EXHIBIT 10.3


     

     

    EXHIBIT 10.3

    
      APPENDIX
        A

      


      Term
        Sheet

      


      
        	
                Definitions

              	
                “Active(s)”
                  shall mean ***** designed by Engelhard ***** and does not mean
                  the
                  Licensed Compound.

                 

                “Anti-Aging
                  Cosmetics” shall mean a cosmetic product in which anti-aging is at least
                  one of the product claims. 

                 

                “*****
                  Formulation(s)” shall mean any formulation that contains *****,
                  excipient(s), and aesthetic modifier(s) and is a consumer-ready
                  product.

                 

                “*****
                  Formulation(s)” shall mean any formulation that contains *****, and
                  excipient(s), and aesthetic modifier(s) and is a consumer-ready
                  product.
                  

                 

                “Effective
                  Date” of the License shall mean February 1, 2006.

                 

                “Licensed
                  Compound” shall mean the pure, crystalline-form of the matrix
                  metalloproteinase inhibitor referred to as ilomostat, as claimed
                  in the
                  license patents/patent applications.

                 

                “Net
                  Revenue” shall mean gross sales price (adjusted for returns), minus *****
                  and *****, including but not limited to taxes and agent’s
                  commissions.

                 

                “Year
                  1” of the License shall mean the time period from the effective date
                  of
                  the license to the first anniversary of the effective date of the
                  license.
                  

                 

                “Year
                  2” of the License shall mean the time period from the end of Year
                  1 of the
                  license to the second anniversary of the effective date of the
                  license.

                 

                “Year
                  3” of the License shall mean the time period from the end of Year
                  2 of the
                  license to the third anniversary of the effective date of the
                  license.

                 

              
	
                License

              	
                License
                  grant to make, use and sell the matrix metalloproteinase inhibitor
                  referred to as ilomostat (the “Licensed Compound” as defined above) as
                  claimed in the patents and patent applications listed in Appendix
                  A
                  (listing as provided by QMT) in the following fields (“Field of Use”):
                  

                 

                An
                  Exclusive license for the field of over-the-counter Anti-Aging
                  Cosmetics
                  (as defined above). 

                 

                Nonexclusive
                  license for the field of over-the-counter acne treatments and skin
                  moisturizers in the cosmetics market. Nonexclusive license will
                  be set
                  forth in a separate agreement with a separate term
                  sheet.

              


      

       

      

        *****
          This material has been omitted pursuant to a request for confidential treatment
          and filed separately with the Securities and Exchange
          Commission.

      

       

      
        
          
             

            
              
              

              
                

              

            

            
              
              

            

          

        

        
          
          

        

      

      
      

      
        	 Royalty	 Engelhard
                shall pay:
                -*****%
                  of Net Revenue (as defined above) received by Engelhard or its
                  affiliate(s) on sales of Actives.

                -*****%
                  of Net Revenue received by Engelhard or its affiliate(s) on sales
                  of the
                  Licensed Compound (as defined above).

                 

                 

                If
                  ***** Formulations (as defined above) are ***** by Engelhard for
                  a
                  customer, Engelhard shall pay a royalty on the quantity of the
                  Active(s)
                  in the formulation, as set forth above (i.e., *****% of Net Revenue
                  for
                  the Active(s)) and in which the sale price used to determine Net
                  Revenue
                  is the sale price ***** for the Active(s). 

                 

                If
                  ***** Formulations (as defined above) are ***** by Engelhard for
                  a
                  customer, Engelhard shall pay a royalty of *****% of the Net Revenue
                  received by Engelhard or its affiliate(s) on the sales of such
                  *****
                  Formulations. 

                 

                Engelhard
                  agrees ***** of its Active-related profitability from Actives sales
                  to
                  ***** Formulations. 

              
	
                 

                Minimum Royalty

              	 

                Engelhard
                  shall pay QMT an aggregate minimum royalty for Year
                  1 and Year 2, combined,
                  equal to 1,140,000 USD (one million one hundred and forty thousand
                  U.S.
                  dollars) prior to the end of Year 2. 

                 

                Until
                  such minimum aggregate royalty amount for Year 1/Year 2 has been
                  paid to
                  QMT, Engelhard agrees to pay QMT a monthly minimum payment (toward
                  the
                  aggregate minimum royalty due) equal to: (i) ***** during any monthly
                  reporting period of Year 1 in which the actual royalties due to
                  QMT are
                  less than such minimum payment amount; and (ii) ***** during any
                  monthly
                  reporting period of Year 2 in which the actual royalties due are
                  less than
                  such minimum payment amount. However, once the aggregate royalty
                  payments
                  made by Engelhard to QMT equal or exceed the minimum aggregate
                  royalty for
                  Year 1/Year 2 set forth above, then Engelhard shall, in any monthly
                  reporting period, only pay the actual royalty due for such reporting
                  period. 

                
                

                If
                  minimum aggregate royalties for Year 1/Year 2 are met, Engelhard
                  may
                  receive the license for an additional one year. Engelhard shall
                  elect
                  prior to Year 3, whether such license shall be *****. If the license
                  is
                  renewed on *****, then the minimum annual royalty for Year
                  3
                  shall be *****. `Until such minimum aggregate royalty amount for
                  Year 3
                  has been paid to QMT, Engelhard agrees to pay QMT a monthly minimum
                  payment (toward the minimum annual royalty due for Year 3) equal
                  to *****
                  during any monthly reporting period of Year 3 in which the actual
                  royalties due to QMT are less than such minimum payment amount.
                  However,
                  once the aggregate royalty payments made by Engelhard to QMT equal
                  or
                  exceed the minimum aggregate royalty amount for Year 3 as set forth
                  above,
                  then Engelhard shall, in any monthly reporting period, only pay
                  the actual
                  royalty due for such reporting period. If Engelhard elects *****,
                  Engelhard shall continue to pay QMT the monthly royalty amount
                  due (e.g.,
                  the monthly minimum payment, or if the aggregate minimum royalty
                  amount
                  has been achieved, the actual monthly royalties due) through the
                  end of
                  Year 2 when the ***** shall cease and thereafter no
                  monthly minimum royalty amount or aggregate minimum annual royalty
                  shall
                  apply but Engelhard shall continue to exercise reasonable commercial
                  efforts in connection with the commercialization and sale of the
                  Licensed
                  Compound. 

              


      

       

      
        *****
          This material has been omitted pursuant to a request for confidential treatment
          and filed separately with the Securities and Exchange
          Commission.

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        	
                 

                 

                 

                 

                 

                 

                 

                 

                 

                 

                 

                 

                 

                 

                
                   

                

                 

                 

                 

                 

                 

                 

                 

                 

                 

                 

              	
                 

                If
                  royalty payments made by Engelhard do not equal such minimum aggregate
                  royalty amount by the end of Year 2, or if any minimum monthly
                  payment
                  amount (as set out above) for Year 1 or Year 2 is not made by Engelhard,
                  then upon notice by QMT, with the ability by Engelhard to cure
                  any such
                  deficiencies, QMT may, upon written notice to Engelhard immediately
                  terminate the license granted to Engelhard. In the event of such
                  termination, Engelhard shall pay to QMT the monthly royalty amount
                  due
                  (e.g., the monthly minimum payment, or if the aggregate minimum
                  royalty
                  amount has been achieved, the actual monthly royalties due) through
                  the
                  date of termination and shall pay the minimum monthly royalty payment
                  in
                  an amount equal to the greater of (a) if such termination date
                  occurred in
                  Year 1, the minimum monthly royalty payments for the remaining
                  portion of
                  Year 1 following such termination date plus ***** after Year 1
                  or (b) if
                  such termination date occurred in Year 2, the minimum monthly royalty
                  payments for a period equal to ***** after such termination date.
                  Except
                  as set forth above, Engelhard shall have ***** any difference between
                  the
                  monthly royalty amounts accrued prior to the termination date and
                  the
                  aggregate minimum royalty for Year 2. Any termination in Year 3
                  is
                  addressed in the paragraph below. 

                 

                If
                  Engelhard elects ***** for Year 3 and any monthly minimum royalty
                  payment
                  amount for Year 3 (as set out above), is not made by Engelhard,
                  then upon
                  notice by QMT and the ability by Engelhard to cure any such deficiencies,
                  QMT may immediately terminate the license granted to Engelhard.
                  In the
                  event of such termination, Engelhard shall pay to QMT the monthly
                  royalty
                  amount due (e.g., the monthly minimum payment, or if the aggregate
                  minimum
                  royalty amount has been achieved, the actual monthly royalties
                  due)
                  through the date of termination and shall pay the minimum monthly
                  royalty
                  payment in an amount equal to the minimum monthly royalty payment
                  for
                  ***** after such termination date. ***** Engelhard shall have *****
                  any
                  difference between the monthly royalty amounts accrued prior to
                  the
                  termination date and the aggregate minimum royalty for Year 3.
                  For the
                  avoidance of doubt, if Engelhard does not elect ***** in Year 3
                  and the
                  license is terminated for cause by QMT, Engelhard shall pay to
                  QMT *****
                  through the termination date and shall ***** any royalties following
                  the
                  date of termination. 

              
	
                Territory

              	
                Worldwide

              


      

       

      
        *****
          This material has been omitted pursuant to a request for confidential treatment
          and filed separately with the Securities and Exchange Commission.

         

      

      
        
          

        

      

      
      

      
        	
                Intellectual
                  Property/ Improvements

              	
                QMT
                  retains rights to the licensed patents and patent applications
                  and to its
                  common law trademark “ilomostat”. 

                 

                Engelhard
                  owns all rights, title and interest to all current ***** and to
                  any
                  inventions relating to new *****, and/or derivatives, variations,
                  and/or
                  improvements to current and new ***** (the “Engelhard IP”). Engelhard owns
                  all rights, title and interest to its registered trademark “EQUISTAT” as
                  well as any and all trademarks used by Engelhard in conjunction
                  with *****
                  and/or Engelhard IP. 

                 

                Notwithstanding
                  the foregoing, any derivative, variation, improvement or modification
                  developed by Engelhard to the Licensed Compound itself shall not
                  be
                  considered Engelhard IP and shall be exclusively assigned to QMT (subject
                  to a license back pursuant to the License Agreement). 

                 

                Engelhard
                  shall repay QMT $166,500 previously paid for development work by
                  Engelhard
                  relating to ilomostat prior to the date hereof. Such amount shall
                  be paid
                  by Engelhard within thirty (30) days of the execution date of the
                  License.

                 

                Engelhard
                  will list Ilomastat as an ingredient in Equistat and complete the
                  registration process with CTFA inclusive of the
                  monograph.

              
	
                Term

              	
                2
                  years, with ***** for an additional one (1) year if the minimum
                  royalties
                  for year 1 and 2 are met, pursuant to Engelhard’s election as set out in
                  “Minimum Royalties” section above. After the first year of the Agreement,
                  Engelhard may terminate the Agreement for any reason upon *****
                  prior
                  written notice to QMT. Until such termination date, Engelhard shall
                  continue to pay QMT the monthly royalty amount due (e.g., the monthly
                  minimum payment, or if the aggregate minimum royalty amount has
                  been
                  achieved, the actual monthly royalties due) and thereafter Engelhard
                  shall
                  have ***** any difference between the monthly royalty amounts accrued
                  prior to such termination date and the aggregate minimum royalty
                  for Year
                  2, or if termination occurs in Year 3, the aggregate minimum royalty
                  amount for Year 3

              
	
                Termination

              	
                Subject
                  to an applicable cure period, agreement may be terminated, after
                  Notice of
                  Default to Engelhard, by QMT as follows:

                 

                ·  Failure
                  to submit a royalty report when due;

                 

                ·  Failure
                  to pay royalties when due; 

                 

                ·  Failure
                  to maintain insurance; or

                 

                ·  Other
                  material defaults.

                 

                The
                  Agreement may also be terminated upon insolvency or bankruptcy
                  of
                  Engelhard.

              
	
                Effect
                  of Termination

              	
                ·  Upon
                  termination, Engelhard shall cease use of the licensed
                  patents/applications, except that Engelhard shall be allowed for
                  a period
                  of no more than ***** from the date of termination to sell off
                  any
                  warehoused product falling under the license. Engelhard shall destroy
                  any
                  excess product. 

              


      

       

      
        *****
          This material has been omitted pursuant to a request for confidential treatment
          and filed separately with the Securities and Exchange
          Commission. 

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        	
                Indemnity

              	
                Engelhard
                  indemnifies QMT against any and all product liabilities with respect
                  to
                  products manufactured and sold by Engelhard and shall annually
                  provide QMT
                  with a certificate of insurance for its product liability
                  policy

              
	
                Reporting

              	
                Engelhard
                  will report monthly on all sales and royalties payable along with
                  the
                  calculation of the royalties and also provide any such other documentation
                  that is necessary for QMT to properly account for the royalties
                  and other
                  payments under the agreement and to comply with its own licenses.
                  

                 

                Such
                  monthly reports shall cover royalties due for the preceding month
                  (e.g.,
                  reports shall be submitted 30 days from the last business day of
                  the month
                  which is being reported). 

              
	
                Audit

              	
                Once
                  per year, QMT may have a certified audit performed, at QMT’s sole cost, by
                  an agreed upon independent auditing firm to certify the Royalty
                  Reports.
                  If the audit results deviate from originally reported data by more
                  that
                  *****%, then Engelhard shall be responsible for the full cost of
                  the
                  audit. If any audit shows a deficiency in excess of *****% then
                  Engelhard
                  shall at its cost supply annual audits by an agreed upon independent
                  auditing firm

              
	
                Research
                  and Development Services

              	
                Engelhard
                  shall be responsible for all ***** necessary to support the sales
                  made by
                  Engelhard hereunder. 

                 

                QMT
                  shall have the right to request and obtain copies of any data and
                  information, including all ***** and reports developed by Engelhard
                  to
                  support the sales made by Engelhard hereunder, that would reasonably
                  be
                  provided publicly to the marketplace or to clients during the marketing
                  process. Any Engelhard or third party confidential information
                  may be
                  redacted prior to submission to QMT

              
	
                Other
                  provisions in Agreement

              	
                New
                  License supersedes and replaces all prior agreements between the
                  parties,
                  and neither party shall have any liability to the other party arising
                  out
                  of the prior agreements.

                 

                QMT
                  warrants that it has the rights necessary to grant the license
                  provided.

              


      

      


      
        *****
          This material has been omitted pursuant to a request for confidential treatment
          and filed separately with the Securities and Exchange Commission.