Document:

Exhibit 10.24

 

Confidential Materials omitted and filed separately with the

Securities and Exchange Commission. Asterisks denote omissions.

 

AMENDED AND RESTATED
  COLLABORATION AGREEMENT

 

This AMENDED AND RESTATED COLLABORATION AGREEMENT (“Agreement”), effective as of January 24, 2007 (the “Effective Date”), is between DYAX CORP., a Delaware corporation, with offices at 300 Technology Square, Cambridge, Massachusetts 02139, U.S.A. (“Dyax”), and MERRIMACK PHARMACEUTICALS, INC., a Massachusetts corporation  with its principal place of business located at One Kendall Square, Building 700, 2nd Floor, Cambridge, MA 02139, U.S.A. (“Merrimack”).

 

WHEREAS, Dyax possesses intellectual property and know-how related to, among other things, the discovery of antibodies having novel binding properties using phage display;

 

WHEREAS, Merrimack is a biotechnology company focused on developing therapeutics in the fields of autoimmune disease and cancer;

 

WHEREAS, Dyax and Merrimack previously entered into a Collaboration Agreement, dated effective as of December 6, 2005 (the “Original Agreement”), under which Dyax agreed to perform research using Dyax Libraries (as hereinafter defined) to identify Dyax Antibodies (as hereinafter defined) to targets to be provided by Merrimack so that Merrimack may evaluate the utility of using and use such antibodies as therapeutics and/or diagnostics; and

 

WHEREAS, Dyax and Merrimack wish to expand the scope of the research activities to be performed by Dyax and amend certain other terms under the Original Agreement; and

 

WHEREAS, to accomplish the foregoing, the Parties have agreed to amend and restate the Original Agreement as set forth herein.

 

NOW, THEREFORE, in consideration of the mutual covenants set forth in this Agreement, the Parties hereby agree that, from and after the Effective Date hereof, the Original Agreement is hereby amended and restated as follows:

 

ARTICLE I
 DEFINITIONS

 

1.1           “Affiliate” means, with respect to either Party, a corporation or other legal entity that controls, is controlled by, or is under common control with such Party.  For purposes of this definition, “control” means the ownership, directly or indirectly, of more than fifty percent (50%) of the outstanding equity securities of a corporation which are entitled to vote in the election of directors or a more than fifty percent (50%) interest in the net assets or profits of an entity which is not a corporation.

 

1.2           “Antibody” means a molecule or a gene encoding such a molecule comprising or containing one or more immunoglobulin variable domains or parts of such domains or any existing or future fragments, variants, modifications or derivatives thereof.

 

1.3           “CAT Agreement” means that certain Amendment Agreement dated January 3, 2003 by and between Cambridge Antibody Technology Limited (“CAT”) and Dyax, as amended

 

1

 

by the Second Amendment Agreement between Dyax and CAT dated September 18, 2003.  Redacted copies of these agreements were provided to Merrimack prior to the Effective Date.

 

1.4           “CAT Gatekeeping Procedure” means the procedure set out in Appendix B hereto which CAT shall carry out in respect of a Nominated Target prior to the grant of the CAT Product License.

 

1.5           “CAT Patent Rights” means the patents and patent applications listed in Appendix C hereto and any patents issuing from such patent applications, together with any divisionals, registrations, confirmations, reissues, extensions, renewals, continuations, continuations-in-part, revalidations, additions, substitutions, renewals or supplementary protection certificates thereof throughout the world and any other patent applications or patents licensed to Dyax under the CAT Agreement or the CAT Product License.

 

1.6           “CAT Product License” means a license from CAT which is required, under the terms of the CAT Agreement, to be granted ([**] of a Therapeutic Antibody Product or [**] for any Diagnostic Antibody Product) in order to commercialize Dyax Antibodies to any Target, as described in more detail in Section 3.2.  The form of CAT Product License is attached hereto as Appendix D.

 

1.7           “CAT Valid Claim” means a claim of an issued and unexpired patent included within the CAT Patent Rights which has been licensed to CAT by the Medical Research Council which has not been held permanently revoked, unenforceable or invalid by a decision of a court or other governmental agency of competent jurisdiction unappealed within the time allowed for appeal, and which has not been admitted to be invalid or unenforceable through reissue or disclaimer or otherwise.

 

1.8           “Commercial Field” means all human therapeutic and diagnostic uses, excluding (i) Research Products, (ii) Separations Applications, (iii) therapeutic products designed to localize an additional non-antibody, active molecule to a Target for therapeutic purposes (e.g. radio-labeled therapeutics, antibody-toxin conjugates), and (iv) with respect to Antibodies directed against any Third Party In Vivo Target, in vivo diagnostic uses.   For the avoidance of doubt, item (iii) in the foregoing sentence is not intended to exclude Products as a result of the incorporation of Poly-Specific Antibodies within such Products.

 

1.9           “Commercial License” has the meaning set forth in Section 3.1(b) hereof.

 

1.10         “Confidential Information” means all information, inventions, data and know-how disclosed to either party by the other party relating to any technology, use, process, method, trade secret, document, technical report, specification, diagram, research project, development program, clinical data, test result, or non-publicly available agreement or document, whether in written, oral, graphic, electronic or any other media or form.

 

1.11         “Diagnostic Antibody Product” means any preparation in the form of a device, composition, compound, kit or service with utility in the diagnosis, prognosis, prediction or management or susceptibility to treatment of a disease or disorder which contains, comprises or the process of development or manufacture of which utilizes a Dyax Antibody.   For the avoidance of doubt, the parties acknowledge and agree that [**].

 

2

 

1.12         “Display Library” means a collection of at least 1,000 genetically different organisms that each contain genetic information encoding a different fusion protein, wherein such collection was created for the purpose of displaying such fusion protein on the outer surface of such organisms.

 

1.13         “Dispose” means to transfer, assign, lease or in any other fashion dispose of control, ownership or possession, but shall not mean to license or sell.  “Disposition” shall have the correlative meaning.

 

1.14         “Dyax Antibody” means any Antibody that is delivered by Dyax to Merrimack in connection with the Research Program and which was identified, generated, developed, produced, optimized, or obtained by Dyax from a Dyax Library, and any variant, modification or derivative of such Antibody, including a Poly-Specific Antibody, whether synthesized by Merrimack or Dyax.

 

1.15         “Dyax Antibody Information” means any data, know-how or other information relating, concerning or pertaining to a specific Dyax Antibody, including, [**] or [**] or [**] or [**], or[**] or [**].

 

1.16         “Dyax Antibody IP” means any patent(s) and/or patent application(s) relating to one or more Dyax Antibodies.

 

1.17         “Dyax Libraries” means Dyax’s proprietary phagemid-based Fab Display Libraries and phage-based Fab Display Libraries.

 

1.18         “Dyax Patent Rights” means the patents and patent applications set forth in Appendix E [**] of the [**] and [**], together with any reissues, re-examinations, renewals, and extensions thereof, and all continuations, continuations-in-part and divisionals of the applications throughout the world.

 

1.19         “Dyax Research Know-How” means any unpatented know-how, technical or other information generated or utilized by Dyax during the conduct of the Research Program that [**] to the [**] in the [**] of the [**], and/or [**] of the [**] that is [**] by the [**].

 

1.20         “Dyax Research Materials” means any materials, including but not limited to Antibody coding expression vectors (but excluding the Dyax Antibodies) provided to Merrimack by Dyax in connection with the Research Program.

 

1.21         “First Commercial Sale” means the first commercial sale of any Product by Merrimack, its Affiliates or sublicensees in any country after grant of a Marketing Authorization.

 

1.22         “FTE” means the equivalent of the work time of a full-time scientist or a full-time project team leader over a twelve-month period (including normal vacations, sick days and holidays).  In the case of less than a full-time person, the portion of an FTE year devoted by such person to the Research Program shall be determined by dividing the number of days during any twelve-month period devoted by such person to the Research Program by the total number of working days of such person’s full-time scientist during such twelve-month period.  One person cannot be counted as more than one FTE for a given year.

 

3

 

1.23         “FTE Rate” means $[**] per annum per FTE (or $[**] per hour based on an FTE year of [**] hours). The FTE Rate includes all salary, employee benefits, materials and all other expenses including support staff and overhead for or associated with Dyax scientists performing activities in connection with the Research Program.

 

1.24         “Indication” means a new and distinct disease category (for example, cancer versus inflammation) and does not mean a different type or subpopulation within the same primary disease (for example, colon cancer versus breast cancer).

 

1.25         “Major Market” any one of the following: (i) the United States of America, (ii) any country in Europe which is subject to the Marketing Authorization procedure of the European Medicines Evaluation Agency, or (iii) Japan.

 

1.26         “Marketing Authorization” means any approval (including all applicable pricing and governmental reimbursement approvals) required from the relevant Regulatory Authority to market and sell a Product in a particular country.

 

1.27         “Merrimack Materials” means the Merrimack Targets and other materials that are delivered to Dyax by Merrimack pursuant to the Research Program.

 

1.28         “Merrimack Targets” means Targets that are delivered to Dyax by Merrimack and accepted by Dyax for inclusion in the Research Program as provided under Section 2.4(a).  For the avoidance of doubt, the identity of Merrimack Targets shall constitute Confidential Information of Merrimack.

 

1.29         “NDA” means New Drug Application as defined in 21 CFR 314 or other comparable regulation imposed by the U.S. Food and Drug Administration, or its foreign counterpart.

 

1.30         “Net Sales” means, with respect to any Product sold by Merrimack, its Affiliates or sublicensees, the price invoiced by that party to the relevant purchaser (or in the case of a sale or other disposal otherwise than at arm’s length, the price which would have been invoiced in a bona fide arm’s length contract or sale) but [**] and[**] or [**], and [**] or [**] and [**]in the [**] to the [**].  In the event the Product is sold as part of a Combination Product (as defined below), the Net Sales from the Combination Product, for the purposes of determining royalty payments, shall be determined by [**] of the [**] the [**], by[**] is the [**] of the [**] and [**] in the [**] the [**] and the [**] in the [**] in which [**].  In the[**] the [**] and [**] in the [**] for the [**] shall be [**] of the [**] is the [**] of the [**] is the [**] of [**] in the [**].  As used above, the term “Combination Product” means any pharmaceutical or biologic product which contains a Product and other active compounds and/or active ingredients.

 

1.31         “Nominated Target” has the meaning set forth in Section 3.2(a)(iii) hereof.

 

1.32         “Party” means Dyax or Merrimack, and “Parties” means Dyax and Merrimack.

 

1.33         “Patent Rights” means patent applications or patents, author certificates, inventor certificates, utility certificates, improvement patents, and models and certificates of addition, and all foreign counterparts of them and includes divisionals, renewals, continuations, continuations-

 

4

 

in-part, extensions, reissues, substitutions, confirmations, registrations, revalidations, or additions of or to them as well as any supplementary protection certificate or any other post patent expiration extension of patent protection in respect to them.

 

1.34         “Phase I Clinical Trial” means a human clinical trial in any country that is intended to initially evaluate the safety of an investigational Product in volunteer subjects or patients that would satisfy the requirements of 21 CFR 312.21(a), or other comparable regulation imposed by the U.S. Food and Drug Administration, or its foreign counterpart.

 

1.35         “Phase III Clinical Trial” means a pivotal human clinical trial in any country the results of which could be used to establish safety and efficacy of a Product as a basis for a marketing application that would satisfy the requirements of 21 CFR 312.21(c) or other comparable regulation imposed by the U.S. Food and Drug Administration, or its foreign counterpart.

 

1.36         “Poly-Specific Antibody” means a Dyax Antibody that is directed to more than one Nominated Target as described in Section 3.2(e).

 

1.37         “Product” means any Diagnostic Antibody Product and/or Therapeutic Antibody Product.

 

1.38         “Quarter” means each period of three (3) months ending on March 31, June 30, September 30, or December 31 and “Quarterly” shall be construed accordingly.

 

1.39         “Regulatory Authority” means the United States Food and Drug Administration, or any national or local agency, authority, department, inspectorate, minister, ministry official, parliament or public or statutory person (whether autonomous or not) of any government of any country having jurisdiction over any of the activities contemplated by this Agreement or the Parties, or any successor bodies thereto.

 

1.40         “Research Campaign” means one of [**] separate funded research campaigns (referred to herein as “Campaign I”, [**]”), each with its own Research Plan, designed to result in the identification of antibodies against each Merrimack Target.  Each Research Campaign will include [**] Merrimack Targets.

 

1.41         “Research Field” means use in in vitro and in vivo studies (excluding any studies in humans) in connection with Merrimack’s internal discovery and development programs, and not for any other purpose.

 

1.42         “Research Plan” means the written description of work to be performed by Dyax for each Research Campaign describing the activities to be conducted by Dyax and Merrimack in connection with the discovery, development and validation of Antibodies against Merrimack Targets.  The Research Plan for Campaign I is attached hereto as Appendix A. The Research Plan for Campaigns [**] will be drafted, reviewed and approved prior to the commencement of each such Research Campaign.

 

1.43         “Research Products” means (i) any kit, vial or array (protein chip) containing one or more Antibodies intended for sale to an end user solely for research purposes and (ii) any

 

5

 

Antibodies sold to a Third Party for incorporation into any kit, vial or array (protein chip) that are intended for sale to an end user for research purposes. Research Products shall exclude Therapeutic Antibody Products and Diagnostic Products.

 

1.44         “Research Program” means the research activities undertaken by Dyax and Merrimack in accordance with the Research Plan for each Research Campaign and the terms of this Agreement.

 

1.45         “Research Term” has the meaning set forth in Section 9.1 hereof.

 

1.46         “Research Steering Committee” has the meaning set forth in Section 2.3(a) hereof.

 

1.47         “Research and Development” means, for the purposes of the XOMA Covenant and the restrictions applicable thereto, the identification, selection, isolation, purification, characterization, study and/or testing of an Antibody for any purpose, including, without limitation, the discovery and development of human therapeutics.  Included within the definition of “Research and Development” shall be all [**]. “Research and Development” shall not include [**].

 

1.48         [**].

 

1.49         [**].

 

1.50         [**].

 

1.51         “Selected Target” has the meaning set forth in Section 3.2(d) hereof.

 

1.52         “Separations Applications” means the use of Antibodies for the development and manufacture of affinity chromatography purification media for use in the separation and purification of pharmaceuticals.

 

1.53         “Target” means an antigen and/or DNA as identified by a full length protein sequence that it encodes.

 

1.54         “Target Acceptance Notification” has the meaning set forth in Section 3.2(b)(iii) hereof.

 

1.55         “Therapeutic Antibody Product” means any preparation which is intended for use in the Commercial Field which contains, comprises, or the process of development or manufacture of which utilizes a Dyax Antibody. For the avoidance of doubt, the parties acknowledge and agree that term “Therapeutic Antibody Product” shall not include [**].

 

1.56         “Third Party” means any entity other than Dyax or Merrimack or their respective Affiliates.

 

1.57         “Third Party Phage Display Agreements” means the CAT Agreement and the XOMA Agreement.

 

6

 

1.58         “Third Party In Vivo Target” means any Target to which Dyax has granted an undisclosed Third Party exclusive rights in the field of in vivo diagnostics pursuant to an agreement with such Third Party that was entered into prior to the date hereof.  To the extent that the agreement with such undisclosed Third Party terminates or is amended or modified in any way that would allow Dyax to expand the Commercial Field to include rights to [**] in the field of in vivo diagnostics, Dyax will promptly notify Merrimack and grant such rights to Merrimack.

 

1.59         “Transferred Materials” means, for the purposes of the XOMA Covenant and the restrictions applicable thereto, the Dyax Libraries, any Dyax Antibodies, Dyax Antibody Information or the product of the practice of any method that in each of the foregoing cases is within the scope of the XOMA Patent Rights.

 

1.60         “Valid Claim” means (a) a claim of an issued and unexpired patent included in the Dyax Patent Rights, CAT Patent Rights or XOMA Patent Rights, as the case may be, which has not been held invalid in a final decision of a court of competent jurisdiction from which no appeal may be taken, and which has not been disclaimed or admitted to be invalid or unenforceable through reissue or otherwise, or (b) a claim of a pending patent application within the XOMA Patent Rights.

 

1.61         “XOMA Agreement” means that certain License Agreement dated October 16, 2002 by and between XOMA Ireland Limited (“XOMA”) and Dyax, a redacted copy of which has been provided by Dyax to Merrimack on or prior to the Effective Date.

 

1.62         “XOMA Covenant” has the meaning set forth in Section 3.1(c) hereof.

 

1.63         “XOMA Know-How” means unpatented or unpatentable technical information, including ideas, concepts, inventions, discoveries, data, designs, formulas, specifications, procedures for experiments and tests and other protocols, results of experimentation and testing, fermentation and purification techniques, and assay protocols, whether now existing or obtained in the future, owned by XOMA which XOMA has the right to license or sublicense and which may be necessary for the practice of the XOMA Patent Rights or which would be misappropriated by the activities of Merrimack contemplated hereunder but for this Agreement.  All XOMA Know-How shall be confidential information of XOMA.

 

1.64         “XOMA Patent Rights” means the patent applications and patents set forth in Appendix F attached hereto and incorporated herein, and, solely to the extent any Valid Claim would cover or be included in the license grants provided for herein, all divisionals, continuations, continuations-in-part, applications claiming priority thereto, and substitutions thereof; all foreign patent applications corresponding to the preceding applications; all U.S. and foreign patents issuing on any of the preceding applications, including extensions, reissues and re-examinations; and any other patent rights owned by XOMA which XOMA has the right to license or sublicense and which would be infringed by the activities contemplated hereunder but for this Agreement.  XOMA Patent Rights shall also include (i) any improvements of the foregoing that are owned or controlled by XOMA and (ii) any patents or patent applications, whether now existing or obtained in the future, owned or controlled by XOMA containing a claim that is dominating over the foregoing patent rights (i.e., is necessarily infringed by the practicing of a claim in one of the foregoing applications).

 

7

 

The above definitions are intended to encompass the defined terms in both the singular and plural forms.

 

ARTICLE II
 RESEARCH PROGRAM

 

2.1           Goal of Research Program.  The initial goal of the Research Program is to identify Dyax Antibodies that bind to the Merrimack Targets provided to Dyax under the terms of the Research Plan for each Research Campaign.  Each Party acknowledges that the outcome of the Research Program cannot be predicted and each Party agrees to cooperate in good faith with the other to modify the Research Plan for each Research Campaign as may be reasonably required to accomplish the goal of the Research Program.

 

2.2           Research Campaigns; Research Plans.  The Research Program will be divided into [**] separate Research Campaigns (referred to herein as “Campaign I”, [**]).   The Research Plan for each Research Campaign will be designed to result in the identification of antibodies against [**] Merrimack Targets.  Unless otherwise agreed in writing, each of Research Campaigns [**] shall be initiated within [**] years after the Effective Date ([**] was initiated and completed prior to the Effective Date).  The Research Plan for Campaign I is attached hereto as Appendix A.  The parties acknowledge and agree that, as of the date of this Amended and Restated Collaboration Agreement, the research activities contemplated under the Research Plan for [**] have been completed.  The Research Plan for Campaigns [**] will be drafted, reviewed and approved prior to the commencement of each such Research Campaign.  During the Research Term, the Research Plan for each Research Campaign may be amended or revised, as appropriate, by the Research Steering Committee.

 

2.3           Research Steering Committee.

 

(a)           Structure and Function.  A committee shall be established to manage the Research Program (the “Research Steering Committee”).  The Research Steering Committee shall be composed of three (3) representatives appointed by Dyax and three (3) representatives appointed by Merrimack. The Research Steering Committee shall direct and administer the Research Program and shall perform the following functions: (a) oversee and monitor the activities contemplated by the Research Plan for each Research Campaign (provided that either Party may enforce the provisions of this Agreement irrespective of such oversight); (b) review and pre-approve external expenditures; (c) review the written progress reports of the parties and maintain frequent communication with the parties regarding the status of the Research Program; (d) amend or revise any Research Plan as necessitated by the outcome of the work conducted under such Research Plan; and (e) identify and select Dyax Antibodies that bind to the Merrimack Targets provided to Dyax under the terms of any Research Plan [**].

 

(b)           Formation and Meetings.  As soon as practical after the Effective Date, each Party shall identify to the other, its representatives on the Research Steering Committee.  The Research Steering Committee shall meet as needed during each Research Campaign.  Such meetings shall be at times and places or in such form (e.g., telephone or videoconference) as the members of the Research Steering Committee shall agree. A Party may change one or more of its

 

8

 

representatives to the Research Steering Committee at any time upon notification to the other Party.  A quorum for a meeting requires at least two representatives from each Party.

 

(c)           Attendance and Voting.  A member of the Research Steering Committee may be represented at any meeting by another member of the Research Steering Committee from the same Party or by a deputy that will be entitled to vote for the absent member.  All approvals, determinations and other actions must be made by unanimous consent of the members of the Research Steering Committee or their deputies present at the relevant Research Steering Committee meeting.  In the event that the Research Steering Committee is unable to reach consensus with respect to any material matter and becomes deadlocked, the parties will seek to resolve the matter through their chief executive officers. Representatives of either Party who are not members of the Research Steering Committee or their deputies may attend meetings of the Research Steering Committee as agreed to by the representative members of the other Party.

 

(d)           Record Keeping and Communications.  At or before the commencement of each meeting, the Research Steering Committee shall appoint one of its members to act as secretary for such meeting or shall arrange for a person to be present in such capacity. The Research Steering Committee shall keep accurate minutes of its meetings and shall record all proposed decisions and all actions recommended or taken.  Copies of the minutes shall be provided to each member of the Research Steering Committee after each meeting and shall be approved, if appropriate, at the next meeting.  In addition, the Research Steering Committee will arrange with the appropriate representatives of each Party for the preparation of written progress reports on the status of the Research Program at least [**] and the members of the Research Steering Committee will generally maintain close and frequent communication among themselves and with the parties. All records of the Research Steering Committee shall at all times be available to both parties.

 

2.4           Obligations of Parties During the Research Term.

 

(a)           Target Identification and Approval.  Prior to commencing activities under any Research Campaign, Merrimack will first provide Dyax with a written notice identifying each Target that Merrimack wishes to include in such Research Campaign as a Target against which Dyax Antibodies would be directed (which must be accompanied by a GenBank® accession number, if available, or similar information which uniquely identifies each such Target).   Dyax shall then have [**] business days to notify Merrimack (i) whether or not it will be able to perform research to identify Dyax Antibodies to such Target on a nonexclusive basis in accordance with the terms set forth in Section 2.4(d) below, and (ii) if any such Target is a Third Party In Vivo Target.  If Dyax rejects any Target submitted by Merrimack, Merrimack shall have the option to identify a new Target for inclusion in such Research Campaign.

 

(b)           Merrimack Responsibilities.  For each Merrimack Target for which Dyax has agreed to perform research under Section 2.4(a), Merrimack agrees to provide to Dyax a reasonable quantity of such Merrimack Targets and other Merrimack Materials as set forth in each Research Plan prior to the commencement of each Research Campaign.  Dyax shall use such Merrimack Targets and other Merrimack Materials solely in accordance with the applicable Research Plan and nothing in this Agreement shall be construed as a grant by Merrimack to Dyax of any rights to any Merrimack Target after the term of this Agreement.

 

9

 

(c)           Dyax Responsibilities.  For each Merrimack Target for which Dyax has agreed to perform research under Section 2.4(a), Dyax agrees to [**] for each Research Campaign, and to [**].  Dyax shall deliver the Dyax Antibodies, Dyax Antibody Information, Dyax Research Materials [**].  Dyax’s activities under each Research Plan will be deemed complete [**].  Notwithstanding the foregoing, Merrimack acknowledges and agrees that the results of each Research Plan cannot be predicted and that Dyax’s sole obligation is to perform the work set forth in such Research Plan and to deliver the Deliverables to Merrimack that are contemplated by such Research Plan based on the outcome of Dyax’s activities thereunder. During the course of the work under any Research Plan, Dyax’s representatives primarily responsible for oversight of Dyax’s activities under such Research Plan shall consult with representatives of Merrimack [**], to respond to questions, facilitate the exchange of appropriate information and review the progress of such Research Plan.

 

(d)           Other Research and Licensing Activities.  Without limiting Dyax’ confidentiality obligations hereunder, Merrimack acknowledges and agrees that:

 

(i)                                     Dyax has previously licensed Dyax Libraries to Third Parties and may continue to do so in the future, and that such Third Parties may be using one or more Dyax Libraries to identify Antibodies to Merrimack Targets;

 

(ii)                                  Dyax may have previously conducted research on behalf of Third Parties to identify and/or develop, or cooperate or participate to identify and/or develop, Antibodies to Merrimack Targets and may continue to do so during the Research Term and in the future; and

 

(iii)                               Dyax will not deliver to Merrimack any Antibodies that are identified by Dyax as a result of the Research Program if such Antibodies were previously delivered to Third Parties in connection with research activities conducted on behalf of Third Parties.

 

ARTICLE III
 GRANT OF RIGHTS TO MERRIMACK

 

3.1           Dyax Grants.

 

(a)           Research License.  Subject to the terms and conditions of this Agreement, including without limitation, the restrictions set forth in Section 3.2 and the payment obligations set forth in Article 4, Dyax hereby grants to Merrimack and its Affiliates a world-wide, non-exclusive, royalty-free, non-transferable license, without the right to sublicense, under the Dyax Patent Rights, Dyax Research Know-How, Dyax Antibody Information, Dyax Antibody IP, and CAT Patent Rights to use Dyax Research Materials and to research, develop and make Dyax Antibodies, solely in the Research Field.

 

(b)           Commercial License.  During the term of this Agreement and prior to the commencement of the first Phase I Clinical Trial of a Therapeutic Antibody Product or prior to the first filing for Marketing Authorization for any Diagnostic Antibody Product, provided that

 

10

 

 

Merrimack is not then in breach of any material terms or conditions hereof, Merrimack shall have the option to obtain a worldwide, non-exclusive license, to use Dyax Antibodies to develop, make, have made, use, sell, offer for sale, import and export Therapeutic Antibody Products and Diagnostic Antibody Products to the applicable Merrimack Target in the Commercial Field (the “Commercial License”) on the following terms:

 

(i)            Merrimack shall have no rights to obtain a Commercial License unless, prior to the commencement of the first Phase I Clinical Trial of a Therapeutic Antibody Product or prior to the first filing for Marketing Authorization for any Diagnostic Antibody Product, Merrimack obtains a sublicense to a CAT Product License with respect to the applicable Merrimack Target(s) as contemplated in Section 3.2(a) hereof;

 

(ii)           Once Merrimack has obtained a sublicense to a CAT Product License to the applicable Merrimack Target(s), Dyax shall and hereby does grant to Merrimack a Commercial License to Dyax Antibodies and Products directed to the applicable Merrimack Target(s), including a license to the applicable Dyax Antibody Information and Dyax Antibody IP;

 

(iii)          the Commercial License granted to Merrimack under Section 3.1(b) shall be subject to the terms and conditions of this Agreement, including without limitation, the restrictions set forth in Sections 3.2, and 3.3 and the payment obligations set forth in Article 4; and

 

(iv)          subject to the terms and conditions of any applicable CAT Product License, Merrimack shall have the right to sublicense the Commercial License granted to Merrimack under this Section 3.1(b) to allow Third Parties to develop, make, have made, use, sell, offer for sale, import and export Therapeutic Antibody Products and Diagnostic Antibody Products directed to the applicable Merrimack Target(s) in the Commercial Field.

 

(c)           XOMA Covenant.  Subject to the terms and conditions of this Agreement, including the provisions of Section 3.3 below, Dyax represents to Merrimack that, pursuant to a covenant running from XOMA to Dyax (the “XOMA Covenant”), XOMA has agreed that it shall not initiate or permit any Third Party over whom it has control to initiate or assist in any way in the initiation or prosecution of any action asserting a claim of infringement under the XOMA Patent Rights or misappropriation of the XOMA Know-How to the extent reasonably necessary to allow the parties to use the Dyax Libraries and Dyax Library Materials to conduct Research and Development activities under the terms of this Agreement.  The XOMA Covenant extends to [**].  The XOMA Covenant expressly does not extend to use of the XOMA Patent Rights to make or the means or methods to make any amount of Dyax Antibodies other than quantities reasonably required for Research and Development purposes.

 

11

 

3.2           Restrictions on the CAT Patent Rights.  [**], the parties acknowledge and agree that the licenses granted to Merrimack under the CAT Patent Rights pursuant to Sections 3.1(a) and 3.1(b) above are subject to the following provisions:

 

(a)           CAT Product License

 

(i)            [**], in the event that Merrimack wishes to develop and commercialize any Product with respect to [**], then [**] in relation to any Therapeutic Antibody Product or [**] for any Diagnostic Antibody Product, Merrimack must first obtain a sublicense under a CAT Product License with respect to such Targets.

 

(ii)           [**] of this Section 3.2.  [**] and [**] or [**] with this Section 3.2.

 

(iii)          In order [**] a CAT Product License [**] with respect to a Target, Merrimack must [**] that Dyax [**] through the CAT Gatekeeping Procedure described in Section 3.2(b).

 

(b)           CAT Gatekeeping.

 

(i)            Any request by Merrimack that Dyax submit a Nominated Target through the CAT Gatekeeping Procedure shall be in writing and must identify the Nominated Target against which Dyax Antibodies are directed [**].

 

(ii)           If CAT notifies Dyax under the CAT Agreement that the Nominated Target has not passed the CAT Gatekeeping Procedure, then Dyax shall promptly notify Merrimack in writing that Dyax will not be granted a CAT Product License, and Merrimack shall have no rights pursuant  to  Section 3.1(b) with respect to such Nominated Target; provided, however, [**].

 

(iii)          Upon receipt of a request by Merrimack under Section 3.2(b)(i), Dyax shall promptly [**] request that CAT subject the Nominated Target to CAT’s Gatekeeping Procedure (as described in Appendix B hereto) in accordance with the CAT Agreement.  If CAT determines that the Nominated Target has passed the CAT Gatekeeping Procedure, [**], CAT is obligated to notify Dyax (the “Target Acceptance Notification”) that a CAT Product License is available for such Target [**].

 

(c)           [**]. In certain circumstances described below, Dyax may allow Merrimack [**].  Pursuant to the terms of the CAT Agreement, Dyax [**] the CAT Gatekeeping Procedure [**].  For the purposes of this Section 3.2(c), [**] provided that, if, at any time [**], Dyax will then so notify Merrimack.  Merrimack will then have [**] from the date of such notice to decide whether or not it wishes to take a CAT Product License for that Nominated Target.  If Merrimack notifies Dyax within that period that it does not wish to take such a CAT Product 

 

12

 

License or fails to notify Dyax that it does wish to take such a CAT Product License, then [**] CAT may grant an exclusive license to a Third Party in respect of such Nominated Target.

 

Prior to [**], Merrimack shall have the [**]. In addition [**], both [**], Merrimack may [**] to [**] of a [**] will be [**], and [**] to [**] to [**] of[**] will be [**], at the [**].

 

[**] to the [**] of the [**] that [**] will be [**] of the [**] for the [**] be so [**].

 

(d)           Sublicense of CAT Product License.  Upon receipt of a Target Acceptance Notification, [**], Merrimack may, by written notice, request that Dyax secure a CAT Product License for the Nominated Target (which shall thereafter be referred to as a “Selected Target”).  In such event, Dyax [**] a CAT Product License with respect to such Selected Target, and to deliver to Merrimack a fully executed redacted copy thereof.  [**], and subject to the prior payment by Merrimack to Dyax of the Product License Fee referred to in Section 4.3, Dyax and Merrimack shall enter into a written sublicense agreement, the form of which is attached hereto as Appendix H, under which Dyax shall grant to Merrimack a worldwide, non-exclusive sublicense under the rights granted to Dyax under Clause 2 of the CAT Product License to develop, make, have made, use, sell, offer for sale, import and export Products against such Selected Target in the Commercial Field.  [**] after the [**] to the [**] with the [**] the [**] is [**] to [**] under [**].

 

(e)           Poly-Specific Antibodies.  Notwithstanding anything to the contrary contained in this Section 3.2 or in the form of CAT Product License attached hereto as Appendix D, in the case where a Dyax Antibody is directed to multiple Targets, then each such Target shall be considered a Nominated Target and [**].  If CAT notifies Dyax that each [**] to which such Poly-Specific Antibody is directed has [**] then, pursuant to an amendment to the CAT Agreement, Dyax shall have the right to obtain a single CAT Product License that will [**] to which Poly-Specific Antibodies bind; provided however, that such CAT Product License shall be limited so as to allow Merrimack to exploit only Products that comprise or contain Poly-Specific Antibodies directed against all such [**].  For the avoidance of doubt, Dyax agrees that the [**] applicable to the development and commercialization of a Poly-Specific Antibody under such a CAT Product License [**], as described in Sections 4.2 through 4.8.  Except as expressly provided for herein, the form of the CAT Product License that would be applicable to any such Poly-Specific Antibody would be negotiated between Dyax and CAT.

 

(f)            Effect of Termination of CAT Agreement.  Pursuant to the terms of the CAT Agreement, upon termination of the CAT Agreement, Dyax represents and warrants that (i) [**] and the [**], and (ii) any sublicense granted by Dyax to Merrimack under a CAT Product License pursuant to this Agreement will continue in force provided [**].  The Parties acknowledge that Merrimack derives independent and significant value from the agreements set forth in the CAT Agreement and may rely thereon and to that extent only shall have the right to enforce the provisions of Section 3.2(f)(ii) above and be a Third Party beneficiary for that purpose only.

 

13

 

(g)           Merrimack Acknowledgement.  As required by the CAT Agreement, Merrimack hereby acknowledges and agrees that Dyax must request, and be granted a CAT Product License, in relation to a Therapeutic Antibody Product prior to Dyax or Merrimack’s commencement of the [**] in relation to a Therapeutic Antibody Products, or in relation to a Diagnostic Antibody Product prior to Dyax or Merrimack’s [**] on the relevant Dyax Antibody.

 

(h)           Third Party Beneficiary Right.  As required by the CAT Agreement, Merrimack agrees that CAT shall be a Third Party beneficiary of the sublicense under the CAT Product License and CAT shall have the right to enforce (including claim damages as a result of any breach) of such sublicense.  If at any time CAT does have to enforce its rights under such sublicense Dyax will, if requested by CAT, supply to CAT a copy of this Agreement as soon as possible.

 

3.3           XOMA Covenant.  As required by the XOMA Agreement, the Parties acknowledge and agree that the XOMA Covenant is subject to the following provisions:

 

(a)           Merrimack will abide by each of the limitations, restrictions and other obligations applicable to Merrimack provided for in the XOMA Agreement including, without limitation, the restrictions on use of Transferred Materials for purposes other than Research and Development;

 

(b)           Merrimack covenants not to use the Transferred Materials for any purpose other than for Research and Development purposes;

 

(c)           Merrimack agrees that the “first sale” doctrine does not apply to any Disposition of Transferred Materials;

 

(d)           Merrimack shall Dispose of Transferred Materials only to a Third Party who otherwise meets the definition of a Dyax Collaborator under the XOMA Agreement and who executes a written agreement in which its undertakes all of the obligations set forth herein;

 

(e)           XOMA shall be an intended Third Party beneficiary with respect to the foregoing provisions of Section 3.3(a) through (d);

 

(f)            If Merrimack or any person or entity controlled by Merrimack contests the validity or enforceability of any of the XOMA Patent Rights hereunder, XOMA shall have the right to terminate (or cause Dyax to terminate) all of the rights hereby granted to Merrimack under the XOMA Patent Rights;

 

(g)           Merrimack acknowledges and agrees that it has received from Dyax, and is subject to the relevant provisions of, the following documents: (i) a redacted copy of the XOMA Agreement containing all of the limitation, restrictions and other obligations provided therein with respect to the XOMA Patent Rights; and (ii) the Form of Notice attached hereto as Appendix G and incorporated herein;

 

(h)           Merrimack acknowledges and agrees that nothing in this Agreement shall be construed as a release or waiver of past, present or future infringement of the XOMA Patent Rights by Merrimack acting outside the scope of this Agreement nor as a release from Dyax 

 

14

 

from any claim of infringement of the XOMA Patent Rights nor as any right to release any Third Party from any claim of infringement under the XOMA Patent Rights;

 

(i)            Merrimack acknowledges and agrees that the XOMA Covenant shall not extend to infringement of the XOMA Patent Rights arising out of making or the means or methods used to make any amount of a Dyax Antibody or Product other than those quantities of Antibody reasonably required for Research and Development purposes; provided, however, that Dyax or Merrimack shall be permitted to make or have made any Dyax Antibody by any means of its selection other than those which otherwise infringe a Valid Claim of the XOMA Patent Rights;

 

(j)            Merrimack acknowledges and agrees that the XOMA Covenant shall become void and without effect as to Merrimack if Merrimack fails to materially discharge or comply with any terms of this Agreement with respect to the XOMA Patent Rights;

 

(k)           Merrimack acknowledges and agrees that the XOMA Covenant is personal to Dyax and Merrimack and Merrimack’s Affiliates and cannot be assigned or transferred;

 

(l)            Merrimack agrees that Dyax shall have the right to deliver to XOMA a written report which shall specify the name, address and contact person for Merrimack; and

 

(m)          In the event of the termination of the XOMA Agreement by Dyax, the covenants, licenses and rights granted to Dyax and Merrimack under the XOMA Agreement shall survive.  In the event of the termination of the XOMA Agreement by XOMA, the licenses and rights granted to Dyax and Merrimack under the XOMA Agreement shall terminate.

 

Notwithstanding anything to the contrary in this Agreement, Merrimack’s sole and exclusive liability for any failure to comply with the foregoing provisions of this Section 3.3 shall be that the XOMA Covenant may not apply.

 

3.4           Limitation of Rights.  Merrimack acknowledges that its rights with respect to the Dyax Libraries, Dyax Library Materials, Dyax Library Technology, CAT Patent Rights and XOMA Patent Rights are limited to those expressly granted in this Article 3.  Each Party agrees that, except as expressly set forth in this Agreement, no other rights or licenses, express or implied, are granted to any patents, patent applications, inventions, trademarks, trade secrets or other intellectual property, or to any materials, information, data or know-how, of the other Party.  Merrimack also agrees that no rights are granted to Merrimack by Dyax outside of the Research Field and, upon exercise of its option to obtain a Commercial License, the Commercial Field.  Merrimack acknowledges that Dyax has previously licensed and will continue to license use of its phage display libraries and phage display patent rights to Third Parties for use in the Research Field and the Commercial Field and that these Third Party licensees of Dyax may discover antibodies or products that are the same or similar to the Dyax Antibodies or Products.  Merrimack also acknowledges that, in connection with Dyax’s own internal research and development activities, Dyax has used and will continue to use its phage display libraries and phage display patent rights to discover antibodies or products that are the same or similar to the 

 

15

 

Dyax Antibodies or Products. Merrimack agrees that any expression vectors provided by Dyax to Merrimack are to be used for research purposes only.

 

3.5           Diligence Requirement.  Merrimack agrees to use commercially reasonable efforts to research and develop the Dyax Antibodies into commercial Products.  Specifically, upon exercise of its option to obtain a Commercial License, Merrimack agrees to use commercially reasonable efforts to develop, pre-clinically and clinically test, market and sell Products in the Commercial Field.  Until the first filing for Marketing Authorization for any Product, Merrimack shall provide Dyax with annual written reports summarizing its development and commercialization efforts for all Products during the period since the previous such report; provided that such reports shall not be required to include any non-public technical or scientific information.

 

ARTICLE IV
 PAYMENTS AND REPORTS

 

4.1           Research Payments; FTEs.

 

(a)           In consideration for the obligations undertaken by Dyax under the Research Plan for each Research Campaign and the other terms and conditions of this Agreement, Merrimack shall compensate Dyax for the work performed by Dyax in accordance with each Research Plan in accordance with the budget established for such Research Campaign.  For work performed by Dyax at Merrimack’s request in addition to the work set forth in the applicable Research Plan, Merrimack shall compensate Dyax at the FTE Rate; provided that the Parties shall agree on the scope of such work prior to Dyax’ commencement thereof.  The FTE rate includes all salary, employee benefits, materials and all other expenses including support staff and overhead for or associated with Dyax scientists performing activities under each Research Plan.  FTE payments shall be made as follows:

 

(i)            Campaign [**]. The parties acknowledge and agree that, as of the date of this Amended and Restated Collaboration Agreement, the research activities contemplated under the Research Plan for Campaign [**] have been completed and all FTE payments due in connection with such research activities have been paid. Additionally, the parties acknowledge and agree that as of the Effective Date, Campaign [**] Technical Milestones associated with 4.2(a)(i) in the amount of $[**] and Campaign [**] Technical Milestones associated with 4.2(a)(ii) in the amount of $[**] have been paid.

 

(ii)           Campaigns [**]. Prior to the commencement of each of Campaigns [**], Merrimack shall deliver to Dyax a payment equal to [**] percent ([**]%) of the total estimated FTEs that will be due under the Research Plan for each such Research Campaign.  The remaining balance of the estimated FTEs for each such Research Campaign, plus any additional FTE expenses reasonably incurred by Dyax in connection with the conduct of such Research Plan, shall be delivered to Dyax within [**] days following the receipt of the report by Merrimack at the conclusion of each such Research Campaign.

 

16

 

(b)           Merrimack shall reimburse Dyax for any mutually agreed upon external costs and expenses incurred in connection with the Research Program.

 

4.2           Technical Milestones

 

(a)           Campaigns [**].

 

(i)            Upon completion of each Research Campaign, Merrimack shall pay to Dyax [**] US Dollars ($[**]) for each Merrimack Target against which Dyax was able to identify Antibodies.

 

(ii)           Within [**] days of the commencement of the first [**] with respect to any Dyax Antibody directed against [**] Merrimack Targets, Merrimack shall pay to Dyax [**] US Dollars ($[**]) for each Merrimack Target against which Dyax was able to identify Antibodies.

 

(b)           (b)           Campaigns [**].  Merrimack shall pay to Dyax a technical milestone of [**] US Dollars ($[**]) upon delivery of Antibodies to Merrimack under each Research Campaign; provided however, that such fee shall not be due unless Dyax is able to identify Antibodies that bind to each Merrimack Target included in such Research Campaign. For the avoidance of doubt, Technical Milestones will be paid no more than once per Research Campaign.

 

4.3           Product License Fee.  Prior to entering into a sublicense under a CAT Product License with respect to any Selected Target in accordance with Section 3.2(d), Merrimack shall pay to Dyax a Product License Fee of [**] US Dollars (US $[**] by wire transfer.  If, for any reason, Dyax has not executed the applicable sublicense within [**] business days after the receipt of such fee, Dyax shall, at Merrimack’s request, immediately return such fee.

 

4.4           Development Milestones.  Within [**] days of the occurrence of each of the following events by Merrimack, its Affiliates or sublicensees with respect to Therapeutic Antibody Products against a particular Selected Target (or as described in Section 3.2(e), against more than one Selected Target), Merrimack shall make the following payments to Dyax:

 

(a)           Upon the first achievement of any of the foregoing milestones by a Therapeutic Antibody Product in any Indication:

 

	
 
    	
Milestone Event
    	
 
    	
Payment
    
	
 
    	
[**]
    	
 
    	
US $[**]
    
	
 
    	
[**]
    	
 
    	
US $[**]
    
	
 
    	
[**]
    	
 
    	
US $[**]
    
	
 
    	
[**]
    	
 
    	
US $[**]
    
	
 
    	
[**]
    	
 
    	
US $[**]
    

 

17

 

(b)           Upon the first achievement of any of the foregoing milestones by a Therapeutic Antibody Product in a second Indication:

 

	
 
    	
Milestone Event
    	
 
    	
Payment
    
	
 
    	
[**]
    	
 
    	
US $[**]
    
	
 
    	
[**]
    	
 
    	
US $[**]
    
	
 
    	
[**]
    	
 
    	
US $[**]
    
	
 
    	
[**]
    	
 
    	
US $[**]
    

 

(c)           Upon the first achievement of any of the foregoing milestones by a Therapeutic Antibody Product in a third Indication:

 

	
 
    	
Milestone Event
    	
 
    	
Payment
    
	
 
    	
[**]
    	
 
    	
US $[**]
    
	
 
    	
[**]
    	
 
    	
US $[**]
    
	
 
    	
[**]
    	
 
    	
US $[**]
    
	
 
    	
[**]
    	
 
    	
US $[**]
    

 

4.5           Diagnostic Antibody Product Milestones. Within [**] days of the occurrence of each of the following events by Merrimack, its Affiliates or sublicensees with respect to Diagnostic Antibody Products against a particular Selected Target (or as described in Section 3.2(e), against more than one Selected Target), Merrimack shall make the following payments to Dyax:

 

	
 
    	
Milestone Event
    	
 
    	
Payment
    
	
 
    	
[**]
    	
 
    	
US $[**]
    
	
 
    	
[**]
    	
 
    	
US $[**]
    

 

4.6           Therapeutic Antibody Product Royalties.  Merrimack shall pay to Dyax the following royalties on Net Sales for Therapeutic Antibody Products commercialized by Merrimack, its Affiliates or sublicensees, calculated separately for each Therapeutic Antibody Product:

 

	
 
    	
Annual Net Sales Worldwide 
    	
 
    	
Royalty Rate
    
	
 
    	
Portion   < US$[**] in a calendar year
    	
 
    	
[**]%
    
	
 
    	
Portion   > US$[**] but < US$[**] in a calendar year
    	
 
    	
[**]%
    
	
 
    	
Portion   > US$[**] in a calendar year
    	
 
    	
[**]%
    

 

18

 

4.7           Diagnostic Antibody Product Royalties.  Merrimack shall pay a [**]% royalty on Net Sales for Diagnostic Antibody Products commercialized by Merrimack, its Affiliates or sublicensees, calculated separately for each Diagnostic Antibody Product.

 

4.8           Duration of Royalty Payments.  The royalties payable by Merrimack to Dyax pursuant to Sections 4.6 and 4.7 shall be payable on a country-by-country and Product-by-Product basis for a period commencing with the First Commercial Sale and ending ten (10) years after First Commercial Sale; provided, however, in the event that such ten (10) years period for a Product in a particular country ends prior to the expiration of the last CAT Valid Claim in such country, then royalties shall be payable until the expiration of last CAT Valid Claim.

 

4.9           [**].  In the event that Merrimack, its Affiliates or sublicensees [**] to [**] or [**] to [**], then Merrimack, its Affiliates and sublicensees [**] to [**] to Dyax [**] to [**] the [**] Sections [**] above.

 

4.10         Reports, Payments, Records and Audits.

 

(a)           Merrimack shall make the payments due to Dyax under this Article 4 in United States Dollars.  Where the payments due to Dyax under this Article 4 are being converted from a currency other than United States Dollars, Merrimack will use the conversion rate reported in The Wall Street Journal two (2) Business Days before the day on which Merrimack pays Dyax.  Such payment will be made without deduction of exchange, collection or other charges.

 

(b)           All royalty payments will be made at Quarterly intervals.  Within [**] days of the end of each Quarter after the First Commercial Sale of each Product in any country, Merrimack shall prepare a statement which shall show on a country-by-country basis for the previous Quarter Net Sales of each Product by Merrimack or its Affiliates or sublicensees and all monies due to Dyax based on such Net Sales and shall submit such statement to Dyax within such [**] day period together with remittance of the monies due.

 

(c)           All payments shall be made free and clear of and without deduction or deferment in respect of any disputes or claims whatsoever and/or as far as is legally possible in respect of any taxes imposed by or under the authority of any government or public authority.  Any tax (other than VAT) which Merrimack is required to pay or withhold with respect of the payments to be made to Dyax hereunder shall be deducted from the amount otherwise due provided that, in regard to any such deduction, Merrimack shall give Dyax such assistance, which shall include the provision of such documentation as may be required by any revenue authority and other revenue services, as may reasonably be necessary to enable Dyax to claim exemption therefrom or obtain a repayment thereof or a reduction thereof and shall upon request provide such additional documentation from time to time as is needed to confirm the payment of tax.  If by law, regulation or fiscal policy of a particular country, a remittance of royalties in the currency stipulated in Section 4.9(a) above is restricted or forbidden, notice thereof will be promptly given to Dyax, and payment of the royalty shall be made by the deposit thereof in local currency to the credit of Dyax in a recognized banking institution designated by Dyax or its Affiliates.  When in any country a law or regulation that prohibits both the transmittal and deposit of such payments ceases to be in effect, all royalties or other sums that Merrimack would 

 

19

 

have been under obligation to transmit or deposit but for the prohibition, shall forthwith be deposited or transmitted promptly to the extent allowable.

 

(d)           Merrimack shall keep and shall procure that its Affiliates and sublicensees keep true and accurate records and books of account containing all data necessary for the calculation of the amounts payable by it to Dyax pursuant to this Agreement.  Those records and books of account shall be kept for [**] years following the end of the calendar year to which they relate.  Upon Dyax’s written request, a firm of accountants appointed by agreement between the Parties or, failing such agreement within [**] business days of the initiation of discussions between them on this point Dyax shall have the right to cause an international firm of independent certified public accountants that has not performed auditing or other services for either Party or their Affiliates and is acceptable to Merrimack, such acceptance not to be unreasonably withheld, to inspect such records and books of account.  In particular such firm:

 

(i)            shall be given access to and shall be permitted to examine and copy such books and records of Merrimack and its Affiliates and sublicensees upon [**] business days notice having been given by Dyax and at all reasonable times on business days for the purpose of certifying that the Net Sales or other relevant sums calculated by Merrimack and its Affiliates and sublicensees during any calendar year were reasonably calculated, true and accurate or, if this is not their opinion, certify the Net Sales figure or other relevant sums for such period which in their judgment is true and correct;

 

(ii)           prior to any such examination taking place, such firm of accountants shall undertake to Merrimack and its Affiliates and sublicensees, as applicable, that they shall keep all information and data contained in such books and records, strictly confidential and shall not disclose such information or copies of such books and records to any third person including Dyax, but shall only use the same for the purpose of calculations which they need to perform in order to issue the certificate to which this Section envisages;

 

(iii)          any such access examination and certification shall occur no more than [**] per calendar year and will not go back over records more than [**] years old;

 

(iv)          Merrimack and its Affiliates and sublicensees shall make available personnel to answer queries on all books and records required for the purpose of that certification; and

 

(v)           the cost of the accountant shall be the responsibility of Merrimack if the certification shows it to have underpaid monies to Dyax by more than five percent (5%) and the responsibility of Dyax otherwise.

 

20

 

(e)           All payments due to Dyax under the terms of this Agreement are expressed to be exclusive of value added tax (VAT) howsoever arising.  If Dyax is required to charge VAT on any such payment, Dyax will notify Merrimack.  Merrimack will then use all commercially reasonable endeavours to obtain a VAT registration as soon as reasonably possible in order to allow it to reclaim any VAT so chargeable.  If Merrimack does obtain a VAT registration then VAT will be added to any relevant payment at the applicable rate.  If having used all commercially reasonable endeavours Merrimack is not able to reclaim the VAT (in whole or in part) the parties agree that the amount of any VAT payable will be shared between them equally.

 

(f)            All payments made to Dyax under this Agreement shall be made by wire transfer to the following bank account of Dyax, or such other bank account as notified by Dyax to Merrimack from time to time:

 

	
 
    	
To:
    	
[**]
    
	
 
    	
Routing/Transit:
    	
[**]
    
	
 
    	
For   Credit to:
    	
Dyax   Corp.
    
	
 
    	
Account   No.:
    	
[**]
    
	
 
    	
By   Order of:
    	
 
    
	
 
    	
Name   of Sender
    

 

4.11         Late Payments.  If Merrimack fails to make any payment to Dyax hereunder on the due date for payment, without prejudice to any other right or remedy available to Dyax it shall be entitled to charge Merrimack interest (both before and after judgment) of the amount unpaid at the [**] rate plus [**] percent ([**]%) calculated on a daily basis until payment in full is made without prejudice to Dyax’s right to receive payment on the due date.

 

4.12         Merrimack Acknowledgement.  Merrimack acknowledges and agrees that the amount of milestones and royalties due under this Article 4 and the duration of the royalty payments (set forth in Section 4.8) have been chosen for the convenience of the Parties as payment for Dyax’s services and use of the Dyax Libraries, Dyax Patent Rights, Dyax Research Know-How and Dyax Research Materials to discover Antibodies to Merrrimack Targets, and not as patent royalties.

 

ARTICLE V
 INTELLECTUAL PROPERTY

 

5.1           Ownership.

 

(a)           Dyax Antibodies and Dyax Antibody Information.  Subject to the licenses granted to Merrimack in Section 3.1, Dyax is and shall remain the owner of all Dyax Antibodies that are identified, generated, developed, produced, optimized, or obtained by Dyax from a Dyax Library that is delivered by Dyax to Merrimack in connection with the Research Program, together with the Dyax Antibody Information applicable thereto.

 

(b)           Dyax Libraries. Dyax is and shall remain the owner of the Dyax Libraries and all improvements thereon developed during the term of this Agreement.

 

21

 

(c)           Dyax Research Materials and Dyax Research Know-How.  Subject to the licenses granted to Merrimack in this Agreement, Dyax is and shall remain the owner of the Dyax Research Materials and Dyax Research Know-How generated or utilized during the conduct of the Research Program.

 

(d)           Merrimack Targets and Merrimack Materials.  Merrimack is and shall remain the owner of the Merrimack Targets and Merrimack Materials.

 

5.2           Inventions.  Title to all inventions and other subject matter not accounted for in Section 5.1, (including all intellectual property rights therein) conceived, reduced to practice or otherwise made solely by Dyax personnel in connection with this Agreement shall be owned by Dyax; title to all inventions and other subject matter (including all intellectual property rights therein) conceived, reduced to practice or otherwise made solely by Merrimack personnel in connection with this Agreement shall be owned by Merrimack or any of its Affiliates; and title to all inventions and other subject matter (including all intellectual property rights therein) conceived, reduced to practice or otherwise made jointly by personnel of Dyax and Merrimack in connection with this Agreement shall be jointly owned by Dyax and Merrimack or any of its Affiliates.  Except as expressly provided in this Agreement, it is understood that neither Party shall have any obligation to account to the other for profits, or to obtain any approval of the other Party to license or exploit a joint invention, by reason of joint ownership of any invention or other intellectual property and each Party hereby waives any right it may have under the laws of any country to require such accounting or approval.  Dyax shall promptly notify Merrimack of all Dyax Antibodies identified against Merrimack Targets in accordance with the applicable Research Plan, together with all Dyax Antibody Information applicable thereto.

 

5.3           Patenting Antibody Inventions under the Research Program.

 

(a)           Filing and Prosecution.  Prior to the exercise of its option to obtain a Commercial License as set forth in Section 3.1(b), Dyax will at Merrimack’s request and expense file and prosecute any Patent Rights in any country for any invention solely owned by Dyax which is directed or relating to any Antibody that are identified, generated, developed, produced, optimized, or obtained by Dyax from a Dyax Library that is delivered by Dyax to Merrimack in connection with the Research Program.  Thereafter, such Patent Rights shall be deemed to be included in the rights licensed to Merrimack under Section 3.1.  Dyax shall (i) keep Merrimack fully informed as to the filing, prosecution and maintenance of such Patent Rights, (ii) furnish to Merrimack copies of all documents relevant to any such filing, prosecution and maintenance, and (iii) allow Merrimack [**] days to review and comment upon, and to incorporate Merrimack’s reasonable comments into, any such document filed with any patent office with respect to such Patent Rights prior to filing such documents.

 

Upon exercise of its option to obtain a Commercial License with respect to a Dyax Antibody, as set forth in Section 3.1(b), Merrimack may, at Merrimack’s expense (i) in Dyax’s name, file, maintain, defend and enforce Patent Rights for any invention solely owned by Dyax which is directed or relating to such Dyax Antibody and assume the prosecution of any such Patent Rights filed by Dyax pursuant to this Section 5.3, or (ii) require Dyax to assign to Merrimack any Patent Rights for any invention solely owned by Dyax which is directed or relating to such Dyax Antibody.  Dyax will use reasonable efforts to cooperate with Merrimack in such activities.  

 

22

 

Dyax shall have [**] days to review and comment upon any patent application before it is filed by Merrimack pursuant to this Section 5.3, and Merrimack shall incorporate Dyax’s reasonable comments.  For the avoidance of doubt, Dyax acknowledges and agrees that if, upon Merrimack’s election to obtain a Commercial License with respect to a Dyax Antibody, Dyax is unable to obtain a CAT Product License with respect to the Target against which such Dyax Antibody is directed because Dyax no longer has any CAT Product License options available to it under the terms of the CAT Agreement, Merrimack’s rights under clauses (i) and (ii) of this paragraph above shall apply notwithstanding such inability by Dyax to obtain a CAT Product License and Merrimack may, at Merrimack’s expense, require Dyax to assign to Merrimack any Patent Rights for any invention solely owned by Dyax which is directed or relating to such Dyax Antibody.

 

(b)           Enforcement.  Merrimack shall have the right but not the obligation, at its expense, to enforce any Patent Rights which relate to any Antibody that are identified, generated, developed, produced, optimized, or obtained by Dyax from a Dyax Library that is delivered by Dyax to Merrimack in connection with the Research Program.  Dyax shall cooperate with Merrimack, at Merrimack’s expense, in pursuing any litigation or other enforcement action to enforce such Patent Rights, including allowing Merrimack to file suit in Dyax’s name, making Dyax employees available to Merrimack, and promptly executing any documents which may be required to pursue such action.  Merrimack shall control any such litigation or other enforcement action and shall enter into, or permit, the settlement of any such litigation or other enforcement action.  All monies recovered upon the final judgment or settlement of any suit to enforce such Patent Rights shall first be paid to recover the respective actual out-of-pocket expenses of Merrimack and Dyax, or equitable portion thereof, associated with the enforcement.  The remainder of any such monies shall be deemed to be Net Sales for purposes of determining the royalties owed by Merrimack to Dyax under Sections 4.5. and 4.6.

 

5.4           Further Assurances.  Each Party has and will have appropriate agreements with its employees and contractors necessary to fully effect the provisions of Sections 5.1, 5.2 and 5.3.  Each Party agrees to execute such assignments and other documents, to cause its employees and agents to execute such assignments and other documents, and to take such other actions, as may reasonably be requested by the other Party from time to time to give effect to the provisions of Sections 5.1, 5.2 and 5.3.

 

ARTICLE VI
 CONFIDENTIALITY, PUBLICITY AND PUBLICATIONS

 

6.1           Confidentiality.  With respect to any Confidential Information received by one Party from the other Party, the receiving Party undertakes and agrees, during the term of this Agreement and for an additional period of [**] years thereafter, to:

 

(a)           only use the Confidential Information for the purposes envisioned under this Agreement and not to use the same for any other purpose whatsoever;

 

(b)           ensure that only those of its officers, directors, employees, consultants and permitted sublicensees who are directly concerned with the carrying out of this Agreement have 

 

23

 

access to the Confidential Information on a strictly “need to know” basis and are informed of the secret and confidential nature of it;

 

(c)           keep the Confidential Information secret, confidential, safe and secure and shall not directly or indirectly disclose or permit to be disclosed the same to any Third Party, including any consultants or other advisors, without the prior written consent of the disclosing Party, except to the extent disclosure is in connection with its use as envisioned under this Agreement;

 

(d)           ensure that the Confidential Information will not be covered by any lien or other encumbrance in any way; and

 

(e)           not copy, reproduce or otherwise replicate for any purpose or in any manner whatsoever any documents containing the Confidential Information except in connection with its use as envisioned under this Agreement.

 

Merrimack acknowledges and agrees that Dyax shall be permitted to disclose this Agreement in confidence to CAT and XOMA to the extent reasonably necessary to comply with Dyax’s obligations pursuant to the CAT Agreement and XOMA Agreement.

 

Dyax agrees, at Merrimack’s request, to enforce the confidentiality and non-use provisions of the CAT Agreement and any CAT Product License against CAT if Merrimack reasonably believes that CAT has failed to adhere to such obligations with respect to any Merrimack Confidential Information that CAT learns through the CAT Gatekeeping Procedure set forth in Appendix B.

 

6.2           Exclusions.  The obligations referred to in Section 6.1 above shall not extend to any Confidential Information which:

 

(a)           was in the public domain prior to this Agreement or becomes part of the public domain through no fault of the receiving Party, or

 

(b)           is known or becomes known to the receiving Party (having been generated independently by the receiving Party or by a Third Party in circumstances where it has not been derived directly or indirectly from any improper use of Confidential Information of the disclosing Party), or

 

(c)           is or was disclosed to the receiving Party at any time by a Third Party having no obligation of confidentiality with respect to such Confidential Information, or

 

(d)           is required to be disclosed by applicable law, rule, regulation or administrative or court proceeding (including as part of any regulatory submission or approval process) and then only when prompt written notice of this requirement has been given to the disclosing party so that it may, if so advised, seek appropriate relief to prevent such disclosure, provided always that in such circumstances such disclosure shall be only to the extent so required and shall be subject to prior consultation with the disclosing party with a view to agreeing on the timing and content of such disclosure (i.e., obligations under Section 6.1 shall not apply to such required disclosure), or

 

24

 

(e)           is information concerning Product which Merrimack is reasonably required to disclose to consultants (such as advertising agencies, reimbursement experts and marketing research companies), customers, healthcare professionals, consumers or regulatory agencies, or which is disclosed by Merrimack to Affiliates and distributors and sublicensees in order to allow them to market and sell Product (i.e., Merrimack’s obligations under Section 6.1 shall not extend to such disclosure by Merrimack, but nothing in this clause (e) shall relieve Dyax of obligations under Section 6.1); or

 

(f)            is disclosed by Merrimack to a Third Party in exercising the rights and licenses granted under this Agreement, provided that such Third Party has confidentiality obligations similar to those of this Agreement (i.e., Merrimack’s obligations under Section 6.1 shall not extend to such disclosure by Merrimack, but nothing in this clause (f) shall relieve Dyax of obligations under Section 6.1).

 

6.3           Dyax Antibodies.  Notwithstanding anything to the contrary contained herein, the fact that any given Dyax Antibody is identified in a Research Campaign against a Merrimack Target shall constitute Confidential Information of Merrimack.

 

6.4           Publicity.  No public announcement or other disclosures concerning the terms of this Agreement shall be made to a Third Party, whether directly or indirectly, by either Party (except confidential disclosures to professional advisors) without first obtaining the approval of the other Party and agreement upon the nature and text of such announcement or disclosure except that: (i) a Party may disclose those terms which it is required by regulation or law to disclose, provided that it takes advantage of all provisions to keep confidential as many terms as possible; and (ii) a Party desiring to make such public announcement or other public disclosure shall obtain the consent of the other Party to the proposed announcement or public disclosure prior to public release.  Each Party agrees that it shall cooperate fully with the other with respect to all disclosures regarding this Agreement as required under the regulations of the U.S.  Securities and Exchange Commission, applicable stock exchanges, NASDAQ and any other comparable foreign body including requests for confidential information or proprietary information of either Party included in any such disclosure. Merrimack agrees that Dyax may include Merrimack on a list of Dyax licensees.  In addition, a Party may disclose the terms and conditions of this Agreement to a Third Party in connection with an equity investment in such Party, a loan or other financing, a merger, consolidation, change in control or similar transaction by such Party, the transfer or sale of the assets of such Party relating to this Agreement, or in connection with the granting of a sublicense under this Agreement.

 

6.5           Publication.  In the event that either Party (the “Publishing Party”) wishes to publish, in oral or written form, any Confidential Information of the other Party (the “Non-Publishing Party”), such Party will promptly notify the Non-Publishing Party and provide the Non-Publishing Party with a written copy of the proposed publication prior to its submission for publication. At the Non-Publishing Party’s request, such the Publishing Party will delay publication in order to permit the Non-Publishing Party to take the steps necessary to secure rights to any intellectual property arising from the Publishing Party’s use of Confidential Information, including the filing of one or more patent applications.  In no event will such delay exceed [**] days from the date the Non-Publishing Party receives a written copy of the proposed publication.  If the Non-Publishing Party makes such a request, the Publishing Party agrees to 

 

25

 

cooperate with the Non-Publishing Party in securing such intellectual property rights using the Non-Publishing Party’s choice of counsel and the Non-Publishing Party will bear all costs of such filing.  No patent application describing an invention resulting from the Publishing Party’s use of Confidential Information will be filed or caused to be filed by the Publishing Party without first notifying the Non-Publishing Party as described above for proposed publications. Any publication or patent application will acknowledge the Non-Publishing Party’s contribution.  No publication or patent application will disclose any Confidential Information of a Party without the prior written permission of that Party.

 

ARTICLE VII
 REPRESENTATIONS, WARRANTIES AND COVENANTS.

 

7.1           Authorization.  Each Party represents and warrants to the other Party that it has the legal right and power to enter into this Agreement, to extend the rights and licenses granted to the other in this Agreement, and to fully perform its obligations hereunder, and that the performance of such obligations will not conflict with its charter documents or any agreements, contracts, or other arrangements to which it is a party.

 

7.2           Dyax Representations and Warranties.  Dyax represents and warrants to Merrimack that:

 

                [**].

 

7.3           Dyax Covenants.  Dyax hereby covenants and agrees that [**] or [**] of the [**] of [**] to be [**] the [**] during the [**] of the [**] not be [**] not be [**] with the [**] in the [**] the [**] or [**]; and [**], and to the [**] have the [**] to [**].  Merrimack agrees that Dyax shall not be deemed to have breached its obligations under this Section 7.3 unless Merrimack’s rights to research, develop and/or commercialize Products under this Agreement are adversely affected.

 

7.4           Disclaimer.  Except as otherwise set forth in Section 5.3, nothing in this Agreement is or shall be construed as obligating Dyax to (a) bring or prosecute actions or suits against Third Parties for infringement of any of the patent rights licensed or sublicensed by Dyax to Merrimack hereunder, (b) maintain any patent or to continue to prosecute any patent application licensed or sublicensed by Dyax to Merrimack hereunder, or (c) granting by implication, estoppel, or otherwise (excluding explicit license and sublicense grants) any licenses or rights under patents or other rights of Dyax or Third Parties, regardless of whether such patents or other rights are dominant or subordinate to any patent rights licensed or sublicensed by one Party to the other Party hereunder.

 

7.5           No Other Warranties.  Except as otherwise set forth in Section 7.1 and 7.2, nothing in this Agreement shall be construed as a warranty or representation by Dyax that the use of the Dyax Libraries or Dyax Library Materials and the practice of the patent rights and know-how licensed or sublicensed to Merrimack hereunder will result in any Dyax Antibodies or Products, or as a warranty or representation by Dyax that the exploitation of any of the foregoing will be free from infringement of patents of Third Parties.  EXCEPT AS OTHERWISE SET FORTH IN SECTION 7.1 and 7.2 ABOVE, NEITHER PARTY HERETO MAKES ANY 

 

26

 

REPRESENTATIONS OR WARRANTIES WITH RESPECT TO ANY OF THE PATENT RIGHTS, MATERIALS (INCLUDING WITHOUT LIMITATION THE DYAX LIBRARIES AND DYAX MATERIALS) OR KNOW-HOW LICENSED HEREUNDER, EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW, BY STATUTE OR OTHERWISE, OR THAT ANY PRODUCT OR SERVICE MADE, USED, SOLD, OR OTHERWISE DISPOSED OF UNDER ANY LICENSE OR SUBLICENSE GRANTED IN THIS AGREEMENT IS OR WILL BE FREE FROM INFRINGEMENT OF ANY PATENT RIGHTS OR OTHER INTELLECTUAL PROPERTY RIGHT OF ANY THIRD PARTY. EACH PARTY SPECIFICALLY DISCLAIMS ANY EXPRESS OR IMPLIED WARRANTY OF MERCHANTABILITY, OF FITNESS FOR A PARTICULAR PURPOSE, OF VALIDITY OR SCOPE OF SUCH PATENT RIGHTS, MATERIALS OR KNOW-HOW, ARISING FROM COURSE OF DEALING OR OF NON-INFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS OF ANY THIRD PARTY.

 

7.6           Limitation of Liability.  Neither Party shall be liable to the other for consequential, incidental, indirect or punitive damages arising from the performance or nonperformance of such Party under this Agreement whether such claim is based on contract, tort (including negligence) or otherwise, even if an authorized representative of such Party is advised of the possibility or likelihood of same.

 

ARTICLE VIII
 INDEMNIFICATION

 

8.1           Indemnification by Merrimack.  Merrimack shall indemnify, defend, and hold harmless Dyax and its Affiliates, directors, officers, employees, and agents and their respective successors, heirs and assigns (the “Dyax Indemnitees”) against any liability, damage, loss, or expense (including reasonable attorneys fees and expenses of litigation) incurred by or imposed upon the Dyax Indemnitees or any one of them in connection with any claims, suits, actions, demands, or judgments in each case initiated by a Third Party which arise out of: (a)  any Product developed or commercialized by or on behalf of Merrimack; (b) the gross negligence or willful misconduct of Merrimack in connection with this Agreement; or (c) any breach of any obligation of Merrimack under this Agreement, including without limitation, the failure of Merrimack to comply with the provisions of Sections 3.3 through 4.6 of this Agreement.  Notwithstanding the foregoing, Merrimack shall have no obligation under this Section 8.1 with respect to claims, suits, actions, demands or judgments to the extent the same is caused by the gross negligence or willful misconduct of a Dyax Indemnitee.

 

8.2           Indemnification by Dyax.  Dyax shall indemnify, defend, and hold harmless Merrimack and its Affiliates, directors, officers, employees, and agents and their respective successors, heirs and assigns (the “Merrimack Indemnitees”) against any liability, damage, loss, or expense (including reasonable attorneys fees and expenses of litigation) incurred by or imposed upon the Merrimack Indemnitees or any one of them in connection with any claims, suits, actions, demands, or judgments in each case initiated by a Third Party which arise out of: (a) the gross negligence or willful misconduct of Dyax in connection with this Agreement; or (b) any breach of any obligation of Dyax under this Agreement.  Notwithstanding the foregoing, Dyax shall have no obligation under this Section 8.2 with respect to claims, suits, actions, 

 

27

 

demands or judgments to the extent the same is caused by the gross negligence or willful misconduct of a Merrimack Indemnitee.

 

8.3           Procedure.  A Party (for purposes of this Section 8.3, the “Indemnitee”) that intends to claim indemnification under this Article 8 shall:  (i) promptly notify the indemnifying party (the “Indemnitor”) in writing of any claim, action, suit, or other proceeding brought by Third Parties in respect of which the Indemnitee or any of its Affiliates, directors, officers, employees, successors or assigns intend to claim such indemnification hereunder; (ii) provide the Indemnitor sole control of the defense and/or settlement thereof, and (iii) provide the Indemnitor, at the Indemnitor’s request and expense, with reasonable assistance and full information with respect thereto.  Notwithstanding the foregoing, the indemnity obligation in this Article 8 shall not apply to amounts paid in settlement of any loss, claim, damage, liability or action if such settlement is effected without the consent of the Indemnitor, to the extent such consent is not withheld unreasonably or delayed.  Without limiting the foregoing provisions of this Section 8.3, the Indemnitor shall keep the Indemnitee reasonably informed of the progress of any claim, suit or action under this Section 8.3 and the Indemnitee shall have the right to participate in any such claim, suit or proceeding with counsel of its choosing at its own expense, but the Indemnitor shall have the sole right to control the defense or settlement thereof.

 

ARTICLE IX
 TERM AND TERMINATION

 

9.1           Research Term.  The term of the Research Program (the “Research Term”) commenced on the effective date of the Original Agreement, has continued in effect through the Effective Date hereof, and shall remain in effect until all activities required to be taken by Dyax and Merrimack under all Research Campaigns of the Research Program have been completed.

 

9.2           Term of Agreement.  This Agreement commenced on the effective date of the Original Agreement, has continued in effect through the Effective Date hereof, and shall remain in effect, unless earlier terminated as provided in this Article 9, for so long as Merrimack or any of its Affiliates or sublicensees continues to develop and/or commercialize Products that are or may be royalty-bearing hereunder or under any CAT Product License and thereafter shall terminate, on a country-by-country and Product-by-Product basis on the earliest the date after which no payments are due to Dyax under Article 4 of this Agreement.

 

9.3           Termination by Merrimack.  After the expiration of the term of the Research Program, Merrimack shall have the right to terminate this Agreement in its entirety or on a Product-by-Product basis at any time by providing ninety (90) days prior written notice to Dyax.

 

9.4           Termination by Dyax.  In the event that Merrimack fails to make timely payment of any amounts due to Dyax under Article 5 of this Agreement, Dyax may terminate this Agreement upon thirty (30) days prior written notice to Merrimack, unless Merrimack pays all undisputed past-due amounts prior to the expiration of such thirty (30) day notice period.

 

9.5           Termination for Other Material Breach.  In the event that either Party commits a material breach of any of its obligations under this Agreement, and such Party fails to remedy that breach within [**] days after receiving written notice thereof from the other Party, then the 

 

28

 

other Party may immediately terminate this Agreement upon written notice to the breaching Party.

 

9.6           Effect of Termination.

 

(a)           Upon termination of this Agreement in its entirety or with respect to any particular Product pursuant to Section 9.3, 9.4 or 9.5 hereof, all of Merrimack’s rights and obligations under this Agreement (including any license rights) with respect to all Products or such particular Product, as applicable, shall terminate immediately and, except as set forth in Section 9.6(c), Merrimack shall cease the development and commercialization of all Products or such particular Product, as applicable; provided however that, subject to the terms of any Third Party Phage Display Agreement, [**].

 

(b)           The following provisions shall survive the expiration or termination of this Agreement:  Articles 5, 6, 8 and 10 and Sections , 4.10, 4.11, 7.4, 7.5, 7.6, and this Section 9.6; as well as Merrimack’s obligation to make payments with respect to Products sold prior to the effective date of termination.  In the event of the termination of this Agreement with respect to a Product in a country under Section 9.2, upon satisfaction of Merrimack’s payment obligations pursuant to Article 4, any license granted under Article 3 with respect thereto shall be fully paid up and royalty free.

 

(c)           Upon any termination of this Agreement in its entirety or with respect to a Product, at its option, Merrimack shall be entitled to complete production of and/or sell any in-process and/or completed inventory of Product under the licenses granted under this Agreement which remains on hand as of the date of termination, so long as Merrimack pays to Dyax the payments applicable to said subsequent sales in accordance with the same terms and conditions set forth in this Agreement.

 

(d)           Upon expiration or termination of this Agreement for any reason, nothing herein shall be construed to release either Party from any obligation that matured prior to the effective date of such expiration or termination.

 

(e)           In the event that Merrimack disputes a payment obligation and Merrimack notifies Dyax of such dispute and makes the payment under protest, then notwithstanding such payment, Merrimack shall have the right to bring an action as to whether or not Merrimack is obligated to make such payment and to the extent Merrimack prevails in such action, Dyax shall return such disputed payment to Merrimack.

 

(f)            This Agreement may be terminated only as expressly provided in this Article 9.

 

ARTICLE X
 MISCELLANEOUS

 

10.1         Relationship of Parties.  Nothing in this Agreement or in the course of business between Dyax and Merrimack shall make or constitute either Party a partner, employee or agent of the other.  Neither Party shall have any right or authority to commit or legally bind the other in 

 

29

 

any way whatsoever including, without limitation, the making of any agreement, representation or warranty.

 

10.2         Notices.  All notices, requests, demands and other communications required or permitted to be given pursuant to this Agreement shall be in writing and shall be deemed to have been duly given upon the date of receipt if delivered by hand, recognized international overnight courier, confirmed facsimile transmission, or registered or certified mail, return receipt requested, postage prepaid to the following addresses or facsimile numbers:

 

	
If to Dyax:
    	
Dyax   Corp.

300   Technology Square

Cambridge,   MA 02139

Attention:   Vice President, Business Development

Attention:   Corporate Counsel, Legal Department

Facsimile:   (617) 225-2501
    
	
 
    	
 
    
	
If to Merrimack:
    	
Merrimack   Pharmaceuticals, Inc.

One   Kendall Square

Building   700, 2nd Floor

Cambridge,   MA 02139

Attention:   Senior Director, Business Development

Facsimile:   (617) 491-1386
    

 

Either Party may change its designated address and facsimile number by notice to the other Party in the manner provided in this Section.

 

10.3         Assignment.  This Agreement may not be assigned by either Party without the prior written consent of the other Party, except that either Party may assign this Agreement (i) to any of its Affiliates, (ii) in connection with the grant of a security interest, or (iii) or to a successor in connection with the merger, consolidation, or sale of all or substantially all of its assets or that portion of its business pertaining to the subject matter of this Agreement, with prompt written notice to the other Party of any such assignment and provided that the assignee assumes in writing all of the obligations of the assignor. This Agreement shall inure to the benefit of and be binding upon the Parties and their respective lawful successors and assigns

 

10.4         Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts, without regard to any choice of law principles that would dictate the application of the laws of another jurisdiction.

 

10.5         Compliance With Law.  Nothing in this Agreement shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision of this Agreement and any statute, law, ordinance or treaty, the latter shall prevail, but in such event the affected provisions of the Agreement shall be conformed and limited only to the extent necessary to bring it within the applicable legal requirements.

 

30

 

10.6         Force Majeure.  Neither Party shall be liable for failure or delay in performance of any obligation under this Agreement, other than payment of any amount due and payable, if such failure or delay is caused by circumstances beyond the control of the Party concerned, including, without limitation, failures resulting from fires, earthquakes, power surges or failures, accidents, labor stoppages, war, revolution, civil commotion, acts of public enemies, blockade, embargo, inability to secure materials or labor, any law, order, proclamation, regulation, ordinance, demand, or requirement having a legal effect of any government or any judicial authority or representative of any such government, acts of God, or acts or omissions of communications carriers, or other causes beyond the reasonable control of the Party affected, whether or not similar to the forgoing.  Any such cause shall delay the performance of the affected obligation until such cause is removed.

 

10.7         Amendment and Waiver.  This Agreement may be amended, supplemented, or otherwise modified only by means of a written instrument signed by both Parties.  Any waiver of any rights or failure to act in a specific instance shall relate only to such instance and shall not be construed as an agreement to waive any rights or fail to act in any other instance, whether or not similar.

 

10.8         Headings.  All headings used in this Agreement are inserted for convenience only and are not intended to affect the meaning or interpretation of this Agreement or any Article or Section hereof.

 

10.9         Severability.  In the event any provision of this Agreement should be held invalid, illegal or unenforceable, the remaining provisions shall not be affected or impaired and the Parties will use all reasonable efforts to replace the applicable provision with a valid, legal and enforceable provision which insofar as practical implements the purposes hereof, provided, however, that if the Parties fail to reach such agreement within [**] days, a Party whose rights or obligations are materially affected as a result of a provision being held invalid, illegal or unenforceable may terminate this Agreement.

 

10.10       Entire Agreement.  This Agreement constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes any term sheets and all prior agreements or understandings between the Parties relating to the subject matter hereof.

 

10.11       Bankruptcy. All rights and licenses granted under or pursuant to this Agreement by Dyax to Merrimack are, and shall irrevocably be deemed to be, “intellectual property” as defined in Section 101(56) of the Bankruptcy Code.  In the event of the commencement of a case by or against either Party under any Chapter of the Bankruptcy Code, this Agreement shall be deemed an executory contract and all rights and obligations hereunder shall be determined in accordance with Section 365(n) thereof.  Unless a Party rejects this Agreement and the other Party decides not to retain its rights hereunder, the other Party shall be entitled to a complete duplicate of (or complete access to, as appropriate) all intellectual property and all embodiments of such intellectual property held by the Party and the Party shall not interfere with the rights of the other Party, which are expressly granted hereunder, to such intellectual property and all embodiments of such intellectual property from another entity.

 

31

 

10.12       Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original agreement.

 

10.13       Amends and Restates.  This Agreement amends, restates and replaces in its entirety the Original Agreement.

 

32

 

IN WITNESS WHEREOF, the undersigned have duly executed and delivered this Agreement as a sealed instrument effective as of the date first above written.

 

	
DYAX CORP.
    	
 
    	
MERRIMACK PHARMACEUTICALS, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/ Henry E. Blair
    	
 
    	
By:
    	
/s/ Robert J. Mulroy
    
	
Title:
    	
Chief Executive Officer
    	
 
    	
Title:
    	
President and Chief Executive Officer
    
	
Date:
    	
January 24, 2007
    	
 
    	
Date:
    	
January 25, 2007
    

 

33

 

APPENDIX A

 

RESEARCH PLAN 
 FOR
 CAMPAIGN I

 

Workplan Overview

 

The aim of the project is to identify [**] from Dyax’s antibody library against [**] targets provided by Merrimack Pharmaceuticals, Inc. (Merrimack).  For [**] of the targets, [**] are available and will be used in the selection plan.  A schematic showing the overall workplan is presented in Scheme 1.  Dyax will perform [**] using the Dyax [**].  Selection output [**] will be tested using a [**] against the [**], and at [**] selection [**] per target showing a [**].  The [**] will be subjected to [**] target to screen approximately [**] per target.  Confirmed [**] will be [**], and the [**] data will be used to identify up to [**] per target that will be [**].  The resulting [**] will be used to [**] based either on [**].  Based on the results from the [**] will be selected for [**]) to Merrimack for more extensive evaluation.

 

Deliverables to Merrimack for each of [**] targets

 

[**]

 

 

Reagent And Data Delivery To Dyax

 

Merrimack will supply Dyax with the following materials with respect to [**] targets for selections and screening:

 

[**]

 

 

Scheme 1, Plan Overview

 

[**]

 

 

Target Validation, Selections, Screening, And Sequencing

 

The selection plan for soluble protein targets is dependent on the target format, and [**].

 

[**].

 

 

Scheme 2, Representative Selection Strategies:

 

[**]

 

 

Final Lead Selection And [**] Production

 

[**].

 

Key Dates And Timeline

 

A project timeline with a start date of Dec 2nd, 2005 has the following key dates:

 

[**]

 

 

 

APPENDIX B
 CAT GATEKEEPING PROCEDURE

 

For each Nominated Target (which must be accompanied by a GenBank® accession number or similar information which uniquely identifies that Nominated Target) submitted by Dyax under Clause 4.1, CAT will, on a Nominated -Target-by-Nominated -Target basis, not grant a Product License to Dyax, if:

 

1.             CAT is, at the date of submission of the Target Option Notice by Dyax, contractually obligated on an exclusive basis in respect of the Nominated Target with a Third Party pursuant to an agreement with that Third Party which was entered into prior to the Commencement Date of this Agreement; or

 

2.             CAT is, at the date of submission of the Target Option Notice by Dyax, engaged in internal research and/or development with respect to the Nominated Target (as can be measured by reliable or verifiable means).

 

NOTES

 

1.             For the avoidance of doubt, CAT will not subject any Nominated Target to the CAT Gatekeeping Procedure unless and until Dyax supplies CAT with a GenBank® accession number or similar information which uniquely identifies that Nominated Target.

 

2.             If Dyax supplies CAT with an incorrect GenBank® accession number for a Nominated Target or otherwise incorrectly identifies a Nominated Target which is then subjected to the CAT Gatekeeping Procedure, the result of the CAT Gatekeeping Procedure in respect of such Nominated Target shall prevail even if it is subsequently discovered that such incorrect GenBank® accession number or identifying information had been provided by Dyax.

 

3.             Within one (1) month after notice is given to Dyax of a refusal by CAT to grant a Product License in respect of any Nominated Target, Dyax may notify CAT that it wishes to appoint an Expert to make such enquiries of CAT as may be reasonably necessary for the Expert to be able to confirm to Dyax that the CAT Gatekeeping Procedure had been correctly applied by CAT in respect of such Nominated Target.  CAT shall provide such information to the Expert as the Expert may reasonably determine is required in order to make such confirmation.  For the avoidance of doubt the Expert shall not be entitled (unless CAT consents) to enter CAT premises in order to carry out its enquiries, shall only provide the confirmation to Dyax on a “Yes/No” basis and shall not give or be obliged to give to Dyax any other information obtained from CAT in respect of the CAT Gatekeeping Procedure or the relevant Nominated Target.  The Expert shall, prior to making any enquiries of CAT, enter into a confidential disclosure agreement with CAT.  Notwithstanding the foregoing, CAT shall not be obliged to respond to the enquiries of the Expert if to do so would, or would reasonably be expected to, cause a breach in terms of any agreement CAT may have with any other Third parties; provided, however, that such disclosure subject to the confidential disclosure agreement shall be treated by CAT in the same manner as disclosure in its normal business operations. The Expert shall complete its investigations and provide the confirmation to Dyax (with a copy to CAT) within thirty (30) days after appointment by Dyax, and payment of the Expert’s fee shall be conditioned on such delivery being timely

 

 

made.  If such written confirmation is not made within such thirty (30) days period, then a replacement Expert shall be appointed within 10 days thereafter, subject to same terms and conditions stated above.  If an Expert provides notice that he or she cannot complete the analysis because CAT has failed without good reason to provide any information requested as provided above, then CAT shall have no more than 30 days to provide the information and the Expert shall then have no more than 15 days after the information is provided to the Expert to evaluate the information and make a determination.  Failure of the second Expert to provide such written confirmation to Dyax on a “Yes/No” basis within thirty (30) days after appointment shall be irrevocably deemed to be confirmation that CAT correctly applied the CAT Gatekeeping Procedure to the Nominated Target in question, provided, however that until (i) CAT provides all information that it is required to provide in accordance with this Schedule 2 and (ii) the expiration of any extension required for the Expert to evaluate such information, there shall not be deemed to be any such confirmation that CAT correctly applied the CAT Gatekeeping Procedure to the Nominated Target in question.

 

If the Expert appointed by Dyax hereunder decides that CAT correctly applied, or is deemed to have correctly applied, the CAT Gatekeeping Procedure, Dyax shall be responsible for the Expert’s fees and CAT shall thereafter have no obligations to Dyax in respect of such Nominated Target.  If the Expert decides that CAT did not correctly apply the CAT Gatekeeping Procedure Dyax shall be granted a Product License in relation to the Nominated Target in question (provided that CAT is not restricted by obligations to any Third Party in relation to the Nominated Target in question in which case the Product License will be subject to those restrictions) and CAT shall be responsible for the Expert’s fees.  The procedure described in this paragraph 3 will not apply to any determination by CAT that the Primary Application of a Nominated Target is in the Excluded Field, where CAT’s decision will be final if made in good faith.

 

“Expert” means a patent agent who is independent of CAT and all of the other parties with an interest in the outcome of a determination regarding a Nominated Target, who has suitable knowledge and experience in the reasonable opinion of Dyax to perform the above activities, subject to CAT’s consent, which consent shall not be unreasonably withheld or delayed.

 

 

APPENDIX C
 CAT PATENT RIGHTS

 

[**].

 

 

EXHIBIT D
 CAT PRODUCT LICENSE

 

Private & Confidential

 

 

CAMBRIDGE ANTIBODY TECHNOLOGY LIMITED (1)

 

AND

 

DYAX CORP.  (2)

 

 

 

PRODUCT LICENSE FOR      

 

 

Appendix D

 

1

 

THIS AGREEMENT is made:

 

BETWEEN:

 

(1)           CAMBRIDGE ANTIBODY TECHNOLOGY LIMITED (Registered in England No. 2451177) whose registered office is at The Milstein Building, Granta Park, Cambridge, Cambridgeshire, CB1 6GH, UK (“CAT”).

 

(2)           DYAX CORP. a corporation organised and existing under the laws of the State of Delaware having its principal place of business at 300 Technology Square, Cambridge, Massachusetts  02139 USA (“Dyax”).

 

BACKGROUND:

 

(a)                                  By the terms of the Amendment Agreement (as defined below), CAT granted Dyax certain options to be granted Product Licences under the Antibody Phage Display Patents and CAT Know How (all as defined below).

 

(b)                                 Dyax has nominated the Target (which was identified prior to the execution of the Amendment Agreement), and this Target has passed the CAT Gatekeeping Procedure (each as defined below).

 

(c)                                  By this Agreement CAT wishes to grant to Dyax a Product Licence in respect of Diagnostic Antibody Products and Therapeutic Antibody Products against the Target.

 

In consideration of the mutual covenants and undertakings set out below, THE PARTIES AGREE as follows:

 

1.             Definitions

 

1.1           In this Agreement, the terms defined in this Clause shall have the meanings specified below:

 

“Acceptance Fee” means                    Dollars (US $          ).

 

[**]

 

“Affiliate” means any company, partnership or other entity which directly or indirectly Controls, is Controlled by or is under common Control with any other entity.

 

“Agreement” means this product licence and any and all Schedules, appendices and other addenda to it as may be amended from time to time in accordance with the provisions of this agreement.

 

“Amendment Agreement” means the agreement executed by Dyax and CAT on 3 January 2003, as amended.

 

2

 

“Antibody” means a molecule or a gene encoding such a molecule comprising or containing one or more immunoglobulin variable domains or parts of such domains or any existing or future fragments, variants, modifications or derivatives thereof.

 

“Antibody Library” means any Antibody library constructed using processes which are covered by a claim of an issued and unexpired patent included within the Antibody Phage Display Patents which has not been held permanently revoked, unenforceable or invalid by a decision of a court or other governmental agency of competent jurisdiction unappealed within the time allowed for appeal, and which has not been admitted to be invalid or unenforceable through reissue or disclaimer or otherwise.

 

“Antibody Phage Display Patents” means:  (a) the patents and patent applications listed in Schedule 1 and any patents issuing from such patent applications, together with any divisions, registrations, confirmations, reissues, extensions, renewals, continuations, continuations-in-part, revalidations, additions, substitutions, renewals or supplementary protection certificates thereof throughout the world; and (b) any Patent Rights which claim or cover any invention or discovery which is developed by CAT or its Affiliates at any time during the term of this Agreement directly related to Antibody phage display or Antibody Services; provided, however, that Antibody Phage Display Patents shall always exclude (i) CAT Diabodies Patent Rights, (ii) any Patent Rights owned or controlled by CAT which claim or cover Catalytic Antibodies, (iii) any Patent Rights owned or controlled by CAT which claim ribosome display technology, (iv) any Patent Rights which claim Single Domain Antibodies, and (v) any Patent Rights acquired by CAT after the Commencement Date from any Third Party for consideration or as a result of CAT’s acquisition of or merger with such Third Party.

 

“Antibody Services” means the provision of research and/or development services for the identification, generation, derivation or development of one or more Antibody Libraries or Antibodies derived therefrom.

 

“Business Day” means a day (other than a Saturday or Sunday) on which the banks are ordinarily open for business in the City of London and the Commonwealth of Massachusetts.

 

“CAT Diabodies Patent Rights” means (a) the Patent Rights entitled “Diabodies — multivalent and multispecific binding proteins, their manufacture and use”, PCT/GB93/02492 and (b) the Patent Rights entitled “Retargeting antibodies and diabodies”, PCT/GB94/02019.

 

“CAT Gatekeeping Procedure” means the procedure set out in Schedule 2 of the Amendment Agreement which CAT has carried out in respect of the Target prior to the grant of this Product Licence.

 

“CAT Know-How” means any Confidential Information of CAT which constitutes unpatented know-how, technical and other information related to the subject matter of the

 

3

 

Antibody Phage Display Patents as identified in Schedule 2 and as amended from time to time in accordance with Schedule 2.

 

“CAT Licensable Antibody” means any Antibody to the Target (a) where such Antibody has been identified, generated, developed, produced or derived by Dyax or a Dyax Sublicensee or its sublicensees and (b) the identification, generation, development, production or derivation of such Antibody uses any of the processes claimed or covered by a claim of an issued and unexpired patent included within the Antibody Phage Display Patents (which has not been held permanently revoked, unenforceable or invalid by a decision of a court or other governmental agency of competent jurisdiction unappealed within the time allowed for appeal, and which has not been admitted to be invalid or unenforceable through reissue or disclaimer or otherwise) or uses the CAT Know-How and (c) which is potentially useful for the development of any Diagnostic Antibody Product and/or any Therapeutic Antibody Product.

 

“Catalytic Antibodies” means solely those Antibodies which bind to and catalyze the chemical transformation of a substrate and in which an Antibody binding region is involved in said catalysis.

 

“Commencement Date” means the date of this Agreement first written above.

 

“Competent Authority” means any national or local agency, authority, department, inspectorate, minister, ministry official, parliament or public or statutory person (whether autonomous or not) of any government of any country having jurisdiction over either any of the activities contemplated by this Agreement or the Parties including the European Commission, the Court of First Instance and the European Court of Justice.

 

“Controls” means the ownership, directly or indirectly, of more than fifty percent (50%) of the outstanding equity securities of a corporation which are entitled to vote in the election of directors or a more than fifty percent (50%) interest in the net assets or profits of an entity which is not a corporation.

 

“Diagnostic Antibody Product” means any preparation in the form of a device, compound, kit or service with utility in the diagnosis, prognosis, prediction or disease management of a disorder for any indication which contains, comprises or the process of development or manufacture of which utilises a CAT Licensable Antibody.  The term “Diagnostic Antibody Product” shall not include any Research Product.

 

“Dyax Therapeutic Antibody Product” means any Therapeutic Antibody Product identified, generated or derived by Dyax for itself or its Affiliates but not a Therapeutic Antibody Product identified, generated or derived by Dyax for, or on behalf of, a Third Party.

 

“Dyax Sublicensee” means any sublicensee of Dyax under this Agreement.

 

“Exploit” means to make, have made, use, sell or import.

 

4

 

“FDA” means the United States Food and Drug Administration, the equivalent Competent Authority in any country of the Territory or any successor bodies thereto.

 

“First Commercial Sale” means the first commercial sale of any Product by Dyax or a Dyax Sublicensee (or its sublicensee) in any country after grant of a Marketing Authorisation.

 

“Force Majeure” means any event outside the reasonable control of either Party affecting its ability to perform any of its obligations (other than payment) under this Agreement, including Act of God, fire, flood, lightning, war, revolution, act of terrorism, riot or civil commotion, but excluding strikes, lock-outs or other industrial action, whether of the affected Party’s own employees or others, failure of supplies of power, fuel, transport, equipment, raw materials or other goods or services.

 

“GAAP” means United States generally accepted accounting principles, consistently applied.

 

“IDE” means an Investigational Device Exemption application, as defined in Title 21 of the United States Code of Federal Regulations, filed with the FDA or an equivalent foreign filing.

 

“IND” means an Investigational New Drug Application, as defined in Title 21 of the United States Code of Federal Regulations, that is required to be filed with the FDA before beginning Phase I Clinical Trials of any Therapeutic Antibody Product in human subjects, or an equivalent foreign filing.

 

“Major Market” means any one of the following:  (i) the United States of America, (ii) any country in Europe which is subject to the Marketing Authorisation procedure of the European Medicines Evaluation Agency, or (iii) Japan.

 

“Marketing Authorisation” means any approval (including all applicable pricing and governmental reimbursement approvals) required from the FDA or relevant Competent Authority to market and sell a Product in a particular country.

 

“Net Sales” means, with respect to a Product sold by Dyax or a Dyax Sublicensee (or its sublicensees) sold by Dyax or its sublicensee, the price invoiced by that party to the relevant purchaser (or in the case of a sale or other disposal otherwise than at arm’s length, the price which would have been invoiced in a bona fide arm’s length contract or sale) but deducting the costs of packing, transport and insurance, customs duties, any credits actually given for returned or defective Products, normal trade discounts actually given, and sales taxes, VAT or other similar tax charged on and included in the invoice price to the purchaser.

 

“Party” means CAT or Dyax.

 

“Patent Rights” means any patent applications and any patents issuing from such patent applications, author certificates, inventor certificates, utility certificates, improvement

 

5

 

patents and models, and certificates of addition and all counterparts of them throughout the Territory, including any divisional applications and patents, filings, renewals, continuations, continuations-in-part, patents of addition, extensions, reissues, substitutions, confirmations, registrations, revalidation and additions of or to any of them, as well as any supplementary protection certificates and equivalent protection rights in respect of any of them.

 

“Pharmacia Agreement” means the agreement between CAT and Pharmacia P-L Biochemicals Inc. dated 11 September 1991.

 

“Pharmacia P-L Biochemicals Inc.” means Pharmacia P-L Biochemicals Inc (now known as Amersham Biosciences).

 

“Phase I Clinical Trial” means a human clinical trial in any country that is intended to initially evaluate the safety of an investigational Product in volunteer subjects or patients that would satisfy the requirements of 21 CFR 312.21(a), or its foreign equivalent and may evaluate the Product’s therapeutic or antigenic effects.

 

“Phase III Clinical Trial” means a pivotal human clinical trial in any country the results of which could be used to establish safety and efficacy of a Product as a basis for a marketing application that would satisfy the requirements of 21 CFR 312.21(c).

 

“Primary Application” means a major application of an Antibody against the Target as ascertained at the time of assessment using objective and reasonable scientific and/or commercial criteria, data and/or information.  Primary Application shall not mean any minor or incidental application.

 

“Product” means a Diagnostic Antibody Product or a Therapeutic Antibody Product.

 

“Product Licence” means the licence granted to Dyax pursuant to Clause 2 of this Agreement.

 

“Quarter” means each period of three (3) months ending on March 31, June 30, September 30, or December 31 and “Quarterly” shall be construed accordingly.

 

“Research Products” means any product in relation to which Pharmacia P-L has an exclusive licence from CAT pursuant to the Pharmacia Agreement.

 

“Single Domain Antibodies” means an Antibody containing only a single domain (heavy or light).

 

“Status Report” has the meaning set forth in Clause 4.1.

 

“Target” means                                      , as set out in Schedule 3.

 

“Territory” means all countries of the world.

 

6

 

“Therapeutic Antibody Product” means any preparation for the treatment or prevention of disease, infection or other condition in humans for any indication which contains, comprises, or the process of development or manufacture of which utilises, a CAT Licensable Antibody.  The term “Therapeutic Antibody Product” shall not include any Research Product.

 

“Third Party” means any entity or person other than Dyax, CAT or their respective Affiliates.

 

“Valid Claim” means a claim of an issued and unexpired patent included within the Antibody Phage Display Patents which have been licensed to CAT by the MRC which has not been held permanently revoked, unenforceable or invalid by a decision of a court or other governmental agency of competent jurisdiction unappealed within the time allowed for appeal, and which has not been admitted to be invalid or unenforceable through reissue or disclaimer or otherwise.

 

“Year” means initially the period from the Commencement Date to the end of that calendar year, and subsequently a calendar year.

 

1.2           The headings to clauses are inserted for convenience only and shall not affect the interpretation or construction of this Agreement.

 

1.3           Words imparting the singular shall include the plural and vice versa.  References to persons include an individual, company, corporation, firm or partnership.

 

1.4           The words and phrases “other”, “including” and “in particular” shall not limit the generality of any preceding words or be construed as being limited to the same class as any preceding words where a wider construction is possible.

 

1.5           References to any statute or statutory provisions of the United Kingdom shall include (i) any subordinate legislation made under it, (ii) any provision which it has superseded or re-enacted (whether with or without modification), and (iii) any provision which subsequently supersedes it or re-enacts it (whether with or without modification.  References to any statute or regulation of the United States of America means that statute or regulation as it may be amended, supplemented or otherwise modified from time to time, and any successor statute or regulation.

 

2.             Grant of Product Licence

 

2.1           Subject to Clause 2.4 below, CAT hereby grants to Dyax and its Affiliates a non-exclusive, royalty-bearing licence (on the terms of this Agreement) with the right to sublicense (on the terms of Clause 3) under the Antibody Phage Display Patents and CAT Know-How to Exploit Products against the Target in the Territory.

 

2.2           The Product Licence granted under this Agreement is pursuant to Dyax’s exercise of one (1) option                                  under the Amendment Agreement.

 

7

 

 

2.3           For the avoidance of doubt, no rights are granted by CAT under this Agreement to any CAT Diabodies Patent Rights, and any Patent Rights owned or controlled by CAT which claim Catalytic Antibodies, ribosome display technology, any Patent Rights which claim Single Domain Antibodies and no rights are granted by CAT in this Agreement under the Antibody Phage Display Patents to Exploit Research Products.

 

2.4           This Product Licence shall come into effect upon the date that the Acceptance Fee is received by CAT.  The Acceptance Fee shall not be refundable or creditable against any other sums which may be payable by Dyax or a Dyax Sublicensee to CAT pursuant to this Agreement.

 

3.             Sub-Licensing

 

3.1           Dyax will, if requested by CAT, inform CAT of the identity of all Dyax Sublicensees (and their sublicensees) in relation to this Agreement.

 

3.2           Dyax (and where relevant each Dyax Sublicensee) will ensure that any sublicensee (to which it sublicences its rights in accordance with the terms of this Agreement) executes a written agreement which requires the sublicensee to abide by the terms of this Agreement.

 

3.3           Dyax (and where relevant each Dyax Sublicensee) will be liable for any breach of the sublicences granted in accordance with Clause 3.2;  provided, however, that Dyax’s liability for such breach by a sublicensee shall be limited to the amount that has been received or is thereafter received by Dyax directly or indirectly from such sublicensee pursuant to the sublicense agreement; and provided, further, that any written agreement with a sublicensee shall contain a provision pursuant to which CAT shall be a third party beneficiary of such sublicence agreement and shall have the right to enforce (including claim damages as a result of any breach) such sublicence agreement.  If at any time CAT does have to enforce its rights under a sublicence agreement Dyax will, if requested by CAT, supply to CAT a copy of the relevant sublicence as soon as possible.  For the avoidance of doubt, sublicensing by Dyax to a Dyax Sublicensee is permitted as is sublicensing by a Dyax Sublicensee to a sublicensee.  No further sublicensing of the rights and obligations under this Agreement is permitted.

 

4.             Status Report

 

4.1           Dyax will provide to CAT a brief summary of the status of each Product against the Target that Dyax or Dyax Sublicensees desire to Exploit under this Agreement (“Status Report”).  During the Term, Dyax will submit such Status Report to CAT for a particular Product prior to the time Dyax or Dyax Sublicensees begin the first human clinical trial with respect to such Product. [**].

 

5.             Gatekeeping

 

5.1           The Parties acknowledge that, as of the Commencement Date, the Target has passed CAT’s Gatekeeping Procedure under the Amendment Agreement.

 

8

 

6.             Consideration

 

6.1           Therapeutic Antibody Products

 

6.1.1        With respect to Therapeutic Antibody Products, Dyax shall pay to CAT the following payments upon achievement of the specified milestones by Dyax or a Dyax Sublicensee (or its sublicensee) for the first Therapeutic Antibody Product to achieve the relevant milestone:

 

	
Initiation of first Phase I Clinical Trial
    	
 
    	
US   $
    	
 
    
	
Initiation of first Phase III Clinical Trial
    	
 
    	
US   $
    	
 
    
	
First filing for Marketing Authorisation in one   Major Market country
    	
 
    	
US   $
    	
 
    
	
Marketing Authorisation granted in the United   States
    	
 
    	
US   $
    	
 
    

 

6.1.2        With respect to Therapeutic Antibody Products, Dyax shall pay CAT royalties in an amount equal to      percent (      %) of Net Sales of the Therapeutic Antibody Product sold by or on behalf of Dyax or the Dyax Sublicensee.

 

6.2           Diagnostic Products

 

6.2.1        With respect to Diagnostic Antibody Products, Dyax shall pay to CAT the following payments upon achievement by Dyax or a Dyax Sublicensee (or its sublicensee) of the milestones set out below.  For the avoidance of doubt the milestone payments shall be payable in respect of the first Diagnostic Antibody Product to achieve the relevant milestone:

 

	
First filing for Marketing Authorisation in one   Major Market country
    	
 
    	
US   $
    	
 
    
	
Marketing Authorisation granted in each Major   Market Country 
    	
 
    	
US   $
    	
 
    

 

6.2.2        With respect to Diagnostic Antibody Products, Dyax shall pay CAT royalties on a country-by-country basis in an amount equal to          percent (        %) of Net Sales of Diagnostic Antibody Products sold by or on behalf of Dyax or any Dyax Sublicensee.

 

6.3           All royalties due to CAT pursuant to Clauses 6.1.2 and 6.2.2 shall be payable on a country-by-country basis until the last Valid Claim expires or ten (10) years from the date of First Commercial Sale of such Product, whichever occurs later.

 

7.             Provisions Relating to Payment of Consideration

 

7.1           All milestone payments shall be paid by Dyax within [**] days of the applicable milestone being achieved and no milestone payments shall be refundable or creditable against any other sum payable by Dyax hereunder for any reason.

 

9

 

7.2           Dyax shall make the payments due to CAT under Clause 6 above in United States dollars (if Dyax in turn receives payment in dollars) or in pounds sterling (if Dyax in turn receives payment in pound sterling), or Euros (if Dyax in turn receives payment in Euros).  Where Dyax receives payment in a currency other than United States dollars, pounds sterling or Euros, Dyax will convert the relevant sum into pounds sterling (or Euros if Euros have replaced pounds sterling at the time of payment).  Dyax will use the conversion rate reported in the Financial Times two (2) Business Days before the day on which Dyax pays CAT.  Such payment will be made without deduction of exchange, collection or other charges.  All payments will be made at Quarterly intervals.  Within [**] days of the end of each Quarter after the First Commercial Sale of each Product in any country, Dyax shall prepare a statement which shall show on a country-by-country basis for the previous Quarter Net Sales of each Product by Dyax or its Affiliates and all monies due to CAT based on such Net Sales.  That statement shall include details of Net Sales broken down to show the country of the sales and the total Net Sales by Dyax or its Affiliates in such country and shall be submitted to CAT within such [**] day period together with remittance of the monies due.  With respect to Net Sales of a Product by a Dyax Sublicensee (or its sublicensee) Dyax shall prepare a statement which will include the same information and remit that statement and any monies due within the same period except with regard to any Dyax Sublicensee with which Dyax has a licence agreement relating to the technology of Antibody phage display as of the Commencement Date where the remittance will be made at Quarterly intervals within [**] days of the date royalties are due to Dyax from such existing Dyax Sublicensees.

 

7.3           All payments shall be made free and clear of and without deduction or deferment in respect of any disputes or claims whatsoever and/or as far as is legally possible in respect of any taxes imposed by or under the authority of any government or public authority.  [**].

 

7.4           Dyax shall keep and shall procure that its Affiliates and Dyax Sublicensees keep true and accurate records and books of account containing all data necessary for the calculation of the amounts payable by it to CAT pursuant to this Agreement.  Those records and books of account shall be kept for seven (7) years following the end of the Year to which they relate.  Upon CAT’s written request, a firm of accountants appointed by agreement between the Parties or, failing such agreement within ten (10) Business Days of the initiation of discussions between them on this point CAT shall have the right to cause an international firm of independent certified public accountants that has not performed auditing or other services for either Party or their Affiliates (or, if applicable, any Dyax Sublicensee with rights to the Product in question) acceptable to Dyax or the Dyax Sublicensee such acceptance not to be unreasonably withheld to inspect such records and books of account.  In particular such firm:

 

7.4.1        shall be given access to and shall be permitted to examine and copy such books and records of Dyax and its Affiliates and Dyax Sublicensees upon twenty (20) Business Days notice having been given by CAT and at all reasonable times on Business Days for the purpose of certifying that the Net Sales or other relevant sums calculated by Dyax and its Affiliates and Dyax Sublicensees during any

 

10

 

Year were reasonably calculated, true and accurate or, if this is not their opinion, certify the Net Sales figure or other relevant sums for such period which in their judgment is true and correct;

 

7.4.2        prior to any such examination taking place, such firm of accountants shall undertake to Dyax that they shall keep all information and data contained in such books and records, strictly confidential and shall not disclose such information or copies of such books and records to any third person including CAT, but shall only use the same for the purpose of calculations which they need to perform in order to issue the certificate to which this Clause envisages;

 

7.4.3        any such access examination and certification shall occur no more than once per Year and will not go back over records more than two (2) years old;

 

7.4.4        Dyax and its Affiliates and Dyax Sublicensees shall make available personnel to answer queries on all books and records required for the purpose of that certification; and

 

7.4.5        the cost of the accountant shall be the responsibility of Dyax if the certification shows it to have underpaid monies to CAT by more than [**] and the responsibility of CAT otherwise.

 

7.5           All payments due to CAT under the terms of this Agreement are expressed to be exclusive of value added tax (VAT) howsoever arising.  [**].

 

7.6           All payments made to CAT under this Agreement shall be made to the bank account of CAT as notified by CAT to Dyax from time to time.

 

7.7           If Dyax fails to make any payment to CAT hereunder on the due date for payment, without prejudice to any other right or remedy available to CAT it shall be entitled to charge Dyax interest (both before and after judgment) of the amount unpaid at the annual rate of LIBOR (London Interbank Offering Rate) plus [**] calculated on a daily basis until payment in full is made without prejudice to CAT’s right to receive payment on the due date.

 

8.             Confidentiality

 

8.1           With respect to any confidential information received from the other Party (“Confidential Information”), each Party undertakes and agrees to:

 

(a)           only use the Confidential Information for the purposes envisaged under this Agreement and not to use the same for any other purpose whatsoever;

 

(b)           ensure that only those of its officers and employees who are directly concerned with the carrying of this Agreement have access to the Confidential Information on a strictly “need to know” basis and are informed of the secret and confidential nature of it;

 

11

 

(c)           keep the Confidential Information secret, confidential, safe and secure and shall not directly or indirectly disclose or permit to be disclosed the same to any Third Party, including any consultants or other advisors, without the prior written consent of the disclosing Party except to the extent disclosure is necessary in connection with its use as envisaged under this Agreement;

 

(d)           ensure that the Confidential Information will not be covered by any lien or other encumbrance in any way, and

 

(e)           not copy, reproduce or otherwise replicate for any purpose or in any manner whatsoever any documents containing the Confidential Information except to the extent necessary in connection with its use as envisaged under this Agreement.

 

For the avoidance of doubt, the Parties agree that the identity of the Target, any information related to the Target provided to CAT by Dyax, and the Status Report is the Confidential Information of Dyax.

 

8.2           The obligations referred to in Clause 8.1 above shall not extent to any Confidential Information which:

 

(a)           is or becomes generally available to the public otherwise than be reason of breach by a recipient Party of the provision of Clause 8.1;

 

(b)           is known to the recipient Party and is at its free disposal (having been generated independently by the recipient Party or a Third Party in circumstances where it has not been derived directly or indirectly from the disclosing Party’s Confidential Information prior to its receipt from the disclosing Party), provided that evidence of such knowledge is furnished by the recipient Party to the disclosing Party within twenty-eight (28) days of recipient of that Confidential Information;

 

(c)           is subsequently disclosed to the recipient Party without obligations of confidence by a Third Party owing no such obligations to the disclosing Party in respect of that Confidential Information;

 

(d)           is required by law to be disclosed (including as part of any regulatory submission or approval process) and then only when prompt written notice of this requirement has been given to the disclosing Party so that it may, if so advised, seek appropriate relief to prevent such disclosure, provided always that in such circumstances such disclosure shall be only to the extent so required and shall be subject to prior consultation with the disclosing Party with a view to agreeing on the timing and content of such disclosure.

 

8.3           No public announcement or other disclosures to Third Parties concerning the terms of this Agreement shall be made, whether directly or indirectly, by either Party (except confidential disclosures to professional advisors) without first obtaining the approval of

 

12

 

the other Party and agreement upon the nature and text of such announcement or disclosure with the exceptions that:

 

(a)           a Party may disclose those terms which it is required by regulation or law to disclose, provided that it takes advantage of all provisions to keep confidential as many terms of this Agreement as possible; and

 

(b)           the Party desiring to make any such public announcement or other disclosure shall inform the other Party of the proposed announcement or disclosure in reasonably sufficient time prior to public release, and shall provide the other Party with a written copy thereof in order to allow such Party to comment upon such announcement or disclosure.  Each Party agrees that it shall cooperate fully with the other with respect to all disclosures regarding this Agreement to the U.S. Securities Exchange Commission, the UK Stock Exchange and any other comparable body including requests for confidential information or proprietary information of either Party included in any such disclosure.

 

9.             Indemnification

 

9.1           Dyax and hereby indemnifies CAT and its Affiliates and their directors, officers, employees and agents and their respective successors, heirs and assigns (the “CAT Indemnitees”) against any liability, damage, loss or expense (including attorneys fees and expenses of litigation) incurred by or imposed upon the CAT Indemnitees or any one of them in connection with any claims, suits, actions, demands or judgments by or in favour of any Third Party concerning any manufacture, use or sale of any Product by Dyax or any Dyax Sublicensee (or their sublicensee). In addition, each Dyax Sublicensee (or their sublicensee) shall indemnify the CAT Indemnitees against any liability, damage, loss or expense (including attorneys fees and expenses of litigation) incurred by or imposed upon the CAT Indemnitees or any one of them in connection with any claims, suits, actions, demands or judgments by or in favour of any Third Party concerning any manufacture, use or sale of any Product by such Dyax Sublicensee (or their sublicensee).

 

9.2           CAT shall not be liable to Dyax and Dyax Sublicensee (or its sublicensee) in respect of any liability, loss, damage or expense (including attorneys fees and expenses of litigation) incurred or suffered by Dyax and Dyax Sublicensees (or its sublicensee) in connection with the manufacture, use or sale of any Products by Dyax and Dyax Sublicensees (or its sublicensee).

 

9.3           CAT gives no warranty or representation that the Antibody Phage Display Patents are, or will be, valid or that the exercise of the rights granted under this Agreement will not result in the infringement of patents of Third Parties.

 

10.          Infringement and Patent Prosecution

 

10.1         Dyax shall notify CAT promptly of any proceedings or applications for revocation of any of the Antibody Phage Display Patents emanating from a Third Party that comes to its notice or if a Third Party takes or threatens to take any proceedings for infringement of

 

13

 

any patents of that Third Party by reason of Dyax’s use or operation of the Antibody Phage Display Patents or manufacture, use or sale of the Products.  Dyax shall notify CAT promptly of any infringement of the Antibody Phage Display Patents by a Third Party which may come to its attention during the term of the Product Licence, except Dyax shall have no obligation to so notify CAT with respect to any infringement by an academic or not-for-profit entity which occurs by reason of such entity carrying out research activities provided such activities are, as far as Dyax is aware, not being carried out with a view to commercialising a product or otherwise for profit.

 

10.2         CAT shall have the sole right and responsibility, at its sole discretion and cost and with reasonable assistance from Dyax, to file, prosecute and maintain the Antibody Phage Display Patents and for the conduct of any lawsuits, claims or proceedings challenging the validity or enforceability thereof including, without limitation, any interference or opposition proceeding relating thereto in all countries.  For the avoidance of doubt, Dyax and Dyax Sublicensees will have the right to conduct any proceedings relating to its Product including any proceedings relating to product liability.

 

11.          Termination

 

11.1         Unless terminated under this Clause 11, this Agreement shall commence on the Commencement Date and shall terminate, on a country-by-country and Product-by-Product basis upon the last to expire of claims of an issued and unexpired patent within the Antibody Phage Display Patents (which has not been held permanently revoked, unenforceable or invalid by a decision of a court or other governmental agency of competent jurisdiction unappealed within the time allowed for appeal, and which has not been admitted to be invalid or unenforceable through reissue or disclaimer or otherwise) or (b) the date upon which no payments are due to CAT under Clause 6 of this Agreement, whichever occurs later.

 

11.2         CAT shall have the right to terminate this Agreement in the event that:

 

11.2.1      Dyax or a Dyax Sublicensee (or its sublicensee) has not filed an IND for a Therapeutic Antibody Product, or a 510(k) or IDE for a Diagnostic Antibody Product within [**] after the Commencement Date; or

 

11.2.2      Dyax or a Dyax Sublicensee (or its sublicensee) directly or indirectly opposes or assists any Third Party to oppose the grant of letters patent or any patent application within the Antibody Phage Display Patents, or disputes or directly or indirectly assists any Third Party to dispute the validity of any patent within the Antibody Phage Display Patents or any of the claims thereof.

 

11.3         In the event that either Party commits a material breach of any of its material obligations with respect to this Agreement, and such Party fails to remedy that breach within ninety (90) days after receiving written notice thereof from the other Party, that other Party may immediately terminate this Agreement upon written notice to the breaching Party.

 

14

 

11.4         Either Party may terminate this Agreement in its entirety by giving notice in writing to the other Party if any one or more of the following events happens:

 

(a)           the other Party has any distress or execution levied on the major portion of its assets (as determined by its balance sheet in accordance with GAAP) which is not paid out within thirty (30) days of its being levied;

 

(b)           the other Party calls a meeting for the purpose of passing a resolution to wind it up, or such a resolution is passed, or the other Party presents, or has presented, a petition for a winding up order, or presents, or has presented, a petition to appoint an administrator, or has an administrative receiver, or receiver, liquidator or other insolvency practitioner appointed over all or any substantial part of its business, undertaking, property or assets;

 

(c)           the other Party stops or suspends making payments (whether of principal or interest) with respect to substantially all of its debts or announces an intention to do so or the other Party suspends or ceases to carry on its business;

 

(d)           a secured lender to the other Party holding a security interest over the major portion of the tangible assets (as determined by its balance sheet in accordance with GAAP) of such other Party takes any steps to obtain possession of the property on which it has security or otherwise to enforce its security;

 

(e)           the other Party suffers or undergoes any procedure analogous to any of those specified in Clause 11.4(a)-(d) above or any other procedure available in the country in which the other Party is constituted, established or domiciled against or to an insolvent debtor or available to the creditors of such a debtor.

 

12.          Consequences of Termination

 

12.1         Upon termination of this Agreement for any reason whatsoever:

 

(a)           the relationship of the Parties hereunder shall cease save as (and to the extent) expressly provided for in this Clause 12;

 

(b)           any sublicenses granted by Dyax in accordance with the terms of this Agreement will continue in force provided that such sublicensees are not in breach of the relevant sublicense and that each sublicensee agrees to enter into a direct agreement with CAT upon the terms of this Agreement;

 

(c)           Dyax shall immediately return or procure to be returned to CAT at such place as it directs and at the expense of Dyax (or if CAT so requires by notice to Dyax in writing, destroy) all CAT Know-How together with all copies of such CAT Know-How in its possession or under its control;

 

15

 

(d)           The following provisions shall survive expiration or termination of this Agreement: Clauses 7 (in relation to any accrued payment obligations of Dyax prior to termination or expiry), 8, 9, 12, 13 and 15; and

 

(e)           Expiry or termination of this Agreement shall not affect the rights and obligations of the Parties accrued prior to such expiry or termination including any accrued obligation for Dyax to make any payments under Clause 6.

 

13.          Dispute Resolution

 

13.1         Any dispute arising between the Parties relating to, arising out of or in any way connected with this Agreement or any term or condition thereof, or the performance by either Party of its obligations hereunder, whether before or after termination of this Agreement, shall be referred to the Chief Executive Officers of each of the Parties.  The Chief Executive Officers shall meet to resolve such deadlock within thirty (30) days of the date that the dispute is referred to them, at a time and place mutually acceptable to them.  Any dispute that has not been resolved following good faith negotiations of the Chief Executive Officers for a period of thirty (30) days shall be referred to and finally settled by binding arbitration in accordance with the then current Commercial Arbitration Rules of the American Arbitration Association.  There shall be three (3) arbitrators, each Party to designate one arbitrator and the two Party-designated arbitrators to select the third arbitrator.  The Party initiating recourse to arbitration shall include in its notice of arbitration its appointment of an arbitrator.  The appointing authority, in the event a Party does not or the Parties do not appoint arbitrator(s), shall be the American Arbitration Association in [**].  The place of arbitration shall be [**]. The language to be used in the arbitration shall be English.  Any determination by the arbitration panel shall be final and conclusively binding.  Judgement on any arbitration award may be entered in any court having jurisdiction thereof.  Each Party shall bear its own costs and expenses incurred in the arbitration; provided that the arbitration panel may assess the costs and expenses of the prevailing Party, including reasonable attorneys fees, against the non-prevailing Party.

 

14.          Notices

 

14.1         All notices, requests, demands and other communications required or permitted to be given pursuant to this Agreement shall be in writing and shall be deemed to have been duly given upon the date of receipt if delivered by hand, recognized international overnight courier, confirmed facsimile transmission, or registered or certified mail, return receipt requested, postage prepaid to the following addresses or facsimile numbers:

 

	
If   to Dyax:
    	
If   to CAT:
    
	
Dyax   Corp
    	
Cambridge   Antibody Technology Limited
    
	
300   Technology Square
    	
The   Milstein Building
    
	
Cambridge,   MA 02139
    	
Granta   Park, Cambridge
    
	
Attention:   Chief Executive Officer
    	
Cambridgeshire   CB1 6GH
    
	
Facsimile:   (617) 225-2501
    	
United   Kingdom
    
	
 
    	
Attention:   Company Secretary
    

 

16

 

	
 
    	
Facsimile:   011-44-(0)1223 471472
    

 

Either party may change its designated address and facsimile number by notice to the other party in the manner provided in this Clause.

 

15.          Governing Law

 

15.1         This Agreement shall be governed by and construed in accordance with the laws of the [**].

 

15.2         Save as provided in this Clause, the United Kingdom Legislation entitled the Contracts (Rights of Third Parties) Act 1999 will not apply to this Agreement.  No person, other than a CAT Indemnitee (as defined in Clause 9.1), who is not a Party to this Agreement (including any employee, officer, agent, representative or subcontractor of either Party) will have the right (whether under the Contracts (Rights of Third Parties) Act 1999 or otherwise) to enforce any term of this Agreement which expressly or by implication confers a benefit on that person without the express prior agreement in writing of the Parties which agreement must refer to this Clause, except that any Dyax Sublicensee shall have the right to enforce the provisions of Clause 12.1(b) of this Agreement and shall be a third party beneficiary for that purpose only.

 

16.          Specific Performance

 

16.1         The parties agree that irreparable damage will occur in the event that the provisions of Clause 8 are not specifically enforced.  In the event of a breach or threatened breach of any such provisions, each Party agrees that the other Party shall, in addition to all other remedies, be entitled to temporary or permanent injunction, without showing any actual damage or that monetary damages would not provide an adequate remedy and without the necessity of posting any bond, and/or a decree for specific performance, in accordance with the provisions hereof.

 

17.          Assignment

 

17.1         This Agreement may not be assigned by either party without the prior written consent of the other party, except that either Party may assign the benefit and/or burden of this Agreement to any Affiliate of it or any Third Party, provided that such Affiliate or Third Party undertakes to the other Party to be bound by the terms of this Agreement. This Agreement shall inure to the benefit of and be binding upon the parties and their respective lawful successors and assigns.

 

18.          Compliance With Law

 

18.1         Nothing in this Agreement shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision of this Agreement and any statute, law, ordinance, or treaty, the latter shall prevail, but in, such event the affected provisions of the Agreement shall be conformed and limited only to the extent necessary to bring it within the applicable legal requirements.

 

17

 

19.                               Amendment and Waiver

 

19.1                           This Agreement may be amended, supplemented, or otherwise modified only by means of a written instrument signed by both parties.  Any waiver of any rights or failure to act in a specific instance shall relate only to such instance and shall not be construed as an agreement to waive any rights or fail to act in any other instance, whether or not similar.

 

20.                               Severability

 

20.1                           In the event that any provision of this Agreement shall, for any reason, be held to be invalid or unenforceable in any respect, such invalidity or unenforceability shall not affect any other provision hereof and the parties shall negotiate in good faith to modify the Agreement to preserve (to the extent possible) their original intent.

 

21.                               Entire Agreement

 

21.1                           This Agreement and the Amendment Agreement constitute the entire agreement between the parties with respect to the subject matter hereof and supersede all prior agreements or understandings between the parties relating to the subject matter hereof.

 

IN WITNESS OF THE ABOVE the Parties have signed this Agreement on the date written at the head of this Agreement.

 

	
SIGNED by
    	
)
    	
 
    
	
 
    	
)
    	
 
    
	
 
    	
)
    	
 
    
	
for   and on behalf of
    	
)
    	
General   Counsel & Authorised
    
	
CAMBRIDGE   ANTIBODY
    	
)
    	
Signatory
    
	
TECHNOLOGY   LIMITED
    	
)
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
SIGNED by
    	
)
    	
 
    
	
 
    	
)
    	
 
    
	
 
    	
)
    	
 
    
	
for   and on behalf of
    	
)
    	
Senior   Vice President &
    
	
DYAX   CORP.
    	
)
    	
Authorised   Signatory
    
	
 
    	
)
    	
 
    

 

18

 

APPENDIX E

 

DYAX PATENT RIGHTS

 

PHAGE DISPLAY PATENT RIGHTS — [**]

 

	
Country
    	
 
    	
Application/
   Publication No.
    	
 
    	
Filing Date
    	
 
    	
Patent No.
    	
 
    	
Issue Date
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
 
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
 
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
 
    	
 
    	
 
    

 

 

Novel [**] Fragments - [**] et al.

 

	
Country
    	
 
    	
Application/
   Publication No.
    	
 
    	
Filing Date
    	
 
    	
Patent No.
    	
 
    	
Issue Date
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
 
    	
 
    	
[**]
    	
 
    	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
 
    	
 
    	
 
    

 

CJ Library — [**] et al.

 

	
Country
    	
 
    	
Application/
   Publication No.
    	
 
    	
Filing Date
    	
 
    	
Patent No.
    	
 
    	
Issue Date
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
 
    	
 
    	
 
    

 

Antibody Reformatting Patents

 

	
Country
    	
 
    	
Application/
   Publication No.
    	
 
    	
Filing Date
    	
 
    	
Patent No.
    	
 
    	
Issue Date
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
 
    	
 
    	
 
    

 

 

APPENDIX F

 

[**] PATENT RIGHTS

 

[**]

 

A total of three pages were omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

 

 

APPENDIX G

 

XOMA NOTICE

 

XOMA owns a number of patents covering various aspects of bacterial antibody expression and phage display.

 

XOMA has licensed these patents on a non-exclusive basis to Dyax.

 

Under the license agreement with XOMA:

 

·                  Dyax cannot provide phage display services or transfer phage display materials, products or information to you without first showing you a redacted copy of its license from XOMA and this notice.

 

·                  If you and Dyax enter into a written agreement by which you become a “Dyax Collaborator,” then you will be permitted to use Dyax phage display services, Dyax phage display materials, products and information to research, develop and commercialize antibody products.

 

·                  Collaborators do not, however, have the right to produce commercial quantities of such antibodies using XOMA’s patented technology.  Rather, collaborators only have the right to make research and development quantities of antibodies using the XOMA patent rights.  Thereafter, unless the collaborator obtains a commercial production license from XOMA (which may be available), the collaborator must produce commercial quantities of antibodies using a method that does not infringe XOMA patent rights.

 

Therefore, if you and Dyax enter into a written agreement, that agreement must contain certain provisions specified in the license agreement with XOMA, including:[**]Terms pursuant to which you, as the recipient of any transferred materials, would agree to abide by each of the limitations, restrictions and other obligations provided for by the license agreement with XOMA, including, without limitation, the restrictions on use of such transferred materials for purposes other than research and development.

 

A covenant not to use transferred materials for any purpose other than for research and development purposes otherwise authorized by the license agreement with XOMA.

 

A provision that the “first sale” doctrine does not apply to any disposition of transferred materials.

 

An agreement by you to further dispose of transferred materials only to a third party who otherwise meets the definition of a “Dyax Collaborator” set forth in the license agreement with XOMA and who executes a written agreement in which it undertakes all of the obligations applied to the transferring party.

 

 

 

APPENDIX H

 

SUBLICENSE AGREEMENT

 

This SUBLICENSE AGREEMENT (“Sublicense”), dated effective as of                               , 20       (the “Effective Date”), is entered into between DYAX CORP., a Delaware corporation, of 300 Technology Square, Cambridge, Massachusetts 02139 (“Dyax”), and                                of                                (“Sublicensee”).

 

WHEREAS, under the terms of that certain Amendment Agreement by and between Dyax and Cambridge Antibody Technologies Limited (“CAT”), dated January 3, 2003, as amended to date (the “Amended Agreement”) Dyax has the right to obtain product licenses, on a target-by-target basis, to develop and commercialize therapeutic and diagnostic antibody products identified using CAT’s proprietary technology and know-how;

 

WHEREAS, Dyax and CAT have executed one such product license, under which CAT granted Dyax rights to develop and commercialize therapeutic and diagnostic antibody products to the target described on Attachment A (the “Product License”);

 

WHEREAS, a redacted version of the Product License is attached hereto as Attachment B;

 

WHEREAS, pursuant to a Collaboration Agreement by and between Dyax and Sublicensee, dated effective                               , 20      , (the “Collaboration Agreement”), Sublicensee has the right to obtain through Dyax a sublicense of the Product License; and

 

WHEREAS, Sublicensee desires to obtain through Dyax a sublicense of the Product License.

 

NOW THEREFORE, in consideration of the premises and the mutual covenants contained herein, and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties agree as follows:

 

1.             GRANT OF SUBLICENSE.

 

Subject to the terms and conditions set forth in Section 2 of this Sublicense, Dyax hereby grants to Sublicensee a world-wide, non-exclusive license of the rights granted to it under Clause 2.1 of the Product License.  Sublicensee is permitted to sublicense its rights under this Sublicense in accordance with the terms and conditions set forth in Clauses 3.2 and 3.3 of the Product License.

 

2.             SUBLICENSEE OBLIGATIONS.

 

2.1           Obligations Under Product License.  Sublicensee agrees to abide by all of the terms and conditions applicable to Dyax and/or Sublicensee (as a Dyax Sublicensee) under the Product License and agrees that all obligations of Dyax to CAT under the Product License shall also be obligations of Sublicensee to Dyax, except for (i) any obligations of Dyax contained in Clause 6 (Consideration) and Clause 7 (Provisions Relating to the Payment of Consideration) of 

 

 

the Product License and (ii) any portion of the Product License that has been redacted by Dyax. Notwithstanding the foregoing, Sublicensee’s obligations pursuant to this Section 2.1 are conditional upon (i) Sublicensee receiving timely notice (in the manner provided in Section 10.2 of the Collaboration Agreement) from Dyax relating to (a) any change in such terms and conditions, and (b) any notice, claim or demand made by CAT under the Product License; and (ii) the parallel performance of Dyax to the extent both parties are required to perform to satisfy the obligations of Dyax or Sublicensee (as a Dyax Sublicensee) under the Product License.

 

2.2           Obligations Under Collaboration Agreement.  Sublicensee acknowledges and agrees that all of the terms and conditions contained in the Collaboration Agreement, as amended to date, remain in full force and effect, and Sublicensee agrees to abide by all of its obligations set forth thereunder.

 

2.3           Royalties.  Notwithstanding anything to the contrary contained in the Product License, the sublicense granted to Sublicensee under Section 1 of this Sublicense shall be royalty bearing in accordance with the terms set forth in the Collaboration Agreement.

 

3.             DYAX OBLIGATIONS.

 

3.1           Obligations Under Collaboration Agreement.  Dyax acknowledges and agrees that all of the terms and conditions contained in the Collaboration Agreement, as amended to date, remain in full force and effect, and Dyax agrees to abide by all of its obligations set forth thereunder.

 

3.2           Amendment to Product License.  Dyax agrees that it shall not amend the Product License in any way that materially and adversely affects or reduces the rights and licenses granted to Sublicensee under this Sublicense.

 

3.3           Indemnification for Dyax Breach.  Dyax shall indemnify and hold Sublicensee and its officers, directors and agents (“Sublicensee Indemnified Parties”) harmless from and against any liability or loss incurred by the Sublicensee Indemnified Parties to CAT under the Product License, to the extent that such liability was incurred by Sublicensee as a result of a breach of the Product License by Dyax.

 

4.             TERM AND TERMINATION.

 

This Sublicense shall expire upon expiration of the Product License and shall terminate upon termination of the Product License; provided that, at Sublicensee’s election, upon termination of the Product License, Sublicensee’s rights hereunder will continue in force provided that Sublicensee is not in breach of this Sublicense and agrees to enter into a direct agreement with CAT upon the terms of the Product License.

 

5.             MISCELLANEOUS.

 

CAT shall be a third party beneficiary of this Sublicense and shall have the right to enforce its terms (and claim damages as a result of any breach).  This Sublicense shall be not be assignable by Sublicensee, except that Sublicensee may assign the benefit and/or burden of this Sublicense to any Affiliate of it or any Third Party (“Affiliate” and “Third Party” being defined 

 

 

in the Collaboration Agreement), provided that such Affiliate or Third Party undertakes to Dyax to be bound by the terms of this Sublicense. This Sublicense shall be binding upon, and shall inure to the benefit of, the parties hereto and their successors and assigns. This Sublicense may be not be amended except pursuant to a written instrument signed by parties hereto.  No provisions of this Sublicense may be waived except by an instrument in writing signed by the party sought to be bound.  Neither this Sublicense nor any part hereof, including this provision against oral modifications, may be modified, waived or discharged except pursuant to a written agreement signed by both parties.

 

IN WITNESS WHEREOF, the parties have caused this Sublicense to be executed by their respective duly authorized representatives as of the Effective Date.

 

	
DYAX CORP. 
    	
 
    	
 
    	
SUBLICENSEE: 
    
	
 
    	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
 
    	
By:
    	
 
    
						

 

 

AMENDMENT

 

This Amendment (this “Amendment”), effective as of July 31, 2008, amends the Amended and Restated Collaboration Agreement effective as of January 24, 2007 (the “Agreement”), between DYAX CORP., a Delaware corporation (“Dyax”), and MERRIMACK PHARMACEUTICALS, INC., a Massachusetts corporation (“Merrimack”). Capitalized terms used herein and not defined herein shall have the meanings ascribed to them in the Agreement.

 

WHEREAS, the Parties have agreed to amend the definition of Commercial Field;

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby amend the Agreement as follows:

 

1.             Section 1.8 of the Agreement is hereby amended and restated in its entirety to read as follows:

 

“1.8         “Commercial Field” means all human therapeutic and diagnostic uses, excluding (i) Research Products and (ii) Separations Applications.”

 

2.             As amended hereby, the Agreement remains in full force and effect.

 

IN WITNESS WHEREOF, the undersigned have duly executed and delivered this Amendment as a sealed instrument effective as of the date first above written.

 

	
DYAX CORP.
    	
 
    	
MERRIMACK PHARMACEUTICALS, INC.
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/   Gustav Christensen
    	
 
    	
By:
    	
/s/   Edward J. Stewart
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Title:
    	
EVP &   Chief Business Officer
    	
 
    	
Title:
    	
Vice   President, Bus. Dev.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Date:
    	
July 31,   2008
    	
 
    	
Date:
    	
July 17,   2008
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
/s/   Lisa A. Evren
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
SVP &   CFO
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Lisa   A. Evren
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
7/17/08
    

 

 

AMENDMENT

 

This Amendment (this “Amendment”), effective as of November 6, 2009, further amends the Amended and Restated Collaboration Agreement, dated effective as of January 24, 2007 and previously amended on July 31, 2008 (the “Amended Agreement”), between DYAX CORP., a Delaware corporation (“Dyax”), and MERRIMACK PHARMACEUTICALS, INC., a Massachusetts corporation (“Merrimack”).  Capitalized terms used herein and not defined herein shall have the meanings ascribed to them in the Amended Agreement.

 

WHEREAS, the Parties wish to amend the Amended Agreement to clarify certain intellectual property issues that have arisen in the course of the collaboration.

 

NOW, THEREFORE, in consideration of the foregoing and the covenants and premises contained in the Amended Agreement, the Parties hereby agree to the following amendments:

 

AMENDMENTS

 

1.             Article 1.33 of the Amended Agreement is hereby amended and restated in its entirety to read as follows:

 

1.33                           “Patent Rights” means patent applications or patents, author certificates, inventor certificates, utility certificates, improvement patents, and models and certificates of addition, and all foreign counterparts of them and includes, provisionals, divisionals, renewals, continuations, continuations-in-part, extensions, reissues, substitutions, confirmations, registrations, revalidations, or additions of or to them as well as any supplementary protection certificate or any other post patent expiration extension of patent protection in respect to them.

 

2.             Article 5 of the Amended Agreement is hereby amended and restated in its entirety to read as follows:

 

ARTICLE V 
 INTELLECTUAL PROPERTY

 

5.1           Ownership.

 

(a)                                  Dyax Antibodies and Dyax Antibody Information.  Subject to the licenses granted to Merrimack in Section 3.1 and the rights granted in Section 5.3, Dyax is and shall remain the owner of all Dyax Antibodies that are identified, generated, developed, produced, optimized, or obtained by Dyax from the Dyax Libraries in connection with the Research Program, together with the Dyax Antibody Information applicable thereto.

 

(b)                                 Dyax Libraries.  Dyax is and shall remain the owner of the Dyax Libraries and all improvements thereon developed during the term of this Agreement.

 

 

(c)                                  Dyax Research Materials and Dyax Research Know-How.  Subject to the licenses granted to Merrimack in this Agreement, Dyax is and shall remain the owner of the Dyax Research Materials and Dyax Research Know-How generated or utilized during the conduct of the Research Program.

 

(d)                                 Merrimack Targets and Merrimack Materials.  Merrimack is and shall remain the owner of Merrimack Targets and Merrimack Materials.

 

5.2           Inventions.

 

(a)                                  Inventorship.  Inventorship will be determined in accordance with United States patent laws.

 

(b)                                 Inventions.  The Parties acknowledge and agree that, regardless of inventorship:

 

(i)            Dyax shall hold title to:

 

(A)                              any invention or other subject matter directed to a composition of matter comprising the [**] that were delivered by Dyax to Merrimack

 

(B)                                any invention or other subject matter relating to [**], and

 

(C)                                any other invention or subject matter (including all intellectual property rights therein) that is conceived, reduced to practice or otherwise made solely by Dyax personnel in connection with this Agreement.

 

Collectively, the inventions referenced under this Section 5.2(b)(i) are referred to herein as the “Dyax Inventions”.

 

(ii)                                  Merrimack shall hold title to any invention or other subject matter (including all Intellectual property rights therein) conceived, reduced to practice or otherwise made solely by Merrimack personnel in connection with this Agreement; [**].  Collectively, the inventions referenced under this Section 5.2(b)(ii) are referred to herein as the “Merrimack Inventions”.

 

(iii)                               The Parties shall jointly hold title to all inventions and other subject matter (including all intellectual property rights therein) conceived, reduced to practice or otherwise made jointly by personnel of Dyax and Merrimack; [**].  Collectively, the inventions referenced under this Section 5.2(b)(iii) are referred to herein as the “Joint Inventions”.

 

Except as expressly provided in this Agreement, it is understood that neither Party shall have any obligation to account to the other 

 

 

for profits, or to obtain any approval of the other Party to license or exploit a joint invention, by reason of joint ownership of any invention or other intellectual property and each Party hereby waives any right it may have under the laws of any country to require such accounting or approval. Dyax shall promptly notify Merrimack of all Dyax Antibodies identified against Merrimack Targets in accordance with the applicable Research Plan, together with all Dyax Antibody Information applicable thereto.

 

5.3           Patenting Antibody Inventions under the Research Program.

 

(a)                                  Filing and Prosecution. Prior to the exercise of Merrimack’s option to obtain a Commercial License as set forth in Section 3.1(b), Merrimack may wish to file or to have Dyax file (as set forth below) a provisional application.  Prior to filing a provisional application, Merrimack shall provide a draft of each such proposed provisional application to Dyax for review and comment and discussion related to inventorship [**] days prior to filing.  During the [**] day review period:

 

(i)                                     Dyax may review and comment upon any such provisional patent application and Merrimack shall incorporate Dyax’s reasonable comments; and

 

(ii)                                  Merrimack and Dyax shall use reasonable and good faith efforts to reach a common understanding of inventorship of claims.

 

(A)                              If Merrimack and Dyax agree that the inventions claimed in the provisional application are Dyax Inventions as defined in Section 5.2(b)(i)(A) or Joint Inventions as defined in Section 5.2(b)(iii), then Dyax will, at Merrimack’s request and expense, file and prosecute any Patent Rights in any country requested by Merrimack with a patent counsel reasonably acceptable to Merrimack.  For clarity, this means that Dyax will also file and prosecute any nonprovisional Patent Rights based on such provisional applications prior to Merrimack exercising its right to obtain a Commercial License as set forth in Section 3.1(b).  Thereafter, Dyax’s Patent Rights in such Dyax Inventions or Joint Inventions shall be deemed to be included in the rights licensed to Merrimack under Section 3.1. Dyax shall (i) keep Merrimack fully informed as to the filing, prosecution and maintenance of such Patent Rights, (ii) furnish to Merrimack copies of all documents relevant to any such filing, prosecution and maintenance, and (iii) allow Merrimack [**] days to review and comment upon, and to incorporate Merrimack’s reasonable comments into, 

 

 

any such document filed with any patent office with respect to such Patent Rights prior to filing such documents.

 

(B)                                If the inventions described in the provisional application are mutually agreed to be Merrimack Inventions or determined to be Merrimack Inventions pursuant to Section 5.3(a)(ii)(C) below, then Merrimack shall have the sole and exclusive right to file and prosecute any Patent Rights based on such provisional application in any country, at Merrimack’s expense.

 

(C)                                If Merrimack and Dyax cannot, despite reasonable and good faith efforts, reach a common understanding of inventorship of claims of any such draft provisional application, then Dyax shall file the provisional patent application.  Merrimack and Dyax [**] reasonably acceptable to both Parties prior to the [**], who shall make a final determination of inventorship (in accordance with [**]) as to the [**] which was [**] to such [**].  Such [**] shall be [**] upon the [**] and their respective [**].  If the [**] is [**] to be a [**] under Section [**] or a [**] under Section [**] then [**] shall continue to [**] in any country requested by [**] at [**] expense.  Thereafter, such [**] in such [**] or [**] shall be deemed to be included in the rights licensed to Merrimack under Section 3.1.  Dyax shall (i) keep Merrimack fully informed as to the filing, prosecution and maintenance of such Patent Rights, (ii) furnish to Merrimack copies of all documents relevant to any such filing, prosecution and maintenance, and (iii) allow Merrimack [**] days to review and comment upon, and to incorporate Merrimack’s reasonable comments into, any such document filed with any patent office with respect to such Patent Rights prior to filing such documents.

 

(b)                                 Upon exercise of Merrimack’s option to obtain a Commercial License with respect to a Dyax Antibody, as set forth in Section 3.1(b), Dyax shall assign (and cause its inventors to assign) to Merrimack any of Dyax’s Patent Rights in the Dyax Inventions as defined in Section 5.2(b)(i)(A) and any Joint Inventions as defined in Section 5.2(b)(iii) that are directed to or relating to such Dyax Antibody. Upon exercise of a Commercial License, Merrimack will also have the right to file and prosecute all pending and subsequent patent applications related to the Dyax Antibody(ies), the intellectual property rights for which are subject to an obligation of assignment to Merrimack hereunder, without providing Dyax with a draft application or other prosecution documents for review and comment prior to such filing.  Dyax will use reasonable efforts to cooperate with Merrimack in such activities.  For the avoidance of doubt, 

 

 

Dyax acknowledges and agrees that if, upon Merrimack’s election to obtain a Commercial License with respect to a Dyax Antibody, Dyax is [**] with respect to the Target against which such Dyax Antibody is directed [**], Merrimack’s rights under clauses of this paragraph above shall apply notwithstanding [**] and Merrimack may, at Merrimack’s expense, require Dyax to assign (and cause its inventors to assign) to Merrimack Dyax’s Patent Rights in any Dyax Inventions as defined in Section 5.2(b)(i)(A) and any Joint Inventions as defined in Section 5.2(b)(iii) that are directed to or relating to such Dyax Antibody.

 

For clarity, If Merrimack does not exercise its option to obtain a Commercial License with respect to a Dyax Antibody, Dyax’s Patent Rights in any Dyax Inventions as defined in Section 5.2(b)(i)(A) directed to or relating to such Dyax Antibody shall remain owned by Dyax and Dyax’s joint ownership rights to Joint Inventions as defined in Section 5.2(b)(iii) directed to or relating to such Dyax Antibody shall remain owned by Dyax.

 

(c)                                  Enforcement. Merrimack shall have the right but not the obligation, at its expense, to enforce any Patent Rights which relate to any Antibody that is identified, generated, developed, produced, optimized, or obtained by Dyax from a Dyax Library that is delivered by Dyax to Merrimack in connection with the Research Program. Dyax shall cooperate with Merrimack, at Merrimack’s expense, in pursuing any litigation or other enforcement action to enforce such Patent Rights, including allowing Merrimack to file suit in Dyax’s name, making Dyax employees available to Merrimack, and promptly executing any documents which may be required to pursue such action. Merrimack shall control any such litigation or other enforcement action and shall enter into, or permit, the settlement of any such litigation or other enforcement action. All monies recovered upon the final judgment or settlement of any suit to enforce such Patent Rights shall first be paid to recover the respective actual out-of-pocket expenses of Merrimack and Dyax, or equitable portion thereof, associated with the enforcement. The remainder of any such monies shall be deemed to be Net Sales for purposes of determining the royalties owed by Merrimack to Dyax under Sections 4.6. and 4.7.

 

5.4                                 Further Assurances. Each Party has and will have appropriate agreements with its employees and contractors necessary to fully effect the provisions of Sections 5.1, 5.2 and 5.3. Each Party agrees to execute such assignments and other documents, to cause its employees and agents to execute such assignments and other documents, and to take such other actions, as may reasonably be requested by the other Party from time to time to give effect to the provisions of Sections 5.1, 5.2 and 5.3.

 

 

3.           From and after the date of this Amendment, the term “Agreement” as used in the Amended Agreement shall mean the Amended Agreement, as further amended by this Amendment.  Except as expressly amended hereby, the terms of the Amended Agreement shall remain in full force and effect and all such terms are hereby ratified and confirmed.

 

4.           This Amendment may be executed in one or more counterparts, each of which shall be deemed an original and all of which shall constitute one and the same instrument.

 

5.           This Amendment shall be governed by the laws of the laws of the Commonwealth of Massachusetts.

 

 

IN WITNESS WHEREOF, the undersigned have duly executed and delivered this Agreement as a sealed instrument effective as of the date first above written.

 

	
DYAX CORP. 
    	
 
    	
MERRIMACK PHARMACEUTICALS, INC.
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/   Ivana Magovcevic-Liebisch 
    	
 
    	
By:
    	
/s/   Edward J. Stewart 
    
	
Title:
    	
Executive   Vice President, Corporate 
    	
 
    	
Title:
    	
SVP,   Business Development 
    
	
Development and General Counsel 
    	
 
    	
Date:
    	
November 4,   2009 
    
	
Date
    	
11/6/09rfcs1a3ex10-28.htm

	
DATED THIS                                          DAY OF                       10 OCT 2007                              2007

BETWEEN

BANK PEMBANGUNAN MALAYSIA BERHAD

[16562-K]

AND

PLANT BIOFUELS CORPORATION SDN. BHD.

[625499-X]

 

 

 

 

************************************************

FACILITIES AGREEMENT

(Term Loan 1 Facility of RM3,000,000.00,

Term Loan 2 Facility of RM56,000,000.00 and

Revolving Credit Facility of RM10,000,000.00)

 

************************************************

 

 

 

 

ABDULLAH, ABD. RAHMAN & CO.

(Advocates & Solicitors)

10th Floor, Block B,

Wisma Yakin, Jalan Masjid India,

50100 Kuala Lumpur.

Tel No.: 03 - 26933455                                                         Fax No.: 03 – 26915436

(Our Ref: WMR/ITA/AFM/AZMI/RH/BPMB/1365/07)

\

  

1

  

 

THIS AGREEMENT is made the               day of     10         OCT           2007 BETWEEN BANK PEMBANGUNAN MALAYSIA BERHAD [16562-K], a company incorporated inMalaysia and having its registered office at Level 16, Menara Bank Pembangunan, Bandar Wawasan, No. 1016, Jalan Sultan Ismail, 50250 Kuala Lumpur (hereinafter called "BPMB") of the one part AND the party whose particulars are set out in Item 1 of the First Schedule hereto (hereinafter called "the Borrower") of the other part.

ARTICLE I

RECITALS

Section 1.01                                Objects of Borrower

The Borrower has as one of its principal objects the carrying on of the business  which is set out in Item 2 of the First Schedule hereto.

Section 1.02                                Application for Loan Facilities

The Borrower has applied to BPMB for a Term Loan Facility (hereinafter called "the TL Facility") comprising Term Loan 1 Facility (hereinafter called "the TL 1 Facility") and Term Loan 2 Facility (hereinafter called "the TL 2 Facility") and a Revolving Credit Facility (hereinafter called "the RC Facility") of Ringgit Malaysia in the amount set out in Item 3 of the First Schedule hereto (both the TL Facility and the RC Facility shall hereinafter be collectively called "the Loan Facilities") and BPMB has agreed to grant the Loan Facilities to the Borrower upon the terms and conditions hereinafter appearing.

  

2

  

 

ARTICLE II

DEFINITIONS

Section 2.01                                Definitions

In this Agreement where the context so admits the following words and expressions shall have the following meanings: -

	
Words

	
Meanings

	
 

"Advance"

	
 

The principal amount of a drawing made or to be made under the RC Facility following the delivery of a Drawdown Notice as set out in Fourth Schedule which includes the Advance rolled over following the delivery of a Rollover Notice as set out in Fifth Schedule.

 

	  	  
	
"Availability Period"

	
(a)      TL 1 Facility and TL 2 Facility

 

Within twenty-four (24) months from the date of                                this Agreement; and

 

(b)       RC Facility

 

Within twelve (12) months from the first (1st) anniversary date of the first (1st) Drawdown of the TL 2 Facility under this Agreement.

 

This Agreement shall be executed latest by 31st day of August, 2007, failing which the offer shall be considered withdrawn, cancelled unless the time period is extended by BPMB at its absolute discretion;

 

	
“Bank Accounts”

	
The bank accounts pertaining to the Project which are assigned by the Borrower to BPMB as security for the Loan facilities;

 

	
"Borrower"

 

	
The company, whose particulars are set out  in  Item 1 of the First Schedule hereto and includes persons deriving title thereunder, its successors-in-title and permitted assigns thereof;

 

	
"BPMB"

 

	
BANK  PEMBANGUNAN MALAYSIA BERHAD [16562-K], a company incorporated in Malaysia and having its registered office at Level 16, Menara Bank Pembangunan, Bandar Wawasan, No. 1016, Jalan Sultan Ismail, 50250 Kuala Lumpur, and includes persons deriving title thereunder, its successors-in-title and assigns thereof-,

 

	
"Business Day"

	
A day (excluding Saturdays, Sundays and Public Holidays) on which banks are open for business in Kuala Lumpur and on which transaction in inter bank deposits are carried out in the Kuala Lumpur money market;

 

	
"Contracts"

 

	
The contract dated the  18th day of   January 2007 made between the Borrower and Contractor (including any supplemental agreements thereto)  and/or  any other contracts pertaining to the Project which are assigned by the Borrower to BPMB as security for the Loan Facilities;

 

	
"Contractor"

	
OIL-LINE  ENGINEERING  &  ASSOCIATES  SDN. BHD. (193811-U),  a  company  incorporated in Malaysia under  the Companies Act 1965  and  having its registered office and its place of business  at  No. 2-2, Jalan SS6/6, Kelana Jaya, 47301 Petaling Jaya, Selangor Darul Ehsan and includes persons deriving title thereunder, its successors-in-title and assigns thereof;

 

	
"Deed of Assignment of Designated Accounts"

 

	
The Deed of Assignment of Designated Accounts executed or to be executed by the Borrower whereby the Borrower assigns all the rights, interests and benefits of the Bank Accounts to BPMB as security for the Loan Facilities  and  referred to in Item 11 of the First Schedule hereto;

 

	
"Deed of Assignment of Construction Contracts"

 

	
The Deed of Assignment of Construction Contracts executed or to be executed by the Borrower whereby the Borrower assigns all the rights, interests and benefits of the Contracts to BPMB as security for the Loan Facilities and referred to in Item 11 of the First Schedule hereto;

 

	
"Deed of Assignment of

Insurance Proceeds"

 

	
The Deed of Assignment of Insurance Proceeds executed or to be executed by the Borrower whereby the Borrower assigns all the rights, interests and

 

benefits  in  the Insurance Proceeds to BPMB as security  for  the Loan Facilities and referred to in Item 11 of the First Schedule hereto;

 

	
“Deed of Assignment of Land”

	
The first party deed of assignment of land created by the Borrower over the Land as security for the Loan Facilities  and referred to in Item 11 of the First Schedule hereto;

 

	
"Deed of Assignment of Rights and Benefits of Licences"

	
The Deed of Assignment of Rights and Benefit of Licences executed or to be executed by the Borrower whereby the Borrower assigns all the rights, interests and  benefits of the Licences to BPMB as security for the Loan Facilities and referred to in Item 11 of the First Schedule hereto;

 

	
"Deed of Assignment of Rights and Benefits of Liquidated Damages"

	
The Deed of Assignment of Rights and Benefits of Liquidated  Damages  executed or to be executed by the Borrower whereby the Borrower assigns all the rights,  interests  and benefits of the Liquidated Damages to BPMB as security for the Loan Facilities and referred to in Item 11 of the First Schedule hereto;

 

	
"Deed of Assignment of Rights and Benefits of Permits"

	
The  Deed  of Assignment of Rights and Benefits Permits executed or to be executed by the Borrower whereby the Borrower assigns all the rights, interests and benefits of the Permits to BPMB as security for the Loan  Facilities  and  referred  to  in  Item 11  of  the First Schedule hereto;

 

	
"Deed of Assignment of Rights and Benefits of Securities"

	
The Deed of Assignment of Rights and Benefits of Securities executed or to be executed by the Borrower whereby the Borrower assigns all the rights, interests and benefits of the Securities to BPMB as security for the  Loan  Facilities and referred to in Item 11 of the First Schedule hereto;

 

	
"Drawdown"

	
A  drawdown  of the Loan Facilities following the delivery of a Drawdown Notice in accordance with Sections 6.01 and 6.02 hereof;

 

	
"Drawdown Date"

	
Each of the  dates  on which a Drawdown is made by the Borrower under the Loan Facilities;

 

	
"Drawdown Notice"

 

	
A  notice  from  the Borrower requesting for a Drawdown, substantially in the form of the Second, Fourth and Fifth Schedules hereof (or any other forms as may be acceptable by BPMB);

 

	
"Effective Cost of Funds"

	
BPMB's effective cost of funds for the duration of the relevant interest period as determined conclusively by BPMB  (save for manifest error),  being  the aggregate of  BPMB's  weighted average cost of net available funds and all administration and other cost of BPMB together with all other cost and expenses of BPMB under this Agreement;

 

	
"Events of Default"

	
Any of the events set out in Section 10.01 hereof;

 

	
"Final Maturity Date"

	
The  last day of the Availability Period for the RC Facility;

 

	
"Financial Statements"

	
Includes  balance  sheets, profit and loss statements and other related financial statements of the Borrower;

 

	
“First Fixed and Floating Debenture”

	
The first fixed and floating debenture created by the Borrower  as  security for the Loan Facilities and referred to in Item 11 of the First Schedule hereto;

 

	
"Guarantee"

 

	
The unconditional irrevocable joint and several guarantee  and  indemnity  executed by the Guarantors in  favour  of BPMB as security for the Loan Facilities and referred to in Item 11 of the First Schedule hereto;

 

	
"Guarantors"

 

	
The party whose particulars are set out in Item 4 of the First  Schedule hereto and includes their respective heirs and personal representatives;

 

 

 

  

3

  

 

	
"Indebtedness"

 

	
The aggregate of all principal sums disbursed at any time  or  from time to time by BPMB to the Borrower or to such party(ies) as BPMB shall at its sole discretion consent to under and in respect of the Loan Facilities together with interests, commission and other monies payable by the Borrower to BPMB pursuant to and under the Loan Facilities and this Agreement (whether in respect of principal, interest, late payment interest, penalties, commission, costs, charges or other expenses). A statement in writing signed by a duly authorized officer of BPMB of the Indebtedness is a conclusive evidence of such indebtedness;

 

	
"Independent Checking Engineer (ICE)"

 

	
A technical consultant or any other ICE acceptable to BPMB,  appointed  by BPMB at the cost of the Borrower, as BPMB's independent checking engineer, to advise BPMB on all matters relating to the Project including all verification works prior to each Drawdown of the Loan Facilities;

 

	
"Insurance Proceeds"

 

	
The  insurance  proceeds  pertaining to the Project which are assigned by the Borrower to BPMB as security for the Loan Facilities;

 

	
"Interest Payment Date"

	
The last day of Interest Period;

 

	
"Interest Period"

 

	
The first (1st) Interest Period shall commence on the date of the first (1st) Drawdown of the Loan Facilities and end three (3) months after the date of the first Drawdown  and  for  each  Drawdown shall commence on the date  of that Drawdown and end on the last day of that Interest Period and thereafter every successive period of three (3) months each commencing from the date immediately following the preceding Interest Payment Date, or such other period as may be stipulated by BPMB in exercise of its powers under Section 3.07 hereof;

 

	
“Land”

	
The land set out in Item 9 of the First Schedule hereto and includes the building(s) erected or to be erected thereon;

 

	
“Legal Process”

	
Pleadings,  all  forms of originating process, interlocutory  applications  of  whatever nature, affidavits, orders and such documents other than the aforesaid which are required to be served under the Rules  of  Court, notices required to be given to the other under this Agreement and correspondences between the parties hereto, notices under the Companies Act, 1965 and Rules made thereunder;

 

	
"Letters of Offer"

 

	
The Letters of Offer set out in Item 10 of the First Schedule hereto and includes any other correspondences  or documents which may thereafter be issued by BPMB to the Borrower or entered into between BPMB  and the Borrower in substitution thereof, in addition or amendment or variation thereof;

 

	
“Licences”

	
The licences pertaining to the Project which are assigned by the Borrower to BPMB as security for the Loan Facilities;

 

	
“Liquidated Damages”

	
The  liquidated  damages  pertaining to the Project which are assigned by the Borrower to BPMB as security for the Loan Facilities;

 

	
“Loan Facilities”

	
The Loan Facilities granted or to be granted to the Borrower pursuant to Section 3.01 hereof and includes any part(s) thereof;

 

	
“Month”

	
A calendar month;

 

	
“Permits”

	
The permits pertaining to the  Project which are assigned by the Borrower to BPMB as security for the Loan Facilities;

 

	
“Project”

	
The Project referred to in Item 7 of the First Schedule hereto;

 

	
“RC Facility”

	
The Revolving Credit Facility  granted or to be granted to the Borrower pursuant to Section 3.01 hereof and includes any part(s) thereof;

 

	
“RINGGIT MALAYSIA”

	
The abbreviation "RM" means the lawful currency of Malaysia;

 

	
“Rollover”

	
The Advance rolled over upon the issuance of the Rollover Notice;

 

	
"Rollover Date"

	
The date(s) of the Rollover of the Advance;

 

	
"Rollover Notice"

 

	
A notice requesting  the  Advance to be rolled over in the form set out in Fifth Schedule hereto (or any other forms as may be acceptable by BPMB) which must be duly completed and signed on behalf of the Borrower;

 

	
"Securities"

 

	
The securities pertaining to the Project which are assigned by the Borrower to BPMB as security for the Loan Facilities;

 

	
"Security Documents"

 

	
The documents as set out in Item 11 of the First Schedule hereto and all other security documents now or at any time hereafter  constituting security for the Loan Facilities, and reference to the Security Documents shall include reference to any one or more of them;

 

	
"Security Party(ies)"

	
The parties  whose  particulars are set out in Items 4 and 12 of the First Schedule hereto and includes persons deriving title thereunder and their respective successors-in-title and permitted assigns;

 

	
"Subsidiary"

 

	
Any company  in which not less than fifty-one per centum (51%) of the voting capital is owned directly or indirectly by the Borrower or which is otherwise effectively controlled by the Borrower pursuant to Section 5 of the Companies Act, 1965;

 

	
"TL Facility"

 

	
The Term Loan Facility comprising of the TL 1 Facility and the TL 2 Facility granted or to be granted to the Borrower pursuant to Section 3.01 hereof and includes any part(s) thereof;

 

	
"TL 1 Facility"

 

	
The Term Loan 1  Facility granted or to be granted to the Borrower pursuant to Section 3.01 hereof and includes any part(s) thereof;

 

	
"TL 2 Facility

	
The  Term  Loan  2  Facility granted or to be granted to the Borrower pursuant to Section 3.01 hereof and includes any part(s) thereof.

 

  

4

  

 

Words importing the masculine gender include the feminine and neuter genders.

Words importing the singular number include the plural number and vice versa.

Words applicable to natural persons include any body of persons, company, corporation, firm or partnership, corporate or unincorporate or vice versa.

The  headings  and  sub-headings to the Articles and Sections of this Agreement are inserted for purposes of convenience only and shall not be deemed to be a part thereof or be taken into consideration in the interpretation or construction of this Agreement.

ARTICLE III

LOAN FACILITIES

Section 3.01                                Loan Facilities

Subject to the terms and conditions herein set forth BPMB agrees to grant, extend or make available to the Borrower and the Borrower agrees to borrow from BPMB Loan Facilities in the amount set out in Item 3 of the First Schedule hereto. The Loan Facilities are granted by BPMB to the Borrower under the General Fund ("GF").

  

5

  

 

Section 3.02                                Tenure/Duration

The tenure/duration of the Loan Facilities shall be as follows: -

(a)           TL 1 Facility and TL 2 Facility

Six (6) years inclusive of the Grace Period set out in Item 5 of the First Schedule hereto; and

(b)           RC Facility

Six (6) months from the date of first (1st) disbursement of the RC Facility and is subject to annual review by BPMB up to five (5) years.

Section 3.03                                Disbursement of Loan Facilities

(i)           TL Facility

The TL Facility or any part thereof shall be disbursed by BPMB to the Borrower during the Availability Period after the execution of this Agreement and the Security Documents herein referred to and upon the observance and performance of the conditions and covenants contained in Sections 5.01, 5.02 and 5.03 hereof to be observed and performed by the Borrower. Any remaining amount of the TL Facility not disbursed at the end of the Availability Period will be automatically cancelled;

(ii)           RC Facility

The RC Facility shall be disbursed by BPMB to the Borrower after the execution of this Agreement and the Security Documents and presentation for registration with the appropriate registries and upon the observance and performance of the conditions and covenants contained in Sections 5.01, 5.02 and 5.03 hereof to be observed and performed by the Borrower.

Section 3.04                                Repayment of Principal Amount of Loan Facilities

The Borrower hereby covenants and agrees to BPMB as follows: -

(i)           TL 1 Facility and TL 2 Facility

The principal amount of the TL 1 Facility and the TL 2 Facility shall be repaid monthly commencing on the twenty-fifth (25th) month from the date of the first (1st) Drawdown  of the TL 1 Facility or TL 2 Facility, whichever is earlier in forty-eight (48) equal instalments.

(ii)           RC Facility

Any amount of disbursement of the RC Facility shall be repayable within six (6) months from the date of each disbursement of the RC Facility.

Section 3.05                                 Interest on Loan Facilities

The Borrower hereby covenants and agrees to pay to BPMB interest on the Loan Facilities or the proportions thereof from time to time disbursed by BPMB and remaining due and outstanding: -

  

6

  

 

(i)           TL Facility

At the rate set out in Item 6 of the First Schedule hereto, calculated as from the date when the respective TL 1 Facility and TL 2 Facility or any part(s) thereof are first (1st) disbursed to or on behalf of the Borrower by BPMB as hereinbefore prescribed and all interest payable shall be paid on the first (1st) day of every one (1) month commencing on the first (1st) day of the month after the expiry of the Grace Period as set out in Items 5 of the First Schedule hereto. Interest during the Grace Period for TL 1 Facility and TL 2 Facility shall be capitalized on a monthly basis.

(ii)           RC Facility

At the rate specified in Item 6 of the First Schedule hereto, calculated as from the date when the RC Facility or any part(s) thereof are first disbursed to or on behalf of the Borrower by BPMB as hereinbefore prescribed and all interest payable shall be paid monthly commencing on the first (1st) day of the month after the expiry of one (1) month from the date of each drawdown of the RC Facility.

Interest  for  any  period  less than a year shall accrue and be calculated on the basis of 365 day/year (366 days in a leap year) or twelve (12) calendar months.

Section 3.06                                 Variation of Interest Rate

	
(a)

	
Notwithstanding the provisions relating to the rate of interest as hereinbefore provided, BPMB shall be entitled at any time and from time to time to vary at its discretion such rate of interest by serving a notice in writing on the Borrower of its intention and such amended rate of interest shall be payable as from the date specified in the said notice. Service of such notice shall be effected in the same manner  as  a notice demanding payment of the balance due as hereinafter provided.

	
(b)

	
If and whenever the rate of interest payable by the Borrower under this Agreement shall be varied in the manner herein appearing, BPMB may at its absolute discretion make the necessary adjustment consequent upon such variation either: -

(i)           by varying the amount of the installments; or

(ii)           by varying the number of the installments.

	
Section 3.07

	
Variation of Dates for Repayment of Loan Facilities and for Payment of Interest

It is hereby expressly agreed and declared by the parties hereto that notwithstanding the provisions of Sections 3.04 and 3.05 hereof, the dates therein provided for the repayment of the principal amount of the Loan Facilities and for the payment of interest may at any time and from time to time be varied by BPMB by way of a letter from BPMB with a new repayment schedule and thereupon such amended dates shall be deemed to become effective and the provisions of Sections 3.04 and 3.05 hereof shall be deemed to have been amended accordingly and shall be read and construed as if such amended dates had been incorporated in and had formed part of this Agreement at the date of execution thereof.

Section 3.08                                Additional Interest on Late Payment

If the Borrower shall default in the payment on due date of the commitment charge or of any one or more of the installments of the Loan Facilities and/or interest or any other moneys herein covenanted to be paid (including all monies expended by BPMB from time to time for and on behalf of the Borrower), the Borrower shall pay to BPMB additional interest calculated  at a rate per annum which is one per centum (1%) above the rate set out in Item 6 of the First Schedule hereto or such other rates to be determined at the sole discretion of BPMB on the commitment charge or the installment(s) or any other sum at that time in arrears calculated from the date of such default until the date of payment of the amount thereof (as well before as after judgment) in a year of three hundred and sixty-five (365) days (three hundred and sixty-six  (366) days in a leap year). The rate charged on late payment may be varied by BPMB at its absolute discretion upon notification to the Borrower.

  

7

  

Section 3.09                                Capitalisation of Interest

Interest on any principal sum for the time being owing including capitalised interest may at the absolute discretion of BPMB be added for all purposes to the principal sum then owing and shall thenceforth bear interest at the applicable rate stipulated in accordance with Sections 3.05 and 3.06 hereof. All covenants and conditions contained in or implied by these presents and all powers and remedies conferred by law or these presents and all rules of law or equity in relation to the said principal sum and interest shall equally apply to such capitalised arrears and to interest on such arrears.

Notwithstanding the above, for the purpose of ascertaining whether the limit of the Loan Facilities agreed by BPMB to be lent or advanced for the benefit of the Borrower has been exceeded or not, accumulated and capitalised interest shall be deemed to be interest and not the principal sum.

Section 3.10                                Commitment Fee

The Borrower shall pay BPMB a commitment fee at the rate of zero point five per centum (0.5%) per annum, payable lump sum in arrears and calculated on such part(s) of the Loan Facilities as shall not have been utilised by the Borrower in accordance with the agreed schedule.

The rate of the commitment charge may be varied by BPMB at its absolute discretion upon notification and agreement from the Borrower.

Section 3.11                                No Deductions

	
(a)

	
All repayments, payments and prepayments whatsoever to be made by the Borrower hereunder shall be made without any set-off or counterclaim and free and clear of any restrictions or conditions and free and clear of and without deduction for any taxes, levies, imposts, duties, charges, fees, deductions or withholding of any nature now or hereafter imposed by any governmental or other authorities.

	
(b)

	
If BPMB is compelled by law to deduct any such taxes, levies, imposts, duties, charges or fees or to make any such deductions or withholdings the Borrower shall pay such additional amounts as may be necessary in order that the net amounts received by BPMB after such deductions or withholdings shall equal the amount it would have received had no such deductions or withholding been made.

Section 3.12                                Payments in Gross

All moneys received from or on account of the Borrower or from any other person or persons or estate or from the realisation of this Agreement or any security or otherwise for the purpose of being applied in the reduction of the account of the Borrower or of the moneys covenanted to be paid as hereinbefore provided, shall be treated for all purposes as payments in gross and not as appropriated or attributable to any specific part or item of the said moneys covenanted to be paid even if appropriated thereto by the person otherwise entitled so to appropriate. All securities now or at any time held by BPMB shall be treated as securities for the said general balance and any other amount owing. The Borrower or any other person or persons claiming under the Borrower shall have no claim to such securities or to any part thereof or any interest therein unless and until BPMB has received the full amount owing to BPMB by the Borrower.

 

  

8

  

 

Section 3.13                                Appropriation of Payment Received

If the Borrower shall pay a sum which is less than the total amount due or overdue in respect of principal, interest, commitment fee, fees or any other sum due under this

Agreement on the due date the Borrower waives any right it may have to make any appropriation of such sum as between any amount(s) so due or overdue and the sum so paid shall be applied by BPMB in or towards satisfaction of such amount or amounts which are due or overdue for payment on that day in the following order or such order as BPMB may decide at its absolute discretion:-

(a)           fees and expenses;

(b)           commitment fee;

(c)           interest due under this Agreement; and

(d)           repayment of principal.

Section 3.14                                Prepayment of Loan Facilities

Subject to and upon the Borrower paying to BPMB all accrued interest, it is hereby expressly agreed that notwithstanding any provision for payment by instalments hereinbefore contained, the Borrower may on an interest payment date by giving BPMB ninety (90) days prior written notice prepay the whole of the Loan Facilities then owing to BPMB under this Agreement or such lesser amount as  BPMB may in its absolute discretion accept and the Borrower shall pay all  interest accrued up to the prepayment date together with the prepayment amount. PROVIDED that the acceptance of such lesser amount as aforesaid by BPMB shall in no way entitle the Borrower to a reduction in the amount of any subsequent instalments but only to a reduction in the number thereof. Each prepayment shall be made in integral multiples of Ringgit Malaysia One Million (RM1,000,000.00) subject  to  a minimum of Ringgit Malaysia One Million (RM1,000,000.00). The prepayment date shall not be during the Availability Period. Any such notice of prepayment shall, once delivered to BPMB, be irrevocable and the Borrower shall be obligated to make the prepayment in accordance with the notice. Partial prepayment under this Section shall be applied in or towards satisfaction of the instalments due under the Loan Facilities in  the  inverse order of maturity of their due dates for payment. Any amounts prepaid under this Section shall not be available for re-borrowing under this Agreement. Prepayment in a manner contrary to the provisions herein shall be liable to a prepayment fee of one point zero per centum (1.0%) flat on the prepayment amount.

Section 3.15                                Letters of Credit

	
(a)

	
The Borrower shall open Letter of Credit with a commercial bank appointed by BPMB if the machinery and equipment including raw materials financed are imported. BPMB shall be the applicant or agent of the Borrower for the opening of the aforesaid Letters of Credit for a value of not more than the RC Facility wherein all costs of the Letters of Credit shall be borne by the Borrower.

(b)           The costs of the Letters of Credit shall be as follows:-

	
  

	
(i)

	
Zero point one per centum (0.1%) per month calculated on the value of Letters of Credit opened.

(ii)           Actual costs of the bank issuing the Letters of Credit.

	
(c)

	
Applications for the opening of Letters of Credit shall be in writing by means of completed Letters of Credit application form as prescribed by BPMB.

	
(d)

	
Disbursements made under the aforesaid Letters of Credit shall be converted to the RC Facility.

  

9

  

 

Section 3.16                                Suspense Account

Any moneys received hereunder may be placed and kept to the credit of any suspense account for so long as BPMB thinks fit without any obligation in the meantime to apply the same or any part thereof in or towards the discharge of any money or liabilities due or incurred by the Borrower to BPMB. Notwithstanding any such payment in the event of any proceedings in or analogous to bankruptcy, liquidation, composition or arrangement BPMB may prove for or agree to accept any dividend or  composition in respect of the whole or any part of such moneys and liabilities in the same manner as if this security had not been created.

Section 3.17                                Purpose of Loan Facilities and Project

The Project (hereinafter called "the Project") to be financed is as set out in Item 7 of the First Schedule hereto and the use and purpose of the Loan Facilities (hereinafter called "the Purpose") is as set out in Item 8 of the First Schedule hereto.

The Loan Facilities shall be used by the Borrower for the Purpose as set out in Item 8 of the First Schedule hereto. In the event that the Borrower requires the use of the Loan Facilities or any part thereof for any other purpose, the Borrower shall obtain the written consent of BPMB, which consent may be refused or given unconditionally or subject to such terms and conditions as BPMB may in its absolute discretion deem fit without any obligation to give reasons thereof.

Section 3.18                                BPMB under no Obligation to Monitor

Notwithstanding Section 3.17 hereof, BPMB shall not be responsible for monitoring or ensuring the use or application of the Loan Facilities or any part thereof and failure by the Borrower to comply with its obligations under Section 3.17 hereof shall not in any way prejudice any rights of BPMB.

Section 3.19                                Changes in Circumstances

	
(1)

	
If by reason of any change after the date of this Agreement in applicable law, regulation or regulatory requirement or in  the interpretation or application thereof by any governmental or other authority charged with the administration thereof it shall become unlawful for BPMB to comply with its obligations hereunder BPMB shall forthwith give notice to the Borrower of the relevant circumstance whereupon the Borrower and BPMB shall forthwith negotiate in good faith with a view to agreeing terms for making BPMB's commitment on a basis which is not unlawful and/or from another source (as the case may be). If within the period allowed by law or after thirty (30) days of such negotiations whichever shall be the earlier no agreement shall have been reached as aforesaid: -

	
  

	
(a)

	
any outstanding obligations of BPMB shall forthwith be terminated and BPMB's commitment shall be cancelled; and

	
  

	
(b)

	
the Borrower shall be obligated in the case where it becomes unlawful for BPMB to comply with its obligations hereunder to prepay to BPMB any amount outstanding under the Loan Facilities.

	
(2)

	
If by reason of any change in applicable law, regulation or regulatory requirement or in the interpretation or application thereof by any governmental or other authority charged with the administration thereof or by reason of compliance by BPMB with any applicable direction, request or requirement (whether or not having the force of law) of any governmental or other authority: -

	
  

	
(i)

	
any tax, duty or charge (other than tax on overall net profits or income) with respect to this Agreement, its commitment or any monies outstanding under the Loan Facilities is imposed on BPMB or the basis on which payments under this Agreement are brought into charge to tax (not being an alteration solely of the rate of tax charged on the overall net profit or income of BPMB) is altered; or

  

10

  

	
  

	
(ii)

	
any reserve or similar requirements are imposed. modified or deemed applicable to BPMB or any special deposits affecting the amounts outstanding or affecting any deposit or other funds obtained by BPMB or to maintain the amount outstanding thereunder are required to be made by BPMB; or

	
  

	
(iii)

	
any other condition with respect to this Agreement or the monies outstanding under the Loan Facilities is imposed on BPMB;

and the result of any of the foregoing is either to increase the cost to BPMB of making or continuing its obligations or to reduce the amount of any payment received or receivable by BPMB or the effective return of BPMB in relation to its commitment by any amount which BPMB deems material and shall so certify then and in any such case: -

	
  

	
(a)

	
BPMB shall give notice to the Borrower of the happening of such event promptly after becoming aware thereof;

	
  

	
(b)

	
BPMB shall then negotiate with the Borrower for a period of not exceeding thirty (30) days after the date of such notice with a view to agreeing on a means of mitigating the increased cost or other reduction as aforesaid including in particular, but without limiting the generality of the foregoing, the changing of the branch or office of BPMB in question through which the Loan Facilities is made available at par to one or more affiliates or financial institutions not affected by such law, regulation or regulatory requirement;

	
  

	
(c)

	
whether or not any such agreement to mitigate the increased cost or other reduction as aforesaid is reached within the said period of thirty (30) days, the Borrower shall (without prejudice to its right of prepayment provided for herein) pay to BPMB on demand such amount as BPMB may certify in such demand to be necessary to compensate BPMB for such additional cost or reduction provided always that the Borrower may (on giving not less than seven (7) days' notice to BPMB of its election so to do) elect to prepay within a period of thirty (30) days after receipt of the notice from BPMB all (but not part only) monies outstanding to BPMB and upon receipt by BPMB of notice of such election the obligations of BPMB with respect to the Loan Facilities shall be terminated;

	
  

	
(d)

	
where the Borrower is obligated or elects to prepay any monies outstanding under the Loan Facilities as provided herein the Borrower shall simultaneously with such prepayment pay to BPMB all other sums payable by the Borrower to BPMB under this Agreement together with such amounts as BPMB certifies to be necessary to compensate BPMB for any loss (including any loss suffered because the rate of interest obtainable by BPMB for the redeployment (in such way as is acceptable to BPMB) of the funds prepaid is less than the rate of interest previously payable to it hereunder in respect of the same period and any losses incurred in liquidating or employing deposits from third parties required to effect or maintain its obligations) incurred by it up to the next succeeding date on which interest is payable hereunder; and

	
  

	
(e)

	
the certificate of BPMB as to any of the matters referred to in this Section shall, save for any manifest error, be conclusive and binding on the Borrower.

  

11

  

 

ARTICLE IV

SECURITY

Section 4.01                                Security Documents

In consideration of the premises and for better securing the Loan Facilities or any part thereof the Borrower shall execute or cause to be executed the Security Documents referred  to  in  Item 11 of the First Schedule hereto in favour of BPMB in form and substance acceptable to BPMB.

Section 4.02                                Restriction Against other Charges

The Borrower hereby declares that save and except for the charges already disclosed to BPMB, there is no mortgage, pledge, lien, charge or debenture (whether fixed or floating) upon any of the assets of the Borrower and: -

	
(a)

	
the Borrower shall not during the subsistence of this Agreement without the consent in writing of BPMB execute any form of charge, mortgage, debenture (whether fixed or floating), pledge or lien in respect of any of the assets of the Borrower;

	
(b)

	
this Agreement shall be without prejudice to any security already given by the Borrower to BPMB or any security which may hereafter be given to BPMB whether the same be for securing repayment of the principal amount of the Loan Facilities and  interest thereon or any part thereof or any other moneys covenanted to be paid herein and whether such security is taken as additional or collateral security or otherwise howsoever.

Section 4.03                                Covenant to Provide Further Security

	
(a)

	
The Borrower shall at the request of BPMB and at the Borrower's own expenses charge to or deposit with BPMB the document of title of any or all movable or immovable properties vested in the Borrower for any tenure. Such charge or deposit may be by way of security for the repayment of moneys hereby secured and may also or otherwise be for the purpose of securing any other moneys owing to BPMB and not secured hereby.

	
(b)

	
The Borrower hereby covenants and undertakes with BPMB, that it will at all future times at the request of BPMB and at the Borrower's own cost and expense execute any subsequent mortgage, charge, assignment and/or debenture on any land, building, machinery and equipment owned by and to be acquired by the Borrower.

	
(c)

	
The Borrower hereby further covenants with BPMB that should any supplementary debenture or debentures or other securities be created in favour of BPMB for the purpose of securing the repayment of any further moneys advanced by BPMB to the Borrower for the purchase of any fixed assets, the charges created under the supplementary debenture or debentures or other securities will in all respects rank pari passu with the charges created under the Security Documents.

Section 4.04                                Continuing Security

The security hereby created is expressly intended to be and shall be a continuing security for all moneys whatsoever now or hereafter from time to time owing by the Borrower to BPMB whether alone or jointly and severally with another or others and whether as principal or surety notwithstanding that the Borrower may at any time or times cease to be indebted to BPMB for any period or periods.

Section 4.05                                BPMB's Other Securities

Nothing herein contained shall prejudice or affect any lien to which BPMB is entitled or any other securities which BPMB may at any time or from time to time hold for or on account of the moneys hereby secured nor shall anything herein contained operate so as to merge or otherwise prejudice or affect any guarantee, mortgage, charge, lien or other security which BPMB may for the time being have for any any money intended to be hereby or otherwise secured or any right or remedy of BPMB thereunder.

  

12

  

 

Section 4.06                                Valuation

The Borrower  hereby authorizes BPMB to value the assets charged to BPMB annually or at such intervals  as BPMB shall in its absolute discretion decide by any valuer or any officer of BPMB or any person of BPMB's choice at the Borrower's sole cost and expense.

ARTICLE V

CONDITIONS PRECEDENT FOR DISBURSEMENT

Section 5.01                                Conditions Precedent

The Loan Facilities or any part thereof shall become available to the Borrower on the date of fulfilment of the following conditions: -

(i)           TL 1 Facility

	
(a)

	
this  Agreement, the First Fixed and Floating Debenture, the Deed of Assignment of Designated  Accounts  and the Guarantee (save and except Deed of Assignment)  shall have been executed and stamped and where required presented for registration with such registries as BPMB may deem necessary or expedient, and the necessary searches shall also have been made at the relevant registries which searches indicate that it is in order for BPMB to take the securities referred to herein;

	
(b)

	
BPMB shall have received a confirmation from BPMB's solicitor pertaining to the Deed of Assignment of Land that all the relevant documents shall have been signed in escrow and the stamping and registration and legal fees shall have been collected in advance from the Borrower;

(c)           the Borrower shall have submitted to BPMB,. -

	
  

	
(i)

	
certified true copies of its Forms 24, 44, 49 and Memorandum and Articles of Association  and  a  certified  true copy of the resolution by the Board of Directors of  the  Borrower  (duly certified by the company secretary of the Borrower  or  in  his absence,  a  director  of the Borrower, as being a true complete and up-to-date copy and not revoked  or amended and as having been passed at a meeting of the Board of Directors duly convened and held and at which  a quorum  was  present  throughout)  authorising the acceptance of the Loan Facilities, the  execution of this Agreement and the other Security Documents and the operations of the Loan Facilities and other related transactions; and

	
  

	
(ii)

	
specimen signature(s) of the authorised signatories to this Agreement and the Security Documents and to all other notices and certificates required of the Borrower, and to operate the Loan Facilities, duly certified by the company secretary of the Borrower or in his absence, a director of the Borrower;

	
(d)

	
the Borrower shall have obtained (where applicable) the relevant letter(s) of consent from any existing chargee(s)/lender(s)/debenture holder(s) (if any) agreeing to the Borrower obtaining the Loan Facilities and to the creation of the Security Documents and acknowledging the agreed ranking thereof of the Security Documents;

(e)           a search shall have been conducted by BPMB's solicitors: -

	
  

	
(i)

	
on the Borrower at the Companies Commission of Malaysia and the results whereof indicate, inter alia, that the Borrower is duly incorporated under the Companies Act, 1965 and that save for those, which have been disclosed to BPMB, there are no other charge or encumbrance or debenture over the assets of the Borrower which would jeopardize BPMB’s interest in the assets of the Borrower and where there is any charge or encumbrance or debenture over the assets of the Borrower which would otherwise jeopardize BPMB's interests, Section 5.01(d) hereof shall apply;

  

13

  

	
  

	
(ii)

	
on the Borrower at the office of the Insolvency Department and the results whereof indicate that the Borrower is not wound-up. Whilst pending receipt of the results of the said search on the Borrower from the Insolvency Department, a director of the Borrower shall have confirmed under oath by way of a statutory declaration that the Borrower is not wound-up;

	
  

	
(iii)

	
on the shareholders and directors of the Borrower and the Guarantors at the office of the Insolvency Department and the results thereof indicate that the shareholders and directors of the Borrower and the Guarantors are not bankrupts. Whilst pending receipt of the results of the said search on the shareholders and directors of the Borrower and the Guarantors from the Insolvency Department, each of the shareholders and directors of the Borrower and the Guarantors shall have confirmed under oath by way of a statutory declaration that they are not bankrupts;

	
(f)

	
in the event that any of the legal actions on the Borrower and/or any of the shareholders and/or any of the directors of the Borrower and/or any of the Security Party(ies) remain unresolved or outstanding or ongoing, BPMB shall have obtained written confirmation from the solicitors of BPMB that the legal and commercial implications or consequences of the cases are not detrimental to the Project and/or the Loan Facilities-,

	
(g)

	
all licences and permits relating to the Project (where applicable) are in place, save to the extent of specified licenses and permits which can reasonably be obtained only at a later date (and which the Borrower has undertaken to use its reasonable endeavour to produce by specific date as agreed by BPMB);

	
(h)

	
BPMB shall have received the original copy (or where applicable, certified true copy) of the executed Sale and Purchase Agreement for the Land between the Borrower and Perbadanan Kemajuan Negeri Pahang;

	
(i)

	
BPMB shall have received a copy of the valuation report for the Land wherein the total market-value shall be not less than RINGGIT MALAYSIA FOUR MILLION AND ONE HUNDRED THOUSAND (RM4,100,000.00) only. The Land shall be valued by an independent professional valuer acceptable to BPMB who is on BPMB's panel of valuers;

	
(j)

	
BPMB shall have received proof of lodgement of Form 24 from the Companies Commission of Malaysia (CCM) as documentary evidence that the Borrower has increased its paid-up capital to at least Ringgit Malaysia Nine Million (RM9,000,000.00) by way of cash or capitalization of cash advances;

	
(k)

	
written confirmation from the Solicitors of BPMB that amongst others, the legality, validity and enforceability of this Agreement and the Security Documents for the Loan Facilities as set out in Section 5.01(i)(a) and that all the conditions precedent for the TL 1 Facility have been complied with by the Borrower.

(ii)           TL 2 Facility and RC Facility

	
(a)

	
all the conditions precedent for the TL 1 Facility have been complied with by the Borrower;

	
(b)

	
this Agreement and the Security Documents shall have been executed and stamped and where required presented for registration with such registries as BPMB may deem necessary or expedient, and the necessary searches shall also have been made at the relevant registries which searches indicate that it is in order f-r PMAR to take the securities referred to herein;

  

14

  

(c)           BPMB shall have received the original copy (or where applicable, certified true copy) of the following: -

	
  

	
(i)

	
the executed Procurement, Construction, Commissioning and Management ("PCCM") Contract between the Borrower and Oil-Line Engineering & Associates Sdn. Bhd. ("OLEASB");

	
  

	
(ii)

	
the executed Contract Agreement(s) for the subcontracting works between Oil-Line  Engineering  &  Associates  Sdn. Bhd. ("OLEASB") and contractor(s);

	
  

	
(iii)

	
the executed Contract for the Purchase of Engineering, ISBL Plant and Equipment between Oil-Line Engineering & Associates Sdn. Bhd. ("OLEASB") and Desmet Ballestra Oleo s.p.a.;

	
  

	
(iv)

	
the  Memorandum of  Understanding(s) and/or the Letter of Intent(s) for Sales Off-Take constituting at least sixty per centum (60%) take up of the Borrower's output capacity, satisfactory to BPMB;

	
  

	
(v)

	
the Memorandum of Understanding(s) and/or the Letter of Intent(s) for the supply contract of the palm oil feedstock between the Borrower and the supplier(s), satisfactory to BPMB-,

	
  

	
(vi)

	
the Environmental Impact Assessment ("EIA") Report for the Project;

	
(d)

	
The Borrower shall have appointed Plant Offshore Technology Sdn. Bhd. ("POT") as the Project Manager for the Project;

	
(e)

	
the Borrower shall have appointed reputable contractor(s) acceptable to BPMB and shall notify BPMB of any changes to the appointment of contractors (subject to BPMB's technical verification and satisfaction).   The appointed contractor(s) shall be registered with the Construction Industry Development Board of Malaysia ("CIDB"). The evidence of the CIDB licence shall have been submitted to BPMB in form and substance acceptable to BPMB;

	
(f)

	
the Borrower shall have appointed an Independent Checking Engineer ("ICE") from BPMB's panel of Consultant or equivalent which is acceptable to BPMB. Their scope of works shall include: -

	
  

	
(i)

	
review the contract documents and the supply contract with the technology provider ("Desmet Ballestra Oleo s.p.a.") to verify the overall Project cost;

(ii)            monitor the Project progress and completion status of the Project;

	
  

	
(iii)

	
certify and verify all documents submitted for claims or payments related to the Project;

	
  

	
(iv)

	
review the Operation & Maintenance ("O&M") plan and the proposed O&M staff for the Project; and

	
  

	
(v)

	
other scope of works identified by BPMB's Technical,

and all costs of such appointment shall be fully borne by the Borrower.

In the event BPMB is not satisfied with the services provided by the ICE or the Consultant appointed by the Borrower, BPMB reserves the right to appoint another ICE or Consultant to monitor, verify and certify all claims submitted to BPMB for payment;

(g)           The Borrower shall have submitted to BPMB: -

  

15

  

          

	 	
(i)

	
evidence that all risks insurance policy has been effected on the Project assets pledged to BPMB with the name of BPMB endorsed therein as the beneficiary; or

	
  

	
(ii)

	
BPMB shall have received an undertaking letter that the Borrower shall properly effect an "all risks" insurance policy on the Project assets to be acquired and financed,

The insurance policy must be taken with an insurer acceptable to BPMB and be duly endorsed with BPMB's interest therein as sole chargee and loss payee (if applicable);

	
(h)

	
a processing fee of zero point two zero per centum (0.20%) of the Loan Facilities shall have been paid by the Borrower upon the acceptance of the Letters of Offer;

	
(i)

	
the relevant Forms 34 shall have been lodged with the Companies Commission of Malaysia for registration and copies of the same shall have been deposited with BPMB;

	
(j)

	
written confirmation from the Solicitors of BPMB that all the conditions precedent for the TL 2 Facility and the RC Facility have been complied with by the Borrower; and

(k)           such other terms as shall be advised by BPMB's solicitor.

Pending the fulfilment in manner satisfactory to BPMB of the conditions hereinbefore stipulated, BPMB may at its absolute discretion terminate the Loan Facilities or suspend the disbursement of the Loan Facilities or any part thereof PROVIDED THAT BPMB may at its absolute discretion without prejudice to any of its rights hereunder suspend the fulfillment of or waive or modify any of the aforesaid conditions, covenants, undertakings and disburse the Loan Facilities or any part or parts thereof to the Borrower and all sums so disbursed shall be deemed to be secured by this Agreement and the Security Documents.

Section 5.02                                Other Conditions

  

16

  

Section 5.02                                Other Conditions

 

	
(a)

	
BPMB shall have received the original copies (or where applicable, certified true copies) of the following documents, six (6) months after the first (1st) Drawdown Date: -

	
  

	
(i)

	
Executed Sales Off-Take Agreement(s) between the Borrower and the buyer(s) constituting at least sixty per centum (60%) take up of the Borrower's output capacity, satisfactory to BPMB; and

	
  

	
(ii)

	
Executed Supply Contract(s) of feedstock between the Borrower and the feedstock supplier(s), satisfactory to BPMB.

	
(b)

	
BPMB shall have received proof of lodgment of Form 24 from the Companies Commission of Malaysia (CCM) as documentary evidence that the Borrower has increased its equity contribution from Ringgit Malaysia Nine Million (RM9,000,000.00) to Ringgit Malaysia Twenty-Four Million (RM24,000,000.00) by way of cash or capitalisation of cash advances on the second (2nd) anniversary of the first (1st) Drawdown Date.

Section 5.03                                Performance of Covenants

The obligation of BPMB to make any disbursement under the Loan Facilities shall also be subject to the following conditions:-

	
(a)

	
BPMB is satisfied that no event has occurred so as to render the Loan Facilities or any part thereof to become immediately repayable, and no event of default under any agreement or arrangement referred to in this Agreement shall have happened and be continuing;

	
(b)

	
there shall not have occurred any default in the performance by any Security Party(ies) of any Security Documents;

	
(c)

	
BPMB is satisfied that any disbursement of the Loan Facilities shall at the time of request thereof, be needed immediately by the Borrower for the Purpose mentioned in Section 3.17 hereof;

	
(d)

	
no circumstances or change of law or other governmental action shall have occurred which shall make it improbable that the Purpose mentioned in Section 3.18 hereof can be carried out or that the Borrower will be able to observe and perform the covenants and obligations on its part to be performed and observed under this Agreement;

	
(e)

	
no event or omission has occurred which entitles any creditor or creditors of the Borrower to declare any of its indebtedness under any agreement for credit facilities due and payable prior to its specified maturity or to cancel or terminate any loan or other credit facilities or to decline to make any advance or further advances thereunder;

	
(f)

	
no litigation, arbitration or administrative proceedings before or of any board, tribunal, arbitrator or governmental authority is presently pending or threatened against the Borrower or any of its assets and no claim has been secured by or threatened against the Borrower save and except for those expressly disclosed to BPMB;

	
(g)

	
the Borrower shall have also delivered to BPMB such evidence as to the proposed utilisation of the proceeds of the disbursement and the utilisation of the proceeds of any prior disbursement as BPMB may reasonably require,

and the Borrower shall have (if requested by BPMB) delivered to BPMB certificates to the foregoing effect signed by an authorized representative of the Borrower and expressed to be effective as at the date of the disbursement, together with such evidence as to the proposed utilisation of the proceeds of the disbursement and the utilisation of the proceeds of any prior disbursement as BPMB shall reasonably require.

  

17

  

Section 5.04                                Waiver of Conditions Precedent

The terms and conditions set out in Section 5.01 and Section 5.02 hereto are inserted for the sole benefit of BPMB and may be waived by BPMB in whole or in part with or without terms or conditions at its sole and absolute discretion without prejudicing the rights of BPMB hereunder. Any such waiver: -

	
(a)

	
shall not preclude BPMB from insisting on the Borrower's compliance with such waived condition at a subsequent time; and

	
(b)

	
shall be subject to such terms and conditions as BPMB may stipulate and any failure by the Borrower to comply with or fulfill such terms and conditions shall be deemed to constitute a breach by the Borrower of the provisions of this Agreement.

Section 5.05                                Designated Accounts

The Borrower is required to open and maintain the following Designated Accounts with a Commercial Bank acceptable to BPMB as follows: -

(a)           Revenue Account-,

(b)           Operating Account; and

(c)           Debt Service Reserve Account.

The Revenue Account and Debt Service Reserve Account shall be operated solely by BPMB while the Operating Account shall be operated solely by the Borrower.

Upon Event of Default, BPMB shall have priority over the amounts in the Designated Accounts.

Section 5.06                                Revenue Account

A monitoring accountant acceptable to BPMB shall be responsible on behalf of BPMB on the monitoring and authorising the Revenue Account which will be opened by the Borrower for the purpose of remitting and/or depositing the following proceeds: -

(a)           All revenues and other income in relation to the Project;

	
(b)

	
All proceeds of insurance claims in respect of all insurances in relation to the Project-,

	
(c)

	
All compensation paid by any issuing party in respect of or pursuant to any performance bonds or guarantees or by way of damages (if any) in relation to the Project; and

	
(d)

	
All equity contributions from the shareholders of the Borrower and all other amounts of any kind received

And be applied towards the following order: -

(a)           Approved tax payable (if applicable);

(b)           Payment of Loan Facilities due;

(c)           In making transfer to the Debt Service Reserve Account; and

(d)           In making transfer to the Operating Account

  

18

  

Section 5.07                                Operating Account

The Borrower shall open an Operating Account and to be applied towards the operating expenditure and any cost in relation to the development of the Project, pursuant to the twelve (12) months budget prepared by the Borrower and to be certified by the external auditors of the Borrower.

Section 5.08                                Debt Service Reserve Account ("DSRA")

The Borrower shall set-up a DSRA and shall maintain a minimum of one (1) installment payment in the DSRA at all times throughout the tenure of the Loan Facilities. In addition, the DSRA shall be built up progressively until the balance of the DSRA is equivalent to the next installment. The amount shall be fully deposited two (2) months before the commencement of Payment Date except for the first two (2)  years; the amount shall be fully deposited one (1) month before the commencement of the Payment Date.

(The DSRA shall be closed and the balance therein paid into the Operating Account on the final maturity of the Loan Facilities)

Subject to BPMB's  consent, the amount in the DSRA is eligible to be invested in the form of fixed deposits in a Commercial Bank acceptable to BPMB or in financial instruments rated P1 by RAM or MARC-1 by MARC for the tenure of less than twelve (12) months.

In the event that the balance held in the DSRA is less than the aggregate amount of next installment, the shortfall shall be topped-up from the Revenue Account or Borrower and/or the Borrower's shareholders' advances.

ARTICLE VI

DRAWDOWN

Section 6.01                                Drawdown of TL 1 Facility

	
(a)

	
The solicitors of BPMB shall have issued to BPMB a letter of confirmation or undertaking in form and substance acceptable to BPMB that all conditions precedent for the TL 1 Facility have been duly fulfilled by the Borrower before the issuance of the Drawdown Notice.

	
(b)

	
Subject to the fulfillment of sub-clause (a) above, not less than fourteen (14) Business Days prior to the proposed Drawdown Date (which shall be a Business Day during the Availability Period), BPMB shall have received from the Borrower a duly completed irrevocable Drawdown Notice in the form of the Second Schedule hereto requesting for the Drawdown (the Drawdown Notice shall be delivered before 10:30 am on a Business Day. In the event the Drawdown Notice is delivered after 10:30 am, it shall be considered received the next Business Day).

	
(c)

	
All Drawdown Notices shall be supported by relevant documents, satisfactory to BPMB.

	
(d)

	
Subject to the terms and conditions herein contained, the TL 1 Facility or any part thereof shall be available for Drawdown by the Borrower only up to seventy-five per centum (75%) of the Land and BPMB shall have received satisfactory documentary evidence that the Borrower's contribution of twenty-five per centum (25%) has been paid.

	
(e)

	
All Drawdowns shall be made available to the Borrower by BPMB by paying the amount thereof on the Drawdown Date to such designated bank account as may be notified by the Borrower to BPMB.

	
(f)

	
Notwithstanding anything to the contrary herein contained, the amount of any Drawdown to be disbursed shall be such sum as determined by BPMB.

  

19

  

 

(g)           The Borrower shall :-

	
  

	
(i)

	
issue to BPMB a Drawdown Acknowledgement as set out in the Third Schedule which in the event the Drawdown Acknowledgement is not received by BPMB it shall not in any way prejudice the rights of BPMB within five (5) days of the relevant Drawdown Date; and

	
  

	
(ii)

	
deliver to BPMB a monthly report within seven (7) days of the end of each month on all payments made from the Drawdowns in the preceding month.

Section 6.02                                Drawdown of TL 2 Facility

	
(a)

	
The solicitors of BPMB shall have issued to BPMB a letter of confirmation or undertaking in form and substance acceptable to BPMB that all conditions precedent for the TL 2 Facility have been duly fulfilled by the Borrower before the issuance of the Drawdown Notice.

	
(b)

	
Subject to the fulfillment of sub-clause (a) above, not less than fourteen (14) Business Days prior to the proposed Drawdown Date (which shall be a Business Day during the Availability Period), BPMB shall have received from the Borrower a duly completed irrevocable Drawdown Notice in the form of the Second Schedule hereto requesting for the Drawdown (the Drawdown Notice shall be delivered before 10:30 am on a Business Day. In the event the Drawdown Notice is delivered after 10:30 am, it shall be considered received the next Business Day).

	
(c)

	
All Drawdown Notices shall be supported by certificate for payment, certified by the Independent Checking Engineer ("ICE") or Architect or Consultant and/or other relevant documents as determined by BPMB.

	
(d)

	
Subject to the terms and conditions herein contained, the TL 2 Facility or any part thereof shall be available for Drawdown by the Borrower only up to seventy per centum (70%) of the machinery and equipment, development and construction cost of the Biodiesel plant and BPMB shall have received satisfactory documentary evidence that the Borrower's contribution of thirty per centum (30%) has been paid on proportionate basis for each Drawdown.

	
(e)

	
All Drawdowns shall be made available to the Borrower by BPMB by paying the amount thereof on the Drawdown Date to such designated bank account as may be notified by the Borrower to BPMB.

	
(f)

	
Notwithstanding anything to the contrary herein contained, the amount of any Drawdown to be disbursed shall be such sum as determined by BPMB.

(g)           The Borrower shall: -

	
  

	
(i)

	
issue to BPMB a Drawdown Acknowledgement as set out in the Third Schedule which in the event the Drawdown Acknowledgement is not received by BPMB it shall not in any way prejudice the rights of BPMB within five (5) days of the relevant Drawdown Date; and

	
  

	
(ii)

	
deliver to BPMB a monthly report within seven (7) days of the end of each month on all payments made from the Drawdowns in the preceding month.

Section 6.03                                Utilisation of RC Facility

	
(a)

	
The solicitors of BPMB shall have issued to BPMB a letter of confirmation or undertaking in form and substance acceptable to BPMB that all conditions precedent for the RC Facility have been duly fulfilled by the Borrower before the issuance of the RC Facility Drawdown Notice in the form set out in Fourth Schedule;

	
(b)

	
All RC Facility Drawdown Notice submitted by the Borrower shall be supported by relevant invoices, purchase orders, delivery orders, quotations, contract agreements and/or other related documents from the suppliers which is related to the Project, satisfactory to BPMB's Technical;

  

20

  

	
(c)

	
Drawdown shall be allowed only up to seventy-five per centum (75%) of the cost of raw materials related to the Project and BPMB shall have received satisfactory documentary evidence that the Borrower's contribution of twenty-five per centum (25%) has been paid on proportionate basis for each drawdown.

(d)           If: -

	
  

	
(i)

	
no default has occurred and is continuing or would occur if a drawdown is made-,

	
  

	
(ii)

	
BPMB has received a Drawdown Notice not later than 11.00 a.m. (Kuala Lumpur time) fourteen (14) Business Days immediately preceding each drawdown date-,

	
  

	
(iii)

	
each of the warranties set out in Article VIII hereof remains correct at the date of the proposed drawdown as if given on that date by reference to the facts and circumstances then existing;

then, subject to the provisions of this Agreement, the Borrower may drawdown under the RC Facility PROVIDED ALWAYS that:-

	
(i)

	
drawdowns may only be made on Business Days in the minimum amount of RINGGIT MALAYSIA FIVE THOUSAND (RM5,000.00) or any large sum which is a whole multiple of RINGGIT MALAYSIA FIVE THOUSAND (RM5,000.00) only;

(ii)           a Drawdown Notice once given by the Borrower shall be irrevocable;

	
(iii)

	
no drawdown shall be made which would cause the cumulative amount of all drawdowns to exceed the limit of the RC Facility;

	
(iv)

	
drawdowns shall be made in the form of revolving advances or if the funds are not available to BPMB such period or any other duration in respect of which funds are available to BPMB;

	
(v)

	
subject to the balance of the RC Facility which is unutilised, disbursements may be made on a revolving basis for the duration of the RC Facility and in all circumstances BPMB reserves the right to disburse the RC Facility progressively as deemed fit by BPMB;

	
(vi)

	
the Borrower may by Rollover Notice received by  BPMB not later than fourteen  (14) Business Days before the Maturity Date of an advance, give notice of its wish to refinance an advance by making a further borrowing of the same amount on the relative Maturity Date, whereupon subject to the provisions of this Agreement, on the Maturity Date the first-mentioned advance shall be deemed to be repaid, the said further advance shall be deemed made and the Borrower shall be deemed to have given an appropriate Drawdown Notice.

	
(vii)

	
the period of each Advance shall expire on the relevant Maturity Date unless at the request of the Borrower to be rolled over;

	
(viii)

	
there are not material changes in the business, financial conditions, operations or prospects of the Borrower;

(ix)           funds are available; and

	
(x)

	
each Advance shall be disbursed upon satisfaction of payment of any outstanding interest.

 

  

21

  

 

ARTICLES VII

COVENANTS

Section 7.01                                Affirmative Covenants

The Borrower hereby expressly covenants with BPMB that it will at all times during the continuance of the Loan Facilities: -

	
(a)

	
carry out and operate the Project, its business and affairs with due diligence and efficiency and in accordance with sound financial and industrial standards and practices and in accordance with its Memorandum and Articles of Association as amended from time to time and cause the moneys available hereby from the Loan Facilities to be applied exclusively to the Project;

	
(b)

	
furnish  to BPMB all such information as BPMB shall reasonably request concerning the use of the Loan Facilities, the Project, implementation and progress of the Project and any factors materially affecting the Borrower's business and the operations and financial condition of the Borrower and in particular supply BPMB with statements of all moneys owing to the Borrower in such form as BPMB may from time to time require;

	
(c)

	
keep full and particular accounts of the carrying on of its business or businesses and cause the same to be properly posted up to date and furnish to BPMB within sixty (60) days from the end of each respective financial year of the Borrower, copies of complete financial statements of  the Borrower certified by an officer of the Borrower in such form as BPMB may from time to time determine, and further as soon as available, but in any event within one hundred and one hundred and eighty (180) days after the end of each respective financial year of the Borrower, forward to BPMB two (2) copies of its balance sheet, profit and loss account and report audited and certified by a qualified independent auditor, stating accurately in accordance with generally accepted  accounting standards in Malaysia, the financial condition of the Borrower;

	
(d)

	
permit BPMB to appoint accountants or accounts clerk to prepare the audited accounts or the financial statements of the Borrower at the expense of the Borrower if the Borrower fails to provide the above to BPMB within the following period: -

	
  

	
(i)

	
Audited Accounts

Not later than six  (6) months after the end of each respective financial year of the Borrower;

	
  

	
(ii)

	
Financial Statements

Not later than two (2) months from the end of each respective financial year of the Borrower;

For the above purpose, the Borrower shall allow BPMB to retain part of the disbursement of the Loan Facilities to settle the fees of the accountant or accounts clerk appointed by BPMB;

	
(e)

	
permit BPMB or its agents and servants at all times to inspect the assets and property hereby charged to BPMB and for such purpose to enter upon the land upon which the same may be and to make relevant inventories and records thereof and if BPMB shall reasonably so desire to have the same valued at the expense of the Borrower by a valuer appointed by BPMB. Any such entry and inspection shall be arranged in advance with the Borrower and shall not unreasonably interfere with the business of the Borrower;

	
(f)

	
maintain proper and accurate books and records adequate to reflect in accordance with consistently maintained sound accounting practices in Malaysia the operations and  financial conditions of the Borrower and allow BPMB or its agents and servants to inspect all records at any office, branch or place of business of the Borrower or elsewhere and all records kept by any other authorities or persons so far as such records relate to or affect the Borrower's properties, assets and business and the Borrower shall give to BPMB or any person authorised by BPMB to inspect the said records;

  

22

  

 

	
(g)

	
inform BPMB in writing and to get the consent of BPMB beforehand for any planned expansion of the Project by the construction of extra buildings or the installation/purchase of additional machinery/equipment/vehicle(s) and to detail the expenses to be incurred thereby. Such consent as is required from BPMB shall not be unreasonably withheld;

	
(h)

	
to do all whatsoever acts, deeds and things which BPMB may from time to time require or deem necessary for the preservation or protection of its assets and properties;

	
(i)

	
punctually pay all rents, rates, taxes and all outgoings payable in respect of its lands and the premises at which it carries on its business and obtain all necessary licences and comply with all regulations relating to the carrying on of its business on such premises;

	
(j)

	
notify BPMB of the appointment of auditors or firm of auditors and authorise such auditor or firm of auditors to supply BPMB with a certified copy of any communication sent by such auditor to the Borrower and further to communicate directly with BPMB at any time in respect of any matter connected with the accounts and operations of the Borrower;

(k)           punctually pay all its indebtedness hereunder when due and payable;

	
(l)

	
notify BPMB of the occurrence of any Event of Default hereunder or any event of default in relation to its other indebtedness or of any occurrence of which it becomes aware which in its reasonable opinion might adversely affect its ability to perform and fully comply with its obligations hereunder and in the other relevant Security Documents;

(m)           forthwith inform BPMB of: -

	
  

	
(i)

	
all material  disputes  between the Borrower and any governmental regulatory body or law enforcement authority;

	
  

	
(ii)

	
any governmental disputes between the Borrower and any governmental regulatory body or law enforcement authority;

	
  

	
(iii)

	
any material labour controversy resulting in or which may result in a strike against the Borrower;

	
  

	
(iv)

	
any other matter which has resulted in or might in the reasonable opinion of the Borrower result in a material adverse change in the Borrower's financial condition or operations; and

	
(n)

	
subordinate all existing and future shareholders' loans and advances to the directors the whole of the moneys due under the Loan Facilities and this Agreement-,

	
(o)

	
comply at all times with all applicable laws and regulations and any directive of BPMB which may be issued from time to time;

	
(p)

	
ensure that all requirements as provided by the Environmental Quality Act, 1974 and the regulations, rules and order made thereunder (as amended from time to time) have been complied with and in particular, any approval, licence or permission required from the Government or any statutory authority for any business development or activity that have been or will be carried out by the Borrower have been obtained;

  

23

  

 

	
(q)

	
duly comply and perform at all times its obligations under this Agreement and the Security Documents;

	
(r)

	
notify BPMB of any change in the persons authorised to sign notices of drawdown and any certificates or other documents required in connection with this Agreement on behalf of the Borrower;

(s)           keep and maintain its present share capital and any increases thereof;

	
(t)

	
notify BPMB of any change in the ownership of the equity share capital or management of the Borrower;

	
(u)

	
inform BPMB of the date on which, in the opinion of the Borrower, the Project is in operation/completed;

	
(v)

	
keep and maintain its corporate existence and business and its right to carry on operations in compliance with all applicable laws and regulations and all directives of government authorities;

	
(w)

	
maintain in full force and effect of all authorisations, licences, approvals and consents referred to in this Agreement;

	
(x)

	
inform BPMB of any legal proceedings, litigation or claim involving the Borrower;

	
(y)

	
promptly inform BPMB of any proposed changes in the nature or scope of the Project and of any event or condition which might materially or adversely affect the carrying out of the Project or the carrying on of the Borrower's business;

	
(z)

	
obtain and promptly renew from time to time and comply with the terms and conditions of all consent and authorization that may be required under any applicable law or regulation necessary for the conduct of its business and to furnish copies of the consent and authorization documents to BPMB on a semi-annual basis;

	
(aa)

	
file all relevant tax returns and pay all taxes promptly upon the same becoming due except to the extent that the taxes are being contested in good faith and by appropriate means and an adequate reserve has been set aside with respect thereto;

	
(bb)

	
in the event of a shortfall in its cashflow, procure or cause to be provided additional funds to make up the deficiency within one (1) month of BPMB requiring the Borrower to do so;

	
(cc)

	
the Borrower shall furnish to BPMB its quarterly progress report together with the quarterly development status of the Project; and

	
(dd)

	
the Borrower shall take out and maintain the necessary insurance policies and shall notify BPMB of any material events, which may give rise to any claim or right of action under the insurance policies.

Section 7.02                                Negative Covenants

The Borrower hereby covenants that during the continuance of this Agreement it will not without the prior written consent of BPMB, which consent shall not be unreasonably withheld: -

(a)           create, incur, assume, guarantee or permit to exist any indebtedness except: -

(i)           the Loan Facilities

  

24

  

	
  

	
(ii)

	
unsecured short-term debts incurred in respect of money borrowed from licensed banks in the ordinary course of business;

	
  

	
(iii)

	
any existing or future overdraft and other credit facilities from one or other licensed banks which has been made known to BPMB and/or consented to by BPMB;

For the purpose of this paragraph, any credit from a supplier of capital goods, instalment purchase, or other similar arrangement is deemed to be indebtedness and is not deemed to be permitted by Section 7.02(b)(ii) hereof and a short-term debt is deemed to be any debt payable on demand or maturing by its terms within twelve (12) months after the date on which it was originally incurred;

	
(b)

	
create, incur or permit to exist any lien on any present and future assets of the Borrower except: -

(i)           the charges created by the Security Documents;

	
  

	
(ii)

	
any tax or other statutory lien, provided that such lien shall be discharged within thirty (30) days after the final adjudication unless the same be contested in good faith by appropriate proceedings by the Borrower and the same is notified in writing to BPMB;

(iii)           liens or rights of set-off in the normal course of business-,

(iv)           liabilities which are preferred solely by the laws of Malaysia-,

For the purposes of this paragraph, the expression "lien" includes mortgages, pledges, charges, privileges and priorities of any kind and the expression "assets" includes any revenues and property, movable and immovable of any kind-,

	
(c)

	
enter into any transaction with any person, firm or company, except in the ordinary course of business, on ordinary commercial terms and on the basis of arm's length arrangements or sales agency, or enter into any transaction whereby the Borrower might pay more than the ordinary commercial price for any purchase or might receive less than the full ex-works commercial price (subject to normal trade discount) for its products;

	
(d)

	
except in the ordinary course of business, enter into any partnership, profit-sharing or royalty agreement or any arrangement whereby the Borrower's income or profits are, or might be shared with any other person, firm or company or enter into any management contract or similar arrangement whereby the Borrower's business or operations are managed by any other person, firm or company;

	
(e)

	
except in the ordinary course of business, have any subsidiary or make or permit to exist loans or lend or make advances to others or make investments in other companies or enterprises or guarantee any person, enterprise or company (other than normal trade credit or trade guarantee or temporary loans to staff, Borrowers, contractors or suppliers in the ordinary course of business) PROVIDED THAT the Borrower shall be at liberty to invest in short-term marketable securities acquired solely so as to utilise such funds of the Borrower as are not immediately required for the Borrower's business;

	
(f)

	
add to, delete, vary or amend its Memorandum and Articles of Association in any manner which would be inconsistent with the provisions of this Agreement unless the same is required for the purpose of direct or indirect listing exercise, or change its financial year, or the nature of its present business or sell, transfer, lease or otherwise dispose of all or a substantial part of its capital assets, or undertake or permit any merger, consolidation or re-organisation;

  

25

  

	
(g)

	
terminate or seek to terminate, commit or threaten to commit a breach, amend or grant any waiver in respect of any of the provisions of: -

	
  

	
(i)

	
any of the agreements or arrangements referred to in Sections 5.01, 5.02 and 5.03 hereof-, or

	
  

	
(ii)

	
any other agreement entered into in connection with or in pursuance of this Agreement or the implementation of the Project;

	
(h)

	
carry on any business other than its existing business on the date it first applied for the Loan Facilities or permit any change in the nature of the said business;

	
(i)

	
cancel, surrender, abandon or otherwise amend this Agreement in any way which has a material adverse effect upon the ability of the Borrower to perform its obligation under this Agreement;

	
(j)

	
subject to the provisions of Section 3.15 hereof, make any prepayment in respect of any debt (other than short-term debts as defined in Section 7.02(a)(iii) hereof);

(k)           grant any loans to its directors, shareholders, related and/or subsidiary companies;

(l)           declare and pay any dividends and issuance of bonus shares or other distribution;

	
(m)

	
except in the ordinary course of business, sell or transfer or dispose off all or a substantial part of its assets hereby charged or assigned to BPMB;

	
(n)

	
permit and execute any changes in respect to the Borrower's shareholders or their respective shareholdings therein or in the management of the Borrower;

	
(o)

	
create additional indebtedness save for shareholder's advances or loans or those in connection with its business;

(p)           sell or transfer all or a substantial part of the assets of the Borrower;

(q)           give any guarantee for any indebtedness to any person or entity;

(r)           dissolve all its affairs;

	
(s)

	
pass any resolution for the winding-up of the Borrower other than for a merger or acquisition which has been permitted in writing by BPMB;

(t)           obtain any other loans or financing for the Project;

	
(u)

	
repay any of its shareholders' loans or advances for so long as the Loan Facilities remain outstanding; and

(v)           abandon the whole or any part of the Project.

ARTICLE VIII

REPRESENTATIONS AND WARRANTIES

Section 8.01                                Representations And Warranties

The Borrower hereby represents and warrants as follows:-

	
(a)

	
the Borrower is a company duly established and subsisting under the laws of Malaysia  and has the power and authority to borrow and own properties and assets and carry on business as it is now being conducted;

	
(b)

	
the execution and performance of the terms and conditions contained in this Agreement are within the powers of the Borrower and have been duly authorised by all necessary actions and do not contravene any applicable law, regulation, decree, order, permit or any contractual or other restrictions binding upon the Borrower or any of its properties and assets which affects the ability of the Borrower to meet its obligations under this Agreement;

  

26

  

 

	
(c)

	
the Borrower has obtained all the necessary governmental and corporate approvals and consents for the financing by BPMB hereunder, the carrying on of the business of the Borrower and the due execution and delivery of this Agreement and the Security Documents;

	
(d)

	
there are no existing agreements, mortgages, charges, debentures (whether fixed or floating) pledges, liens or any other form of encumbrances whatsoever in respect of any of the assets and properties of the Borrower herein charged to BPMB save and except those expressly made known to BPMB;

	
(e)

	
there is no litigation, arbitration or administrative proceedings before any court, arbitrator, governmental authority or agency pending or to the knowledge of the Borrower threatened against the Borrower, save and except those expressly made known to BPMB, which would have a material adverse effect on the business or assets and properties and condition of the Borrower or which would enjoin or restrain the execution or performance of this Agreement;

	
(f)

	
all financial statements, information and other data furnished by the Borrower to BPMB are complete and correct, and have been prepared in accordance with generally accepted accounting principles and practices consistently applied and accurately and fairly represent the financial condition and results of operations of the Borrower as of the date or dates to which they were made up. Since such date or dates there has been no change in the Borrower's financial conditions or results of operations sufficient to materially and adversely impair the Borrower's ability to repay the Loan Facilities in accordance with the terms hereof;

	
(g)

	
the Borrower has no contingent obligations, liabilities for taxes or other financial obligations which are material in the aggregate except as disclosed in the financial statements, information and other data furnished by the Borrower to BPMB;

 

	
(h)

	
this Agreement is and will be the legal, valid and binding obligation of the Borrower enforceable in accordance with its terms and the obligations of the Borrower hereunder are and will be direct, unconditional and general obligations of the Borrower;

	
(i)

	
the Borrower is not in default in the payment or performance of any of its obligations in respect of borrowed money and no Event of Default has occurred or is continuing;

	
(j)

	
there are no winding-up proceedings pending against the Borrower and the Borrower has not commenced any action for voluntary winding-up of the Borrower;

	
(k)

	
the Borrower is not now nor will it by executing this Agreement and utilising the Loan Facilities be in default under this Agreement or any other existing mortgage, indenture, contract or debenture binding on the Borrower or to which it is subject;

	
(l)

	
no violation of any provisions of legislation, Court orders, judgment and others has been committed by the Borrower;

	
(m)

	
every consent, licence, approval or authorisation of any governmental authority in Malaysia which is required in connection with the execution, performance, validity or enforceability of this Agreement has been obtained and is in full force and effect;

	
(n)

	
the execution, delivery and performance of this Agreement and the use by the  Borrower of the proceeds of the Loan Facilities for the purpose for which they are designated will not exceed the power granted to the Borrower or violate the provisions of (1) any law or regulation or any order or decree of any governmental authority, agency or Court to which it is subject or (2) its Memorandum and Articles of Association or (3) any mortgage contract or other undertaking or instrument to which it is a party or which is binding upon it or any of its assets and (4) any limitation imposed on the borrowing powers of the Borrower and will not result in the creation or imposition of, or any obligation to create or impose any mortgage, lien, pledge or charge on any of its assets pursuant to the provisions of any such mortgage, contract or other undertaking or instrument.

  

27

  

 

The truth and correctness of all the matters stated in the paragraphs of this Section shall form the basis of BPMB's commitment to make available the Loan Facilities or any part thereof to the Borrower. If any such representations and/or warranties made shall at any time hereafter be found to have been incorrect in any material respect, then and in such event  and notwithstanding anything to the contrary herein this Agreement contained, BPMB shall have the right at its absolute discretion to review, suspend, recall or terminate the Loan Facilities or any part thereof.

ARTICLE IX

INSURANCE

Section 9.01                                Insurance

The Borrower shall keep all assets in good order and condition and insured by the Borrower at its expense for a sum satisfactory to BPMB: -

(i)           against contractors all risk, public liability, work compensation;

	
(ii)

	
against loss  or damage by fire, lightning, tempest, flood, riot, civil commotion, strike, malicious acts-, and

	
(iii)

	
against any other risks associated with the development of the Project as BPMB may from time to time decide;

and shall cause the name of the Borrower and BPMB to be endorsed as joint chargees in the policy or policies so taken out and that the insurance so taken out is not to be amended without prior written consent of BPMB,  and shall keep so insured throughout the duration of this Agreement to their full insurable value to the satisfaction of BPMB with an insurance company acceptable to BPMB. In default whereof it shall be lawful for but not obligatory upon BPMB to insure the same and all moneys expended by BPMB shall be added on to the principal sum then outstanding with interest thereon at the applicable prescribed rate from the date of such payments shall be recoverable from the Borrower and shall be repaid on demand for the same being made by BPMB. BPMB shall not be held liable for any negligence whatsoever as a result of any action taken or omission to effect, take out, maintain or renew such insurance or otherwise.

Section 9.02                                Restriction Against Additional Insurance

The Borrower shall not except at the request or with the consent in writing of BPMB effect or keep on foot any insurance against any risk in respect of the assets charged to BPMB when BPMB have effected or shall keep on foot such insurance.

Section 9.03                                Premium Receipts

	
(a)

	
Insurance policies taken out by the Borrower shall be notified in writing to the Bank within fourteen (14) days and the Borrower shall forward the original of all insurance policies and the receipts or other evidence of payment of premium or any premium paid by the Borrower to BPMB and will when required, deliver or produce to BPMB or such persons as BPMB may direct any policy of insurance effected by the Borrower and the receipts or other evidence of payment of the current premium in respect thereof.

	
(b)

	
Any insurance policies taken in relation to the Project shall not be cancelled without the prior written consent of BPMB.

  

28

  

	
Section 9.04

	
Application of Insurance Money

BPMB may require any moneys received on any insurance of the assets charged making good the loss or damage in respect of which the moneys are received or receivable in or towards the discharge of any principal money and interest owing by the Borrower to BPMB in accordance with the terms and conditions of this  Agreement and the Security Documents, and the Borrower shall hold any money received on such insurance in trust for BPMB and BPMB may receive and give a good discharge for any such moneys.

ARTICLE X

REMEDIES OF BPMB

Section 10.01                                Events of Default

The whole of the principal amount of the Loan Facilities and interest thereon and any other monies covenanted to be paid by the Borrower under this Agreement shall become due and immediately repayable and the outstanding obligations of BPMB shall forthwith be terminated in any of the following events: -

	
(a)

	
if the Borrower defaults in the payment of the commitment fee or any one or more of the instalments of the Loan Facilities and/or interest or any other moneys herein covenanted to be paid after the same shall have become due by the Borrower to BPMB whether formally demanded or not;

	
(b)

	
if the Borrower and/or any Security Party(ies) ceases or threatens to cease to carry on its business (including a direction by any governmental authority or agency to stop or cease operation);

	
(c)

	
if a petition shall be presented or an order be made or a resolution be passed for the winding-up of the Borrower and/or any Security Party(ies) (unless for the purpose of amalgamation or reorganisation thereof with the consent of BPMB), and no step is taken by the Borrower and/or any Security Party(ies)  to oppose the same within the time prescribed under the High Court Rules;

	
(d)

	
if a Receiver and/or Manager of the Borrower's and/or any Security Party(ies)'s undertaking or property or any part thereof pursuant to any debenture shall be appointed other than by BPMB under the provisions hereof;

	
(e)

	
if a distress or execution or other process of a court of competent jurisdiction be levied upon or issued against any property of the Borrower and/or any Security Party(ies) and such distress, execution or other process as the case may be is not satisfied by the Borrower and/or the Security Party(ies) within seven (7) days from the date thereof;

	
(f)

	
if the Borrower and/or any of the Security Party(ies)  commit(s) a breach of any term, conditions, stipulation,  covenant or undertaking herein contained or contained in the Security Documents respectively or in such other agreement or security documents between BPMB  and the Borrower and/or any Security Party(ies) or such other party and executed pursuant to or referred to in this Agreement and on its or their part to be observed and performed and in the opinion of BPMB has failed to remedy the same within fourteen (14) days after notice from BPMB;

	
(g)

	
if in the reasonable opinion of BPMB (which shall be final and binding) the Borrower is not carrying on the reasonable Project or its business and affairs in accordance with sound financial and industrial standards and practices;

	
(h)

	
if any representation or warranty made or deemed to be made in connection with the execution and delivery of this Agreement or of any of the Security Documents referred to herein or pursuant to any notice, opinion, certificates, document or financial or other statements furnished at any time pursuant to this Agreement or any other Security Documents, or in any respect thereof or in connection with any request for disbursement of the Loan Facilities or any part thereof shall be found to have been incorrect or misleading in any material respect;

  

29

  

 

	
(i)

	
if in the reasonable opinion of BPMB its security hereunder or under any other security documents is/are in jeopardy and notice thereof is given to the Borrower and no step is taken by the Borrower to remedy the same within fourteen (14) days from the date of such notice;

	
(j)

	
if any legal proceedings, suit or action shall be instituted against the Borrower and no step is taken by the Borrower to defend the same or an event or events has or have occurred and a situation exists and after review by BPMB, BPMB is of the reasonable opinion that this will materially and adversely affect the Borrower's ability to repay the Loan Facilities and accrued interest thereon and/or to perform its obligations under this Agreement in accordance with the terms hereof;

	
(k)

	
if any loan(s),  overdraft  and/or other credit facilities granted by any licensed bank(s) or financial institution(s) to the Borrower shall be or have been determined by the bank(s) or financial institution(s);

	
(l)

	
if the Borrower and/or any Security Party(ies) is unable to pay its debts within the meaning of Section 218 of the Companies Act, 1965 or any statutory modification or re-enactment thereof or suspends the payment thereof or if the Borrower and/or any Security Party(ies) enters into any arrangement or composition with its creditors or there is declared by any competent court pursuant to an application by the Borrower and/or any Security Party(ies) a moratorium on the payment of indebtedness;

	
(m)

	
if BPMB has been misrepresented, willfully misled or pertinent information has been withheld by the Borrower with regard to any request for disbursement of the Loan Facilities and/or the existing financial position of the Borrower-,

	
(n)

	
if the ownership or control of any of the equity shares in the Borrower or the management thereof is changed without the prior written consent of BPMB;

	
(o)

	
if the Borrower defaults under any other agreements or instruments with any other person(s), bank(s) or financial institution(s) involving the borrowing of money by or the advance of credit to the Borrower which gives the holder of the obligation concerned the right or power to accelerate repayment or withdraw the advance or credit;

	
(p)

	
if BPMB shall be of the opinion that to continue with the Loan Facilities would be detrimental to its interests or otherwise undesirable in view of any changes in applicable law or regulation which makes it unlawful for BPMB to continue with the Loan Facilities;

	
(q)

	
if without the prior written consent the Borrower and/or any Security Party(ies) shall sell, dispose or deal or threaten to sell any of the assets charged to BPMB and/or the whole or a substantial part of its assets;

	
(r)

	
if any provision of this Agreement or any other Security Documents created in respect of the Loan Facilities becomes invalid or unenforceable for any reason whatsoever;

	
(s)

	
the Borrower defaults in the payment of any amount due under the this Agreement or commits or threatens to commit a breach of any term, stipulation, covenant, condition or undertaking contained in this Agreement;

	
(t)

	
if any licence, authorization, approval or consent required by the Borrower to carry on its business or to exercise its rights and perform its rights and perform its obligations under the Project or any part thereof is revoked or withheld or modified or is otherwise not granted or fails to remain in full force and effect;

  

30

  

	
(u)

	
if any licence, authorization, approval, consent, order or exemption or filing with any governmental authority to enable the Security Party(ies) to enter into the relevant Security Documents and to exercise their rights and perform their obligations thereunder and the Security Documents, ceases to be in full force and effect;

	
(v)

	
if any Security Documents are likely to be inadmissible as evidence in the courts of Malaysia or is deemed by BPMB as not to be in proper legal form for enforcement in the courts of Malaysia;

 

 

	
(w)

	
if the infrastructure work in relation to the whole or any part of the Project was abandoned or suspended for an aggregate period of one hundred and eighty (180) days in a year;

	
(x)

	
if one or more judgment or decree was entered against the Borrower and/or any of the Security Party(ies) and such judgment or decree shall have not been vacated, discharged or stayed within sixty (60) days from the date of entry of the judgment or decree;

	
(y)

	
if any change in the financial  position of the Borrower which in the opinion of BPMB, prejudices the ability of the Borrower to perform its obligations hereunder, under the Security Documents or any part thereof;

	
(z)

	
if occurrence of any event which in the reasonable opinion of BPMB, adversely affects the execution or implementation of the Project;

 

	
(aa)

	
if the Project is destroyed or suffers substantial damage in the opinion of BPMB without commencement of rectification within a period of six (6) months;

	
(bb)

	
if the Independent Checking Engineer (ICE) determines at any time during the construction period that the development of the Project is not in conformity with accepted professional standards and codes of practice;

	
(cc)

	
if the Borrower and/or any Security Party(ies) is declared insolvent or a petition is presented and no action is taken to defend the same within fourteen (14) days from the service of petition on the Borrower and/or any Security Party(ies), or an order is made or an effective resolution is passed or a meeting is convened to consider the passing of a resolution for the winding-up of the Borrower and/or any Security Party(ies);

	
(dd)

	
if a receiver, custodian, intervenor or trustee or bailiff is appointed to take possession of the property, assets or undertakings of the Borrower and/or any Security Party(ies) or any part thereof;

	
(ee)

	
if the Borrower and/or any Security Party(ies) commits an act of bankruptcy or becomes insolvent, or is unable to pay their debts when the fall due, or enter into any composition or arrangement with or for the benefit or creditors of the Borrower and/or that Security Party(ies) or allows any legal suit or any judgment against the Borrower and/or Security Party(ies) to remain unsatisfied or outstanding for a period of more than seven (7) days;

	
(ff)

	
if any event or events occur or a situation exists which could or might, in the reasonable opinion of BPMB materially and adversely prejudice the ability of the Borrower to perform its obligations hereunder, under the Security Documents or any part thereof;

	
(gg)

	
if any indebtedness of any Security Party(ies) becomes capable, in accordance with the relevant terms thereof, of being declared due prematurely or subject to recall or withdrawal by reason of a default by the Security Party(ies) in its obligations in respect of the same, or a Security Party(ies) defaults in the performance of any term applicable to such indebtedness or the security for such indebtedness becomes enforceable;

  

31

  

          

	
(hh)

	if an event of default as provided in any other agreements entered into by the Borrower and/or any Security Party(ies) with any other person or persons occurs or any present or future security given over any of the assets of the Borrower and/or any Security Party(ies) becomes immediately enforceable;

 

	
(ii)

	
if any of the Security Documents is not registered where the registration is necessary for the perfection of the security thereby created or not otherwise perfected or it is not capable of being registered or perfected, for any reason whatsoever;

	
(jj)

	
if any of the Security Documents is terminated or cease to be in full force and effect or cease to be the legal and valid obligations of the relevant Security Party(ies) for any reason whatsoever, or any term or condition of the Security Documents becomes invalid or unenforceable;

	
(kk)

	
if any Security Party(ies) fails to pay on demand being made by BPMB subject to the term of the Security Documents;

	
(II)

	
if all or a substantial part of the properties, shares, assets or undertaking of the Borrower or any Security Party(ies) or any subsidiary of the Borrower or any part of the Project shall be condemned, seized or otherwise appropriated or nationalized or the custody or control of or any part thereof or such properties, assets or undertaking shall be assumed and retained by any person acting or purporting to act under the authority of the government, state or other regulatory authorities;

	
(mm)

	
if at any time, the payment obligation of the Borrower under the Security Documents does not rank in all respects prior to all its other unsecured and unsubordinated indebtedness with the exception of that which is preferred by operation of law;

	
(nn)

	
if it is unlawful for the Borrower or any other Security Party(ies) to perform or comply with any of their obligations under the Security Documents, to which it is a party;

 

	
(oo)

	
if any Security Party(ies) or any subsidiary of the Borrower have been prevented for a period of more than sixty (60) days from exercising normal managerial control over all or a material part its properties, assets or undertaking by any person;

	
(pp)

	
if legal action is instituted by BPMB against the Borrower and/or any one or more of the Security Party(ies) in respect of any other financing facility other than the Loan Facilities.

A demand for repayment of the Loan Facilities or the balance thereof together with interest thereon and any other monies due as aforesaid under any of the provisions of this Section may be served on the Borrower by BPMB by a notice demanding payment within fourteen (14) days from the date of such notice. Service of such notice shall be effected in the same manner as provided in Section 13.01 hereof. If at the expiry of the said period the Borrower fails to repay the Loan Facilities or the balance thereof together with interest thereon and any other monies due to BPMB, BPMB may institute such proceedings as it may deem fit against the Borrower for the recovery thereof and all other rights and remedies as may be available to BPMB.

Section 10.02                                Occurrence of an Event of Default or Potential Event of Default

At any time after the occurrence of an Event of Default or potential Event of Default, BPMB may at its absolute discretion (but shall not be under any obligation to): -

	
(a)

	
suspend further Drawdown on or utilization of the Loan Facilities for such period as BPMB may decide; or

	
(b)

	
by written notice to the Borrower, declare that its commitment to make available the Loan Facilities  is cancelled whereupon the same shall be cancelled and all moneys (whether principal, interest, fee, commission or otherwise) for the time being owing under the Loan Facilities and this Agreement shall become due and immediately repayable on demand and BPMB shall forthwith become entitled to recover the same with interest thereon at additional interest on daily rests and to exercise the rights and powers upon default, and BPMB shall be entitled forthwith to institute such proceedings and take such steps as BPMB may think fit to enforce payment of all amounts due and payable pursuant to the Security Documents without further notice to the Borrower. 

  

32

  

ARTICLE XI

TERMINATION AND EFFECT OF REPAYMENT OF LOAN FACILITIES

Section 11.01                                Cancellation of Loan Facilities

	
a)

	
If before the disbursement of the Loan Facilities, the Borrower shall fail to perform and observe all or any of the covenants, stipulations and conditions herein contained and on its part to be performed and observed, BPMB may at any time at its option terminate this Agreement and rescind the Loan Facilities by notice in writing to the Borrower.

	
(b)

	
BPMB shall have the absolute right, by notice in writing to the Borrower, to rescind the Loan Facilities: -

	
  

	
(i)

	
if the first (1st) disbursement of the TL Facility to the Borrower shall not have been made within twenty-four (24) months from the date of this Agreement and/or if the first (1st) disbursement of the RC Facility to the Borrower shall not have been made within twelve (12) months from the first (1st) anniversary date of the first (1st) drawdown of the TL 2 Facility under this Agreement or on such other date as shall be determined by BPMB;

	
  

	
(ii)

	
if the principal sum or any part thereof or any interest thereon shall become immediately repayable under the provisions of this Agreement;

	
  

	
(iii)

	
if there is any change of circumstances which makes it improbable in the opinion of BPMB that the Borrower will be able to observe and perform the covenants and obligations on its part to be observed and performed in this Agreement;

	
  

	
(iv)

	
if any representation or warranty made by the Borrower or any document delivered by the Borrower is found to be materially and adversely incorrect, false or misleading;

	
  

	
(v)

	
if there has been willful concealment or withholding of material facts by the Borrower for the purpose of obtaining the Loan Facilities;

	
  

	
(vi)

	
if there is litigation, arbitration or other proceedings current, pending or threatened against the Borrower which in the opinion of BPMB would, if adversely decided, materially and adversely affect the Borrower's business, assets or financial condition and would materially and adversely affect the Borrower's ability in the performance of its liabilities and obligations under this Agreement.

	
(c)

	
Upon the giving of such notice, any part of the Loan Facilities not hereinbefore disbursed shall be cancelled, but any part of the Loan Facilities already disbursed shall become due and immediately repayable on demand.

	
(d)

	
The Loan Facilities may be cancelled in part or in whole on any redemption date upon the Borrower giving ninety (90) days prior written notice to BPMB.

  

33

  

Section 11.02 Full Repayment of Loan Facilities

Notwithstanding anything to the contrary contained herein, it is hereby agreed that on the satisfaction by repayment or otherwise of the whole of the moneys due under this Agreement, all the provisions herein contained shall cease to be of any effect but without prejudice to BPMB's rights and remedies against the Borrower in respect of any antecedent claim or breach of covenant.

Section 11.03                                Discharge of Security

When the Borrower has paid to BPMB all moneys herein covenanted to be paid, BPMB will at the request and at the cost and expense of the Borrower discharge this Agreement and release the Security Documents.

ARTICLE XII

MISCELLANEOUS

Section 12.01                                Modification and Indulgence

BPMB may at any time without in any way affecting the security hereby created: -

(a)           determine, vary or increase any credit or other facility granted to the Borrower;

(b)           grant to the Borrower or to any other surety or guarantor any time or indulgence;

(c)           renew any bills, notes or other negotiable securities;

	
(d)

	
deal with, exchange, release or modify or abstain from perfecting or enforcing any securities or other guarantees or rights it may now or at any time hereafter or from time to time have from or against the Borrower or any other persons-,

(e)           compound with the Borrower or any other person or guarantor.

The security, liabilities and/or obligations created by this Agreement shall continue to be valid and binding for all purposes whatsoever notwithstanding:-

	
(a)

	
any time given or extended to the Borrower or any other indulgence which BPMB may from time to time grant to the Borrower for the payment of monies due to BPMB or for the observance or performance of any term, stipulation, covenant or undertaking on the part of the Borrower to be observed and performed under this Agreement or for the failure to enforce any right or remedy against the Borrower;

	
(b)

	
any arrangement entered into or any composition accepted by BPMB modifying its rights and remedies by any alteration, amendment, modification, waiver or release of any of the obligations,  terms conditions, stipulations, covenants, agreements and undertakings contained herein or by any forbearance whether as to payment, time, performance or otherwise;

	
(c)

	
any variation, release, exchange, modification, refusal, neglect or abstinence from completing, perfecting, enforcing or assigning any judgment specialty or other security or securities or instruments negotiable or otherwise or other guarantees, judgment or rights held or to be held by BPMB for and on account of the moneys secured hereunder or any part thereof which BPMB may now or at any time hereafter or from time to time have from or against the Borrower.

Section 12.02                                Waiver

No failure or delay on the part of BPMB in exercising or omission to exercise any right, power, privilege or remedy accruing to BPMB under this Agreement upon any default on the part of the Borrower shall impair any such right, power, privilege or remedy or be construed as a waiver thereof or an acquiescence in such default; nor shall any action by BPMB in respect of any default or any acquiescence in any such default, affect or impair any right, power, privilege or remedy of  BPMB in respect of any other or subsequent default.

  

34

  

Section 12.03                                Reconstruction of BPMB or Borrower

The security, liabilities and/or obligations created by this Agreement shall continue to be valid and binding for all purposes whatsoever notwithstanding any change by amalgamation, reconstruction, merger or otherwise which may be made in the constitution of BPMB and similarly the security, liabilities and/or obligations created by this Agreement shall continue to be valid and binding for all purposes whatsoever notwithstanding any change by amalgamation, reconstruction or otherwise howsoever in the constitution of the Borrower, and it is expressly declared that no change of any sort whatsoever in relation to or affecting the Borrower, shall in any way affect the security, liabilities and/or obligations created hereunder in relation to any transaction whatsoever whether past,  present or future.

Section 12.04                                Indemnity for Receivers and Others

Every agent of the Borrower and every Receiver, attorney, manager, agent or other person appointed by BPMB shall be entitled to be indemnified out of the assets charged in respect of all liabilities and expenses incurred directly or indirectly by any of them in the execution or purported execution of any of the powers, authority or discretion vested in them or him under this Agreement and against all actions, proceedings, Cost, claims and demands in respect of any matter or thing done or omitted in any matter relating to the assets charged hereunder to BPMB and any such Receiver may retain and pay all sums in respect of such liabilities and expenses out of any money received by them under the powers conferred by this Agreement.

Section 12.05                                More than One Loan Facilities Account

In the circumstances where the Borrower shall have more than one loan facilities account with BPMB, it shall be lawful for BPMB at any time and without any prior notice to the Borrower immediately to transfer all or any part of any balance standing to the credit of any one loan facilities account to any other loan facilities account which may be in debit but BPMB shall notify the Borrower of the transfer having been made.

Section 12.06                                Stamp Duties

The Borrower shall, upon notice from BPMB, pay all stamp duties, fees or other charges payable on or incidental to the execution, issue, delivery and registration of this Agreement and any documents related hereto and shall reimburse BPMB for any such duties, fees or other charges paid by BPMB.

Section 12.07                                Cost

The  Borrower shall be liable to pay all fees and expenses in connection with or incidental to this Agreement including BPMB's solicitors' fees (on a solicitor and client basis) in connection with the preparation and execution of this Agreement and the Security Documents. If the Loan Facilities or any part thereof shall be required to be recovered through any process of law, or if the Loan Facilities or any part thereof shall be placed in the hands of solicitors for collection, the Borrower shall pay (in addition to the moneys then due and payable under the Loan Facilities) BPMB's solicitors' fees (on a solicitor and client basis) and any other fees and expenses incurred in respect of such collection.

Section 12.08                                Law

This Agreement shall be governed by and construed in all respects in accordance with the laws of Malaysia and the parties hereto hereby submit to the jurisdiction of the Courts of Malaysia in all matters connected with the obligations and liabilities of the parties under this Agreement and the parties hereby further agree that the service of any Writ or

  

35

  

Summons or any legal process in respect of any action arising out of or connected with this Agreement may be effected in the manner set out in Section 13.02 hereof.

Section 12.09                                Successors Bound

This Agreement shall be binding upon the liquidators, receivers, representatives, permitted assigns and successors-in-title of the Borrower and on the assigns and successors-in-title of BPMB.

Section 12.10                                Expenditure Incurred by BPMB

All moneys expended by BPMB hereunder from time to time for and on behalf of the Borrower and for its account with interest thereon at the applicable prescribed rate from the date of such payment relating to insurance, quit rent, assessment, rates, taxes, repairs, legal cost and all other outgoings shall be recoverable from the Borrower and shall be repaid on demand.  In default of payment,  such moneys shall be deemed to form part of the Loan Facilities and to be secured hereunder.

Section 12.11                                Invalidity of any Provision

Any provision of this Agreement which is invalid, unenforceable or prohibited shall not affect the validity or enforceability of the remaining provisions of this Agreement.

Section 12.12                                Construction

In the event of any ambiguity or inconsistency in the interpretation or construction of this Agreement such ambiguity or inconsistency shall be resolved in favour of BPMB.

Section 12.13                                Assignment or Transfer

	
(a)

	
BPMB shall be at liberty at any time with or without the concurrence of and without notice to the Borrower to assign and transfer this Agreement and the Cost and expenses of BPMB and the assignee or transferee of and incidental to such assignment or transfer shall be paid by the Borrower and any recital or statement thereof of the amount due to BPMB under and by virtue of these presents shall be conclusive and binding for all purposes against the Borrower;

	
(b)

	
The Borrower shall not assign its rights hereunder or any interests herein without the prior written consent of BPMB and it shall in any event remain liable for all its obligations hereunder. All undertakings, agreements, representations and warranties given, made or entered into by the Borrower herein shall survive the making of any assignment hereunder.

Section 12.14                                Statement of Account

It is hereby agreed that a statement of account in writing showing the indebtedness of the Borrower to BPMB duly certified by any manager or any authorised officer of BPMB shall (save for any manifest error) be binding and conclusive against the Borrower, persons deriving title thereunder, its successors- in-title and permitted assigns that the balance or the amount thereby appearing is due from the Borrower to BPMB and payable on demand by the Borrower.

Section 12.15                                Evidence of Authority

The Borrower shall furnish to BPMB sufficient evidence of the authority of the person or persons who will sign the request for disbursement provided for under the provisions of this Agreement.

Section 12.16                                Schedules

The Schedule annexed to this Agreement shall be taken, read and construed as essential parts of this Agreement.

  

36

  

Section 12.17                                Right of Set-Off

Where the Borrower has incurred any liability to  BPMB whether under the Loan Facilities or otherwise and whether such liability is liquidated or unliquidated,  BPMB shall be at liberty to set-off the amount of  such liability against any sum that would otherwise be due to the Borrower hereunder and otherwise.

Section 12.18                                Disclosures

The Borrower hereby expressly agrees and confirms that BPMB is authorized by the Borrower to furnish and disclose: -

	
(a)

	
information concerning the terms of this Agreement and the Loan Facilities to such parties in such manner and to such extent as BPMB shall from time to time consider necessary for or in connection with the enforcement of, or preservation of any rights hereunder;

	
(b)

	
all relevant information pertaining to the Loan Facilities to the Central Credit Unit of Bank Negara Malaysia when requested to do so in writing for use by the Unit and the participating banks and/or financial institutions and other regulatory ministries or agencies, and BPMB shall be under no liability for furnishing such information whether before or after the date of this Agreement;

	
(c)

	
to the Security Party(ies) information on the Borrower's Loan Facilities and to any other financial institution(s) seeking information on the credit worthiness of the Borrower-,

	
(d)

	
pursuant to any law or subpoena or other legal process or in connection with any action, suit or proceeding relating to any Security Documents; and

	
(e)

	
to such other persons that BPMB in its absolute discretion may deem necessary and BPMB shall not be liable for furnishing such information.

Section 12.19                                Development Financial Institutions Act 2002

Subject to Section 28(3) of the Development Financial Institutions Act 2002 (Act 618), BPMB is prohibited from granting credit facilities to the Borrower where any directors, officers, managers, agents or guarantors of the Borrower is presently or in future are connected with any directors or officers of BPMB. BPMB reserves the rights to recall the Loan Facilities immediately and the Borrower undertakes to advise BPMB immediately if any of the above relationship is establised or discovered at any time.

Section 12.20                                Variation of Terms

It is hereby expressly agreed and declared by the parties hereto that notwithstanding any of the provisions of this Agreement to the contrary, the provisions and terms of this Agreement may at any time and from time to time be varied or amended at the sole discretion of BPMB by means of a mutual exchange of letters or such other means as the parties may agree upon from time to time and thereupon such amendments and variations shall be deemed to become effective and the relevant provisions of this  Agreement shall be deemed to have been amended and varied  accordingly and shall be read and construed as if such amendments and variations had been incorporated in and had formed part of this Agreement at the time of execution thereof.

Section 12.21                                Concurrent Legal Actions

Upon a default or breach by the Borrower of any term, covenant, stipulation and or undertaking  herein  provided and on the part of the Borrower to be observed and performed, BPMB may thereafter exercise all or any of the remedies available whether by this Agreement, the Security Documents or by statute or otherwise and shall be at liberty to exercise such remedies concurrently, including but not limited to pursuing all remedies pursuant to the provisions of this Agreement and civil suit to recover all moneys due and owing to BPMB by the Borrower.

  

37

  

	
Section 12.22

	
BPMB's Failure to Exercise its Rights under this Agreement shall not be a Defence to the Borrower

In the event of any civil claim by BPMB against the Borrower for all monies due to BPMB, failure to exercise its rights under this Agreement shall not be a defence to the Borrower and shall not prejudice the right of BPMB to claim all sums due and owing to BPMB.

Section 12.23                                Irregularity in Borrowing

The security, liabilities and/or obligations created by this Agreement shall continue to be valid and binding for all purposes notwithstanding that the borrowing or incurring of any liabilities may be invalid or in excess  of the powers of the Borrower or its directors or agents or other persons acting or purporting to act on behalf of the Borrower.

Section 12.24                                Illegality

Notwithstanding any other provisions herein, if by reason of any applicable law or regulation or regulatory requirement (whether or not having the force of law) or any change therein or judicial decision relating thereto or the interpretation or administration or application thereof, it shall become (or it shall appear to BPMB) that it has or will become unlawful or otherwise prohibitory for BPMB to maintain or give effect to its obligations as contemplated by this Agreement, BPMB shall thereupon notify the Borrower to that effect, whereupon, the obligations of BPMB to extend the Loan Facilities shall cease immediately.

Section 12.25                                Terms of Letters of Offer Incorporated

All the terms and conditions of the Letters of Offer referred to in Item 10 of the First Schedule shall be deemed to be incorporated into and form part of this Agreement (whether such provisions are repeated herein or not) subject to such alterations or variations where necessary to make the provisions of the Letters of Offer consistent with the provisions of this Agreement and in the event of any conflict or discrepancy between the provisions of the Letters of Offer and the provisions of this Agreement, the provisions of this Agreement shall prevail for the purposes of interpretation and enforcement of this Agreement.

Section 12.26                                Liens and other Securities not Affected

Nothing herein contained shall prejudice or affect any lien to which BPMB is entitled or any other securities which BPMB may at any time or from time to time hold for or on account of the moneys advanced hereunder and hereby secured, nor shall anything herein contained operate so as to merge or otherwise prejudice or affect any guarantee, mortgage, charge, lien or other security which BPMB may for the time being have for any moneys intended to be hereby or otherwise secured or any right or remedy of BPMB thereunder.

Section 12.27                                Site Visit

BPMB shall have the right to conduct site visit to determine the progress of the Project and to audit the Borrower's account and request for other particulars as required by BPMB from time to time.

Section 12.28                                Discretionary Right of BPMB

	
(a)

	
BPMB reserves the right to revoke the offer if, in its subsequent opinion, the granting of the Loan Facilities is prejudicial to the interest of BPMB or to recall the Loan Facilities upon the happening of any event of default under this Agreement provided always that BPMB shall not in any way be liable for any damages or loss howsoever suffered by the Borrower or any persons as the result of BPMB revoking/withdrawing the offer.

  

38

  

	
(b)

	
BPMB reserves the right to vary the terms and conditions offered in the Letters of Offer and should this situation occur, the Borrower shall be notified accordingly.

Section 12.29                                Cross Default

Notwithstanding the provision relating to the repayment of monies advanced as hereinbefore, the Borrower hereby expressly agrees that if any sums shall be due from the Borrower to BPMB from time to time or at any time or if the Borrower may be or become liable to BPMB anywhere on banking account or any other account current or otherwise in any manner whatsoever or if default is made in any provisions of such accounts or in any other loans granted by BPMB to the Borrower or in any of the provisions herein,  then and in such event, the Indebtedness owing by the Borrower to BPMB under the Loan Facilities shall immediately become due and payable and the security herein become immediately enforceable.

Section 12.30                                Taxes

All payments made by the Borrower under the Loan Facilities shall be made free and clear of any present and future taxes and deductions including stamp duties.

Section 12.31                                Legal Counsel

A legal counsel shall be appointed by BPMB and all legal costs or stamp duty shall be borne by the Borrower.

ARTICLE X111

NOTICES AND STAMPING

Section 13.01                                Notices

Subject as otherwise provided herein, any demand for payment of the monies covenanted herein to be paid by the Borrower and any notice or request required or permitted to be given or made under this Agreement and the other Security Documents to BPMB or to the Borrower shall be in writing and in the case of BPMB  shall be under the hand of its any duly authorised officer of BPMB or a solicitor or firm of solicitors purporting to act for BPMB and may be delivered at or sent by hand, ordinary post or registered post or by telex, telegram, facsimile or cable to the address or addresses specified hereunder of the other party or to such other address as may from time to time be notified in writing by the Borrower to BPMB for that purpose and shall be deemed to be duly served: -

(1)           if it is delivered by hand, at the time of delivery,

(2)           if it is sent by ordinary post or registered post, five (5) days after posting thereof,

	
(3)

	
if it is sent by telegram or cable, on the Business Day next after the date of despatch, or

	
(4)

	
if it is sent by telex or facsimile, immediately after transmission thereof, if the date of transmission is a Business Day, and if such a date is not a Business Day, then the notice by telex or facsimile shall be deemed to be served on the immediately following Business Day.

For BPMB: -

BANK PEMBANGUNAN MALAYSIA BERHAD[16562-K]

Level 16, Menara Bank Pembangunan,

Bandar Wawasan, No. 1016,

Jalan Sultan Ismail,

50250 Kuala Lumpur.

  

39

  

	
Fax. No.

	
:03-2691 6658, 2698 5701

	
Tel. No

	
:03-2692 9088

	
Telex No

	
:MA 31546

	  	  

  

For the Borrower: -

PLANT BIOFUELS CORPORATION SDN. 1311-111D. [625499-X]

No. 22-2, Jalan 1/76C,

Desa Pandan,

55100 Kuala Lumpur

Fax No                                :03-7880 6022

Tel No                                :03-7880 6021

Section 13.02                                Service of Legal Process

	
(1)

	
The service of any Legal Process may be given by registered or ordinary post sent to the respective address for service of the parties hereto and such Legal Process shall be deemed to have been duly served after the expiration of five (5) days from the date it is posted and, if delivered by hand on the day when it is delivered.

	
(2)

	
No change in the address of service howsoever brought about shall be effective or binding on either party unless that party has given to the other actual notice of the change of address for service and nothing done in reliance on Section 13.02(1) shall be affected or prejudiced by any subsequent change in the address of service over which the other party has no actual acknowledge of at the time the act or thing was done or carried out.

Section 13.03                                Principal/Subsidiary Instruments

It is hereby agreed and declared that this Agreement and the Security Documents referred to in Item 11  of the First Schedule hereto are all instruments employed in one transaction to secure the amount set out in Item 3 of the First Schedule hereto and interest thereon within the meaning of Section 4(3) of the Stamp Act 1949 and for the purpose of the said Section, this Agreement shall be deemed to be the principal instrument and the other Security Documents the subsidiary instruments.

[Remainder of this page is intentionally left blank]

  

40

  

	
 

FIRST SCHEDULE

	
 

No.

	
 

SUBJECT- MATTER

	
 

PARTICULARS

	
 

1.

	
 

Name and registered Address of the Borrower

-Preamble

 

	
 

PLANT     BIOFUELS     CORPORATION    SDN.  BHD. [625499-X],   a company incorporated under the laws of Malaysia and having its registered  office   at   No. 22-2, Jalan 1/76C, Desa Pandan, 55100  Kuala  Lumpur  and  a place of business at Lot 217, 1st Floor, FAS Avenue,    No1,  Jalan  Perbandaran  Kelana Jaya, 47301 Petaling Jaya.

 

	
 

2.

	
 

Business of the Borrower

-Section 1.01

 

	
 

The Borrower has as one of its principal objects the carrying on of civil engineering and constructions.

 

	
 

3.

	
 

Amount of Loan Facilities Granted to Borrower

-Sections 1.02, 3.01 and 13.03

	
 

Ringgit Malaysia Sixty-Nine Million (RM69,000,000) only comprising:-

 

(a)      TL 1 Facility

 

          Up to Ringgit Malaysia Three Million         (RM3,000,000) only  or   up   to seventy-five point zero per centum (75.0%) of the Land cost, whichever is lower;

 

(b)      TL 2 Facility

 

           Up to Ringgit Malaysia Fifty-Six Million (RM56,000,000) only or up  to seventy point zero per centum (70.0%) of the machinery and equipment, development and construction cost, whichever is lower; and

 

(c)      RC Facility

 

          Up to Ringgit Malaysia Ten Million

(RM 10,000,000)  only  or up to seventy-five point zero per  centum  (75.0%)  of  the raw materials cost, which is lower.

 

.

  

41

  

	
 

FIRST SHEDULE

 

	
 

NO.

	
 

SUBJECT - MATTER

	
 

PARTICULAR

 

	
 

4.

 

	
 

Name and Residential Address of the Guarantors

-Section 2.01

	
 

(a)  TAN YEE HEAN

       [NRIC No.   660326-08-5205    (NEW)/ A0393550 (OLD)   of 808,   Jalan   Wisma Pantai 1,   Pantai   Apartment, 12200 Butterworth, Penang.

 

(b)   AHMAD FAIZAL BIN JAAFAR

      [NRIC  No.    670420-01-5763 (NEW)/ A0672724 (OLD)]   of   No.9,   Jalan  Elitis Ujana,   Valencia,   47000 Sungai Buloh, Selangor Darul Ehsan.

 

	
 

5.

 

	
 

Grace Period of Payment

-Section 3.02

	
 

 TL 1 Facility and TL 2 Facility

 

Twenty-four   (24)  months  from  the  date  of  the first   (1st)  Drawdown  of   the  respective  TL 1 Facility and TL 2 Facility.

 

RC Facility

 

Nil

 

	
 

6.

 

	
 

Interest Rate

- Section 3.05

	
 

(a)   TL 1 Facility and TL 2 Facility

 

First year : One point two five per centum (1.25%)   per  annum   plus BPMB’s     Effective  Cost  of   Fund (ECOF).

 

Thereafter : Two  point   zero  per  centum (2.0%)   per   annum   plus ECOF

 

(b)   RC Facility

 

Two point zero per centum (2.0%) per annum plus ECOF.

 

BPMB’S   ECPF  at  the  date  of  the Letters   of Offer  is  six   point  two five per  centum   (6.25%)   per  annum  and  is  subject  to  change  as   and when advised by BPMB.

 

  

42

  

	
 

FIRST SCHEDULE

 

	
 

NO.

	
 

SUBJECT-MATTER

	
 

PARTICULARS

 

	
 

7.

 

	
 

Nature of the Project

-Sections 2.0.1 and 3.17

	
 

The development, construction, commissioning and  operation of 100,000 MT per annum capacity Biodiesel production plant at Gebeng Industrial Estate, Kuantan, Pahang.

	
 

8.

 

	
 

Purpose and Use of a Loan Facilities

-Section 3.17

	
 

(a)  TL 1 Facility

 

To part-finance  the  purchase of the Land as specified in item 9 of the First Schedule hereto.

 

(b) TL 2 Facility

 

To part-finance the purchase of machinery and equipment, development and construction of the Biodiesel production plant as specified in the Sixth Schedule hereto.

 

(c)  RC Facility

 

To part-finance the purchase of raw materials.

 

	
 

9.

 

	
 

Particulars of Land Charged to BPMB

-Section 2.01

	
 

The land identified as Lot 122A, Kawansan Perindustrian Gebeng Phase II, Kuantan, Pahang Darul Makmur together with the building(s) erected or to be erected thereon.

 

	
 

10.

 

	
 

Date of BPMB’s Letters of Offer

-Sections 2.01, 11.01(b)(i) and 12.25

	
 

8th  day  of  March  2007 and the Letter of Changes dated 25th day of July, 2007.

	
 

11.

 

	
 

Other Security Documents

-Sections 2.01, 4.01 and 13.03

	
 

(i)      First Fixed and Floating Debenture;

 

(ii)     Deed of Assignment of Land;

 

(iv) Deed of Assignment of Construction Contracts;

 

(v)  Deed  of  Assignment  of Insurance Proceeds;

 

(vi)  Deed  of  Assignments  of Right and Benefits of Permits;

 

(vi)  Deed  of  Assignment  of Rights and Benefits of Liquidated Damages;

 

 

 

  

43

  

 

 

	
 

FIRST SCHEDULE

 

	
 

NO.

 

	
 

SUBJECT-MATTER

 

	
 

PARTICULAR

	
11.

	
 

Other Security Documents

-Sections 2.01, 4.01 and 13.03

 

	
 

(vii) Deed of Assignment of Rights and Benefits of    Securities

 

(viii) Deed of Assignment of Rights and Benefits of Licences

 

(ix)  Deed of Assignment of Designated Accounts;    and

 

(x)    Guarantee.

	
 

12.

	
 

Security Party(ies)

- Sections 2.01 and Item 4

	
 

(i)  Guarantors

  

44

  

 

SECOND SCHEDULE

DRAWDOWN NOTICE

(TL 1 Facility)

(Section 6.01(b))

(Letterhead of Borrower]

Date:

To:          BANK PEMBANGUNAN MALAYSIA BERHAD [16562-K]

Level 16, Menara Bank Pembangunan, Bandar Wawasan,

No. 1016, Jalan Sultan Ismail,

50250 Kuala Lumpur.

Attention: Head, Loan Administration Department

Dear Sirs,

	
Re:

	
Facilities Agreement dated [

	
] (the "Facilities Agreement") for Term Loan 1 Facility of RM3.0 Million (the "TL 1 Facility")

	
  

	
___________________________________________________________________________________________________________________

We refer to the TL 1 Facility constituted by the Facilities Agreement. Terms defined in the Facilities Agreement have the same meanings herein.

We hereby: -

	
(i)

	
in accordance with Section 6.01 of the Facilities Agreement, give you notice that we wish to request for the Drawdown under the TL 1 Facility of the amount in Ringgit Malaysia

	
(RM

on the                          ;

	
(ii)

	
request you to remit the Drawdown to us at                                        Branch (specify Designated Bank Loan Account number);

	
(iii)

	
confirm that the Drawdown requested complies with Section 6.01 of the Facilities Agreement.

We hereby represent and warrant to you that: -

	
(a)

	
the representations and warranties stated in Section 8.01 of the Facilities Agreement are true and correct as at today's date;

(b)           no Event of Default as defined in the Facilities Agreement has occurred; and

	
(c)

	
making of the Drawdown or disbursement hereby requested will not, to the best of our knowledge, give rise to any such event as is referred to in (b) above nor will it, to the best of our knowledge, cause any of the representations stated in Section 8.01 of the Facilities Agreement to become untrue or incorrect as if made at the date of such disbursement and there is not, so far as we are aware, any reason why we will not be permitted to make any payment as required under the Facilities Agreement.

By,

.....................................

Duly Authorised Signatory

for and on behalf of

Plant Biofuels Corporation Sdn. Bhd. [625499-X]

  

45

  

SECOND SCHEDULE

DRAWDOWN NOTICE

(TL 2 Facility)

(Section 6.01(b))

(Letterhead of Borrower)

Date:

To:           BANK PEMBANGUNAN MALAYSIA BERHAD [16562-K]

Level 16, Menara Bank Pembangunan, Bandar Wawasan,

No. 1016, Jalan Sultan Ismail,

50250 Kuala Lumpur.

Attention: Head, Loan Administration Department

Dear Sirs,

	
Re:

	
Facilities Agreement dated [                              ] (the "Facilities Agreement") for Term Loan 2 Facility of RM56.0 Million (the "TL 2 Facility")

_____________________________________________________________________________________________________________

We refer to the TL 2 Facility constituted by the Facilities Agreement. Terms defined in the Facilities Agreement have the same meanings herein.

We hereby: -

	
(i)

	
in accordance with Section 6.01 of the Facilities Agreement, give you notice that we wish to request for the Drawdown under the TL 2 Facility of the amount in Ringgit Malaysia

	
(RM

	
   )

on the                                           ;

	
(ii)

	
request you to remit the Drawdown to us at

	
    Branch (specify Designated Bank Loan Account number);

	
(iii)

	
confirm that the Drawdown requested complies with Section 6.01 of the Facilities Agreement.

We hereby represent and warrant to you that: -

	
(a)

	
the representations and warranties stated in Section 8.01 of the Facilities Agreement are true and correct as at today's date;

(b)           no Event of Default as defined in the Facilities Agreement has occurred; and

	
(c)

	
making of the Drawdown or disbursement hereby requested will not, to the best of our knowledge, give rise to any such event as is referred to in (b) above nor will it, to the best of our knowledge, cause any of the representations stated in Section 8.01 of the Facilities Agreement to become untrue or incorrect as if made at the date of such disbursement and there is not, so far as we are aware, any reason why we will not be permitted to make any payment as required under the Facilities Agreement.

By,

....................................

Duly Authorised Signatory

for and on behalf of

Plant Biofuels Corporation Sdn. Bhd. [625499-X]

  

46

  

 

THIRD SCHEDULE

DRAWDOWN ACKNOWLEDGEMENT

(TL 1 Facility)

(Section 6.01(g)(i))

(Letterhead of Borrower)

Date:

To:           BANK PEMBANGUNAN MALAYSIA BERHAD [16562-K]

Level 16, Menara Bank Pembangunan, Bandar Wawasan,

No. 1016, Jalan Sultan Ismail,

50250 Kuala Lumpur.

Attention: Head, Loan Administration Department

Dear Sirs,

	
Re:

	
Facilities Agreement dated [                              ] (the "Facilities Agreement") for Term Loan 1 Facility of RM3.0 Million (the "TL 1 Facility")

____________________________________________________________________________________________________________

We refer to the above Facilities Agreement.

We hereby acknowledge that we have received the drawdown of RM [   amount   ] in respect of our Drawdown Notice dated [   date   ].

By,

......................................

Duly Authorised Signatory

for and on behalf of

Plant Biofuels Corporation Sdn. Bhd. [625499-X]

  

47

  

 

THIRD SCHEDULE

DRAWDOWN ACKNOWLEDGEMENT

(TL 2 Facility)

(Section 6.01(g)(i))

(Letterhead of Borrower)

Date:

To:           BANK PEMBANGUNAN MALAYSIA BERHAD [16562-K]

Level 16, Menara Bank Pembangunan, Bandar Wawasan,

No. 1016, Jalan Sultan Ismail,

50250 Kuala Lumpur.

Attention: Head, Loan Administration Department

Dear Sirs,

	
Re:

	
Facilities Agreement dated [                               ] (the "Facilities Agreement") for Term Loan 2 Facility of RM56.0 Million (the "TL 2 Facility")

                                                                                                                                ______________________________________________________    .

We refer to the above Facilities Agreement.

We hereby acknowledge that we have received the drawdown of RM [   amount   ] in respect of our Drawdown Notice dated [    date    ].

By,

.........................................

Duly Authorised Signatory

for and on behalf of

Plant Biofuels Corporation Sdn. Bhd. [625499-X]

  

48

  

FOURTH SCHEDULE

DRAWDOWN NOTICE

(Section 6.03 (b))

(RC Facility)

Date:

To:           BANK PEMBANGUNAN MALAYSIA BERHAD [16562-K]

Level 16, Menara Bank Pembangunan,

Bandar Wawasan,

No. 1016, Jalan Sultan Ismail,

50250 Kuala Lumpur.

Dear Sirs,

	
Re:

	
Facilities Agreement dated the

	
               day of

	
                       2007      RC Facility Drawing Number (                                                              )

 

 

We refer to the Revolving Credit Facility (hereinafter called "the RC Facility") made available by a Facilities Agreement dated the               day of                          2007 (hereinafter called "the Facilities Agreement") between this Company as borrower and yourselves as lender.

We hereby:-

(a)           give you notice that we wish to make a RC Facility Drawing of Ringgit Malaysia

                                                         (RM                                                                                                                           )  on the RC

Facility on                                           (Date);

	
(b)

	
request you to remit the RC Facility Drawing to (specify name of bank and account number);

	
(c)

	
confirm that each of the conditions contained in Sections 6.02(a), (c) and (d) of the Facilities Agreement is satisfied as at the date hereof and we know of no reason why it should not be satisfied as at the date referred to in (a) above; and

	
(d)

	
certify that since the date when we first applied for the RC Facility there have been no material changes in our affairs and or business.

Yours faithfully,

by......................................

Authorised Signatory of

PLANT BIOFUELS CORPORATION SDN. BHD. [625499-X]

* Delete where approciate

  

49

  

FIFTH SCHEDULE

ROLLOVER NOTICE

(RC Facility)

(Section 2.01)

Date:

To:           BANK PEMBANGUNAN MALAYSIA BERHAD [16562-K]

Level 16, Menara Bank Pembangunan,

Bandar Wawasan,

No. 1016, Jalan Sultan Ismail,

50250 Kuala Lumpur.

Dear Sirs,

	
Re:

	
Facilities Agreement dated the

	
          day of

	
                     2007 Rollover Notice Number (                                                  )

                                                                                                                                                                                                                                                                                      

We refer to the Revolving Credit Facility (hereinafter called "the RC Facility") made available by a Facilities Agreement dated the day of        2007 (hereinafter called "the Facilities Agreement") between this Company as borrower and yourselves as lender. Terms defined in the Facilities Agreement have the same meaning herein.

We hereby: -

(a)           give you notice that we wish to make a RC Facility Drawing of Ringgit Malaysia

(RM                                           )    on

the                                     (Date);

	
(b)

	
confirm that each of the conditions contained in Sections 6.02(a), (c) and (d) of the Facilities Agreement is satisfied as at the date hereof and we know of no reason why it should not be satisfied as at the date referred to in (a) above.

Yours faithfully,

by........................................

Authorised Signatory of

PLANT BIOFUELS CORPORATION SDN. BHD. [625499-X]

* Delete where appropriate

 

  

50

  

SIXTH SCHEDULE 

TOTAL PROJECT COST

(Item 7 of the First Schedule)

TOTAL PROJECT COST

 

	Items	 	 	 	 	 Amount (RM)	 
	

Procurement, Construction, Commissioning & Management (“PCCM”) Contract

	 	 	 	 	 	 
	
 

Proposed 100,000 MT/PY Biodiesel Plant

 

 

	 	 	 	 	 	 
	
Items

	 	
Amount (RM)

	 	 	 	 
	
Preliminaries and other general requirement

	 	 	3,230,000	 	 	 	 
	
Project Management Team

	 	 	5,445,000	 	 	 	 
	
OSBL Basic and Detail Engineering

	 	 	1,235,000	 	 	 	 
	
Procurement and Installation

	 	 	 	 	 	 	 
	
Supply, Fabricate and Install Storage Tanks

	 	 	6,909,693	 	 	 	 
	
Process and Utility Pump (Including Fire Pumps)

	 	 	3,934,315	 	 	 	 
	
Package Equipments

	 	 	2,008,060	 	 	 	 
	
Air Compressor System

	 	 	121,968	 	 	 	 
	
Fire Fighting Equipment

	 	 	459,800	 	 	 	 
	
Piping System

	 	 	6,456,862	 	 	 	 
	
Electrical and Instrumentation (Including Emergency Genset)

	 	 	5,517,156	 	 	 	 
	
Construction

	 	 	 	 	 	 	 
	
ISBL Equipment Installation

	 	 	322,068	 	 	 	 
	
Civil Works

	 	 	3,660,102	 	 	 	 
	
Building and Structural Works

	 	 	6,214,293	 	 	 	 
	
Piled Tank Foundation

	 	 	2,945,969	 	 	 	 
	
Commissioning (Including 2 year Operation Spares)

	 	 	1,475,885	 	 	 	 
	
Plant Machinery and Equipment- De Smet Bellestra

	 	 	40,000,000	 	 	 	 
	
TOTAL

	 	 	 	 	 	 	89,936,171.00	 
	
Engineering Contract

	 	 	 	 	 	 	3,000,000.00	 
	
Land Cost

	 	 	 	 	 	 	4,102,811.46	 
	
Administration & Operating Expenses during construction phase/Contingencies

	 	 	 	 	 	 	3,100,000.00	 
	
TOTAL

	 	 	 	 	 	 	100,138,982.46	 

 

 

* BPMB financing is subject to the bold item only.

 

 

 

AS WITNESS BPMB has hereunto set its hand and the Common Seal of the Borrower was hereunto affixed.

  

51

  

 

	  

SIGNED by BANK PEMBANGUNAN ) MALAYSIA BERHAD [16562-K] by     )

its lawful Attorney in the presence of: -        )

	 	
BANK PEMBANGUNAN MALAYSIA

BERHAD [16562-K]

by its Attorney

	 

	 
	
 

 

The execution of this instrument by    ) PLANT BIOFUELS CORPORATION )

SDN. BHD. [625499-X], the Borrower,  )

was duly effected in the manner         )

authorised by its constitution under    )

the Common Seal of the Borrower      )

which said Seal was hereunto affixed )

in the resence of: -                             )

	

	 	 

 

	 	

	
Director:

Name: Ahmad Faizal Bin Jaafar NRIC NO: 670420 - 01 -  5763  (New)/

                                 A0672724(Old)

	
Director:

Name: TAN YEE HEAN

NRIC   NO:  660326  - 08  -  5205   (New)/

                                         A0393550  (Old)

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00191-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00191-of-00352.parquet"}]]