ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL
OR PUNITIVE DAMAGES IN CONNECTION WITH THIS AGREEMENT OR ANY LICENSE GRANTED
HEREUNDER.

     

     

    ARTICLE
XI:

     

     

    PATENTS
AND TRADEMARK

     

     

    Section
11.01.  Filing, Maintenance and Protection of Patents.

     

    AMAR has
no active patents on file in the Territory.  CYTOB may, at CYTOB's
expense, file, maintain and protect any future AMAR Patent Rights in the
Territory during the TERM.

     

     

    ARTICLE XII:

     

     

    COVENANTS
OF CYTOB AND AMAR

     

     

    Section
12.01. Further Actions. 

     

    Upon the
terms and subject to the conditions hereof, each of the Parties hereto shall use
its commercially reasonable efforts to (a) take, or cause to be taken, all
appropriate action and do, or cause to be done, all things necessary, proper or
advisable under Applicable Law or otherwise to consummate and make effective the
transactions contemplated by this Agreement, (b) obtain from Governmental
Authorities any consents, licenses, permits, waivers, approvals, authorizations
or orders required to be obtained or made by the Parties in connection with the
authorization, execution and delivery of this Agreement and the consummation of
the transactions contemplated by this Agreement and (c) make all necessary
filings, and thereafter make any other required submissions, with respect to
this transaction under (i) the Securities Exchange Act of 1934, as amended and
the Securities Act of 1933, as amended, and the rules and Regulations thereunder
and any other applicable federal or state securities laws and (ii) any other
Applicable Law. The Parties hereto shall cooperate with each other in connection
with the making of all such filings, including by providing copies of all such
documents to the other Party's counsel (subject to appropriate confidentiality
restrictions) prior to filing and, if requested, by accepting all reasonable
additions, deletions or changes suggested in connection therewith. Without
limiting the generality of the 

     

    
      
         

      

      
        28

        
          

        

      

      
         

      

       

      foregoing,
each Party shall take or omit to take such action as the other Party shall
reasonably request to cause the Parties to obtain any material Governmental
Approvals and/or the expiration of applicable waiting periods, provided that the
foregoing shall not obligate either Party to take or to omit to take any action
(including, without limitation, the expenditure of funds or any holding separate
and agreeing to sell or otherwise dispose of assets, categories of assets or
businesses) as in the good faith opinion of such Party, would cause a material
adverse effect on a Party.

    

     

    Section
12.02. Equitable Relief. 

     

    The
Parties understand and agree that because of the difficulty of measuring
economic losses to the non-breaching Party as a result of a breach of the
covenants set forth in this Article XII or Section 15.01, and because of the
immediate and irreparable damage that may be caused to the non-breaching Party
for which monetary damages would not be a sufficient remedy, the Parties agree
that the non-breaching Party will be entitled to seek specific performance,
temporary and permanent injunctive relief, and such other equitable remedies to
which it may then be entitled against the breaching Party. This Section 12.02
shall not limit any other legal or equitable remedies that the non-breaching
Party may have against the breaching Party for violation of the covenants set
forth in this Article XII or Section 15.01. Subject to Section 16.03, the
Parties agree that the non-breaching Party shall have the right to seek relief
for any violation or threatened violation of this Article XII or Section 15.01
by the breaching Party from any court of competent jurisdiction in any
jurisdiction authorized to grant the relief necessary to prohibit the violation
or threatened violation of this Article XII or Section 15.01. This Article XII
shall apply with equal force to the breaching Party's Affiliates.  

     

     

    ARTICLE
XIII:

     

     

    INDEMNIFICATION

     

     

    Section
13.01. CYTOB Indemnified by AMAR. 

     

    AMAR
shall indemnify and hold CYTOB harmless from and against any liabilities or
obligations, damages, losses, claims, encumbrances, costs or expenses (including
attorneys' fees) (any or all of the foregoing herein referred to as “Loss”)
insofar as a Loss or actions in respect thereof, whether existing or occurring
prior to, on or subsequent to the Effective Date, arises out of or is based upon
(a) any misrepresentation or breach of any of the warranties, covenants or
agreements made by AMAR in this Agreement; (b) the Manufacture of any Product
that is identifiable as having been Manufactured by or on behalf of AMAR; (c)
any claims that a Product (as a result of the use of the AMAR Technology
therein) or its Manufacture (as a result of the use of AMAR Technology therein),
use or sale infringes the patent, trademark or other intellectual property right
of a Third Party.

     

     

    Section
13.02. AMAR Indemnified by CYTOB. 

     

    CYTOB
shall indemnify and hold harmless AMAR from and against any Loss insofar as such
Loss or actions in respect thereof occurs subsequent to the Effective Date,
whether existing or occurring prior to, on or subsequent to the date hereof,
arises out of or is based upon (a) any misrepresentation or breach of any of the
warranties, covenants or agreements made by CYTOB in this Agreement or (b)
CYTOB’s material violation of any Applicable Law.

     

    
      
         

      

      
        29

        
          

        

      

      
         

      

    

     

    Section
13.03. Prompt Notice Required. 

     

    No claim
for indemnification hereunder shall be valid unless notice of the matter which
may give rise to such claim is given in writing by the persons seeking
indemnification (the “Indemnitee”) to the persons against whom indemnification
may be sought (the “Indemnitor”) as soon as reasonably practicable after such
Indemnitee becomes aware of such claim; provided that the failure to notify the
Indemnitor shall not relieve it from any liability which it may have to the
Indemnitee otherwise than under this Article XII. Such notice shall state that
the Indemnitor is required to indemnify the Indemnitee for a Loss and shall
specify the amount of Loss and relevant details thereof. The Indemnitor shall
notify Indemnitee no later than 60 days from such notice of its intention to
assume the defense of any such claim. In the event the Indemnitor fails to give
such notice within that time, the Indemnitor shall no longer be entitled to
assume such defense.

     

     

    Section
13.04. Indemnitor May Settle. 

     

    The
Indemnitor shall at its expense, have the right to settle and defend, through
counsel reasonably satisfactory to the Indemnitee, any action which may be
brought in connection with all matters for which indemnification is available.
In such event, the Indemnitee of the Loss in question and any successor thereto
shall permit the Indemnitor full and free access to its books and records and
otherwise fully cooperate with the Indemnitor in connection with such action;
provided that this Indemnitee shall have the right fully to participate in such
defense at its own expense. The defense by the Indemnitor of any such actions
shall not be deemed a waiver by the Indemnitor of its right to assert a claim
with respect to the responsibility of the Indemnitor with respect to the Loss in
question. The Indemnitor shall have the right to settle or compromise any claim
against the Indemnitee without the consent of the Indemnitee provided that the
terms thereof: (a) provide for the unconditional release of the Indemnitee; (b)
require the payment of compensatory monetary damages by Indemnitor only; and (c)
expressly state that neither the fact of settlement nor the settlement agreement
shall constitute, or be construed or interpreted as, an admission by the
Indemnitee of any issue, fact, allegation or any other aspect of the claim being
settled. No Indemnitee shall pay or voluntarily permit the determination of any
liability, which is subject to any such action while the Indemnitor is
negotiating the settlement thereof or contesting the matter, except with the
prior written consent of the Indemnitor, which consent shall not be unreasonably
withheld or delayed. If the Indemnitor fails to give Indemnitee notice of its
intention to defend any such action as provided herein, the Indemnitee involved
shall have the right to assume the defense thereof with counsel of its choice,
at the Indemnitor's expense, and defend, settle or otherwise dispose of such
action. With respect to any such action, which the Indemnitor shall fail to
promptly defend, the Indemnitor shall not thereafter question the liability of
the Indemnitor hereunder to the Indemnitee for any Loss (including counsel fees
and other expenses of defense).

     

     

    ARTICLE XIV:

     

     

    DISPUTE
RESOLUTION

     

     

    Section
14.01. Disputes. 

     

    The
Parties recognize that disputes as to certain matters may from time to time
arise during the TERM, which relate to either Party's rights and/or obligations
hereunder. It is the objective of the Parties to establish procedures to
facilitate the resolution of disputes arising under this Agreement in an
expedient manner by mutual cooperation and without resort to litigation. To
accomplish this objective, the Parties agree to follow the procedures set forth
in this Article XIV if and when a dispute arises under this
Agreement.

     

    
      
         

      

      
        30

        
          

        

      

      
         

      

    

     

    Unless
otherwise specifically recited in this Agreement, disputes among the Parties
will be resolved as recited in this Article XIV. Disputes among the Parties
first shall be presented to the chief executive officers of AMAR and CYTOB, or
their respective designees, for resolution. In the event that the chief
executive officers of AMAR and CYTOB, or their respective designees, cannot
resolve the dispute within ten days of being requested by a Party to resolve a
dispute, either Party may, by written notice to the other, invoke the provisions
of Section 14.02.

     

     

    Section
14.02. Trial Without Jury. 

     

    If the
Parties fail to resolve the dispute through negotiation in accordance with
Section 14.01, each Party shall have the right to pursue any of the remedies
legally available to resolve the dispute; provided, however, that the Parties
expressly waive any right to a jury trial in any legal proceedings under this
Section 14.02.

     

     

    Section
14.03. Performance to Continue. 

     

    Each
Party shall continue to perform its obligations under this Agreement pending
final resolution of any dispute arising out of or related to this Agreement;
provided, however, that a Party may suspend performance of its obligations
during any period in which the other Party fails or refuses to perform its
obligations.

     

     

    Section
14.04. Provisional Remedies. 

     

    Although
the procedures specified in this Article XIV are the sole and exclusive
procedures for the resolution of disputes arising out of or related to this
Agreement, either Party may seek a preliminary injunction or other provisional
equitable relief, if, in its reasonable judgment, such action is necessary to
avoid irreparable harm to itself or to preserve its rights under this
Agreement.

     

     

    Section
14.05. Determination of Patents and Other Intellectual
Property.

     

     Notwithstanding
the foregoing, any dispute relating to the determination of validity of claims,
infringement or claim interpretation relating to a Party's patents shall be
submitted exclusively to federal court.

     

     

    ARTICLE XV:

     

     

    CONFIDENTIALITY

     

     

    Section
15.01. Confidentiality. 

     

    During
the TERM and for a period of five years thereafter, each Party shall maintain
all Confidential Information of the other Party as confidential and shall not
disclose any such Confidential Information to any Third Party or use any such
Confidential Information for any purpose, except (a) as expressly authorized by
this Agreement, (b) as required by law, rule, regulation or court order
(provided that the disclosing Party shall first notify the other Party and shall
use commercially reasonable efforts to obtain confidential treatment of any


     

    
      
         

      

      
        31

        
          

        

      

      
         
such
information required to be disclosed), or (c) to its Affiliates and its
employees, agents, consultants and other representatives (“Representatives”) to
accomplish the purposes of this Agreement, so long as such persons are under an
obligation of confidentiality no less stringent than as set forth herein. Each
Party may use such Confidential Information only to the extent required to
accomplish the purposes of this Agreement. Each Party shall use at least the
same standard of care as it uses to protect its own Confidential Information to
ensure that it and its Affiliates and Representatives do not disclose or make
any unauthorized use of the other Party's Confidential Information. Each Party
shall be responsible for any breach of this Agreement by its Representatives.
Each Party shall promptly notify the other Party upon discovery of any
unauthorized use or disclosure of the other Party's Confidential
Information.

    

     

     

    Section
15.02. Publicity Review. 

     

    The
Parties agree that the public announcement of the execution of this Agreement
shall be in the form of press releases issued by each of the Parties on or
before the Effective Date and thereafter each Party shall be entitled to make or
publish any public statement consistent with the contents thereof. The Parties
acknowledge the importance of supporting each other's efforts to publicly
disclose results and significant developments regarding the Product. The
principles to be observed by AMAR and CYTOB in such public disclosures will be:
accuracy, compliance with FDA Regulations and other FDA guidance documents and
other Applicable Laws, the advantage a competitor of AMAR or CYTOB may gain from
any public statements under this Section 15.02, and the standards and customs in
the biotechnology and pharmaceutical industries for such disclosures by
companies comparable to AMAR and CYTOB. The terms of this Agreement may also be
disclosed by a Party to: (a) government agencies where required by law,
including filings required to be made by law with the United States Securities
and Exchange Commission (“SEC”), (b) Third Parties with the prior written
consent of the other Party, which consent shall not be unreasonably withheld, or
(c) lenders, investment bankers and other financial institutions solely for
purposes of financing the business operations of such Party, so long as such
disclosure in (b) and (c) above is made under an agreement of confidentiality at
least as restrictive as the confidentiality provisions in Section 15.01, to the
extent possible highly sensitive terms and conditions such as financial terms
are extracted from the Agreement (including in any disclosure required by law or
the SEC) or deleted upon the request of the other Party, and as the disclosing
Party gives reasonable advance notice of the disclosure under the circumstances
requiring the disclosure.

     

     

    ARTICLE XVI:

     

     

    MISCELLANEOUS

     

     

    Section 16.01. Commercially Reasonable Efforts. 

     

    Each
Party shall use commercially reasonable and diligent efforts to perform its
responsibilities under this Agreement. As
used herein, the term “commercially reasonable and diligent
efforts” means, unless the Parties agree otherwise, those
efforts consistent with the exercise of prudent scientific and business
judgment, as applied to other products of similar scientific and commercial
potential within the relevant product lines of the Parties.

     

    
      
         

      

      
        32

        
          

        

      

      
         

      

    

     

    Section
16.02. CytoPharm.

     

    The territories of China (Hong Kong
& Macao) and Taiwan are already licensed to CytoPharm, Inc. (“CYTO”) under
that certain License and Supply Agreement dated November 16, 2006 regarding
certain human indications (hepatitis B, hepatitis C and influenza); and that
certain Supply Agreement for Animal Health dated March 20, 2008 regarding
certain indications in swine, cattle and poultry (hereinafter collectively
referred to as the “CYTO Agreements”).  Within five business days of
delivery of $300,000 to AMAR for CYTOB purchase of stock, AMAR shall give CYTO a
first right of refusal notice regarding this Agreement for rights for all
animals except swine, cattle, and poultry and for rights for all human
indications except hepatitis B, hepatitis C and influenza in the territories of
China (including Hong Kong & Macao) and Taiwan.  If CYTO does not
accept the terms of the first right of refusal offer, within 30 days, then AMAR
shall license to CYTOB all human indications except hepatitis B, hepatitis C and
influenza and all animal indications except in swine, cattle and poultry for the
territories of China (including Hong Kong & Macao) and Taiwan.

     

     

    Section
16.03. Bumimedic.

     

    The territory of Malaysia is already
licensed to Bumimedic under that certain License and Supply Agreement dated
January 18, 2006 (herein, “Bumimedic Agreement”) regarding influenza and one
other indication in humans.  AMAR will give Bumimedic a first right of
refusal notice for all human indications except influenza and one other
indication in the territory of Malaysia.  In the first right of
refusal notice, AMAR will also notify Bumimedic to identify the one other
indication.  If Bumimedic does not accept the terms of the first right
of refusal offer, then AMAR shall license to CYTOB all human indications except
influenza and one other indication in the territory of Malaysia.

     

     

    Section
16.04. Biovet.

     

    AMAR and
CYTOB will give best effort priority to work together to get import license for
the Biovet’s products for Taiwan and China.

     

    Section
16.05. Notices. 

     

    All
notices, requests and other communications to any party hereunder shall be in
writing and shall be deemed to have been given if delivered personally, mailed
by certified mail (return receipt requested) or sent by cable, telegram or
recognized overnight delivery service to the parties at the following addresses
or at such other addresses as, specified by the parties by like
notice:

     

    
      	
               
      

            	
              If
      to AMAR :

            	
              Dr.
      Joseph M. Cummins, Chairman &
CEO

            


    

    
      	
               
      

            	
              Amarillo
      Biosciences, Inc.

            


    

    
      	
               
      

            	
              4134
      Business Park Drive

            


    

    
      	
               
      

            	
              Amarillo,
      TX 79110

            


    

    
      	
               
      

            	
              Facsimile:
      (806) 376-9301

            


    

    


    
      	
               
      

            	
              With
      a copy to:

            	
              Edward
      L. Morris, Legal Counsel

            


    

    
      	
               
      

            	
              Underwood
      Law Firm

            


    

    
      	
               
      

            	
              500
      S. Taylor, Suite 1200

            


    

    
      	
               
      

            	
              Amarillo,
      TX 79101

            


    

    
      	
               
      

            	
              Facsimile:
      (806) 379-0316

            


    

    


    
      
         

      

      
        33

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              If
      to CYTOB:

            	
              Jason
      C. c. Chang

            


    

    
      	
               
      

            	
              CYTOBIOTECHl,
      Inc.

            


    

    


    


    
      	
               
      

            	
              Taipei,
      Taiwan

            


    

    
      	
               
      

            	
              Telephone:

            


    

    
      	
               
      

            	
              Mobile:

            


    

    


     

    Notice so
given shall be deemed given and received (i) if by mail on the 15th day after
posting; (ii) by cable, telegram, telex or personal delivery on the date of
actual transmission, with evidence of transmission acceptance, or (as the case
may be) personal or other delivery; and (iii) if by overnight delivery courier,
on the next business day following the day such notice is delivered to the
courier service.

     

     

    Section
16.04. Severability. 

     

    Whenever
possible, each clause, subclause, provision or condition of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any clause, subclause, provision or condition of this Agreement should be
prohibited or invalid under applicable law, such clause, subclause, provision or
condition shall be considered separate and severable from this Agreement to the
extent of such prohibition or invalidity without invalidating the remaining
clauses, subclauses, provisions and conditions of this Agreement.

     

     

    Section
16.05. Entire Agreement/Merger. 

     

    This
Agreement sets forth the entire agreement between the Parties hereto pertaining
to the subject matter hereof and supersedes all negotiations, preliminary
agreements, memoranda or letters of proposal or intent, discussions and
understandings of the Parties hereto in connection with the subject matter
hereof. All discussions between the Parties have been merged into this
Agreement, and neither Party shall be bound by any definition, condition,
understanding, representation, warranty, covenant or provision other than as
expressly stated in or contemplated by this Agreement or as subsequently shall
be set forth in writing and executed by a duly authorized representative of the
Party to be bound thereby.

     

     

    Section
16.06. Amendment. 

     

    No
amendment, change or modification of any of the terms, provisions or conditions
of this Agreement shall be effective unless made in writing and signed on behalf
of the Parties hereto by their duly authorized representatives.

     

     

    Section
16.07. Counterparts. 

     

    This
Agreement may be executed in one or more counterparts, each of which shall be
deemed to be an original document, but all such separate counterparts shall
constitute only one and the same instrument. This Agreement may be signed and
delivered to the other Party by facsimile signature; such transmission shall be
deemed a valid signature.

     

    
      
         

      

      
        34

        
          

        

      

      
         

      

    

     

    Section
16.08. No Waiver of Rights. 

     

    No waiver
of any term, provision, or condition of this Agreement, whether by conduct or
otherwise, in any one or more instances, shall be deemed to be or construed as a
further or continuing waiver of any such term, provision, or condition of this
Agreement.

     

     

    Section
16.09. Force Majeure. 

     

    Neither
Party shall be liable hereunder to the other Party nor shall be in breach for
failure to deliver, provided failure to deliver is no greater than the delay in
time caused by circumstances beyond the control for either Party, including acts
of God, fires, floods, riots, wars, civil disturbances, sabotage, accidents,
labor disputes, shortages, government actions (including priorities,
requisitions, allocations and price adjustment restrictions) and inability to
obtain material, equipment, labor or transportation (collectively, “Force
Majeure”).

     

     

    Section
16.10. Further Assurances. 

     

    The
Parties hereto shall each perform such acts, execute and deliver such
instruments and documents and do all such other things as may be reasonably
necessary to accomplish the transactions contemplated in this
Agreement.

     

     

    Section
16.11. Assignment and Sublicense. 

     

    Neither
this Agreement nor any of the rights, interests, options or obligations
hereunder may be assigned, sublicensed or delegated by either of the Parties
without the prior written consent of the other Party, provided, however, that
either CYTOB or AMAR may, without such consent, assign this Agreement and its
rights and obligations hereunder in connection with the transfer or sale of all
or substantially all of its business pertaining to this Agreement, or in the
event of its merger or consolidation or change in control or similar
transaction. Any permitted assignee shall assume all obligations of its assignor
under this Agreement. Further, a Party may assign or sublicense any and all of
its rights, interests, options, and delegate all obligations hereunder, to any
Affiliate of such Party (and such Affiliate may further assign or sublicense
this Agreement to such Party or any other Affiliate of such Party) without the
consent of the other Party. In the event of an assignment or sublicense to an
Affiliate, the assigning Party shall guarantee the performance of such assignee
or sublicensee. The assignment or sublicense to an Affiliate shall not operate
to discharge the assignor or sublicensor from any obligation under this
Agreement. Any assignment that contravenes this Section 16.12 shall be void ab
initio.

     

     

    Section
16.12. Expenses. 

     

    The
Parties hereto shall each bear their own costs and expenses (including
attorneys' fees) incurred in connection with the negotiation and preparation of
this Agreement and consummation of the transactions contemplated
hereby.

     

     

    Section
16.13. Binding Effect. 

     

    This
Agreement, and all of the terms, provisions and conditions hereof, shall be
binding upon and shall inure to the benefit of the Parties hereto and their
respective permitted successors and assigns.

     

    
      
         

      

      
        35

        
          

        

      

      
         

      

    

     

    Section
16.14. Governing Law. 

     

    This
Agreement shall be construed and interpreted in accordance with the laws of
Taiwan if a lawsuit against CYTOB is initiated by AMAR, and any such suit shall
be brought in Taiwan; this Agreement shall be construed and interpreted in
accordance with the laws of Texas, USA, if a lawsuit against AMAR is
initiated by CYTOB, and any such suit shall be brought in Texas,
USA.

     

     

    Section
16.15. Survival of Representations and Warranties.


     

    All
statements contained herein, or in any schedule hereto, shall be considered a
representation, warranty or covenant of the Party making such statement. All
representations, warranties, covenants contained herein, or in any schedule
hereto, shall survive the closing of this transaction.

     

     

    Section
16.16. No Strict Construction. 

     

    This
Agreement has been prepared jointly and shall not be strictly construed against
either Party.

     

     

    Section
16.17. Independent Contractors. 

     

    The
status of the Parties under this Agreement shall be that of independent
contractor. No Party shall have the right to enter into any agreements on behalf
of the other Party nor shall it represent to any Person that it has such right
or authority.

     


    
      
        
           

          CYTOB-AMAR License  Supply
Agree 2-25-2009 redacted   Final Agreement


        

         


      

      
        36

        
          

        

      

      
         


      

    


     

    


     

     

    


     

     

    IN
WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the Effective
Date.

     

    


    AMARILLO
BIOSCIENCES, INC.

    


    
 

    By:          
/s/ Joseph M. Cummins

        Joseph M.
Cummins,

        President and
Chief Executive Officer

    


    


     

    CYTOBIOTECH,
INC.

     

    


    


    By:          
/s/ Jason C. C Chang

        Jason C. C
Chang

                Chief
Executive Officer

    


    


     

    


     


    
      
        
           

          CYTOB-AMAR License  Supply
Agree 2-25-2009 redacted   Final Agreement


        

         


      

      
        37